$0/ Cornell University Law Library The Moak Collection PURCHASED, FOR - The School of Law of Cornell University And Presented February 14, 1893 IN nenoRY of JUDGE DOUGLASS BOARDMAN FIRST DliAN OF THE SCHOOL By his Wife and Daughter A. Al. BOARDMAN and ELLEN D. WILLIAMS „_ Cornell University Library KF 801.W5S A commentary on the law of contracts / 3 1924 018 822 696 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/cu31924018822696 A COMMENTARY ON THE LAW OF CONTRACTS. BY FRANCIS WHARTON, LL.D., AUTHOR OF TREATISES ON CONFLICT OF LAWS, ON EVIDENCE, ON AGENCY, ON NEGLIGENCE, AND ON CRIMINAL LAW. IN TWO VOLUMES. VOLUME I. PHILADELPHIA : KAY AND BEOTHBE, LAW BOOKSELLEKS, PUBLISHERS, AND IMPORTERS. 1882. Entered according to Act of Congress, in the year 18S2, by FRANCIS WHARTON, In the Office of the Librarian of Congress, at Washington. COLLINS, PRINTER. PEEFACE. For several reasons the older English text-books on eon- tracts, and the American treatises based oh them, have ceased to represent the actual state of the law in England and in this country. 1. Recent English legislation has to a large measure assimi- lated the doctrines of common law to those of equity, and has committed to a common judiciary the administration of both branches of jurisprudence. The older English rulings, there- fore, so far as they were based on a system now abrogated, are no longer authoritative in England ;' while in most of our states they have not, so far as they sustained at com- mon law doctrines repudiated in equity, been regarded as at any time authoritative. The recent English rulings, there- fore, as embodied in the treatises of Mr. Pollock, Mr. Leake, and Sir W. Anson, are far more in sympathy with our sys- tem, as a whoTe, than are the older English rulings as em- bodied in the treatises of Mr. Powell and Mr. Chitty. The need, it is true, for such a work as I now offer has been much lessened by the .excellent American editions of the treatises of Mr. Pollock and Sir W. Auson. But we should not forget that our jurisprudence, so far as regards these important changes, took the lead of that of England ; and ' See as applying the rule that, ble as distinguished from common law under the judicature act of 1873, a doctrine, Walsh u. Lonsdale, 46 L. T. common law court must adopt equita- N. S. 858 (1882). iii PREFACE. that the cases in this country in which these changes are discussed are vastly more numerous, and many of them more carefully considered, than are the cases within the same range in England. It is proper, therefore, that in a work on contracts, American jurisprudence should not at least be postponed to a jurisprudence which, in this relation, is its junior and which has been less elaborately mapped out. 2. The law of contracts being in many of its aspects cosmo- politan, English judges and authors sought, from the earliest times of which we have a record, to discover how contracts were considered in what they called the " civil" law. But for a long time their opportunities of accuracy in this respect were not great. The Corpus Juris has only within the last few years been cleared of glosses and interpolations which made some of its most important passages senseless if not erroneous ; and the treatise of Grains, which has proved so valuable in elucidating the text, was only discovered thirty years ago. The foreign jurists who were until within twenty years cited in England were either scholastic casuists speculating on an unreal world, or servile commentators expanding a cor- rupted text.' Now, however, Savigny's great works on con- tracts and on the Roman law as a system are accessible, in 1 Of the inadequacy of the older the Roman jurist^, so far from this English standards an illustration may being their opinion, held that, in de- be found in the case of Jordan v. termining the question whether con- Elliott, decided by the supreme court sent was extorted by fear of violence, of Pennsylvania in March, 1882 (12 the distinctive characteristics of the Weekly Notes, 56). In the opinion of assailant and of the assailed were to the coiirt, Blackstone is cited to the he considered. See infra, § 147. And effect that fear, to constitute a defence this is the conclusion reached by the in cases of duress, must be such fear supreme court of Pennsylvania in this as a person of courage and firmness interesting case, dissenting with evi- would be likely to yield to ; and Black- dent reluctance from Blackstone in a stone, in a passage quoted from him, matter in which Blackstone relied on states that the " civil" law took this authorities who misrepresented the position. Now, though this was the Roman law. view of some of the scholastic civilians, iv PREFACE. annotated translations, to bench and bar; and Savigny's con- clusions are cited by English judges as the basis of many of their most important decisions, while Mr. Pollock, in a treatise which I think the best that England has given on contracts, when he does not rely on Savigny as final, differs from the great master with hesitancy, making him the basis even for a departure. Yet Savigny is not to be regarded as having settled the multitudinous questions which arise in this branch of jurisprudence. Milton tells us of an " anarch old Who by'deoision more embroiled the affray." This, from a fundamental law of thought, must be the case with judges and jurists as well as with "anarchs." Every new position advanced, no matter how wisely and lucidly, gives rise to multitudes of new distinctions, it being neces- sary to show how far it aft'ects each new and varying case. This is eminently so with Savigny, whose ofiice it was not to codify but to issue germinal principles to be developed by those who should follow. Of this we have an interesting illustration in a thoughtful German work on contracts re- cently published,' which shows how the tendency of thought with us and that in Germany are unconsciously approxi- mating in this relation. Nothing is more remarkable than the modification, in recent English and American cases, of the doctrine of consideration. For nearly a century it was held that a consideration must be either a benefit to the prom- isor or a detriment to the promisee. Gradually, however, it was seen that the first alternative was superfluous, and that no benefit to the promisor was a consideration unless it was a detriment to the promisee. The conclusion, it was true, was not very lucidly expressed ; the consideration, it was said, must " flow" from the promisee ; but, no matter how the rule ' Der Vertrag, von Dr. Siegmund Schlossman, Leipzig, 187G. V PREFACE. was stated, it is now settled. There must be detriment of some kind to the promisee; it may or it may not be that the promisor is benefited by the bargain, but detriment to the promisee there must be. Now it is an interesting fact that this is the conclusion to which Schlossman comes after a copious and subtle discussion, not only of the Roman stand- ards, but of the philosophy of modern jurisprudence. I men- tion this book in this place because I did not obtain it until my chapter on consideration was in the printer's hands. Other illustrations of the way in which German authorities have recently been invoked to sustain the conclusions of Eng- lish judges will hereafter be given in detail. It is enough now to say that even if our sole object be to reproduce Eng- lish jurisprudence, no book on contracts can meet the present need unless it at least gives us what is said by great German commentators now recognized in England as authoritative in the jurisprudence common to Germany and England. We cannot verify English decisions based on German authorities without seeing what it is that these authorities say. 3. I think, also, it is important to take into account the influence exercised on jurisprudence by the kindred science of political economy. Lord Kenyon, who was a tory, based his decision, in Waddington's case, that it is illegal to buy up produce on speculation, on the paternal theory of political economy; and he took particular pains to condemn the theoiy of laissez /aire, announcing that he held Adam Smith's doc- trines in this respect to have been satisfactorily refuted.^ Lord Campbell, a liberal, and upholder of the theory of laissez fairs, he]d just the opposite, arguing that freedom to bargain is a right with which government, except in cases 1 See Lord Kenyon's opinion in E. <;. discussion in Criminal Law Magazine Waddington, 1 East, 143 et seq., and for Jan. 1882. vi PKEPACE. of necessity, ought not to interfere.' — It is on this important issue that we find one of the most marked contrasts be- tween the tendency of recent English and that of recent American adjudication. In England free trade principles {although the recent Irish land bill is a striking exception) are dominant, and this is to be seen not only in the repudia- tion of the old rulings as to forestalling and regrating, but in the assigning of almost unchecked liberty to the right to con- tract. In this country, on the other hand, free trade princi- ples (whether rightly or wrongly it is not within the province of the present work to consider) have at least not been ac- cepted as part of the national creed; and we find as a result numerous decisions of our courts restricting freedom of con- tract. ITot only is it held in almost all our states, and by the federal courts, that agreements to release from liability for negligence are invalid though couched in terms which would be legal in England,^ but our courts have decided that agree- ments to fix the price of labor,^ agreements to control trans- portation,^ and agreements to absorb a staple,' are invalid, although similar agreements have been sanctioned in Eng- land. It is enough, in order to explain the large space which these and cognate rulings occupy in the present work, to say that they are not only distinctively American, but that they peculiarly demand accurate and prominent statement and classification. If public policy is to determine whether con- tracts are valid or otherwise, it is important that public policy should be clearly defined.* 4. One other distinctive feature of our American jurispru- dence — a feature which each day becomes more marked — is its copious minuteness of difi:erentiation. An English critic has 1 Hilton V. Eckersley, 6 E. & B. 62. » Znfra, § 442. 2 Infra, § 438. ^ As to constitutionality of such legis- 3 Infra, § 439. lation, see infra, § 1064. « Infra, § 442 a. vii PREFACE. complained of the multitudinous mass of citations iu my other works. I do not see how this can be avoided. There is no state in the Union in which a student is not entitled to know the cases decided on any given topic by the court by whose law he is bound ; and in addition to the federal reports, of which we have at least twelve volumes issuing annually, we have annual reports from thirty-eight states. But there is another reason for the citation of all the cases from each state bearing on each point discussed. The more ex- tended the induction, the more satisfactory is the conclu- sion reached; and, independently of this reason, each new case, especially where new conditions of society intervene, gives a new phase in which the doctrine at issue may be tested. My duty, in the preparation of my other works, has required me to carefully examine for the last few years the reports of all our courts ; and from these volumes I have noted whatever bears on the points discussed in the following pages. In some of these reports will be found opinions in which the questions at issue are discussed with an ability at least equal to that of contemporaneous English judgments. But be this as it may, there is no state the decisions of whose supreme judiciary should not be cited in a work professing to aid practitioners and students in the United States. And this citation is what I have here undertaken to give. My particular acknowledgments are due to John Douglass Brown, Jr., Esq., of the Philadelphia bar, for valuable aid received from him in verification and correction for the press. If the cases cited are uniformly accurate, as I believe will be found to be the case, it will be largely due to his con- scientious diligence. I desire, also, to express my indebted- ness to Professor L. von Bar, of Gottingen, one of my col- leagues in the Institute of International Law, not merely viii PREFACE. for his admirable printed expositions of several of the topics I here discuss, but for the suggestions as to authorities he has been kind enough to give me in our private correspondence. F. W. Narbagansett Pier, R. I., Sept. 24, 1882. IX TABLE OF CONTENTS. CHAPTER I. Constituents of Contract, §§ 1-28. CHAPTER II. Infants, §§ 29-74. CHAPTER III. Maekied Women, §§ 7G-D2. CHAPTER IV. Aliens, §§ 93-94. CHAPTER V. Agents, § 96. CHAPTER VI. Lunatics, Deunkaeds, and Spendtheifts, §§ 98-124. CHAPTER VII. CoEPOEATioNS, §§ 127-143. CHAPTER VIII. Duress, §§ 144-154. xl CONTENTS, CHAPTER IX. Undue Influence and Imposition, §§ 157-170. CHAPTER X. Errob and Mistake, §§ 171-211. i CHAPTER XI. Representation and Warranty, §§ 212-231. CHAPTER XII. Fraud, §§ 232-279. CHAPTER XIII. Rescission ; Rectification, §§ 282-293. CHAPTER XIV. Impossibility, §§ 296-331. CHAPTER XV. Illegality, §§ 335-488. CHAPTER XVI. Consideration, §§ 493-540. CHAPTER XVII. Conditions, §§ 545-617. CHAPTER XVIII. Alternative Promises, §§ 619-624. xii CONTENTS. CHAPTER XIX. INTEKPRETA.TION AND CONSTKUCTION, §§ 627-674. CHAPTER XX. Deeds and Sealed Contkacts, §§ 677-691. CHAPTER XXI. Lost and Altered Conteacts, §§ 694-705. CHAPTER XXII. Implied Contracts for Sale and Service, §§ 707-721. CHAPTER XXIII. Monet had and Received, §§ 722-755. CHAPTER XXIV. Money Paid to Another's Use, §§ 756-771. CHAPTER XXV. Account Stated, §§ 774-780. CHAPTER XXVI. Parties, §§ 784-848. CHAPTER XXVII. Novations, §§ 852-865. CHAPTER XXVIII. Mode op Performance, ^ 869-918. xiii CONTENTS. CHAPTER XXIX. Payment, §§ 923-967. CHAPTER XXX. Tender, §§ 970-995. CHAPTER XXXI. Accord and .Satisfaction, §§ 996-1008. CHAPTER XXXII. Set-off, §§ 1009-1030. CHAPTER XXXIII. Release, §§ 1031-1042. CHAPTER XXXIV. Negligence in Contracting, §§ 1043-1056. CHAPTER XXXV. Constitutional Limitation on Impairing Contracts, §§ 1061-1071. xiv ADDENDA ET COERIGENDA. Vol. I., page 199, at end of note 5, add: — Jordan ;;. Elliott, 12 Weekly Notes, 56. " 493, lOtli line, for " selling," read "delivering." " 552, at end of note 1, add: — Dexter v. Snow, 12 Cush. 594; Tuxbury v. Miller, 19 Johns. 311. " 623, at end of note 5, add: — See Conly v. Hillegas, 94 Penn. St. 132. " 736, strike out " that" at beginning of first line. " 793, last two lines of § 594, change " in favor of" to " against," and " former" to " latter." [For volume II. see beginning of that volume.] XV CONTRACTS. CHAPTER I. CONSTITUENTS OF CONTRACT. ACCEPTANCE. PKOPOSAl. AND A contract is an interchange of legal rights, § 1. Parties must he hoth bound, § 2. Terms used must he susceptible of de- finite construction, § 3. Concurrence must he as to the same thing, § 4. Provisional concurrence not to he treated as final, § 5. Contract may he by conduct, § 6. Acceptance of services or goods may amount to a contract to pay for them, §7. Contracts resolvable Into proposal and acceptance, § 8. Proposal not to hind beyond reasonable time, § 9. When rejected a proposal is exhausted, § 9 a. Until accepted a proposal may he re- voked, hut not afterwards, § 10. Revocation requires notice brought home to party addressed, § 11. Except in case of proposer's death or insanity, § 12. Proposer may hind himself to keep open proposal to specific date, § 13. Proposal not binding if not continuous, § 14. VOL. I. — 1 If not accepted within designated limits as to time and place, proposal falls, § 15. Proposal and acceptance may be con- ditional, § 16. So of subscriptions to joint enterprises, §16o. Acceptance must be communicated when required, § 17. Agreement to he hound on mere post- ing of acceptance may he implied, §18. Rule depends on terms of proposal, §19. Place of acceptance is place of contract, §20. Time of acceptance is time of contract, §21. Assent must he definite ; mere non- refusal is not enough, § 22. Grants under seal may bind grantor without communication to grantee, §23. General proposal binds as to all parties taking action in conformity with its terms, § 24. So of railway time tables, § 25. So of letters of credit and promises to accept bills, § -25 a. 1 §!•] CONTRACTS. [chap. I. So of auction sales, § 25 b. From general proposals are to be dis- thiguished bids for customers, § 26. Telegrams may constitute a contract, §27. ' 'Voidable' ' distinguished from " void, ' ' §28. § 1. A contract is an interchange by agreement of legal , * . risfhtE. It must be an interchange, involving the A contract » a ■> a is an inter- assent ot' two Or more persons. It must be by agree- change of . . . „ . „, ^ legal ment; a mere intimation ot purpose is not sutncient. "^ ^^' It must have legal rights as its object. An agree- ment between A. and B. to respect each other is not a con- tract ;' nor is an agreement between A. and B. to commit a ' Infra, §§ 8, 588. Anson on Cont. 14 ; citing Roll. Ab. 8 ; Guthing i.. Lynn, 2B. & Ad. 232 ; Taylor v. Brewer, 1 M. & S. 291). In Taylor v. Brewer the agreement was to do services for what- ever remuneration should be deemed right. This was held to be a mere engagement of honor. Chief Justice Marshall (Sturges v. Crowninshield, 4 Wheat. 196) defines a contract as "an agreement in which a party undertakes to do or not to do a particular thing ;" Blaokstone mak,es it "an agreement, on sufficient con- sideration, to do or not to do a parti- cular thing." 2 Black. Com. 446. In L. 1, § 2 D. de pact. (2, 14) we have the following: " Et est pactio duorum pluriumve in idem placitum consensus.'' The German code (AUg. Landrecht, I. 5, § 1) defines a contract to be a re- ciprocal assent to the acquisition or alienation of a right. In Koch's Forderungen, § 69, a con- tract is defined to be a reciprocal ex- press agreement of two or more persons for the establishment or the surrender of a legal relation between them. Savigny defines a contract (iii. 309) as the union of two or more persons in a common expression of will, by which their legal relations are determined ; 2 " die Vereinigung mehrerer zu einer iibereinstimmenden Willenserklarung, wodurch ihre Eechtsverhiiltnisse be- stimmt werden." Hence marriage and adoption are included by him among contracts, in distinction from those older jurists who limited the term to obligatory engagements. Kant takes a much narrower view, defining a contract to be the united will of two persons for the transfer of property. (Metaphysische Anfangs- grilnde der Rechtslehre, pp. 98-103.) Property he defines in the Roman sense, as dominion over a specific thing. Within this definition he comprehends not only contracts of service, but con- tracts of sale and of exchange. At tlie same time he regards marriage as a contract, holding that each person in marriage has a lien on the other (ein auf dingliche Art persijnliches Recht), and that copula cnrnis is to be regarded as equivalent to tradition. Marriage with him is, therefore, an obligatory contract, which he defines to be "the union of two persons of different sexes for reciprocal sexual possession for life ; die Verbindung zweier Personen verschiedenen Geschlechts zum lebens- wierigen wechselseitigen Besitz ihrer Geschlectseigenschaf ten . ' ' Hegel, like Kant, apparently treats CHAP. I.J DEFINITION. [§1. crime .a contract. The agreement, to be a contract, must concern a right whose transfer the law will compel. It must the term contract as limited to transfer of property (Grundlinien der Philoso- phie des Reohts, § 71) ; but this coin- cidence of opinion is only nominal, as he regards the individual action of a person as a thing, which may he the object of alienation. His view, there- fore, is substantially the same as that of Savigny ; though he refuses to re- gard marriage and treaties as contracts. Savigny coincides with Kant in holding marriage to be a contract, and makes the contract to consist in the reciprocal promises of marital cohabitation and support in general, rejecting Kant's sexual limitation. Windscheid, who will be constantly quoted in the following pages as one of the most reliable of German com- mentators, defines (§ 305) a contract as consisting in the union of two decla- rations of Intentions (der Vereinigung zweier Willenserklarungen). The de- claration of one party is to the effect that he will be a debtor to the other party, subjecting his will to the will of the other party ; the declaration of the other party is that he accepts this sub- jection. The one party, in other words, is to perform a certain service ; the other to accept this service. It makes no mat- ter, he proceeds to say, which of these declarations has precedence. Mr. Pollock (3d ed. 1) defines an agreement as "an act in the law whereby two or more persons declare their consent as to any act or thing to be done or performed by some or one of these persons for the use of the others or other of them." " It must be con- cerned," he adds, "with duties and rights which can be dealt with by a court of justice." It therefore excludes ' ' an appointment between two friends to go out for a walk or to read a book together ;" for this is "not meant to produce, nor does it produce, any new legal duty or right, or any change in existing ones." This is covered by the definition in the text that a contract is an interchange by agreement of legal rights. As illustrating an interchange of courtesies that do not amount to an interchange of legal rights, see Potter V. Carpenter, 76 N. Y. 157. The Indian contract act of 1872 gives the following definitions, follow- ing, in the main, Savigny : — "(a) When one person signifies to another his willingness to do or al}stain from doing anything, with a view of obtaining the assent of that other to such act or abstinence, he is said to make a proposal. (Ii) When the person to whom the proposal is made signifies his assent thereto, the proposal is said to be ac- cepted. A proposal when accepted be- comes a promise. (c) The person making the proposal is called the 'promisor,' the person accepting the proposal is called the promisee. (rf) When, at the desire of the prom- isor, the promisee, or any other person, has done or abstained from doing, or does or abstains from doing, or prom- ises to do or abstain from doing some- thing, such act or abstinence or prom- ise is called a consideration for the promise. (el Every promise, and every set of promises forming the consideration of each other, is an agreement. (/) Promises which form the con- sideration, or part of the consideration for each other, are called reciprocal promises. (jr) An agreement not enforceable by law is said to be void. 3 §1.] CONTEACTS. [chap. I. consist, not merely of loose talk, but of a business proposal and acceptance bearing on a specific act. (7i) An agreement enforceable by law ia a contract. (/) An agreement which ia enforce- able by law at the option of one or more of the parties thereto, but not at the option of the other or others, is a voidable contract. (j) A contract which ceases to be enforceable by law becomes void when it ceases to be enforceable." Of the above, the subsections down to (e) may be accepted as giving a suc- cinct and accurate statement of the law. The siibsection marked (e) is imperfectly expressed ; it would have been better to have said : " Promises made in consideration of each other form an agreement." An agreement is not constituted by a unilateral prom- ise. The distinction taken between void and voidable agreements — the term contract being reserved for agree- ments which are enforceable at law by one or both parties — is one which will be generally accepted ; and of this Mr. Pollock remarks that it is "a clear improvement, for it makes the legal meaning of the words more precise and convenient, without doing violence to former or even to popular usage." The language of subsections ((/) and (j), he adds, "is not exactly applica- ble to English law," and this obser- vation he extends "in some cases to subsection (;) also." To sustain this he refers to agreements of imperfect obligation which are not enforceable by law, yet are not void. To this it may be added that there are few agreements which are not enforceable by the laws of some country, and that there are few agreements, therelore, which, though not enforceable with us, may not be enforceable somewhere else. To say that void agreements are agree- ments which can be nowhere enforced would leave us no void agreements to speak of. To say that all agreements not enforceable with ns are void would be untrue. On many such agreements parties may be held in other countries. Koch, following the Roman law, di- vides contracts as follows : — ' I. As TO THEIR WORKIXG. (1) Unilateral and bilateral (tmllate- ralea and bitnterales) . This distinction is based, not upon the way in which the contract is formed, since in this respect there is no contract that is not bilateral, but upon its effect. If only one obligation springs from it, it is uni- lateral. According to the old Roman law, an obligation is in form unilateral when one party is creditor and the other debtor, so that by only one of them can a suit be maintained {actio directa), the other party being limited to set-off, or actio contraria. A bilateral contract, therefore, is in this view the fusion of two obligations, the perform- ance of the one being conditioned on the performance of the other. Each party can on such a contract sue the other in an actio directa. (2) Onerous and lua-ative. A lucra- tive contract is one which brings pe- cuniary benefit to one party alone. An onerous contract is one in which each party gains something and parts with something. Onerous contracts are, therefore, in the main, convertible with bilateral. But lucrative con- tracts are not convertible with uni- lateral, since there are unilateral con- Koch, Ford. § CHAP. I.] BOTH PARTIES BOUND. [§2. § 2. Tlie parties to a contract, tlierefore, must Parties must be be both bound. Supposing that one promises in both bound tracts which are not necessarily lucra- tive. (3) Conventiones juris ciiilis and juris gentium. ' ' Pactio aut legitime aut j aris gentium," L. 5, pr. D. de pact. (2-14). This division relates to the system of law on wliich the contract rests, and to which recourse must be made for its enforcement. In the same way we may speak of contracts good in law, and contracts good in equity ; and of contracts for which distinctive statu- tory remedies are provided (c. g., deeds duly acknowledged and recorded), and contracts for which there is no distinc- tive statutory remedy. (4) In bonrnfidei and stricti juris con- tractus. This is a processual distinc- tion. Contracts ex jure gentium are not necessarily bonce fidei contractus. Koch's second division is as follows : II. As TO MODE OP FOKHATION. Contracts in this respect are divided into real, verbal, literal, and consen- sual. The Roman system prescribed certain forms as essential to the validity of contracts, on the same principle as is adopted by our statute of frauds in reference to certain classes of contracts. But outside of these forms there were two other modes by which parties could bind themselves. These were by per- formance on one side, and by a privilege attached to certain single specified con- tracts which were valid without form. The reasons given for requiring specific forms to be adopted were the dangers of fraud, and the necessity of precision in a transaction by which the will of one person is subjected to the will of another person. These forms were of two kinds — oral and written — verba, Uteres ; verborum, literarum obligatio. Of oral contracts there were two kinds : nexus and stipulation: Real contracts (re contracta obligatio) were contracts which were not embraced within either of the classes above mentioned, but which had been performed on the one side. The special contracts, which were privileged without form (consensu contracta obligatio, consensual contract), were four : emtio venditio, locatio con- ductio, societas, and mandatum. The reason was that contracts of sales and of service were so numerous, and related often to transactions so trivial, that it would be inconvenient and oppressive to require them to be executed in the form of the stipulation. Societas and mandat were excepted as being virtu- ally real contracts, not existing until there was on one side or the other something in the way of part perform- ance. The normal form was the oral, and in the old law took the name of nexus (Koch, 2, p. 61). Five witnesses and a libripens were essential to perfect the transaction, which symbolized a weigh- ing of gold and then a loan of the gold weighed. The creditor then asked the debtor whether he had received the gold, to which question the debtor re- plied, acknowledging the receipt and the debt. Of later introduction was the stipulation , in which there were no scales or specified attesting witnesses. The essence of the stipulation was that when the parties met, the one (the stip- ulator) should ask whether the other agreed, upon which the other (the promisor) answered. No fixed words were prescribed ; the only requisite was that the answer should apply exactly to the question. The form " spondes." " spondee," however, which in prior times was essential to the nexus, was always regarded as valid when used in the stipulation. But no form of words 5 §2.] CONTKACTS. [chap. I. consideration of the promise of the other, the one is not bound unless the other is bound.* A promise to do a thing on an executed consideration is not a contract f nor is a promise to do a thing in consideration of an illegal or im- possible engagement on the other side.' Without this recip- rocal obligation, no contract can be constituted.^ "It is a general principle," says Mr. Fry, " that when, from personal incapacity, the nature of the contract, or any other cause, a contract is incapable of being enforced against one party, that party is equally incapable of enforcing it specifically against the other, though its execution in the latter way might in it- self be free from difficulty attending its execution in the for- mer."^ It is said, indeed, that this rule is subject to certain important exceptions, prominent among which, it is alleged, is that of an infant, a party contracting with an infant being bound to the infant, but the infant not being bound to such other contracting party. ^ But this is a mistake. An infant, it is now generally agreed, is bound by his contracts, though they cannot be enforced against him until he is of full age. was requisite to the validity of the stip- ulation. All that was required was that there should be a concurrence as to the tiling. For a long time the personal presence of the parties was essential, AVlien writing subsequently became a common mode of business, it was held that when a written agreement existed it would he presumed that the forms of the stipulation had been adopted. It will be seen, therefore, that by the Roman law the great body of con- tracts (embracing sales and most bail- ments) required no special form ; that sperial oral contracts, indeed, had, to 111' put in the form of stipulations ; but that written special contracts were at least prima facie valid. ' Infra, § 523. 2 hfra, § 514. 3 hfra, § 509 et seq. ' Kennaway v. Treleavan, 5 M. & W. 4'J8 ; Arnold v. Poole, 4 M. & G. 860 ; 6 Lees V. Whitcomb, 5 Bing. 34 ; Head v. Diggon, 3 Man. & R. 97 ; Martin v. Mit- chell, 2 Jac. & W. 413 ; Jenness v. Iron Co., 53 Me. 20; Dresel v. Jordan, 104 Mass. 412 ; Keep r. Goodrich, 12 Johns. 397 ; Tucker >•. Woods, 12 Johns. 190. In Cooke r. Oxley, 3 T. R. 653, Lord Kenyon said " the other party was not bound: it was there/ore nudum pactiini." That in promises to marry mutuality is essenti.il, see Daniel c. Bowles, 2 C. & P. 553; Wightman ,. Coates, 15 Mass. 5 ; Russell i. Cowles, 15 Gray, 582 ; Waters r. Bristol, 26 Conn. 398 ; Southard r. Rexford, 6 Cow. 254; Moritz t>. Melhorn, 13 Penn. St. 334 ; and other cases cited, 1 Ch. on Con. 11th ed. 22. ' Spec. Per. § 286 ; adopted in Stur- gis (.. Galindo, Sup. Ct. Cal. 1881, 13 Rep. 266. 6 1 Ch. on Cout. 11th Am. ed. 23. CHAP. I.] BOTH PARTIES BOUND. [§ 2. and although when he arrives at full age they may be repudi- ated by him.' But this is part of the limitation of the con- tract itself. The contract is binding on him on a contingency, i. e., its non-repudiation at a specified period ; and it stands on the same footing, therefore, as sales on trial, and other condi- tional contracts.^ It is the very essence, as will be hereafter seen, of a conditional promise that it is limited on an uncertainty ;' and here the uncertainty is non- repudiation at majority. It is also said that exceptions to the rule requiring mutuality are to be found in cases where one of the parties is defrauded, in cases where one of the parties can defend under the stat- ute of frauds, and in cases where an agent turns out to be act- ing fora principal subsequentlydisclosed. But in all these cases the question of liability is raised by confession and avoidance; and if we are to hold that there is no contract in such cases, we must hold that there is no contract in any case in which one of the parties could interpose a good defence, no matter what that defence may be. In all these cases, also, the ratifi^- cation (or non-repudiation, as it is more properly called)* does not start a new contract; it merely confirms a contract already existing.^ In respect to contracts declared void on account of essential error, it may be said that the party who was under no mistake is bound, while the mistaken party is relieved. The answer to this, however, is, that the vacating as to one party vacates as to the other, as the consideration fails.^ The rule requiring mutuality is, not that the contract should bind in defiance of fraud, or of equities subsequently arising between the parties, but that each party should agree to perform his part. It may be that this part is to be performed only on a contingency. It may be that there is a failure of con- sideration, so that specific performance cannot be compelled.' It may be that some insuperable obstacle may be aftervVards interposed in the way of performance.' But be this as it may, there must be mutuality when the contract is made, ' Infra, § 32. 5 gge infra, §§ 283-4. ' Infra, § 16, and see generally in/ra, ^ Infra, §§ 493 et seq. § 545. ■ Infra, § 520. 3 Infra, § 546. ' Infra, §§ 296 et seq, * See infra, §§ 56 et seq. § 3.] CONTRACTS. [CHAP. I. and this mutuality is essential to the making of the contract. A more difficult exception to deal with arises in cases of con- tracts with married women. A married woman may be in- capable of contracting in a general sense of the term, and if she makes a contract for the purchase of real estate, that con- tract cannot be enforced against her, though if the contract be executed by her, it has been held that she may have a remedy against the other party. ^ Now, in the first place, it does not follow that, because specific performance is refused in a partic- ular line of cases, in such cases there is no contract. Specific performance is refused in many cases of contractual hardship in which a party can avail himself of the contractual relation in a court of law. And in the second place, a married woman, though technically unable to contract, may yet preclude her- self by estoppel at least from fraudulently asserting title against a third party who is encouraged by her to buy a property to which she has a title, which she at the time knowingly suppresses.^ But, thirdly, and this is the best reason, after the married woman pays for and takes the property thus purchased by her, the vendor is himself estopped from denying her ca- pacity. On the other hand, however, if we concede that she cannot be estopped, and that she has no contractual capacity whatever, then we must hold, in accordance with the great preponderance of authority, that there is no contract, and that where there is no contract the other party is not contractually bound. He may be bound for negligence, or for deceit, but he cannot be bound on a contract.' § 3. It is not necessary that all the terms in a contract should be free from ambiguity. If it were, no con- Terms 1 T 1 n 1 • must be tract could be framed, since it is impossible to use of definite^ terms which are entirely free from doubt. All that is required is that the contract, as drawn from pro- posal and acceptance, should be susceptible of defi- nite construction.' It may be necessary for this purpose, when the obscurities are latent, to prove the intention of the ' Chamberlain K. Robertson, 31 Iowa, '> See Vance v. Nogle, 70 Penn. St. 410 ; Neef v. Eedmon, S. C. Mo. 1881, 176. 13 Rep. 434, cited infra, § 89. * As to interpretation and construc- 2 See infra, § 89. tion, see infra, §§ 627 et sey. construc- tion. CHAP. I.] MUST BE DEFINITE. [§3. parties, either by showing the business usage to which they may be supposed to have adapted themselves, or by showing what was tiie meaning they themselves attached to the terms employed, or by putting in evidence extrinsic facts ex- plaining obscure terms.* To constitute a valid contract, how- ever, there must be proved an agreement to which can be assigned a definite contractual force. Whether the bargain be or be not in writing, it cannot, if its terms are hopelessly ambiguous, be executed by the courts. In other words, a contract will not be executed unless its terms are certain and its enforcement practicable.^ But a party to whose fault an ' Wh. on Ev. §§ 920 et seq.; infra, § 646. 2 Bispham's Eq. § 377; Fry on Spec. Perf. §§ 203, 229 ; Walpole u. Orford, 3 Ves. 420; Pearce v. Watts, L. R. 20 Eq. 492 ; Colson v. Thompson, 2 Wheat. 336 ; Marble Co. v. Ripley, 10 Wal. 339 : Ewins v. Gordon, 49 N. H. 444 ; Bruce v. Bishop, 43 Vt. 161 ; Thruston v. Thornton, 1 Cush. 89 ; Dodd u. Seymour, 21 Conn. 476 ; Bene- dict V. Lynch, 1 Johns. Ch. 370 ; Buck- master u. Thompson, 36 N. Y. 558 Whittlesey u. Delaney, 73 N. Y. 571 King V. Ruckman, 5 C. E. Green, 316 Meason u. Kaine, 63 Penn. St. 340 Sutherland v. Parkins, 75 111. 338 Baldwin v. Kerlin, 46 Ind. 426 ; Mun- sell o. Loree, 21 Mich. 491 ; Aday v. Echols, 18 Ala. 353 ; Thompson v. Ray, 46 Ala. 224 ; Huflf v. Shepard, 58 Mo. 242. As to construction, see infra, §§ 641 et seq. In Guthing v. Lynn, 2 B. & Ad. 232, an agreement, collateral to the pur- chase of ahorse, that "if the horse was lucky" the vendee "would give £5 more or the buying of another horse," was held to be too vague to be legally enforced. In Donnison v. Caf6 Co., 45 L. T. N. S. 187, the evidence was, that, the plain tifif being the lessee of vaults in the city of London under a lease granted by the corporation of London, the defendants entered into a negotiation for the purchase of the lease. The defendant's secretary wrote to the agents of the plaintiff a letter, in which he said that the directors thereby offered to purchase the vaults for £2500 cash, and to take over a mortgage for £3500 on the lease, these terms to include the lease, goodwill, fixtures, etc. The plaintiff's agents answered as follows ; " In reply to your letter of the 7th instant, we are now instructed to accept the offer therein contained, and will forward contract as soon as we obtain it from the solici- tor." Differences subsequently arose respecting the time when possession should be given, and eventually the plaintiff brought an action against the defendants claiming damages for breach of contract. Malins, V. C, held that the letters contained a binding contract between the parties. It was held by the court of appeal on .Tune 22, 1881 (Jessel, M. R., Baggallay, L. J., and' Lush, L. J., reversing the decision of Malins, V. C), that no binding con- tract had been entered into : iirst, be- cause the name of the vendor had not been disclosed or a sufficient descrip- tion given so as to satisfy the statute of frauds ; and secondly, because the letters mentioned only what was the property to be purchased and tlje price 9 §3.] CONTRACTS. [chap. I. ambiguity is imputable must bear the construction less favor- able to himself, if otherwise equitable.' And the sense in to be given for it, but left the other necessary terms of the agreement, such as the time when possession was to be given, to be settled by a formal con- tract to be prepared by a solicitor in the ordinary way. "The only point, really," said Jessel, M. R., "that we have to decide is whether there is any contract. It is said to be contained in two letters. In my opinion there is no contract, and for two reasons : one is that neither the name nor sufficient description of the vendor was given ; the other that there was no acceptance free from conditions. There is a mere conditional acceptance, and not a com- plete clear acceptance. As regards the first point, there is no possible ac- ceptance. The auctioneer only says, ' We are instructed to dispose of pro- perty ; our instructions are to sell.' That does not show that the person who is selling is the owner, or proprie- tor, which is the same thing. He may be a person having a power to dispose of the property, or what is sometimes called a power simply collateral with- out any interest in the property. " Now the other point I should like to say a word upon, because the cases have laid down this distinction, that, where all the terms of the contract are defined and settled, then the merely saying there shall be a formal contract does not prevent specific performance. It is mere form. But where it is in- tended that all the terms of the con- tract shall not be treated as settled, but other terms are intended to be in- serted in what is called the formal contract, then of course there is no contract until what is called the formal contract is signed, as I have expressed it. All we have is this : certain terms are agreed upon subject to such further terms as may be agreed upon. Now, what is intended by the parties must be ascertained from the documents themselves, and from the surrounding circumstances. It does not depend on a nice verbal criticism, but the court is to ascertain the meaning of the letters as it ascertains the meaning of any other documents, and according to the same rules of construction. In this case we have the following circum- stances : An auctioneer is selling pro- perty by private contract ; he offers that property for sale ; he gets an offer back for the price, and he states what are the particulars of the property. He writes, ' In reply to your letter of the 7th inst. we are now instructed' — although it is ' we' the letter is signed by Frederick Clark — ' to accept the cffiFer therein contained, and will for- ward contract as soon as we obtain it from the solicitors.' What does he mean ? Does he mean the solicitor is not to put any other term into the con- tract, but it is to be an open contract with no given price, no stipulation as to title, no day fixed, no other term introduced ; or does he mean to say, ' We have settled the price and de- scription of the property, and the other usual terms will be settled by the soli- citor who will send you a contract '? I have no doubt the second is the pro- per interpretation of the letter — that he did not intend to bind his client to an open contract without any safe- guard as to title to be furnished, or ■ Infra Dow, 61. i 670 Prichard v. Ovey, L. J. & W. 396 ; Kensington v. Phillips, 5 10 CHAP. I.] MUST BE DEFINITE. r§3. winch the proposer knew that the acceptor accepted the proposal, is the sense that is to prevail.' — llfotwithstanding some vacillation in the earlier cases, it is now settled that in contracts of sale, either the price must be specified, or the means of determining the price given.^ Hence it was properly held in Michigan, in 1880, that an inquiry by V. as to how much P. & Co. were paying for a particular article, and an answer that they would take all that he could deliver at a certain price, does not constitute a contract without a further agreement to act on P. & Co.'s order, so that the price and quantity could be definitely fixed.' But it was subsequently held in the same state, that a proposal by A., " that, if the city would build one half of a good bridge, he would build the other half," constituted, when accepted by the city, a definite any time being mentioned as to com- pletion, this being not only a lease, but the sale of a goodwill in a business ; but what he did mean was, ' We have settled the two main terms, namely, the property to be sold and the price to be paid for it. The other terms, which are to some extent formal and usual, and which to a great extent must be the subject of special agree- ment, must be settled by the solicitor.' I think there is no contract on that gi'ound, and I am bound to say there is no contract on the subsequent letters." In Miller v. Kendig, 55 Iowa, 174, it was held that a contract in which the grantee agreed to account to his grantor for tlie proceeds of certain land above the price paid by him above " a reason- able amount" was not void for uncer- tainty. In Lincoln v. Ins. Co., Sup. C. Mass. 1882, 13 Rep. 399, the telegrams on which the alleged contract was based were as follows : From the plaintiff to tlie defendant, ' ' Telegraph how much corn you will sell, with lowest cash price, Buffalo." From defendant to plaintiff, "Three thousand cases, one dollar five cents, open one week." From plaintiff to defendant, "Sold corn; will see you to-morrow." The defendant was a corporation in New York, the plaintiff a broker and dealer in Boston. It was held that the tele- grams did not contain any offer by de- fendants to sell to the plaintiff. The plaintiff, so it was said by the court, was a broker, and had acted as a broker for the defendants, and also had dealings with them on his own account. " Construing the first two telegrams together, the defendants say to the plaintiff that they will sell a certain quantity of corn, on certain terms, and within a certain time ; but they do not say that they will sell to the plaintiff'. They say in effect that they will hold the corn for a week, for the plaintiff to find a purchaser. The plaintiff's reply confirms this construc- tion, for he does not say that he will take the corn, but that he has sold it, and will see the defendants the next day." ' Infra, § 657. ° Benj. on Sales, 3d Am. ed. § 89 ; Plagg V. Mann, 2 Sumn. 538 ; Fuller V. Bean, 34 N. H. 304. ' Ahearn v. Ayers, 38 Mich. 692. 11 § 3.] CONTRACTS. [CHAP. I. contract on which A. could be sued.' — It is sufficient, if pro- perty to be passed be described in general terms ; and these terms can be explained and applied by parol proof.^ Thus, in a case before the English Court of Appeals in 1881, it was held, that a receipt given by an auctioneer at a sale of real estate, as follows : "Received of Mr. S., the sum of £21 as deposit on property purchased at £420 at Sun Inn, Plaxton, on the above date, Mr. C. Pinxton, owner. Received by H. M., 29th March, 1880, H. M. ;" taken in connection with the following memorandum: " The property duly sold to Mr. S., butcher, Pinxton, and deposit paid at the close of sale. H. M., auctioneer," — constituted, when explained by parol proof, a binding contract, even under the statute of frauds.' ''I agree," said Jessel, M. R., " tliat the word 'property' alone is vague. But the word is well understood. In a conveyance by a debtor for the benefit of his creditors the words used are ' all the property.' There is sometimes a contest, but there is never any doubt that parol evidence may be admitted to show what was part of that property. There is nothing re- quiring the description to be an inseparable incident. Tlie words ' all the property ' immediately' throw open an inquiry into the matter. As regards separable incidents, has anybody ever doubted that a sale of ' all that farm, in the tenancy of C, formerly bequeathed by A. to B.,' shows a sufficient de- scription? l^obody ever doubted it. I have seen these words, ' All that land formerly in the occupation of B. and now of ,' and that is quite sufficient. Those who are old enough may remember that in the form used in a common recovery, very general words were used. They were quite sufficient as a description, although outside evidence was required to show what pro[>erty passed. There is no such general rule as tlie learned judge iu the court below supposed. It does not follow that, because some general words are used, the description is insufficient. The learned judge in the court below says: ' Su[)pose, for example, the vendor were to say, I sold, at the Sun Inn, a certain house, certain plans, certain loose materials 1 Long V. Battle Creek, 39 Micli. 323. App. 1881 ; Jessel, M. R., Baggallay, L. 2 Infra, § 661. J., Lush, L. J., reversing Kay, .J., in 3 Shardlow v. Cotterell, Eng. Ct. of s. c. L. R. 18 Ch. D. 280. 12 CHAP. I.] CONCURRENCE ESSENTIAL. [§ 4. on the ground, and I say what I sold were all these things ;' and he gives a list.' If the words used in the case put by the learned judge were in a will, they would be sufficient to pass the property. When he says, 'You must have, on the face of the contract, a sufficiently definite description of the things sold to enable you to introduce parol evidence to show what the articles were to which that description refers,' I agree entirely. 'But,' the learned judge continues, 'a mere description of the thing sold as 'property' is not, to my mind, sufficiently definite to enable any such parol evidence to be adduced.' The error he makes there is, taking the word ' property' alone." — In a succeeding chapter it will be seen that the con- struction of contracts is to be determined by the laws of logic as limited by legal precedent ; that while the intention of the parties is to be carried out, the construction most consistent with good faith and legality is to be preferred, and that the whole context, aided by extrinsic facts, may be invoked to determine what the parties meant. * § 4. There must not only be a concurrence of mind at a particular time, but this concurrence must be as to a particular thing. There must be, to constitute Concur- ^ _ " ' rence must this, as will presently be seen more fully, a proposal be as to the ' , 1 , Tf xi 1.1 same thing. squarely assented to. it the proposal be assented to with a qualification, then the qualification must go back to the proposer for his adoption, amendment, or rejection. If the acceptance be not unqualified, or go not to the actual thing proposed, then there is no binding contract.^ "A proposal to ' See infra, §§ 641 et seq. Bateman, 2 Wood. & M. 359 ; Snow v. 2 Hyde v. Wrench, 3 Beav. 336 ; Miles, 3 Cliff. 608 ; Utley v. Donaldson, Honeyman u.Marryatt, 6 H. L. C. 112 ; 94 U. S. 29 ; National Bank u. Hall, Eoutledge v. Grant, 4 Bing. 653 ; Ori- 101 U. S. 51 ; Jeuness v. Iron Co., 53 ental Steam Co. v. Briggs, 4 De G. F. Me. 20 ; Belfast, etc. R. R. v. Unity, 62 & J. 191 ; Cliinnook v. Ely, 4 De G. J. Me. 148 ; Abbott ;;. Shepard, 48 N. H. & S. 638 ; Jordan o. Norton, 4 M. & W. 16 ; Bruce o. Bishop, 43 Vt. 161 ; 155 ; Appleby v. Johnson, L. R. 9 C. Thruston v. Thornton, 1 Cush. 89 ; P. 158; Crossley v. Mayoook, L. B. 9 Allcotti). Flour Mill, 9 Cush. 17; Smith C. P. 163 ; Dickinson v. Dodds, 2 Ch. v. Gowdy, 8 Allen, 566 ; Lyman i.. D. 463 ; Smith ... Webster, 3 Ch. D. Robinson, 14 Allen, 254 ; Rommel v. 49; Holland t). Eyre, 2 Sim. & S. 194; Wingate, 103 Mass. 327; Gowing v. Eliason v. Henshaw, 4 Wheat. 225 ; Knowles, 118 Mass. 232 ; Harlow c. Carr v. Duval, 14 Pet. 11 ; Greene i'. Curtis, 121 Mass. 320 ; Ocean Ins. Co. 13 §4.] CONTRACTS. [chap. I. accept or acceptance based upon terms varying from tbose offered, is a rejection of the offer."' A variance between tlie proposal and the acceptance prevents a contract from matur- ing f and this has been held to be the case where the proposal was to buy with a warranty, and the acceptance to sell with- out a warranty f where there was a difference as to what the warranty was to be ;* where the proposal was for " good" bar- ley, and the acceptance was for " tine" barley, there being a material difference between " good" and " fine ;"^ where bought and sold notes differed in material points f where there was a material difference between the application for and the allot- ment of shares.' Sending, also, a smaller quantity of goods V. Carrington, 3 Conn. 357 ; Crocker v. K. R., 24 Conn. 262 ; Bruce o. Pear- son, 3 Johns. 534 ; Tattle u. Love, 7 Johns. 470; Tucker u. Woods, 12 Johns. 190 ; Barlow v. Scott, 24 N. Y. 40 ; Rittenhouse v. Tel. Co., 44 N. Y. 263 ; AUis v. Reed, 45 N. Y. 142 ; De- muth V. Am. Inst., 75 N. Y. 502 ; Po-tts < . Whitehead, 5 C. E. Green, 55, 8 C. E. Green, 512 ; MoKibbin v. Brown, 1 McCart. 13 ; s. c. 2 McCart. 498 ; Slay- maker V. Irwin, 4 Whart. 369 ; Morrow u. Waltz, 18 Penn. St. 118 ; McKinley V. AVatkins, 13 111. 140 ; Dana v. Shoot, 81 111. 468 ; Maclay v. Harvey, 90 111. 525 ; Johnson v. Stephenson, 26 Mich. 63; Baker u. .Tolmson Co., 37 Iowa, 189 ; North W. Iron Co. o. Meade, 21 Wis. 474; McCartney v. Hubbell, 52 Wis. 361 ; Brown u. Rice, 29 Mo. 322 ; Bruner v. Wheaton, 46 Mo. 363 ; Hutcheson o. Blakeman, 3 Met. (Ky.) 80 ; Plant Seed Co. i-. Hall, 14 Kan. 553 ; Solomon < . Webster, 4 Col. 335. That the acceptance must be definite, see ivfra, § 22. That an essential error as to the parties or the object precludes a contract, see infra, §§ 171 et seq. That the minds of the parties must assent "on both sides to one and the same set of terms," see Chevely t;. Pul- ler, 13 C. B. 122 ; Hazard v. Ins. Co., 1 Sumner, 218 ; Lyman c. Robinson, 14 14 Allen, 242; Rommel v. Wingate, 103 Mass. 327 ; Hartford, etc., R. R. / . Jackson, 24 Conn. 514. That in sales error as to identity of things sold avoids, see infra, § 186. ' Swayne, J., National Bank v. Hall, 101 U. S. 51. « Infra, §§ 177, 202 et seq. 207; Champion v. Short, 1 Camp. 53 ; Hutch- ison r. Bowker, 5 M. & W. 535 ; Honey- man a. Marryatt, 6 H. L. C. 112 ; Prop. Eng. Co. v. Arduin, L. R. 5 H. L. 64; Andrews t. Garrett, 6 C. B. (N. S.) 262 ; Holland v. Eyre, 2 Sim. & S. 194 ; Addinell's Case, L. R. 1 Eq. 225 ; aff. in H. L. under name of Jack- son D. Turquand, L. R. 4 H. L. 305 ; Utley V. Donaldson, 94 U. S. 48 ; First Nat. Bank c. Hall, 101 U. S. 43 ; Kyle t^. Kavanagh, 103 Mass. 356. 8 Smith • y. Hughes, L. R. 6 Q B. 597 ; infra, § 186. * Jordan c. Norton, 4 M. & W. 155. ' Hutchison v. Bowker, 5 M. & W. 535 ; infra, §§ 186 et seq. « Grant v. Fletcher, 5 B. & C. 436 ; Gregson u. Ruck, 4 Q. B. 737. See, for these illustrations, Leake, 2d ed. 30. ' Addinell's Case, L. R. 1 Eq. 225 ; Jackson n. Turquand, L. R. 4 H. L. 305 ; Wynne's Case, L. R. 8 Ch. 1002 ; infra, § 185. CHAP. I.J CONCURRENCE ESSENTIAL. [§ 4. than ordered, when quantity is material, and on a shorter credit, is not an acceptance corresponding to a proposal ;' nor is acceptance of goods of a quality materially different from that proposed.^ On the other hand, if there be an acceptance, the concurrence of minds requisite to make a contract is not prevented by the use by the party assenting of expressions of reluctance or of dissatisfaction.^ Nor are differences of opin- ion as to collateral or remote or immaterial matters inconsist- ent with concurrence on the points the contract is immediately to meet.'* Nor does the introduction in the assent of comments, provided they are mere surplusage, deprive it of its binding force.' Nor does a memorandum attached to the acceptance fixing a time for a formal signature.* There must be, in other words, to constitute a contract, a concurrence of the minds of the parties at a given time to a given thing.' In old times this concurrence was given in the great majority of cases by parties dealing face to face. Subsequently came in the agent, or nuntius, who was charged with delivering and receiving the acceptance of a proposition, and in whom, within such limits, the minds of the parties met and coalesced. Then came the postal service; and as multitudinous business com- munications are by letter, and as the parties live often at great distances, this coalition of minds does not take place until, in the ordinary course of travel, a letter can be trans- mitted from the one to the other ; but when a proposal is thus transmitted, and when it is accepted, and the accept- ance embodied in a reply duly mailed, then, on the putting the acceptance in this formal shape, there is the requisite ' Bruce v. Pearson, 3 Johns. 534 ; Johnson, L. R. 9 C. P. 158 ; infra, infra, § 190. §§ 193-4. 2 Hutchison v. Bowker, 5 M. & W. ' Pollock, ut supra, citing Gribbins u. 535 ; infra, §§ 180 et seq. Asylum Dist., 11 Beav. 1 ; English & 8 Pollock, 3d ed. 39, citing Joyce Foreign Cred. Co. v. Arduin, L. R. 5 H. V. Swann, 17 C. B. (N. S.) 84; Abbott L. 64. v. Shepard, 48 N. H. 14. « Branson v. Stannard, 41 L. T. (N. * Clive V. Beaumont, 1 De G. & S. S.) 474. 397 ; Baines v. Woodfall, 6 C. B. (N. ' As to error and mistake, see infra, S.) 657. It is otherwise where mate- §§ 171 et seq. As to interpretation and rial points are left open ; Appleby v. construction, see infra, §§ 627 et seq. ; Tilley v. Chicago, U. S. Sup. Ct. 1881. 15 § 5.] CONTRACTS. [CHAP. I. coincidence of minds, l^ow, by the telegraph, and more particularly by the telephone, negotiations, if not face to face, may be made almost instantaneously, mind to mind. But in any case, as will presently be seen more fully, the question whether a reply is in time depends upon the mode of communication. Due business expedition, as we will see, must be employed in forwarding proposal and reply. When, however, the proposition is forwarded and delivered, and the proposer puts himself in communication with his correspond- ent, then their minds meet, and an acceptance of a proposal thus made is, when forwarded in the way (unless it be other- wise limited in the proposal) business usage prescribes, a con- tract between the parties. The act of forwarding is the point at which their minds meet.' § 5. If terms be provisionally agreed to by the parties with ^ . . , the understanding that they are preliminary to a Provisional _ ° j r j concur- future and fuller contract, then the prior imperfect be treated agreement is regarded as merged in the later and as final. complete document.^ And where it is part of an acceptance or of a proposal that a written contract is to be framed by the parties, wnthout which the negotiations are to be inoperative, then there is no agreement until this con- tract is framed. Whether it was intended that the preli- minary proceedings should be thus inchoate is to be deter- mined by an examination of the entire negotiations.' A tenta- tive scheme is not to be treated as a contract ;* and the contract ' That a proposal may be coutinu- 638 ; Adams v. Woodley, 1 M. &W. 74 ; ous, and only take eifect on a remote Proprietors Eng. & For. Cred. Co. v. contingency, is Illustrated in Bornstein Arduin, L. R. 5 H. L. 64; Steven- V. Lans, 104 Mass. 216. See Xenos v. son v. McLean, L. R. 5 Q. B. D. 346 ; Wickham, L. R. 2 H. L. 296; Morton Winn r. Bull, L. R. 7 Ch. D. 29 ; V. Burn, 7 A. & E. 19. As to continu- Honeyman v. Marryatt, 6 H. L. C. 112 ; ousness of proposal, see Boston, etc. R. Ridgway v. Wharton, 6 H. L. C. 238 ; R. V. Bartlett, 3 Ciish. 224 ; infra, § 14. Chicago r. Sheldon, 9 Wall. 50 ; Millett That a party is not bound by condi- v. Marston, 62 Me. 477 ; Real Est. Ins. tions on a railroad ticket printed in Co. v. Roessle, 1 Gray, 336 ; Chicago such a way as to elude attention, see etc. R. R. v. Dana, 43 N. Y. 240 ; Corn- Harris V. R. R., L. R. 1 Q. B. D. 515 ; missioners o. Brown, 32 N. J. L. 504. and cases cited infra, §§ 22, 438. See iifni, § 643. 2 Wh. on Ev. § 1014. « Wh. on Ev. § 1090, and cases 8 Chinnock v. Ely, 4 De G. J. & S. there cited ; Smith v. Webster L. R 16 CHAP. I.] MAY BE BY CONDUCT. [§ 6. is to be regarded as a mere negotiation as long as matters essential to its completion are left undetermined ;' or as long as it is understood that the terms are not binding until put in writing.^ But the fact that a more detailed contract is in- tended, does not deprive articles of agreement of their force -j^ and, when alternatives are presented, one may be accepted and the other rejected.* — It is also settled that '' a contract may be made by letters, and that the mere reference by them to a future formal contract will not prevent their constituting a binding bargain ;"° and that the question whether a specific agreement is to have provisional force, or is to be entirely inoperative until formally drafted, depends upon the circum- stances of each particular case, being a question of construc- tion when the evidence of the agreement consists of written documents. And whether a particular agreement is provis- ional or final is to be tested in the same way.° § 6. Acquiescence by conduct may operate as an acceptance in all cases in which such acquiescence is with ^ ^ ^ ^ , Contract knowledge of the facts and is of a nature to imply may be by assent.' Thus the reception and retention without objection of a banker's pass-book, returned by the bank, is a L. R. 3 Ch. D. 49 ; see infra, §§ 643 et § 645. "The tendency of recent au- seq.; Rossiter v. Miller, L. R. 5 Ch. D. thorities," says Mr. Pollock, 3d ed. 41, 648 ; 3 App. Cas. 1124. citing the above cases, "is to discour- ' Infra, §§ 644 et seq. 646 ; Brown v. age any fixed rule or canon as govern- R. R., 44N. Y. 79 ; Appleby w. Johnson, ing these cases." " It is not to be sup- L. R. 9 C. P. 158. posed," he says, adopting Lord Cran- ' Ridgway v. Wharton, 6 H. L. C. worth's words in Ridgway a. Wharton, 305, by Lord Wensleydale ; Maitland 6 H. L. C. 264, " because persons wish V. Wilcox, 17 Penn. St. 231 ; Brown v. to have a formal agreement drawn up, Finney, 53 Penn. St. 373; Fredericks that therefore they cannot be bound by V. Fasnaclit, 30 La. An. pt. 1. p. 117. a previous agreement, if it is clear that ' Thomas v. Dering, 1 Keen, 729, and the agreement has been made ; but the cases cited infra, § 645. circumstance that the parties do intend ' Infra, §§ 619 et seq. a subsequent agreement to be made, is 5 James, L. J., in Bonnewell v. Jeu- strong evidence to show that they did kins, L. R. 8 Ch. D. 70, 73. not intend the previous negotiations to " Ridgway v. Wharton, 6 H. L. C. amount to an agreement." See infra, 238, 264, 268 ; Rossiter v. Miller, L. R. §§ 644-5. 3 Ap. Ca. 1124, 1152 ; Winn i,-. Bull, ' As to implied contracts, see infra, L. R. 7 Ch. D. 29 ; Lewis v. Brass, L. §§ 707 et seq. ; see also Bigelow on Es- E. 3 Q. B. D. 667, and oases cited infra, top. 3d ed. pp. 476, etc. VOL. I. — 2 17 § 6.] CONTRACTS. [CHAP. I. prima facie approval by the depositor of the account contained in the book;' and an invoice makes a, jvima facie case against a business man who receives and retains it without dissent.^ Admission by silence, also, as well as admission by speech, may have a contractual force, and may bind as effectually as may words.' When such silent admissions so operate as to put the actor in a specific attitude to other persons by which such other persons are induced to do or omit to do a particu- lar thing, then he is estopped from subsequently denying that he occupied such position, and is compelled to make good any losses which such other parties may have sustained by his course in this relation.^ — The proposal, as well as the assent, may be by conduct without words.' He who takes his seat in a railway car binds himself to pay fare;^ he who takes a book at a book-stall out of a parcel marked with a partic- ular price, binds himself to pay that price and the bookseller to sell at that price though no words be spoken f he who enters into an inn, and occupies a chamber, to pay for his entertain- ment ; he who leaves a horse at a livery stable, to pay for the horse's keep. A nod at an auctioneer may be a proposal of a particular price, and the fall of the hammer may indicate the acceptance of that price. ^ A mere tacit recognition by a man of a woman as his wife may not only bind him to her, but ))ind him, on her account, to third parties.' And, as a rule, a contract evidenced by conduct may bind as eff'ectually, there being no statutory prohibitiou, as a contract evidenced by words.'" — On the topic before us we have the following by ' Williamson v. Williamson, I.. R. 7 R. 148 ; Sweeting n. Turner, L. R. 7 Q. Eq. 542. B. 310 ; Fisher v. Seltzer, 23 Penn. St. 2 Field v. Moulson, 2 Wash. C. C.155. 308 ; Grotenkemper v. Aohtermayer, 11 3 See infra, § 217. Bush, 222. See infra, §§ 2G7, 443. . Norton, 4 Conn. 524 ; Smith v. Morse, 20 La. An. 220. As to implied indebtedness, see infra, § 708 et seq., for other cases. 19 § 7.] CONTRACTS. [CHAP. I. But this is not the case when the party to whose benefit the work enures has no knowledge of the doing of the work at the time when it is done;' nor when the services are rendered as gratuities or courtesies f nor when the party employed has a stated salary independently assigned to hira.' But, subject to the qualifications just noticed, the acceptance of continuous services for which a commission is paid leads to the inference that future services will be paid for by commission/ — In con- formity with the general rule above stated, a party who stands by, encouraging a payment to be made in his behalf, is bound to reimburse the party making the payment.'' And even when such payment is not encouraged by the party on behalf of whom it is made, yet if it is made under compulsion of law, this im- plies a promise from such party to pay it.^ But a mere volun- teer payment on behalf of a party not encouraging it does not imply such a promise.' — What has been said Avith regard to implied contracts for a payment of services applies to implied contracts of payment for goods.' The acceptance of goods from a tradesman with whom the receiver is accustomed to deal, creates an implied promise to pay for them f and when, after an order for goods, goods deviating from the order are sent and accepted, there is an implied contract on the part of the receiver to pay for them.'" A sale, also, is implied in a ' Infra, § 719 ; Pollock, 3d ed. 10 ; Marsden, L. R. 1 C. P. 529 ; Richard- White V. Corlies, 46 N. Y. 467. son v. Williams, 49 Me. 558. « Infra, § 719. 8 gee infra, §§ 709, 716. 3 Infra, § 720. That when a term of = Infra, §§ 709, 716 ; Hart v. Mills, service has been broken into, back 15 IVI. & W. 87 ; Downs t. Marsh, 29 wages may be recovered on a quantum Conn. 409 ; Oatfield v. Waring, 14 meruit, see infra, § 717 ; and tliat a con- Johns. 188. tract partially performed may be the '" Oxendale v. Wetherell, 9 B. & C. basis of suit, see infra, § 719. 386 ; Richardson v. Dunn, 2 Q. B. 222 ; * Thompson v. Matthews, 56 Miss. Star Glass Co. u. Morey, 108 Mass. 570 ; 368. Wilson v. Wagar, 26 Mich. 452; see ^ Injra, §§ 757 etseq.; Forstert'. Tay- infra, § 22. Whether, when there is a lor, 3 Camp. 49 ; Alexander v. Vane, reception and retention of goods less in 1 M. & W. Oil. amount than the order calls for, the 6 Infra, § 759 ; Exall v. Partridge, 8 sender can recover is hereafter consid- T. R. 308 ; Sapsford i,. Fletcher, 4 T. ered. (Infra, § 520.) Mere non-rejeo- R. 511. tion of goods, however, does not imply ' Infra, §§ 757 et seq. ; England u. a promise to pay ; infra, § 22. When 20 CHAP. I.] PROPOSAL AND ACCEPTANCE. [§ 8. recovery in trover, and in a recovery of damages, in cases where the value of the thing converted is included in the damages recovered. "But an uv satisfied judgment in trover does not pass the property, and is an assessment of damages, on pay- ment of which the property vests in the defendant."' — In Pennsylvania it is held that a judgment on which execution is sued out in trespass or trover for carrying away goods, is to be regarded as divesting the plaintiff's title in the goods.^ § 8. Contracts, as we have just seen, may be by conduct, or they may be by word of mouth, or they may be by writing, or they may be by record ; and in these are resoiv- relations they may present innumerable variations, proposal In one important relation, however, which will now and ac- ■^ ceptance. be considered, they may be regarded as possessing a common requisite. There is no contract, so it is maintained, that may not be resolved into a proposal and an acceptance. It is possible, indeed, to conceive of the idea of a contract emanating simultaneously from two contracting minds. But the answer is that, as a matter of fact, there is no contract in which the initiative is not taken in the way of a sug- gestion or proposal from one party, followed up either by acceptance, or by counter-suggestion or counter-proposal from •the other party; and, ultimately, no matter how protracted may be the negotiations, they are consummated, if there be a contract, in proposal and acceptance. The proposal by itself is no more a contract than a single pier on one side of a river is a bridge, or a single hook is a coupling. It is the accept- ance that makes the contract, i. e., the cohesion of two pur- an order is sent for a speoiflo amount be a payment on partial failure of con- of goods to be paid for at a certain price, sideration, see infra, §§ 511, 520. at a certain day, in lump as a whole, • BenJ. on Sales, 3d Am. ed. § 49, and the vendor sends only » part of citing Brinsmeed u. Harrison, L. R. 6 the order, and the goods sent are re- C. P. 684 ; Lovejoy v. Murray, 3 Wall, ceived and enjoyed by the purchaser, 1, 16; Hyde p. Nobles, 13 N. H. 494; the question arises whether the ven- Rotch v Hawes, 12 Pick. 138 ; Oster- dor can recover at all, and if so, to hout v. Roberts, 8 Cow. 43. what extent. This question is dis- ^ Floyd v. Browne, 1 Rawle, 121 ; cussed in future sections ; infra, §§ see Fox u. Northern Liberties, 3 W. & 898 et seq. As to whether there can S. 107. 21 § 8.] CONTRACTS. [CHAP. I. poses necessury to make up one joint conclusion.' — It is true that this position is assailed by Mr. Pollock, in the third edi- tion of his valuable work on contracts, though, as he tells us, it was " tacitly adopted in the first two editio-ns." He main- tains that the analysis does not apply to cases in which " the consent of the parties is declared in a set form, as where they both execute a deed or sign a written agreement," wherever, in such cases, "the parties intend not to be equally bound to anything until their consent is formally declared." " In such a case," he holds, " it cannot be said that the proposal and acceptance constitute an agreement, at all events, not the true and final agreement." He instances the case of a lease, and asks who in such case is the proposer and who is the acceptor? On the face of the lease itself, it is true, this question may not be capable of solution; yet this does not establish the proposi- tion that neither party is proposer or acceptor. Parol evidence is always admissible to show the relations to each other of the )iarties to a contract; and though the lease itself does not indicate who was proposer and who was acceptor, j-et, in the negotiations leading to the lease, there was, as to each stipu- lation, a proposer and an acceptor, and, were this material, the fact could be brought out by parol. ISTo contract consists exclusively of the words in which it is ultimately expressed. It consists, not simply of those words, but also of all others which, in a proper issue, may be admitted for its explanation and rectification, and in it are to be incorporated all the rela- tive surrounding circumstances which may serve to fait it in its true light.^ — An indorsement on negotiable paper, to take another illustration, consists merely of the indorser's name; and here, we may say, there is neither proposal nor acceptance. But this indorsement is in itself a contract in short-hand; and the words of which it consists embody, in their sur- roundings, a proposal from the party seeking the accommoda- tion, and an acceptance from the party granting it.^ The same criticism niay be applied to brokers' memoranda. If there be a range of contracts of which instantaneousness may I See Langd. Coiit. ii. 990; Winds- 2 Infra, §§ 627, 641, 657-9. ckeid, Paiidekt. § 306. 3 Wh. on Ev. § 1061. 22 CHAP. I.] REQUISITES OF PROPOSAL. [§ 9. be predicated, it is that of brokerage as conducted in our great business centres. Myriads of contracts may be made in what to an uninitiated observer may appear to be the same instant. Yet not only may these contracts be severed, but each one of them contains in itself a proposal and an acceptance, which may be brought out by parol proof.' No matter how ap- parently simultaneous, on the face of a contract, may be the action of the parties, there is no case in which, if the inquiry be material, evidence may not be received showing what are virtually proposal and acceptance. — It should at the same time be kept in mind, that, unless some action is required on the part of the proposer to give efficiency to an acceptance, an acceptance is sufficiently consummated by performance of the consideration.^ § 9. When there is no time fixed as the limit within which a proposal is to bind, it is eflective only for as long pfopog^i is a period as may be supposed to have been within not to bind , , . „ , ■ , ■ ■ ■ ^ beyond the contemplation or the parties, keeping in miiid reasonable the usages of the particular business.^ In determin- ™^' iug what is this reasonable time, the particular terms of the concrete case are to be considered. If a parcel of perishable goods is offered for sale, the answer must from the nature of things be prompt. It is otherwise with ti'ansactions which require long deliberation before decision. TRe question of reasonable time, therefore, depends (in absence of indications on the face of the agreement) in part on the usages of trade, in part on the nature of the business.^ The question, also, may be conditioned by mode of communication. Wiien this ' Wh. on Ev. §§ 968 et seq. Dane, 43 N. Y. 240 (where a delay of 2 Infra, § 17. four months was held to avoid) ; John- 3 See Wh. on Ev. § 968 et seq. ston <,. Fessler, 7 Watts, 48 ; Mactier * Baily's case, L. R. 5 Eq. 428 ; 3 u. Frith, 6 Wend. 103 ; Potts v. White- Ch. 692 ; Dunlop v. Higgins, 1 H. L. head, 5 C. E. Green, 55 ; 8 C. E. Green, C. 381 ; Ramsgate Hotel v. Montefiore, 512 ; Maclay v. Harvey, 90 111. 525 ; L. R. 1 Ex. 109 ; Eliason u. Henshaw, Judd u. Day, 50 Iowa, 247 ; Stookham 4 Wheat. 225 ; Beckwith «. Cheever, u. Stockham, 32 Md. 196 ; Martin v. 1 Fost. (21 N. H.) 41 ; Abbott v. Sliep- Black, 21 Ala. 721 ; and oases cited in ard, 48 N. H. 14 ; Loring ^. Boston, 7 Wald's Pollock, 9 ; Pollock, 3d ed. Met. (Mass.) 409 ; Barnes v. Perrine, 24-25. 9 Barb. 202 ; Chicago, etc. R. R. v. 23 § 9a J CONTRACTS. [CHAP. I. is by parties speaking face to face, an immediate reply, as has been said, is to be expected ;i while, when the telephone, the telegraph, and the post are resorted to, the delays incident to each of these modes of transmission are to be taken into account. Where, however, the course of business is to return an immediate answer, if an immediate answer is not returned the proposal will be regarded as declined. And it was held in Illinc5is, in 1880, that where an offer is made by post, it being understood between the parties that there should be an answer by return post, the making of the offer implies the stipulation that the answer should be sent by return of post.^ But "an offer which is in its nature continuous and open for some period of time, and which is also conditional upon an event which may not immediately happen, but must at all events be attended with some delay, becomes a valid contract on good consideration, if accepted in fact, and upon the fulfil- ment of the conditio^, within a reasonable time and before an actual retraction of the offer. "^ § 9rt. "When a proposal is rejected, its force is ex- posal is re- hausted, if the rejection reaches the proposer before force is' ex- acceptance.'' But a mere letter of inquiry cannot be hausted. treated as a rejection.^ ■ Johnson v. Feaeler, 7 Watts, 48. plaintiff that he would sell certain iron ' Maclay v. Harvey, 90 111. 525. warrants for 40s., net cash, open all As sustaining the text, see Boyd o. Monday. On Monday morning the de- Brinckin, 55 Gal. 427. That a guar- fendant received a telegram from the antee must be promptly accepted in plaintiff: "Please wire whether you order to bind, see Brandt, Suretyship, would accept forty for delivery over § 158 ; infra, § 570. That there should two mouths, or, if not, longest limit be a reasonable time allowed for per- you would give." It was held that formance, see infra, § 882. As to the this was not a rejection of the defend- meaning of "forthwith" and similar ant's offer, which was still open during terms, see infra, § 886. That time may the Monday, and which, when ac- be of essence, see infra, § 887. cepted, formed a contract binding the ' Bernstein u. Lans, 104 Mass. 216, defendant, citing Train v. Gold, 5 Pick. 380; « Leake, 2d ed. 47 ; Hyde w. Wrench, Goward v. Waters, 98 Mass. 596. That 3 Beav. 334 ; Honeyman v. Marryatt, a proposal, if not continuous, must be 21 Beav. 14 ; Wager v. Chew, 15 Penn. accepted immediately, see infra, § 14. St. 323. In Stevenson v. McLean, L. R. 5 Q. B. s Stevenson v. McLean, L. R. 5 Q. D. 346, the defendant wrote to the B. D. 346. 24 CHAP. I.J REVOCATION OP PROPOSAL. [§ 10. § 10. Supposing a proposal to be made orally, the negotia- tors conversing face to face, or by telephone, there „ ^., »_ . . Until ac- can be no question that if the person addressed hesi- ceptea a i i. J.1 • -ii J iU proposal tates, the person proposing can withdraw the pro- may be re- posal before the person addressed signifies his accept- ^ot afier-^' ance. A similar right of withdrawal exists when wards. the proposal is made by mail or by telegraph.^ " If there be no contract until acceptance, there is nothing by which the proposer can be bound. "^ Before acceptance a proposal is "but an offer to contract, and the parties making the offer might undoubtedly withdraw it at any time before acceptance."^ — ■ The right to revoke before acceptance is one whicli prior con- ditions cannot limit. — Thus, at an auction sale, the bidder may recall his bid at any time before the hammer falls, though the conditions of sale are that no bidding shall be retracted,^ and the seller may retract though the sale was to be without reserve." It would be a, petilio principii to say that the party retracting was bound by contract not to retract, since it is to this very contract not to retract that his retracting applies.^ But as we will soon see more fully, when an acceptance has been duly posted or telegraphed, a revocation is ordinarily too late.' — Whether there is a revocation, is, in all cases of con- flicting inferences, a question of fact. Thus in a New York case in 1880, in a contract for the sale of 5000 feet of lumber was the following clause; "and I agree to pay said Q. four and a half cents per foot for from six to fourteen thousand feet of the same kind and quality of the timber as aforesaid, and delivered at place aforesaid during the winter, to be paid on ■ Vangerow, § 603 ; Windscheid, § Shotwell, 13 Bush, 271 ; and cases 305 ; Pollock, 3d ed. 22 ; Routledge v. hereafter cited. Grant, 4 Bing. 653 ; Honeyman v. Mar- ^ Benj. on Sales, 3d Am. ed. § 41. ■ryatt, 21 Beav. 14; 6 H. L. C. 112; " Fletcher, J., Boston, etc. R. R. «. Harris's case, L. R. 7 Ch. 587 ; Stitt v. Bartlett, 3 Cush. 224. Huidekopers, 17 Wall. 384; Beckwith < Sugden, V. & P. 11 ; Dart, V. & V. Cheerer, 21 N. H. 41 ; Faulkner P. 3d ed. 80 ; Leake, 2d ed. 42 ; as to V. Hebard, 26 Vt. 452 ; Boston & Me. auctions, see infra, §§ 25 6, 267, 443. R. R. Co. i;. Bartlett, 3 Cush. 224 ; s Warlow v. Harrison, 1 E. & E. 295 ; Crocker v. R. R., 24 Conn. 249 ; Moline Harris v. Niokerson, L. R. 8 Q. B. 286. Go. V. Beed, 52 Iowa, 307 ; Burton v. ^ Benj. on Sales, 3d Am. ed. § 41. ' Infra, §§ 11, 18, 27. 25 § 11.] CONTRACTS. [CHAP. I. the first day of .June, 1874." There was no acceptance by Q. of the proposal to deliver the additional lumber. It was held that the clause quoted was a mere proposal, not binding until acceptance, and that it could therefore be revoked at any time before acceptance; but that the proof of revocation before acceptance must be made out by the party setting up the revo- cation, and that the question whether there was a revocation, supposing there was no order revoking produced, and there was conflicting testimony, was one of fact to be decided on all the circumstances of the case.' — It is also to be kept in mind that, as the performance of the consideration involves an acceptance, and as it is not necessary that the performance of the consideration should at the time be communicated to the proposer unless required by the terras of the contract, a pro- posal cannot be revoked after the consideration has been per- formed.^ But the coitsideration must be entirely performed before the promisee can sue. It is not enough for it to be begun. The condition must be performed entire.^ § 11. When a proposal, therefore, is fully acted on by Revocation ^'^"^ P^^y addressed, this establishes between the requires parties a contractual relation which cannot be broken notice ' brouffiit unless by the pi'ovisions of the transaction itself, or party ad- ^Y ^ revocation communicated to the party addressed, dressed. rp|^g proposal, in fact, is virtually this: "I offer to do this particular thing, but my offer continues open only either (1) to a fixed date, or (2) for what under the circum- stances is a reasonable period. And if the latter be the al- ternative, then, within this reasonable period, I reserve the right to revoke the proposal at any time before acceptance." Hence, a revocation to be operative must be bi-ought home to the party holding a proposal which is still in force; and an acceptance prior to the reception of such revocation, • Quick V. Wheeler, 78 N. Y. 300. pleted." It was held that this was an In a Michigan case, in 1880, P. sent order which P. could withdraw at any the following order to V. : "You will time before acceptance or performance, please send me galvanized lightning Weiden w. Woodruff, 38 Mich. 130. rods for my house within sixty days, ' Infra, §§ 17, 24. for which I will give you thirty-five " Infra, § 545. cents per foot, due when work is com 26 CHAP. I.] REVOCATION OF PROPOSAL. [§ 12. tliough after it was forwarded, binds the proposer.* — In an English case, decided in 1880,^ the defendants, at Cardiff, Wales, wrote on October Ist, 1879, to the plaintiffs at New York, offering 1000 boxes of tin plates on terms specified iu their letter; and on receipt of the letter, on October 11th, an acceptance was telegraphed by ocean cable, which was followed by a letter of acceptance posted on October 15th. On October 8th, however, the defendants, in a letter received by the plain- tiffs on October 20th, explicitly withdrew their offer. Qt was held by Lindley, J., tliat a witlidrawal of an offer is not effective until communicated to the party to whom it is sent, and that posting a letter of withdrawal is no such com- munication.^ The' same position was shortly afterwards taken by Lush, J.' And it is argued by Mr. Pollock^ that " it seems impossible to find any reason in principle why the necessity for communication should be less in the case of a revocation which is made not by words but by conduct, as by disposing to some one else of a thing offered for sale."' And it is set- tled in England that it is not necessary that the revocation should be made in any formal terms. A sale, for instance, to B. of an article previously offered to A., is a revocation of the proposal to A.,\if A. be notified of the sal^l^ § 12. The rule that a revocation of a proposal, to Except in . 1111 '^"■^^ °^ v°' be effective against the party addressed, must be poser's brought home to him, does not apply when the sanity. '^'" proposer dies before the proposal is accepted. In ' ;. Harper, 3 Cush. 158; law and justice which is sometimes Boston, etc. R. R. u. Bartlett, 3 Cush. complained of." As will be seen, how- 224 ; Hoohster v. Baruch, 5 Daly, 440 ; ever, the English rule is not settled to Burton o. Shotwell, 13 Bush. 271 ; the extent supposed by Mr. Bell. And Falls v. Gaither, 9 Port. 605 ; Eskridge the engagement is not without con- v. Glover, 5 St. & P. 264. In Eskridge sideratiou when the party receiving v. Glover, 5 St. & P. 264, there was a the promise suspends, no matter to proposal by A. to B. to exchange horses how slight a degree, his inquiries else- with a specific sum to be given to B. to where. Infra, § 505. make the matter even, with the privi- * Violett u. Patton, 5 Cranoh, 142 ; lege to B. to decide upon the proposal 29 §13.: CONTRACTS. [chap. I. that "even if he (the proposer) purports to give a definite time for acceptance, he is free to withdraw his proposal before that time has elapsed. He is not bound to keep it open un- less there is a distinct collateral contract to that effect, founded on a distinct consideration."' But the authorities cited by Mr. Pollock do not justify this broad assertion ; and it is, in fact, much modified in a note on the same page of the second edition of his work, where he tells us "that an action would lie for a breach of promise to keep the offer," which would not be the case if the party were not in some sense bound by his promise.^ So far as concerns Mr. Benjamin's summary, it liy a certain day. It wag held that under this agreement A. had the right to recede before the day designated. And see Beckwitli i\ Cheever, 21 N. H. 41 ; Faulkner v. Hebard, 26 Vt. 452. ' Pollock, 3d ed. 23, citing Cooke v. Oxley, 3 T. R. 653 ; fireat North. R. R. V. Witham, L. R. 9 C. P. 16 ; Hochster V. De la Tour, 2 E. & B. 678 ; Frost v. Knight, L. R. 7 Kx. Ill ; Routledge v. Grant, 4Bing. 653 ; Dickinson i'. Dodds, L. R. 2 Ch. D. 463 ; Eskridge v. Glover, 5 St. k P. 264. 2 Cooke r. Oxley, 3 T. R. 653, which is supposed to rule that an offer which is to remain open till it specified date does not bind the proposer, does not, as will be seen, sustain that posi- tion. In this case, as reported, the evidence was that Oxley proposed to sell Cooke certain tobacco at a certain price, Cooke having till four o'clock on the same afternoon ' ' to agree to or dissent from the proposal." Before the hour designated, Cooke notified Oxley that he agreed to take the tobacco. Oxley, however, refused to deliver it, and a suit was brought against him for damages. A verdict was taken for the plaintiff, but judg- ment was arrested. (See Benjamin on Sales, 3d Am. ed. §§ 64-67 ; Leake on Contracts, 2d ed. 44, cited by Wald, note to Pollock, 9.) Lord Kenyon 30 said: "Nothing can be clearer than that, at th e time of entering into this contract, the engagement was all on one side ; the other party was not bound ; it was therefore nudum pactum." To this Buller, J., added : " It is not stated that the defendant did agree, at four o'clock, to the terms of the sale." From these expressions we must infer that, in the opinion of the court, the cause of action set forth in the declaration amounted simply to a promise, not accepted or acti'd on by the promisee, to make a sale at a future date. There was no averment in the declaration either that the promise was a continuing one, or that it had been accepted by Cooke ; and hence, being a mere vague tentative proposal, not accepted by Cooke, Cooke could not play with it fast and loose. He was bound, if he received the proposal siib- ject to this option, to say so ; he could not repel or ignore the proposal, and then afterwards treat it as continuing. If he wished to have bound Oxley, he should have said : "I accept your proposal to sell the tobacco to me in case I call for it before four o'clock." Because the declaration did not aver any such relation between the parties, judgment was arrested. That this is the purport of the decision in this famous case is shown by the comments CHAP. I.] HOW LONG PROPOSAL MAY STAND. [§31. does not differ in principle from the rule here advocated. It is not disputed that a parol contract without consideration is of Bajley, J., in Hiimphries u. Car- valho, 16 East, 47 : " The question in Cooke V. Oxley," so said this learned judge, who may he regarded almost as a contemporaneous expositor, " arose upon the record, and a writ of error was afterwards brought on the judg- ment of this court, hy which it appears that the objection made was that there was only a proposal of sale by the one party, and no allegation that the other party had acceded to the contract of sale." In other words, as is stated by Judge iWetcalf (who rejects, as "un- reasonable and inconsistent with good faith, and at variance with acknowl- edged principles of law," the rule that an offer to sell within a specific limit does not bind the proposer), " in set- ting forth an offer on a given day, and averring an acceptance afterwards, though on the same day, a party does not show necessarily that there was any mutual assent. The offer, as has before been stated, may have been retracted, or rejected, or have expired, within an hour from the time it was made. And as this depends on such a variety of circumstances, peculiar to each case, it would be a great stretch of credulity, as well as of legal pre- sumption, to assume that an accept- ance of an offer, on the same day it was made, does, of course, evince a mutual concurrent assent of the par- ties, according to the principles above suggested." Judge Metcalf further argues that Cooke o. Oxley is in- consistent with Adams v. Lindsell, 1 B. & Aid. 683, which held that an offer in a letter is to be regarded as continuing during all the time it is in the mail. Such (unless revoked by telegram or other more rapid mode of communication) is undoubtedly the intention of the party making the offer. But if, as in Cooke v. Oxley, I say to a customer, face to face, " I will hold this matter open for you till four o'clock," and if, as may have been the case so far as the declaration in Cooke i;. Oxley averred, instead of agreeing to this, he turns his back on me and walks off, a continuing offer on my part cannot be inferred. There must, in such case, be a continuing offer on which the party addressed relied ; and this, if he seeks to recover on the pro- posal, he must aver and prove. To this effect, see Routledge o. Grant, 4 Bing. 653 ; Dickinson c. Dodds, L. R. 2 Ch. D. 463 ; Larmon u. Jordon, 56 111. 204. In Dickinson v. Dodds, L. R. 2 Ch. D. 463, the defendant's memorandum, on which suit was brought, was as follows : "I hereby undertake to sell to Mr. George Dickinson the whole of the dwelling-houses, garden ground, sta- bling, and out-buildings, etc., for the sum of £800, etc. (Signed) John Dodds. P. S. This offer to be left over until Friday, 9 o'clock A.M. (the twelfth) 12th June, 1874. (Signed) J. Dodds." The plaintiffs notified their acceptance before the expiration of the time speci- fied, but were informed that the de- fendant had sold the property on June 11th to a third party. A bill for spe- cific performance was decided in the plaintiffs' favor by Bacon, V. C. This was reversed by the court of appeal. James, L. J., said : " It is clear settled law, on one of the clearest principles of law, that this promise being a nudum pactum, was not binding, and that, at any moment before a complete accept- ance by Dickinson of the offer, Dodds was as free as Dickinson himself. Well, that being the state of things, it is said 31 §13.] CONTRACTS. [chap. I. a nullity, and that a promise to hold open a proposal, if with- out any consideration, cannot, therefore, be enforced. What is here maintained is that a proposal to hold open an offer is, if accepted, a bargain from which ordinarily a consideration is to be inferred. It is true that if the party addressed should say, " You may do as you please ; I will abandon no right, even in the slightest degree, in consequence of what you tell me; I will pursue my inquiries just as if I never heard from you ; I shall not take the least amount of trouble in looking into your offer; I will behave as if I never heard it;" then we might say, " This is all speaking to the winds ; the party addressed has done nothing and omitted nothing in conse- quence of what has been said to him ; the proposal does not bind." This would undoubtedly be the case with a proposal to a party who takes no action whatever on the proposal. that the only mode in which Dodds could assert that freedom would be by actually and distinctly saying to Dick- inson, Now I withdraw my offer. I apprehend there is neither principle nor authority for the proposition that there must be an express and actual withdrawal of the offer, or what is called a retractation. It must, to con- stitute a contract, appear that the two minds were one at the same moment of time, that is, that there was an oiler continuing up to the moment of accept- ance. If there was not such a con- tinuing oifer, then the acceptance comes to nothing.'' The objection to the above reasoning is the assertion with which it starts that the agreement was a 7tudum pactum. So far as the particular case went, this may have been so. But ordinarily the proposal means : "I will agree to keep the mat- ter open for a day (or week, as the case may be), if you will consider the mat- ter and not commit yourself at once to some other pending proposal." This is a sufficient consideration. As approving Cooke v. Oxley^ see Tucker v. Woods, 12 Johns. 190 ; 32 Chic. etc. R. R. i: Dane, 43 N. Y. 240; Gillespie v. Edmonston, 11 Humph. 653. In Benj. on Sales, 3d Am. ed. §§ 64 et seq., Cooke c. Oxley is elaborately vindicated ; and to the position in the text that the detriment to the vendee by keeping the matter open is a con- sideration, it is replied that this takes such detriment, or "inconvenience," for granted. But this is the case with all propositions for conditional sales. {Infra, § 547.) Here the offer is sub- stantially this : "I will keep this thing for you until to-morrow in considera- tion of your putting aside other com- peting openings." If the promisee, having this offer in view, rejects other offers which he might otherwise accept, this detriment is a good considera- tion. In Hallock v. Ins. Co., 2 Dutch. 268, Cooke v. Oxley is spoken of as having been effectually overruled in England; and in Boston, etc. R. R. v. Bartlett, 3 Gush. 228, Fletcher, J., says that Cooke v. Oxley "has certainly, in later cases, been entirely disregarded, and cannot now be considered as of any authority." CHAP. I.] CONTINUOUS PROPOSALS. [§ 14. But if any action whatever be taken on the proposal, whether this action consists in trouble, no matter how trivial, taken in consequence of the proposal by the party addressed, or in a suspension by him, no matter how brief, of inquiries elsewhere, tlie proposer being cognizant thereof, this makes a binding contract. Even the mere holding the matter under advise- ment is a consideration that binds. The party proposing says: " If you will consider this proposal, I will give you a day to decide." This the party addressed accepts. The fact that it is thus to be acted on is a concession that forms an ade- quate consideration.' Sometimes it may be a matter of much importance to the proposer to be able to say : "I have oflered the matter to Mr. A., who has it under consideration." But, be the benefit thus arising to the proposer great or little, the party entertaining the proposition, if it be seriously enter- tained (of this as of all other contracts seriousness being a condition), gives it the time and examination necessary for due deliberation. And this is a sufficient consideration. § 14. We have seen^ that a continuous proposal only binds for a reasonable time. Whether a proposal is con- tinuous depends not only upon the language used, not binding but upon the mode of the negotiation. If it should tinuous™ be said, " these goods are yours if called for during business hours to-day," and the party addressed accepts, either expressly or tacitly, in conformity with the usages of business, the proposal, this is a sale defeasible on part of the vendor in case the purchaser does not comply with the condition of call- ing for the goods. An action for the price, based on the con- tract, would lie against the vendee if he took the goods ; an action for the damages incurred would lie on the contract against the vendor in case he did not deliver the goods when called for within the time limited. Yet, on the other hand, the proposal may be simply this : " If you call at any time within ten days, I will procure a certain article for you at a certain price." In such case there is no sale, though (if the transaction be not void as a gambling adventure) the proposer would be liable, in case his promise was not made good, for ' See infra, §§ 505, 515, 516. 2 Supra, § 9. VOL. I.— 3 33 §15.J CONTRACTS. [chap. I. any damages accruing to the other party from its breach. Or the proposal may be to sell if called for at a particular time, and the proposal may be made face to face, but may not be as- sented to when assent would be practicable and in accordance with business usage. In such case the proposal is not binding if not continuing, though if continuing it binds.' — Mr. Leake^ gives the following examples of rulings on offers limited in continuance : A tender to supply goods at certain prices dur- ing twelve months may be accepted from time to time during the twelve months, provided the tender is not otherwise with- drawn, by ordering goods upon the terms of the tender.' An agreement to carry all goods presented for carriage at a certain rate during twelve months is to be construed as a mere offer that may be accepted from time to time by delivering goods for carriage ;* and an analogous interpretation has been applied to an offer to guarantee the payment of a particular line of bills for twelve months.' In such case the guarantee may be revoked at any period during the continuance, except so far as it has been acted on.^ — The modification, before acceptance, of the law under which a continuing proposal is made, if material, may operate as a revocation.' § 15. Whatever we may think as to the questions abovestated,it is plain that, when the party addressed has a specific time within which to accept a pro- posal, the proposal falls if not accepted within the limit.^ The proposal, also, may fix a limit as to the If not, ac- cepted withlD de- signated limit as to time or place, pro- posal tails. ' See anthorities cited to §§ 9, 13 ; Mactier o. Frith, 6 Wend. 103 ; Lang- dell, Ca. Gout. 1091. As to contin- uing considerations, see infra, § 515. That a party delivering goods to a pro- posed purchaser on trial, is bound by his proposal to sell, see Hunt v. Wy- man, 100 Mass. 198. 2 2d ed. 41. 3 Great North. R. R. v. Witham, L. R. 9 C. P. 16. < Burton v. R. R., 9 Ex. 507. " OfFord V. Davies, 12 C. B. N. S. 748. 6 Ibid. As to continuous guarantees, see infra, § 570. 34 ' Mercer Co. v. R. R., 27 Penn. St. 389. 8 Infra, §§ 881 et seq.; Vangerow, ui supra; Jackson v. Galloway, 5 Biug. N. C. 75 ; Mactier v. Frith, 6 Wend. 103 ; White V. Corlies, 46 N. Y. 467 ; Potts u. Whitehead, 5 C. E.Green, 55 ; Long- worth u. Mitchell, 26 Ohio St. 334; Maolay v. Harvey, 90 111. 525 ; Smith V. Wetherell, 4111. App. 655 ; Eskridge o. Glover, 5 St. & P. 264. That when required an answer must be sent by return mail, see infra, § 19. CHAP. I.] CONDITIONS OF ACCEPTANCE. [§ 16. place of acceptance. If so, unless the condition is complied with, no contract is perfected.' " The proposal," says Mr. Pollock,^ "may prescribe a certain time within which the proposal is to be accepted, and the manner and form in which it is to be accepted. If no time is prescribed, the acceptance must be communicated to him within a reasonable time."' Even a partial payment, by the promisee, if made condition- ally, does not bind him to a proposal which he does not accept. Thus, in an Illinois case in 1880, the evidence was, that V. made the following memorandum in his books: "Sold this day to P. a bill of lumber to complete a house for himself at the following prices." This was followed by a specification of prices but not of quantity. It was held that this was a mere proposal which was not a contract until accepted, and that P. making a payment on account was not of itself an acceptance.^ § 16. An acceptance, as well as a proposal, may be con- ditional ; that is to say, it may be conditioned upon something at present uncertain." Thus a proposal Proposal 1 , . , , , , , and accept- to take goods on trial may be accepted dependent on ance may the contingency contemplated in the ofi'er, and the ditionai. contract, supposing there be no unfair advantage taken by the purchaser, does not bind unless the goods prove satisfactory.^ When the proposal is thus made, the purchaser is entitled to hold the goods during the period limited for trial.' And where the proposal is to take with a right to return if not liked, this makes a sale with a right of contingent rescis- sion.* On the other hand, the acceptance, though partial, must be unqualified to be operative, that is to say, the accept- ' Infra, § 881 ; Savigny, viii. § 371 ; 2 Phila. 289 ; Bowney u. Clark, 22 Puchta, Pandekt. § 251 ; Adams v. Pitts. L. J. 69. Lindsell, 1 B. & Aid. 681 ; Stooken v. ^ Infra, §§ 545 et seg. CoUen, 7 M. & W. 515 ; Eliason o. Hen- « Hunt «. Wymau, 100 Mass. 198 shaw, 4 Wheat. 225, and oases cited ; infra, § 589. Wh. Con. of L. § 421. ' Ellis v. Mortimer, 1 B. & P. 257 " 3d ed. 24. see infra, §§ 589 et seg. ; Reed v. Upton ' Supra, § 9 ; infra, § 19. 10 Pick. 522. That a provisional con * Smith V. Weaver, 90 111. 392. That currence is not final, see supra, § 5. hy business usage the proposal may be ' Witherby v. Sleeper, 101 Mass. conditioned on acceptance by next con- 138. venient mail, see Carmiohael v. Newell, 35 § 17.] CONTRACTS. [CHAP. I. ance must go to some one specified thing put forth by the pro- posal.' A promise, also, to pay on performance of an act from which the promisee will incur a loss, becomes binding on the performance of the act.^ Nor is the promise less binding from the fact that the consideration is contingent, being dependent on the option of the promisee.' But if the promise be on a condition not afterwards complied with, there is no contract.' And, where an application was made to an institute for an allotment of space in its hall for exhibition, the. applicant paying the stipulated entrance fee, and the institute reserving the right of rejection, it was held that this did not constitute a contract to award the desired space.° — Agreements contin- gent upon the action of other parties are hereafter distinctively considered. ° § 16 a. What has just been said applies to subscriptions to joint enterprises.' Whether such subscriptions bind. So of sub- , . j^ . . , . . , 1 V . scriptions as having suihcient consideration, will be hereafter terprises!"' tionsidered.^ At present we have to notice that until they are accepted they are merely inchoate, and have no binding force.^ § 17. Where the proposal is conditioned on notice of aecept- Acceptance ^""^^ being communicated, or when anything is to must be be done by the proposer in order to make an accent- communi- , ■ ^" catedwheu ance Operative, the fact of the acceptance must be requiie . communicated to the proposer." Thus, where a party applies for shares in a company, and these shares are allotted to him, he is not bound until notice is communicated to him of the allotment, his proposal being conditioned on communi- ' Pollock, 3d ed. 37. < Infra, §§ 545 et seq. 2 Hilton V. Southwick, 17 Me. 305 ; ^ Demuth v. Institute, 75 N. Y. 502. Morse v. Bellows, 7 N. H. 563 ; Sturgis « Infra, § 528. u. Robbins, 7 Mass. 301 ; Worrell u. ' See infra, §§ 528, 595. Pres. Ch., 8 C. E. Green, 96 ; see 1 Ch. » Infra, § 528. on Con. 10th Am. ed. 29 ; infra, § 505. " Ives v. Sterling, 6 Met. 310 ; Ayer's 3 Great N. R. R. v. Witham, L. R. App., 28 Penn. St. 179 ; Commis. v. 9 C. P. 16 ; Barnes v. Perrine, 9 Barb. Perry, 5 Ohio, 58 ; Stuart v. R. R., 32 205 ; Willetts v. Ins. Co., 45 N. Y. 45, Grat. 146. and cases cited, infra, §§ 524, 589. As '" Leake, 2d ed. 34. See Lang. Cas. to conditional acceptance, see further on Cent. 993. Gray v. James, 128 Mass. 110. 36 CHAP. I.] COMMUNICATION OF ACCEPTANCE. [§ 17. cation of acceptance.' Registration, in such case, of thie ap- plicant is not enough ; nor is it enough to send notice of the allotment to a local agent of the company through whom the application had been received.'' An acceptance of an offer of guarantee, also, must be communicated to the guarantor, in order to bind him.' But a party, by acting on the fact of acceptance, may waive formal proof of notice of acceptance having been communicated to him.* Nor need the notice be express. It may be implied from the conduct of the parties.' — An agent specially appointed by the receiver to deliver his acceptance to the proposer, is regarded as the mere extension of his employer ; and as long as the acceptance remains in the agent's hands, it is supposed to remain in the principal's hands. Hence there is no contract in such a case until the acceptance is delivered to the proposer.^ On the other hand, notice of acceptance is not necessary in cases where the pro- posal is conditioned on certain things to be done by the acceptor, and the doing of these things is made known to the proposer. In other words, where certain things are to be done by the promisee on condition of promisor's promise being performed, the promisor becomes liable on his promise on the promisee's performance of the condition.' But wherever the proposal requires a counter-offer on the part of the promisee, and not the mere performance of a condition, then the counter- offer must be communicated to the proposer. It follows that, when a promise is a consideration for a promise, then the parties must reciprocally accept each other's promises, and in order to accept, the promises must be reciprocally com- municated.' ' Ibid. ; Pellatt's case, L. R. 2 Ch. 6 C. P. 591 ; Levita's case, L. R. 3 Ch. 36 ; Crawley's case, L. R. 4 Cli. 322. As to notice see fully infra, §§ 567 e( seq. ; as to waiver, infra, § 604. 527; Gunn's case, L. R. 3 Ch. 40 Sahlgreen's case, L. R. 3 Ch. 323 Robinson's case, L. R. 4 Ch. 322 Ward's case, L. R. 10 Eq. 659. ^ Richards v. Assurance Asso., L. R. 2 Ibid. ; Hobb's case, L. R. 4 Eq. 9. 6 C. P. 591 ; infra, §§ 602 et seq. * Leake, ut supra; Mosley v. Tink- ^ Thayer v. Ins. Co., 10 Pick. 326. ler, 1 C. M. & R. 692 ; Mclver v. Rich- See Bryant v. Booze, 55 Ga. 438. ardson, 1 M. & S. 557; infra, § 570. ' See infra, §§ 24, 545 et seq. * Richards v. Assurance Asso., L. R. * See infra, § 523 ; Lang. Sum. § 13. 37 § 18.] CONTKACTS. [CHAP. I. § 18. That a proposal made by me to another, in writing . ^ or throuo-h a messenger, does not bind me until I Agreement a » ' tobebouDd knovv it is accepted, may be conceded in all cases in posting of which the proposal, either from its express terms or ance^may fi'O™ t^''^ course of business to which its interpreta- be implied, ^jpn is subject, IS dependent for its binding force on notification to me of its acceptance. We may also hold that generally a posting of a letter is not delivery to the sendee.^ On the other hand it is competent for me to bind myself by a proposal conditioned upon the acceptance being forwarded to me by mail. — It is no objection to this position that by it one party is conditionally bound and the other not. This objec- tion if good would vitiate all conditional sales and sales on trial; yet conditional sales and sales on trial, as we will see elsewhere, have in many instances been held good.^ The pro- posal is simply this: "If you will post an acceptance to this offer within a fixed time, or a reasonable time, as the case may be, I will forward you the goods, or perform for j^ou the ser- vice." On posting the answer by the party addressed, the proposer becomes bound on his proposal, though the answer never reached him. Even supposing the loss occur through the negligence of the post-office, and not his own negligence, yet, on such a proposal, the loss falls on him who designated this channel of communication, or did business in subjection to a usage by which it is designated, more properly than upon the party forwarding the acceptance.' This reasoning applies more strongly to cases of acceptance by telegraph (supposing that be the mode of acceptance designated or sanctioned by practice), since there is recourse over to the telegraph com- pany in case by its negligence the acceptance is not commu- nicated.'' It is on the assumption that in proposals commu- nicated in the ordinary course of business there is an implied agreement to be bound by an acceptance if forwarded promptly by post or telegraph, that we can sustain the numerous rul- ings in England and the United States, that an acceptance, ' Newcombe u. De Roos, 2 E. & E. ' Hallock v. Ins. Co., 2 Dutcher, 268. 271 ; British Tel. Co. v. Colson, L. R. < See m/ra, §27, for cases. That pro- 6 Ex. 118. mises dependent on contingent action 2 Supra, § 16 ; infra, §§ 545 et seq. of third parties bind, see infra, § 593. 38 CHAP. I.] COMMUNICATION OF ACCEPTANCE. [§18. whether posted or telegraphed, takes effect from the time when it is forwarded.' If it be said that there is no considera- tion, the answer is that the proposal is: "I will be bound if you will put aside other openings and take this." The con- sideration is the detriment to the promisee of putting aside other openings.^ But an acceptance by post, to bind, must be ' See remarks of Bramwell, J., Brit. Tel. Co. c.. Colson, L. E. 6 Ex. 118; Mellish, J., Harris's case, L. E. 7 Ch.. 594; and Blackburn, L. J., in Brogdeu V. E. E., L. E. 2 App. Ca. 691 ; Vassar V. Camp, 1 Kern. 441 ; Trevor v. Wood, 36 N. Y. 307 ; Howard v. Darley, 61 N. Y. 362 ; Hallock v. Ins. Co., 2 Butcher, 268, and cases cited infra. " See discussion, supra, § 13. In Adams v. Lindsell, 1 B. & Aid. 681, the proposal -was, "We now offer you 800 tods of weather fleeces," etc., " re- ceiving your answer in course of post." Here the proposal designated the post as the channel of communication . The proposal was misdirected, and hence was late in its arrival ; but the plain- tiffs, to whom it was addressed, imme- diately on receiving it, sent an accept- ance by post. It was held that this acceptance bound the defendant (the proposer) , though he had sold the goods to another party between the date of the receiving of the proposal by the plaintiff and the date of his reception of their acceptance. To the position that the contract is not complete till the acceptance is received, the court replied : "If that were so, no contract could ever be completed by the post. For if the defendants were not bound by their offer when accepted by the plaintiffs till the answer was received, then the plaintiffs ought not to be bound till after they had received the notifi- cation that the defendants had received their offer and assented to it ; and so it might go on ad infinitum. The de- fendants must be regarded in law as making, during every instant of time their letter was travelling, the same identical offer to the plantiff ; and then the contract is completed by the accept- ance of it by the latter." The position that an acceptance duly posted binds the proposer from the date of posting was afterwards affirmed in the house of lords in Dunlop v. Higgins, 1 H. L. C. 381, a case in which the proposal did not designate the time and mode of acceptance. The acceptance was posted on the same day the proposal was received, though not in time for the first mail that might have been caught ; and the letter containing the acceptance was delayed so that it did not arrive until the afternoon of the day in the morning of which it might have been received. It was held that the acceptance bound the proposer, though he had between the forwarding and reception of the letter disposed of the goods. That the acceptance, if thus forwarded promptly, binds has been decided in several subsequent cases. Infra, § 20 ; Duncan v. Topham, 8 C. B. 225 ; Kennedy v. Lee, 3 Meriv. 452 ; Stocken v. Collin, 7 M. & W. 515 ; Towusend's case, L. E. 13 Eq. 148 ; "Wall's case, L. E. 15 Eq. 18 ; House- hold Ins. Co. 0. Grant, L. E. 4 Ex. D. 216 ; 27 W. E. 858 ; 41 L. T. N. S. 298 ; 19 Am. L. Eeg. 298 (qualifying Brit. & Am. Tel. Co. v. Colson, L. E. 6 Ex. 118) ; Harris's case, L. E. 7 Ch. 587 ; Brogden u. E. E., L. E. 2 Ap. Ca. 691. In Household Ins. Co. u. Grant, ut supra, it was held that non-delivery of the letter did not vacate the contract if 39 §18.] CONTRACTS. [chap. I. posted within a reasonable time;' and, a fortiori, there is no contract when the acceptance is not posted, but is negligentlj' the letter was mailed. The same rule is adopted in Scotland : Thomson u. James, 18 Dunlop, 1. In this country, this is, in most juris- dictions, the law in cases in which the acceptance is forwarded without delay. Tayloe v. Ins. Co., 9 How. 390 ; Min- nesota Oil Co. V. Lead Co., 4 Dill. 431 ; Beckwith u. Cheever, 1 Foster, N. H. 41 ; Abbott u. Sheppard, 48 N. H. 14; Averill v. Hedge, 12 Conn. 436 ; Vassar )). Camp, 14 Barb. 341 ; s. c. 11 N. Y. 441 ; Clark v. Dales, 20 Barb. 42 ; Bris- ban c. Boyd, 4 Paige, 17 ; Mactier o. Frith, 6 Wend. 103; Trevor c. Wood, 36 N. Y. 309; Howard v. Daly, 61 N. Y. 362 ; Potts v. Whitehead, 5 C. E. Green, 58; Hallock v. Ins. Co., 2 Dutch. 268 ; Hamilton c>. Ins. Co., 5 Barr, 339 ; Wheat v. Cross, 31 Md. 99 ; Stockham v. Stockham, 32 Md. 196; Chiles V. Nelson, 7 Dana, 282; Hut- cheson v. Blakeman, 3 Met. (Ky.) 80; Cornwells v. Krengel, 41 111. 394 ; Levy V. Cohen, 4 Ga. 1 ; Bryant v. Boose, 55 Ga. 438 ; Falls v. Gaither, 9 Port. 605 ; Whiston I. Stodder, 8 Mart. 95 ; Mal- pica u. McKown, 1 La. R. 248 ; Lung- strass V. Ins. Co., 48 Mo. 201. In Massachusetts, however, it is held that an acceptance by post must, in order to bind, be delivered to the pro- poser. McCuUoch V. Ins. Co., 1 Pick. 278. (But see Mclntyre v. Parks, 3 Met. 207.) As also dissenting from English rule, see Gillespie v. Edmonston, 11 Humph. 553. McCulloch v. Ins. Co., however, has not been elsewhere fol- lowed. The learned editor of the 3d Am. ed. of Benj. on Sales, § 75, says: "The principle of McCulloch V. Ins. Co. is certainly most positively controverted by the recent cases of Byrne v. Van Tienhoven, L. R. 5 C. P. D. 344, and Stevenson v. McLean, L. R. 5 Q. B. D. 346," and the case is declared in Hallock «;. Ins. Co., 2 Dutch. 268, "to be against the whole current of autho- rities." On the other hand McCulloch V. Ins. Co. is supported with much acutenessby Prof. Langdell (Cas. Cont. ii. 994). In Lewis v. Browning, 130 Mass. 175, McCulloch V. Ins. Co. is referred to, and the fact that the case is not generally followed is admitted. Gray, C. J., then goes on to say : " But this case does not require a consideration of the general question ; for, in any view, the party making the offer may always, if he chooses, render the forma- tion of the contract which he proposes dependent upon the actual communica- tion to himselfof the acceptance." The question was the subject of elabo- rate discussion in Household Fire Ins. Co. r. Grant, L. R. 4 Ex. D. 216, Court of App. (July, 1879), where it was held by Thesiger and Baggallay, L. JJ. (Bramwell, L. J., diss.), that the contract binds as soon as a letter of acceptance, properly directed to the proposer, has been posted within rea- sonable time after receiving the propo- sal, the post being the ordinary and natural mode of communication in such cases ; and that this rule obtains even where the letter never reaches its desti- nation (see note to 32 Am. Rep. 40). In Byrne v. Van Tienhoven, L. R. 5 C. P. D. 344 (cited supra, § 11), Lindley, J., said; "It may be taken as now settled that where an offer is made and accepted by letters sent through the post, the contract is complete the mo. ' Supra , 40 9 ; Maclay v. Harvey, 90 111. 525. CHAP. I.] COMMUNICATION OF ACCEPTANCE. [§18. held in the hands of an agent to whom it was entrusted by the accepting party, such agent not bei^ig the agent also of the proposer.' — By the Indian Contract Act, " the communi- cation of an acceptance is complete as against the proposer when it is put in a course of transmission to him, so as to be out of the power of the acceptor ; as against the acceptor, when it comes to the knowledge of the proposer. The communica- tion of a revocation is complete as against the person who makes it when it is put into a course of transmission to the person to whom it is made, so as to be out of the power of the person who makes it ; as against the person to whom it is ment the letter accepting the oifer is posted." He further said: "I am aware that Pothier and some otlier writers of celebrity are of opinion that there can he no contract if an offer is withdrawn hefore it is accepted, al- though the withdrawal is not commu- nicated to the person to whom the oifer has been made. . . . Against this view, however, it has been urged that a state of mind not notified cannot be regarded in dealings between man and man ; and that an uncommunioated re- vocation. is, for all practical purposes, and in point of law, no revocation at all. This is the view taken in the United States. . . . This view appears to me much more in accordance with the general principles of English law than the view maintained by Pothier. I pass, therefore, to the next question, namely, whether posting the letter of revocation was a sufficient communica- tion of it to the plaintiff. The offer was posted on the 1st of October, the withdrawal was posted on the 8th, and did not reach the plaintiff until after he had posted his letter of the 11th accepting the offer. It may be taken now as settled, that where the offer is made and accepted by letter sent through the post, the contract is com- pleted the moment the letter accepting it is posted. . . . When, however, these authorities are looked at, it will be seen that they are based on the principle, that the writer of the offer has expressly or impliedly assented to treat an answer to him duly posted as a sufficient acceptance and notification to himself ; or, in other words, he has made the post office his agent to receive the acceptance and notification of it. But this principle appears to me to be inapplicable to the case of the with- drawal of an offer. In this particular case I find no evidence of any authority in fact given by the plaintiff to the defendants to notify a withdrawal of their offer by merely posting a letter ; and there is no legal principle that compels me to hold, contrary to the fact, that the letter of the 8th of Octo- ber is to be treated as a communication to the plaintiff on that day, or on any day before the 20th, when the letter reached him." See article in .Journal of .Jurisprudence and Scottish Law Mag. for July, 1880, cited Benj. on Sales, 3d Am. ed. § 69. A contract by telegram is complete when the acceptance by telegram is forwarded {infra, § 27). ' Thayer u. Ins. Co., 10 Pick. 326 ; Bryant u. Booze, 35 Ga. 438 ; supra, §17. 41 § 18.] CONTRACTS. [CHAP. I. made when it comes to his knowledge." But according to the above, communietftion by letter would never be complete, where there is a telegraph by which the letter could be counter- manded, until the delivery of the letter, since till then the letter would not be out of the power of the sender. That this, however, was not intended, appears by the following illustra- tion annexed : " B. accepts A.'s proposal by a letter sent by post. The communication of the acceptance is complete as against A. when the letter is posted ; as against B. when the letter is received by A." — That a contract does not become binding until the acceptance of the proposal comes to the knowledge of the proposer is maintained by Hasse,^ Wachter,^ Bekker,' "Wiirth,^ Mittermaier,' Seufiert,^ and Arndt.'' Other high au- thorities argue that a contract is complete on acceptance, some, however, holding that it is sufficient if the acceptance be de- clared in any way {e.g. writing the letter of acceptance), while others hold that it is necessary that the letter of acceptance should have arrived at its place of destination, though not as yet known to the person sending the proposition.' The first of these theories has been called the reception or recognition theory, the other the declaration theory. Between these two theories several intermediate positions have been taken. Kel- ler asserts that there can be no fixed rule, but that each case must be governed by the general rule of bona fides. Bluhme' concedes that the contract is closed as soon as the acceptor puts the accepting letter in the post, and gives the proposer the right of recall down to this point, but gives to the acceptor the right to recall his acceptance at any time before it reaches ■ Rhein. Mus. ii. p. 371. int. pr. § 247 ;. cited Wli. Con. of L. 2 Ziy. Arch. xix. p. 116. § 421 ; Merlin, cited Lang. Cas. Cont. s Jahr. ii. p. 342. i. 156. * Des principes de droit qui regissent ' Wening-Ingenheim, Ziv. Arch. ii. les lettres, missives, etles telegrammes. 25; Serafini, il telegrafo in relazione 5 Ziv. Arch. xM. p. 12. alia giurisp. civ. e commerc. ; Hepp, de ' § 256. la correspondence privee postele ou ' § 231 ; see Vangerow, § 603. To telegraphique, 1864 ; Muhlenbruoh, the same sfifect, see Merlin, Repertoire, § 331 ; Puohta, § 251 ; Siuteuis, § 96 ; Vente, § 1 ; Troplong, Vente, i. No. Savigny, Syst. viii. 235 ; and other au- 22; Pardessus, Dr. Com. No. 250; thorities cited by Vangerow, u< su^jra. Mass§, Dr. Com. No. 578 ; Fiore, Dr. " Ency. Abth. ii. § 266. 42 CHAP. I.J COMMUNICATION OF ACCEPTANCE. [§ 18. the proposer. Windscheid' distinguishes between cases where the proposal emanates from the future debtor and those in which it emanates from the future creditor. The first is complete on acceptance; the second is to be regarded simply as a question ad- dressed to the future debtor, in which case it is necessary that the answer should reach the person putting the question. — Vangerow, in discussing the above theories, justly remarks that, unless a proposal is made in definite terms, and in such a shape that an answer of simple acquiescence would form a conti'act, it is merely tentative, and cannot bind the proposer until the action of the other party is made known to and ac- cepted by him. Supposing, however, a true proposal, in the above sense, be made, then he argues that the contract does not come into existence until the acceptance of the proposal is made known to the proposer. A contract does not exist, until the minds of the parties unite as to a specific act, and to this it is a prerequisite that each knows what the other's mind on the negotiation between thera is. This is settled in cases where the parties negotiate face to face ; as when one party accepts in a language the other party does not understand -^ and where the party to whom the acceptance is made is deaf, so that he cannot hear it.' The same rule applies to contracts between absent parties. Even supposing an answer accepting a pro- posal be rightly posted ; even supposing it has arrived at its destination ; yet, until it has been read by the party addressed, there is no concurrence of minds as to the specific act. It is true that to this view it is objected, that, if it is essential to the contract that the proposer should have notice of its ac- ceptance, then it is also essential to the contract that the exist- ence of this prerequisite should be made known to the acceptor ; and so on forever, so that on this theory no contract could be ever complete. But according to Vangerow, since a proposer is bound by his proposal, so far as concerns the other party, until it is withdrawn, and since in the case before us there has been no withdrawal down to the time of the reception of the accept- ance by the proposer, then at that time the minds of both con- tracting parties meet in consent, and the contract is complete. 1 Pandekt. § 306. » L. I. § 15, de 0. ot. A. (44, 7). 2 § 1 J. deV. 0. (3, 15). 43 § 19.] CONTRACTS. [CHAP. T. A class of cases, however, is excepted in which the proposition is so much to the advantage of the party addressed that a formal acceptance is assumed. In such cases the proposer, ac- cording to Vangerow, may be supposed to know of the accept- ance without notice, and hence the contract is closed on mere acceptance. It is, however, conceded by Vangerow that, though the proposer is not bound contractually until he is advised of the acceptance of his proposal, yet, if he has, by his proposal, given the party addressed the right to expect that a contract will be executed ; and if he (the proposer) backs out before notification of acceptance, in such a way that the other party suffers injury, he is bound to compensate for this injury. This liability, however, ceases, when the time is expired within which an acceptance could be expected. — But it is not disputed by Vangerow that it is within the power of a party to agree to bind himself on the posting of a reply ; and his admission of liability for negligence on the part of the proposer is based on this concession. The question then is, was there such a piromise made by the proposer? If it was, it binds, for the reasons above given. Whether in point of fact such a promise was made is to be determined by the proposal itself, as inter- preted by its own context, by the prior dealings of the p)arties, and by the general course of business at the time. And if the law in any particular jurisdiction be settled to be that pasting a letter of acceptance is an acceptance, then promises made in such jurisdiction are presumed to be made subject to such law.' § 19. It has been said both in England^ and in this country,' J, that the proposer is bound by an acceptance when pends on dulv posted, on the ffround that the post-office is terms of *' f i , , ■ , • ,• , • -r. proposal, constituted by him his agent tor this purpose. But unpiued ^^'^ Cannot now be sustained. An agreement to agency. constitute A. as my agent to receive letters cannot be inferred merely from my appointing him my agent to carry letters. If it could, it would apply to all other modes of de- livering letters, and would make it impossible for me to give a letter to an express agent or even to an errand boy without • See Wh. Con. of Laws, §§ 418 et ^ Hebb's case, L. R. 4 Eq. 9. seq. " Tayloe v. Ins. Co., 9 How. 390. 44 CHAP. I,] EFFECT OF ACCEPTANCE. [§ 20. making the messenger an agent to receive as well as to deliver. If good as to messengers, it would be good as to all other forms of agency, and the distinction between special agents and gene- ral agents would be obliterated. There is no agency, there- fore, to be implied from the mere fact of giving a party a letter to deliver. When, however, the post-office, apd the telegraph office, are the usual modes of doing business, and when by local law or local usage an acceptance posted or telegraphed is regarded as adequately communicated, then, in all cases in which a proposal does not designate the mode of acceptance, it may be regarded as implying, that the accept- ance will be good if sent by post or telegraph. The risk is one the proposer himself takes.' — As we have already seen,^ the proposer, on the question of time of answer, is bound by his proposal according to its terms. If it contains no limit, then, according to the course of business by which it is to be interpreted, an answer posted or telegraphed to him in reason- able time binds him. If the proposal requires an answer by re- ■ turn mail, then an acceptance put off for two days is too late.* § 20. So far as concerns the mode in which the acceptor's obligation is to be construed, and in which it is to. be performed, the place from which the acceptance acceptance is sent is that which supplies the governing law.^ i*spiace°of It is at this place that the purposes of the parties contract. for the first time coalesce. The same rule applies where the proposition is made not in writing, but through a messenger, and where a written contract signed by one party is forwarded to be signed by the other, and where a bill or promisory note is submitted to a party for his signature. In each of these cases, the place where one party assents to the other's proposi- tion is the place of contract, so far as the particular transac- tion between the two parties is concerned. And if from this ' See cases cited supra, § 18 ; Abbott ' Supra, §§ 9, 15. K. Shepherd, 48 N. H. 14 ; Mactier o. » Longworth v. Mitchell, 26 Oh. St. Frith, 6 Wend. 103 ; Northampton Ins. 234 ; Maclay v. Harvey, 90 111. 525 ; Co. V. Tuttle, 40 N. J. L. 476. On this See supra, § 15, and prior cases in this topic see examination of cases in Pol- section. lock, Wald'sed. 15 c^.sey.; Wald's note, * As to place of performance, see ib. 18 ; Langdell's Cases on Cont. 933 infra, § 871. et seg.; 22 Alb. L. J. 424. 45 § 21.J CONTRACTS. [CHAP. I. and other circumstances we can infer that the place of such acceptance was regarded by the parties as the place where the matter was to be determined, then the law of such place is the lex loci contractus, and is also the lex loci solutionis, so far as concerns the acceptor's liability.' At the same time while the admission of a debt contained in a letter is sufficiently made at the place of posting, it is continuous in its effect until it reaches its destination, and may be considered as also made there.^ So far, however, as concerns the mode of performing a contract, the law to which it is subject is the law of the place of performance.^ — The performance of the contract is to be in the place assigned by the contract,^ though when no place is designated, it is to be inferred from all the circum- stances of the case.^ § 21. The time of acceptance, as above fixed, determines the date of the contract.^ Until such acceptance, accepting the buyer has no insurable interest;' nor can he contract^ Until acceptance, maintain an action for injury to the goods.* When the acceptance is implied in the performance of the consideration, then the time of the contract is the time of the performance of the consideration.' It is true that it has been argued that the acceptance relates back in time to the proposal.'" But it is impossible to see how a contract can be made, so far as third parties are concerned, to relate back to a period when it did not exist." — As will hereafter be seen , money obligations without date, are payable on demand -,'2 while a party disabling himself from performance may be made ■ Wh. Con. of Laws, § 421, and < Infra, § 871. cases there cited ; Newcomb v. DeRoos, ^ Infra, § 872. 2 E. & E. 270 ; Duulop v. Higgiiis, 1 « Supra, § 15 et seq. H. L. C. 381 ; Taylor ;;. .Jones, L. E. ' Stockdale u. Duhlop, 6 M. & W. 1 C. P. D. 87 ; Taylor ;;. NichoUs, L. R. 224 ; Seagrave v. Marine Co., L. R. 1 1 C. P. D. 242 ; Chapman a. Cottrell, C. P. 305 ; Taylor v. Jones, L. R. 1 C. 3 H. & C. 865 ; Tuttle u. Holland, 43 P. D. 87. Vt. 542 ; Webber v. Donelly, 33 Mich. « Felthonse v. Bindley, 11 C. B. N. S. 469. 869. 2 Leake, 2d ed. 49, citing Evans v. 9 See supra, § 17. Nicholson, 45 L. J. C. P. D. Ill, n. 4; 'i Kennedy v. Lee, 3Mer. 441 ; Dick- 32 L. T. N. S. 778 ; Taylor v. Nicholls, inson v. Dodds, L. R. 2 Oh. D. 463. L. R. 1 C. P. D. 242. " See Lang. Sum. § 10. " Wh. Con. of L. § 486 ; infra, § 874. 12 Infra, § 881. 46 CHAP. I.J ACCEPTANCE MUST BE DEFINITE. [§22. liable to suit before the time fixed.' — When time is essential, also, stipulations respecting it will be enforced.^ — A nominal date will be presumed to be real, though it may be varied by parol proof.^ § 22. To bind the party to whom the proposal is addressed, it is necessary that his assent should be definite to . ■' _ Assent go to the proposal specifically.^ One party cannot must be de- ?. , ., K K. ;i ^ I,- J • finite; mere bina another by sending goods to him and saying, non-refusai " if you do not refuse these goods you are bound for "°* enough them." Mere inaction after such reception does not constitute a contract that binds the sendee.' The proposal, in order to fix the party addressed with an admission, must be of a definite character he is bound to answer.' In the same light are to be considered services accepted as courtesies or as family attentions.' In any view, a mere proposal, unassented to, forms no contract.' At the same time, as we have already seen, a person who knowingly encourages another to do for him work which is usually paid for as a matter of business, becomes liable to pay such other person for the work.' — Under this head may be noticed cases in which a proposal contains ' Infra, § 885a. 2 Infra, § 887. ' Infra, § 893. ' That there must he some act of ac- ceptance see White v. Corlies, 46 N. Y. 467. See infra, §§ 184, 707 et seq. 6 Pollock, 3d ed. 25 ; Felthouse o. Bindley, 11 C. B. N. S. 869 ; Corning V. Colt, 5 Wend. 253 ; and cases cited infra, § 184. In Felthouse v. Bindley, 11 C. B. N. S. 869, the proposal was to buy A. 'a horse for £30, adding, " if I hear no more about him I consider the horse is mine at £30 15s." The mefe non-answering of this letter was held not to constitute a contract. See Leake, 2d ed. 28. — On the other hand, ' ' acceptance by the grantee, of a deed or land contract, executed by the grantor only, binds such grantee." Lyons, J. Hubbard v. Marshall, 50 Wis. 327 ; citing Lowber v. Connit, 36 Wis. 176. See supra, § 6. That mere loose talk cannot constitute proposal and accept- ance, see Bruce v. Bishop, 43 Vt. 161, supra, § 3. That when a price is agreed on for a club supper, the club cannot be charged with extras furnished, see Eaton V. Gay, 44 Mich. 431. s Supra, § 3 ; Corser v. Paul, 41 N. H. 24; Mattocks v. Lyman, 18 Vt. 98; McGregor v. Wait, 10 Geary, 72 ; Bar- tholomew u. Jackson, 20 Johns. 28 ; Borland v. Guffey, 1 Grant Cas. 394, and other cases cited, Wh. on Ev. § 1138. As to interpretation see infra, §§ 627 et seq. ' Infra, § 719. » Taylor v. Laird, 25 L. J. Exch. 329 ; Corning v. Colt, 5 Wend. 253 ; Bower V. Blessing, 8 S. & R. 243; and see infra, §§ 707 et seq. ' Supra, § 7 ; and see infra, §§ 184, 707, et seq. 47 § 22,] CONTRACTS. [CHAP. I. conditions printed in such a way as to elude the attention of the acceptor. A party is not bound by a condition, thus, with- out express notice to him, slid covertly into a contract in such a way as to materially modify what would be its ordinary mean- ing. Hence, when a condition materially limiting liability is inserted in a railway ticket or receipt, such a condition, if not brought to the notice of the other party, and if not put in such a way as to attract his attention, will not bind him. It is only as to the matter in respect to which his mind and that of the carrier met that he is bound.' And even if notice be brought' home to him, yet if it be against the policy of the law, as are all unreasonable releases of common carriers from the duty of care, the limitation will not bind.^ The rule that a party is presumed to know the contents of a document assented to by him,^ does not make it my duty to inform my- self of provisions inserted in an informal contract in such a way as to elude ordinary attention. I am required to exercise the sagacity of a good business man ; and I am only charge- able with negligence when I omit to exercise such sagacity. That which a good business man would not ordinarily per- ceive, I am not chargeable with negligence in not perceiving. Besides, to impute to me a knowledge of conditions inserted, not in the body of a document, where I would be likely to see them, but in places where they would not be likely to attract my attention, would make a maxim which was designed to prevent fraud an engine of fraud, by enabling one party to surreptitiously work into a contract conditions of which the other party was not likely to take notice. And this infer- ence grows stronger when the condition is one repugnant to the body of the contract. We are not required to look for a sweep- ing abrogation of a book contract in a few small lines inserted in its margin or on its back. The contract, if thecarrier meant to make it special, should have been constructed as a special ' Infra, § 572; Wh. on Neg. § 587; Sands, 54 N. Y. 512; and other cases Harris u. R. R., L. R. 1 Q. B. T>. 515 ; cited, infra, § 572. Parker v. R. R., L. R. 1 C. P. D. 618 ; 2 See infra, § 438. As to telegraph Burke v. R. R., L. R. C. P. D. 1 ; Ma- limitations see Wh. on Neg. § 761. lone V. R. R., 12 Gray, 388 ; Verner v. » Tnfra, § 196. Sweitzer, 32 Penn. St. 208 ; Elmore v. 48 CHAP. I.] MODE OF ACCEPTANCE. [§ 24. contract. We have a right to suppose that matters apparently minor inserted in a contract relate to subordinate specifications, and we are not called upon to look to them to see whether they give the conti-act a shape repugnant to what it purports to be on its face. In proportion, therefore, to the repug- nancy of such conditions to the body of the contract, is the inference strengthened that they were not seen.' Whether there is notice in such cases is a question of fact.^ § 23. An exception to the maxim that a proposal must be accepted to be binding, is supposed to be found in the common law rule that a grant under seal binds derseai the grantor, if held as an escrow, or delivered to a ^■antor' third party, thouu;h not communicated to the !"'1'°"*, p-rantee.' But this exception is more nominal than cation to ~ , grantee. real. Such a deed, when placed in the hands of a third party on conditions, is a proposal to the grantee that he should take the property as from the date of the delivery. The acceptance establishes the contract as thus stated.'' § 24. It is not necessary to the validity of a contract, that the party to whom the proposition is addressed General should be specified in it by name. I may bind my- ^["^'"^^^s to self contractually by a general proposal to do a aii parties particular thing for the benefit of any person who actionin renders me a particular service, or takes part with °rt"h°™'^ me in a common risk. Under this head fall otfers terms. of rewards to any person finding a lost article, and otfers to receive as a stockholder in a particular company any person subscribing and paying an instalment by a particular time. A proposition of this kind is called, by German authors, Auslobung, and is defined to be a public announcement, that to any person performing a particular service, a designated benefit will be given in return. Although in the classical Koman law, assuming, as it did, that to a contract it is essential that ' See infra, § 438, to the effect that 2 Infra, § 572. such releases are against the policy of ^ Garnons u. Knight, 5 B. & C. 671 ; the law. That written terms, when in see Xenos v. Wiokliam, L. R. 2 H. L. conflict with printed, prevail, see infra, 296 ; Woodbury v.. Fisher, 20 Ind. 387. § 652. That as a rule ignorance of ' See infra, § 679. As to agreement fact is a defence, see infra, §§ 185 et by vendee to pay burdens on land, see seq. infra, § 720. VOL. I.— 4 49 § 24.J CONTRACTS. [CHAP. I. tbere should be parties specified on its face, contracts based upon general proposals were unknown, such contracts are uni- versally admitted by modern Roman jurists to be of binding force.' The proposal is regarded as a bid which becomes a contract when acted on by a party withii} the range of those to whom it is addressed. There is, therefore, an important distinctive feature of proposals thus directed to persons of a particular class, as distinguished from persons designated in- dividually. Proposals of the general character now before us are conditioned, so far as their efficiency is concerned, upon something being done by the party accepting them.^ It is not enough that there should be a mere acceptance. The service {Lelstang) called for, must be performed.' Thus, an offer of a reward on returning stolen property is not binding until the stolen property is returned ; an ofier of membership in a stock company is not consummated until the first instalment re- quired in the offer is paid. It is performing the condition, and not technically accepting the offer, that makes the con- tract between the party making the proposal and the party acting on it. Until the performance of its condition, the offer is a mere proposal ; but when this condition is performed by an ascertained person, the contract is complete.'' There can, however, be no recovery except by a party who had notice of 1 Vaiigerow, § 603, iii. 255 ; Iherhig, Crocker r. R. R., 24 Conn. 261 ; Kelly. .Jahr. iv. p. 93 ; Windsclieid, § 309. in re, 39 Conn. 159 ; Fitch . . fcinc.laker, 2 Anson, op. cit. 25. 38 N. Y. 248 ; Rowland r. Lowndes, 51 3 Jones v. Bank, 8 N. Y. 228 ; Fur- N. Y. 604; Grady v. Crook, 2 Abb. (N. man r. Parke, 1 Zab. 310. C.) 53 ; Furman ;;. Parke, 1 Zab. 310; * Supra, § 17; Anson, 24, adopted I'innmings ;•. Grann, 52 Penn. 8t. 4S4 ; in Pollock, 3d. cd. 12; 1 Ch.Cont. nth G..ldsborougli <■. Cradie, 28 Md. 477; Am. ed. 11; Williams .■. Carwardine, Eagle r. Smith, 4 Houston, 293; Cilmore 4 B. & Ad. 621 ; Gerhard ,-. Bates, 2 E. r. Lewis, 12 Ohio, 281 ; Montgomery v. & B. 476 ; Neville ,-. Kelly, 12 C. B. Robinson, 85 111. 174 ; Hanson v. Pike, N. S. 740 ; Tarner < . Walker, L. li. 3 16 Ind. 140 ; Hayden v. Soiiger, 56 Q. B. 301 ; Spencer r. Harding, L. R. Ind. 42 ; Stamper v. Temple, 6 Uumpili. 5 C. P. 563 ; Slmey r. U. S., 92 U. S. 73 ; 113 ; llorreU , . Qaarles, 35 Ala. 544 ; Janvrin v. Exeter, 48 N. H. 83 ; Davis Salbadore v. Ins. Co., 22 La. An. 338. V. Munson.43Vt. 676 ; Russell r. Stew- Si^e Stamp ,.■. Cass Co., 11 N. W. Rep. art, 44 Vt. 170 ; Freeman ;•. Boston, 5 1S3. That on this ground the right of Jletc. 56; Loring u. Boston, 7 Mete, holders of negotiable paper to sue on 409; Crawshaw (•; Roxbury, 7 Gray, such paper may be sustained, see /»/><;, 374; Kinoaid i'. Eaton, 98 Mass. 139 ; § 7;t5. This axjplies to rules poste.l 50 CHAP. I.J GENERAL PROPOSALS: REWARDS. [§24. the proposal when he rendered the service. \If there could, we would have a contract without two contractitig parties. The proposer must maice the proposal known before the acceptor undertakes to perform the condition, and the acceptor must have the reward in view at the time he renders the services on which he claims.' — Suppose, that to an advertisement of a in factories, which bind tlie employer to the employes taking action in con- formity with rules ; Wright v. Trainer, 1 Weekly Notes, 198; 32 Leg. Int. 264. "To a certain extent," says Mr. Pollock (3d. ed. 19), " this notion of a floating obligation" {i. e., that by the offer there is a contract established with an unascertained promisee) "is countenanced by the language of the judges in the cases above discussed ; and it also receives some apparent sup- port from the much earlier case of Williams v. Carwardine, 4 B. & Ad. 621. . . The decision sets up a con- tract without any animus contrahendi. If it be now law (which may be doubted), it goes to show that in this class of cases, there may be an accept- ance constituting a contract without any communication of the proposal to the acceptor, or of the acceptance to the proposer. But the statement of Parke, .T., that 'there was a contract with any person who performed the condition mentioned in the advertisement,' is rather ambiguous ; it savors of the notion, that there is an inchoate or un- ascertained obligation from the first publishing of the offer. And if such were indeed the ratio decidendi, we need not hesitate to say, that at the present day it cannot be maintained. The modern cases not already cited have turned only on the question whether the party claiming the reward performed the required condition according to the terms of the advertisement." That there may be a claim for damages based on negligence in mak- ing a general proposal, see infra, § 1054. It was maintained by the Supreme Court of the United States, in Shuey v. U. S., 92U. S. 73, that ageueral proposal made by public advertisement may be revoked by an advertisement of equal publicity, even as against a person who acts on the proposal not knowing it has been revoked. Of this, Mr. Pollock says: " this is, perhaps, a convenient rule, and may possibly be supported as a fair inference of fact from the habits of the newspaper reading part of man- kind ; yet it seems a rather strong piece of judicial legislation." So far as concerns the admissibility of news- papers to prove notice, the ruling of the Supreme Court is sustained by a series of cases cited in Wh. on Ev. § 673. As to revoking offer to sell tickets, see Crocker r. R. K., 24 Conn. 249. Sliuey 0. V. S. can be sustained on the ground, that the party claiming , the reward was to be presumed to have known of the revocation before he sup- plied the consideration. The revoca- bility of a proposal of this class, up to the period of the rendering of the con- sideration, is maintained in Janvrin r. Exeter, 48 N. H. 83 ; Wentworth v. Day, 3 Met. 352 ; Gilmore u. Lewis, 12 Ohio, 282. That after a reasonable time, an offer of a reward is inferred to be withdrawn, see Loring v. Boston, 7 Met. 409. ' See cases cited supra; but see contra, Russell V. Stewart, 44 Vt. 170 ; Auditor V. Ballard, 9 Bush, 572. In Williams u. Carwardine, 4 B. & Ad. 621 ; it was held that the defendant was 51 I 25.J CONTKACTS. [CHAF. I. reward on tlie diaeoverj of lost property, two or Bjore elaim- anta with ecjual rights appear ; or, suppose, tiiat a certain amoHut of stock is otferedi to all persons s-ubscribiing a specified sam, and it tuyus oat tiiat there are more persona snljscFJbiiig' sind paying in than there is s-tock to satisfy : in ^yhat way are the claimants in such cases to be met 1 Sij far a& concerns the parties, applying foi- a reward, it has beeia held in Geraiany, that, if they stand in precisely the same position, the reward is to be divided between them.' A similar prinriple naay be invoked to detejTEoiiiie cases in whicb there are roore persons subscribing aad paying in on stock allotroents than there ia stock to satisfy. — Where a portion of the thing lost is found and restored, the revyard may, it is held, be apportioned.^ I 2a. Under the same het\d may be classed time-tables issued by railway companies, which bind the companies to So ef rail- ^ •' ,. , . ^ road time- reasonable pmnetaahty ;* a?id whjch, so it has bee-n argaed, make the companies liable for any damage received by a party fi-om a failure on their part to keep the time advertised by them. It has even been held in England* that, when a traveller offers to take a ticket to any place to which a railroad company has advertised to carry passengers, the compajiy contracts wilh him to receive him as a passenger to that place according to the advertisement. Brat this view, as expressed by Lord Campbell, C. J., and Wightman, J., was not necessary to the decision of the case, and was dissented Siable em a gs-Deral proEai&» t-f rj re^ Ti««s with tlae inteiati&iaoit CiaiiPji^nif;!!]!© ward forces-tain information, wliicli reward. But tke cases do not necessarily information the piaintiff supplied, conflict, as. in Willianjsr. Carw-ardine it thoiugh the fewaed was ixit the control- does^uot appeas thattheplaintiff wasnot ling motive which induced the plaiutitf sjware of the re-sasd. See mfrm, § 507. Jo supply the information. EutinSitcli ' Vangerow, 4 CA&, iii,2S&. ^. Snedaker, 38 N. Y. 248, it was held, a Synnnes i-. Frazjer, 6 Mass-. 34i. that, when the information called for » Leate, 2d ed. 25 ^ Aicscn, u supra, ■was given by the plaintiff l'«£ore he had citing Le Blanche- d. R. R., 1 C, P. B. motieeof the reward, lie could net claim 286;. and se<^ (ioi-dcai v. R. R. 52 N. the reward, as he could not be held te. H. 5% ; S-^ars- -j:. R. R.^ 14 Allen accept aa offer «>f -which he had n& 433;. Stsohn v. R, R., 23 Wis. 126- knowledge. And in Hewitt v. Ander- Thompson v. R. R., 5-9 Mias^ 316 ; Wh- son, 56 Cal. 546, it' was held that the- on Neg. §§, 662, 810. claimant must have rendered the ser- * Denton v. li. R., Jx E. & B 860 • a 52 CHAP. I.] TIME-TABLES : LETTEES OP CREDIT. [§ 25 . Cave, ' Harris v. Nickerson, L. R. 8 Q. B. and argues ''that the true view seems 286. 55 § 27.] CONTKAOTS. [CHAP. I. definite agreement in respect to them, the application for the shares in pursuance of the offer or agreement may make a complete contract without any further notice of allotment.' But a general offer of stock or other commodity to bidders is to, be construed as reserving to the parties advertising a dis- cretionary power in the acceptance of bids.^ § 27. Telegrams may be employed either to propose or to accept, and become, in either case, part of the evi- m'fy'^oT^ denue by which a contract can be established.^ The stitute con- original written proposal or acceptance by telegraph is a sufficient memorandum in writing under the statute of frauds; but to satisfy the statute the writing must be signed by the party charged. When so signed, and assented to orally by the other side, it constitutes a contract of sale under the statute;^ supposing that it adequately expresses the terms of the proposal or acceptance, as the case may be.^ To satisfy the statute, it has been held that the original message must be produced.^ But in those jurisdictions in which the telegraph company is the agent of the sender, the message as delivered by the company must be regarded as the message of the sender, under the statute, and if duly signed or attested b}^ the company must be regarded as duly signed or attested < See Adam's case, L. R. 13 Eq. 474 ; • 591 ; Saveland u. Green, 40 Wis. 431 ; Hamilton's case, L.K. 8 C'h. .'■.48 ; Ham- West. Un. Tol. Co. r. Meyer, 61 Ala. ley's case, L. R. 5 C. D. 705; Jenner's 158; Williams r. Brickell, 37 Miss, case, L. R. 7 C. D. 132. CSi; Taylor v. St. Robert Campbell, 20 2 Spencer v. Harding, L. R. 5 C. P. Mo. 2.54. 561; Thetcher r. Kngland, 3 C. B. 2.54; « Wh. on Ev. §§ 617, 872; Godwin Tarner u. Walker, L. R. 1 Q.. B. G41 ; t. Francis, L. R. 5 C. P. 295 ; Reiiss v. 2 Q. B. 301. Pickley, h. R. 1 Ex. 342; Coupland c. 3 Wh. on Ev. §§ 67, 618; William- Arrowsmith, 18 L. T. (N. S.) 755; Un- soii ,: Freer, L. R. 9 C. P. 393 ; Conp- thank v. Ins. Co., 4 Biss. 357 ; Dunning laud r. Arrowsmith, 18 L. T. (N. S.) v. Roberts, 35 Barb. 463; Crane v. Ma- 755; Henkel v. Pape, L. R. 6 Ex. Ch. loney, 39 Iowa, 39; Wells r. R. R., 30 7; Unthank r. Ins. Co., 4 Biss. 357; Wis. 605; see Stevenson y. McLean, L. Minn. Oil Co. r. Lead Co., 4 Dill. 431 ; R. 5 n. B. D. 34i;. Durkee r. R. R., 29 Vt. 127; Trevor i-. 5 Xrevor u. Wood, 36 N. Y. 307; Wood, 36 N. Y. 306; Beach r. R. R., McElroy t: Bush, 35 Mich. 434; Save- 37 K. Y. 457; Leonard r. Tel. Co., 41 land r. Green, 4ll Wis. 431. N. Y. 544; Benford .•. Sanner, 40 Penn. « Durkee r. R. R., 29 Vt. 127. That St. 9 ; Robinson Works v. Chandler, 56 this is the English rule may be inferred Ind. 575 ; Matteson v. Noyes, 25 III. from Henkel v. Pape, L. R. 6 Ex 7 56 CHAP. I.] TELEGRAMS. [§ 27. by the sender.^ — A party may agree to make a contract depen- dent on receipt of telegram, and such contract is binding on a telegraphic acceptance.^ — "Whether the sender of a telegram makes the telegraph company his agent so that he becomes responsible for the message delivered by the company at its place of destination, has been much discussed. In England, in a case in which, after some negotiations for the purchase of "fifty" rifles, a telegram ordering "three" rifles was delivered so as to read " the rifles," so that fifty rifles were sent by the plaintitt' (the receiver of the telegram) to the defendant (the sender of the telegram), it was held that the company was uot to be regarded as the agent of the sender, and that therefore the plaintiff could not recover.' In this country, however, the prevalent opinion is that the sender is bound by the mes- sage as delivered by the telegraph company,* though where no agency on the part of the telegraph company is established, the original must be produced, or its loss explained.' It has been objected that this, in consequence of the numerous mis- takes incident to the transmission of letters by telegrai)h, ex- poses the sender of telegrams to undue risk ; and no doubt blunders in the transmission of telegraphic messages are seri- ous and constant.^ But to this may be given the following answers. (1) The mistakes of agents charged orally with specific duties are likely to be far more numerous and more serious than those of telegraphic operators charged with the transmission of messages, and if we refuse to impute to the principal the blunders of telegraphic agents, there is no blunder of other agents that can be so imputed. (2) To relieve tele- ' Hawley v. Whipple, 48 N. H. 487 ; * Durkee ;;. R. R., 29 Vt. 127 ; Dunn- Dunning V. Roberts, 35 Barb. 463 ; ing v. Roberts, 35 Barb. 463 ; Trevor v. Trevor v. Wood, 36 N. Y. 307. A tele- Wood, 36 N. Y. 307 ; Crane v. Maloney, gram in the words, " you may draw on 39 Iowa, 39; Saveland ». Green, 40 me for $700," is not an acceptance of a Wis. 431 ; Taylor v. St. Eobt. Campbell, bill in the technical sense, but it is an 20 Mo. 254 ; Scott & J. on Tel. § 345. authority to draw at sight, and involves " Wh. on Ev. § 1128; Benford u. a promise to accept and pay, Franklin Sanner, 40 Penn. St. 9; Matteson v. Bank v. Lynch, 52 Md. 270. Noyes, 25 111. 591 ; Williams v. Brickell, 2 Household Ins. Co. u. Grant,' L. R. 37 Miss. 682. 4 Ex. D. 223; Lewis u. Browning, 130 ^ gee article in Blackwood's Mag. for Mass. 195. April, 1881, Eng. ed. vol. 129, p. 468. a Henkel v. Pape, L. R. 6 Ex. 7. See infra, § 1056. 57 § 28.] CONTRACTS. [CIIAP. I. graphic communications from the restrictions of the law of agency would be to expose the business of the country to a fiir greater peril than it is exposed to by treating the operator as the sender's agent. It is only by insisting on this agency, and tlien holding the company responsible to the sender under the law of agency, that general accuracy can be secured.' — It follows, also, from what has been stated, that the deposit of an acceptance in a telegraphic office, duly addressed to a proposer by telegram, is a due acceptance of the proposal, al- though never received by the proposer, supposing the accept- ance to follow within reasonable time. It is true that this has been doubted in England;^ but in cases where the proposer has selected a telegraphic company as his agent in making his proposal, or where he by letter authorizes his correspond- ent to reply by telegraph, there is good reason on principle to hold that it is sufficient if the acceptance be deposited in due time with the telegraphic company.* That this is the case in respect to letters has been already seen.* § 28. Much difficulty, as we will hereafter see, has arisen "Voida- from the inexact use, in decisions referring to con- bie".ii3- tracts, of the words "void" and "voidable." A tinguiehcd from contract is executed under the influence of.fraud, the parties being competent to agree as to the sub- ject matter of the contract, and actually agreeing. It is sub- quently set aside, on account of the fraud by which the assent of one of the parties was induced. The court, in pronouncing the avoidance of the contract, declares that it is " void." In one sense it is, after it is avoided. But the term " void con- tract" (contradictory as the expression is, since, if it was a "contract" it was not always "void," and if it was always " void" it never was a " contract") implies, that a " contract" ' In England, where the message is ' See supra, § 18. Willes, J., God deliverwl to the wrong person, the re- win v. Francis, L. R. 5 C. P. 295. ceiver has no remedy against the com- ' Wh. on Et. § 1128 ; Minnesota pany, Dickson u. Tel. Co., L. R. 2 C. P. Linseed Oil Co. v. Lead Co., 4 Dill. 431 ; D. 62 ; aff. on app. 2 C. P. D. 1 ;— Durkee v. R. R., 29 Vt. 127 ; Trevor v. though it is otherwise in this country. Wood, 36 N. Y. 307; see 12 Cent. L. J. Wh. on Neg. § 758. That the sendee 365. has no claim for non-delivering, see » Supra, § 18. Wh. on Neg. § 757. S8 CHAP. I.] voidable" and " VOID. [§28. never existed between the parties, whereas in fact a con- tract did exist between the parties, though it was afterwards avoided. On the other hand, the term " voidable" is often used in reference to apparent agreements which are not real agreements, and which are, therefore, not contracts at all. Now the true distinction is not, as is sometimes said, that a voidable contract is a contract with only one party to it (since there can be no contract without two contracting parties'), but that it is an agreement which one of the parties is at liberty, on some future contingency, to treat as if it were not binding.^ — The term "void," on the contrary, can in strictness only be applied, in this connection, to transactions which are either (1) absolutely prohibited by law, or (2) wanting in one of the necessary constituents of a valid agreement, i. e.] two parties capable of consenting, or a concurrence of minds as to a particular object of consent.^ — While such, however, is the ' Supra, § 2. ^ That contracts of infants are at common law, in this sense, voidable, see infra, §§ 31, 55, 56 ; that contracts of lunatics are thus voidable, see §§ 114 et seq., 117a; that it is so as to duress, see § 154 ; that it is so as to agreements induced by fraud, see infra, § 283 ; that, on the other hand, there is no contract when the parties do not agree as to the same thing, see supra, § 4, infra, § 177 ; and see, generally, Kounsavell w. Pease, 45 Wis. 506. The distinction given by Mr. Pollock (3d ed. 7) is substantially that of the text. "An agreement or other act which is void has from the beginning no legal effect at all, save in so far as any party to it incurs penal conse- quences, as may happen where a spe- cial prohibitive law both makes the act void and imposes a penalty. Other- wise no person's rights, whether he be a party or a stranger, are affected. A voidable act, on the contrary, takes its full, proper, and legal effect, unless and until it is disputed and set aside by some person entitled so to do." Mr. Pollock justly objects to the definition iu the Indian contract act, that "an agreement not enforceable in law is said to be void," for the reason that there are agreements that cannot be sued upon, and yet are recognized by law for other purposes, and have legal effects in other ways." He adds: "Perhaps it would be better to say that a voidable contract is an agree- ment such that one of the parties is entitled at his option to treat it as never having been binding on him." ' That " void" when used in formal documents is construed to mean "void- able" in all cases where there is a mind to contract and a thing contracted about, see Lincoln Coll. Ca., 3 Co. Eep. 586 ; Bryan v. Banks, 4 B. & Aid. 401 ; Malins v. Freeman, 4 Bing. N. C. 395 ; and that this is the case in con- struction of acts of parliament, see Davenport v R., L. R. 3 Ap. Ca. 128 ; Governors, etc. v. Knotts, L. R. 4 Ap. Ca. 324, cited Pollock, 3d ed. 52. 59 § 28.] CONTRACTS. [CHAP. I. proper use of the term, it is impossible to deny to it a seeoiiclaiy meaning limiting invalidity to parties. Of this we have illus- trations in notes executed on Sunday. These, under statute, have been repeatedly declared to be void/ yet in the hands of bona fide indorsees without notice, such notes have been held to biiid.^ Nor can property sold, and delivered in pursuance of a Sunday contract, void though it be, be recovered back.^ ' Ii.fni, k 382. » Infra, § 383. ^ Infra, § 38t). 60 CHAP. II.] INFANTS. CHAPTER II. INFANTS. Infancy at commoTi law embraces twenty years, § 29. When last year of infancy expires, §30. Contracts of infants voidable, § 31. Other contracting party bound, § 32, Only infant can set up privilege, § 33. Avoidance may be rluving minority, § 34. Infant may hold property and pass title, § 35. Doubts whether prejndicial engage- ments are void or voiiahle, § 36. Negotiable paper voidable, § 37. And 90 of sealed instruments, § 38- Contracts of agency not necessarily void, § 39. Nor partnerships, § 49. Nor suretyship, 5 41. Nor contract* for labor, § 42. By statute all contracts of infants may be void, § 43. At common law question is on© of no- tice, § 44. Infant's lease and other deeds are void- able, and may be avoided by subse- quent deed, § 45, Disaffirmant-e of part is disaffirmance of whole, § 46. Compensation not required for what has been wasted in infancy, § 47. But cannot inequitably recover back, §48. Other party can reclaim or rescind contract, § 48 a. If taking benefits, mast bear burdeii, §49. Distinction between executory and txn- cuted contracts, § 50. Infant's disaffirmance of exe. Huffman by Medbury v. Watrous, 7 Hill, 110. In Vent v. Osgood, 19 Pick. 572, Putnam, J., put the question on the right ground : " By the avoidance the contract was annihilated, and the par- ties are left to their legal rights and remedies, just as if there had never been any contract at all." But the contract, if an advantageous one at the time it was entered into, and fully con- sidered on both sides, cannot be treated by the infant, when he arrives at age, as void, so as to enable him to recover a higher rate of compensation, even though, in consequence of the rise of wages, such compensation, had there been no contract, might have been re- covered. See Breed u. Judd, 1 Gray, 460 ; and see infra, § 48 a. > Wood V. Fenwick, 10 M. & W. 195 ; Leslie v. Fitzpatrick, L. R. 3 Q. B. D. 229. 2 Ibid.; R. V. Lord, 12 Q,. B. 759. 8 Whitley v. Loftus, 8 Mod. 190 ; McKnight v. Hogg, 3 Brev. 44 ; King v. Amesly, 10 M. & W. 195 ; Woodruff v. Logan, 1 Engl. Ark. 276. For enlistment statutes and the rul- ings under them, see Wh. Cr. PI. and Pr. §§ 980, 983. * Tyler on Infancy, 2d ed. § 97 ; Beard v. Webb, 2 B. & P. 96 ; Day v. Everett, 7 Mass. 145 ; People v. Gales, 57 Barb. 291 ; People ... Gates, 43 N. Y. 40. 71 § 43.] CONTRACTS. [CHAP. II. minority and majority should be firmly fixed, led, in 1874, to the adoption of the following statute (37 & 38 Vict. c. 62): — " 1. All contracts, whether by specialty or by simple contract, henceforth entered into by infants for the repayment of money lent or to be lent, or for goods supplied or to be supplied (other than contracts for necessaries), and all accounts stated with infants, shall be absolutely void ; provided always, that this enactment shall not invalidate any contract into which an infant may by an}' existing or future statute, or by the rules of common law or equity enter, except such as now by law are voidable." — " 2. No action shall be brought whereby to charge any person upon any promise made after full age, to pay any debt contracted during infancy, or upon any ratifica- tion made after full age of any promise or contract made during infancy, whether there shall or shall not be any new consideration for such promise or ratification after full age." " In fact," says Mr. Pollock,^ when commenting on this stat- ute, " the operation of the present act seems to be to reduce all voidable contracts of infants ratified at full age, whether the ratification be formal or not, to the position of agreements of imperfect obligation, that is, which cannot be directly en- forced, but are valid for all other purposes." " The proviso about new consideration," be adds, " was presumably intro- duced by way of abundant caution, to prevent colorable eva- sions of the act by the pretence of a new contract founded on a non)inal or trifling new consideration. Where a substantial consideration appears on the face of the transaction, these vFords can hardly be supposed to impose on the court the duty _of inquiring whether the apparent consideration is the whole of the real consideration." He proceeds to argue that, when an infant buys and pays for goods, the statute does not entitle him, when of full age, to recover back the moneys paid. " Such a consequence would be most unreasonable, and is not required by the policy of the statute, which is obviously to protect in- fants from running into debt, and to discourage tradesmen and others from giving credit to them, not to deprive them of all discretion iu making purchases for ready money." " On this ■ Cont. 3d. Eng. ed. 61. 72 CHAP. II.] INFANTS. [§ 44. more reasonable construction, it is difficult to see what result is obtained by the first section which is not equally well or better obtained by the second. At common law, the infant was not bound by any of the contracts specified in the first section, unless he chose to bind himself at full age: by the second section he cannot henceforth so bind himself. No more complete protection can be imagined, and the first section appears superfluous." In Connecticut, certain contracts by infants are made void by statute.' In other states, such eon- tracts are void, unless there be a written ratification.^ § 44. The statutejnst noticed sprang from the conviction, that in the long run less harm would be done by absolutely incapacitating infants, except so far as law'^ques-"" concerns the purchase of necessaries, than would be p°i1 °°^ °^ done by making their contracts simply voidable. With this is to be considered the growing sentiment in Eng- land, that it is better that young men under twenty-one should be completely excluded from business. To enable them to make voidable engagements, so it is argued with much force, is worse for them than would be entire incapacity, since bargains made by unprincipled parties with infants under such circumstances would have in them a gambling element which would be an excuse for extortionate conditions. It must not be forgotten, also, that at common law, the question is affected by local policy. An over-populated state, where it is not desirable to increase the number of persons in busi- ness life, for whose distinctive industries long apprenticeships are desirable, whose climate and traditions do not stimulate early development, naturally fixes majority at a more advanced period of life than a state whose soil and industries call for large additions of young, active, and adventurous laborers, and whose climate and traditions lead to the assumption of responsibility at an early age.^ There are states in this country, for instance, in which a modified business capacity cannot be refused to infants without producing serious busi- ness disturbance. There are also states in which it may be ' Rogers v. Hard, 4 Day, 57 ; Maples 2 See Tyler on Inf., 2d ed., § 50. . V. Wightman, 4 Conn. 376. " Wli. Con. of Laws, § 113. 73 § 45.J CONTRACTS. [CHAP. II. better, in the long run, taking the population as a whole, that persons under twenty-one should be absolutely barred from making business contracts. In some states, local policy of this class is formulated in legislation. In others, it exhibits itself in greater or less judicial relaxation of the common law rule. The matter, it should be observed, under the constitu- tion of the United States, is within the exclusive range of state determination. — In eases of conflict of local laws, the law most favoring capacity will prevail, unless there be a posi- tive local law to the contrary.' § 45. An infant's conveyance of real estate is good until ^ „ , avoided,^ and a lease beneficial to him may abso- Infant 6 . . . "^ . leasts and lutcly bind him after he has enjoyed the profits.^ real estate Unless it be repudiated when he comes of age, his con- bie In'd' veyance of real estate will be held good in all cases maybe in which there was no fraud, and in which he had avoided by . • i • mi • subsequent the opportunity to exercise an election.'' That an in- fant's lease, without reserving rent, is not absolutely void, is held, according to Mr. Pollock, l)y Lord ^lansfield and Lord St. Leonards,^ and this is clearly the case " with a lease reserving a substantial rent, whether the best rent or not;"" nor, so it has been held, can such a lease be well avoided by the infant, on arriving at majority, leasing the same land to another person, unless there has been re-entry by the infant or some notorious act indicative of resumption of possession.' A purchase or exchange of real estate by an in- fant is not void, but only voidable at his option.^ The fact that the real estate has been intermediately conveyed to an innocent third party, does not by itself preclude the infant from avoiding the deed. Infancy is an ascertainable fact of which ' Wh. Con. of Laws, §§ 112, 114, kins c. Jenkins, 12 Iowa, 195 ; Dixon w. 259. Merritt, 21 Minn. 196. 2 Supra, § 35 ; Co. Lit. 2 b ; Bac. Ab. « Pollock on Cont., Wald's ed. 1881, Inf., i. 3 ; Irvine v. Irvine, 9 Wal. p. 38, citing Zouch v. Parsons, 3 Burr. 617 ; Spencer <•. Carr, 45 N. Y. 406 ; 1794; Allen v. Allen, 2 Dr. k W. 307. Skinner v. Maxwell, 66 N. C. 45. 6 PoUock on Gout., iit supra. ' Madden v. White, 2 T. R. 159. ' Slater v. Brady, 14 Ir. C. L. 61. * Knotts V. Stearns, 91 U. S. 638 ; B Co. Lit. 2 6, 51 6 ; Bac. Ab. In- Tunison i-. Chamblin, 88 111. 378; fancy, i. 3 ; Knotts u. Stearns, 91 U. S. Johnson a. Rockwell, 12 Ind. 76 ; Jen- 638. 74 CHAP. II.] INFANTS. f§ 47. notice, with due diligence, may be taken, and if there be a hi8s, it must fall on those who have taken title carelessly.' Avoidance of a deed of real estate after the infant has come of age, may be inferred from his conveying such real estate to a third party, in all cases in which the infant has remained in possession or in which (he not remaining in possession), by the lex rei sifee, a party out of possession can make a good deed of real estate without re entry.'' § 46. Whether a disaffirmance of part of a contract is a disaffirmance of the whole, depends upon its divisi- Djgaffirm- bility. Ordinarily, however, when the ground of anceofpart "' . . , . , , is disafflrm- disaffirmance goes to incapacity, this pervades and auceof discredits the entire contract.' But an infant, when ^ ° '^• rescinding a contract to work for a term of years, may recover on a quantum meruit for his services rendered.^ § 47. As we will hereafter see more fully, when a contract is executory on both sides, a rescission by the infant cotnpensa- relieves the other party from the duty of perform- *•"? "°V^" y , J r quired for ance.' When it is executory on the part of the what has adult, but executed on part of the infant, and the wasted la infant rescinds, he may recover back from the adult infancy. what he has paid.^ According to Chancellor Kent,' "If an infant pays money on his contract, and enjoys the benefit of it, and then avoids it when he comes of age, he cannot recover back the consideration paid. On the other hand, if he avoids an executed contract when he comes of age, on the ground of infancy, he must restore the consideration he has received."' It is true that it has been held that a female infant, plainly such, who agrees to release dower for a consideration, and ' Ibid. ; Dunbar u. Todd, 6 Johns. Medbury „. Watson, 7 Hill, 100 ; see 357 ; Myers v. Saunders, 7 Dana, 506; Hoxie o. Lincoln, 25 Vt. 206. Somers v. Pumphrey, 24 Ind. 231. ' 2 Kent's Com. 240. 2 See infra, § 61. * See Cresinger o. Welsh, 15 Ohio, 3 See infra, §§ 114 et seg. 156. That an infant, when disafiirm- * Gaflfney v. Hayden, 100 Mass. 137, ing a contract, is only compelled to re- and other oases cited supra, 42, infra, store the consideration when able tp §§ 51, 711. do so, and that when the money is ex- 5 Supra, § 2 ; infra, § 50 ; Tyler on pended, lie may avoid without refund- Inf. 2d ed. § 35. ing, see Reynolds v. McCurry, 100 HI. 6 Millard v. Hewlett, 19 Wend. 301 ; 356. 75 § 47.] CONTRACTS. [CHAP. II. afterwards disaffirms the release, cannot be compelled to pay back money received by her for the release.' But the riglit rule is, that where there has been a fair bargain, the benefit of which has been received by the infant, then, if he repu- diates the contract when he comes of age, he should return what he has received, if retained by him.^ If he has sold goods, and been paid for them, he will not, on retaining the price, be assisted in recovering them back.^ But if he no longer retains the specific money or other consideration ob- tained by him from the adult, this having been wasted by him during infancy, then, if when he comes of age he repu- diates tlie transaction, he cannot be compelled to return the equivalent of what he has received.^ In such case payment or tender of the amount is not necessary to enable him to avoid the contract, and recover back the thing sold.^ The reason of the distinction may be this: A party doing busi- ness with an infant must take the risk of the infant wasting the goods or money obtained by him, and that this may be likely to be the case, the adult ought to infer from the very fact of infancy. If the money or goods received are wasted, and the infant, on coming of age, should say, " I will not keep to this bargain, but repudiate it," then the other party must bear the loss as a consequence of his improvidence. It would be otherwise, as we will see,^ as to things remaining in the infant's hands after he comes of full age. The very reten- tion of such things is a ratification of the bargain.' E.e- 1 Shaw r. Boyd, 5 S. & R. 303 ; see Ala. 446 ; Hill v. Anderson, 5 Sm. & M. Walsh U.Young, 110 Mass. 39(j ; Doe 216; Smith v. Eyans, 5 Humph. 70, ( . Abernethy, 7 Blackf. 442. and other oases cited, Tyler on Inf. 2d 2 Infra, § 48a. See Williams o. ed. § 37. Brown, 34 Me. 594; Shaw D. Cufiin, 58 » Dana v. Stearns, 3 Cush. 372; Me. 254 ; Riley v. Mallory, 33 Conn. Chandler v. Simmons, 97 Mass. 508 ; 201 ; Oliver r. McClellan, 21 Ala. 673 ; Bartlett r. Drake, 100 Mass. 174 ; over- Kerr v. Bell, 44 Mo. 120. ruling dicta in Bartlett o. Coates, 15 ' Badger v. Phinney, 15 Mass. 363. Gray, 445 ; Badger y. Phinney, 15 Mass. « Price .'. B'-urman, 27 Vt. 268; Ed- 359. garton v. Wolf, 6 Gray, 456 ; Gibson i'. ^ Infra, § 48 a. Soper, 6 Gray, 279 ; Chandler v. Sim- ' See this distinction accepted in mons, 97 Mass. 508 ; Green v. Green, 7 Bartlett c. Drake, 100 Mass. 174 ; Hun, 492, 69 N. Y. 553 ; Dill v. Bowen, Walsh v. Young, 110 Mass. 396 ; and 54 Ind. 204 ; Manning v. Johnson, 26 cases infra, § 48. 76 CHAP. II.] INFANTS. D 48. taining and enjoying the fruits of a bargain, as we will see,' ratifies the bargain. But if the fruits of the bargain are lost, before majority, there can be no such ratification. § 48. Where an infant, when within a few months of his majority, entered into a business arrangement, in „ , . , , 1 J i- But cannot carrying on or which a store was leased, a proportion inequitably of whose rent was paid by the infant, he receiving blck!^"^ the profits, it was held in England that he could not recover back, at his majority, the sum paid, without putting the other parties in statu quo.^ And an infant paying a pre- mium to enter into partnership cannot, after enjoying the profits of the partnership, recover back the premium f nor can an infant, when repudiating a mortgage given by him as part payment of land purchased by him, retain the land,^ unless the funds received by him as a consideration are no longer in his power." The principle thus stated is substan- tially that expressed by Lord Mansfield,^ that "the privilege ' See infra, § 59. 2 Holmes v. Blogs, 8 Tafint. .^08 ; 2 Moore, 552 ; see Welch p. Welch, 103 Mass. 562 ; and see infra, §§ 723 et seq. 752. 3 Taylor ex parte, 8 D. M. G. 254. * Roberts u. Wiggin, 1 N. H. 73 ; Curtiss V. McDougal, 26 Ohio St. 66. As authorities to the effect that the plaintiff, when repudiating a purchase, must restore the consideration he re- ceived before he can recover back what he paid, see Locke v. Smith, 41 N. H. 346 ; Hubbard v. Cummings, 1 Greenl. 13 ; Carr v. Clough, 26 N. H. 280 ; Heath v. West, 28 N. H. 104 ; Favr v. Sumner, 12 Vt. 28 ; Taft v. Pike, 14 Vt. 405 ; Weed v. Beebe, 21 Vt. 498; Edgerton v. Wolf, 6 Gray, 453 ; Bartlett V. Cowles, 15 Gray, 445 ; Bartholomew u. Fennemore, 17 Barb. 428 ; Strain v. Wright, 7 Ga. 568 ; Williams «. Norris, 2 Littell, 157 ; Smith u. Evans, 5 Humph. 70 ; Betts v. Carroll, 6 Mo. Ap. 518 ; Hill V. Anderson, 5 Sm. & M. 216. But this will not be required if there was any taint of unfairness or illegality in the conduct of the opposite side. Cope u. Overton, 10 Bing. 252 ; Price V. Furman, 27 Vt. 268 ; Gibson v. Soper, 6 Gray, 279 ; Walsh v. Young, 110 Mass. 396 ; Stoolfoos v. Jenkins, 12 S. & R. 399 ; Leuhart v. Ream, 74Penn. St. 59 ; Urban v. Grimes, 2 Grant Cas. 96. That an infant can recover back the price only (when practicable) on re- storing the thing purchased, see Riley V. Mallory, 33 Conn. 201 ; Kerr v. Bell, 44 Mo. 120. In Chandler v. Simmons, 97 Mass. 508, and Bartlett o. Drake, 100 Mass. 174, it was held that if an infant has spent the money received by him for a conveyance of real estate, he could avoid the conveyance without repaying the amount. To same effect as to personal property, see' White o. Branch, 51 Md. 210. This distinction is more fully noticed, supra, § 47. - Walsh u. Young, 110 Mass. 396. ^ Zouoh V. Parsons, 3 Burr. 1794. 77 §48a.J CONTKACTS. [chap. ir. is given as a shield and not as a sword ;" and " that it never shall be turned iiito an offensive weapon of fraud or injustice." This maxim is adopted by Cliancellor Kent.' On the other hand, money advanced by an infant for business purposes can he recovered back when the infant retained no benefit from the contract.^ And money paid by an infant on an unexecuted contract can ahvays be recovereil back.^ § 48 a. We may, therefore, hold that where an infant repu- diates, on arriving at age, a contract by which he canredaim has obtained assets he has in infancy wasted, he can- ed coinraet "°* ^^ made to pay an equivalent for such assets; while, on the other hand, if he retains the assets, but disaffirms and repudiates the contract, the other contracting party can reclaim these assets, though he can sustain no action against the infant for any deterioration they may have suf- fered in the infant's hands. ^ In case, however, the goods have ' 2 Com. 240. 2 Cope ( . Overton, 10 Bing. 252 ; 3 Moore & S. 738. 3 Kobinson o. Weeks, 56 Me. 102 ; Medbury v. Watrous, 7 Hill, 110. In Ruchizky r. De Haven, 97 Penn. St. 202, it was held that an infant's exe- cntors could recover from stock-brokers money advanced by him to the.m on a gambling stock speculation which they engaged in on his account. The court said that "if the parties had been sui juris, the contract having been fully executcil, we would not interfere to help either party. But such is not the case ; for, as we have said, Ruchizky was a minor, and hence was entitled to legal protection and guardianship. It is said they knew not that he was a minor ; hut what does that matter ? He was, nevertheless, an infant, and their want of knowledge did not make him sui juris. . . . The defendants have endeavored to interpose for their protection the doctrine that where an infant has executed a contract, and has enjoyed the benefit of it, and after- 78 wards, on arriving at age, seeks to avoid it, he must first restore the con- sideration he received ; that he cannot have the benefit on the one side with- out restoring the equivalent on the other. The rule may, and certainly does, apply in certain cases, but, as a general rule, it is unsound. Its appli- cation was refuseil in Shaw v. Boyd, 5 S. & R. 309 ; and as was said by Mr. Justice Bailies, in Abell v. Warren, -i Vt. 149, ' If this be true, tlien the pri- vilege of infants is not worth possess- ing.' But all this is foreign to the case in hand, for we have here a contract condemned by public policy — a con- tract that is not merely voidable, but void ab initio. It follows that nothing can be imposed on the infant as a con- dition of rescission." * Boody V. McKenney, 23 Me. 525 ; Fitts u. Hall, 9 N. H. 441 ; Price v. Furmau, 27 Vt. 2B8 ; Whitcomb v. Jos- lyu, 51 Vt. 79 ; Badger v. Phinney, 15 Mass. 359 ; Kitchen u. Lee, 11 Paige, 107 ; Henry v. Root, 33 N. Y. 526 ; Strain v. Wright, 7 Ga. 568 ; Jefford v. CHAP. II.] INFANTS. [§ 50. been wasted or parted with by the infant, no action can be maintained against him for not redelivering them to the vendor.' § 49. An infant who takes property on which are certain burdens, cannot enjoy the property relieved from the burden. An infant lessee, for instance, who holds beneflt"^^ until he is of full age, becomes then liable for back "J'/^'g^^'^'' arrears, though accumulated during his minority.^ And an infant stockholder in a railway company who holds his shares, enjoying the benefits attached to them, is bound, if he does not throw them up when of full age, to meet any obligations growing out of the property so held.' § 50. As has been already incidentally noticed,^ an execu- tory contract, i. e., one which requires the action of a court to enforce if performance be refused, cannot, between"" unless for necessaries as hereafter noticed, be en- ''^'■'y ' and exe- forced against a party who entered into it during cuted con- infancy, supposing that there was no ratification at majority." An executed contract remains in force until dis- affirmed ; an executory contract requires affirmatory action for its establishment." The executed contract requires the action of a court to disturb it ; the executory contract the action of a court to enforce it. The principle pervading both lines of cases is, that a bargain made by an infant, he should have the option of disaffirming when arriving at full age. The dis- tinction between the two is, that, in reference to the executed Ringgold, 6 Ala. 544 ; Manning c/. apply to the case of shares in a com- Johnson, 26 Ala. 446. pany not having any permanent prop- ' Benj. on Sales, 3d Am. ed. § 22 ; erty ; but it seems tolerably plain that Boody V. MoKenney, 23 Me. .525 ; Price if necessary, the general principles of !;. Furman, 27 Vt, 268; Whitcomb u. the law of partnership would, and that Joslyn, 51 Vt. 79 ; supra, § 47. the same results would follow, except 2 Kettle i>. Eliot, Rolle Ab. i. 731, it may be as to suing the shareholder K. ; 2 Bulst. 69; Cro. Jac. 320. See while still a minor." See supra, ^ 40. Evelyn v. Chichester, 3 Burr. 1717. * Supra, § 47. 3 Newry & Ennisk. R. R. v. Coombs, ' Hunt v. Peake, 5 Cow. 475 ; Wilt 3 Ex. 565 ; Northwestern R. R. v. Mc- u. Welsh, 6 Watts, 9. Michael, 5 Ex. 114. Of these cases Mr. « Williams v. Moor, 11 M. & W..256 ; Pollock says: "It may perhaps be Conklin v. Ogborn, 7 Ind. 553 ; Blank- doubted whether the reason on which enship v. Stout, 25 111. 132. these authorities are grounded would 79 § 52.] CONTRACTS. [CHAP. II. contract, he then appears as the actor in the suit, bearing the burden of proof, if he wish to set aside the arrangement ; while, in reference to the executory contract, he appears as defend- ant, the burden being on the party seeking to make good against him the contract. — When a contract is executed by an infant, and a title vests in him, this cannot afterwards be disturbed, nor can he, while holding the property, recover back what he paid for it.' And " if an infant buys an article which is not a necessary, he cannot be compelled to pay for it; but if he does pay for it during his minority, he cannot, on attain- . ing his majority, recover the money back."^ Infant's § ^^" When an executory contract is disaffirmed disafBrm- by an infant, the other contracting party is released anceofexe- , -t mi o i. ./ cutorycon- irom all liability, ihe agreement becomes a nullity, lieves'other ^^^ when one party is not bound, the other party is P^'"'5'' ., not bound. ^ Where, however, an infant, on arriving though it ' ' ' 3 may sub- at majority, repudiates a contract of labor for a term ject him to .'','" ^ , . , a quantum ot years, he may sue his employer on a quantum meruit. •. r • i j .1 meruit tor services rendered.* § 52. Where an infant cannot be made liable on a contract Infant can- ^J ^ ^^^^ *-•" ^^^ Contract, he cannot be made liable not be by suing him in tort." Tiius, an infant innkeeper is made liable ./ o 1 r on contract not liable for losses sustained by his guests.^ Even ing in tort, an actioii does not lie against him for deceit in af- ' Supra, § 35. 377 ; Ray v. Haines, 52 111. 485 ; for 2 Turner, L. J., in Taylor ex parte, analogous cases see infra, §§ 711 el seq. 8 DeG. M. & Q. 254; Benj. on Sales, ^ Jennings v. Randall, 8 T. R. 335 ; 3d Am. ed. § 24, citing Robinson 0. Price i'. Hewett, 8 Ex. 146; Burley v. Weeks, 56 Me. 102 ; Breed v. Judd, 1 Russell, 10 N. H. 184 , Prescott r. Nor- Gray, 456 ; Harney v. Owen, 4 Blackf. ris, 32 N. H. 101 ; West i. Moore, 14 337 ; Bailey n. Bamberger, II B. Mon. Vt. 447 ; Tilson ■■. Spear, 38 Vt. 311 ; 113; Smith u. Evans, 5 Humph. 70 ; Merriam j). Cunningham, 11 Gush. 40 ; Hill u. Anderson, 5 Sm. & M. 216 ; Conroe v. Birdsell, 1 Johns. Gas. 127 ; Cummings v. Powell, 8 Tex. 801. See, People v. Kendall, 25 Wend. 399 ; however, Riley t. Mallory, 33 Conn. Schenck v. Strong, 1 South. 87 ; Stool- 201, where it was held that an infant, foos v. .Jenkins, 12 S. & R. 400; Wilt on returning a tiling purchased, could u. Welsh, 6 Watts, 9 ; Penrose n. Cur- recover what he paid for it. ran, 3 Rawle, 351. 3 See supra, §§ 2, 47. 6 Crosse v. Androes, 1 Roll. Ab. 2 D. < Supra, § 42; Sloan v. Hayden, 110 pi. 3. Mass. 141 ; Whitmarsh v. Hall, 3 Denio, 80 CHAP. II.] INFANTS. [§53. firming himself of full age, and thereby defrauding the plain- tiff.^ ISTor does an action lie against him for deceit or false representation in sale of goods.^ Nor does the fact that the infant has made such representations estop him from after- wards setting up infancy f nor, in any action on the contract, does the fraudulent misrepresentation afford any answer upon equitable grounds to the pica of infancy.^ § 53. Trover, not being based on contract, is not barred by a plea of infancy.' The same rule applies to replevin.^ That an infant cannot be made liable for tort for in- as'to™lts iuries sustained by a horse hired by him, but driven not based '' •' ■ 1 • -I-, on contract. beyond the limit agreed upon, is asserted in Penn- 1 Pollock on Cont. 3d Eng. ed. 74 ; Johnson v. Pie, 1 Sid. 258 ; 1 Keble, 905 ; aff. in Adelphia Loan Ass. u. Fairhurst, 9 Ex. 422 ; Stikeman v. Dawson, 1 DeG. & S. 113 ; Brown v. MoCune, 5 Sandf. 224 ; an action, however, on contract. See, contra, Fitts u. Hall, 9 N. H. 441 ; Ecksteen v. Frank, 1 Daly, 334 ; Hughes (.. Gallans, 10 Phila. 818 ; 31 Leg. Int. 349 ; and criticism in Metoalf on Con- tracts, 51. In 1 Am. Lead. Cas. (4th ed.) 262, Fitts u. Hall is disapproved on the ground that "the representa- tion, by itself, was not actionable, for it was not an injury, and the avoid- ance of the contract, which alone made it so, was the existence of a perfect legal right on the part of the infant." This was adopted in Benj. on Sales, 3d Am. ed. § 22, where the question is examined in detail. The question is left open in Merriam u. Cunningham, 11 Cush. 43. See infra, § 1047. 2 DeRoo V. Foster, 12 C. B. N. S. 272; Prescott V. Norris, 32 N. H. 101 ; Eaton t: Hill, 50 N. H. 235 ; VPest v. Moore, 14 Vt. 447 ; People v. Kendall, 25 Wend. 399 ; Heath v. Mahoney, 14 N. Y. Sup. Gt. 100. 3 Burley v. Russell, 10 N. H. 184 ; Merriam v. Cunningham, 11 Cush. 40 ; and cases cited infra, § 74. VOL. I. — 6 * Leake, 2d ed. 546, citing Bartlett V. VPells, 1 B. & S. 836 ; DeRoo v. Fos- ter, 12 C. B. N. S. 272 ; Stikeman u. Dawson, 1 D. & Sm. 90 ; Burley ;;. Rus- sell, 10 N. H. 184 ; Merriam u. Cun- ningham, 11 Cush. 40 ; Stoolfoos g. Jenkins, 12 S. & R. 399. But see Mat- thews V. Cowin, 59 111. 341 ; Pergin v. Sutclifie, 4 MoCord, 389 ; Kilgrove v. Jordan, 17 Tex. 349. In Stoolfoos v. Jenkins, Tilghman, C. J., said : "If an infant, wishing to engage in trade or commerce, should purchase goods on credit, representing himself to be of full age, this, though extremely repre- hensible, would not make the contract obligatory. So, if, under a similar re- presentation, he should borrow money, and give his bond for it, payment would not be compelled." " Vasse V. Smith, 6 Cranch, 226 ; Lewis V. Littlefleld, 15 Me. 233 ; Wal- lace ... Moss, 5 Hill (N. Y.), 391 ; Campbell f. Stakes, 2 Wend. 137 ; Schenck v. Strong, 1 South. 87 ; Strain V. Wright, 7 Ga. 568 ; though see in Pennsylvania, Wilt v. Welsh, 6 Watts, 9. * Badger v. Phinney, 15 Mass. 364 ; Boyden v. Boyden, 9 Met. 521 ; Jeftord c. Ringgold, 6 Ala. 544. 81 § 53.J CONTRACTS. [CHAP. II. sylvaiiia.' But the prevalent tendency is to affirm such lia- bility.^ And although an infant cannot be made liable in tort for overriding a hired horse,' yet if he hurt a horse in doing something for which it was not hired to him (e.^., jumping and not riding, the horse being refused for jumping), he is liable in tort for the injiary.^ — The question v\rhether an infant is chargeable in an action for fraudulently obtaining goods with intention not to pay for them, is one of much difficulty. On the one hand, it may be argued that when capaz doli he is in- dictable, under such circumstances, for obtaining property by false pretences:^ and if criminally indictable for the fraud, he is civilly responsible in a suit for tort.* On the other hand, it may be "said that as in most cases an infant doing business does not disclose his age, to make him liable in all cases of non-disclosure would do away with the protection of infancy altogether. But this is not so. Criminal prosecutions for false pretences, and civil suits for fraud, could only be sus- tained in cases where there was nothing in the infant's appear- ance and surroundings to give notice of his infancy. The eases, therefore, in which such responsibility would attach, are comparatively rare; and the protection given to infancy, as a rule, is not likely to be diminished if a person who, in ayipearance, is of full age, who is cajpax doli, and who is per- mitted by his guardians to do business on his own account, is held responsible for tort. At the same time there is a strorjg current of authority to the effect, that unless there is some special damage in the way of injury by the infant's false pre- tence, and unless that false pretence was in the nature of a false token, calculated, under the circumstances, to deceive even the circumspect, he cannot be made liable for a false ' Wilt V. Welsh, 6 Watts, 9 ; Penrose Wiley, 23 Vt. 355 ; Campbell v. Stakes, / . Curran, 3 Rawle, 351. 2 Weud. 137. 2 Ray V. Tubbs, 50 Vt. 688 ; Horner 6 ^i^, Cp_ l, gti^ g^_ § ii4g_ o. Thwing, 3 Pick. 492 ; Campbell v. " B'itts v. Hall, 9 N. H. 441 ; Wallace Stakes, 2 Wend. 137. f.Morse, 5 Hill, 391; Hughes v. Gallans, 3 Jennings v. Rundell,' 8 T. R. 335. 10 Phila. 618 ; Mathews v. Cowan, 59 « Burnard v. Haggis, 14 C. B. N. S. 111. 341 ; see Shaw „. Coffin, 58 Mc. 45; Horner v. Thwing, 3 Pick. 492; 254. Eaton V. Hill, 50 N. H. 235 ; Towne i. 82 CHAP. II.J INFANTS. [§ 55. affirmation of age.' But for a purely noncontractual tort an infant is liable, supposing he is over fourteen years of age f and between seven and fourteen, he is liable, on proof of malice, the burden of proof being on the plaintifi? And even when under seven years, his estate may be liable for negligent injuries sustained through its instrumentality.* § 54. Even the Infants' Relief Act, which in England miikes absolutely void an infant's contracts, does not ^0^ jj^ preclude a party from recovering in equity from an tie in equi- infant property that he has obtained by a false repre- store things seiitation of his age ;" nor, in equity, can an infant lentiy^ob- who has had money paid him on the faith of his twined. statement that he is of full age, recover, on his majority, such money a second time from the party from whom it was ob- tained.' And it has been further held, that a minor who holds himself out as of full age, and as such becomes a bank- rupt trader, cannot subsequently contest the bankrupt decree on the ground of iiis infancy.'' § 55. In case of the death of an infant before reaching ma- jority, his representatives may disaffirm contracts Priyiesmay made by him, subiect to the conditions above disaffirm contr£LCt stated. Thus his executors may refuse to fulfil an executory contract which he may have made f and his heirs may by conveyance, or other method of repudiation, dis- ' Johnson v. Pie, 1 Lev. 169 ; Price ' See Wh. Cr. L. 8th ed. §§ 67 i-( V. Hewett, 8 Exch. 146 ; Brown u. Mc- seq. Cune, 5 Sandf. 224; 1 Am. Lead. Cas. •■ McGee v. Willing, 31 Leg. Int. 37. 117, 118 ; 1 Parsons on Cont. 317. That an infant is liable in cases of non- ^ Lewis u. Littlefield, 15 Me. 233 ; contractual tort, see furtlier Prescott Prescott V. Norris, 32 N. H. 101 ; Eaton .-. Norris, 32 N. H. 101. c. Hill, 50 N. H. 235 ; Loop v. Loop, 1 » Pollock on Contracts, 3d Eng. ed. Vt. 177 ; Humphrey v. Douglass, 10 75, citing Bartlett v. Wells, 1 B. & S. Vt. 71 ; Green u. Sperry, 16 Vt. 390 ; 836 ; Clarke v. Cobley, 2 Cox, 173 ; Baxter v. Bush, 29 Vt. 465 ; Walker v. Stiteman v. Dawson, 2 DeG. & S. 901. Davis, 1 Gray, 506 ; Sikes o. Johnson, ^ Cory v. Gertoken, 2 Madd. 40. 16 Mass. 389 ; Brown v. Maxwell, 6 ' Watson ex parte, 16 Ves. 265 ; Hill (N. Y.), 592 ; Wilt ■;. Welsh, 6 Lynch ex parte, L. R. 2 Ch. § 227. Watts, 9 ; Hughes v. Gallans, 31 Leg. * Supra, § 33 ; Stone v. Wythipol, Int. 349 ; Barham i/, Turbeville, 1 Cro. Eliz. 126 ; see Euchisky v. De Ha- Swan, 437. ven, cited supra, § 48. 83 § 56.] CONTRACTS. [CHAP. II. affirm prior conveyances made by him.' The disaffirmance, however, must be made by heirs, if the contract relate to real estate, or by executors, if to personalty. His guardian is not his representative for this purpose.'^ The privilege is personal.' § 56. No matter how numerous may be the ratifications of a contract by an infant, and how closely these may cationfuu press upon his majority, they are without effect, age IS rpj party to whom the ratification is imputed must necessary. t j r be of full age, or otherwise it will be inoperative.^ On the other hand, we must remember that an infant can avoid a contract during infancy, though it is doubtful, as we have seen, whether such avoidance is otherwise than provi- sional until he is of full age.* As to real estate, full age is necessary, it is said, to disaffirmance.^ It must also be remem- bered that, as is said by high authority, " voidable means not invalid until ratified, but valid until rescinded."'' Non-avoid- ance of a contract at full age, therefore, when the contract is brought to the party's notice, is, if intelligent and deliberate, a ratification.* Undoubtedly much confusion has arisen from the use, in this relation, of the word " ratification," as if it involved the assumption, that prior to such " ratification" the supposed " contract" was not existent. But this is a wrong meaning of the term. A contract made by an infant, sup- posing him to have the mental power to do business, and sup- posing that he and the other contracting party agree as to one and the same thing to be done, binds him unless it is dis- affirmed by him when he reaches full age. When he reaches ' Whittingliam's Case, 8 Co. 42 b. s Shipman v. Hortoii, 17 Conn. 481 ; i Oliver v. Houdlet, 13 Mass. 240. Stafford v. Roof, 9 Cow. 626. In Taylor v. Johnson, 46 L. T. N. S. 219, : Pollock on Cont. (Wald's ed.) 42, it was ruled that a gift made by an in- citing Lord Colonsay, in re Overeud, fant and perfected by delivery cannot, Gurney & Co., L. R. 2 H. L. 375. after his death, be set aside, in absence s Supra, ^ 28; Forsyth v. Hastings, of proof of fraud or undue influence, 25 Vt. 646. That affirmance must take by his personal representatives. place before action brought, see Thorn- 3 Towle >: Dresser, 73 Me. ton v. Illingworth, 2 B. & C. 824 ; Thing ■* Mete, on Cont. 55, and cases cited, c.Libbey, 16 Me. 55 ; Conn v. Coburn, 7 infra, §§ 51 et seq. N. H. 372; Hale v. Gerrish, 8 N. H. 5 Supra, § 34. 374 ; Aldrich v. Grimes, 10 N. H. 198 ; Goodridge v. Ross, 6 Mete. 487. 84 CHAP. II.j INFANTS. [§ 57. full ao;e, and, being conscious of the existence of the contract, deliberately declines to repudiate, it may be enforced against him, dating not from his majority, but from the period of its original inception.' The same distinction applies to tlie con- tracts of lunatics, mutatis mutandis.'^ According to Mr. Chitty :^ " In the case of a continuing contract, which is voidable only by an infant on his coming of age, he is presumed to ratify such contract; if he do not, wilhin a reasonable time after he has attained his full age, give notice of his disaffirmance of, or otherwise reject, such contract; unless, that is, the other party dispense with such disaffirmance."* The distinction is this: A continuing contract, unless repudiated, continues in force. On the other hand, while the same principle applies to executory contracts, a refusal to perform is a disaffirmance, and has to be overcome by proof of actual prior ratitioation.' § 57. Supposing that there be no fraud on the part of the other contracting party, it is not necessary to the validity of an affirmance, that the person making ofTaTvls^ it should be aware of its legal effects. He may °'^' neces- ^ J sary. have as little knowledge of these effects the day after as he had the day before he comes of age. But the line drawn by the law is necessarily arbitrary; and, as soon as he becomes of age, a knowledge of the legal character of his acts is imputed to him. It is true that there have been intima- tions that a ratification will not be recognized by the courts ' Supra, § 28. s i Cont. lltli Am. ed. 216. 2 Infra, § 114. As sustaining tlie * To this is cited Holmes i-. Blogg, 8 text, see Gibbs v. Morrill, 3 Taunt. Taunt. 35. See to same effect cases 307 ; Irvine e. Irvine, 9 VPall. 617 ; cited, supra, § 28 ; infra, § 58. Boody V. McKenny, 23 Me. 517 ; Tucker 5 fnfra, § 63 ; Hoit v. Underbill, 9 ... Moreland, 10 Pet. 58 ; Heath «.West, N. H. 436, 10 N. H. 220 ; Thompson Harmer u. Killing, 5 Esp. 103 ; ^ See Turner <,-. Gaither, 83 N. C. Thing u. Libbey, 16 Me. ftl ; Smith u. 357; and inf'rn, § KiS. Mayo, 9 Mass. 64 ; Cartin h. Patton, 11 ' Boody v. McKenny, 23 Me. .517; S. & R. 311 ; Hinely u. Margaritz, 3 Boyden v. Boyden, 9 Mete. 519 ; Ald- Barr, 428; Norris i'. Vance, 3 Rich, rich v. Grimes, 10 N. H. 194; Delano (S. C.) 168; Febrow i'. Wiseman, 40 )■. Blake, 11 Wend. 85 ; Henry w. Root, Ind. 148 ; Turner v. Gaither, 83 N. C. 33 N. Y. 526 ; Pursley v. Hays, 17 367. * Iowa, 311 ; Deason l\ Boyle, 1 Dana, 2 Benj. on Sales, 2d ed. § 27 ; Mete. 45 ; Alexander v. Heriot, 1 Bailey Eq. on Conti 59 ; Stevens f. Lynch, 12 243 ; Cheshire «. Bai-rett, 4 McCord, East, 38 ; Morse .-. Wheeler, 4 Allen, 241. 570; Taft ,.. Sergeant, 18 Barb. 320. s Supra, § 56; Smith v. Low, 1 At- That mistake as to law does not usually kins, 489 ; Thing v. Libbey, 16 IVIe. 55. avoid, see infra, § 198. 86 CHAP. II.] INFANTS. [§ 60. of stock on which there is a burden ;' witli regard to the holding and using of cattle -j^ and with regard to a settlement of indebtedness acquiesced in "for several years.' A convey- ance in fee, after majority, reciting and providing for a mort- gage of the same land made during minority, is a ratification of the mortgage.* Acquiescence for a series of years in a sale cannot be excused on the ground of forgetfulness.' But mere temporary retention of goods is not sufficient to sustain the in- ference of ratification ;' nor will an assumption of a debt unless specifically pointed to such debt.^ Continuance by a servant in a contract of service, after he is of full age, is a ratification of the contract.' § 59. A continuance, after majority, in possession of land purchased during minority may ratify ;' and so may the payment of rent on a lease taken during finuance"i"n minority ;'" and the carving out of inferior interests, possession, retaining the control of the title." § 60. A mere non-disaflirmance, after majority, of ■,,.., 1 11- Silence by a vendee 8 title, under a conveyance made during vendor minority, does not operate to affirm the conveyance, ^ountto unless the period of statutory prescription is reached;'^ estoppel. ' Western R. R. u. McMiohael, 5 Ga, '" Supra, § 58. 114. " See Tucker v. Moreland, 10 Pet. 2 Robinson !>. Hoskins, 14 Bush, 393 ; 58; Hubbard i. Cummings, 1 Greenl. see Miller v. Sims, 2 Hill, S. C. 479. 11 ; Eagle Co. v. Lent, 6 Paige, 635 ; s Thomasson v. Boyd, 13 Ala. 419. Williams v. Mabee, 3 Halst. Ch. 500 ; * Story y. Johnson, 2 Y. & C. 607 ; Hoyle ... Stowe, 2 Der. & B. 320 ; cf. Boston Bk. v. Chamberlain, 15 Mass. Holmes v. Blogg, 8 Taunt. 35. 220 ; see Williams u. Mabee, 3 Halst. '« Tucker v. Moreland, 10 Pet. 58 ; Ch. 500. Irvine .-. Irvine, 9 Wall. 617 ; Boody 5 Tunison v. Chamblln, 88 111. 378. v. McKenny, 23 Me. 523 ; Emmons -■. That part payment is not a ratification, Murray, 16 N. H. 394 ; Kline v. Beebe, see infra, § 63. 6 Conn. 494 ; Jackson c. Carpenter, 11 6 Todd u. Clapp, 118 Mass. 495. Johns. 539 ; Bool ^. Mix, 17 Wend. 7 Tobev V. Wood, 123 Mass. 88. 120 ; Drake u. Ramsay, 5 Ohio, 251 ; 8 Spicer v. Earl, 41 Mich. 291. As to Cresinger v. Welsh, 15 Ohio, 193 ; Doe repudiation of contract, see supra, § 51. v. Abernethy, 7 Blackf. 442 ; Hastings 9 Dana v. Coombs, 6 Greenl. 89 ; u. Dollarbride, 24 Cal. 195 ; Prout u. Kline v. Beebe, 6 Conn. 494 ; Henry v. Wiley, 28 Mich. 164 ; Norris ;'. Vance, Root, 33 N. Y. 526 ; Lynde ... Budd, 2 3 Richards. S. C. 164; Wallace o. Paige, 191 ; see Bigelow v. Kinney, 3 Latham, 52 Miss. 291. Vt. 353. 87 § 61.J CONTRACTS. [CHAP. II. though it is otherwise, if, after arriving at twenty-one, the vendor sees, without notice, the vendee put valuable improve- ments on the propertj' conveyed". Such silent acquiescence on his part amounts to an estoppel, and precludes him from after- wards invalidating the sale.^ And an enjoyment of the pur- chase-money for a long series of years, with tacit encourage- ment to the vendee to settle permanently, operates as a con- iirmation,^ especially when the vendee has gone on without molestation to make improvements on the land.^ The same rule ajiplies to all contracts. But lapse of time does not pre- clude rej)udiation when there has been no estoppel or interme- diate ratification by enjoyment.* § 61. An infant vendor's deed of real estate is disaffirmed by the execution, after his majority, of a second second""^ deed, inconsistent with the first, to a third party; flrmsflrst*^" ""'"' ^'^ eftect this disafiirmance, is it necessary, that the infant should re-enter on the lands. The second deed, however, must be in express conflict with the first.' But to make tlie second deed eftectual as against the first vendee, the grantor, in jurisdictions where this is required, must be in actual or constructive possession, and must not be estopped by laches from asserting his rights." Tlie question whether there must be a re-entry depends upon whether the lex rei site sustains deeds from parties in merely constructive pos- session.' It would be unfair, Iiowever, to treat a second deed, made after majority, as an avoidance of a first deed, made during minority, unless the vendee under the first deed has notice of the vendor's avoiding act. If the vendor and the ' Whart. on Ev. § 1144 ; Big.-low on < Gillespie v. Bailey, 12 W. Va. 70. Est. 3d ed. 337 et serj. ; Kerr on Fraud, ^ Eagle Fire Co. v. Lent, 6 Paige, 296 ; Gregory v. Mighell, IS Ves. 32S ; 636 ; Cresinger v. Welsh, 15 Ohio, 156 ; Jones r. Phoenix Bank, 4 Seld. 215 ; Hovle i-. Stovve, 2 Dev. & B. 320 ; see Wallace v. Lewis, 4 Harring. 75 ; Slater v. Brady, 14 Ir. C. L. 61. Wheaton i . East, 5 Yerg. 41. As to « Riggs v. Fisk, 64 Ind. 100. estoppels during infancy, see infra, ' See Jackson «. Carpenter, 11 Johns. § 74 et scq. 539 ; Jackson ;;. Burchin, 14 Johns. ' Richardson u. Boright, 9 Vt. 368 ; 124 ; Bool v. Mix, 17 Wend. 119 ; Mus- Kline !'. Beebe, 6 Conn. 494. tard v. Wohlford, 15 Grat. 329 ; cf. 3 Davis i'. Dudley, 70 Me. 236 ; Cocks Tucker v. Moreland, 10 Pet. 58. V. Simmons, 37 Miss. 183. CHAP. II.] INFANTS. [§ 63. second vendee permit the first vendee to go on and improve, this, with non-notification, may estop them from contesting his title.' § 62. Where an executory contract by an infant is ratified by him conditionally, after he comes of age, the con- y^^^^^ ^^t;, dition must be complied v^ith, in order to enable fleation is . . conditional the ratification to operate.^ A promise to pay when condition able will not be eflective as a ratification without proof of ability.' § 63. We have already adverted to the distinction between executed and executory contracts in this relation.'' An executed or partially executed contract remains in force from the nature of the case, and must be repudiated to be avoided. On principle, also, an executory contract, made during infancy, binds until repudiated ; but a refusal to comply with it, on suit being brought, is a repudiation, and when the other party sues after such repudiation, there must be specific proof of intermediate aflirmance to overcome the proof of repudiation presented by resisting the suit. It must be shown that the defendant, before the suit was brought, aflirmed the contract.* " A mere acknowledgment of the debt, such as would take a case out of the statute of limitations, is not a ratification of a contract must be complied with. Executory contract, if resisted, must be shown to have been ratified. ' Bigelow on Est. 3d ed. 484 et seg. 2 Cole V. Saxby, 3 Esp. 159 ; Thomp- son c. Lay, 4 Pick. 150 ; Proctor y. Sears, 4 Allen, 95 ; Everaon v. Car- penter, 17 Wend. 419. As to condi- tions generally, see infra, § 545 et seq. 3 Chandler v. Glover, 32 Penn. St. 509 ; then see Bobow. Hansell, 2 Bailey, 114, and see infra, §§ 588 et seq. * Supra, § 56. ^Thrupp V. Fielder, 2 Esp. 628; Thornton v. Ellingworth, 2 B. & C. 824; Hale u. Gerrish, 8 N. H. 374; Robbins v. Eaton, 10 N. H. 561 ; Thompson v. Lay, 4 Pick. 48 ; Rogers V. Hurd, 4 Day, 57 ; Wilcox v. Roath, 12 Conn. 550 ; Bigelow v. Grannis, 2 Hill, N. y. 120; Curtiu v. Patton, 11 S. & R. 305 ; Hinely v. Margarita, 3 Barr, 428 ; Fetrow u. Wiseman, 40 Ind. 148 ; Alexander v. Hutcheson, 2 Hawks, 535 ; Ordinary u. Wherry, 1 Bailey, 28 ; Mayer u. McClure, 36 Miss. 389 ; Ferguson v. Bell, 17 Mo. 347. And see to same general eifect. Tucker u. More- land, 10 Pet. 75 ; Robinson v. Weeks, 56 Me. 102; Aldrich v. Grimes, 10 N. H. 194 ; Emmons c. Murray, 16 N. H. 385 ; Morrill v. Aden, 19 Vt. 505 ; Hoxie V. Lincoln, 25 Vt. 206 ; Martin o. Mayo, 10 Mass. 137 ; Chandler v. Simmons, 97 Mass. 871 ; Burnham v. Bishop, 9 Conn. 330 ; Kline v. Beebe, 6 Conn. 494 ; Mil- lard V. Hewlett, 19 Wend. 301 ; Spencer ,;. Carr, 45 N. Y. 406 ; Hoyle v. Stowe, 2 Dev. & Bat. 320. 89 § 64.] CONTRACTS. [CHAP. II. made durino; minority."' But a promise to pay, whether in express words, or inferrible from the terms in which the debt is spoken of, constitutes a ratification.^ There need not, how- ever, be an express promise to pay on demand,' provided the promise involves an express adoption of the debt.* Part-pay- ment, after attaining majority, however, is not a ratification.' — By statute in England, and in several states in this country, a ratification of an executory contract must be in writing.' — When a sale of real estate by an infant is repudiated, and defence taken on suit brought on the contract, strong proof of ratification after majority and before repudiation must be adduced to overcome the repudiation.' § 64. Were an infant not liable for necessaries supplied to him at periods when he is absent from home, or Infant lia- • . , n t i We for DC- Without the support of parents or guardian?, the privilege of minority, designed for his protection, might expose him to cruel wrong. He might have an estate fully adequate to his support ; and yet, as it could not be made available for the payment of necessaries, persons on vvhom he calls to supply him with such necessaries might refuse to supply them, or might furnish them only on exorbitant terms. 1 Parker, C. J., Whitney v. Dutch, 5 Thrupp ^. Fielder, 2 Esp. 628 ; 14 Mass. 457; Wilcox <-. Roath, 12 Robhins r. Eaton, 10 N. H. 561 ; Hinely Conn. 650 ; Goodsell v. Myers, 3 Wend. u. Margaritz, 3 Barr, 428 ; Dunlap v. 479 ; Bigelow v. (Jrannis, 2 Hill, N. Y. Hales, 2 Jones, N. C. 381. 120 ; and see Conklin v. Ogborn, 7 Ind. « See Hartley v. Wharton, 11 A. & 553 ; Murray v. Shanklin, 4 Dev. & B. E. 934 ; Stern v. Freeman, 4 Mete. Ky. 289 ; Dunlap u. Hales, 2 Jones, N. 0. 309. In Hale i: Gerrish, 8 N. H. 374, 381. an admission that the debt was due, 2 Smith V. Mayo, 9 Mass. 62 ; Ford o. and that the other party would get his Phillips, 1 Pick. 202 ; Conaway w. Shel- pay, but refusing to give a. note, was ton, 3 Ind. 334 ; Conklin u. Ogborn, 7 held no ratification. Ind. 553. ^ J Boody v. McKenney, 23 Me. 517 ; 3 Haleu. Gerrish, S'n.H. 376; Whit- Jackson v. Carpenter, 11 Johns. 542; ney r. Dutch, 14 Mass. 460 ; Martini'. Jackson v. Burchin, 14 Johns. 124; Mayo, 10 Mass. 137. Bool v. Mix, 17 Wend. 120 ; Curtin v. ' Hale V. Gerrish, 8 N. H. 374 ; Ben- Patton, 11 S. & R. 517 ; Cresinger v. ham 1'. Bishop, 9 Conn. 330 ; Goodsell Welsh, 15 Ohio, 193 ; and other cases ,: Myers, 3 Wend. 479 ; Bigelow c. cited, 1 Chit, on Con. 11th Am. ed. 219. Granuis, 2 Hill, N. Y. 120 ; Alexander V. Hutcheson, 2 Hawks, 535. 90 CHAP. II.] INFANTS. [§66. Hence it is a settled principle that for necessaries furnished to an infant his estate may be made liable.' § 65. The liability, however, is only for the value of the thinsjs furnished, and not for their price as acrreed ^ " . ' r => But (,jj]y upon by the parties at the tinie.^ Hence a deed given for value, , • i' i i ii ,_ c ■ and not on l>y an iniant to secure the payment oi necessaries account is voidable.' The value is always open to examina- ^ot'e*^ ""^ tion as a question of fact.* § 66. It has been ruled that a negotiable note given by an infant for necessaries is void,' and that a debt of „ , ' Rule as to this class cannot be charged as a balance of an negotiable 1111 • paper. account stated, even though there be a promise proved to pay such balance.' But so far as this involves the position that bills or notes made by infants are always void, it is no longer law. Such paper, even though negotiable, is now held, at common law, voidable only, even though void under statute.'' And it has been held by high authority, that on a negotiable note given by an infant, the plaintiff may re- ' Co. Lit. 172 a ; Wharton v. Mc- Kenzie, 5 Q. B. 60t) ; Burghart v. Hall, 4 M. & W. 727 ; Ryder u. Worabwell, L. R. 3 Ex. Ch. 90 ; Kelly v. Davis, 49 N. H. 187 ; Gordon u. Potter, 17 Vt. 348 ; Hussey v. Jewett, 9 Mass. 100 ; Stone V, Dennison, 13 Pick. 1 ; Breed V. Judd, 1 Gray, 455 ; Shelton u. Pen- dleton, 18 Conn. 417 ; Strong u. B'oote, 42 Conn. 203; Dubose v. Wheddon, 4 McCord, 221 ; Parsons v. Keys, 43 Tex. 557. 8 Locke u. Smith, 41 N. H. 346 ; Earle v. Reed, 10 Met. 387; Price i. Sanders, 60 lud. 310. 3 Martin v. Gale, L. R. 4 Ch. D. 428 ; Ingledew v. Douglass, 2 Stark. 36 ; Hedgley v. Holt, 4 C. & P. 104 ; Wil- liams V. Moor, 11 M. & W. 256. * Locke V. Smith, 41 N. H. 346 ; Earle v. Eei^d, 10 Met. 387; Swift v. Bennett, 10 Gush. 436 ; Johnson v. Lines, 6 W. & S. 80 ; Beeler v. Young, 1 Bibb, 519; Glover v. Ott, 1 McCord, 572 ; Dubose u. Wheddon, 4 McCord, 221. 5 McCrillis v. How, 3 N. H. 348 ; Swasey v. Vanderheyden, 10 Johns. 33 ; Fenton v. White, 1 South, 100; Mc- Minu c. Richmond, 6 Yerg. 9 ; Morton c. Steward, 5 111. Ap. 553 ; see, how- ever, supra, § 37. 6 Trueman v. Hurst, 1 T. R. 40 ; In- gledon V. Douglass, 2 Stark, R. 36. ' Supra, § 37 ; Hunt v. Massey, 5 B. & Ad. 902 ; Boody v. McKenney, 23 Me. 523 ; Earle „. Reed, 10 Mete. (Mass.) 389 ; Goodsell v. Myers, 3 Wend. 479 ; Everson u. Carpenter, 17 Wend. 419 ; Henry u. Root, 33 N. Y. 526 ; Hesser V. Steiner, 5 W. & S. 476 ; Fetrow r. Wiseman, 40 Ind. 148 ; Hyman r. Cain, 3 Jones, L. Ill ; Dubose v. Wheddon, 4 McCord, 221 ; Cheshire v. Barrett, 4 McCord, 241 ; McMinn o. Richmond, 6 91 § 69.] CONTRACTS. [CHAP. II. cover for as much of the debt as is incurred for necessa- ries.' § 67. The object of restrictions of this class being to post- Articles of PO'ie business capacity until the age of twenty-one, trade not articles furnished to an infant to enable him to carry necessaries. ^ , • i i • i on trade, no matter how essential tliese articles may be to his credit, or how dependent he may be on his business, are not considered necessaries.^ On the same reasoning, articles required by hiin in farming, in which he is engaged, are not considered necessaries.^ Such articles, however, in a bill of sale of this class, as are used by him in the necessary support of his family, are excepted from this rule.* § 68. Under necessaries are included services as well as ot^ j goods, provided, as will presently be seen, tiiey are astoeduca- reasonably called for by the infant's condition of tional and ,. , -^^ , i-i Tf-i, i- ij_ other ser- lite.' U ndcr this head tall teaching a trade to an ^"'''*' infant;'' his literary education, suitable to his social position;' the preparation of a proper marriage settlement;' the burial, with suitable expense, of the infant's husband;' and the due support of the infant's wife ;'° and of his children. '^ § 69. Wliat are necessaries in one station of life may not be necessaries in other stations of life. It is important for the ' Earle v. Reed, 10 Mete. (Mass.) » Cooper v. Simmons, 7 H. & N. 707. 479 ; Price v. Saunders, 60 Ind. 310; ' Manby v. a.ott, 1 Sid. 112 ; Peters see Bradley r. Pratt, 23 Vt. 378 ; Gu- v. Fleming, 6 M. & W. 48 ; Baker i'. tlirie II. Morris, 22 Ark. 411, and see as Lovett, 6 Mass. 78 ; Middlebury College to divisible considerations, infra, § c. Chandler, 16 Vt. 682 ; Raymond u. 511. Loyl, 10 Barb. 489. 2 Love ('. Griffith, 1 Scott, 458 ; Latt » Helps <,. Clayton, 17 C. B. N. S. «. Booth, 3 C. & K. 2'.I2 ; Mason .-. 553. Wright, 13 Met. 308 ; Merriam v. Cun- » Chappie v. Cooper, 13 M. & W. ningham, 11 Cush. 40; though see 252. Rundell ». Keeler, 7 Watts, 237 ; Wat- '» Turner «. Trisby, 1 Stra. 168 ; son c. Hensil, 7 Watts, 344, to the Abell r. Warren, 4 Vt. 149 ; Tapper c. effect that an infant with his guardian's Cadwell, 12 Met. 562; Roach i'. Quick, assent may so bind himself. 9 Wend. 238, and cases cited infra, § » Decell V. Lowenthal, 57 Miss. 331. 69. « Turberville v. Whitehouse, 1 C. & "1 Ch. on Con. 11th Am. ed. 197 ; P. 94 ; 12 Price, 692. Beeler v. Young, 1 Bibb, 520, and cases 5 Infra, § 69. cited in last note. 92 CHAP. II.] INFANTS. [§ 69. public interests, that a boy who is to inherit a large estate should be brought up with liberal tastes, so that his money can afterwards be dispensed in such a way ^"ifjfuonf^ as to promote public culture, and that his mind ''.'io"^^*^; should be improved so that his influence should be afterwards used wisely and effectively. Hence it is, that he will be entitled, when under age, to such use of his estate, as will secure those ends; and when this is not done by special allowance granted to his guardians, the same end is effected by making him personally liable to parties who, on fair terms, furnish him with goods by which not merely his education, but his liberal support and training, in view of his future re- sponsibilities, may be promoted.' But horses furnished for the purposes of pleasure are not necessaries f though it may be otherwise when their use is requisite to health, and they are not unsuited to the infant's condition and means,^ while, as has already been noticed, adaptation to station is a question of law for the court. Whether goods furnished are " neces- saries or not, is a question of fact for the jury, depending on the circumstances; and the two principal circumstances are, whether the articles are suitable to the minor's estate, and whether he is, or is not, without other means of supply." . . . " Whether the articles sued for were necessaries or not, is a question of fact, to be submitted to a jury, unless in a very clear case, where a judge would be warranted in directing a ' Maddox v. Miller, 1 M. & S. 738 ; facie necessary, see Bryant v. Richard- Peters u. Fleming, 6 M. & V(^. 42; son, L. R. 3Ex. 93, n. (3); 14L. T. N. S. Davis V. Cald\¥ell, 12 Cush. 512 ; Mo- 24 ; and that without proof of special Kenna v. Merry, 61 111. 177. As illus- circumstances sustaining them, articles trating the limit in this respect, see of luxury or hospitality are not neces- Hedgley v. Holt, 4 C. & P. 104 ; Char- saries, see Brooker v. Scott, 11 M.& W. ters V Bayntun, 7 C. & P. 52 ; Davis v. 67 ; Wharton i/. Mackenzie, 5 Q. B. Caldwell, 12 Cush. 513 ; Strong v. 606 ; Ryder v. Wombwell, L. R. 3 Ex. Foote, 42 Conn. 203 ; Rundel v. Keeler, 90 ; Leake, 2d ed. 550. 7 Watts, 237 ; Mohney v. Evans, 51 ^ Rainwater v. Durham, 2 Nott & Penn. St. 80; Beeler u. Young, 1 Bibb, McC. 524; see Mason v. Wright, 13 519. That even the guardian's assent Met. 306. will no,t sustain extravagant charges, ' Cornelia v. Ellis, 11 111. 584 ; see 1 see Johnson v. Lines, 6 W. & S. 80. Gh. Cout. 11th Am. ed. 234. That cigars and tobacco are not prima 93 §70.] CONTRACTS. [chap. II. jury authoritatively that some articles, as, for instance, dia- monds or race horses, cannot bo necessaries for any minor.'"' But the finding of the jury in such respect is open to revision by the court; and in a recent English case, the court of ex- chequer chamber "held that a jury were not at liberty to find tliat jewelled cuff buttons of the price of 2bl. are necessaries to a young man of fortune.^ — As has been already incidentally noticed, necessaries furnished for the support of an infant's wife and children are to be regarded as furnished to himself. "What is supplied to them on his express or implied credit is considered as purchased by him."^ § 70. As necessaries cannot be regarded goods supplied 1 Shaw, C. J., Davis c Caldwell, 12 Cush. 512 ; and see Peters v. Flem- ing, li M. & W. 42 ; Wharton c. Mac- kenzie, 5 Q. B. 606 ; Bent v. Man- ning, 10 Vt. 225 ; Merriam v. Cunning- ham, 11 Cush. 40; Hall r. Weir, 1 Allen, 261 ; Eames v. Sweetzer, 101 Mass. 78 ; .Johnson u. Lines, 6 W. & S. 80. In Peters !■. Fleming, 6 M. & W. 42, it was said by Parke, J., with the approval of Gurney andRolfe, BB., that the true rule is, " that all such articles as are purely ornamental are not neces- sary, and are to be rejected because they cannot be requisite for any one ; and for such matters, therefore, an in- fant cannot be made responsible. But, if they are not strictly of this description, then the question arises, whether they were boixglit for the necessary uses of the party, in order to support himself properly in the degree, style, and sta- tion of life in which he moves : if they were, for such articles the infant may be responsible. That must be a ques- tion for the jury." While whether the articles were necessary in the infant's particular station is a mixed question of law and fact, the question of im- position is mainly one of fact. Har- rison V. Fane, 1 M. &G. 550; Wharton 94 u, Mackenzie, 5 Q. B. 611 ; Dalton . . Gib, 7 Scott, 117 ; Ryder v. Wombwell, L. R. 4 Exch. 38 ; Plielps ... Worces- ter, 11 N. H. 51'; Bent ^\ Manning, 10 Vt. 225 ; Bradley v. Pratt, 23 Vt. 378 ; Tupper V. Cadwell, 12 Met. 562 ; Stan- ton 0, Wilson, 3 Day, 37 ; Johnson u. Lines, 6 W. & S. 80 ; Rivers r. Gregg, 5 Rich. Eq. 274; Lefils r. Sugg, 15 Ark. 137. 2 Ryder „•. Wombwell, L. R. 4 Ex. 32 ; reversing S. C, L. R. 3 Ex. 90 ; see Burghart v. Angerstein, 6 C. & P. 690 ; Hands u. Slaney, 8 T. R. 578. An in- fant who was a member of a volunteer corps, was held by Lord EUenborough liable for regimentals sold him ; the country being at war at the time, and volunteers being called out for the public defence. Coates v. Wilson, 5 Esp. 152 — A captain in the army, who is an infant, is liable for the livery of a servant, but not for cockades ordered for soldiers in his company ; Hands v. Slaney, 8 T. R. 578. ' Benj. on Sales, 3d Am. ed. § 25, citing Turner t . Trisby, 1 Str. 168 ; Abell V. Warren, 4 Vt. 149; Tupper I. Cadwell, 12 Met. 562; Roach v. Quick, 9 Wend. 238 ; Beeler v. Young, 1 Bibb, 519. CHAP. II.] INFANTS. [§72. to an infant living at home and there suitably maintained.* And articles with which an infant is already sup- j^^j^^j plied by parent or guardian are not necessaries.^ must be V,,„ , . „ , ■ -T without But the mere fact that an intant has an income paid home into his own hands which would have enabled him ™pp<""'- to have paid for all articles he required, does not preclude a tradesman supplying him with necessaries from recovering.* § 71. If an infant's property is exposed to waste or other peril, the proper course is to apply to his guardian services for the pay of services in its preservation. Hence rendered in ^ ■' _ ^ _ _ preserving it has been held that an infant is not liable to a infant's third party for the premium on insuring his prop- notnecee- erty ;^ nor for repairs done to his house which would ^^"^^' otherwise have been in danger of great dilapidation •,' nor for expenses of law-suits, unless absolutely essential to the infant's personal support, the guardian being the party to act in such cases under the court having charge of the infant's estate.* § 72. Money is not ordinarily included under the head of necessaries.' Even though actually spent by the jj„ngyg infant in the purchase of necessaries, it cannot, such lent not , -r-, , , . . , necessaries. IS the prevalent English opinion, be recovered from the infant by the lender.' In this country, however, it has been held that a person lending money to an infant to pur- chase specific necessaries stands in the position of the trades- ' Bainbridge v. Pickering, 2 W. Black. 1325 ; Angel v. McLellan, 16 Mass. 28 ; Wailing v. Toll, 9 Johns. 141 ; Bredin u. Diven, 2 Watts, 95 ; Guthrie v. Murphy, 4 Watts, 80 ; Johnson v. Lines, 6 W. & S. 80. 2 Swift u. Bennett, 10 Cush. 436 ; Davis V. Caldwell, 12 Cush. 512 ; Strong u, Foote, 42 Conn. 203 ; Kline v. L'Amo- reaux, 2 Paige, 419 ; Hull v. Conolly, 3 McCord, 6 ; Beeler a. Young, 1 Bibb, 579 ; Simms <». Norris, _ 5 Ala. 42 ; Perrin v. Wilson, 10 Mo. 451 ; Parsons V. Keys, 43 Tex. 557. But in Ryder V. Wombwell, L. R. 3 Ex. 90, it was held that evidence that the infant was already well supplied, without evidence that the plaintiff knew this, was inad- missible ; though see, contra, Foster v. Redgrave, L. R. 4 Ex. 35, ,.. (8). This point was left open in Ryder v. Womb- well, L. R. 4 Ex. 42. See Leake, 2d ed. 551. 3 Burghart u. Hall, 4 M. & W. 727 ; Peters v. Fleming, ,6 M. & W. 42. * Mut. Fire Ins. Co. ;;. Noyes, 32 N. H. 345. 5 Tupper V. Cadwell, 12 Met. 562. ^ Phelps V. Worcester, 11 N. H. 51 ; Thrall v. Wriglit, 38 Vt. 494. ^ Darby v. Boucher, 1 Salk. 279 ; Walker v. Simpson, 7 W. & S. S3. » Ellis V. Ellis, 5 Mod. 368 ; 1 Ld. Raym. 344. S5 § 74.] CONTRACTS. [CHAP. II. man who furnishes the necessaries;' and, when an infant is pressed for a debt for necessaries, the party lending him money to pay such debt can recover the loan from him.^ § 73. An adult entering into an engagement of marriage with an infant is bound by the contract, though the marriage infant's contract to marry is voidable.' Hence, i'/vo"kSbie while an infant may sue on such a contract, he is butaduitis pot liable to be sued, though he may ratify it when hound. ' ^ •' ,. , of full age, in which case he would become liable.* Marriage settlements by an infant are voidable, though since, when a female infant marries a husband of full age, her per- sonal property at common law passes to him wlien he assumes possession, the settlement of her personal property made by a duly executed marriage contract binds the husband, impress- ing on the property thus taken by him the conditions of the particular trust. ^ But, unless authorized by statute, even an order of the chancellor having jurisdiction does not operate to make a marriage contract, otherwise invalid, binding on an infant.^ And a settlement Biade by a female infant, in con- templation of marriage, is voidable -J though after marriage and during coverture she is (unless by statute) incapable of disaffirming it.^ § 74. We have already seen' that an infant by continuing ' Conn V. f'oburn, 7 N. H. 368 ; Price bury, 1 A. K. Marsh. 76. Under the i'. Sanders, 60 Ind. 310 ; Watson v. Infant's Relief Act (supra, § 43), an Cross, 2 Duv. 147. infant's promise of marriage is void, 2 Randall c. Sweet, 1 Denio, 460. and a ratification of it at full age does bee to same effect, Clarke v. Leslie, ii not bind the infant. Rowe v. Hop- Esp. 28. wood, L. R. 4 Q. B. 1 ; Coxhead v. 3 Holt V. Clarencieux, 2 Str. 937 ; Mullis, 3 C. P. D. 439 ; Northcote c. Hunt V. Peeke, 5 Cow. 475 ; Willard v. Doughty, 4 C. P. D. 435 ; Ditcham <■. Stone, 7 Cow. 22 ; Hamilton v. Lomax, Worrall, 5 C. P. D. 410. 26 Barb. 615 ; Leichtweiss v. Treskow, ^ Pollock on Cont. 3d Eng. ed. 57, 21 Hun, 4S9; Rush c. Wick, 31 Oh. citing Davidson's Conv. 3 (pt. 2), 728; St. 521 ; Develin v. Riggsbee, 4 Ind. and see Drury r. Drury, 2 Eden, 39 ; 464; Cannon v. Alsbury, 1 A. K. Mar. McCartee r. Teller. 2 Paige, 511. 76 ; Warwick v. Cooper, 5 Sneed, 659 ; = Field v. Moore, 7 D. M. G. 691, 710. see Tyler on Inf. 2d ed. 58. ' Milner v. Harewood, 18 Ves. 259. < lb. ; Pollock on Cont. 3d Eng. ed. 56; 8 Temple lU Hawley, 1 Sandf. Ch. Warwick o. Bruce, 2 M. & S. 205 ; Pool 153. r. Pratt, 1 Cliipm. 252 ; Cannon v. Als- ^ Supra, §§ 60 et seq. 96 CHAP. II.] INFANTS. [§ 74. in possession after majority may be estopped from asserting an adverse claim, and that enioyment of the fruits of , . „ . , Infant a contract may estop him from contesting the con- maybe tract. The doctrine of estoppel has been extended ^*'°pp^ • further, and it has been held that an infant who encourages a purchaser to buy an estate on a particular title may be after- wards equitably estopped from asserting an adverse right.' But to make such estoppel effectual it should be based on an attitude which is intelligent, deliberate, and persistent. If mere transient approval by an infant of another's purchase should bar the infant's rights, the protection of infancy would be destroj'ed. His rights would be assigned away indirectly in the face of a rule established by the policy of the law that his direct assignment of such rights would be invalid.^ In cases of fraud, however, the better doctrine, as Mr. Bigelow well states,^ is that infants of years of discretion, as well as married women, " may be estopped to set up a claim to their property against a purchaser. Both are liable when properly sued for their torts in an action which does not seek the en- forcement of a contract or demand damages for repudiating or for fraudulently inducing the plaintiff to make a contract ; and in an action for a fraudulent representation of title, whereby the plaintift" has been induced to expend money for the purchase of property belonging in reality to the defendant, the measure of damages must, of course, be the sum paid. Ifow to prevent a circuity of action (which, indeed, is the ground of many estoppels, if not also of this very class of equitable estoppels), it is but right, on analogy, that the infant or feme should be rebutted when proceeding to regain posses- sion."^ But an infant who has obtained credit by represent- ■ Bispham's Eq. 2d ed. § 293 ; Bige- 120 ; Whittington v. Wright, 9 Ga. 23 ; low on Estoppel, 447, (3d ed. 515 ;) and see Jennings v. Wliitaker, 4 Mon- Overton v. Banister, 3 Hare, 503 ; roe, 51. Esron v. Nicholas, 1 D. Gr. & S. 118 ; ^ gee as to estoppel of married Thompson v. Simpson, 2 Jones & L. women, infra, § 89. 110 ; Stikeman u. Dawson, 1 D. G. & ' Op. cit. 3d ed. 516. S. 90 ; Wright v. Snowe, 2 D. G. & S. » See Story Eq. Jur. § 380 ; Stike- 321 ; Nelson v. Stocker, 4 D. G. & J. man v. Dawson, 1 De G. & S. 90 ; 458 ; Hall v. Timmons, 2 Rich. Eq. Unity Ass. v. King, 3 D^e G. & J. 63 ; VOL. I.— 7 97 §74.] CONTRACTS. [chap. II. iiig himself of full age is not estopped from afterwards setting up infancy.' Nor is an infant estopped by a recital of his age in an indenture of apprenticeship.^ Telegraph. Co. u. Davenport, 97 U. S 369 ; Com. v. Sherman, 18 Penn. St 343 ; Merritt ■•. Home, 5 Oh. St. 307 Goodman v. Winter, 64 Ala. 410. ' 1 Ch. on Cont. 11th Am. ed. 208 Biirley v. Russell, 10 N. H. 184; Mer- riam ^. Cunningham, 11 Gush. 40 98 Stoolfoos V. Jenkins, 12 S. & K. 399 ; see Cook v. Toumbes, 36 Miss. 685. ' Houston L,. Turk, 7 Yerg. 13. As to the analogous case of estoppel of married women, see infra, § 89. As to how far deceit in this respect may be set off, see supi-a, § 52. CHAP. III.] MARRIED WOMEN. [§76. CHAPTEK III. MARRIED WOMEN. At common law, married women, with certain limitations, cannot contract, § 76. But woman with separate estate may bind such estate, § 77. May contract for services, hut not for goods or money, § 77 a. Cannot bind future acquired estate, § 78. By statute disability has been much qualified, § 79. Divorce creates independent liability, § 80. Otherwise as to mere separation, § 81. Her contracts before marriage pass to husband, § 82. Husband liable for wife's torts, § 83. Wife may bind husband as agent, § 84. Husband may be wife's agent, § 85. Husband cannot divest himself of his duty by his own wrong, § 86. But liability ceases when wife leaves without cause, § 87. And when wife separates with allow- ance, § 88. Married women may be bound by es- toppel, and may enforce executed contracts, § 89. Contracts for future separation in- valid, § 90. Agreements between husband and wife void, § 91. Husband liable for necessaries fur- nished wife, § 92. § 76. By the common law of England, a married woman may bind herself and her estate by contract, in the . ■' ■' ' At corn- following cases : 1. When her husband has been ab- moniaw sent, unheard from for seven years, though he may women, really at the time be alive;' and this has in some y"!! '^ff^^'^™ .^ ' exceptions, states been extended to all cases of final and perma- cannot con- tract. nent abandonment.^ iiut mere temporary deser- tion does not by itself have this effect.' Hence, a note given by a wife, whose husband had deserted her, while living apart ' Doe u. Jesson, 6 East, 80 ; Loring V. Steineman, 1 Mete. Mass. 211 ; King V. Paddock, 18 Johns. 141. In Valen- tine V. Ford, 2 Browne, 193, it was held that an absence of two years might have this effect. In Black v. Tricker, 59 Penn. St. 13, desertion by husband, leaving the wife dependent on her own exertions for support, was held to entitle her to be decreed a feme sole trader. As to the presumption of death in such cases see Whart. on Ev. § 1274. And see Schouler, Husb. and Wife, §§ 89 et seq. " Rhea c. Renner, 1 Pet. 105 ; Ayer V. Warren, 47 Me. 217; Gregory y. Pierce, 4 Mete. Mass. 478 ; Black o. Tricker, 59 Penn. St. 13. 3 Infra, § 82. 99 §76.] CONTRACTS. [chap. III. from him, for necessaries used by her in her own support, is void, and her promise to pay it, made after her divorce and before her remarriage, is without consideration and invalid.' — When, however, the desertion is such as to entitle her to an independent domicil, in which she is thrown on her own re- sources for support, then she may independently sue and be sued.^ 2. When her husband has been banished from the country, or when a punishment imposed on him has been commuted on the condition of expatriation, though on his return her independence in this respect is lost.' 3. Where the husband is an alien, and the wife, deserted by him, does business as a feme sole.* 4. When, by local custom, she is a feme covert trader, her husband not meddling with her trading.' In Penn- sylvania this privilege is given and limited by statute.' De- sertion, leaving the wife dependent on her own exertions, may entitle her to be regarded as a feme sole trader.^ In South Carolina, also, the custom of London in this respect is recog- nized. But it is limited to matters of shop-keeping.^ With ' Hayward p. Barker, 52 Vt. 429. 2 Infra, § 81. ' Carrol u. Blencow, 4 Esp. 27 ; Spooner a. Brewster, 2 C. & P. 35 ; Cornwell v. Hoyt, 7 Conn. 420 ; Trough- ton V. Hill, 2 Hayw. 406. That a sen- tence of the husband to transportation, although he has not yet been sent away, enables her to bind herself, see Franks ex parte, 7 Bing. 762; and also when lie remains away after his trans- portation. Carrol J). Blencow, 4 Esp. 27. » On this topic, Mr. Pollock, 3d ed. 81, after commenting on Walford v. Duchess de Pienne, 2 Esp. 554 ; Franks V. same deft., ibid. 587; Gaillon u. L'Aigle, 1 Bos. &P.357 ; Kay zi. Duchess de Pienne, 3 Camp. 123 ; Barden v. Keverberg, 2 M. & W. 61 ; concludes, " that it would be enough to show that the husband never had an English domicil, or, at all events, to show that he never resided in England." In De Wahl V. Braune, 1 H. & N. 178, it was held that a wife could not sue during 100 coverture, although her husband was an alien, resident in Russia, while she was an English subject. In the same case it was further held that the fact that the husband was an alien enemy does not give the wife business capacity. 6 Caudell r. Shaw, 4 T. R. 361 ; Beard v. Webb, 2 Bos. & Pul. 93 ; and see Schouler, Husband and Wife, §§97 et seq. 5 Jacobs V. Featherstone, 6 W. & S. 646. ' Valentine a. Ford, 2 Brown, 193. Whether a decree of court is necessary, see Black v. Tricker, 59 Penn. St. 13 ; Hentz V. Clawson, 34 Leg. Int. 5 ; Cleaver v. Sclieetz, 70 Penn. St. 496 ; Westernitz ,. Porter, 86 Penn. St. 35. As to statute giving deserted wife this privilege, see King o. Thompson, 87 Penn. St. 365. ' Surtell r. Brailsford, 2 Bay, 333 ; McDowall V. Wood, 2 Nott & MoC. 242 ; Starr v. Taylor, 4 McCord, 413; and .see Radford v. Carwile, 13 W. Va. 572. CHAP. III.] MARRIED WOMEN, [§77. these exceptions, a married woman is at common law incapable of making a contract on which she can sue or be sued. Even for her earnings, at common law, he alone can sue, though living separate from her.' § 77. A married woman, who has a separate estate, is, in England, capable in equity of binding such estate -yyToman under certain limitations. These limitations are withsepa- thus condensed by Mr. Pollock from recent English may Mnd adjudications.— 1. "I^fot only the bonds, bills, and s^^^^estate. promissory notes of married women, but also their general engagements, may affect their separate estate ;"' and property settled" to a married woman's separate use for her life, with power to dispose of it by deed or will, is for this purpose her separate estate, her power, however, being limited by the in- strument creating it.' — 2. To make a general engagement thus binding on her separate estate, it must appear " that the engagement was made with reference to and upon the faith and credit of that estate."* And the intention to charge ' Grlover v. Drury Lane, 2 Chit. R. 117; WiiislowD. Croker, 17 Me. 29 ; Howes ti. Bigelow, 13 Mass. 384 ; Wash- burn V. Hale, 10 Pick. 429 ; Morgan v. Bank, 14 Conn. 99 ; Hyde v. Stone, 9 Cow. 230. 2 Johnson v. Gallagher, 3 D. F. J. 514 ; aff. in London, etc. Bank of Aus- tralia V. Lempriere, L. R. 4 P. C. 572. ■" Mayd v. Field, L. R. 3 Ch. D. 587 ; Godfrey v. Harben, L. R. 13 Ch. D. 216 ; Davies v. Jenkins, L. R. 6 C. D. 728 ; Poole's Est., L. R. 6 C. D. 739 ; see, to same affect in this country, Cheever v. Wilson, 9 Wall. 108 ; Ste- phen V. Beall, 22 Wall. 329 ; Heburn V. Warner, 112 Mass. 271 ; Insurance Co. V. Babcock, 42 N. Y. 613 ; McVey V. Cantrell, 70 N. Y. 295; Maurer's App., 86 Penn. St. 380 ; Phillips o. Graves, 20 Oh. St. 371 ; Patrick v. Littell, 36 Oh. St. 79; Whitesides v. Cannon, 23 Mo. 457 ; Davis v. Smith, Sup. Ct. Mo. 1881 ; Hooton v. Ransom, 6 Mo. Ap. 19 ; Burnett u. Hawpe, 25 Grat. 481 ; Harshberger u. Alger, 81 Grat. 52 ; and cases cited in Wald's Pollock, 69, and Story's Eq. § 1397. In Robinson v. Pickering, 44 L. T. R. N. S. 165, L. R. 16 Ch. D. 660, it was ruled that an ad interim injunction by a creditor will not be granted to re- strain a married woman from dealing with her separate property until judg- ment. See London Law Times, 10th April (p. 412) and 15th May (p. 38), 1880; 2d April (p. 382), 1881. * Johnson v. Gallagher, 3 D. F. J. 515 ; London Bank of Australia v. Lempriere, L. R. 4 P. C. 572 ; see Conn V. Conn, 1 Md. Ch. 212; Burch u. Breokenridge, 16 B. Mon. 482. In Patrick o. Littell, 36 Oh. St. 79, it was held that an agreement by a mar- ried woman to pay for services to be rendered in procuring a loan of money to remove a mortgage on her real estate binds her separate estate. — Boynton, J. said; "She" (the plaintifiF) , "being the owner of a separate estate, which 101 §77.] CONTRACTS. [chap. hi. ■her separate estate must distinctly appear ; and the trust es- tablishing the separate estate should be so guarded as to carry out tlie purpose for which it was created.' — 3. Debts cf)n- tracted by a married woman, living apart from her husband, are presumed to have been intended by lier to be charged to her separate estate ;^ and the same presumption exists when a married woman gives a guarantee of her husband's debt,' or was lieavily incumbered by mortgage, engaged the defendants in error, her husband joining, to secure for her a loan of m10,000 to enable her to re- move the mortgage from her estate. Slie agreed to pay an attorney's fee for making an examination of her title, and a commission of SlOO to the de- fendants for securing the loan. The services stipulated for were fully per- formed, the defendants paying $50 from their own funds to the attorney making the abstract of title. The plaintiif re- fused til accept the loan, or to pay for the services rendered in procuring it. We have no hesitancy in pronouncing the agreement made to be one not only having direct reference to Mrs. Pat- rick's separate estate, but made for its benefit. The object was to remove an existing incumbrance upon the pro- perty, and it was to accomplish this object that the services of the defend- ants were engaged. The fact that the loan was to be secured by a new mort- gage upon the same property aifects the question but very little. She was to get rid of a mortgage debt then due and pressing, by substituting another there for, to become due ten years thereafter. The question is, whether an intention upon the part of Mrs. Patrick to charge her separate estate with payment for the services rendered, and money paid by defendants, for the benefit of such estate, will be implied fi'om the char- acter of the transaction and the nature 102 of the engagement entered into. The principles announced in previous ad- judications of this court require an affirmative answer to this question. 20 Ohio St. 371 ; 35 ib. 270 ; ib. 296. Holding the separate estate of Mrs. Patrick liable to the defendants' de- mand, we are also of the opinion that a personal judgment against her was proper. Her obligation is one upon whicli, were she sole, she would be liable at law. It is a contract or obli- gation upon which, under § 28 of the Code, as amended March 30, 1874, she miglit have been sued alone ; and being of that character, the statute requires the like judgment to be rendered and enforced, in all respects, as if she were unmarried. 71 Ohio Laws, 47. It was one of the objects of this section, as thus amended, to so far modify the dis- abilities of coverture as to authorize a personal judgment to be rendered against a married woman, where such judgment would have been proper had she remained unmarried." ' Pike V. Fitzgibbon, L. R. 17 Ch. D. 454 ; 44 L. T. N. S. 562 ; Rice v. R. R., 32 Oh. St. 380 ; Pfirschiug v. Falsh, 87 111. 260 ; Collins v. Underwood, 33 Ark. 265. 2 Ibid. » Morrell i-. Cowan, L. R. 6 Ch. D. 166. This topic is well discussed in Schouler on Husb. and Wife, §§ 184 et CHAP. III.J MARRIED WOMEN. [§77. makes with him a joint promissory note,' or gives her note in payment of her husband's debt.^ But on such engagements, a married woman cannot be personally sued. The remedy is in rem against the separate estate.* The execution by a married ' Davies v. Jenkins, L. R. 6 Ch. D. 728. To this Mr. Wald, the American editor of Pollock on Contracts, adds, Williams u. Urmston, 35 Oh. St. 296 : Cowles V. Morgan, 34 Ala. 535 ; Nunn V. Givham, 45 Ala. 375 ; Burnett v. Hawpe, 25 Grat, 481 ; Lincoln w. Rowe, 51 Mo. 571. 2 Wicks V. Mitchell, 9 Kan. 80, cited Wald's Pollock, 69. 3 .Tohnson v. Gallagher, 3 D. P. & J. ; Rogers f. Ward, 8 Allen, 389. For form of decree, so as to bind personal estate, see Pioard v. Hine, L. R. 5 Ch. 274. Mr. Pollock holds the older cases, cited in Sug. V. & P. 206, to be over- ruled, referring to Picard v. Hine, ut supra; Pride v. Bubb, L. R. 7 Ch. 64; He adds, "that the separate estate is regarded as a sort of artificial person created by courts of equity, and repre- sented by the beneficial owner as an agent with full powers, somewhat in the same way as a corporation sole is represented by the person constituting it for the time being." — And in sup- port of this view is cited by Mr. Wald, the following from Grissell in re, L. R. 12 Ch. D. 490 : " It is not the woman, as a woman, who becomes a debtor, but her engagement has made that particular part of her property which is settled to her separate use a debtor, and liable to satisfy the engagement. She herself is not a debtor, within the meaning; of the bankruptcy act." To the same effect, see Bispham's Equity, § 102. — In Mathewman's case, L. R. 3 Eq. 781, the law was stated to be that if a married woman, "having separate property, enters into a pecuniary en- gagement, whether by ordering goods or otherwise, which, if she were a, feme sole, would constitute her a debtor, and in entering into such engagements she purports to contract, not for her hus- band but for herself, and on the credit of her separate estate, and it was so in- tended by the person with whom she is contracting, that constitutes an obli- gation for which the person with whom she contracts has the right to make her separate estate liable." This is adopted by Mr. Benjamin, Sales, 3d Am. ed. § 37, citing further Shattock i'. Shattock, L. R. 2 Eq. 182 ; Picard v. Hine, L. R. 6 Ch. Ap. 274 ; and see Butler v. Cump- ston, L. R. 7 Eq. 20. That a note given by a married woman in payment of property purchased by her is to be in- ferred to have been meant to bind her separate estate, see Williams i . Urmston, 35 Oh. St. 296. — In Ver- mont it is ruled that a married woman is only sub modo a feme sole in dealing with her separate estate ; but such estate, whether real or personal, will be liable for her debts contracted in its management, and for its benefit, or for her benefit on the credit of such estate, unless the instrument creating such estate protects it from being charged with such debts. Dale v. Robinson, 51 Vt. 20 ; Priest v. Cone, 51 Vt. 495.-- Such is the case in Rhode Island when she declares expressly and in writing, that her intention was to charge her separate estate, but otherwise not, Elliot V. Gower, 12 R. I. 79 ; Angell v. Cullough, 12 R. I. 47; see Schouler, Husb. and Wife, §§ 246 et se?.— The English rule is stated by Mr. Bisphara to be that " the separate property of a married woman being a creature of equity, it follows, that if she has the power to deal with it, she has the 103 §77.] CONTRACTS. [chap. iir. woman, of a formal separate instrument of indebtedness, has been held evidence of an intention on her part in this way to bind her separate estate,' and an assignee with notice is bound by such action on her part ^ But unless the considera- tion of the obligation passes to the married woman herself, the intention to bind her separate estate, such is the better opinion, must appear on the document, to subject her sepai-ate estate to liability for the payment.' Whether the engagement was made in reference to the wife's separate estate, is a matter to be determined from all the circumstances of the particular case ; and, as we have seen, the inference is peculiarly strong where it appears that the wife is living apart from her hus- other power incident to property in general, viz., the power of contracting debts to he paid out of it ; and equity- will lay hold of the separate estate as the only means by which those debts can be satisfied." Bispham's Eq. § 102. This view has been accepted in nume- rous courts in the United States. Cheever v. Wilson, 9 Wall. 119 ; Batch- elder u. Sargent, 47 N. H. 265 ; Frary ,: Booth, 37 Vt. 78 ; Welland v. East- ham, 15 Gray, 328 ; Imlay v. Hunting- ton, 20 Conn. 175; Wells u. Thorman, 37 Conn. 318 ; Gardner u. Gardner, 7 Paige, 112; Yale v. Dederer, 18 N. Y. 265 ; Ballin v. Dillaye, 37 N. Y. 35 ; Gosraan v. Cruger, 69 N. Y. 87 ; John- son V. Cummins, 1 C. E. Green, 99 ; Van Kirk u. Skillman, 5 Vroora, 109 ; I.eaycraft v. Hedden, 3 Green Ch. 512 ; Perkins v. Elliott, S C. E. Green, 529 ; Johnson u. Vail, 1 McCarter, N. J. 423 ; Cooke V. Husbands, 11 Md. 492 ; Bu- chanan f. Turner, 26 Md. 5 ; Vizon- neau v. Pegram, 2 Leigh, 183 ; Penn v. Whitehead, 17 Grat. 503 ; Greenough v. Wigginton, 2 Greene, Iowa, 435 ; Har- ris V. Harris, 7 Ired. Eq. Ill ; Coleman V. Wooley, 10 B. Mon. 320; Fears <.-. Brooks, 12 Ga. 200 ; Dallas u. Heard, 32 Ga. 604; Gunter v. Williams, 40 Ala. 572 ; Whitesides v. Cannon, 23 104 Mo. 457; Schafroth p. Ambs, 46 Mo. 114 ; Kimm v. Weipport, 46 Mo. 532 ; Lewis c. Yale, 4 Fla. 418 ; Miller u. Newton, 23 Cal. 554; Hutchinson u. Underwood, 27 Tex. 255. That a more restricted view is maintained in several state courts will be hereafter seen. ' Bispham's Eq. §102; Pioard v. Hine, L. R. 5 Ch. Ap. 274 ; Shattock v. Shattock, L. R. 2 Eq. 182 ; Batchelder V. Sargent, 47 N. H. 2i;2 ; Leaycraft v. Hedden, 3 Green, Ch. 512 ; Perkins v. Elliott, 8 C. E. Green, 529 ; Phillips v. Graves, 20 Oh. St. 371 ; Vizonueau u. Pegram, -2 Leigh, 183; Garland v. Paraplin, 32 Grat. 305 ; Coleman v. Wooley, 10 B. Mon. 320 ; Ozley i: Ikel- heimer, 26 Ala. 332 ; Kimm c. Weip- pert, 46 Mo. 532 ; Metropolitan Bank o. Taylor, 62 Mo. 338. 2 Warne v. Routledge, L. R. 18 Eq. 500. ' Nourse v. Henshaw, 123 Mass. 96 ; Yale V. Dederer, 18 N. Y. 265 ; 22 N. Y. 450 ; 68 N. Y. 329 ; Manhattan Co. v. Thompson, 58 N. Y. 80; Johnson u. Cummins, 1 C. E. Green, 97 ; Harrison u. Stewart, 3 C. E. Green, 451 ; Peake c. La Haw, 21 N. J. Eq. 269 ; Pippen V. Wesson, 74 N. C. 437 ; see Schouler on Husb. and Wife, §§ 237 et seq. CHAP. III.] MARRIED WOMEN. [§77. band, receiving no maintenance from him.^ In some jurisdic- tions in the United States, however, a married woman, on whom a separate estate has been settled, has no power over such estate beyond what is given to her by the instrument creating it, and this instrument is to be so construed as to give her no power of disposal beyond what its terms ex- pressly specify.^ — By a clause forbidding the anticipation of income, a married woman may have a separate income so se- cured to her as to be protected against her own debts.' — A clause prohibiting anticipation or alienation takes away the ' Picard v. Hine, L. R. 5 Ch. Ap. 274 ; Johnson v. Gallagher, 3 De G. F. & J. 494. " Imlay u. Huntington, 20 Conn. 146 ; Metoalf V. Cook, 2 R. I. 355 ; Lancaster V. Dolan, 1 Rawle, 231 ; Thomas v. Fol- well, 2 Whart. R. 11 ; Wright u. Brown, 44 Penn. St. 224; Shonk c. Brown, 61 Penn. St. 320 ; Swift v. Cas- tle, 23 111. 209 ; Cookeson v. Toole, 59 111. 515 ; Bressler u. Kent, 61 111. 426; Hume V. Hood, 5 Grat. 374 ; Harris v. Harris, 7 Ired. Eq. Ill ; Ewing v. Smith, 3 Dessaus. 417 ; Reid v. Lamar, 1 Strobh. Eq. 27 ; Marshall!). Stephens, 8 Hump. 159 ; Bradford u. Greenway, 17 Ala. 797 ; Short v. Battle, 52 Ala. 456 ; Doty v. Mitchell, 9 Sm. & M. 435. " In the authorities just cited," says Mr. Bispham (Eq. 2d ed. § 103), "it was said, that there is a manifest diffe- rence between the legal separate estate which is due to the provisions of the statute, and the equitaile separate estate which is the creature of courts of equi- ty ; and this view seems to be taken, also, by the courts in Illinois (Cooke- son u. Toole, 59 111. 515 ; Bressler v. Kent, 61 IlL 426; Cole <>. Van Riper, 44 111. 58 ; Carpenter v. Mitchell, 50 111. 470; Rogers v. Higgins, 48 111. 211) ; and, after some fluctuation, by those in Alabama. See Short v. Battle, 52 Ala. 456 ; overruling Molton v. Mar- tin, 43 Ala. 651 ; Glenn c.. Glenn, 47 Ala. 204, and Denechand v. Berry, 48 Ala. 591 ; see Lippincott o. Mitchell, 94 U. S. 767. But a different opinion on the subject has been entertained in other states, and the general tendency of the division is, perhaps, to put es- tates of both kinds, so far as regards the power of the feme over them, upon the same footing. Willard v. Eastham, 15 Gray, 328 ; Yalet). Dederer, 18 N. Y. 265 ; Ballin u. Dillaye, 37 N. Y. 35 ; Peake v. La Bau, 6 C. E. Green, 282. The South Carolina rule was, however, adopted in Rhode Island (Metcalf v. Cook, 2 R. I. 355); Tennessee (Marshall V. Stephens, 8 Hump. 159 ; see, how- ever. Young <^. Young, 7 Cold. 461) ; Mississippi (Doty u. Mitchell, 9 Sm. & M. 435) ; Illinois (Swift o. Castle, 23 111. 209 ; Bressler ;;. Kent, 61 111. 426 ; overruling Young v. Graff, 28 111. 20) ; and formerly in Maryland (Miller v. Williamson, 5 Md. 219 ; Tarr v. Wil- liams, 4 Md. Ch. 68). It was also rec- ognized, to a limited extent, in Ohio (Machir v. Burroughs, 14 Ohio, N. S. 519)." — That a married woman may bind herself by articles of partnership so far as concerns her separate estate, is argued by Mr. Pollock, citing Lind- ley on Partnership, 1, 86. That she may thus be a partner of her own hus- band, see Kinkead in re, 3 Biss. 405. » Bispham's Eq. § 104. 105 § 77 a.] CONTRACTS. [chap. III. power of disposition in advance; and creditors are restricted to dividends and profits already accrued.' And the restraint against alienation protects even against liability for fraudu- lent acts.^ — -A gift to the separate use of a married woman now gives her, in England, the same power of alienation as she would have if she were single.' § 77 a. When a married woman contracts for remuneration for her own services, she is, as is said, the merito- May con- . x' ._■ i i 4.1, tract for nous cause ot action, and she may sue on the con- butTot'for ti'act, the coverture being no defence on the merits, goods or though in some iurisdictions it may be necessary on money. ~ '^ . . . technical grounds to join the husband in the suit.^ It is also " settled law that a married woman, though inca- pable of making a contract, is capable of having a chose in action conferred upon her, which will survive to her on the death of her husband, unless he shall have interfered by doing some act to reduce it into possession. "° And while a married woman cannot, at common law, sue for the value of goods supplied by her, or for money lent by her, all chattels in her possession being the personal property of her husband,^ she may sue for money received by a third party to her use, which money has not been reduced in her husband's possession.'' But reduction into possession by the husband divests her of her interest. Thus, even where the husband opens an account with a banker in his wife's name, the money deposited re- mains his property.^ And when an account is opened by the husband in his own and his wife's names, with authority to the wife to draw, the balance on his death remains his prop- erty.^ 1 Butler V. Cumpston, L. R. 7 Eq. 16 ; M. & W. 97 ; Guyard r. Sutton, 3 C. B. Roberts v. Watkiiis, 46 L. J. Q. B. 552 ; 153. Leake, 2d ed. 557. ' Per cur. in Dalton i-. R. R., 13 C. 2 Arnold v. Woodhams, L. R. 16 Eq. B. 474. 29 ; Thomas v. Price, 46 L. J. C. 761 ; " King v. Basingham, 8 Mod. 199 ; Stanley Montague v. Benedict, 3 B. & C. 631 ; Seatou u. Benedict, 5 Bing. 58 ; Prestwick u. Marshall, 7 Bing. 565 ; Millard v. Harvey, 34 Beav. 237. ' "Wh. on Agency, § 11 ; Reed c. Earle, 12 Gray, 423 ; Buckley v. Wells, 33 N. Y. 518 ; Rowell v. Klein, 44 Ind. 291; Cubberly o. Scott, 98 111. 38; Bennett v. Stout, 98 HI. 47 ; McLaren u. Hall, 26 Iowa, 297 ; Ready v. Bragg, 1 Head (Tenn.), 511. CHAP. III.] MAKRIED WOMEN. [§86. one of fact to be determined on all the circumstances of the case.^ § 86. As has been already incidentally seen, a husband, when he is able, is bound to support his wife, she depending on him for this support.^ He- does not cannot relieve himself of this duty by deserting her; and self of m™" no matter how absolute may be his repudiation of duty by his ■' ^ own wrong her, he is liable, if he does not duly support her, for necessaries furnished by third parties for her support.* The same rule is maintained in cases where the husband drives the wife from their house by his cruelty.'' She is entitled, under such circumstances, to procure, on her husband's credit, arti- cles proper to the situation in life in which her marriage placed her.° ITor is it necessary that she should have been driven from the house by physical violence from him. It is enough if her position is made morally intolerable by him.* — In Eng- land, where a woman has been wrongfully deserted by her husband, money advanced to her when necessary for her actual support can be recovered from him in equity,' and the same view has been taken in Connecticut.^ — Notice on the husband's > Arnold v. Spurr, 130 Mass. 347; see Schouler, Husb. and Wife, §§ 277 et seq. 2 See also Wh. Cr. L. 8tli ed. §§ 321, 1563. ' Emmett v. Norton, 8 C. & P. 506 ; Honliston v. Smyth, 3 Bing. 127 ; Allen V. Aldrich, 9 Foster, N. H. 63. " Rawlyns u. Vandyke, 3 Esp. 250 Houliston u. Smyth, 3 Bing. 127 Brown v. Ackroyd, 5 E. & B. 819 Hancock v. Merrick, 10 Cush. 41 Reynolds u. Sweetzer, 15 Gray, 78 Blowers v. Stnrtevant, 4 Denio, 46 Breinig o. Meitzler, 23 Penn. St. 156 Hnltz V. Gibbs, 66 Penn. St. 360. 6 Mayhew v. Thayer, 8 Gray, 172 ; see Hunt v. De Blaquiere, 5 Bing. 550 ; Montague v. Benedict, 3 B. & C. 635. 6 Baker v. Sampson, 14 C. B. (N. S.) 383. ' Deare v. Soutten, L. E. 9 Eq. 151. " Kenyon u. Farris, 47 Conn. 510, reported in Cent. L. J. 1881, p. 804, where will be found a valuable article by Mr. L. T. Michener giving the Eng- lish cases. From the opinion of Pardee, J., in Kenyon v. Farris, the following is extracted : — " In Harris v. Lee, 1 P. Wms. 482, the petitioner had loaned £30 to the respondent's wife, who had left him for cause, to enable her to pay doctors and for necessaries. The court said : 'Admitting that the wife cannot at law borrow money, though for necessaries, so as to bind the husband, yet this money being applied to the use of the wife for her use and for necessaries, the plaintiff that lent this money must in equity stand in the place of the persons who found and provided such necessaries for the wife. And, there- fore, as such persons could be creditors 115 87.] CONTRACTS. [chap. III. part, either generally by publication or specially by private communication, will not relieve him from liability ;' nor, on the other hand, is notice necessary to protect him when the wife has notoriously separated from him in her own wrong.^ — A note given by a wife, separated from her husband, for neces- saries has been held to be void.' § 87. A husband's liability for necessaries furnished to his wife living separate from him is limited to the cases in which this separation is compelled by his misconduct. And the of the husband, so the plaintiff shall stand in their place and be a creditor also ; and let the trustees pay him his money and likewise his costs.' And in Marlow v. Pitfield, 1 P. Wms. 559, the court said : ' If one lends money to an infant to pay a debt for neces- saries, and in consequence thereof the infant does pay the debt, here, although he may not be liable at law, he must nevertheless be so in equity.' In Deare o. Soutten, L. R. 9 Eq. 151 (1869), the marginal note is as follows : 'A person who has advanced money to a married woman deserted by her hus- band for the purpose of, and which has been actually applied towards her support, is entitled in equity, though not at law, to recover such sums from the husband.' In giving the decision, Lord Romilly, M. R., said: 'I am of the opinion that this is a proper suit and that the plaintiff is entitled to a decree. The cases cited on behalf of the defendant have no application, and May v. Shey, 16 Sim. 588, is over- ruled by .Tenner v. Morris, 3 De Gt. F. & .J. 45.' " He then proceeds to quote from the latter case, and from Walker r. Simpson, 7 Watts & S. 83, to the same effect, and concluded as follows : ' ' We willingly follow the leading of these authorities, because we think that the line of separation between necessaries and money loaned for the purpose of purchasing them may well 116 be obliterated. So far as the husband is concerned, they are practically con- vertible terms. His burden will not be increased if he is made liable for money ; the scope of the word neces- saries will not thereby be broadened ; the lender will be compelled to prove an actual expenditure for them ; the law has discharged its duty to the husband in protecting him from liabil- ity for anything beyond them ; it only discharges its duty to the wife by making it impossible for him to escape liability for these irrespective of the method by which he forces her to obtain them. If he has any preference as to that method, the law will secure it to him ; if he refuses to adopt any, he is not'to be heard to complain if she is permitted to elect, providing always that she is kept within the small circle of necessity. It is not certain that credit will, under all circumstances, supply necessaries to the wife ; at times they may not be had without money, and accidents of time, place, or distance may bring about such a state of things as that a friend may be able and willing to place money in her hands upon her husband's credit, who cannot personally attend to its dis- bursement." 1 Dixon u. Hurrell, 8 C. & P. 717 ; Montague v. Benedict, 3 B. & C. 635. 2 Infrn, § 88. ' llayward v. Barker, 52 Vt, 429. CHAP. III.] MARRIED WOMEN. [§ 88. better opinion is that, to establish liability under these cir- cumstances, the party suina; the husband must make ' '^ -^ , . ° ■ 1 1 But liabil- out such a case against him as would entitle her to ity ceases a decree of divorce should it be sought by her. leaves^ Hence, in such cases, the burden of showing the wife ^aJ*gg"* had cause for leaving is on the party suing the hus- band. And the husband may set up as a defence any provo- cative misconduct on the part of the wife which would entitle him to a judgment had she proceeded against him for divorce.' Adultery on the wife's part relieves the husband from the duty of her maintenance, even though the party furnishing her with the goods has no notice of the adultery f though a verdict of adultery not followed by decree is not conclusive in a suit against the husband.^ ISor is it a suffi- cient reply that the husband was guilty of adultery in the first place.* § 88. The wife's power to bind her husband for necessaries ceases, also, when they are living in voluntary sepa- . ' • 1 • -11 AUCl SilSO ration, she receiving from hira an allowance for her whfjn wife suj^port." ITotice to tradesmen that the husband wuh^iiow- will not be bound by the wife's contracts is not ^°'^''- necessary to protect him from such tradesmen; though where particular tradesmen have been accustomed to furnish the wife with the husband's assent, the implied authority to the wife may continue, unless notice of its repudiation be given. ^ It has been intimated that in such suits the burden is on the husband to discharge himself by showing the provision made ' Mainwaring o. Leslie, 2 C. & P. 2 R. o. Flinton, 1 B. & Ad. 227 ; 507; Hindley v. Westmeath, 6 B. & C. Cooper v. Lloyd, 6 C. B. N. S. 519. 200 ; Blades v. Free, 9 B. & C. 167 ; ' Needham u. Bremner, L. R. 1 C. Hardie v. Grant, 8 C. & P. 512 ; Tliorne P. 583. V. Kathan, 51 Vt. 520 ; Hunter v. < Govier u. Hancock, 6 T. R. 603. Boucher, 3 Pick. 289 ; McCutchen v. 6 Hodgkins v. Fletcher, 4 Camp. 70; McGahay, 11 Johns. 281 ; Cunningham Johnston <,. Sumner, 3 H. & N. 261 ; V. Irwin, 7. S. & R. 247 ; Walker v. Richardson v. Duhois, L. R. 5 Q. B. Simpson, 7 W. & S. 83 ; Bevier v. 51. Galloway, 71 111. 517 ; Schnuckle v. = See Mizen v. Pick, 3 M. & W. 481 ; Bierman, 89 111. 454 ; Brown v. Pattou, Cunningham r. Irwin, 7 S. & R. 247 ; 3 Humph. 135 ; Williams v. Prince, 3 and see supra, § 84. Strobh. L. 490. But see Rumney d. Keyes, 7 N. H. 571. 117 89.] CONTRACTS. [chap. III. by him for the wife is adequate.' But the more reasonable view i8, that the mere fact of separation is sufficient to put persons dealing with her on inquiry how far her authority to bind her husband continues.^ If, on the whole case, how- ever, it appears that the wife's allowance is insufficient, the husband will be bound for whatever supplies may be required for her actual support.^ § 89. The contract of a married woman, when by law „ . , invalid by reason of her coverture, cannot be vali- Married •' women dated by estoppel, so far as to make her bound by a topped and Contract by which she would not otherwise be bound. forceTxe- Thus a married woman's sale of real estate, other- cuted con- wise invalid, will not be validated by encourasrement tract. J ^ given by her to the vendee to enter on the estate and make on it valuable and expensive improvements.^ Nor is such estoppjel worked by the additional fact that the married woman held herself out to be unmarried.' But if a married woman induces a purchaser to buy an estate to which she has an adverse title, she being cognizant at the time of such title but fraudulently concealing it, she will be estopped from after- wards setting up her title against him.^ The condition of fraud is on principle important in all jurisdictions in which a married woman is not contractually liable; and adopting this 1 Frost V. Willis, 13 Vt. 202. But see Mainwaring < . Leslie, M. & M. IS ; 2 C. & P. 507 ; Edwards v. Towels, 5 M. &G. 624. 2 Johnston c. Sumner, 3 H. & N. 261; Bifi'en ,.. Bignell, 7 H. & N. 877; Mott V. Comstook, 8 Wend. 544 ; Caney V. Pattou, 2 Asli. 140 ; Jacolos v. Featli- erston, 6 W. & S. 346 ; see Hultz r. (xibbs, 66 Penn. St. 360. ^ Hodgkiuson r. Fletcher, 4 Camp. 75 ; Emmett v. Norton, 8 C. & P. 506 ; Lookwood V. Thomas, 12 Johns. 248. * Bispharn's Eq. 2(1 ed. § 293, citing Drury v. Foster, 2 Wal. 24 ; Rangeley c. Spring, 21 Me. 130 : Concord Bank ?■. Bellis, 10 Cush. 276 ; Bemis v. Call, 10 Allen, 512 ; Merriara v. Boston R. R., 117 Mass. 241 ; Glidden v. Strupler, 52 118 Penn. St. 400 ; Williams v. Baker, 71 Penn. St. 476 ; Miles v. Lingerman, 24 Ind. 3S5 ; Kane Co. u. Herringtou, 50 111. 232 ; Morrison u. Wilson, 13 Gal. 494. ' Liverpool Ass. v. Fairhurst, 9 Ex. 422. 5 Bispharn's Eq. 2d ed. § 293, citing MoCullough V. Wilson, 21 Penn. St. 436 ; Couch u. Sutton, 1 Grant's Cas. 114 ; Brinkerhoff v. Brinkerhofif, 8 C. E. Green, 477, 483 ; Carpenter ,.. Car- penter, 10 C. E. Green, 194 ; Connolly u. Braustler, 3 Bush, 702; Drake v. Glover, 30 Ala. 382. See Klein r. Cald- yell, 91 Penn. St. 140. As to estoppel by infants see supra, § 74. As to whe- ther estoppel can operate on future acquired property, see supra, § 78. CHAP. III.] MARRIED WOMEN. [§89. distinction, Mr. Bigelow' states the law to be that " parties under disability, as infants and married women, are not estop- ped unless their conduct has been intentional and fraudulent."^ And he goes on to 'say that " in cases of fraud unmixed with contract, whether by concealment or active conduct, the cur- rent of authority declares (in opposition to the doctrine in Massachusetts) that a married woman may estop herself to deny the truth of her representation."^ — Whether a married woman ' Estoppel, 3d ed. 510. ' He cites Kane Co. v. Herrington, 50 111. 232 ; Schnell o. Chicago, 38 111. 382 ; Davidson v. Young, 38 111. 148 ; Rogers v. Higgins, 48 111. 211 ; Scliwartz u. Saunders, 46 111. 18 ; Miles u. Lin- german, 24 Ind. 385 ; McCoon v. Smith, 3 Hill, 147 ; Sehenck v. Stumpf, 6 Mo. Ap. 381. ' To this, in addition to the cases already noted, are cited, among other cases : Reed v. Hall, 57 N. II. 482 ; Pat- terson V. Lawrence, 90 111. 174 ; Ander- son V. Armstead, 69 111. 452 ; Meiley v. Butler, 26 Oh. St. 535 ; Dukes v. Spang- ler, 35 Oh. St. 119 ; Rusk u. Fenton, 14 Bush, 490 ; Davis v. Zimmerman, 40 Mich. 24 ; Levy v. Gray, 56 Miss. 318. It may be in view of this modified capacity of binding herself by estop- pel that a married woman has been held entitled, though on questionable reasoning, after part payment of the purchase money of land bought by her, to enforce performance of the contract. Neef V. Eedmon, S. C. Mo. 1881. The court said : " This is a case of the first impression in this court, and there is a lamentable dearth of authority on the question involved. ' As a general rule a married woman cannot, except in special cases, contract as a feme sole, nor as such sue or be sued.' Cord on Married Women, § 532. ' Any form of contract which she may make is as to her a nullity.' 1 Bishop on Married Women, § 39. But it by no means follows that one cannot bind himself by a contract with her. She cannot bind herself personally by any contract she may make. It is not like most contracts of an infant, voidable only, but while it remains wholly unexe- cuted on her part is absolutely void. Not binding her, it cannot be enforced against the party contracting with her. The element of reciprocity or mutuality is absent. A contract executed by her in whole or in part, and remaining executory on the part of the person contracting with her, occupies a dif- ferent footing. If she has executed her part of the contract, he cannot say there is no consideration for his agree- ment. ' If she has done all on her part required by the contract, it will be enforced against the other party ;' and it makes no difference that she could not have been compelled to per- form the agreement. 2 Bishop on Mar- ried Women, § 250. ' But if the agree- ment rests merely in mutual promises, then, in principle, as the promise of the married woman is a nullity, it cannot constitute a consideration for the promise of the other party, and, therefore, it is void as to him.' Ibid. Conceding that he might rescind tlie contract by tendering to her what he had received, in part performance of the contract on her part, shall he re- tain what he has thus received, and 119 89.] CONTRACTS. [chap. III. is estopped by her covenant of warranty, or by recitals, is a question as to which there is much conflict of opinion. The preponderating view is that she cannot be so estopped in juris- dictions where she has no business capacity ;^ though this is not without strong dissent and occasional departures from the rule even in states where it is nominally recognized.^ Under recent statutes conferring capacity on married women, estop- refuse to perform his contract, ou an offer by her to complete the perform- ance on her part ? "It is not the case of a mere pay- ment of money on a verbal contract and an attempt to enforce specific perform- ance, because there has been a part performance of the contract. Here is a contract in writing, signed by the party to be charged, and while the contract as to the other party is a nul- lity, as long as it is entirely executory on her part, and, therefore, not binding on him, it ceases to be a nullity as to him when she has executed her agree- ment either in whole or in part. If after having received a part of wliat she was to give, he may still rescind the contract, because he cannot compel the performance of the balance of her contract, equity will not let him do so without returning or offering to return what he may liave received from her in part performance ; but will regard the contract as possessing sufficient vitality, as against him, to enable her to get what she bargained for unless he will place her //( statu, quo by return- ing what he has received from her. The principle which exonerates her from personal liability on any contract she may make, is a shield for the pro- tection of herself and husband, and is not to be used as a weapon for their destruction. "In Chamberlain v. Robertson, 31 Iowa, 410, somewhat similar to the case at bar, there was a purchase by a mar- 120 ried woman of a tract of land and part payment of the purchase-money. The defendant refused to convey to her on the ground that she was a married woman, and as the contract could not have been enforced against her, neither could it be enforced against him. In delivering the opinion of the court, Beck, J., observed : ' Admitting that the contract, if it had not been per- formed or partly performed by plaintiff, could not have been enforced against her, it does not follow that defendant for that reason would be relieved from its obligation.' " But notwithstanding the conclusion thus stated, we must hold that if the contract was void as to the one party, it was void as to the other. Supra, § 2. ' Bank of America v. Banks, 101 0. S. 240; Lowell r. Daniels, 2 Gray, 161, overruling Fowler r. Shearer, 7 Mass. 21 ; Merriam v. R. R., 117 Mass. 241 ; Jackson c. Vanderheyden, 17 Johns. 167 ; Sparrow i. Kingman, 1 Const. 242; Wallace v. Miner, 6 Ohio, 364; Sfraun r. Straun, 50 111. 33; Patterson c. Lawrence, 90 111. 174, 612 ; Barker c. Circle, 60 Mo. 258 ; Gonzales v. Ilukil, 49 Ala. 260 ; and cases cited Big. on Est. 3d ed. 277. ' Dukes V. Spangler, 35 Oh. St. 119 ; Hill V. West, 8 Ohio, 222 ; Massie < . Sebastian, 4 Bibb, 433 ; Strong p. Wad- dell, 56 Ala. 471 ; King i-. Rea, 56 Ind. 1. As to parallel cases of estoppel by infants, see supra, § 74. CHAP. III.J MARRIED WOMEN. [§91. pels operate wherever there is capacity to contract.' This is the rule in England,^ and has been extended to cases of con- tract in several adjudications in this country.' And even though the capacity to be bound by an estoppel in pais is not conferred by an enabling act, it may be asserted that, if the capacity to be bound directly is given, that to be bound indi- rectly follows.* § 90. A contract for the future separation of husband and wife, being; against the policy of the law, is invalid.* T^ • xi • 4. . J.- ■ A- 4- Contracts it IS otherwise as to agreements tor immediate sepa- for future ration, which, when there is sufficient consideration, fnyaiid'"" and when the provisions are fair and equitable, will, according to the opinion now prevalent, be sustained.^ And a husband will be enjoined from molesting his wife in contra- vention of provisions of articles of separation ;' and may be enjoined from suing for restitution of conjugal rights, in vio- lation of a deed of separation.^ § 91. In both law and equity, agreements between Agree- 1 1 J J .n • J J} i.1 merits be- husband. and wife are void, so far as concerns the tween hus- marital estate, they being in this respect regarde. Cuyler, 6 T. R. 176; Bazeley v. Forder, ut supra. 3 Leake, 2d ed. 574 ; Grindell r. Godmond, 5 A. & E. 755 ; Turner <■. Rookes, 10 A. & E. 47 ; Brown c. Ack- royd, 5 E. & B. 819 ; Baker ,.. Samp- son, 14 C. B. N. S. 383; Wilson ,. Ford, L. R. 3 Ex. 63 ; Pierce v. Pierce, 9 Hun, 50; Porter r. Briggs, 38 Iowa, 166 ; Warner <. Ryan, 28 Wis. 517 ; but see, contra, as a common law rule, Ray c. Adden, 50 N. H. 82 ; Coffin r. Dunham, 8 Gush. 404; Sheldon v. Pen- dleton, 18 Conn. 417 ; Dow v. Eyster, 79 111. 254 ; Pearson c. Darringtou, 32 Ala. 227 ; see supra, § 71, infra, § 122. '" Harris v. Lee, 1 P. Wms. 482 ; Mayhew v. Thayer, 8 Gray, 172. '" Sears i'. Giddey, 41 Mich. 90. See for other oases, infra, § 757, last sen- tence. CHAP. IV.] ALIENS. [§ 94. enemies void. CHAPTEE IV. ALIENS. Capacity of aliens limited, § 93. I Contracts with alien enemies void, I § 94. § 9.3. As is shown more fully in another work,' aliens, in all jurisdictions in the United States, have now the ^ ^jt ^^ same civil rights, so far as concerns contracts, as aliens lim- citizens. The only limitation on their business capacity that remains is, that in some states they are pre- vented from holding real estate permanently unless they be- come residents, or declare an intention to become naturalized.^ § 94. A contract with an alien enemy, unless licensed by the home government, is void both in law and ., „ T • 1 J" 1 • 1 Contracts equity.^ Licenses are personal franchises, and are with alien not transferable;*and are to be limited to their specific objects." The subject of an alien state at war with the state of the forum may bring suit if his residence be per- mitted by the sovereign of the/orH?H.* And permission is to be inferred from non-expulsion.'' As a general rule, however, trading without license with public enemies is void at com- mon law ;^ and the same rule applies to trading with bellig- erent insurgents.' Contracts, previously valid, are suspended during hostilities.'" 1 Whart. on Conf. of Laws, § 17. * Infra, § 475 ; Patten v. Nicholson, 2 See Phillips <.. Moore, 100 U. S. 3 Wheat. 204. 208 ; Hanenstein v. Lynham, 100 U. S. ' Infra, § 475. 483. " Walls t: Williams, I Salk. 46 ; ' Infra, §§ 473-8 ; Roll. Ah. Alien, Boulton v. Dohree, 2 Camp. 163. B. ; 1 Ch. on Con. 11th Am. ed. 258 ; ' Wells v. Williams, 1 Ld. Bay. Branden v. Nesbitt, 67 R. 23 ; Albrecht 282 ; Clarke o. Morey, 10 Johns. 69 ; V. Sussman, 2 V. & B. 323 ; Barrick v. Russell v. Skipwith, 6 Binn. 241. Buba, 2 C. B. N. S. 563 ; Scholefield v. ^ Infra, §§ 473-5. Eichelberger, 7 Pet. 586; Griswold c. » Infra, § 474. Waddington, 16 Johns. 438. "> Infra, § 478. 125 96.] CONTRACTS. [CHAP. V. CHAPTEE V. AGENTS. Agent may bind principal by contract, § 96. § 96. The power of agents to bind their principals by con- tract is discussed at large in another work, where bincTprin^^ the authorities are grouped and criticised. To now cipai by p-Q over the same ground would not only unduly contract. ° ,, , . -, ,, , . ,, swell the present treatise, but would be virtually to reprint a large part of a volume with which this is intended to stand side by side. It is enough now to say, in general, that though in the classical Roman law an agent's power to bind his principal by independent contract was disputed, this power, when rightfully exercised, is now as fully conceded in states retaining the Roman common law as in those accepting the English common law. A principal, it is now also univer- sally held, is chargeable with the representations of his agent when such representations were among the inducements which led to a contract which the principal seeks to enforce. Special authorization is not necessary, in order that the principal should be bound by any particular representations, when such representations are within the general range of the duties with which the agent is charged. A principal, also, is bound by all representations which are part of the res gestse, and by the agent's fraudulent representations made in furtherance of the principal's plan. When an agent ignorantly makes a false statement of which the principal knows the falsity, the prin- cipal cannot avail himself of a bargain based on such repre- sentations.' An agent, also, authorized to sell, may do what- ever is necessary to effect a sale, and may sell on credit when this is usual, though this does not necessarily imply a power ' Wliart. on Agency, §§ 146-176. 126 CHAP. V.J AGENTS. [§ 96. to pledge or to barter. Unless clothed with real or apparent authority from his principal, he cannot, ordinarily, transfer his principal's title. lie is authorized, when representing his principal for the purpose, to collect or receive debts due his principal, to negotiate bills, to transact business abroad, and to take proper steps in maritime affairs involving the princi- pal's interests. In following sections it will be seen that : — a principal is liable for his agent's representations when within the agent's range ;' and this is eminently the case with corporations, who can act only through agents •? an agent's misrepresentations, may avoid a contract ■? an agent may become personally liable on an illegal contract :* an agent canriot take advantage of his opportunities as agent to prejudice his principal ;° nor can he usually set up illegality against his principal ;^ nor can he hold to a contract obtained by unduly influencing his principal :' an agent is liable to his principal in account stated and for value due •? the construction of letters of agency which will best sup- port the good faith of the transaction will be sustained ■? an agent's debt cannot be set off against principal,'" though the principal's may against the agent:" a principal is liable for his agent's negligence:'^ an agent is liable to third parties for his negligence ;" and for money he has wrongfully paid over to principal after notice :^* an agent may sue in his own name :'' payment to and by an agent, when the agent is duly autho- rized, is equivalent to payment to and by principal :'" agency, however, cannot be proved by the agent's declara- tions."- 1 Infra, §§ 269 et seq. 10 Infra, § 102. 2 Infra, §§ 130 et seq. " Infra, § 1027. 3 Infra, § 214. I2 Infra, § 1052. < Infra, § 359. i3 Infra, § 1054. 5 Infra, §§ 378, 435. '^ Infra, § 755. 6 /n/ro, § 357. '5 /n/ra, § 810 a. ' Infra, § 161. '« Infra, § 992. 8 Infra, §§ 724, 774. i' Infra, § 278. As to inferences from ^ Infra, § 656. contract of agency, see in/ra, §§ 709 e«sey. 127 §97.] CONTRACTS. [chap. VI. CHAPTER VI. LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. Total mental incapacity precludes con- tract, § 98. By early authorities lunacy not gene- rally ground for avoidance, § 99. Subsequent tendency to liold such con- tracts Toid, § 100. Exception as to necessaries, § 101. Prevalent view now is that where there is capacity there is liability ; but that contract is voidable when made with party with notice, § 102. Question conditioned by fraud, § 103. And by undue influence, § 104. Notice to be inferred from facts, § 105. Contracts bind when fair and benefi- cial, § 106. Exception as to deeds, § 107. Lunatic may take title, § 107 ». And may transfer title and may en- dorse, § 108. Business capacity restored in lucid in- tervals, § 109. Monomania does not avoid contracts on other topics, § 110. On rescinding contract parties to be placed in statu quo, § 111. Partnership contracts of lunatics void- able, § 112. Distinctive rule as to marriage con- tracts, § 113. Distinctive rule as to divorce, § 113 a. Party may himself avoid contract on ground of mental incompetency, §114. And so of his administrator, § 115. And so of guardian and assignee, § 116. Other contracting party cannot avoid, §117. Non-repudiation may be ratification, § 117a. Mere intoxication no ground for hold- ing contract void, § 118. Otherwise when there is fraud, § 119. Ratification to be inductively shown, §120. No defence in action for necessaries, § 121. Legal expenses may be necessaries, § 122. Inquisition prima facie evidence of in- competency, § 123. ' Spendthrifts may be incapacitated by local statute, § 124. § 98. Theoretically there is no person who can be spoken Total men- °^ ^^ perfectly sane, and no one as perfectly insane. t^i i°'^;^P''- Between perfect sanity -and perfect insanity the eludes con- gradations are innumerable.^ If it were possible to conceive of a person utterly deprived of intellect, there would be no difficulty in saying that the contracts of 1 See Wh. & St. Med. Jur. 4th ed. vol. i. §§ 4 et seq. 128 CHAP. VI.] LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. [§ 98. such persons would be void. The assertion, however, involves a contradiction in itself. To make a contract no fixed stand- ard of intelligence is required. We cannot, therefore, saj' of any particular party actually assenting to an act, that he is absolutely incapable of contracting. But this incapacity may, in many instances, practically exist, as is the case with idiots and old persons whose powers of recollection and discrimina- tion have almost entirely ceased. Of these we may say gene- rally that such persons, not having contracting minds, cannot contract.^ The true test is, not whether the party is capable of fully understanding the nature of an act and foreseeing its consequences, for this cannot be absolutely predicated of any pierson, but whether he is capable of seeing the act in the relations in which it would be seen by ordinary observers. If utterly deficient in this respect, he is insane.^ The same reason ' Sentance v. Pool, 3 C. & P. 1 ; Hall o. Warren, 9 Vea. 605 ; Banks v. Good- fellow, L. R. 5 a. B. 549 ; Ball v. Man- nin, 3 Bllgh (N. S.), 1 ; Burke v. Allen, 29 N. H. 106 ; Young v. Stevens, 48 N. H. 135 ; Van Deusen c. Sweet, 51 N. Y. 378 ; see 16 Alb. L. J. 292 ; Baldwin t.: Duntou, 40 111. 188 ; Emery v. Hoyt, 46 111. 258 ; Somers v. Pumplirey, 24 Ind. 231. In 1 Wh. & St. Med. Jur. 4th ed. (1882) the topic in the text is considered as follows : Lunatics in any view liable for necessaries, § 1. Also liable for contracts during lucid inter- vals, § 2. Monomania does not incapa- citate on other topics, § 3. By early authorities lunacy no ground for avoid- ance, § 4. Subseqiient tendency to hold all contracts with lunatics void, § 5. Question conditioned by fraud, § 6. Inquisition only pn'ma/acie proof to third parties, § 6 a. Better opinion that contracts by lunatics are voidable at option, § 7. Contracts executed in good faith will be sustained, § -8. Con- flict as to whether deeds are voidable, § 9. In rescission parties to be placed in statu quo, § 10. Partnership contracts not dissolved, ipso facto, by lunacy, VOL. I. — 9 § 11. Administrators may avoid con- tract of insane decedent, § 12. And so of representatives and guardians, § 13. And so of party himself, § 14. Lunatic liable for torts, § 15. Idiots are distinguished, by Lord Tenterden, in Ball v. Mannin, 3 Bligh (N. S.), 1, from lunatics by the test of permanency. As to idiocy. Lord Ten- terden says : " I find in an old book on this subject, that if a person is capable of learning the alphabet, he is not within the legal definition of idiocy ; yet it is impossible to hold that persons no further qualified are capable of exe- cuting a deed." And he further holds that it was right to (ell a jury that to constitute mental incapacity, " it was not necessary he (the party whose sanity is in dispute) should be without any glimmering of reason." 2 Dennett v. Dennett, 44 N. H. 531 ; Mann v. Betterly, 21 Vt. 326 ; Brown V. Brown, 108 Mass. 386 ; Titcomb u. Vantyle, 84 111. 371 ; Willemin v. Dunn, 93 111. 511 ; Somers u. Pumph- rey, 24 Ind. 231 ; Henderson w. Mc- Gregor, 30 Wis. 78 ; Coleman, w. Fr^zer,, 3 Bush, 300. 129. § 100.] CONTRACTS. [chap. VI. which precludes the formation of a contract where the two parties are thinking about difterent things,' precludes its for- mation when one of the parties is not thinking at all. § 9'r>. The rule laid down by Coke, that a man " should not be allowed to stultify himself, "^ was for some time so applied as to preclude either a party, or his representatives, from subsequently setting up his mental incapacity as a ground for avoiding a con- tract. This rule is as without foundation in the Ro- man law as it is repugnant to reason and good morals.^ The extreme view of Coke, that mental incapacity cannot be set up to avoid a contract, was followed, te'^dencyto i" natural reaction, by the acceptance of the rule that all contracts are avoided by proof of mental incapacity.* It is true that it is probable that nothing more was meant by this, than that when a man is transparently an idiot no contract made by him will be enforced.' It is certain that it was never meant, that when there is nothing in the conduct and appearance of a party to notify those dealing with him that he is insane, and By early authori- ties, luna- cy, unless involviug total inca- pacity, no ground for avoidance of contract §100. hold all contracts with luna- tics void. > Infra, §§ 177 at eeq. 2 4 Co. 123; Co, Litt. 2476. 3 1 Story, Eq. Jur. § 225 ; 1 Fonblan- que's Eq., Bk. 1, ch. 2, § 1 ; Pollock, Wald's ed. 78. The Roman authorities distinguish between furiosus and tlie viente captiis or demtiis. L. 25 C. de nupt. 5, 4 ; L. 8, § 1, D. de tut. dat. 26, 5 ; L. 6, D. de cur. fur, 27, 10 ; L. 28, C de episc. aud. 1, 4, cited Wind- scheid, Pandekt. § 54, 11. Windscheid makes Wahnsiiin convertible vritli lu- nacy, as afterwards defined, and Geis- tesschioadJieit with idiocy, as defined above. In the Roman law, the lunatic is ftiiiostis, the idiot y'a/MMs. L. 2, D. de post. 3, 1 ; L. 21, D. de reb. auct. jud. 42, 5. Cicero, Tusc. iii. 5, speaks of the condition of the former as insania; and to same effect see L. un. C. 9, 7. Even as late as Brown v. Jodrell, 3 C. 130 & p. 30, where lunacy was pleaded as a defence to an action for work and labor done. Lord Tenterdeu said, "no person can be suffered to stultify him- self, and set up his own lunacy iu de- fence." He proceeded, however, to say that it wouLl be otherwise, where the mental incapacity of one party was used by the other party to extort un- fair conditions. * See Lang v. Whiddeu, 2 N. H. 435 ; Mitchell o. Kingman, 5 Pick. 431 ; Grant v. Thompson, 4 Conn. 203 ; Rice V. Peet, 15 Johns. 503 ; Hope c. Ever- hardt, 70 Penn. St. 235 ; Fitzgerald c. Reed, 9 S. & M. 94 ; Hines v. Potts, SB Miss. 346. 5 To this effect is Dexter v. Hall, 15 Wall. 9. For an exposition of the fluc- tuations of English law, see Pollock, op cit., 7S-9. CHAP. VI.] LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. [§ 102. when such parties have no notice of his insanity, their bar- gains with him, no matter how much they may be to his ad- vantage, are void. That a person apparently sane, for instance, should lease a house and occupy it and then be protected from payment, the bargain having been fair and advantageous to him, or that under similar circumstances he should buy goods and use them, and then be relieved from paying for them, never could have been intended. But in the rebound from the position of Coke, it was natural that expressions should be dropped to the etiect that lunacy of all kinds should in all cases destroy capacity to contract. § 101. Even supposing insanity to exist to such an extent as to preclude a party from making a binding con- „^ tract, his estate will nevertheless be liable for neces- always rec- saries furnished for his support. Such, as we have toneces- seen, is the rule humanely prescribed in reference to ^^™^- infants,' and such, for the same reason, is the rule in reference to insane persons.^ The wife of a lunatic may buy necessaries for herself on his credit, though he be at the time confined in an asylum.^ And a lunatic's liability for necessaries continues even under a statute which provides that all the contracts of a lunatic under guardianship shall be void.' Legal expenses incurred in the protection of the lunatic and his estate fall under the head of necessaries.' § 102. As insanity is a generic term, covering mental dis- tui'bance of all grades, the better view is, that no prevalent rule absolutely and universally determining its ef- thaTwhere^ ' Supra, §§ 64 et seq. Richardson v. Strong, 13 Ired. L. 106 ; ' 1 Vi^h. k St. Med. Jur. 4tlx ed. Carr < . Holliday, 5 Ire. Eq. 167 ; Nor- § 1 ; Bagster v. Portsmouth, 7 D. & R. thington ex parte, 1 Ala. Sel. Ca. 400; 614; 5 B. & C. 170 ; Niell v. Morley, 9 Coleman v. Frazer, 3 Bush, 300 ; Mc- Ves. 478 ; Dane v. Kirkwall, 8 C. & P. Cormiok v. Little, 85 111. 62 ; Infra, § 679 ; Tarbuck v. Bispham, 2 M. & W. 121. 6 ; Sawyer v. Luf kin, 56 Me. 308 ; Mo- ' Read v. Legard, 6 Exch. 636 ; Shaw Crillis, l: Bartlett, 8 N. H. 569 ; Lin- v. Thompson, 16 Pick. 198. coin u. Buckmaster, 32 Vt. 652 ; Ken- ' McCrillis v. Bartlett, 8 N. H. 569. dall r. May, 10 Allen, 59 ; Skidmore = Meares in re, L. R. 10 Ch. D. 582 ; V. Romaine, 2 Bradf. (N. Y.) 122; Williams «. Vi^entworth, 5 Beav. 325 ; Van Horn v. Hann, 39 N. J. L. 207 ; Hallett v. Oakes, 1 Cush. 296 ; see su- La Rue o. Gilkysou, 4 Barr, 375 ; pra, § 71 ; infra, § 122. 131 § 102.] CONTRACTS. [CHAP. VI. thereiBca- fects Can be imposed.* The monomaniac is held by pacity there .... is liability ; the highest authorities to be insane; yet the mono- contract is maniac is responsible in matters to which his delu- ^°hen*'made ®^°" ^'^^^ °°* extend. There are probably as few with party persons perfectly sane as there persons perfectly in- withnotice. -^ J^ , •' . i • , • , „ sane. No bargain was ever made in which one of the parties was not superior to the other in mental capacity ; none, if there was a consenting mind on both sides, in which absolute incapacity on either side could be proved. Hence, after first swinging to the position that insanity can never be set up by a party to avoid his contracts, and then rebounding to the position that all contracts by insane persons are void, the courts have settled on the rule that the question of com- petency is one of fact to be determined on the special circum- stances of the particular case. If the party making a contract was at the time without the capacity to contract, then the contract is void. But such incapacity is rarely, if ever, absolute. The mere fact of apparent consent indicates some degree, how- ever small, of reason. — The question then first arising is, was there reason sufficient for the particular act ? " Whether in any particular case," says Mr. Pollock,^ "a state of conscious- ness of this kind (drunkenness) does or does not amount to absolute deprivation of a consenting mind for the purposes of contract, is a question which it would be probably impractica- ble and certainly undesirable for a court of justice to enter into. The same considerations apply irith almost or quite the same force to the capacity of a lunatic." And he declares the English rule to be "that the contract of a lunatic or drunken man, who by reason of his lunacy or drunkenness is not capable of under- standing its terms or forming a rational judgment of its effect upon his interest, is not void, but only voidable at his option ; and this only if his state is known to the other party." "Wher- ever there is mental capacity to contract, in other words, there a contract may be made, subject to be avoided at the option of a party whose eccentricity or debility of mind has been knowingly practised on by the other side. When there ' 1 Wh. & St. Med. Jur. ^ ed. §§ 2 Tollock, 3d ed. 102. 531 et seg. 132 CHAP. VI.] LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. [§ 103. is no capacity to contract, — i. e., in cases of idiocy and frenzy, • — then there is no contract for want of a consenting mind.' — • The distinction between " voidable" and " void" contracts has been already generally discussed.^ It is proper here to say, that the fact that " void" and " voidable" are used in many cases as convertible terms makes it necessary to appeal rather to the reason on which such cases rest than to their particular words.' § 103. A party who has mental capacity enough to make a contract which would bind hira if fair, may, never- , , ... , 1 1 - Question theless, either in person or through his representa- condition- tives, set up mental deficiencies as a defence when "^ y lau . such deficiencies were fraudulently acted on by the opposing party to extort an undue advantage.^ And imbecility or bal- ' This is now finally established in England, in Matthews v. Baxter, L. R. 8 Exch. 132 ; affirming Molton v, Cam- roux, 4 Exoh. 17, see infra, § 106. In this country may be cited to the same effect, Hovey v. Hobson, 53 Me. 451 ; Young V. Stevens, 48 N. H. 133 ; Allis V. Billings, 6 Met. 415 ; Howe v. Howe, 99 Mass. 88 ; Ingraham v. Baldwin, 9 N. Y. 45 ; Riggs v. Tract Soc, 84 N. Y. 330 ; Matthiesen R. R. Co. v. McMahon, 38 N. J. L. 537 ; Murray v. Carlin, 67 111. 286 ; McCormick v. Little, 85 111. 62; Scanlan v. Cobb, 85 111. 296 ; Wil- lemin v. Dunn, 93 111. 511 ; Van Patten V. Beals, 46 Ind. 62 ; Musselman u. Cravens, 47 Ind. 1 ; Freed u. Brown, 55 Ind. 310; Hardenbrook v. Sher- wood, 72 Ind. 403 ; Rusk v. Fenton, 14 Bush, 490 ; Elston v. Jasper, 45 Tex. 409. In Matthiesen R. R. Co. v. Mc- Mahon, supra, though the court use the term void, the word is shown by the context to be meant in the sense of voidable. 2 Supra, § 28 ; see also infra, § 114. ' The subject is considered more in detail in 1 Wh. & St. Med. Jur. 4th ed. §§ 5 e« seq. To sustain a contract made with a lunatic on the ground that it was made in good faith and for his benefit and without knowledge of his incapacity, and that it has been so far performed that the other party cannot, if it be rescinded, be placed in statu quo, these facts must be alleged and proved. Riggs 0. Tract Soc, 84 N. Y. 330, re- versing S. C. 19 Hun, 481. In Haydock V. Haydock, 34 N. J. Eq. 570, affirm- ing S. C. 33 N. J. Eq. 494, it was said by Reed, J., in the New Jersey Court of Appeals: "The influence which is undue in cases of gifts inter vivos, is very different from that which is re- qiiired to set aside a will. In testa- mentary cases, undue influence is al- ways defined as coercion or fraud, but, inter vivos, no such definition is applied. Where parties hold positions in which one is more or less dependent upon the other, courts of equity hold that the weaker party must be protected, and they set aside his gifts if he had not proper advice independently of the other. ' ' * Infra, §§ 157 et seq., 232 et seq. ; Gartside v. Isherwood, 1 Bro. C. C. 560 ; Dane v. Kirkwall, 8 C. & P. 679 ; Dent u. Bennett, 7 Sim. 539 ; Rhodes t". Bate, L. R. 1 Ch. 252 ; Grant v. Thompson, 133 104.] CONTRACTS. [chap. VI. lucination in the party imposed on, the other party having notice of such disability and taking advantage of it, is a ground for setting aside a contract which would have been sustained had the parties been of equal intelligence.^ But mere mental disparity between the parties, there being no fraud, will not be ground for interference.^ If it were, few contracts would remain undisturbed.' And the better rule is, " that if the proof be clear that an executory contract to pur- chase was made in good faith, and for a full, fair price, when the lunacj' of the vendor was neither known nor suspected, and that the contract was executed on the part of the pur- chaser without knowledge or belief of the existence of the in- capacity of the grantor, the contract will be upheld."^ § 104. The question of mental incompetency rarely presents , J itself detached from that of undue influence.^ A Ana on undue person whose mind is enfeebled may make a will in influence. i- i i i i • t i solitude, but he cannot make a contract in solitude. To contract he must bring himself more or less completely within the sphere of the other contracting party ; and it is 4 Conn. 208 ; Seeley r. Price, 14 Mich. 541 ; Henderson o. McGregor, 30 Wis. 78 ; Garrow r. Brown, 1 Wins. (N. C.) No. 2, Eq. 46 ; Eutlierford r. Ruff, 4 Dessaus. 350 ; Birdsong r. Birdsong, 2 Head, 2S9 ; Killian c. Badgett, 27 Ark. 166. ' AUore o. .Jewell, 94 U. S. 506; Harding i . Wheaton, 2 JIass. 373 ; Mann u. Betterly, 21 Vt. 326 ; Taylor I . Atwood, 47 Conn. — ; Sliakisjieare v. Markliam, 72 N. Y. 48 : Hunt v. Moore, 2 Barr, 105 ; Beals r. See, 10 Barr, 60 ; Moore v. Hersliey, On Penn. St. 196; Whitehorn v. Hines, 1 Muuf. 557 ; Jones ('. Perkins, -5 B, J!on. 222; Kee- lile r. Cummins, 5 Hayvr. Tenn. 43; Buf- falow /'. Buffalow, 2 Dev. & B. Eq. 241 ; Rutherford c. Ruff, 4 Des. Eq. 350; Halley ' . Troester, 72 Mo. 73 ; see Turner r. Rusk, 53 Rid. 65 ; Clearwater , . Kimh-r, 43 HI. 272 ; Myatt r. Walker, 44 111. 485 ; Emery r. Iloyt, 46 111. 258 ; Cadwallader /■. West, 48 Mo. 483 ; 134 Seely r. Price, 14 Mich. 541 ; Jacox r. Jacox, 40 Mich. 473 ; Taylor i-, Patrick, 1 Bil)b, 168 ; Wilson ,-. Oldham, 12 B. Mon. 55 ; Birdsong u. Birdsong, 2 Head, 289; Killian ,■. Badgett, 27 Ark. 166; Henderson r. McGreg . .lones, 22 Ark. 92. That such con- tracts may be ratified, see infra, § 117 k. - Beavan c. McDonnell, 9 Exch. 309. 6 Dane r. Kirkwall, 8 C. & P. 679. ' Si-e Baxter v. Portsmouth, 2 C. & P. 178; 7D. & R. 617. 136 ' La Rue c Gilkyson, 4 Barr, 375 ; Beals V. See, 10 Barr, 60. As tending to sustain the position in the text, see Dane r. Kirkwall, 8 C. & P. 679 ; Nel- son V. Duucombe, 9 Beav. 211 ; Sawyer «. Lufkin, 56 Me. 308; Hallett u. Oakes, 1 Cush. 2i)6 ; Seaver v. Phelps, 11 Pick. 304 ; Fitzhugh v. Wilcox, 12 Barb. 235 ; Riggs <■. Tract Soc, 19 Hun, 481 ; Mutual Life Ins. Co. c. Hunt, 79 N. Y. 541 ; S. C. 14 Hun 169 ; Wilder r. Weakley, 34 Ind. 181; Simms v. McClure, 8 Rich. Eq. 286; Marmon u. Marmon, 40 Mich. 478 ; Henry v. Fine, 23 Ark. 417 ; Encking r. Simmons, 28 Wis. 272; Henderson v. McGregor, 30 Wis. 78 ; Fitzgerald v. Reed, 9 Sm. & M. 97. As to ratifica- tion, see infra, § 117 a. In Kendall !•. May, 10 Allen, 59, the lunatic, who had been placed under guardianship, but whose guardian had been removed, and who had an income CHAP. VI.] LUNATICS, DKUNKARDS, AND SPENDTHRIFTS. [§ 107. § 107. It was once said in England, however, that lunacy is always a defence to an action on a specialty, no matter how fair may have been the conduct of the asto'deeds other party, or how beneficial the transaction to the lunatic ;' and though this is no longer the law, even as to deeds of real estate,^ it is still (1882) held, in several states in this country, that a deed by a lunatic of real estate is void even as to innocent third parties for a full consideration.' But it is difficult to see on what this distinction rests. A person who is sane enough to make a contract without a seal is sane enough to make a contract with a seal.* If a party dealing bona fide with a person whose insanity is latent is entitled to protection, there is no reason why he should be stripped of this protection in cases in which a seal happens to be attached to the instrument of indebtedness. If a party is sufficiently sane to bind himself by simple contracts, justice to parties dealing innocently with him as well as to himself requires that he should be regarded as sane enough to bind himself by specialties.' And unless we hold that latent insanity, of of ten thousand dollars a year, boarded with the plaintiff. The suit was brought in part to meet the expenses of a journey which the plaintiff took with the lunatic at the latter's request. This was allowed. " If without harm," said Chapman, C. J., " he could enjoy luxuries and gratify his tastes and fancies, he ought to be indulged in such enjoyments to a reasonable extent. If he enjoyed journeys, it was proper that he should be indulged in them." And the following was adopted from Persse in re, 3 MoUoy, 94: "The maintenance of a lunatic is not limited as an infant's is, within the bounds of income. It is not limited except by the fullest comforts of the lunatic. Fancied enjoyments and even harmless caprice are to be indulged up to the limits of income, and, for solid enjoy- ments and substantial comforts, the court will, if necessary, go beyond the limits of income." ' See Baxter r. Portsmouth, 5 B. & C. 170 ; though see Faulder v. Silk, 3 Camp. 126. " Elliott V. Ince, 7 De G. M. & G. 485 ; aliter as to voluntary deeds, e. y., disentailing deeds. ' Hovey c. Hobson, 63 Me. 451 ; Gibson u. Soper, 6 Gray, 279 ; Seaver V. Phelps, 11 Pick. 304; Van Deu- sen t>. Sweet, 51 N. Y. 378 ; Desilver's Est., 5 Rawle, 111; Rogers c. Walker, 6 Barr, 371; Crawford v. Scovell, S. Ct. Penn. 1881 ; Fitzgerald u. Reed, 9 Sm. & M. 94 ; Farley v. Parker, 6 Oreg. 105. That deeds of insane persons are only voidable in Maryland, see Turner V. Rusk, 53 Md. 65 ; and so in New Jersey, Blakeley v. Blakeley, 33 N. J. Eq. 502. * Beavan v. McDonnell, 9 Exch. 309. ' It is agreed, even by those who hold that a lunatic has no capacity to execute deeds for real estate, that such deeds may be ratified by the grantor 137 § 107.] CONTRACTS. [CHAP. VI. which the other contracting party had no suspicion, does not avoid a deed, there are few titles to real estate that can be reo-arded as secure.^ If there be fraud (and without fraud we cannot conceive of a deed being executed by a person obvi- ously and unquestionably insane), this, coupled with the in- sanity, vitiates the deed. But if a person apparently sane transacts business and executes deeds bona fide, and on a fair contract, then he must bear the loss, though a commission of lunacy, when duly perfected, may prima facie avoid sub- sequent deeds.^ — What has been said in reference to sealed contracts by infants applies to sealed contracts by persons of impaired mind.^ A party who is competent to make an un- sealed contract is competent to make a sealed contract. There is nothing in a seal which requires for its imposition any greater power or maturity of intellect than is required for the signing of a name. Ifor is there anything in sealed contracts which, as a rule, requires any such increased power or matur- ity. As things now stand, unsealed contracts (e. g., negotiable paper and brokers' memoranda) affect the rights of parties at least as seriously as do sealed contracts. The distinction, in the present relation, is so unreasonable that it cannot be ex- pected to linger much longer in our reports. The true rule is that "A voidable deed is capable of ratification, and if a grantor, when insane, makes a deed, and should afterwards in a lucid interval, well understanding the nature of the instru- ment, ratify and adopt it as his deed, as by receiving the pur- chase-money due under it, this would give effect to it and render it valid in the hands of the grantee."* And in respect when of sound mind, or during a lucid ;'. Cliaucellor, 5 Whart. 371 ; Miller v. intc-rval. Allis /■. Billings, 6 Met. 415 ; Craig, 36 111. 109 ; Somers i . Pum- Arnold r. Iron Works, 1 Gray, 434 ; phrey, 24 Ind. 231. That mental de- Gibson !'. Soper, 6 Gray, 279 ; Howe v. bility does not avoid deed, see Dennett Howe, 99 Mass. 88; Trunkey, J., i,. Dennett, 44 N. H. 531. Crawford i-. Scovell, ut supra; Key r. 2 Eaton r. Eaton, 37 N. J. L. 108; Davis, 1 Md. 82; Chew v. Bank, 14 Eusk .•. Fenton, 14 Bush, 490 ; Scan- Md. 229. Ian o. Cobb, 85 111. 296 ; Nichol c. ' See Campbell u. Hooper, 3 Sm. & Thomas, 53 Ind. 42; Freed c. Brown, G. 153 ; Matthews v. Baxter, L. R. 8 55 hid. 310 ; infra, § 123. Ex. 132 ; Allis ?•. Billings, 6 Mete. 415 ; ' Supra, § 38. Ingraham a. Baldwin, 5 Selden, 45 ; * Allis u. Billings, 6 Met. 415 ; Desilver's Est., 5 Rawle, 111 ; Bensell adopted in Blakeley v. Blakeley, 33 138 CHAP. VI.] LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. [§ 108. to persons whose insanity is latent, and who possess at the time of the transaction a-contracting mind, contracts by spe- cialty should be placed under the same rule as parol contracts.' When advantage has been taken of mental incapacity, they should be set aside. When no such advantage has been taken, but the transaction was fair and reasonable, it should be sustained.^ § 107 a. " A man of non-sane memory," it is said by Coke,^ " may, without the consent of another,, purchase lands;" and "idiots, madmen, lepers, deaf, dumb, may take and blind, minors, and all other reasonable crea- tures, have power to purchase and retain lands and tenements."* By deed poll a title can thus be granted to a lunatic, although the grantee would be under a legal disability to convey ; and a deed to the lunatic can be perfected by delivery to a third person for his use.* And it was held in Michigan, in 1881, that a valid delivery of a deed, in consideration of an ante- cedent indebtedness, may be made to an imbecile, the transac- tion being fair and beneficial to the imbecile.* § 108. The fact that a person conveying property Lunatic is insane, there having been no judgment of lunacy fer title, against him, and no notice to or negligence on the endorse^ N. J. Eq. 502 ; S. P. Bassett v. Brown, 105 Mass. 551 ; Allen u. Berryhill, 27 Iowa, 534 ; Breckenvidge v. Ormsby, 1 J. J. Marsh. 236 ; Waters v. Barral, 2 Bush, 598. And see as generally sus- taining the text, Hovey v. Hobson, 53 Me. 451 ; Allis v. Billings, 6 Mete. 415 ; Arnold c. Richmond Iron Works, 1 Gray, 434 ; Gibson u. Soper, 6 Gray, 279 ; Howe v. Howe, 99 Mass. 88 ; Valpey v. Rea, 130 Mass. 384; Eaton ? . Eaton, 37 N. J. L. 108 ; Key v. Daris, 1 Md. 82 ; Chew v. Bank, 14 Md. 299 ; Evans c. Horan, 52 Md. 602 ; Rusk v. Fen ton, 14 Bush, 490; Ashcraft v. De Armand, 44 Iowa, 229 ; Scanlan v. Cobb, 85 III. 296; Nichol v. Thomas, 53 Ind. 42 ; Freed v. Brown, 55 lud. 310 ; Elston v. Jasper, 45 Tex. 409. ' As to distinction, see infra, § 6"77. ' See infra, §§ 157 et seq. ' I. eh. i. § 1, 2 5. * See also 1 Steph. Com. 441 ; 2 Br. & Had. Com., Am. ed. 714 ; Concord Bank v. Bellis, 10 Gush. 276. 5 Concord Bank v. Bellis, ut supra. 6 Campbell r. Kuhn, 24 Alb. L. J. 217, citing Garnons u. Knight, 5 B. & C. 671 ; Gould v. Day, 94 U. S. 405 ; Buffnom v. Green, 5 N. H. 71 ; Hastings V. Merriam, 117 Mass. 245 ; Regan o. Howe, 121 Mass. 424 ; Merrills v. Swift, 18 Conn. 257; Tibbals v. Jacobs, 31 Conn. 428 ; Church u. Gilman, 15 Wend. 656 ; Mitchell ... Ryan, 13 Oh. St. 377; Hosley «. Holmes, 27 Mich. 416 ; Latham v. Udell, 38 Mich. 238 ; Wesson ;;. Stephens, 2 Ired. Eq. 557. 139 108.]- CONTRACTS. [chap. VI. part of the other side, does not avoid the transfer, when it is so far executed that the parties cannot be put in statu, quo. Nor when the contract is so far executed that the prior condition of things cannot he restored, will the contract be afterwards set aside.' And an endorsement by a lunatic to a promissory note, if without fraud or notice, transfers the title to the note.^ It is true that it has been held in Pennsylvania that a lunatic is not liable on a mere accommodation endorse- ment.' But as a rule insanity of the maker of a note is no defence to a suit by a bona fide holder for value without notice.* > Elliott V. Ince, 7 De G. M. & G. 475 ; La Rue !■. Gilkyson, 4 Barr, 375 ; Lan- caster Co. Bank v. Moore, 78Penn. St. 407 ; Wilder v. Weakley, 34 Ind. 181. 2 Caulkins o. Fry, 35 Conn. 170; Miller ,-. Finley, 26 Mich. 249. That such is the case with infants, see supra, §§ 35, 37. See Seutance v. Poole, 3 C. & P. 1, as to which Mr. Parsons, Cont. i. 385, says ; " It is difficult to see how one could indorse a bill or note in such a way that its appearance would excite no sxispicion, and yet be so drunk as to know nothing of what he was doing ; and unless the indorser were utterly in- capacitated, it should seem that a third party, taking the note innocently and for value, ought to hold it against him." ' Moore v. Hershey, 90 Penn. St. 196 ; Wirebach v. Bank, 97 Penn. St. 543. • Pollock, 3d ed. 99 et seq.; State Bank r. McCoy, 69 Penn. St. 204. In Wirebach v. Bank, ut supra, Trunkey, J., said : " The question now presented is, will an action lie on the accommodation indorsement of a prom- issory note by a lunatic ? If the deter- mination of this was not made, it was very clearly indicated in Moore r. Hershey, 9 Noriis, 196. There the action was by an indorsee against the maker of a promissory note, and evi- dence was offered to prove that the 140 maker had received no consideration, which fact the plaintiff had admitted in conversation, proof having been made that the maker was insane, but the offer was rejected, the court below ruling that as the note in suit was com- mercial paper, and the plaintiff a holder for value, the consideration could not be Inquired into. If the holder could recover against one who was insane when he indorsed or made the note without consideration there- for, no wider door could be opened for the swindler to despoil such helpless persons of their estates. An infant who makes or indorses a note may by his representative plead his Infancy as a complete defence. In like manner a lunatic may plead insanity and want of consideration. If the fact that the holder had paid value were enough, the lunatic could not defend for fraud or want of consideration. Then an in- nocent holder could recover, though the judgment would sweep away the lunatic's entire estate, and he had not been benefited a farthing. Nor would a nominal sum be sufficient. It is said the law protects those who cannot pro- tect themselves, but it would bo sorry protection, if one holding a valid note ■against a helpless man for $4000 could get it renewed for $10,000, and recover the full amount of the renewal note. The consideration must be fair and CHAP. VI.] LUNATICS, DRUNKARDS, AND SPENDTHRIFTS. [§ 110. § 109. The fact that a party was insane before executing a particular contract, and was insane afterwards, does ^ . ^ ' . . Business not invalidate the contract, if he was sune at the time capacity it was made." If, however, such prior and subse- lucid'inter- quent insanity be proved, the burden is on the party ^''''^• setting up a lucid interval to prove it.^ But periodic and in- termittent incapacity {e. g., epilepsy) cannot be presumed to be continuous and permanent.' § 110. Were a monomaniac precluded from executing con- tracts relating to topics to which his monomania does not extend, the business power of the country would be seriously impaired, since some of the most efficient business men have been monomaniacs on special topics.* Hence, it has been repeatedly held that the existence of a collateral monomania does not impair capacity to make a contract on a matter to which the mono- mania does not relate." Responsibility, in other words, as to a Monoma- nia does not avoid contracts on othei' topics. consclonable, and then it is proper. When it is a pre-existing debt, or money loaned, its measure is certain, and the insane man is liable for no more than the amount of such debt or loan. The holder of a madman's note stands in no better position than the payee. An accommodation maker or indorser, in fact, is a, surety for the principal debtor, and when he is an infant or an insane person he or his representative may defend as in other forms of contract. We are not per- suaded that commercial or public in- terests require an adjudication that a lunatic who signs a contract as surety, or as accommodation maker or indorser, is liable for the debt of another man." ' Story on Contracts, § 74 ; Hall v. Warren, 9 Ves. 605 ; Gore v. Gibson, 13 M. & W. 623 ; Tozer o. Saturlee, 3 Grant (Penn.), 162 ; Blakeley w. Blake- ley, 33 N. J. Eq. 502 ; Lilly i-. Wag- goner, 27 111. 395 ; McCormick v. Lit- tler, 85 111. 62; Curtis v. Brownell, 42 Mich. 165 ; Jones u. Perkins, 5 B. Mon. 222 ; Frazer v. Frazer, 2 Del. Ch. 260. ° Wh. on Ev. § 1253 ; Attorney Gen. V. Parnther, 3 Bro. C. G. 443 ; Staples u. Wellington, 58 Me. 454 ; Amentz v. Anderson, 3 Pitts. 310 ; Rush v. Magee, 36 Ind. 69 ; State v. Wilner, 40 Wis. 304 ; State <.. Roddick, 7 Kan. 143 : McCormick o. Littler, 85 111. 62. ' Amentz i: Anderson, 3 Pitts. 310 ; Brown v. Riggen, 94 111. 560 ; Carpen- ter V. Carpenter, 8 Bush, 283. « See 1 Wh. & St. Med. Jur. §§ 53 et seq. ' Attorney General t. Parnther, 3 Bro. C. C. 443 ; Jenkins u. Morris, L.' R. 14 Ch. D. 674 ; Banks v. Goodfellow, L. R. 5 Q. B. 549 ; Hovey v. Hobson, 55 Me. 256 ; Dennett v. Dennett, 44 N. H. 531 ; Somes v. Skinner, 16 Mass. 348; Osterhout v. Shoemaker, 3 Hill, N. Y. 573 ; Hall v. Unger, 2 Abb. U. S. 507; Lozear u. Shields, 23 N. J. Eq. 509 ; Turner v. Rusk, 53 Md. 65 ; Speers V. Sewell, 4 Bush, 239 ; see Bond c-. Bond, 7 Allen, 1. That an insane de- 141 § 110.] CONTRACTS. [CHAP. VI. particular line of acts, is not impaired by insanity in reference to another line of acts.' And the same rule applies to insane delusions. They do not affect capacity in reference to sub- jects to which they do not relate.^ It is sufficient if there be mental capacity enough to transact with intelligence the par- ticular business.' The proper test is, was the party, at the time of the contract, insane as to the particular thing to which the contract related? It is not necessary to inquire whether the party in question was generally insane. We have to limit ourselves to the litigated transaction, and inquire what was his capacity in that relation. He may have been of good understanding in reference to other matters, but this will not validate the contract if in reference to its subject matter he was under the influence of insane delusions, of which the other party had notice. On the other hand, no matter how numerous and how strong may have been his insane delusions on other topics, this will not invalidate a contract made by him concerning which he had no insane delusions.^ " It is to be noted," says Mr. Pollock, in 1881,' " that the existence of par- tial delusions does not necessarily amount to insanity for the purposes of this rule. The judge or jur^-, as the case may be, must in every case consider the practical question whether the party was incompetent to manage his own affairs in the matter in hand."^ hision as to a particular topic incapa- L. R. 14 Ch. D. (!74, a lease was sus- eitates as to such topic, see Boyce u. taiued, though the lessor was under Smith, 9 Grat. 704 ; Lemon r. Jenkins, the insane delusion that the land leased 48 Ga. 313. was impregnated with sulphur, though ' Wh. Cr. L. 8th ed. § 37; Odell /■. he was otherwise sane. See to same Buck, 21 Wi-nd. 142; Samuel r. Mar- effect remarks of Bramwell, L. J., in shall, 3 Leigh, r(67. Drew v. Nuun, L. R. 4 Q. B. D. 669. 2 Staples V. Wellington, 58 Me. 453 ; 5 3d ed. 105. Emery /•. Hoyt, 46 111. 258. 6 jo this are cited Jenkins v. Morris, 3 Hovey v. Chase, 52 Mc-. 305 ; Den- L. R. 14 Ch. D. 074 ; Drew v. Nunu, L. nett V. Dennett, 44 N. H. 531 ; Mann R. 4 Q. B. D. 669. To same etfect is ... Betterby, 21 Vt. 326 ; Farnam r. Hovey v. Hobson, 53 Me. 451 ; Dennett Brooks, 9 Pick. 220 ; Baldwin v. Dun- , . Dennett, 44 N. H. 531 ; Blakeley v. ton, 40 111. 188 ; Clearwater v. Kimljer, Blakeley, 33 N. J. Eq. 502 ; Miller r. 43 111. 272 ; Burgess u. Pollock, 53 Craig, 36 111. 109. As to the coexist- lowa, 273. ence of insane delusions with general J Ball u. Mannin, 1 Dow. & C. 380; business capacity, see 1 Wh. & St. 3 Bligh (N. S.), 1. In Jenkins l\ Morris, Med. Jur. 4th ed. §§ 53 et seq. 142 CHAP. VI.] LUNATICS, DRlfNKAKDS, AND SPENDTHRIFTS. [§ 111. § 111. As has been already incidentally noticed, a party who seeks to rescind a contract made by him when T ., , , 1- • , On rescie- insane, is ordinarily bound, as a preliminary, to re- sion parties store to the other party, when practicable, the price '°s. Newell, 13 Mass. v. Gas Co., 1 A. & E. 526 ; 3 N. & M. 406 ; Peabody v. Flint, 6 Allen, 52 ; 771 ; Gibson v. East India Co., 5 Bing. Weckler u. Bank, 42 Md. 581 ; Straus N. C. 262 ; Bank U. S. v. Dandridge, i;. Ins. Co., 5 Oh. St. 59. 12 Wheat. 64 ; Canal Bridget. Gordon, ' Wh. on Agency, § 57 ; Windsoheid, 1 Pick. 297 ; Commercial Bank v. Kort- Pandekt. § 58 ; Savigny, ii. 265-74. right, 22 Wend. 348 ; Christian Church 3 L. 10, de I. F. (49, 14). That a i.. Johnson, 53 Ind. 273 ; Sheffield u. corporation has no extra-territorial Andress, 56 Ind. 157 ; Athens v. status, see Wh. Con. of L. § 105. Thomas, 82 111. 259. * 1 Bl. Com. 475 ; Anson on Con- tracts, 45 Wh. on Agency, § 58. 155 128.] CONTRACTS. [chap. VII. itself contractually by its agents. And this may be in two ways. In the first place, it may give its agents specific power to do particular things. In the second place, it may appoint particular ofiicers with certain functions, and it is bound by any acts of these officers in performance of these functions.^ And in all matters essential and incident to the discharge of its corporate duties, it may bind itself, without seal, by specific resolution, by by-laws, as well as by the ap- pointment of officers and servants to perform particular classes of duties.- A seal is not necessary for the appointment even of agents to execute documents under seal.^ Where, how- ' Infra, § 130 ; Kennedy r. Ins. Co., 3 Har. & J. 367. As illustrating the positions in the text, may he mentioned Birmingham Banking Co. ex parte, L. R. 6 Cli. 83, in which it was held, tliat a corporation can (unless prohibited) mortgage any part of its property, as well for an existing debt as for a new loan. A corporation, it was said by .James, L. J., can "hold property and dispose of it as freely as an individual, unless it is specially prohibited from so doing." That a director binds the company when acting as agent, see Stratton /■. Allen, 16 N. J. Eq. 229. 2 Wh. on Agency, § 59 ; Angell & Ames on Corp. § 284 ; Sutton's Hos- pital, 10 Co. Rep. 30 6 ; South of Ireland Colliery Co. c. Waddle, L. R. 3 C. P. 469; Church r. Gas Light Co., 6 Ad. & El. 846 ; Nicholson < . Bradfield, L. R. 1 a. B. 620; Wells <•. Kingston, L. R. 10 C. P. 402 ; Riche r. Ashbury, L. R. 9 Ex. 224; Bank of Columbia L. Patterson, 7 Cranch, 299 ; Fleck- ner v. Bank U. S., 8 Wheat. 338 ; Bank U. S. u. Dandridge, 12 Wlieat. 70; Eureka ,-. Bailey Co., 11 Wall. 488 ; Canal Co. c. Knapp, 9 Pet. 541 ; Goodwin v. Screw Co., 34 N. H. 378; Stamford Bk. v. Benedict, 15 Conn. 445; Perkins v. Ins. Co., 4 Cow. 645; People V. Mawran, 5 Denio, 389 ; 156 Chestnut Hill Turnpike Co. c. Rutter, 4 S. & R. 16 ; Berks, etc. Turnpike Road V. Myers, 6 S. & R. 12 ; JIcMas- ters V. Reed, 1 Grant, Penn. 36 ; Elys- ville Co. V. Okisko, 5 Md. 153 ; Banks V. Poitiaux, 3 Rand. (Va.) 136 ; Bank of Chillicothe v. Swain, 8 Ohio, 257; Palm c. Ins. Co., 20 Ohio, 537 ; Cin- cinnati R. R. )'. Clarkson, 7 Ind. 595 ; Board of Education v. Greenebaum, 39 111. 609 ; Blunt < . Walker, 11 Wis. 3.34 ; Buncombe Co. v. McCarson, 1 Dev. & B. 306 ; Buckley v. Briggs, 30 Mo. 452 ; Kiley v. Forsee, 57 Mo. 390 ; Kitchen i. R. R., 59 Mo. 514; .Selmar. Mullen, 46 Ala. 411 ; Western Bank v. Gilstrap, 45 Mo. 419. According to Sir W. Anson (p. 45), a, seal even in England is no longer requisite, first, where the rule would defeat the object of the corporation, and second, where it would cause great inconvenience ; see to same elleet, Bap- tist Church V. Melford, 3 Halst. L. 185 ; McCuUough r. Ins. Co., 46 Ala. 376 ; Buckley v. Briggs, 30 Mo. 452. 3 Bank U. S. t. Dandridge, 12 Wheat. 64 ; Maine Stage Co. c. Long- ley, 14 Me. 444 ; Eastman v. Bank, 1 N. H. 26 ; Warren v. Ins. Co., 16 Conn. 444; Burrill c. Nahant Bk., 2 Mete. 163; Com. Bk. v. Kortriglit, 22 Wend. 348. CHAP. VII.] CORPORATIONS. [§ 129. ever, a seal is prescribed by the charter, it must be used ;' though, as will hereafter be seen, the defect may be cured by estoppel in cases of executed contracts with third parties acting bona fide. § 129. A contract in express contravention of the charter, or of the legislation under which the corporation comes into existence, is invalid.^ But it does not fol- prohibited low that because an act is prohibited in a charter it jj^^aiid'^''''^ is invalid as against bona fide third parties. It may be that the prohibition is purely corrective, as where a penalty by way of a mere fine is imposed upon the exercise of a par- ticular act. If so, the act is not invalid, though the corpora- tion has to pay the penalty of doing it.' — Whether, when a prohibition not simply corrective is in a charter or in indepen- dent binding legislation, this prohibition makes contracts as to such action void ah initio, has been much discussed. In New York such contracts may be only voidable.* In New Jersey they are regarded, and with better reason, in all cases in which the prohibition is a matter of public legislation, as from the outset illegal and void.' Such, also, is the English rule." — A charter, as will be hereafter seen more fully, is, in case of doubt, to be construed liberally in favor of the grantees.' ' Koehler v. Iron Co., 2 Black, 715. in New York, by statute, all banking 2 Bank U. S. v. Owens, 'Z Pet. 527 ; contracts made by corporations without Hitchcock V. Galveston, 96 U. S. 351 ; authority are invalid, see New York Harris v. Runnels, 12 How. 79 ; Whit- Ins. Co. v. Helmer, 77 N. Y. 64. ney u. Bank, 50 Vt. 388 ; Phil. Loan ' Farmers' Bank v. Bearing, 91 U. Co. V. Towner, 13 Conn. 249 ; Fuller v. S. 29 ; Central Bank v. Pratt, 115 Mass. Nav. Co., 21 Conn. 559 ; Hood r. R. R., 539. 23 Conn. 609 ; Crocker o. Whitney, 71 < See Moss v. Averill, 10 N. Y. 460 ; N. Y. 161 ; Maryland Hosp. u. Foreman, Whitney Arms Co. o. Barlow, 63 N. Y. 29 Md. 524; State Board c. R. R., 47 62; and see infra, §§ 135-7. Ind. 411 ; Wood v. Caldwell, 54 Ind. ^ Morris R. R. v. Sussex R. R., 20 N. 271 ; Pangborn u. Westlake, 36 Iowa, J. Eq. 542. 546 ; Hazlehurst r. R. R., 43 Ga. 13 ; " Ashbury R. R. u. Riche, L. R. 7 H. Montgomery v. Plank Road, 31 Ala. L. 653 ; Morawetz on Corp. § 43. 76 ; Marion Bank a. Dunkin, 54 Ala. ' Infra, § 670 ; Morawetz on Corp. § 471 ; and other cases cited Morawetz on 154. Corp. § 40. See infra, §§ 135-7. That 157 § 131.J CONTRACTS. [chap. VII. agents' contracts. § 130. Since a corporation acts only through agents, it is ^. ,, bound by its agents' contracts when made ostensibly Liable on n i ■ n- within the range of their omce, or when specially authorized by itself, supposing the transaction be not obviously ultra vires.^ But contracts not within the range of the agent's power, and which he is not specially autViorized to make, do not bind bis principal as against parties who ought to have taken notice of this limitation.^ A general agent, how- ever, employed to conduct the business of the corporation gen. erally, binds the corporation, if the appointment is consistent with the charter, in all matters within the corporate range.' § 131. A corporation is also liable for the frauds and deceits of its agents, when acting within their orbit, even Liable for , , . agents' though such agents are appointed by parol. Wher- inaiice'and cver they Can contract, they can subject their prin- neghgence. Q^-,a,ls to liability for their deceitful misstatements or malicious misconduct.* Hence, a corporation is liable for mali- 1 Wh. on Agency, §§ 57, 59, 171, 670 ; Gibson v. East Ind. Co., 5 Bing. N. C. 27r> ; Church c. Gas Co., 6 A. & E. 846 ; Ferguson v. Wilson, L. R. 2 Ch. 77 ; Trundy v. Farrer, 32 Me. 225 ; Smith V. Proprietors, 8 Pick. 178 ; Mer- rick ('. E. R., 11 Iowa, 74; Seagraves r. Alton, 13 111. 366 ; Rochford R. R. v. Wilcox, 66 111. 417. 2 Wh. on Agency, § 687 ; Angell & Ames on Corp. cli. 9 ; U. S. p. City Bank, 21 How. 356 ; Frankford Bank -■. Johnson, 24 Me. 490 ; Conant v. Bel- lows Falls Co., 29 Vt. 263; Bank <. Steward, 37 Me. 519 ; Cocheco Bank v. Haskell, 51 N. H. 116 ; Bank of Genesee ( . Patohin, 13 N. Y. 309 ; Pope t: Bank, 57 N. Y. 126 ; Watson ( . Bennett, 12 Barb. 196 ; Leggett i-. Bank, 1 N. J. Eq. 541 ; Harrisburg Bank >. Tyler, 3 Watts & fS. 373 ; Lamm r. Port Deposit Co., 49 Md. 233 ; Humphrey v. Mercant. Ass., 50 Iowa, 607 ; Western Cottage Co. V. Reddish, 51 Iowa,. 55 ; Bank of St. Mary's v. Calder, 3 Strobh. 403; Holt V. Bacon, 25 Miss. 567. 158 ' Ibid. Crowley r. Mining Co., 55 Cal. 270 ; McKieman v. Lemsen, 56 Cal. 61. ' Iiifi-d, § 277 ; Greene's Brice's Ultra Vires, 425 ; Angell & Ames on Corp. '§ 388 ; Barwick v. .Joint Stock Bank, L. R. 2 Ex. 259 ; Bayley u. R. R., L. R. 7 C. P. 415; 8 C. P. 148; Moore v. R. R., L. R. 8 Q. B. 36 ; Boling- broke i: Board, L. R. 9 C. P. 575 ; Ed- wards V. R. R., L. R. 6 Q. B. D. 287 ; Houldsworth r. Bank, 5 App. Cas. 317 ; Butler r. Watkins, 13 Wall. 456 ; Per- son !■. Sanger, 1 W. & M. 136 ; Tlmyer c. Boston, 19 Pick. 516 ; Gloucester Bank t. Salem Bank, 17 Mass. 33 ; Andrews c. Suffolk Bank, 12 Gray, 461 ; Kibbe r. Ins. Co., 11 Gray, 163; Goodspeed c. East Haddam Bank, 22 Com. 530 ; Wat- son r. Bennett, 12 Barb. 196 ; Allerton r. Allerton, 50 N. Y. 670 ; Mundorff i. Wickersham, 61 Penn. St. 87; Tome <•. R. R., 39 Md. 36 ; Carter v. Machine Co., 51 Md. 290; Daly v. Bank, 56 Mo. 94 ; Madison R. R. v. Norwich, 24 Ind. 457 ; Indianapolis R. R. v. Anthony, 43 Ind. 183 ; Scofield v. State, 54 Ga. CHAP. VII.] CORPORATIONS. [§ 131. cious prosecution' and for libel.' " As to the difficulty of imput- ing fraudulent intention to a corporation," says Mr. Pollock,^ "which has been thought to be peculiarly great, it may be remembered that no one has ever doubted that a corporation may be relieved against fraud to the same extent as a natural person. There is exactly the same difficulty in supposing a corporation to be deceived as in supposing it to deceive ; and it is equally necessary, for the purpose of doing justice in both cases, to impute to the corporation a certain mental condi- tion — of intention to produce a belief in the one case, of belief produced in the other — which, in fact, can exist only in the individual mind of the person who is its agent in the transac- tion. Lord Langdale found no difficulty in speaking of two railway companies as ' guilty of fraud and collusion,' though not in an exact sense.' However, the members of a corpora- tion cannot, even by giving an express authority in the name of the corporation, make it responsible, or escape from being individually responsible themselves for a wrongful act (as trespass in removing an obstruction of an alleged highway), which, though not a personal wrong, is of a class wholly be- yond the competence of the corporation, so that, if lp,wful, it would not be a corporate act."' A corporation, also, is liable 635 ; Western Union Tel. Co. v Eyser, municipalities, but this was rather 2 Col. T. 141 ; South R. R. Co. c. Chap- politically than judicially, such as has pell, 61 Ala. 527 ; Factors' Ins. Co. v. been sometimes the case iu England, Dry Dock, 31 La. Ann. 149. That where municipal charters were for- directors are not personally liable in felted for political offences. But that such cases see infra, § 277. the members of private corporations ' Copley w. Grover, 2 Woods, 494. were held liable for delicts, see Savigny, ' Maynard v. Ins. Co., 34 Cal. 48 ; Syst. ii. p. 340. 47 Cal. 207 ; Vinas v'. Ins. Co., 27 La. 8 3d ed; 127. Ann. 367. In the Roman law, muni- < Citing Lord Blackburn, Erlanger v. cipal corporations, at least, were held Phosphate Co., 3 App. Ca. 1264. not liable in actions charging malicious ' Solomon v. Laing, 12 Beav. 382. torts. Vangerow, § 55. In L. 15, § 1, " Mill c. Hawker, L. R. 9 Ex. 309 de. dolo mal.o, Ulpian replies to the ques- no judgment on this part of the case tion whether such a corporation could (according to Mr. Pollock) being given be held so responsible by another ques- in Ex. Ch. L. R. 10 Ex. 92. It has been tion : Quid enim municipes dolo facere held in Georgia that as directors of a possunt? The dolus, in such oases, is corporation are jwast trustees they can- imputable to the offending agent. It not bind it by a contract to pay usury. is true that penalties were imposed on Planters' Co. v. Johnson, 62 Ga. 308. 159 § 133.] CONTRACTS. [CHAP. VII. for injuries caused by the negligence of its agents and sub- alterns when engaged in their official duties. And this lia- bility extends not only to injuries inflicted on parties with whom the agents deal contractually, but to injuries to third parties.' It is, therefore, liable for nuisances to third parties, and for so misusing its franchises and property as to injure third parties.^ A municipal corporation, however, is not liable for the non-exercise of discretionary functions.' But while a corporation which puts a work out on contract is not, with certain limitations, liable for the negligence of the contractor,* yet if a nuisance be produced incidentally to such work, such nuisance not being authorized by the legislature, the corpora- tion is liable for the damage. ° § 132. Mere informalities in the election and qualification of officers will not invalidate contracts made by such Lh facto officers so as to defeat suits brought against sub- offleers. sequent receivers or liquidators.^ A de facto officer, no matter how irregular may have been his appointment, can pledge the credit of the corporation to third parties dealing with the corporation in good faith. It is the fault of the stockholders if they permit agents to act for them without due authority or due preliminary check ; and if loss ensues from this, the loss should be borne by the party to whose negligence the loss is peculiarly imputable. The stockholders cannot set up as a defence to suits brought against them irregularities which their own vigilance would have pre- vented.' § 133. The representations of the agents of a corporation, as Represen- ^"^ facts of administration distinctively within their tatiops of knowledge, or as to the performance of formal pre- agents bina ... ^ corpora- liminary conditions by the corporation, bind the tioii. , . , , . ... , corporation to parties with whom it may contract on the basis of such representations.* Hence the cashier of a ' Wh. on. Neg. §§ 250, 271, 798 et ' Mahony r. Mining Co., L. R. 7 H. seq. L. 869 ; Brady's case, 1 De (Jex, J., & S. 2 Wh. on Neg. §§ 250, 959. 488 ; Sampson ,\ Bowdoinham, 36 Me. 3 Wh. on Neg. §§ 260, 959 o. 78. ' Wh. on Xeg. §§ 181, 193. s infia, § 269 ; Wh. on Agency, 5 Water Co. v. Ware, 16 Wall. 566. § 679 ; Wh. on Ev. § 1170 ; Nat. Ex. s Infra, §§ 140-1. Co. u. Drew, 2 Manq. 103; Mackay v. 160 CHAP. VII.] CORPORATIONS. [§ 134. bank binds the bank as to bona fide third parties by certifying that a check is good, even though the certificate is untrue, and is in violation of his private instructions from the bank.' A cashier may give a certificate of deposit which binds, though untrue.^ But a representation by an agent of a cor- poration, such representation being not only without author- ity, but not within the range of his duties, does not bind his principal.' The rule above stated applies generally to fraud- ulent representations by agents.^ § 134. It must appear, however, from the document itself, that it was meant to bind the corporation. Thus a Document deed bv the treasurer of a corporation, acknowledged ™"^' ^e ' ' ' duly exe- to be his "free act and deed," and executed under cutedto his "hand and seal," has been held to be his deed, and not that of the corporation." And a statement of official position is mere surplusage, if the party signing the deed speaks in his own name.^ On the other hand, where the party signing the document obviously means to do so in his capacity as agent, mere formal variances will be disregarded, and the corporation will be held bound.' Parol evidence also will be admitted to show that the name signed, though not technically that of the corporation, was adopted by the cor- poration as its own.^ — When a seal is required, it must be Com. Bk., L. R. 5 P. C. 394; Commis- 3 Franklin Bank v. Steward, 37 Me. siouers v. Aspinwall, 21 How. 639 ; 519. Merchant's Bk. v. State Bank, 10 Wall. " Infra, § 269. 604; Coloma v. Eaves, 92 U. S. 484; ^ Brinley v. Mann, 2 Cush. 337. See Orleans v. Piatt, 99 U. S. 676 ; Fogg to same effect, Paice v. Walker, L. R. V. Griffin, 2 Allen, 1 ; Fairfield v. 5 Ex. 173 ; Norton v. Herron, 1 C. & P. Thorp, 13 Conn. 173 ; Toll Bridge Co. 648 ; Freese v. Crary, 29 Ind. 524 ; r. Betsworth, 30 Conn. 380; Bank of Sencerbox u. MoGcrade, 6 Minn. 484. Monroe v. Field, 2 Hill,' N. Y. 445; See fully, infra, § 810a. Spalding v. Bank, 9 Barr, 28 ; Stewart " Dutton c;. Marsh, L. R. 6 Q. B. u. Huntington Bk., 11 S. & R. 267; 361; Collins w. Ins. Co., 17 Oh. St. 215. Carey v. Giles, 10 Ga. 9; Payne v. Infra, § 810 a, etc. Bank, 6 Sm. & M. 24. ' Despatch Line of Packets u. Bel- ' Merchant's Bk. «. State Bank, 10 lamy Co., 12 N. H. 205; Melledge o. Wall. 604; Farmer's and Mech's Bk. Iron Co., 5 Cush. 173; Pease v. Pease, V. Butcher's Bk., 16 N. Y. 727. 35 Conn. 131. 2 Barnes v. Bank, 19 N. Y. 152; » Melledge v. Iron Co., 5 Cush. 173. Cooke V. Bank, 52 N. Y. 69. In Minot o. Curtis, 7 Mass. 444, the VOL. I.— 11 161 § 135.J CONTRACTS. [CHAP. VII. the formal 8eal of the corporation that is used.' — -As is else- where shown, corporate action, when on its face adequate and conformable to the charter, will be presumed to have been regular.^ § 135. A corporation can only bind itself contractually within its chartered limits. A banking corpora- ad°w'i°hL tion, for instance, chartered to do banking, cannot, ito't^''''^ without specific additional powers from the sover- eign, bind itself by contracts of common carriage; nor can a manufacturing company without such powers go into the mining business. The corporation, in other words, cannot be bound to any act not appertaining to the proper exercise of the functions it was created to perform.' When a corporation is chartered for a specific purpose, then all con- tracts which are not incidental to such purpose are invalid. The test is not judiciousness. Such contracts ma}', to a dis- passionate and intelligent observer, appear wise. The test is, is the contract incidental to the discharge of the functions the corporation was chartered to perform ? If not, it is on its face invalid f while otherwise it would be valid. ^ "A corporation," so is the rule stated by Gray, C. J., in the Supreme Court of Massachusetts in 1881,^ "has power to do such business only as it is authorized by its act of incorpora- tion to do, and no other. It is not held out by the govern- court said: "We know not why cor- 2 How. 424; Old Col. R. R. <-. Evans, porations may not hv known by several 6 Gray, 38 ; and cases cited iuf'ra. names as well as individuals." See « Colchester c. Lowten, 1 Ves. & B. infra, § 810a. 245; see Brown r. Winnisimuiet Co., ' Horn V. Ivey, 1 Mod. 18 ; 2 Keb. 11 Allen, 326 ; Lynch v. Hartwell, 8 567 ; Koehler v. Iron Co., 2 Black, 715. Johns. 422 ; Curtis v. Leavitt, 15 N. Y. 2 Lifra, § 141 ; Wh. on Ev. § 1310. 65 ; Hood ,.. R. R., 22 Conn. 502 ; Van- 3 Pollock, 3d ed. 122 eise«7.; Norwich wickle c. R. R., 2 Green, 162; Stew- V. R. R., 4 E. & B. 397 ; East Anglian art's Appeal, 56 Penn. St. 413 ; Galena R. R. V. E. C. R. R., 11 C. B. 775 Ashbury Co. o. Riche, L. R. 7 H. L 653 ; Laing v. Reed, L. R. 5 Ch. 4 Clinch V. Fin.ancial Corp., L. R. 4 Ch 117 ; Macgregor c. R. R., 18 Q. B. 618 u. Corwith, 48 HI. 423. ^ Lyndeborough Glass Co. r. Mass. Glass Co., Ill Mass. 315; Ossipee Man. Co. r. Canney, 54 N. H. 2!J5 ; Hood V. R. R., 22 Conn. 1 ; Thompson Prince of Wales Co. o. Harding, E. B. c. Lambert, 44 Iowa, 239 ; Cent. R. R. & E. 183; MuUiner u. R. R., L. R. 11 r. Collins, 40 Ga. 582. Ch. D. 611 ; R. ,: Reed, L. R. 5 Q. B. « Davis r. R. R., infra, § 137. D. 488 ; White Valley Co. u. Vallette, 162 CHAP. VIT.J CORPORATIONS. [§ 135. ment, nor by the stockholders, as authorized to make con- tracts which are beyond the purposes and scope of its charter. It is not vested with all the capacities of a natural person, or of an ordinary partnership, but with such only as its charter confers. If it exceeds its chartered powers, not only may the government take away its charter, but those who have sub- scribed to its stock may avoid any contract made by the cor- poration in clear excess of its powers. If it makes a contract manifestly beyond the power conferred by its charter, and therefore unlawful, a court of chancery, on the application of a stockholder, will restrain the corporation from carryyig out the contract ; and a court of common law will sustain no action on the contract against the corporation." Thus a cor- poration cannot, without special legislative authority, go into a distinct business, as where a railroad company under- takes buying and selling coal as merchandise,' or running an independent line of steamers to a foreign port,^ or dealing with real estate on speculation.^ " That which the crown has not granted by express unambiguous terms, the subject has no right to claim under a grant or charter. ' In no species of grant does this rule of construction more especially obtain than in grants which emanate from and operate in derogation of the prerogative of the crown,' ex. gr.., where a monopoly is granted."* In England it is settled that a corporation can only act contractually within its chartered limits, nor can it employ its franchises and property in any way but that spe- cifically designated by the charter.' But a corporation organ- ized for commercial purposes has power to borrow money, unless restricted specially, and for this purpose to mortgage 1 Atty.-Gren. u. Great North. R. R., 65 ; Featherstonhaugh u. Clay Co., L. 1 Dr. & Sm. 154 ; Eccles. Commis. v. R. 1 Eq. 318 ; Horsey'? case, L. R. 5 R. R., L. R. 4 Ch. D. 845. Eq. 561 ; Holmes v. Newcastle AJo3.\.- 2 Colman v. R. R., 10 Beav. 1. toir Co., L. R. 1 Ch. D. 682 ; Ashbury ' Carington v. Wycombe, L. R. 3 Ch. R. R. Carriage Co. v. Riche, L. R. 7 H. 377 ; Leake, 2d ed. 587. L. 653 ; Hope v. Financial Society, L. * Brown's Leg. Max. 607, citing R. 4 Ch. D. 327 ; London and Provin- Feather v. R., 6 B. & C. 283 ; The cial Coal Co. in re, L. R. 5 Ch. D. 525 ; Rebeckah, 1 Rob. 227. White v. R. R., 1 H. & M. 786 ; Cork, " Southall .;. Ass. Co., L. R. 11 Eq. etc., R. R. in re, L. R. 4 Ch. 748. 163 § 135.] CONTRACTS. [chap. vri. its property,' and to draw and accept commercial paper, if it be authorized to do trading business.^ It is, however, con- ceded in England that the acts of a corporation within its chartered sphere are to be considered a,B prima facie authorized ; and this presumption is liberally applied to whatever may be regarded as conducive to the protection of the interests the corporation was chartered to promote. If it is acting appa- rently for the purposes of its creation, the burden is on it, should it afterwards attempt to disavow its acts, to show that they were ultra vires} ' Leake, 2d ed. 585 ; Australian Clipper Co. v. Mounsey, 4 K. & J. 733 Patent File Co. in re, L. R. 6 Ch. 83 Shears c. Jacob, L. R. 1 C, P. 513 Anglo Daniibian St. Co. in re, L. R. 20 Eq. 339 ; Campbell's case, L. R. 4 Ch. D. 470. 2 Murray o. East Ind. Co., 5 B. & Aid. 204. Infra, § 137. Lord C'ranworth, in Shrewsbury, etc., R. R. V. N. W. R. R., 6 H. L. 135, as adopted by Mr. Pollock (Wald's ed. 104), said: "Prima facie corporate bodies are bound by all contracts under their common seal. When the legis- lature constitutes a corporation, it gives to that body prima facie an absolute right of contracting. But this prima facie right does not exist iti any case M'hen the contract is one which, from the nature and object of the incorpora- tion, the corporate body is expressly or impliedly prohibited from making ; such a contract is said to be ultra rires. And the question here, as in similar cases, is whether there is anything on the face of the act of incorporation which expressly or impliedly forbids the making of the contract sought to be enforced." In East. Co. R. R. v. Hawkes, 5 H. L. C. 331, Lord Cranworth said: "It must now be considered as a well-set- tled doctrine that a company incorpo- rated by act of parliament for a special 164 purpose cannot devote any part of its funds to objects unauthorized by the terms of its incorporation, however desirable such an applieation may ap- pear to be." And when the legislature prohibits a corporation from entering on a particular line of business, its contracts in this line of business are invalid. Taylor <■. R. R., L. R. 2 Ex. 356. And it is laid down " that if, on the true construction of a statute cre- ating a corporation, it appears to be the intention of the legislature, express or implied, that the corporation shall not enter into a particular contract, every court, whether of law or of equity, is bound to treat a contract entered into contrary to the enactment as illegal and therefore void." Black- burn in Riche c. Ashbury R. R. Car. Co., L. R. 9 Ex. 262 ; adopted in Ash- bury R. R. Car. Co. v. Riche, L. R. 7 H. L. 673. That a corporation can mortgage its property to pay its debts, see People v. Brown, 5 Wend. 590. The expressions ultra vires and infra vires are preferred by Lord Cairns as more correct in such cases than "il- legal" or "legal." Ashbury R. R. Car. Co. V. Riche, L. R. 7 H. L. 672. s Lindley, op. cit. 266 ; Pollock, 3d ed. 131. " As a general rule, corporations can have and exercise only such powers as CHAP. VII.J CORPORATIONS. [§ 136. § 136. In the United States, under the shelter of the con- stitutional provision prohibiting laws impairing the obligation of contracts, corporations, unless the pracuce'^^ power of amending them be reserved in the charter, ™ tws ^. „ 1 . , . , country. possess an immunity from legislative control not enjoyed by them in England ; and in view of the fact that charters convey such high prerogatives, we would suppose that they would be subjected to a construction at least as strict as that placed on charters in England. Such, no doubt, is the rule with us in all cases involving a contest between the state granting the charter, and the corporation char- tered.' Contentions, however, as to chartered limits arise generally between the corporation itself and third parties ; and in this relation the tendency of our decisions, so far at least as concerns bona fide purchasers without notice, has been to allow corporate action a wider range than in England. This may be attributed to several causes. In England, in the first place, charters of corporations are comparatively rare, are subjected to severe scrutiny before they are passed, and are as cautious and artificial in their limitations as are deeds of settlement between private parties. They may be regarded, therefore, as special powers of attorney, conveying only the authority they specifically describe. In this country, on the other hand, private charters are usually drawn by the repre- sentatives of the corporation to be chartered, and are often passed in the terms which these representatives propose. These comprehensive charters create a public sentiment in ac- cordance with which all corporations are supposed to possess are expressly conferred on them by the attempts to do so are void.. Mechanic's act of incorporation, and such implied Bank a. New York & N. H. R. Co., 13 powers as are necessary to enable them N. Y. 599 ; New York and New Haven to perform their prescribed duties. R. Co. v. Schuyler, 34 id. 30 ; Railway Fertilizer Company v. Hyde Park, 97 Co. c. AUerton, 18 Wall. 233 ; Stace & U. S. 659 ; Salomons v. Laing, 12Beav. Worth's case, L. R. 4 Ch. 685, note." 339 ; Eastern Counties R. Co. v. Hawkes, Woods, J., Scoville ;;. Thayer, Sup. Ct. 5 H. L. Cas. 348. U. S. 1882. "And it is well settled that a cor- ' See Morawetz on Corp. § 642; poration has no implied power to People o. Turnpike Co., 23 Wend, change the amount of its capital as 193. prescribed in its charter, and that all 165 § 136.] CONTRACTS. [CHAP. VII, the incidental powers which it is notorious that some possess. That a railroad company, for instance, should be supposed to have power to endorse commercial paper is natural in a com- munity in which there are many such companies which have this power expressly given to them ; and when such power is largely exercised by corporations of this class, it is natural that it should be supposed to belong to all others. — A second reason is, that in this country, charters are now largely granted under general laws, while in England, they are always the creatures of special legislation. In England the grant is only what is given by the charter, the sovereign reserving all power in the subject matter not specially granted. In most of our American States, large blocks of power, by means of general legislation, are distributed without reservation among certain classes of corporations. Thus, any corporation that desires to do banking business may do so by complying with certain requisites ; and the artificial persons coming up to do business under these statutes are entitled to do this business as freely as could natural persons. — In the third place, a corpora- tion, in England, when it is chartered, remains open to revision by parliament, and continues, during its whole existence, to be the creature of parliament; whereas, in this country, under the clause in the federal constitution which provides that no state shall impair the obligation of contracts, a corporation once chartered is an independent power. — In the fourth place, from the very fact of the multitudes of corporations by which the business of the country is conducted, great injury would accrue to the public and to individuals if corporations should be held responsible only on such of their contracts as do not technically transcend their chartered limits. — For these and other reasons, our courts, with but few exceptions, have held that business corporations are entitled to exercise whatever incidental powers would be exercised by natural persons doing the same kind of business under general powers of attorney. If an agent, under a general power of attorney, can issue negotiable paper, or can pledge assets, or can take or grant leases, so can a corporation. And if a corporation exceeds its powers, it can only be called to account in two ways. The first is by injunction by its members, which will presently be 166 CHAP. VII.] CORPORATIONS. [^ 137. noticed. The second is by proceedings of ouster and dissolu- tion by the sovereign. So far as concerns bona fide purchasers, its contracts within the above limits are legal, even though at the first view ultra vires, and it is estopped from setting up their illegality.' Any contract, however, by such a corporation, designed to pervert the trust of which it is the agent, and of such a character that its inconsistency with the object for which the corporation is designed is transparent, is illegal.'^ § 137. An important distinction is to be noticed between the usurpation by a corporation of powers not con- /.j -ii^Ui 1 • c Distinction ferred on it by charter, and a misuse ot powers between which the charter confers; between, in other words, usurpation ' ' "of power "the exercise by a corporation of a power not con- and misuse ■ ■ r 11- p- °^ power. ferred upon it, varying from the objects of its crea- tion as declared in the law of its organization, of which all persons dealing with it are bound to take notice; and the abuse of a general power, or the failure to comply with pre- scribed formalities or regulations, in a particular instance, when such abuse or failure is not known to the other con- tracting parties."^ In the former case the corporation is not bound by its agents' contracts ; in the latter case it is so bound.* — If a general power to exercise a specific franchise • Union Nat. Bank v. Matthews, 98 U. S. 621 ; Whitney Arms Co. u. Bar- low, 63 N. Y. 62 ; Oil Creek K. R. o. Penn. Trans. Co., 83 Penn. St. 160; Culver V. Reno Real Est. Co., 91 Penn. St. 367 ; Hays c. Galion, 29 Ohio St. 330; State Board of Agr. v. R. R., 47 Ind. 407 ; St. Joseph's Ins. Co. u. Hauck, 71 Mo. 465. 2 Thomas o. R. R., 101 U. S. 71 ; Bissell V. R. R., 22 N. Y. 285 ; Blauki). Canal Co., 22 N. J. Eq. 130. That action of a corporation ultra vires may be cured by subsequent legislation, see Morawetz on Corp. § 31. In Mahoney Mining Co. u. Bank, Sup. Ct. U. S. 1882 (21 Am. Law Reg. 101), it was held that, where a mining corpora- tion, by its charter, had power to raise money for use in its corporate business, and in the ordinary course of its busi- ness overdrew through its officers its account in bank, it will be presumed that these officers had power to make an overdraft, and that in making it, not only they did not exceed their au- thority, but the moneys thus obtained were paid over to or received by the company. 8 Gray, C. J., Davis v. R. R., S. C. Mass. 1881. ' Coleman v. R. R., 10 Beav. 1 ; Bag- shaw V. R. R., 7 Hare, 114; East Ang- lian R. R., 11 C. B. 775. The recent cases are thus grouped by Gray, C. J., in Davis r. R. R., S. Ct. Mass. 1881 :— " In Ashbury Railway Carriage and Iron Co. u. Riche, L. R. 7 H. L. 653, and L. R. 9 Ex. 224, the objects for which a company, registered under the 167 §137] CONTRACTS. [chap. VII. is given, this, such is the prevalent view, implies a power to do all acts incidental, to a pro})er exercise of such franchise. Englisli joint stock companies act of 1862, was created, were stated in its memorandum of association to be, ' to make and sell or lend on hire railway carriages and wagons, and all kinds of railway plant, Uttings, macliinery, and rolling stock ; to carry on the business of mechanical engineers and general contractors ; to purchase, lease, work, and sell mines, minerals, land, and buildings ; to purchase and sell, as merchants, timber, coal, metals, or other materials, and to buy and sell any such materials on commission or as agents.' The directors agreed to pur- chase it concession for making a rail- way in a foreign country, and after- wards (on account of difficulties exist- ing by the law of the country) agreed to assign the concession to an associa- tion formed there, wliioli was to supply the materials for the construction of the railway, and to receive periodical payments from the English company. In an action at law brought by the foreign associates against the English company upon this agreement, it was held in the lower courts, as well as in the House of Lords, to be ultra vires. The judges below were divided upon the question whether it had been rati- fied by the stockholders so as to bind the company. But in the House of Lords it was unanimously lield, by Lord Chancellor Cairns and Lords Chelms- ford, Hatherley, O'Hagen, and Sel- borne, that the contract was not within the scope of the memorandum of asso- ciation, and was, therefoi-e, void and incapable of being ratified, and the ac- tion could not be maintained. Lord Selborne said : ' The action in this case is brought upon a contract, not directly or indirectly to execute any works, but to find capital for a foreign railway 168 company, in exchange for shares and bonds of that company. Such a con- tract, in my opinion, was not author- ized by the memorandum of association of the Ashbury Company. All your lordships, and all the judges in the courts below, appear to be, so far, agreed. But this, in my judgment, is really decisive of the whole case. I only repeat what Lord Cranworth, in Hawkes f. Eastern Counties Railway Company (when moving the judgment of this house), stated to be settled law, when I say that a statutory corpora- tion, created by act of parliament for a particular purpose, is limited, as to all its powers, by the purposes of its incorporation as defined in that act. The present and all other companies, incorporated by virtue of the companies act of 1862, appear to me to be statu- tory corporations within this principle. The memorandum of association is under that act their fundamental, and (except in certaiii specified particulars) their unalterable law ; and they are incorporated only for the objects and purposes expressed in that memoran- dum. The object and policy of those provisions of the statute which pre- scribe the conditions to be expressed in the memorandum, and make these conditions (except in certain points) unalterable, would be liable to be de- feated if a contract under the common seal, whioh on the face of it trans- gresses the fundamental law, were not held to be void, and ultra vires of the company, as well as beyond the power delegated to its directors or adminis- trators. It was so held in the case of East Anglian Railway Company, and in other cases upon railway acts, which cases were approved by this house in Hawkes' case ; and I am unable to see CHAP, Vli.] CORPORATIONS. [§ 137. It is true that the same conflict of opinion exists on this ques- tion as exists on the parallel question of the bestowal of any distinction for this purpose "be- tween statutory corporations under rail- way acts, and statutory corporations under the joint stock companies' act of 1862.' ' I think that contracts for objects and purposes foreign to, or in- consistent with, the memorandum of association are ultra vires of the corpo- ration itself. And it seems to me far more accurate to say that the inability of such companies to make such con- tracts rests on an original limitation and circumscription of their powers by the law, and for the purposes of their incorporation, than that it depends upon some express or implied prohibi- tion, making acts unlawful which other- wise they would have had a legal capa- city to do. This being so, it necessarily follows (as indeed seems to me to have been conceded in Mr. Justice Black- hum's judgment) that, where tliere could be no mandate, there cannot be any ratification ; and that the assent of all the shareholders can make no difference when a stranger to the cor- poration is suing the company itself in its corporate name, upon a contract under the common seal. No agreement of shareholders can make that a con- tract of the corporation, which the law says cannot and shall not be so.' L. E. 7 H. L. 693-695. " In the very recent case of Attorney General c. Great Eastern Ey., 5 App. Cas. 473, 478, in which the contract in question was held to be expressly authorized by the terms of the act of parliament, and, therefore, not ultra vires, Lord Chancellor Selborne, while expressing the opinion that 'this doc- trine ought to be reasonably, and not unreasonably, understoo^l and applied, and that whatever may fairly be re- garded as incidental to, or consequen- tial upon, those things which the legis- lature has authorized, ought not (un- less expressly prohibited) to be held, by judicial construction, to be ultra vires, ' declared his sense of the import- ance of maintaining the doctrine of ultra vires, as explained in the case of Ashbury Eailway Carriage and Iron Co. V. Eiche. And Lord Blackburn said : ' That case appears to me to decide at all events this, that where there is an act of parliament creating a corporation for that particular purpose, what it does not expressly or impliedly author- ize is to be taken to be prohibited ; and, consequently, that the Great Eastern Company, created by act of parliament for the purpose of working a line of railway, is prohibited from doing any- thing that would not be within that purpose;' although he also agreed ' tliat those things which are incident to, and may reasonably and properly be done under the main purpose, though they may not be literally within it, would not be prohibited.' 5 App. Cas. 481. " These statements are the more sig- nificant, because Baron Bramwell, in the same case below (11 Ch. D. 449, 601-503), had cast doubts upon the correctness of the decision in the case of East Anglian Eys. u. Eastern Coun- ties Ey. ; and Lord Blackburn himself, when a justice of the court of queen's bench, had more than once approved Baron Parke's form of stating the doc- trine. Chambers o. Manchester, etc. Ey., 5 B. & S. 588, 610 ; Taylor v. Chi- chester, etc. Ey., L. E. 2 Ex. 356, 384 ; Eiche v. Ashbury Eailway Carriage & Iron Co., L. R. 9 Ex. 264. "The same principles have been 169 § 137.J CONTKACTS. [chap. VII, political powers under the Constitution of the United States. On the one side, the extreme position may be taken that the clearly and positively enunciated in two unanimous judgments of the su- preme court of the United States. " In Pearoe c. Madison, etc. Ey., 21 How. 441, two corporations, created by the laws of Indiana to construct dis- tinct, though connecting, lines of rail- road in that state, were consolidated by agreement, and conducted the busi- ness of both lines under a common board of management, which gave notes in the name of the consolidated com- pany in payment for a steamboat, which was to be employed on the Ohio river to run in connection with the railroads. After the execution of the notes and the acquisition of the steam- boat, this relation between the corpo- rations was legally dissolved. It was held, that an action brought by an in- dorsee against the two corporations upon the notes could not be main- tained. " Mr. Justice Campbell, in delivering judgment, said : ' The rights, duties, and obligations of the defendants are defined in the acts of the legislature of Indiana, under which tliey were organ- ized, and reference must be had to these, to ascertain the validity of their contracts. Tliey empower the defend- ants respectively to do all that was necessary to construct and put in ope- ration a railroad between the cities which are named in the acts of incor- poration. There was no authority of law to consolidate these corporations, and to place both under the same management, or to subject the capital of the one to answer for the liabilities of the other ; and so the courts of Indi- ana have determined. But, in addition to that act of illegality, the managers of these corporations establislied a steamboat line to run in connection 170 with the railroads, and thereby diverted their capital from the objects contem- plated by their charters, and exposed it to perils for which they afforded no sanction. Now persons dealing with the managers of a corporation must take notice of the limitations imposed upon their authority by the act of in- corporation. Their powers are con- ceded in consideration of the advantage the public is to receive from their dis- creet and intelligent employment, and the public have an interest that neither the managers nor stockholders of the corporation shall transcend their au- thority.' " He then referred with approval to the cases of Colman i'. Eastern Counties Ey., East Anglican Eys. v. Eastern Counties Ry., and Macgregor i\ Dover, etc. Ry., above cited, and added : ' It is contended that, because the steam- boat was delivered to the defendants, and has been converted to their use, they are responsible. It is enough to say, in reply to this, that the plaintiff was not the owner of the boat, nor does he claim under an assignment of the owner's interest. His suit is instituted on the notes, as an indorsee ; and the only question is, Had the corporation the capacity to make the contract, in the fulfilment of which they were exe- cuted ? The opinion of the court is, that it was a departure from the busi- ness of the corporation, and that their oflicers exceeded tlieir authority.' .Judg- ment was rendered for the defendants. It is to be observed that in that case there was no suggestion that the plain- tiff took the notes sued on without notice of the illegality in the original consideration, which would have pre- sented a different question. Lexington V. Butler, 14 Wall. 282; Macon u. CHAP. VII.] CORPOEATIONS. [§ 137. grant of a franchise, or of a political prerogative, is to be con- strued as giving only the powers the words themselves convey. Shores, 97 tJ. S. 272 ; Monument Bank V. Globe Works, 101 Mass. 57. "In Thomas „. Railroad Co., 101 U. S. 71, a railroad corporation, without authority of the legislature, leased its railroad to three persons for twenty years, for the consideration of one-half of the gross sums collected from the operation of the road by the lessees during the term, reserving the right at any time to terminate the contract and retake possession of the road, paying such damages for the value of the un- expired term as should be determined by arbitration. At the end of five years the corporation resumed possession, and the accounts for that period were ad- justed and paid. It was held that no action could be maintained against the corporation to recover the value of the unexpired term. The opinion was de- livered by Mr. Justice Miller. "It was argued by counsel for the plaintiffs in that case, that though there was nothing in the language of the charter which authorized the mak- ing of this agreement, yet ' a corporate body may (as at common law) do any act which is not either expressly or impliedly prohibited by its charter ; although where the act is unauthorized by the charter, a stockholder may en- join its execution ; and the state may, by proper process, forfeit the charter.' But the court said : ' We do not concur in this proposition. We take the gene- ral doctrine to be in this country, though there may be exceptional cases and some authorities to the contrary, that the powers of corporations orga- nized under legislative statutes are such, and such only, as those statutes confer. Conceding the rule applicable to all statutes, that what is fairly im- plied is as much granted as what is expressed, it remains that the charter of a corporation is the measure of its powers, and that the enumeration of these powers implies the exclusion of all others.' The court, then, after referring to some of the English cases above cited, and particularly to the decision of the House of Lords in Ash- bury Railway Carriage & Iron Co. v. Riche, as establishing ' the broad doc- trine that a contract not within the scope of the powers conferred on the corporation, can not be made valid by the assent of every one of the share- holders ; nor can it by any partial per- formance become the foundation of a right of action,' expressed the opinion that that decision ' represents the de- cided preponderance of authority, both in this country and in England, and is based upon sound principle.' " The court further said : ' There is another principle of equal importance and equally conclusive against the validity of this contract, whioli, if not coming exactly witliin the doctrine of ultra vires as we have just discussed it, shows very clearly that the railroad company was without the power to make such a contract. That principle is that, where a corporation, like a railroad company, has granted to it by charter a franchise intended in large measure to be exercised for the public good, the due performance of those functions being the consideration of the public grant, any contract which dis- ables the corporation from performing those functions, which 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 171 § 137.] CONTRACTS. [chap. VXI. On the other side, the equally extreme position is taken, that a grant of a franchise, or of a political prerogative, involves a public policy.' This proposition is sup- ported by tlie cases there cited, and by many others. See Richardson v. Sibley, 11 Allen, 65, 67 ; "Whittenton Mills v. Upton, 10 Gray, 582 ; Proprietors of Locks and Canals <. Nashua, etc. R. Co., 104 Mass. 1 ; Middlesex Railroad u. Boston, etc. R. Co., 115 Mass. 347. But that the decision was not intended to be put exclusively upon this ground, is manifest from the terms in which it was introduced, as well as from those in which the general doctrine has been already laid down, and from the con- cluding sentence of the opinion. ' ' The j udgments of the English courts, and of the Supreme Court of the United States, to which we have referred, do but affirm and apply prin- ciples long ago declared by this court. " More than fifty years since. Chief Justice Parker said : ' The power of corporations is derived only from the act, grant, charter, or patent by which they are created. In this common- wealth the source and origin of such power is the legislature, and corpora- tions are to exercise no authority ex- cept what is given by express terms or by necessary implication by that body. Ko vote or act of a corporation can en- large its chartered authority, either as to the subjects on which it is intended to operate, or the persons or property of the corporators.' Salem Milldam r. Ropes, 6 Pick. 23, 32. And the im- portance, for the security of the 'rights of each stockholder, of a steady ad- herence to the principle that ' corpora- tions can only exercise tlieir powers over their respective members for the accomplishment of limited and well- defined objects,' was strongly stated 172 by Chief Justice Shaw in 1839. Spauld- ing V. Lowell, 23 Pick. 71, 75. " As was observed in Morville r. American Tract Society, 123 Mass. 129, 136, ' The power to make all such con- tracts as are necessary and usual in the course of business, or are reasona- bly incident to the objects for which a private corporation is created, is always implied where there is no positive re- striction in the charter.' Thus a cor- poration may let or mortgage property lawfully held by it under its charter, and not immediately needed for its own business. Simpson r. Westminster Hotel Co., 8 H. L. Cas. 712 ; Brown u. Winnisimmet Co., 11 Allen, 326 ; Hen- dee r. Pinkerton, 14 Allen, 381. A corporation established ' for the pur- pose of manufacturing and selling glass' may contract to purchase glass- ware from a like corporation to keep up its own stuck and supply its customers while its works are being put in repair. Lyndeborough Glass Co. <,. Massachu- setts Glass Co., Ill Mass. 315. A cor- poration authorized to purchase and hold water power created by the erec- tion of dams, and to hold real estate, may, when the water power has been lawfully extinguished, sell its lands, and as part of the contract of sale agree to raise their grade. Dupee u. Boston ■Water Power Co., 114 Mass. 37. A railroad corporation may agree to trans- port as a common carrier over connect- ing railroads goods intrusted to it for carriage over its own line. Hill Manu- facturing Co. u. Boston, etc. Ry., 104 Mass. 122 ; Railway Co. v. McCarthy, 96 U. S. 258. And it cannot dispute its liability for goods delivered to it to be carried over a railroad of which it CHAP. VII.] CORPORATIONS. [§ 137. grant of whatever powers the grantee may find it expedient to invoke to utilize such franchise or prerogative. An inter- mediate position, however, may be found ; and towards this the courts are inclined to gravitate. On the one side, it is is in actual possession and use under a lease, on the ground that the lease is void. MoCluer v, Manchester, etc. Ry., 13 Gray, 124." In Davis i. R. R. above cited, the action was brought upon the following agreement, signed by the Old Colony Railroad Company, in the sum of $6000, and by the Smith American Organ Company in the sum of $5000, and by other corporations, partner- ships, and individuals in various sums, amounting in all to more than $200,000. "Boston, January 23, 1872. We, the undersigned subscribers, hereby agree, each with the other, that we will contribute towards any deficiency (should there be one) that may arise towards defraying the expenses of the World's Peace Jubilee and Interna- tional Musical Festival, to be held in Boston, commencing on the 17th of June, and closing on the 4th of July next, in such proportions as the amounts affixed to our several names bear to the whole amount subscribed ; provided that no subscription shall be binding until the whole amount svib- scribed shall reach the sum of two hundred thousand dollars, and that no expenditure be incurred except under the authority of the executive com- mittee, which committee shall repre- sent the subscribers, and consist of ten or more persons, who may he chosen by the first' six subscribers hereto.'' It was held that this contract, so far as concerns the Old Colony Railroad Company, was neither a necessary nor appropriate means of carrying on its business, and was ultra vires, and could not bind it by reason of benefit to be derived from possible increase of pas- sengers over its road. That parties are bound to take notice of limitations in public charters, see Franklin Co. o, Lewiston Savings Inst., 68 Me. 43. " Where a private corporation has authority to issue negotiable securities, such instruments, when issued, possess the legal character ordinarily attaching to negotiable paper, and the holder in good faith, before maturity, and for value, may recover even though in the particular case the power of the corpo- ration was irregularly exercised or was exceeded ; or to state the legal pro- position in its application to this case ; this defendant having power to incur debts to a limited extent, and to issue its negotiable notes therefor, this plain- tiff, as a bona fide holder of the notes in suit, may recover upon it although in this particular case the indebtedness of the corporation at the time of giving this note already exceeded the limits prescribed by its articles of association. Stoney i. Am. Life Ins. Co., 11 Paige, 635 ; Mclntire v. Preston, 10 111. 48 ; Monument. Nat. Bank v. Globe Works, 101 Mass. 57 ; Bissell v. Mich. Sou., etc., R. Co., 22 N. Y. 289 ; Lexington ^. Butler, 14 Wall. 282; Morau o. Miami Co., 2 Black, 722; Ang. & Ames Corp. (10th ed.) 268 ; Field on Corp. 303 ; Green's Brice's Ultra Vires, 273-74, 729. Although in such a case, the corporation or its officers ex- ceeded the corporate authority, and its contract would be hence in a sense ultra vires, yet other legal principles besides those merely relating to the powers of the corporation come in to afi'ect the result." Auerbach r. Mill Co., Sup. Ct. Minn. 1881, 13 Reporter, 51. 173 § 138.] CONTRACTS. [CHAP. VII, absurd to say that the grantee of a franchise or power cannot perform acts without which the grant would be inoperative. On the other side, it would be equally absurd to say that a grant for a special purpose conveys to the grantee unlimited power to do whatever he chooses in working the grant. The proper view is, that a grant conveys all powers which in the ordinary acceptation of the particular line of business are neces- sary to its due exercise.^ But this is subordinate to the terms used in the charter, which is to be subjected to rules of con- struction hereafter to be distinctively noticed.^ It may, how- ever, be particularly observed, that while a general grant con- veys whatever powers are, in ordinary business acceptation, necessary to its exercise, it is otherwise when the grant, after the general terms of bestowal, goes on to specify certain modes in which the power is to be exercised. Such a specification operates as a limitation to the particular lines of exercise. Ex- pressio uniiis est exdusio alterius} — Formalities prescribed under a charter as requisites to a corporate act are not to be regarded as essential prerequisites of a valid exercise of power. Hence, though a charter requires that the contracts of a corporation should be executed by it in a particular form, the corporation is bound by contracts executed by it in another form, in all cases in which it has enjoyed the benefit of such contracts, and when no exception was taken at the time by the parties interested.^ § 138. A corporation is entitled to borrow money when Corpora- this is ueccssary to enable it to exercise the fran- bom'iw'^ chises of its charter ; and the right to borrow in- moneyand cludes the right to give Written acknowledgments issue . negotiable of debt." If a Corporation is restricted by its char- paper. 1 See 2 Kent's Com. 298-9. = Internat. Life Ass. Co. in re, L. R. 2 I„fm, §§ 627 i:l seq. 10 Eq. 312 ; Fay v. Noble, 12 Cusli. 1 ; ' Infra, § 674 ; Ashbury K. R. .. Partridge <■. Badger, 25 Barb. 146 ; Riclie, L. R. 7 H. L. 653 ; At. Gen. o. Clark r. Titcomb, 42 Barb. 122 ; Nelson R. R., L. R. 5 Ap. Ca. 481 ; R. v. Reed, v. Eaton, 26 N. Y. 410 ; Lucas v. Pit- L. R. 5 Q. B. D. 488. ney, 3 Dutch. 221 ; Bank of Chillicothe ■' Davis u. R. R., «( stipro; Zftbriskie v. Chillicothe, 7 Ohio, 354; Tucker i/.R. R., 23HOW.381 ; Bulkley r. Fish- c. Raleigh, 75 N. C. 267; Craven c. ing Co., 2 Conn. 252; Bank of Northern R. R., 77 N. C. 289; Oxford Co. r. Liberties v. Cresson, 12 S. & R. 306. Spradley, 46 Ala. 98 ; Alabama Ins. 174 CHAP. VII.] CORPORATIONS. [§ 138. ter from issuing paper beyond a certain limit, it is not bound, unless by way of estoppel, for its issues beyond such limit.' But this refers to loans in their formal sense. Such a limitation does not preclude the corporation from bor- rowing money to carry on the ordinary business of the cor- poration.^ The right to borrow includes, unless there be a restriction, the right to mortgage.^ In England the right to issue negotiable paper is limited to those corporations to whose business the issue of such paper is an ordinary inci- dent ;^ and has been denied to mining companies,' to gas companies,^ to cemetery companies,' to waterworks compa- nies,^ and to railway companies.^ According to Mr. Pol- lock, a corporation may be bound by negotiable paper issued by it in the following cases: 1. When the issuing of such paper is one of the objects for which the corporation is char- tered, as is the case not only with banks, but with " financial companies generally."'" 2. '' When the instrument is accepted or made by an agent for the corporation whom its constitution empowers to accept bills, etc., on its behalf, either by express words or by necessary implication."" In this country it has been laid down that a power to borrow money implies a power to issue negotiable paper as security for money borrowed ;'^ Co. 0. Association, 54 Ala. 73 ; Bradley Paddock, 80 111. 263 ; Burr ». McDon- V. Ballard, 55 111. 413. That negoti- aid, 3 Grat. 215 ; and other cases ahility of bonds depends on terms of cited, Morawetz on Corp. § 174. document, see infra, § 797. ■* See Bateman u. R. R., L. R. 1 C. 1 Worcester Com. Exch. Co. in re, P. 499. 3 De G. M. & G. 180. s Brown v. Byers, 16 M. & W. 252. 2 German Mining Co. in re, 4 De G. ^ Bramah v. Roberts, 3 Bing. N. C. M. & G. 19 ; Cork, etc. R. R. in re, L. 963. R. 4 Ch. 748 ; Norwich Yarn Co. inre, ' Steele v. Harmer, 14 M. & W. 831. 22 Beav. 143. ' Broughton v. Waterworks, 3 B. & 3 Jones V. Guaranty Co., 101 U. S. Aid. 1. 622; Pierce v. Emery, 32 N. H. 503; « Bateman v. R. R., L. R. 1 C. P. Richards v. R. R., 44 N. H. 127; Cur- 499. tis V. Leavitt, 15 N. Y. 9 ; Nelson u. '" Per Montague Smith, ,T., Shears r. Eaton, 26 N. Y. 410 ; Patent File Co. Jacob, L. R. 1 C. P. 512 ; City Bank in re, L. R. 6 Ch. 83 ; Shears v. Jacob, ex parte, L. R. 3 Ch. 758. L. R. 1 C. P. 513 ; Watt's App., 78 " Pollock, 3d ed. 141-2. Penn. St. 370 ; Susquehanna Bridge ^ Police Jury v. Britton, 15 Wall. Co. V. Ins. Co., 3 Md. 305 ; Burt v. 560. Rattle, 31 Oh. St. 116 ; Aurora Soc. o. 175 § 138.] CONTRACTS. [CIIAP. VII. and the general rule is that corporations, in all cases in which the issue of negotiable paper is promotive of the objects of their charter, may be held liable on such paper, either as maker, as drawer, or as endorser.^ Unless the corporation is precluded from exercising such a power, the execution, when undertaken, will be presumed to be regular.^ — When a private corporation has -prima fade power, either express or implied, to issue negotiable securities, such securities possess the ordi- nary incidents of negotiable jiaper; and the holder, acquiring title in good faith before maturity and for value, may recover even though in the particular case the power of the corpora- tion was irregularly exei'cised.^ Manufacturing companies in 1 Railroad Co. v. Howard, 7 Wall. 392; State Bank u. Fox, 3 Blatoli. C. C. 431 ; Came v. Brigham, 39 Me. 35 ; Patten v. Moses, 49 Me. 2.55 ; Farmer's Bk. <■. Maxwell, 32 N. Y. 579 ; Farm- er's Bk. u. Watson, 32 N. Y. 583 ; Me- chanic's Ass. V. White Lead Co., 35 N. Y. 505 ; Strauss t . Ins. Co., 5 Ohio St. 59 ; Hardy v. Merriweatlier, 1-t Ind. 203; Goodrich u. Reynolds, 31 111. 490; Preston v. Mo. Lead Co., 51 Mo. 43 ; Bacon r. Ins. Co., 31 Miss. 116. ^ London, etc., R. R. r. Fairclough, 2 Man. & G. 674 ; Lexington v. Butler, 14 Wall. 282 ; Great West. Tel. Co. hi re, 5 Bis. 363 ; Atlantic Bk. v. Mer- chant's Bk., 10 Gray, 532 ; Monumen- tal Bank u. Globe Works, 101 Mass. 57 ; Clarke o. School Dist., 3 R. I. 199 ; Brown v. Bank, 3 Barr, 187 ; Ox- ford Iron Co. u. Spradley, 46 Ala. 98. Whether a municipal corporation can issue negotiable paper, see Mayor c. Ray, 19 Wall. 468. 3 Field, Corp. 303; Green's Brice's Ultra Vires, 273-4 ; Moran v. Miami Co., 2 Black, 722; Lexington v. Butler, 14 Wal. 282 ; Narragansett Bk. v. Silk Co., 3 Met. Mass. 282 ; Monument. Nat. Bk. V. Globe Works, 101 Mass. 57; Moss ■/. Averill, 10 N. Y. 449 ; Bissell V. Mich. South. R. R., 22 N. Y. 289 ; Mclntire v. Preston, 10 111. 48 ; Smith v. 176 Flour Mills, 6 Cal. 1 ; Magee u. Canal Co., 5 Cal. 258. "Although in such a case," said Dickenson, J., in a case in 1881 in the Supreme Court of Minnesota, " the corporation or its officers exceeded the corporate authority, and its contract would be, hence, in a sense ultra vires, yet other legal principles besides those merely relating to the powers of the corporation come in to affect the result. It is true, a corporation is a being created by the law, and has, properly, no authority but such as is conferred upon it, expressly or by implication, by the law of its creation ; yet it may become legally bound to observe and perform contracts which it had not authority to enter into. The ends of justice may require, as in this case, that the corporation which has ex- ceeded its powers should be estopped by its own acts from pleading in de- fence of its assumed obligations tliat they were ultra vires. To apply the principle of estoppel is not to enlarge the powers of the corporation ; nor does it give warrant to a corporation to disregard or violate the restrictions which have been expressly imposed upon it, or which exist in the absence of power conferred. Bradley v. Bal- lard, 55 111. 413 ; R. R. Co. v. McCar- CHAP. VII.] CORPORATIONS. [§ 138. the United States (though it is otherwise in England) have power to issue negotiable paper ;' and so have railway com- panies.^ thy, 96 U. S. 258. In this case the defence sought to be made to the note is, that in giving it the article of tlie defendant's incorporation, limiting the amount of its indebtedness, was vio- lated. The debt was incurred in the ordinary prosecution of the business of the corporation. The defendant re- ceived and appropriated the money which was the consideration of the note, and, having authority to issue negotiable paper, it put forth the note in question, negotiable, calculated to circulate as, and perform the office of, commercial paper, and expressing upon its face the obligation and promise of the maker to pay to the bearer, at all events, the sum named. It has come into the hands of a bona fide purchaser, and simple justice, as well as plain principles of law, forbid that courts should listen to the plea that in this particular case the corporation had not authority to issue its note. It ought to be, and it is, estopped." Auerbach v. Mill Co., S. C. Minn. 1881, 13 Rep. 51. ' Monument. Bank v. Globe Works, 101 Mass. 57 ; Mott v. Hicks, 1 Cow. 513 ; Banking Ass. v. White Lead Co., 35 N. Y. 505; Oxford Iron Co. v. Spradley, 46 Ala. 98. 2 Railroad Co. v. Howard, 7 Wall. 412; Olcott V. R. R., 27 N. Y. 546; Lucas V. Pitney, 27 N. J. L. 221 ; Richmond R. R. v. Sneed, 19 Grat. 354 ; and other oases cited Morawetz on Corp. § 178. In McCalmont v. R. R., U. S. Cir. Ct. Phil. 1881, 10 Weekly Notes, 338, it was held that the power in a charter to borrow money does not include the power to issue irredeemable bonds en- titling the holder merely to a oontin- VOL. I. — 12 gent share in the profits. "In one respect," it was said by McKenna, J., ' ' and in one only, does the plan pro- posed resemble a loan, and that is in the result to be attained. They are both expedients for raising money, but the method of accomplishing this result is of the essence of the power of the corporation. If its employment has not explicit legal sanction, it cannot be made available. If the defendant were offered a rental for its property amply sufficient to relieve it from the burden of embarrassment with which it is now struggling, unless it could show that its legislative creator had endowed it with a right to make a lease, it could not accept such relief. Thomas o. West Jersey Railroad Company, 101 U. S. 82. And, although it has power to acquire real estate for all necessary corporate purposes, no one would main- tain that it could lawfully enter into a contract for the purchase of real estate merely to resell and thereby realize large gains. Authority to raise money by borrowing does not imply the use of another and different method of raising it, however well adapted to the end it may be. Even in the pros- pectus issued by the president of the defendant (Exhibit I) the proposed issue of 'deferred bonds' is not in any aspect treated as a loan, and the system is correctly stated to be new in the United States, and to have been frequently adopted in Great Britain with great benefit to the companies and to subscribers. But we know that in Great Britain this 'system' is express- ly authorized by statute, and hence it may be assumed that such legislation was deemed necessary to legalize a re- sort to it. Is not this suggestive of the 177 § 139.] CONTRACTS. [chap. VII. § 139. The stockholders of a corporation may enjoin it from entering into operations foreign to the object for which it was inference that, although it lias been proved to be of great benefit in Great Britain, it is ' new' in this country be- cause it has been regarded as without necessary legislative authorization?" In Thomas v. R. E., ut supra, Miller, J., said: "We take the general doc- trine to be in this country, though there may be exceptional cases and some authorities to the contrary, that the powers of corporations organized under legislative statutes are such, and such only, as those statutes confer. Conceding the rule applicable to all statutes, that what is fairly implied is as much granted as what is expressed, it remains that the charter of a cor- poration is the measure of its powers, and that the enumeration of these powers implies the exclusion of all others." The question of the validity of the Reading bonds came before the Supreme Court of Pennsylvania, in March, 1882, and by a majority of four to three it was held that the corporation had power to execute the bonds. From the opinion of the majority of the court by Pax- son, J., the following passages are ex- tracted : — " We are in no doubt as to the power of the Philadelphia and Reading Rail- road Company to issue the ' deferred income bonds' described in this bill. So far as the mere borrowing of money is concerned, it is not necessary to look into the character of the company for a grant of express powers. It exists by necessary implication. ' As a gene- ral proposition, the right of private or trading corporations to issue promis- sory notes, bonds, or other evidences of indebtedness, unless restrained by their charters or the law of the land, may be conceded. 178 " ' The reason is plain. Such corpo- rations are organized for the purposes of trade and business, and the borrow- ing of money and issuing of obligations therefor are not only germane to the objects of their organization, but ne- cessary to carry such objects into effect. ' •' There being no objection, therefore, on the ground of want of power, is there anything in the form of the transaction to render it ultra vires ? We learn from the pleadings that in May, 1880, the company failed and passed into the hands of receivers ; that at the time of such failure it had a floating or un- funded debt of upward of $10,000,000 ; that a large amount of property, main- ly stocks and bonds of great value, had been pledged to secure said debt ; and that said stocks and bonds were sub- ject to the risk of being sold at forced sales at a great sacrifice ; that the president and managers of the com- pany, in order to pay this fioating debt, and thereby regain possession of the collaterals, determined to ask the stock- holders to contribute 810,000,000 for such purpose, for which they proposed to give them $34,300,000 of deferred income bonds on which interest is to be deferred to a dividend of 6 per cent, on the common stock of the company, and thereafter to take all revenues up to 6 per cent., and then to rank pari passu with the common shares for fur- ther dividend. " It will thus be seen that the stock- holder who advances $15 receives a bond for $50, which is irredeemable, and which is not entitled to interest until after 6 per cent, has been paid upon the common stock. "The objections that have been made to this scheme are twofold : CHAP. VII.j CORPORATIONS. [§ 139. chartered •,'^ and it is no defence to such an applica- Parties in- tion that none of the parties owning the stock at corporation First, that it is usurious ; and, second, tliat the transaction is not a borrowing of money, but the issuing of a deferred stock, which is beyond the power of the company. " It is sufficient to say in regard to the first objection that as the interest on the 'deferred income bonds' is pay- able only upon a contingency, the con- tract is not usurious. Non constat that the company will ever pay any- thing to this class of bondholders. The contingency which will entitle them to interest may never arise, and is reasonably certain to be postponed for a considerable period. There is, therefore, no contract for the payment of more than legal interest. It is settled law that where the promise to pay a sum above legal interest depends upon a contingency and not upon the happening of a certain event, the loan is not usurious. Spain o. Hamilton, 1 Wall. 604 ; Lloyd „. Scott, 4 Peters, 205. This point does not need elabo- ration. " The second objection is equally without merit. The bonds in question are not deferred stock either in form or substance. They are certificates of indebtedness under the seal of the company, with a recital that they are irredeemable ; that they are entitled to no interest until after the common stock has received 6 per cent., and after that to come in pari passu with said common stock. They more nearly resemble a perpetual loan, with the interest indefinitely postponed. The holders would certainly have no right as stockholders. "It is urged, however, that this transaction is not a borrowing of money within the implied powers of the com- pany ; that the meaning of the word ' borrow' as applied to moneyed trans- actions involves an obligation to return the sum or thing borrowed. This is a narrow view of the subject. It is true we often use this word in the sense of returning the thing borrowed in specie, as to borrow a horse. But it is not limited to this sense. ' ' Among the definitions given by Webster are the following : First, ' To take or receive from another on trust, with the intention of returning or giving an equivalent for,' and, sec- ond, ' to take from another for one's own use ; to adopt from a foreign source; to appropriate; to assume.' We need not give the apt illustrations with which the learned lexicographer adorns his text. While the borrowing of money is usually accompanied with a contract for the return of the princi- pal at a stated time, it is not always nor necessarily so. The object of loan- ing money is to obtain a return in the way of interest. The interest is the consideration for the loan, the hire or price which is paid for the use of it. If I agree to pay $60 for the use of SIOOO for one year, it is a borrowing of money. It is equally so if I contract at the same rate for the use of it for ten years. Is it any the less so when the contract is perpetual and the loan ir- 1 Lindley on Part. 3d ed. ii. 1059 ; Field, Corp. §§ 264-271 ; Salomons v. Laing, 12 Beav. 339 ; Colman v. R. E., 10 Beav. 1 ; Beman v. Rufl'ord, 1 Sim. (N. S.) 550; Dodge K. Woolsey, 18 How. 331; Thomas v. R. R., 101 U. S. 71 ; CoUes V. City Directory Co., 18 N. Y. Sup. Ct. 397 ; Oil Creek Co. v. Trans. Co., 83 Penn. St. 160. 179' § 139.] CONTRACTS. [chap. VII. may enjoin the time of the act complained of, objected to its uiguUrT^' consummation.! The corporation may not only be vires. compelled to abandon acts which it has no right to do, but it may be compelled to do acts its charter requires.^ These functions it cannot surrender.^ "When, also, funds are contributed by stockholders to a corporation, they have a right to insist that these funds shall not be diverted to an object utterly distinct. And even the unanimous consent of the shareholders for the time being will not validate, as against subsequent stockholders without notice, transactions utterly foreign to the object for which the company was chartered.* But it is not necessary that an authority, to be sustained in execution, should have been expressly given. It is enough if it be implied.' And a party applying for aid of this class must show that he has a real interest on behalf of which he claims protection. If the application, though nominally from a stockholder, is really to subserve an adverse interest, it will not be regarded as a ground for interference.^ It is no bar to redeemable ? The equivalent is paid annually in the shape of interest. " We do not thinli trading corpora- tions any more than individuals are restricted in their moneyed transac- tions to the narrow meaning of the word ' borrow.' In its broader sense it implies a contract for the use of money. The terms of the contract are within the control of the contracting parties so long as they keep within the law. I see no legal objection to a contract for a perpetual loan. Such contract implies the voluntary advance of a sum of money, repayment of which is not to be demanded, presumably for some benefit or advantage to the lender. Such transactions are common in Eng- land, and are not unknown in this country. They are referred to in Union Canal Company v. Antillo, 4W. & S. 556, and in the appeal of the Zoological Society, 38 Legal Intelli- gencer, 403 ; and I am informed that the annuity bonds of the Lehigh Valley 180 Railroad Company are irredeemable. So long as the company pays the in- terest the principal is not demandable. If the Reading Railroad Company may not accept money from its stockholders as a perpetual loan, I am unable to see how it could accept it as a gift." That usage may authorize the officers of a corporation to issue notes, without a formal vote, supposing the corpora- tion has power to issue such paper, see Great West. Tel. Co. in re, 6 Biss. 313. 1 Ashbury R. R. ,-. Riche, L. R. 7 H. L. 653. « Cohen V. Wilkinson, 12 Beav. 125. ' Thomas v. R. R., 101 U. S. 71; Middlesex, etc. R. R. v. Boston R. R., 115 Mass. 347. * Ashbury R. R. v. Riche, L. R. 7 H. L. 653; Colraan v. R. R., 10 Beav. 1. s Hart V. R. R., 7 Ex. 246, 8 Ex. 116. ^ Pollock, ut supra, 107 ; Robson v. Dodds, L. R. 8 Eq. 301 ; Forrest v. R. CHAP. VII.] CORPOKATIONS. [§ 139. his suit, hbwever, that he may have " collateral motives, or is acting on the suggestions of strangers or enemies to the com- pany, or even has acquired his interest for the purpose of instituting the suit."' — A court of equity, therefore, will not only refuse to enforce an executory contract which is ultra CTres, and as to which no bona fide third party is interested,^ or which conflicts with limitations of the charter f but on ap- plication of a stockholder, or any other party interested, such a court will enjoin further proceeding on such a contract.^ R., 4 DeG. F. & J. 126; Kenton «..R. R., 54 Penn. St. 401. ' Pollock, ut supra, citing Bloxam v. R. R., L. R. 3 Ch. 337. In Pickering V. Stevenson, L. R. 14 Eq. 322, 340, Wickens, V. C, said: " Tlie special powers given either to the directors or to a, majority "by the statutes or other constituent documents of the associa- tion, however absolute in terms, are always to he construed as subject to a paramount and inherent restriction, that they are to be exercised in sub- jection to the special purposes of the original bond of association.'' 2 Thomas t. R. R., 101 U. S. 71 ; Hitchcock V. Galveston, 96 U. S. 341 ; Kent u. Mining Co., 78 N. Y. 159; Screven Hose Co. v. Philpot, 53 Ga. 625 ; Bank of Michigan v. Niles, Walker, Mich. 99. ' New York, etc. R. R. u. Schuyler, 34 N. Y. 34. * Whitney Arms Co. v. Barlow, 63 N. Y. 68 ; Arnot v. R. R., 67 N. Y. 319 ; Bradley v. Ballard, 55 111. 413 ; Crutoher V. Bridge Co., 8 Humph. 403. In Hawes V. Water Works Co., Sup. Ct. U. S. 1882, we have the following from Miller, J.: "The principle involved in that case (Dodge u. Woolsey, 18 How. 331) permits the stockholder in one of these corporations to step in be- tween that corporation and the party with whom it has been dealing, and institute and control a suit in which the rights involved are the rights of the corporation, and the controversy one really between that corporation, entirely capable of asserting its own rights, and the other party, who is equally so. This is a very different affair from a controversy between the shareholder of a corporation and that corporation itself, or its managing di- rectors or trustees, or the other share- holders, who may be violating his rights or destroying the property in which he has an interest. Into such a contest the outsider, dealing with the corpora- tion, through its managing agents, in a, matter within their authority, can- not be dragged, except where it is necessary to prevent an absolute failure of justice in cases which have been re- cognized as exceptional in their char- acter, and calling for the extraordinary powers of a court of equity. It is, there- fore, always a question of equitable jurisprudence, and as such has, within the last forty years, received the re- peated consideration of the highest courts of England and of this country. See Foss v. Harbottle, 2 Hare Ch. 488; Mozley v. Alston, 1 Phillip Ch. 790; Gray ^. Lewis, L. R. 8 Ch. App. 1035. "But perhaps the best assertion of the rule and of the exceptions to it are found in the opinion of the court by the 181 140.] CONTRACTS. [chap. VII. When § 140. It has been held in England, as well as contract is . ,. ,ij t' -ii ij. executed, m this country, that, when either party to con- same learned justice in the caseof Mac- Dougall V. Gardiner, in 1875, L. R. 1 Cli. Div. 21 : 'I am of opinion,' he says, ' that this demurrer ought to be allowed. I think it is of the utmost importance in all these controversies that the rule which is well known in this court as the rule in Mozley u. Alston, supra, and Lord u. Copper Min- ing Co., and Foss v. Harbottle, supra, should always be adhered to ; that is to say, that nothing connected with in- ternal disputes between shareholders is to be made the su-bject of a bill by some one shareholder on behalf of him- self and others, unless there be some- thing illegal, oppressive, or fraudulent — unless there is something ultra vires on the part of the company qua com- pany, or on the part of the majority of the company, so that they are not fit persons to determine it, but that every litigation must be in the name of the company, if the company really desire it. Because there may be a great many wrongs committed in a company, there may be claims against directors, there may be claims against officers, tliere may be claims against debtors, there may be a variety of things of which a company may well be entitled to com- plain, but which, as a matter of good sense, they do not think it right to make the subject of litigation, and it is the company, as a company, which has to determine whether it will make anything that is a wrong to the com- pany a subject-matter of litigation, or whether it will take steps to prevent the wrong from being done.' In this country the cases outside of the federal courts are not numerous, and wliile they admit the right of a stockholder to sue in oases where the corporation 182 is the proper party to bring the suit, they limit this right to cases where the directors are guilty of a fraud, or a breach of trust, or are proceeding ultra vires. See March v. Eastern R. R. Co., 40 N. H. 548 ; Peabody v. Flint, 6 Al- len, 52 ; Brewer v. Boston Theatre, 104 Mass. 378, where the general doctrine and its limitations are very well stated. See, also, Hersey o. Veazie, 24 Me. 9 ; Samuel v. Holladay, 1 Wool. 400. "The case of Dodge v. Woolsey, supra, is, however, the leading case on the subject in this country. And we do not believe, notwithstanding some expressions in the opinion, tliat it is justly chargeable with the abuses we have mentioned. It was manifestly well considered, and the opinion is unusually long, discussing the point now under consideration, with a full reference to the decisions then made in the courts of England. . "The examination of the case of Dodge V. Woolsey, supra, satisfies us that it does not establish, nor was it in- tended to establish, a doctrine on this subject different in any material respect from that found in the cases in the English and in other American courts, and that the recent legislation of con- gress referred to, leaves no reason for any expansion of the rule in that case beyond its fair interpretation. We understand that doctrine to be that to enable a stockholder in a corporaHiion to sustain in a .court of equity, in his own name, a suit founded on a right of action existing in the corporation itself, and in which the corporation itself is the appropriate plaintiff, there must exist, as a foundation of the suit, some action or threatened action of the man- aging board of directors or trustees of CHAP. VII.] CORPORATIONS. [§ 140. tracts of this character enjoys the fruits of the con- party bene- tract, he cannot afterwards, supposing there was no cannot ^' fraud, or notice to the other side, and supposing ™P<'^'='> **• the corporation which is heyond the authority conferred on them by their charter or other source of organization ; or such a fraudulent transaction com- pleted or contemplated by the acting managers, in connection with some other party, or among themselves, or with other shareholders, as will result in serious injury to the corporation, or to the interests of the other share- holders ; or where the board of direc- tors, or a majority them, are acting for their own interest, in a, manner de- structive of the corporation itself, or of the rights of the other shareholders ; or where the majority of shareholders themselves are oppressively and ille- gally pursuing a course, in the name of the corporation, which is in violation of the rights of the other shareholders, and which can only be restrained by the aid of a court of equity. Possibly other cases may arise in which, to pre- vent irremediable injury, or a total failure of justice, the court would be justified in exercising its powers, but the foregoing may be regarded as an outline of the principles which govern this class of cases. ' ' But in addition to the existence of grievances which call for this kind of relief, it is equally important that be- fore the shareholder is permitted in his own name to institute and conduct a litigation which usually belongs to the corporation, he should show to the satisfaction of the court that he has exhausted all the means within his reach to obtain, within the corporation itself, the redress of his grievances, or action in conformity to his wishes. He must make an earnest, not a simulated effort, with the managing body of the corporation, to induce remedial action on their part, and this must be made apparent to the court. If time permits or has permitted, he must show, if he fails with the directors, that he has made an honest effort to obtain action by the stockholders as a body, in the matter of which he complains. And he must show a case, if this is not done, where it could not be done, or it was not reasonable to require it. The efforts to induce such action as com- plainant desires on the part of the directors, and of the shareholders when that is necessary, and the cause of failure in these efforts, should be stated with particularity, and an allegation that complainant was a shareholder at the time of the transactions of which he complains, or that his shares have devolved on him since by operation of law, and that the suit is not a col- lusive one to confer on a court of the United States jurisdiction in a case of which it could otherwise have no cog- nizance, should be in the bill, which should be verified by affidavit. The appellant's bill presents no such case as we have here supposed to be neces- sary to the jurisdiction of the court. He merely avers that he requested the president and directors to desist from furnishing water free of expense to the city, except in case of fire or other great necessity, and that they declined to do as he requested. No correspond- ence on the subject is given — no reason for declining. We have here no alle- gation of a meeting of the directors, in which the matter was formally laid before them for action — no attempt to consult the other shareholders to as- certain their opinions, or obtain their action ; but within five days after his application to the directors this bill is 183 § 140.] CONTRACTS. [CHAP. VII. the case to have been one prima facie within the corporate range, set up as a defence that the contract was ultra vires. In all cases in which the exercise of a particular power is doubtful, parties desiring to contest it must, before avail- ing themselves of its benefits, attempt by injunction or similar immediate action, to prevent it from being carried into effect.' Parties who could thus dispute its exercise can- not, after they have received any substantial benefit it may have worked to them, dispute their liability to pay the con- sideration.^ Hence it has been ruled by the Supreme Court of the United States that, " where a corporation is incom- petent by its charter to take a title to real estate, a convey- ance to it is not void, but only voidable, and the sovereign only can object. It is valid until assailed in a direct pro- ceeding instituted for that purpose."^ And it has been held that a defendant, who, under a contract relating to land made witli a corporation claiming to own the land, has received the full benefit of the contract, cannot set up that the contract was ultra vires.'' What has here been declared with regard to executed contracts for the sale of real estate applies to all other executed contracts. When a corporation has received the benefit of an executed contract, it cannot throw up such contract unless it can put the other party in statu quo ; nor filed. There is no allegation of fraud Ct. 554 ; Oil Creek R. R. Co. u. Penns. or of acts ultra vires, nor of destruction Trans. Co., 83 Penn. St. 160; Darst w. of property, or of irremediable injury Gale, 83 111. 136 ; State Board u. Citi- of any kind. Conceding appellant's zen's St. R. R., 47 Ind. 407 ; Miner's construction of the company's charter Ditch Co. v. Zellerback, 37 Cal. 543. to be correct, there is nothing which See Big. on Est. 3d ed. 284-6 ; 465-8. forbids the corporation from dealing ' Nat. Bk. v. Matthews, 98 U. S. with the city in the manner it has 621 ; Gold Min. Co. o. Bank, 96 U. S. done." 640; Cowell v. Springs Co., 100 U. S. 1 Colman v. R. R., 10 Bear. 1. 55 ; Christian Union u. Yount, 101 U. 2 Fountaine ^. R. R., L. R. 5 Eq. S. 352 ; Chester Glass Co. v. Davey, 16 316; Royal Bank v. Turquand, 5 El. Mass. 94; Whitney Arms Co. o. Bar- & B. 248; 6 El. & B. 327; Taylor v. low, 63 N. Y. 62; Amer. Bible Soc. o. R. R., L. R. 2 Exch. 356 ; Ossipee Co. Marshall, 15 Oh. St. 537 ; Newburg Pet. V. Canney, 54 N. H. 295 ; Bradstreet (■. Co. o. Weare, 27 Oh. St. 343 ; Notoma Bk., 42 Vt. 128 ; Witte v. Fishing Co., Co. v. Clarkin, 14 Cal. ,543. 2 Conn. 260; Le Coutenex v. Buffalo, « Missouri Valley Land Co. v. Bush- 83 N. Y. 333 ; Whitney Co. a. Barlow, nell, 11 Neb. 192. 63 N. Y. 62; reversing S. C. 38 Sup. 184 CHAP. VII.] CORPORATIONS. [§ 140. can it, if there have been any laches on its part, ask for rescis- sion. ^ Hence a railway corporation is liable on its contract to carry passengers on connecting lines, though the contract is technicall}" ultra vires.^ On the one side, when a corporation has performed its part in a contract technically ultra vires, the other contracting party will be compelled to perform his part.^ Thus, in a New York case, a company incorporated for the purpose of manufacturing fire-arms entered into a contract to manufacture railroad locks. As against the party receiving the locks, it was held that the corporation was entitled to recover their price. " The plea of ultra vires" said Allen, J., in the court of appeals, " should not as a general rule pre- vail, whether interposed for or against a corporation, when it would not advance justice, but, on the contrary, would accom- plish a legal wrong."* On the other side, a corporation will be estopped from disputing its liability on a contract techni- cally ultra vires, when the contract has been performed by the other party.' > Infra, §§ 285-6 ; Zabriskie v. R. R., 23 How. 381 ; White v. Bank, 22 Pick. 181 ; McClure v. R. R., 13 Gray, 124; Bissell v. R. R., 22 N. Y. 258 ; Chapman o. R. R., 6 Oh. St. 137; Newburg Co. v. Weare, 27 Oh. St. 343 ; Bradley v. Bullard, 55 111. 413; Chicago Building Ass. v. Crowell, 65 111. 453 ; St. Louis v. &as-Light Co., 70 Mo. 69; Humphrey i;. Patron's Ass., 50 Iowa, 607 ; Hazlehurst v. R. R., 43 Ga. 54 ; Argenti v. San Francisco, 16 Cal. 255. ^ Wh. on Neg. § 579 ; Marshall v. R. R., 11 C. B. 655 ; Martin u. R. R., L. R. 3 Ex. 9 ; South Wales R. R. v. Redmond, 10 C. B. N. S. 675 ; Wilby V. R. R., 2 H. & N. 703; Bartle v. Wheeler, 49 N. H. 9 ; Burroughs v. R. R. 100 Mass. 26 ; Burtis v. R. R., 24 N. Y. 269 ; Root v. R. E., 55 N. Y. 636 ; Buffett v. R. R., 40 N. Y. 168. ' Infra, § 142. < Whitney Arms Co. v. Barlow, 63 N. Y. 62. See, to same efifect. Railway V. McCartliy, 96 U. S. 258 ; Rutland R. R. V. Proctor, 29 Vt. 96 ; Chester Glass Co. V. Davey, 16 Mass. 94 ; Oil Creek R. R. v. Penn. Trans. Co., 83 Penn. St. 160 ; and otlier cases cited, Morawetz on Corp. § 103, and also infra, § 142. 6 Field, Corp. § 273 ; Green's Brice's Ultra Vires, 2d ed. 729 ; Jones, Rail- road Securities, § 356 ; Hitchcock v. Galveston, 96 U. S. 341 ; Watt's App., 78 Penn. St. 370 ; Oil Creek Co. v. Penn. Trans. Co., 83 Penn. St. 160; Hays V. Gallon Co., 29 Oh. St. 330; Darst V. Gale, 83 111. 136 ; Thompson V. Lambert, 44 Iowa, 239 ; Cozart v. R. R., 54 Ga. 379. The authorities will be found further noticed in arti- cles, 5 Am. L. Rev. 272 ; 9 Cent. L. J. 463 ; and particularly in 12 Cent. L. J. 386. 185 § 141. J CONTRACTS. [CHAP. VII. § 141. We may, therefore conclude, that the doctrine of estoppel applies to corporations as well as to natural tionmaybe persons. Wherever a natural person would be es- to°bmaflde topped by his prior action in assuming a particular third character, or on permitting his agents to assume such a character, a corporation would under similar circumstances be estopped from asserting a claim of which the other contracting party had no notice.' The argument for an estoppel is strengthened in cases in which the corpora- tion has made representations that the proper steps to vali- date the contested acts have been taken. ^ It would be a gross perversion of franchises granted by the state if a corporation, created as an engine of business accommodation, after enjoy- ing the proceeds of a contract, should be permitted, when called upon to pay the consideration for what it has enjoyed, to set up a technical bar of uU7'a vires.^ And although a con- tract may not be executed in the way the charter prescribes, yet, so far as concerns third parties without notice, it may bind the corporation.^ When, it is true, the charter is a public statute, of which all parties are required to take notice, and when the deviation is as to a matter of substance, and not as to a matter of form, then parties making contracts with the corporation do so at their own risk.'' But when the deviation ' Infra, § 796 ; Wh. on Er. § 1151 ; Block v. Commis., 99 U.S. 686; Monasha Big. on Est. 3d ed. 467; Pollock, 3d «. Hazard, 102 U. S. 81 ; Tipton «. Loco- ed. 142 ; Webb v. Heme Bay, 1 L. R. motive Works, 103 U. S. 523 ; Jasper 5 Q. B. 642 ; Barwiok v. Eng. Joint St. v. Ballon, 103 U. S. 745, see Big. oil Co., L. E. 2 Exch. 259 ; Crook ... Sea- Est. 3d ed. 467 ; infra, § 796. ford, L. R. 6 Ch. 551 ; Bank U. S. v. ' See supra, § 140, and see infra, § Dandridge, 12 Wheat. 64 ; Pendleton 796. V. Army, 13 Wall. 297 ; Episcopal " Merchant Bank o. State Bank, 10 Charitable Soo. v. Episcopal Church, 1 Wall. 604 ; Badger «. Bank, 26 Me. Pick. 372 ; Bird v. Daggott, 97 Mass. 428 ; Witte o. Fishing Co., 2 Conn. 494 ; Monument. Bk. u. Globe Works, 260 ; Reynolds «. Kenyon, 43 Barb. 101 Mass. 57 ; Stoddard v. Foundry 585 ; Bank of Kentucky -v. Schuylkill Co., 34 Conn. 542 ; Bissell o. R. R., 22 Bk., 1 Pars. Sel. Cas. 180 ; Aurora Co. N. Y. 258 ; Grape Sugar Co. u. Small, v. Paddock, 80 111. 263 ; Northern 40 Md. 395 ; Schaeflfer u. Bonham, 95 Bank v. Johnson, 5 Coldw. 88. 111. 368 ; Home Ins. Co. v. Sherwood, 5 D^vis „. R. R. and other cases 72 Mo. 461. cited mpra, § 137. 2 Hackett u. Ottawa, 99 U. S. 86 ; 186 CHAP. VII.] CORPORATIONS. [§ 142. is not as, to matter in respect to which third parties are bound to take notice, or when it involves a mistaken subsumption of facts under law,i then the corporation is bound notwithstand- ing such deviations.^ — But this is not to be so extended as to make a corporation liable for functions which it is expressly prohibited by its charter from exercising, and which are plainly out of the range of its powers, or of the powers of the officer undertaking them.^ It is otherwise, however, as to transactions within the ordinary range of corporate action of institutions of the same class, though forbidden by the par- ticular charter.^ — So far as concerns the formal proceedings of corporations, such proceedings will be presumed to be regular until the contrary be shown. The burden is on the party seeking to prove irregularity. ° When, however, a statute pre- scribes certain material conditions as the prerequisites of cor- porate action, it must appear from the face of the pi'oceedings that these conditions are satisfied.^ § 142. A distinction, also, is to be observed between suits against and suits by a corporation. "When a. corpo- nisy^gtioQ ration is sued on an executory contract which is between . , . . 1 . suite Ultra vires, the attempt is to drag it into a sphere in against and which it cannot legally exist. When a corporation corpora-^ seeks to enforce a contract on which it has already *'°°- performed its part, it may go out of its sphere, but this is ' Infra, § 199. 2 Merchants' Bk. a. State Bk., 10 Wall. 604; Stoney v. Ins. Co., 11 Paige, 635 ; Genesee Bk. v. Patohin Bk., 3 Kern. 309 ; Farmers' Bk. v. Butchers' Bk., 16 N. Y. 125 ; Bradley V. Ballard, 55 111. 413; Thompson ii. Lambert, 44 Iowa, 239. ' Pollock, ut supra ; Foster v. Essex Bank, 17 Mass. 479 ; Austin v. Daniels, 4 Denio, 299 ; First Nat. Bk. v. Ocean Nat. Bk., 60 N. Y. 278; Ogdensburg E. R. V. Vt. R. R., 6 Thomp. & C.488 ; 4 Hun, 268 ; see Brown u. Donnell, 49 Me. 421 ; Hood i>. R. R., 22 Conn. 502. * Badger r. Bank, 26 Me. 428 ; Bank of Ky. V. Schuylkill Bk., 1 Parsons Sel. Cas. 180; Hagerstown Bk. v. London goo., 3 Grant (Penn.) 135. " Wh. on Et. § 1310 ; Grady's case, 1 De G. J. & S. 488 ; Express Co. v. R. R., 99 U. S. 199 ; Muzzey v. White, 3 Greene, 290 ; Copp v. Lamb, 12 Me. 312; Hathaway u. Addison, 48 Me. 440 ; Cobleigh v. Young, 15 N. H. 493 ; Bassett v. Porter, 10 Cush. 418 ; Mc- Farlan v. Ins. Co., 4 Denio, 392 ; Yates u. Van De Bogert, 56 N. Y. 526 ; Endres V. Lloyd, 56 Ga. 547 ; Dana v. Bank, 4 Minn. 385 ; see Morris R. R. o. Sussex R. R., 20 N. J. Eq. 542. 6 Clark V. Wardwell, 55 Me. 61. 187 § 142.] CONTRACTS. [chap. VII. for the purpose of turning into that sphere the fruits of its own action. Hence, there are many cases in which contracts sued on by corporations have been sustained on the ground that the profits go to the lawful uses of the corporation, when, were the purpose to apply the funds of the corporation to a purely extraneous object, the action of the corporation would be held ultra vires} The plea of ultra vires, for instance, ' National Bank u. Matthews, 98 U. S. 621 ; Old Colony R. R. <■. Evans, 6 Gray, 25 ; National Bank v. Porter, 125 Mass. 333. The cases on this point are thus examined by Gray, C. J., in Davis V. R. R., ut supra. "In Chester Glass Co. V. Dewey, 16 Mass. 94, the plain- tiff, a corporation established for the purpose of manufacturing glass, kept a shop near its factory, for the accom- modation of its workmen, containing a general assortment of such goods as are usually kept in country stores ; and the defendant was a carpenter, living near, who made boxes and did otlier carpenter's work for the corpora- tion. In an action for the price of goods sold and delivered to him from the shop, the defendant objected that the plaintiff was not authorized by law to keep such a shop and to sell goods in this manner ; and it was held that this objection could not avail him. The leading reason assigned was, ' The legislature did not intend to prohibit the supply of goods to those employed in the manufactory ;' in other words, the contract sued on was not ultra vires. This reason being decisive of the case, the further suggestion in the opinion, ' Besides, the defendant cannot refuse payment on this ground ; but the legis- lature may enforce the prohibition, by causing the charter to he revoked, when they shall determine that it has been abused,' was, as has been since observed by the court, wholly obiter dictum. Whittenton Mills v. Upton, 10 Gray, 599. 188 " In Old Colony Railroad v, Evans, 6 Gray, 25, the defendant, being under contract to haul a large quantity of gravel on to lands bolonging to the city of Boston, made an agreement in writing with the plaintiff corporation, by which it agreed to purchase a tract of land in Quiney, and he agreed to take gravel therefrom, and to carry it in his own cars over the plaintiff's road to Boston, paying a specified toll ; the defendant afterwards further agreed in writing, that if the plaintiff would purchase another tract for the same purpose, he would pay the cost of the first tract ; and both tracts were purchased by the plaintiff. The objec- tion that the corporation had no right to trade in gravel or land was raised by the defendant by way of defence to a bill in equity by the corporation for specific performance of his second agree- ment, by accepting a deed of and pay- ing for the first tract. There can be no doubt of the correctness of the deci- sion overruling the objection. The corporation, by its purchase, had ac- quired a title to the land, which was good against all the world, except, pos- sibly, the commonwealth ; and tlie de- fendant, having knowledge of all the facts, did not and could not object that the title might be defeasible by the commonwealth. Banks i/. Poitiaux, 3 Rand. 136 ; Leazure v. Hillegas, 7 S. & R. 313 ; Gouudie r. Northampton Water Co., 7 Penn. St. 233 ; Silver Lake Bank V. North, 4 Johns. Ch. 370, 383 ; Smith V. Sheeley, 12 Wall. 358; Common- CHAP. VII.] CORPORATIONS. [§142 cannot be properly interposed when a corporation lends money and seeks to recover the loan,' or when it sells goods and seeks wealth V. Wilder, 127 Mass. 1, 6. Al- though it was said in the opinion, that the purchase of the land seemed to have been made as a mode of promoting the purposes of the plaintiff's incorpo- ration, the increasing of its business in transportation upon its railroad, and not as an object of trade or speculation in lands, the point adjudged was that the want of corporate capacity to pur- chase and sell lands was not a legal objection to the maintenance of the bill. The only authority referred to by the court was the treatise of Angell & Ames on Corporations, sees. 10, 11, 151, 153, of which the section most directly applicable is section 163, in which it is clearly laid down that a court of equity will enforce against a natural person his agreement to pur- chase of a corporation lands which it holds in violation of its charter, but will not enforce against a corporation its agreement to purchase lands for a purpose not authorized by its charter. The distinction is obvious. In the latter case, to enforce the agreement against the corporation is to compel the application of its funds to a pur- pose not authorized by law. In the former case, to compel the individual to take and pay for the property ac- cording to his agreement is the surest and most effectual means of replacing in the treasury of the corporation, for its lawful uses and the benefit of its stockholders, the funds which it had misapplied. Rutland, etc. R. Co. v. Proctor, 29 Vt. 93, 97. ' ' In National Pemberton Bank v. Porter, the point decided was, that the objection that a national bank had ex- ceeded its powers by purchasing a promissory note from an indorsee there- on did not prevent it from maintaining an action upon the note against the maker ; for the reasons, that the action was not brought upon the contract of purchase, or against any party to that contract, and that it was not necessary in this commonwealth that the plain- tiff in an action on the promissory note should have any title or interest in it. See also Attleborough National Bank u. Rogers, 125 Mass. 339. " In National Bank v. Matthews, 98 U. S. 621, the act of congress providing that a national bank might purchase and hold real estate for certain enu- merated purposes only, of which to secure money lent at the time of taking a mortgage, was not one, was held by a majority of the court, in accordance with the opinion of Chancellor Kent, in Silver Lake Bank v. North, above cited, not to make void a mortgage given to secure the payment of a prom- issory note for money so lent, nor to prevent the bank from enforcing such a mortgage. A like decision was made in National Bank u. Whitney, 103 U. S. 99. "A corporation may, indeed, be bound to refund to a person, from whom it has received money or property for a purpose unauthorized by its charter, the value of that which it has actually received ; for, in such a case, to maiu- ' Steam Nav. Co. u. Wead, 17 Barb. 378 ; see Hays v. Gallon Co., 29 Oh. St. 330 ; Darst v. Gale, 83 111. 141 ; though see contra, Grand Lodge v. Waddill, 36 Ala. 313. That this is the case with usurious contracts, see Philadelphia Loan Co. o. Towner, 13 Conn. 249 ; Perkins v. Watkyns, 58 Tenn. 173. 189 § 143.] CONTRACTS. [CHAP. VII. to recover the price.' On the other hand, when it is sued on a purely executory contract, in which no bona fide third party intervenes, and on which there is no estoppel, it is free to show that the contract was ultra vires. § 143. Municipal corporations occupy, so far as concerns the questions now before us, a distinctive position. Municipal ^ , i • ■ i charters They are not chartered to do business in the sense stricter ° that a bank or a railroad is chartered to do business, hmitatioii. Their object is municipal government, and what this means is to be learned, not from business usage, but from the legislation of the state. Hence there is a tendency to limit the contracts of municipal corporations much more strictly than the contracts of banks, and of railroad and insurance corporations.^ But when a municipal corporation is author- ized to perform certain business duties — e. ^., to issue bonds — it will be bound, as against bona fide purchasers, by the recitals of its officers in such bonds to the efiect that the conditions of the enabling statute were complied with,^ though it is otherwise when the bond refers to a statute which is mis- recited.* And the agents of a municipal corporation cannot bind it to objects foreign to the object of its existence.^ It is otherwise, however, as to matters apparently within its range, as to which it cannot refuse, when it has received the benefits of the contract, to perform its part on the ground that the tain the action against the corporation it." See, also, Franklin Co. v. Lewis- is not to affirm, hut to disaffirm the ton, 68 Me. 43; Downing v. R. R., 40 illegal contract. White v. Franklin N. H. 230. See to same effect Whitney Bank, 22 Pick. 181 ; Morville v. Ameri- Arms Co. u. Barlow, 63 N. Y. 62. can Tract Society, 123 Mass. 129, 137 ; ' Whitney Arms Go. v. Barlow, 63 Cork, etc. Railway in re, L. R. 4 Ch. N. Y. 62. 748. But when the corporation has ^ Thomas c. Richmond, 12 Wall, actually received nothing in money or 349 ; Mayer v. Ray, 19 Wall. 468 ; and property, it cannot be held liable upon see cases cited, supra, §§ 140-1. an agreement to share in, or to gua- ' Gelpcke v. Dubuque, 1 Wall. 175 ; ranty the profits of, an enterprise Supervisors v. Schenck, 5 Wall. 7S4 ; which is wholly without the scope of Lexington v. Butler, 14 Wall. 296 ; its corporate powers, upon the mere Coloma u. Eaves, 92 U. S. 4S4 ; Nat- ground that conjectural or speculative chez o. Mellery, 54 Miss. 499 ; and benefits were believed by its officers as cases cited, supra, §§ 13S-140. likely to result from the making of the ■* McClure v. Oxford, 94 U. S. 429. agreement, and that the other party 5 DiUon, Munio. Corp. I 381. has incurred expenses on the faith of 190 CHAP. VII.j CORPORATIONS. [§ 143. contract is technically ultra vires} — So far as concerns the question of the due execution of a power, the rule is thus authoritatively stated : " Where legislative authority has been given to a municipality, or to its officers, to subscribe for the stock of a railroad company, and to issue municipal bonds in payment, but only on some precedent condition, such as a popular vote favoring the subscription, and where it may be gathered from the legislative enactment that the officers of the municipality were invested with power to decide whether the condition precedent has been complied with, their recital that it has been, made in the bonds issued by them and held by a bona fide purchaser, is conclusive of the fact, and binding upon the municipality ; for the recital is itself a decision of the fact by the appointed tribunal."^ And, as we have seen,' a corporation will be estopped by its recitals of due execution.* ' Ibid. ; supra, § 141 ; Hitchcock v. Galveston, 96 U. S. 341; East St. Louis V. Gas Co., 98 111. 415 ; and otlier cases cited. Big. on Est. 3d ed. 467 ; 12 Gent. L. J. 390. 2 Strong, J., Coloma v. Eaves, 92 U. S. 484; and see Commissioners v. Bolles, 94 U. S. 104 ; Rock Creek v. Strong, 96 U. S. 271 ; Davies v. Huide- koper, 98 U. S. 98 ; Hackett v. Ottawa, 99 U. S. 86. ' Supra, § 141. " In Eufaula v. MoNab, Sup. Ct. of Ala. 1881 (12 Rep. 484), the question arose under the following section of the act of the legislature chartering the city of Eufaula: " Sec. 24. Be it further enacted, that the council shall have full power and authority to pur- chase, and provide for the payment of the same, all such real estate and per- sonal property as may be required for the use, convenience, and improve- ment of the city," etc. The council of Eufaula, in 1872, purchased from the appellee, McNab, thirty-four acres of land located within the corporate limits of the city, and a warranty deed was executed by McNab, conveying the same in fee simple to the city. The consideration paid was $10,000 of the bonds of the city. A bill was filed to enforce the vendor's lien on the land for the accumulated interest, which amounted to about $5000, and also to fix the liability of the city of Eufaula for principal and interest of the bonds. The chancellor made the decree prayed for, and ordered the sale of the lands for its payment, and the city appealed from this decree. It was held by the Supreme Court, that, as the land in question was not purchased for an exclusively public use, the purchase was ultra vires. "It may be conceded," said Somerville, J., "if the land in question had been pur- chased for an exclusively public use, as being designed for dedication to a purpose within the usual scope of municipaL governments, it might be a proper exercise of corporate power under the above section, and the validity of the contract of purchase would not be afl'ected or rendered in- valid by any subsequent perversion of the land to unauthorized uses not shown satisfactorily to have been 191 § 143.] CONTRACTS. [chap. VII. mutually intended at the time of tlie purchase. 2 Dillou on Mun. Corp. § 444 ; Weismer v. Douglass, 64 N. Y. 91. But the terms of the charter are imperative that such property must be ' required for the use, convenience, and Improvement of the city.' Collateral advantages incidentally resulting in the promotion of the city's commercial or business prosperity will not be suffi- cient. It is not contemplated or per- mitted that such property shall be acquired in aid of any private enter- prise not of a public character, however laudable may be its purpose, or how- ever useful may be its encouragement. As said by Mr. .Justice Miller, in Loan Association r. Topeka, 20 Wall. 655, 660 : 'It follows that in this class of cases the right to control must be limited by the right to tax, and if in the given case no tax lawfully be levied to pay the debt, the contract itself is void for want of authority to make it.' " The doctrine," so it is argued, "grows out of the nature of such insti- tutions, and rests upon solid and rea- sonable grounds. The inhabitants are the corporators ; the officers are but the public agents of the corporation. The duties and powers of the officers or public agents of the corporation are prescribed by statute or charter, which all persons may not only know, but be fraught with such danger and accom- panied with such abuse that it would soon end in the ruin of municipalities, or be legislatively overthrown. These considerations vindicate both the rea- sonableness and necessity of the rule that the corporation is bound only when its agents or officers, by whom it alone can act if it acts at all, keep within the limits of the chartered authority of the corporation. 1 Dillon on Mun. Corp. (2d ed.) § 381. Muni- cipal corporations, it is obvious, can 192 exercise only such powers as are ex- pressly granted in their charters, and such as may be necessary and proper in order to carry such express or direct powers into effect ; but these powers include those which are indispensably necessary to the declared objects and germane to the governmental purpose for which such corporations may be organized. City Council o. Road Co., 31 Ala. 76 ; Mayor v. Yuille, 3 lb. 137 ; 1 Dillon on Mun. Corp. § 55 ; Ins. Co. u. Ely, 5 Conn. 560. All contracts, therefore, which are unauthorized by these principles are ultra vireSj and im- pose no legal liability upon the cor- porations which purport to be bound by them. This is conceded to be a most salutary principle, and one of transcendent importance to the pro- tection of the citizen against exorbi- tant and unauthorized taxation, im- posed for ends entirely foreign to legit- imate governmental purposes. 1 Dillon on Mun. Corp. § 55 ; § 381, note 2. To such an extent is this true, that the law rather favors the application of the doctrine of ultra vires to munici- palities and counties which are invested with civil, police, and political func- tions ; and in case of any ambiguity or doubt arising out of terms used in the charter, they are strictly instructed against the existence of such doubtful powers, and are resolved by construc- tion in favor of the public. Green's Bryce's Ultra Vires, 42, note ; Mayor u. Ray, 19 Wall. 468 ; Minturn v. Larue, 23 How. 435 ; 1 Dillon on Mun. Corp. § 55, note 1 ; 2 Kent Com. §§ 51, 292 ; Stetson v. Kempton, 13 Mass. 272." In Buffalo R. R. v. Falconer, 103 U. S. 821, the evidence was that the town of EUicott, being authorized by statute to subscribe to the stock of a railroad company, upon petition of the tax- payers, either absolutely or condition- CHAP. VII.J CORPORATIONS. [§ 143. ally, the taxpayers petitioned that such subscription should he made, condi- tionally, n.pon the railroad heing con- structed through a certain village. A contract was then made hy the town commissioners with the railroad com- pany, before the railroad was so con- structed, that they would make the subscription when the condition was complied with. This contract was held to be ultra vires, and without force and effect as against the township. "We are clearly of opinion," said Bradley, J., "that the agreement made by the commissioners with the railroad company in June, 1872, was ultra vires. Their powers were confined to subscrib- ing for the stock and making and issuing the bonds in payment thereof, when and as the petition of the tax- payers directed — that is, after the road was completed through Jamestown. By the act of 1870 they might also stipulate as to the instalments in which the bonds should be delivered, VOL. I. — 13 and the purposes for which they might be applied. But the power to do this being but an incident of the principal power to make and issue the bonds, and being only intended to enable the commissioners to prescribe the time and manner of their issue and the uses to which they should be applied, would not properly arise, and could not be effectively exercised, until the princi- pal power itself arose and became exer- cisable. Whilst, however, the com- missioners had the power, or, rather, would have the power, at the pre- scribed time, to subscribe for the stock and to execute and issue the bonds, neither the statutes, nor the tax- payers' petition, gave them any power to make a, contract to subscribe for stock, nor a contract to deliver bonds to the railroad company. They were not charged with any such duty ; they were not invested with any such power." 193 § 144.J CONTRACTS. [chap. VIII. CHAPTER VIII. DURESS. Consent obtained by duress is inopera- tive, § 144. Distinction between "void" and "void- able," 145. Party or privies may defend on this ground, bona fide endorsees, § 146. Tlie danger must be real from stand- point of party threatened, § 147. There must be violence threatened, § 148. Duress of goods does not invalidate promise, § 149. Nor fear of legal procedure, § 150. Threat of criminal prosecutions avoids, § 151. And so of criminal prosecutions of near relations, § 151 a. Must be causal relation between the duress and the consent, § 152. Person from whom the duress proceeds immaterial, § 153. Such contracts may be ratified, § 154. § 144. The earlier scholastic jurists speak of duress as either absolute or compulsive. Absolute is where the per- Consent „ , . , . ■, . -n • obtainedby son torcecl IS purely passive, his will in no sense fnoperattve cooperating. A contract apparently accepted in such cases is null and void.' Compulsive duress (kompulsive Gewalt) is where the will of the person coerced is made to yield to the coercion, in which case the obligation is in strict law valid, though open to be impeached ope excpjMonis. A contract thus induced is ipso jure valid ; but there arises a counter obligation ex aequitatr, by which the contract may be assailed (1) by the ndio quod mttus causa, (2) by the exceptio doli, (3) by the restitutio in integrum. — But this distinction is stoutly contested by Grotius,^ and by other jurists of the naturalistic school, it being argued by them that what is willed under compulsion is not to be regarded as willed.^ ' See Savigny, Rom. Rech. III. 109. ambagibus ; si mes arbitrio liberari 2 De jure belli ac pacig, II. cap. possum, et obligationem nuDem in me XII. § 7 ; though see Pufendorf, de jure deprehendo, imprimis cum promissor, nat. et gent. lib. III. cap. 6, § 10. si promissarius nolit, liberationem sibi 3 Thus Boehmer, L. c. cap. 1, § 13, p. ipsi praestare possit." 779, writes: "Quid enim opus his 194 CHAP. VIII.] DURESS. [§ 144. The Grerman code, following authorities to be hereafter more fully noticed, rejects this distinction, prescribing that ex- pressions of the will to which a party is forced by physicial power, have no binding efiect, whether the consent be givea or not. As illustrations of such physical power are enume- rated the withdrawal of food, the application of torture, and such threats of bodily violence as are likely to overcome in the particular case a resisting will.' In our own law the same position has been recognized, and it has been frequently ruled that consent obtained by duress is inoperative. Striking illustrations of this are to be found in prosecutions for robbery and rape, in which it is not necessary to prove that the party injured resisted to the extreme end, but in which it is enough if the prosecution shows that submission was coerced by threats of life.^ In suits on contracts the same rule prevails. A party can set up as a valid defence to a suit on a contract, that it was agreed to by him under threats of great violence.^ 1 A. L. E. L. 4, § 32, see L. 3, § 1, D. quod metus causa, and other cita- tions given by Koch, § 75. 2 Wh. Cr. L. 8th ed. §§ 146, 577, 850. » 1 Roll. Ahr. 688 ; 1 Bl. Com. 131 ; Paxton V. Popham, 9 East, 421 ; Wil- liams V. Bayley, L. R. 1 H. L. 218; Baker v. Morton, 12 Wal. 150 ; French u. Shoemaker, 14 Wal. 314; White- field V. Longfellow, 13 Me. 146 ; Wat- kins V. Baird, 6 Mass. 511 ; Lewis r. Bannister, 16 Gray, 500 ; McMahon u. Smith, 47 Conn. 221; Neilson o. Mc- Donald, 6 Johns. Oh. 210 , Stouffer v. Latshaw, 1 Watts, 167 ; Miller v. Mil- ler, 68 Penn. St. 486; Reynolds o. Copeland, 71 lud. 422 ; Seiber v. Price, 26 Mich. 518 ; Gist v. Frazier, 2 Litt. 118. Money, also, paid under duress maybe recovered back. Infra, § 730 et seq.; Gates u. Hudson, 6 Exch. 340; Motz V. Mitchell, 91 Penn. St. 114; Schulz V. Culbertson, 49 Wis. 122. On the subject of duress the Roman literature is very full. See Koch, op. cit. § 75 ; Savigny, Rom. Rechts, II. § 114 ; Gundling, de efflcientia metus turn in promissionibus liberarum gen- tium, turn etiam hominum privato- rum, auxiliis contra metum ; Boehmer, de exceptione metus injusti ; Rudolph, de effectu metus in pactis et contracti- bus ; Lennep, de eo quod metus causa gestum ; Tiennes, de eo quod metui causa gestum erit jure Romano. That a money consideration does not by itself cure a sale by duress, see Foshay v. Fer- guson, 5 Hill, 154 ; Belotev. Henderson, 5 Cold. 471. That duress must be spe- cially pleaded, see Bac. Abr. Duress, C. That proof of duress is admissible to impeach execution of document, see Davis V. Fox, 59 Mo. 125 ; Davis «. Luster, 64 Mo. 43 ; Moore ... Rush, 80 La. Ann. 1157 ; Bane v. Detrick, 52 111. 19 ; Thurman v. Burt, 55 111. 129 ; Bosley v. Shenner, 26 Ark. 280 ; Diller o. Johnson, 37 Tex. 47 ; Olivari t'. Monger, 39 Tex. 76. That the doc- trines of equity and of law are in this respect the same, see Story, Eq. Jur. 195 § 145.] CONTRACTS. [CHAP. VIII. And courts of equity watch with extreme jealousy all con- tracts made by a party while under imprisonment; and, if there is any good ground to suspect oppression or imposition in such cases, they will set the contract aside.' Circum- stances, also, of extreme necessity and distress, though not accompanied by any direct restraint or duress, may, in like manner, so entirely overcome free agency as to justify the court in setting aside a contract made by a party, "on account of some oppression, or fraudulent advantage, or imposition, attendant upon it."^ § 145. Duress, therefore, does not presuppose that the per- Distinction ^^'^ acted On becomes a mere automaton. It is true between that there may be, as has been iust said, absolute "void" and , , i i i "voida- duress. One man s hand may be used by another to pull a trigger, or by another he may be held back from doing something he is about to do. Action thus forced is without legal effect; a contract thus compelled is void. The great majority of the cases of duress, however, are those in which one man's will is influenced by fear to execute an- other man's purpose. Mere fear, it is true, will not have this effect. Multitudinous contracts, induced by fear, have been held valid ; it is only when the fear is brought about by the threats of the party benefiting by the contract that invalidity may result.* Duress and freedom, as is justly remarked by Savigny,* are not incompatible. The speculative questions 12th ed. § 239 ; Miller v. Miller, 62 ' Windscheit, Pandekt. § 80. Penn. St. 486 ; Harshaw v. Dobson, 64 ' Rom. Reolit, iii. § 114. Savig- N. C. 384; Tliurmau v. Burt, 53 111. ny's doctrine, that contracts made 129. under coercion are to be regarded as ' Story, Eq. Jur. 12th ed. § 239, " willed," and are, therefore, voidable citing Roy u. Beaufort, 2 Atk. 190 ; and not void, has been criticised with NiclioUs ti. Nioholls, 1 Atk. 409 ; Hin- much acuteness by subsequent German ton I/. Hinton, 2 Ves. 634 ; Falkner v. critics. — See Schliemaim, Lehre von O'Brien, 2 B. & B. 214; GrifiSth u. Zwange, 1861; Czylark in Ihering's Spratley, 1 Cox, 383; Underbill v. Ja.br. XIII. 1. Brinz (Pandkt. § 320), Horwood, 10 Ves. 219 ; Attorney Gen. while acquiescing in Savigny's position (1. Gothon, 2 Vern.497. To same effect, in respect to obligations that are purely see Smith u, Monteith, 13 M. & W. voluntary, such as stipulations, holds 427; Soule v. Bonney, 37 Me. 128; that it does not apply in cases where a Tilley o. Damon, 11 Cush. 247. material causa justa is essential to the 2 See infra, § 169. validity of a transaction. If in such 196 CHAP. VIII.] DURESS. [§ 145. involved do not touch practical jurisprudence any more than they touch practical life; in jurisprudence, in such cases, to follow Savigny's exposition, we have to deal with freedom only so far as it involves the capacity to choose between three possible conclusions: to do the thing which the threatening party requires, to repel the violence threatened, or to submit to this violence. If the party assailed chooses the first of these alternatives he chooses it as much as if he chose one of the others, and there is a voluntary acceptance of the act on his part sufficient at least to make a prima facie contract. This view is accepted by the Roman standards: '■'■ Tamen coactus volui" is the term applied in one striking passage; and in another' we are told, " Si patre cogente ducit uxorem, quam non duceret, si sui arbitrii esset . . . maluisse hoc videtur." Contracts thus influenced are not, therefore, nullities of them- selves. They are valid on their face ; but at the same time they are assailable on grounds of public policy. For one man by coercion to wring a bargain from another is a wrong for which the law gives redress. The party injured is entitled either to defend on this ground a suit brought on the contract thus extorted, or to recover back the thing extorted from him in a distinct suit. — In our own law the same distinction is maintained. Physical compulsion precludes assent. A man whose hand is taken by another and placed by force on a paper no more assents to what the paper contains, than an idiot assents to a paper to which he attaches his mark. There can be no ratification because there is nothing to ratify. On the other hand, an assent not under physical, but under moral compulsion, constitutes a contract pri7na facie valid. The contract, it is true, may be repudiated by showing duress.^ But until repudiated and annulled by the proper court, it case metus comes in to prevent the open to be set aside for undue influence weighing of causa, the transaction re- or coercion. In either case, however, mains invalid. But it cannot be it was consent that was unduly in- claimed that in the determination of ttuenced or coerced. causa the will does not act. If it does ' L. 21, 22, de vitu nupt. xxiii. 2. act, no matter under what compulsion, 2 See authorities at end of last sec- then the thing done is willed. It is tion. 197 § 147.] CONTRACTS. [chap. VIII. Party or privies may defend on this ground Bona fide indorsees. binds; and repudiation is precluded by ratification at a time when the duress was removed.' § 146. Not only the party himself, but privies, may contest a promise on the ground of duress, so that all parties taking with notice are infected with the same dis- ability.^ — An indorser, who has indorsed a note in good faith, without knowledge that it was obtained by duress, may set up the duress of the maker to a defence against the holder, who was participant in the duress.^ As a general rule, however, the defence is to be restricted to the party on whom the duress has been exercised, and to those claiming under him.* Hence the duress of the maker is no defence to a bmiafide indorsee for value without notice.' § 147. Fear, to be a defence, must be real and sincere: it must be metus non vanus sed Justus.^ This is the case, so the Roman jurists declare, when danger to life, health, liberty, or honor is threatened.' Hence the maxim; Exeusat career, status, mors, verbera, stuprum.* But it is not necessary that the danger should be real. It is enough if it honestly exist in the estimation of the party yielding to the threat.^ We must put ourselves in his place in order to detei-mine whether the threat was likely to have been operative ; and for this purpose it is admissible to show that he was at the time of the trans- action peculiarly sensitive to influences of this kind, and that this was known to the party attempting to apply the influ- The danger must be real and imminent from stand- point of party tlireatened. ' Infra, § 154. 2 Huscombe u. Standing, Cro. Jac. 189 ; McClintock c. Cummins, 3 MuL. 158 ; Fisher r. Shattuck, 17 Pick. 252 ; Spaulding v. Crawford, 27 Tex. 155. 3 Griffith V. Sitgreaves, 90 Penn. St. 161. ' Huscombe u. Standing, Cro. .Tac. 187 ; Manlett v. (iibbs, 1 Brownl. 64; McClintock a. Cummins, 3 McL. 158 ; Robinson o. Gould, 11 Gush. 55 ; Thompson ( . Lockwood, 15 John. 256 ; Steuben Bk. Co. o. Matthewson, 5 Hill, 249 ; Bac. Ab. tit. Duress, A. 198 5 Bowman v. Hiller, 130 Mass. 153 ; see infra, § 347. " L. 6, D. iv. 2. ' L. 5, D. eod. L. 3, § 1, inf.; L. 4, § 8, eod. L. 4, and 7 C. eod. * To same efl'ect see Baker v. Morton, 12 Wal. 150; Bowker v. Lowell, 49 Me. 429 ; Miller v. Miller, 68 Pemi. St. 486. ' That this is the case when fear of violence is set up as a defence to a prosecution for homicide, see Wli. Cr. L. 8th ed. § 488. CHAP. VIII.] DURESS. [§ 148. ence. The condition of the mind of the party yielding to Buch influence is to be determined from that of his own stand- point, and not from that of an ideal average.' In the Roman law we have several rulings to the efl'ect that in determining whether consent was extorted by fear, we are to take into consideration the physical condition, the sex, the mental and nervous condition, the education, and the peculiar social and domestic relations of the party threatened.^ " Metus autem causa abesse videtur, qui justo timore mortis, vel cruciatus corporis conterritus abest ; et hoc ex affectu ejus intelligitur. Sed non sufficit quolibet terrore abductum timuisse, set hujus rei disquisitio judicis est."^ In our own law the same dis- tinction is maintained.^ § 148. But there must be actual physical violence threat- ened. A deed, for instance, which is executed in jj^^^f^g dread of purely imaginary dangers may be con- violence , \ •' -, n ■ • 1 . xi threatened. tested on the ground oi insanity, but not on the ground of duress.' It must be " Metus non illatus, quem nullae minae praecessirint."* In the Roman standards this view is repeatedly aflirmed. Thus it has been held no ground to invalidate a contract that it was induced by a desire to pro- pitiate a party to whom a wrong had been done f nor by a desire to evade a prosecution for crime, the contract being fair, and there being no knowledge on the other side that this was the motive, and no attempt at extortion f nor, if there be no unfair influence exerted to extort an unjust bar- gain, will a contract be held invalid because the party sub- sequently assailing it was influenced by peculiar reverence {metus reverentialis) for the other contracting party.' In the 1 Wh. Cr. L. 8th ed. § 489. « L. 14, § 3 ; h. 9, § 1, D. eod. 2 L. § 3, D. ex quibus causis majores « Koch," ii. lOi. See Seymour v. (iv. 6). Preseott, 69 Me. 376; Tapley v. Tap- 3 Gail, obs. Lib. ii. obs. 93 ; Brun- ley, 10 Minn. 448. iieman, ad L. 6, C. h. t. Leyser, spec. ' L. 21, pr. D. eod. Donellus, L. xv. 58, m. 3, L. 8 D. h. t. cap. 39 ; No. 60. " Bispham's Eq. § 230 ; Williams v. » L. 10, C. h. t. Donellus, ut supra. Bayley, L. R. 1 H. L. 218 ; Neilson u. « See L. 7, pr. D. quod metus causa. McDonald, 6 Johns. Cas. 210 ; McCand- Leyser, L. o. m. 2 ; Boehmer, L. C. less V. Engle, 51 Penn. St. 309 ; Lou- cap. ii. § 8, p. 788. den V. Blythe, 16 Penn. St. 532. 199 § 148.] CONTRACTS. [chap. VIII. same line may be cited numerous cases in our own courts in which it has been held that the mere fact that a promisee has obtained an ascendency over the promisor is in itself no ground for setting aside a promise.^ Nor do specific fore- bodings of disaster, not otherwise to be averted, have their eftect, when such influence does not emanate from the prom- isee. Thus it has been held in New Jersey to be no defence at common law to an action against a married woman on a note signed by her that she was led to sign it by her husband's saying that if she did not sign, he would commit suicide.^ Nor do threats of disaster even by the promisee necessarily avoid. Thus the fact that a sheriff was induced to give a special bond, not legally obligatory on him, by threats of the board of supervisors, that, unless he did, his ofiice would be declared vacant, does not by itself avoid the bond.^ In an ' Infra, § 158. ' Wright V. Remmington, 41 N. J. L. 48. 3 State V. Harney, 57 Miss. 863. In Wright v. Remmington, 41 N. J. L. 53, Reed, J., said : "The common law, however, very early guarded the stability of contracts by a rule which required the exercise of a much higher degree of coercive force than here ap- pears before the question of want of the power of consent could be enter tained as a question of fact. The de- grees of restraint or terror to which the party must be subjected, as a ground for avoiding his contract, must rise to what the law recognized as duress, and the statement of tlie grounds of such avoidance appears in the earliest books of authority. Bac. Abr. Duress. "These grounds were stated in the case of Sooy ads. State, 9 Vroom, 329, and repetition of them here would be profitless. The language in the opinion in that case, although used in reference to the avoidance of a bond, is applicable to the avoidance of any con- tract, sealed or unsealed. "In turning from the statement of 200 what is essential to constitute a defence upon the ground of duress to the facts in this case, it at once appears that they do not make a case within the rule laid down relative to such defence. There was no imprisonment of the woman or threat of imprisonment. There was no threatened injury to her person. The influence was that her husband threatened not to injure her, but to kill himself. It is true that there is the statement in the books that duress to a wife will avoid a deed made by the husband under that in- fluence. Bac. Abr. Duress, B. "It maybe that had the payees of the note or their agent threatened to take the life of the husband unless the wife signed the note, and she signed under the influence of the terror ex- cited by such threats, it would have avoided the contract. But here the threats were made by the husband against his own life. The maker and the object of the threats were the same. Their execution was within his own power of volition. The wife knew that no h-irm could come to him except by his own act. The present case is CHAP. VIII.] DURESS. [§ 148. action on a promissory note by the payee against, the maker, it was set up as a defence that the plaintiff obtained the note by threatening the defendant, who was an aged man in ill health, about leaving Knoxville, Tennessee, for his home in Maine, with arrest, the note being for a debt due by the maker's son. There was no menace of violence proved, how- ever, and no pretence that process authorizing an arrest had been procured, nor was there any officer of the law in attend- ance. It was held that the note was not avoided on ground of duress.' — Nor do threats of a mere trespass amount to duress.^ — It used to be held that a threat of burning a house would not avoid a contract it produced f but, as Mr. Chitty well observes, " it may be doubted whether a threat to com- mit so serious an injury would not be considered sufficient duress to avoid a contract obtained by means thereof."^ When, however, imprisonment or great violence to the person is threatened, no matter what such violence may be, this avoids a contract obtained by suoh threat ;" and even where imprisonment is lawful, duress may be constituted by the application of undue force, or by unjustifiable pressure, such as withholding of food.^ But the fact that a contract was made by a party in prison does not by itself avoid it unless undue force or improper influence was used to extort it.' utterly unlike an instance of the pres- even in a public prison, constitutes ence of some overshadowing danger, duress, if the imprisonment be tinlaw- uncontrollable by either the wife or ful, see Smith v. Monteith, 13 M. & W. the person endangered. 427 ; Soule u. Bonney, 37 Me. 128 ; " There is no trace of a doctrine that Tilley v. Damon, 11 Cush. 247. the threat of a husband against him- s 2 Inst. 482 ; Smith f. Monteith, 13 self will avoid the contract of his wife, M. & W. 427, 438, 442 ; Williams v. or conversely, and such a rule would Brown, 3 B. & P. 69 ; R. v. Southerton, lead to an instability in that class of 6 East, 140 ; Pole v. Harrobin, 9 East, contracts which would be vicious." 417. 1 Seymour v. Prescott, 69 Me. 376. ' Infra, § 150 ; 1 Ch. on Con. 11th 2 R. u. Southerton, 6 East, 140; Am. ed. 270; Stepney .^. Lloyd, Cro. Bingham v. Sessions, 6 Sm. & M. 13. Eliz. 647 ;' Kelsey v. Hobby, 16 Pet. " Bac. Abr. Duress (A). 269 ; Crowell v. Gleeson, 1 Fairf. 325 ; * 1 Ch. on Cent. 11th Am. ed. 272. Bowker u. Lowell, 49 Me. 429 ; Shep- ■ 5 Infra, § 150 ; Taylor v. Jacques, hard v. Watrous, 3 Caines, 166 ; Stouf- 106 Mass. 291. That imprisonment, fer v. Latshaw, 2 Watts, 167. 201 § 149.] CONTRACTS, [chap. VIII. Duress of goods does not invali- date prom- ise. § 149. Mere detention of goods, it has been frequently held, does not, in cases where this injury can be com- pensated for by a cross suit, constitute such duress as will invalidate a promise made in order to release the goods.' But whatever may be held to be the efEcacy of a promise made under duress of goods, a party may recover back money paid under such duress.^ Heuce, exces- sive charges made by a railroad or express company, and paid in order to obtain goods or avoid expulsion from carriage, may be recovered back f and so generally may money unlaw- fully detained.'* — The refusal, therefore, of the charterer of a vessel to clear her after she is loaded and in the stream, unless certain concessions are made him, is duress, and the charterer cannot avail himself of such concessions.' As a general rule, 1 Infra, §§ 737-8; 1 Ch. on Cent. 11th Am. ed. 206 ; Atlee v. Backhouse, 3 M. & W. 642 ; Skeete ;;. Beale, 11 A. & E. 983 ; Neilson v. McDonald, 6 John. Ch. 201 ; James u. Roberts, 18 Ohio, 548 ; Elston v. Chicago, 40 111. 514 ; Spaids V. Barrett, 57 111. 289 ; Mao- loon V. Smith, 49 M'is. 200 : Hunt v. Bass, 2 Dev. Eq. 292 ; Collins v. West- bury, 2 Bay, 211 ; Lehman v. Shackel- ford, 60 Ala. 437 ; Bingham v. Sessions, 6 Sm. & M. 13 ; see contra, Sasportas v. Jennings, 1 Bay, 470 ; Collins i. West- bury, 2 Bay, 211. 2 Gates c. Hudson, 6 Exch. 348 French v. Shoemaker, 14 Wall. 314 U. S. 0. Huckabee, 16 Wall. 414 Chase u. Dwinel, 7 Greenl. 134 ; and cases cited infra, §§ 737-8. As to ex- tortion by strikes see infra, § 439. ' Infra, § 738 ; Uarton v. R. R., 28 L. J. Exch. 169 ; Riddington ... R. R., 27 L. J. C. P. 295 ; Everslied u. R. R., L. R. 2 Q. B. D. 254 ; Ashmole i-. Wain- wright, 2 Q. B. 837 ; Harmony v. Bing- ham, 12 N. Y. 99. < Iifni, §§ 742 et seq. ; Astley v. Rey- nolds, 2 Str. 915 ; Wakefield .,■. New- ton, 6 Q. B. 676 ; Chandler u. Sanger, 114 Mass. 364; Foshay u. Ferguson, 5 202 Hill, 154; Briggs u. Boyd, 56 N. Y. 289 ; Baldwin <■. St. Co., 74 N. Y. 125 ; Stover V. Mitchell, 45 111. 213 ; Waller u. Parker, 5 Cold. 496. "In Miller v. Miller, 18 P. F. Smith (68 Penn. St. § 486), it is said that in civil cases the rule as to duress per minos has a broader application at the present day than formerly. Where a party has the property of another in his power, so as to enable him to exert his con- trol over it to the prejudice of the owner, a threat to use this control may be in the nature of the common-law duress per minus, and enable the party threatened with this pernicious control to avoid a bond or note obtained with- out consideration, by means of such threats. The constraint that takes away free agency and destroys the power of withholding assent to a con- tract must be one that is imminent, and without immediate means of pro- tection, and such as would operate on the mind of a person of reasonable firmness." Sterrett, J. Motz u. Mit- chell, 91 Penn. St. 117. See on this topic notes in 21 Am. Law Reg. 115. ' McPherson v. Cox, 86 N. Y. 472 ; citing Harmony v. Bingham, 12 N. Y. CHAP. VIII.] DURESS. [§ 149. also, a party may recover back goods or money illegally extorted by a bailee refusing to return such goods or money without 99 ; Scholey v. Mumford, 60 N. Y. 98 ; 64 N. Y. 121. "The master of the vessel," said Danforth, J., "testified, and I do not find his evidence contra- dicted, that ■after the vessel was laden in the stream, ready for sea, the plain- tiff applied to him to sign the draft and the agreement, that the captain resisted upon the ground that the tare, etc., should he first allowed, as required at the port of delivery, but the plaintiff, as the captain testifies, said he ' would not clear the ship from the customs, settle my business, or al- low me to proceed without the signa- ture of these papers,' and then the captain says he was ' compelled to sign them.' The plaintiff was the agent of the owners of the vessel, the shipper and consignor of the goods. He, and no other person, could get clearance for the vessel at the custom-house (U. S. Rev. Stat. § 4200), and that exclu- sive power and the refusal to exercise it was constraint. To make the con- tract unlawful, it was not necessary that the person of the master should have been arrested, or his goods or vessel seized or libelled. It is enough that the contracts which he then en- tered into were made to procure the liberation of the vessel, and their exe- cution might well be imputed to illegal restraint. The learned court should, therefore, have charged as requested by the defendant's counsel, that if ' the jury believed the testimony given by the captain, as to the circumstances under which the bill was executed, and that there was no way for him to leave the port with the vessel or cargo without the consent of the plaintiff, the refusal of the plaintiff to allow the ves- sel to leave the port until the bill was signed, did constitute duress.' The confinement by reason of the plaintiff's refusal to do the thing which should clear or let go the vessel was as coer- cive and difficult to resist as an actual seizure or imprisonment would- have been, and under the construction given by us to the charter-party the refusal was unlawful, for itwas an omission of duty." In Pemberton v. Williams, 87 111. 16, A., the assignee of a purchaser of land, having contracted to sell the land to E., who demanded to see A.'s deed therefor, was compelled to pay the original vendor more than was due him, in order to get a deed to satisfy E., and the payment was made under protest. It was held to be a question of fact for the jury, whether the pay- ment was made under a moral duress ; and if so, the excess above the real sum due might be recovered back in assumpsit under the common counts. See generally to same effect Miller v. Miller, 68 Penn. St. 493; Spaids c. Barrett, !)7 111. 289 ; Bennett d. Ford, 47 Ind. 264 ; Crawford u. Cato, 22 Ga. 594 ; Bingham u. Sessions, 6 Sm. & M. 13. In Atlee v. Backhouse, 3 M. & W. 650, Parke, B., said: "There is no doubt of the proposition laid down by Mr. Erie, that if goods are wrongfully taken, and a sum of money is paid, simply for the purpose of obtaining possession of these goods again, with- out any agreement at all, especially if it be paid under protest, tliat money can be recovered back ; not on the ground of duress, because I think that the law is clear, although there is one case in Viner's Abridgment to the contrary (9 Vin. Abr. 317, Duress, B. 3 ; 1 Roll. Abr. 587, 20 Ass. 14), that, in order to avoid a contract by reason 203 § 149.] CONTRACTS. [chap. VIII. such contribution.^ Money illegally obtained by a public officer may in this way be recovered back, when paid under compulsion or under protest f and so of money extorted ille- gally as toll f and so where illegal commissions are extorted by a refusal otherwise to surrender securities.* On the same principle goods illegally exacted by a collector of the revenue, on summary process, can be recovered back.' " Ifor is the prin- ciple confined to payments made to recover goods ; it applies equally well when money is extorted as a condition to the exercise by the party of any other legal right; for example, when a corporation refuses to suffer a lawful transfer of stock of duress, it must Ije duress of a man's person, not of his goods ; and it is so laid down in Siieplierd's Touclistoiie (p. 61) ; but the ground is that it is not a voluntary payment. If my goods have been wrongfully detained, and I pay money simply to obtain them again, that, being paid under a species of duress or constraint, may be re- covered back ; but if, while my goods are in possession of another person, I make a binding agreement to pay a. certain sum of money, and to receive them back, that cannot be avoided on the ground of duress." Duress of goods also exists "where one is compelled to submit to an illegal exaction in order to obtain them from one who has them in possession, but refuses to surrender them unless the exaction is submitted to." Cooley, .J., Hackley v. Headley, 45 Mich. 569 ; see infm, §§ 439, 737-H. ' Smith V. Bromley, Doug. 696 ; Ash- mole u. Wainwright, 2 Q,. B. 837 ; Gates V. Hudson, 6 Exoh. 346 ; Shaw v. Woodcock, 7 B. & C. 73 ; Maxwell v. Griswold, 10 How. 242 ; Silliman v. U. S., 101 U. S. 465 ; Chase u. Dwinel, 7 Greenl. 134 ; Sartwell o. Horton, 28 Vt. 370 ; Wilcox V. Howland, 23 Pick. 167; Cobb v. Charter, 32 Conn. 358; 204 Collins V. Westbury, 2 Bay, 211 ; Har- vey o. Gluey, 42 111. 336; Alston u. Durant, 2 Strobh. 257. That threats of destruction of goods may avoid a promise thus coerced, see Foshey v. Fer- guson, 5 Hill, 158. 2 Dew V. Parsons, 2 B. & Aid. 562 Ggden v. Maxwell, 3 Blatch. 319 ; Cun ningham v. Munroe, 15 Gray, 471 Harmony o. Bingham, 12 N. Y. 99 Allentown v. Saeger, 20 Penn. St. 421 White o. Heylman, 34 Penn. St. 142 American St. Co. o. Young, 89 Penn St. 186 ; Deal v. Martin, 1 Phila. 500 Tenbrook u. Phila., 7 Phila. 105 ; Els- ton u. Chicago, 40 111. 514; Sasportas c. Jennings, 1 Bay, 470 ; Quinnett v. Washington, 10 Mo. 53 ; Laterade v. Kaiser, 15 La. Ann. 296. As to pay- ment to tax collectors see infra, § 737. ' Chase v. Dwinel, 7 Greenl. 134. * Scholey i'. Mumford, 60 N. Y. 498. As to payment under protest see infra, §737. 5 Irving V. Wilson, 4 T. R. 485 ; El- liott V. Swartwout, 10 Pet. 138 ; Mar- riott u. Brune, 9 How. U. S. 619 ; Maxwell v. Griswold, 10 How. U. S. 242 ; and cases cited infra, § 738. That taxes paid under protest may thus be recovered, see infra, § 738. CHAP. VIII.] DURESS. [§ 149. till the exaction is submitted to ;* or a creditor withholds his certificate from a bankrupt.^ And the mere threat to employ colorable legal authority to compel payment of an unfounded claim is such duress as will support an action to recover back what is paid under it.^ But where the party threatens nothing which he has not a legal right to perform, there is no duress.^ When, therefore, a judgment creditor threatens to levy his execution on the debtor's goods, and under fear of the levy the debtor executes and delivers a note for the amount, with sureties, the note cannot be avoided for duress."' — But it is not duress of goods to pay money to redeem goods from the custody of the law f unless the execution or attach- ment be one which the plaintiff knows is without cause of action.' Nor is it duress of goods where a creditor accepts a less sum than his just demand, when due, being at the time financially straitened, the money being accepted to avert immediate insolvency'; the fact that the debtor knew of his creditor's circumstances, and availed himself of them by re- fusing to pay at all except at the reduced amount, not con- stituting duress of goods.' Where, also, 0., on selling a house, before delivery of possession claimed the right to re- move certain fixtures, which was disputed by P., the pur- chaser, and on O.'s threatening to remove them, P. gave his note to 0. for their value, it was held that this note could not be avoided on ground of duress.' — S., who was the owner of certain barges, having executed charter parties of them to the United States, at a fixed monthly price, as long as they were kept in service, was informed, after they had been used for some time, that he must execute a new contract, at a re- ' Bates V. Ins. Co., 3 Johns. Cas. Cited by Cooley, J., Hackley v. Head- 238. ley, ut supra, 45 Mich. 569, 21 Am. 2 Smith V. Bromley, Doug. 670. Law Keg. 109, with a valuable note by " Beokwith v. Frisbie, 32 Vt. 559 ; Mr. Elwell. Adams v. Reeves, 68 N. C. 134 ; Briggs « Liverpool Marine Co. v. Hunter, 1 V. Lewiston, 29 Me. 472 ; Grim v. School L. R. 3 Ch. 479. District, 57 Penn. St. 433 ; First Nat. ' Chandler v. Sanger, 114 Mass. 364 ; Bank v. Watkins, 21 Mich. 483. see Spaids v. Barrett, 57 111. 289. * Skeate u. Beale, 11 Ad. & E. 983 ; ' hackley v. Headley, ut supra. Preston v. Boston, 12 Pick. 14. ' Heysham v. Dettre, 89 Penn St. 6 Wilcox 0. Hoiyland 23 Pick. 167. 506. 205 § 150.] CONTRACTS. [CHAP. VIII. duced price. This S. declined to do, and demanded the barges, which was refused. He was informed that it was the inten- tion of the quartermaster-general to retain possession without compensation, upon which he executed the new contract, stating that he did so under protest, compelled b}^ financial necessity. The subsequent payments due him on the new contracts were received by him without protest. It was held by the supreme court of the United States that the new con- tract could not be regarded as void from duress, and that he could not, therefore, recover from the United States the dif- ference between the price allowed under the old contract and that allowed and paid under the new contract.^ § 150. It is no defence to a suit upon a contract that it was executed by the defendant for the purpose of com- Nor fear of ..... i r legal pro- promising a civil suit threatened or impending, ^ ^ ' even though he was at the time under arrest.^ A party who has a just claim against another has a right to threaten the legal proceedings appropriate for the enforce- ment of such claim, and to withdraw such proceedings on obtaining satisfaction; and if no unfair advantage be taken, and no illegal pressure applied, the use of such process, no matter how severe, cannot constitute duress. So speaic the Roman standards,^ and we have numerous authorities in our own law to the same effect.' "Should the party choose to ' Silliman ti. U. S., 101 U. S. 465. 1 Roll. Abr. 688; Kelsey u. Hobby, 2 Bac. Ab. Duress, B ; 1 Bl. Com. 16 Pet. 269 ; Eddy u. Herrin, 17 Me. 131 ; Biffin v. Bignell, 7 H. & N. 877 ; 338 ; Smith i: Reedfield, 27 Me. 145 ; Bates V. Butler, 46 Me. 387 ; Alexan- Crowell v. Gleason, 1 Fairf. 325 ; Bow- der V. Pierce, 10 N. H. 494 ; Robinson ker v. Lowell, 49 Me. 429 ; Watkins v. V. Gould, 11 Gush. 55 ; Stouffer v. Lat- Baird, 6 Mass. 511 ; Wilcox v. How- shaw, 2 Watts, 167 ; Brooks , . Barry- land, 23 Pick. 167 ; Shepliard u. Wat- hill, 20 Ind. 97 ; Taylor v. Cottrell, 16 rous, 3 Gaines, 166 ; Harmony v. 111. 93 ; Plummer u. People, 16 111. Bingham, 1 Duer, 229 ; Miller v. Mil- 358 ; Mayhew c. Ins. Co., 23 Mich, ler, 68 Penn. St. 486 ; Waterman u. 105 ; Landa ,.•. Obert, 45 Tex. 539. Barratt, 4 Harring. 311 ; Mayor v. That a compromise of doubtful claims Lefferman, 4 Gill, 425 ; Rood ,j. Wins- is a good consideration, see infra, § low, 2 Dougl. (Mich.) 68 ; Taylor v. 533. Cottrell, 16 111. 93 ; Meek .. Atkinson, ' L. 7, pr. D. quod metus causa (IV. 1 Bailey, 84 ; Smith v. Atwood, 14 Ga. 2); L. 13, § I, D. de injur. XLVII. 402; Bingham v. Sessions, 6 Sm. & M. 10- 13 ; Holmes u. Hill, 19 Mo. 159 ; see « Supra, § 148 ; infra, §§ 532 et seq. ; Felton v. Gregory, 130 Mass. 176. 206 CHAP. VIII.] DURESS. [§ 151. make terms instead of pursuing his rights (at all events when there is nothing to prevent him from so doing), he cannot afterwards turn round and complain that the terms were forced on him.''^ "If a man, supposing that he has cause of action against another, by lawful process cause him to be ar- rested and imprisoned (in a civil suit), and the defendant voluntarily execute a deed for his deliverance, he cannot avoid such deed by duress of imprisonment, although, in fact, the plaintiff had no cause of action."'' On the other hand, if the suit on which the arrest was made was without cause of action, and was fraudulently designed to extort, or was with- out lawful authority, a promise obtained by the pressure thus applied is invalid.^ This was held to be the case when a bond for the maintenance of a bastard child was given under the pressure of a procedure not authorized by law.* And if an unjust claim be collected under stress of an arrest, the money can be afterwards recovered back.° And a threat of illegal arrest or attachment is duress.^ Thus where a married woman, to save property owned by her from seizure on an execution issued against her husband, paid money to the officer levying the execution, it was held that she could recover back from the officer the money paid.' § 151. It is against the policy of the law that criminal prosecutions should be used to collect private debts ; JLnr63,t 01 and in the Roman law this abuse was stigmatized criminal as concussion, and was held to vitiate all contracts tion avoids. ' Pollock, 3d ed. 566, citing Silli- see Bane v. Detrick, 52 111. 19 ; Seiber man ^. U. S., 101 U. S. 468. v. Price, 26 Mich. 518. ^ Parsons, C. J., Watkins v. Baird, * 1 Chitty on Cont. p. 207 ; Story on ut supra. And see Soule c. Bonney, 37 Cont. §§ 510-512, citing Severance v. Me. 128 ; Smith v. Atwood, 14 Ga. Kimball, 8 N. H. 386 ; Whitefleld v. 402. Longfellow, 13 Me. 146; Fisher u. ' Baker u. Morton, 12 Wall. 150 ; Shattuck, 17 Pick. 252. In Norton Richardson v. Duncan, 3 N. H. 508 ; v. Danvers, 7 T. R. 376, Lord Kenyon Gumming v. Ince, 11 Q. B. 112 ; Kava- held that, if a person was held to bail nagh V. Sanders, 8 Grreenl. 426 ; Os- on an insufficient affidavit, the bail born V. Robbins, 36 N. Y. 365 ; Stouffer bond could be invalidated on ground V. Latshaw, 2 Watts, 165; Phelps u. of duress. Zuschiag, 34 Tex. 371. = Taylor v. Jaques, 106 Mass. 291. < Fisher v. Shattuck, 17 Pick 252; ' Coady v. Curry, 8 Daly, 58. 207 § 151 a.] CONTRACTS. [CHAP. VIII. which it compelled.' Such is the rule in our own law.^ On the other hand, the mere fact that a contract was made, by a defendant under criminal prosecution with the pros- ecutor, does not avoid the contract.' — E., employed as a gold refiner, on being accused of embezzling gold given to him by his employers to refine, agreed, when under arrest, to pay back the amount taken, by means of a mortgage. There was no bargain not to prosecute him, nor any agree- ment shown to the effect that his punishment would be less heavy should he refund. It was held that the mortgage was valid.* — The difference between civil and criminal process in this respect is this: that the former can be used expressly to collect a debt, while the latter cannot. The reason for the distinction is this: Civil suits are designed for the purpose of collecting debts, and it is not only lawful but proper to use such suits as engines of compromise. But to compound a criminal prosecution is in itself an indictable oflience, and a contract to commit a criminal offence is voidable as against the policy of the law.' Hence it is duress to threaten a pros- ecution for burglary, and thereby obtain money,' or to use any other criminal process to extort money.^ § 151a. Promises extorted under the threat of the criminal So of crim- prosecution of near relatives are to be subjected to inai prose- tjjg game tests. Thus it is held a defence to a suit cutione ©I near on a mortgage or other obligation that it was exe- cuted by a wife to save her husband from prosecu- tion for false pretences ;' or for embezzlement f or for any other indictable offence."" A court of equity, also, while it ' L. 2, D- de coneussione (xlvii. ' Infra, §§ 483 et seq. 13) ; L. 8, L. 1, § 3, D. de ealumuiator « Schulz v. Culbertson, 46 Wis. 313; (iii. 6) ; L. 2, pr., L. 4, § 2, D. de S. C. 49 Wis. 122. cond. ob turp. causam (xii. 5). ' Infra, § 483; Heckman c. Swartz, 2 Eieliardson v. DuncaB, 3 N. H. 50 Wis. 267. See, as to pleading, 508; Tilley u. Bamon, 11 «uRh. 247 ; Holbrook v. Cooper, 44 Mick. 373. Oeborn v. Robbins, 36 N.. Y. 365 ; Sny- » McMahou u. Smith, 47 Conn. 221. der V. Braden, 58 Ind. 143 ; Schulz v. » Riddle o. Hall, Sup. Ct. Penn. Culbertson, 49 Wis. 122 ; and cases 1881 ; Singer Co. v. Eawson, 50 Iowa, cited, irfra, §§ 483 et seq. 634. ' See infra, •§§ 483 et seq. w Meto. on Cont. 280 ; Robinson v * Smillie v. Titus, 32 N. J. Eq. 51. Gould, 11 Cush. 55, 208 CHAP. VIII.] DURESS. [§ 151a. will not set aside a deed by a married woman on the ground that she executed it to relieve her husband from arrest, will not compel the performance of a contract so induced.' It has been held in England that, where a father whose name had been forged by his son was induced by threats of the son's prosecution to promise to pay the debt, the promise was void as made under illegal compulsion.^ And in Massachusetts, in 1881, a mortgage executed by a father to save his son from a threatened "prosecution for forgery was held void.* — In Oon- 1 Smith V. Eowley, 66 Barb. 502 ; Compton V. Bank, 96 111. 301. In Whltmore c. Farley, .45 L. T. (N. S.) 99 (Ct. of App. May, 1881), C. was arrested at the instance of P. on the charge of having committed the offence of larceny by a bailee. C. was brought up before a magistrate and remanded. C.'s wife then induced P. to withdraw from the prosecution on C.'s wife agreeing to charge her sepa- rate real estate with the amount taken. The magistrate, at a subsequent hear- ing, being informed of the terms, al- lowed the prosecution to be withdrawn. C.'s wife afterwards refused to perform her agreement. P. brought an action to enforce the charge, and C.'s wife counter-claimed for a declaration that she was entitled to have the deeds de- livered up to her. It was held (affirm- ing the decision of Fry, J., 43 L. T. (N. S.) 192) that the agreement to charge the separate property was illegal and could not be enforced, and that the defendant was entitled to the declaration for delivery of the deeds. Citing Williams v. Bayley, 1 H. L. 200 ; Keir v. Leeman, 6 a. B. 308 ; 9 Q. B. 371 ; Davis v. Holding, 1 M. & W. 159. For other cases, see infra, § 483. 2 Williams o, Bayley, L. R. 1 H. L. 200. See, to the same eifect, Shenk v. Phelps, 6 111. Ap. 612 ; Schultz v. Cul- bertson, 46 Wis. 313; Coffman v. Bk., 5 Lea, 232 ; but see Seymour v. Pres- oott, 69 Me. 376, cited supra, § 148. VOL. I. — 14 ' Harris o. Carmody, 131 Mass. 51. "The question," said Morton, .1., "whether this exception extends to the relation of parent and child, does not appear to have been expressly adjudicated. But we find many dicta of judges and statements of autliors entitled to great respect, which show that from the earliest times it has been considered as the settled law that the relation of parent and child was within the exception. See the remarks of Lord Coke in Baylie v. Clare, 2 Brownl. 275, 276 ; s. c. 1 RoUe Abr. 687, pt. 4-6 ; and of Lord Bacon in Bac. Max. reg. 18. The same rule is explicitly laid down without question by the author of Bacon's Abridgment, and by Mr. Dane, and by Mr. Justice McLean. Bacon Abr. Duress, B. ; Dane Abr. 166, 375; MoClintick v. Cum- mins, 3 McLean, 158, 159. See, also, the remarks of Wylde, J., and of Twisden, J., in Wayne u. Sands, 1 Freem. 351. This case is too imper- fectly reported to be of great weight, and the remarks attributed to Twisden, J., would exclude the case of husband and wife in opposition to all the au- thorities. See the same case under the name Warn v. Sandown, 3 Keh. 238. We are not referred to any modern authorities opposed to the views of the learned judges and au- thors whom we have cited. The ex- ception in favor of husband and wife is not based solely upon the legal flc-- 209 §151«.J CONTRACTS. [chap. VIII. necticut, in 1879, we have a ruling still further extending the protection. D., a town treasurer in that state, having become a defaulter, a selectman of the town visited D.'s aged maiden aunt and informed her that D. had subjected himself to conviction of a state's prison oflence. He then left her, and a short time afterwards returned with a lawyer with a draft of a mortgage to the town of certain real estate she owned, which mortgage she signed in great distress of mind, without taking any advice from her friends, in the belief that this was the only means of averting the prosecution. It was held that the mortgage was under the circumstances invalid.' Under the same head fall agreements to compound felonies wherever the agreement is extracted from one party by a threat of the other to prosecute for a crime. ^ At the same time the settlement of a private civil suit is not precluded by tion that they are in law one person, but rather upon the nearness and ten- derness of the relation. The substan- tial reasons of the exception apply as strongly to the case of a parent and child as to that of a husband and wife. No more powerful and constraining force can be brought to bear upon a man, to overcome his will, and extort from him an obligation, than threats of great injury to his child. Both u]3on reason and the weight of the authorities, we are of opinion that a parent may avoid his obligation by duress to his child, and, therefore, that the ruling of the court below on this point was correct." See, to the same general effect. Na- tional Bank v. Kirk, 90 Penn. St. 49, and Kiewert v. Rindskopf, 46 Wis. 481. It is remarkable tliat Williams u. Bayley, L. R. 1 H. L. 200, above cited, escaped the notice of counsel and court in Harris v. Carmody. In Secar v. Cohen (Q. B. D. 1881), 45 L. T. N. S. 589, the plaintiff, by his agents, made representations to the defendants that criminal charges, 210 under the Debtor Act, 1869, could and were about to be brought against the bankrupt, C, who was the son of one defendant and nephew of the other. The defendants, induced by this threat, gave certain notes to the plaintiff. The defendants swore on the trial that they had believed these representations to be true, and would not have given the promissory notes had tliey not so be- lieved. In an action by the trustee against the defendants as makers of the promissory notes, it was held, after a, verdict for the plaintiff, that judg- ment should be entered for the defend- ants on the ground that they had been induced to enter into the contract by duress, and threats of criminal pro- ceedings ; and that it was not neces- sary that any particular charge under the Debtor Act should have been spe- cified, or that any ground for such charge should have existed in fact. The court relied on Williams v. Bay- ley, L. R. 1 H. L. 200 ; Hamilton u. Johnson, L. R. 5 Q. B. D. 2ti3. 1 Sharon r. Gager, 46 Conn. 189. 2 See infra, § 483. CHAP. VIII.] DURESS. [§ 154. the fact tliat a criminal prosecution may be sustained for the act for which the suit is brought.' § 152. There must be shown, in order to make out this defence, to have been a causal connection between the duress and the consent. The mere fact that a causal re- man is under duress does not avoid all promises [^^eenthe made by him; it must be shown, to produce this auress and •' ' '■ . the consent avoidance, that the duress caused the promise.' Duress, also, after the promise, will not avoid.^ But when the promise is produced by the duress, then, under the limitation above stated, the duress avoids the promise. § 153. If a promise is extorted by duress, it makes no mat- ter whether the duress was applied by the promisee, pg^^o^ or bv a third party. " lu hac actione non quseritur, ftomwhom •^ _ 7 . . . duress pro- utrum is, qui convenitur, an alius metum fecit; ceedsim- sufficit enim hoc docere, metum sibi illatum, vel vim, etc."* Hence duress by a stranger at the suggestion of the party benefited avoids a contract thus extorted.' But the duress must have been used by the party applying it to piro- cure the promise, and the promisee must knowingly avail himself of this means of extortion. It is no defence, there- fore, so it has. been held in the Roman law, that the promise sued upon was made in consideration of rescue from duress for which the promisee was in no sense responsible.^ Hence a false statement that other persons threaten a prosecution is not duress when it is not pretended that there is any authori- zation from such other persons.^ § 154. We have already seen' that whether a promise ex- torted by duress is absolutely void, and incapable of „ .^ . , , . . , . Such con- ratmcation, or whether it is merely voidable, and tracts may hence open to ratification, depends upon whether consent was given. If there was no consent {e. g., when the ' Infra, § 486. " L. 14, § 3, D. eod. L. 9, § 8, D. 2 Westphal, metus turn tantum vitiat, eod. si ab altero ideo incnssus, ut contra- ^ Keilw. 154a. hatur, Koch, ii. 105. Silliman u. U. S., « L. 9, § 1, in f. D. h. t. L. 34, § 1, 101 U. S. 465 ; Shephard o. Watrous, D. de donet. xxxix. 5 ; Pauli, sent. reo. 3 Calnes, 166 ; Eddy v. Herrin, 17 Me. Lib. v. T. 11, § 6. 338 ; Heaps v. Dunham, 95 111. 583. ' Fulton v. Hood, 34 Penn. St. 365. 3 Fulton V. Loftus, 63 N. C. 393. » Supra, § 145. 211 § 154.] CONTRACTS. [CHAP. VIII. party was in a stupor, or when his hand was by force made to sign a mark), then the whole transaction is a nullity. But where there is consent, this consent holds until avoided, which must be, in the Roman law, ope exeepiionis} Hence, by this law, such consent is capable of ratification, which ratification relates back to the original promise. In those systems in which such promises are ipso jure null and void, they are incapable of ratification.^ Our own law follows in this respect the Roman, holding that while a paper signed under physical compulsion is a nullity, a promise made under duress \s prima facie valid. To avoid its eifect it must be repudiated by the promisor and annulled by the proper tribunal. And repudiation may be precluded by ratification at a time when the duress is removed. This ratification may be by accepting the fruits of the bargain as well as by express assumption of its burdens.' 1 L. 2 and 4 C. h. t. 116 Mass. 227 ; Hassler v. Bitting, 40 2 Koch, op. cit. ii. 113. Peiin. St. 68 ; Veach v. Thompson, 15 ' Shepp. Touch. 61, 288 ; Parsons on Iowa, 380. For ratification in cases of Cont. i. 437; Matthews c Baxter, L. undue influence, see in/ra, § 168. Tliat R. 8 Ex. 132 ; Worcester v. Eaton, 13 ratification is to be inferred from facts, Mass. 377 ; Montgomery v. Pickering, see supra, §§ 58 et seq. 212 CHAP. IX.j UNDUE INFLUENCE AND IMPOSITION. [§ 157. CHAPTER IX. UNDUE INFLUENCE AND IMPOSITION. That promisor is under influence of promisee does not invalidate promise, § 157. Nor does great mental superiority of promisee over promisor, § 158. Otherwise when position of superiority is used to extort unfair advantage, § 159. Courts of equity take peculiar cogni- zance of such breaches of trust, § 160. Rule applies wherever there are autho- ritative or fiduciary relations, § 161. Influence when established presumed to continue, § 162. Question one of burden of proof, § 163. When vohmtary donation is set up, burden is on party claiming, § 164. Gross inadequacy of price may lead to inference of fraud, § 165. In such cases specific performance will be refused, § 166. Party's representatives may contest, §167. Such contracts may be ratified, § 168. Necessity of heir expectant may con- duce to unfair dealing, § 169. Extortionate contracts made more open to revision by repeal of usury laws, §170. § 157. We have already seen that in the Roman law metus revereniialis, or reverential awe, does not invalidate That the a contract made under its influence.' A father, for prom'sor is ' under the instance, may use his influence over a son to induce influence the latter to make a settlement of his estate in trust ; promisee a brother may use his influence over a dependent fnvluXte and weak-minded sister to induce her to make stable P™mise. and judicious investments of her estate; and such exercises of authority, when equitable in their results, will be regarded not only as unobjectionable but as laudable.^ Even gifts from child to parent, from inferior to superior, will be sustained, when these gifts are free, and suitable to the circumstances of the parties. "This court," so it was said in an English case of this class, "does not interfere to prevent an act even of bounty between parent and child, but it will take care (under Supra, §§ 145 et seq. 2 As to limitation in cases of fraud see infra, § 376. 213 158.] CONTRACTS. [chap. IX. the circumstances in which the parent and cliild are placed before the emancipation of the child), that such child is placed in such a position as will enable him to form an entirely' free and unfettered judgment, independent altogether of any sort of control."' And reasonable dispositions of property, con- ducive to fair family settlements, will be upheld as between parent and child. ^ But the excuse of family convenience will not justify a conveyance by whicli a son improvidently gives up, without consideration, a valuable estate to his father,^ or a conveyance in fraud of creditors."* § 158. Should mental dis[)arity between the parties avoid Nor does '^ Contract, there are few contracts that would stand, great men- and few men of great business capacity that would tal t-uperi- y , i j ority of be Capable of doing business. Whenever a man of ovei"pro- tli'S class should make a bargain, unless in the very misor. j.j^|,g cases of bargains among his intellectual equals, it would be the duty of the courts to set it aside; and the men most capable of advancing the interests of the com- munity by their far-sightedness and their sagacity would be under an interdict. But such a restraint on superior intelli- gence would be not only unwise but impracticable ; and the courts, supposing there be no fraud, and no abuse of authority or of trust, have refused to set aside bargains merely because one party, by means of superior intelligence, obtained an ad- vantage over the other.' The converse also is true, that the men- ' Archer v. Hudson, 7 Beav. 560 ; see Jenkins v. Pye, 12 Pet. 253; Hawkins' App., 32 Penn. St. 263 ; Millican o. Mil- lican, 24 Tex. 426. 2 Jenner v. Jeniier, 2 Giff. 232, 2 De G. F. & J. 359 ; Hartopp v. Hartopp, 21 Beav. 259 ; Williams v. Williams, L. R. 2 Ch. 294. 3 Savery c. King, 5 H. L. C. 627, cited Pollock, 534. * Infra, §§ 376 et seq. 5 Bispliam's Eq. § 230 ; Osmond u. Fitzroy, 3 P. Wms. 129 ; Mann v. Bet- terly, 31 Vt. 326 ; Allen ex parte, 15 Mass. 58 ; Hallenbeck t. Dewitt, 2 214 Johns. 404 ; Stiner v. Stiner, 58 Barb, 643 ; Graham r. Pancoast, 30 Penn St. SI); Nace «. Boyer, 30 Penn. St 79 ; Aiman v. Stout, 42 Penn. St. 114 Ilyer r. Little, 5 C. E. Green, 443 Losear v. Shields, 8 C. E. Green, 509 Mulock V. Mulock, 31 N. J. Eq. 594 Thornton v. Ogden, 32 N. J. Eq. 723 Darnell ,.. Rowland, 30 Ind. 342 Rogers V. Higgins, 57 111. 247 ; Bever ley v. Waldon, 20 Grat. 147 ; Hadley ( . Latimer, 3 Yerg. 537 ; Eippy u. Gant, 4 Ired. Eq. 443 ; Paine u. Ro- berts, 82 N. C. 451 ; Thomas v. Shep- pard, 2 McCord Eq. 36 ; Killian u. CHAP. IX.J UNDUE INFLUENCE AND IMPOSITION. [§ 159. tal inferiority of a party to a contract is by itself no ground for setting such contract aside. WerC it otherwise, persons with intellectual gifts below the average would be incapable of any business whatsoever.' At the same time, when there is fraud or undue influence exerted by a party obtaining a contract in his favor, proof of a comparatively slight degree of mental imbecility is required to set aside a contract induced by such influence.^ § 159. Equity will not permit a position of authority or influ- ence to be used to extort unfair advantages. When- ,, . -, , , . , -, , ^ Otlierwise ever there is ascendancy on the one side, and mental ^hen posi- inferiority and subjection on the other, promises in *„" °ority which this ascendancy is used to extort unfair ad- is used to ■ 11 1 111- T 1 T^ • - extort un- vantages will beheld invalid. Dominion, whatever fairadvan- it may be, exercised so as to wring unrighteous con- ^°''' cessions from the person controlled to the person controlling will be a ground for equitable relief.^ "The acts and contracts Badgett, 27 Ark. 166 ; Biglow v. Leabo, 8 Oregon, 147. As to limitation in oases of fraud, see infra, §§ 232 et seq. ' See supra, § 103 ; Gratz v. Cohen, 11 How. U. S. 19 ; Howe u. Howe, 99 Mass. 88 ; Hallenbeck u. Dewitt, 2 Johns. 404; Mason v. Williams, 3 Munf. 126 ; Russell v. Russell, 4 Dana, 40 ; Smith u. Beatty, 2 Ired. Eq. 456 ; Lindsey v. Lindsey, 50 111. 79 ; Darnell V. Rowland, 30 Ind. 342 ; Galpin u. Wilson, 40 Iowa, 90. 2 Supra, § 103 ; infra, §§ 232 ef seq. ' Storey's Eq.. Jur. 12th ed. § 238 ; Bispham's Eq. § 231 ; Nottidge u. Prince, 2 Giff. 246; Boyse u. Ross- horough, 6 H. L. C. 2 ; Tate v. Wil- liamson, L. R. 2 Oh. 61 ; Harding v. Harding, 11 Wheat. 103 ; Selden v. Myers, 20 How. 506 ; AUore v. Jewell, 94 U. S. 511 ; Whelan v. Whelan, 3 Cow. 537 ; Dunn v. Chambers, 4 Barb. 376 ; Hutchinson u. Tindall, 2 Green Ch. 357 ; Haydock v. Haydoek, 33 N. J. Eq. 494 ; 34 N. J. Eq. 570 ; Hunt u. Moore, 2 Barr, 105 ; Davidson v. Little, 22 Penn. St. 245 ; Brady's Appeal, 66 Penn. St. 277; Highberger v. Stiffler, 21 Md. 338; Wiestt;. Garman,4Houst. 119 ; Samuel v. Marshall, 3 Leigh, 567 ; Traoey v. Saoket, 1 Oh. St. 54 ; Wartemberg v. Spiegel, 31 Mich. 400 ; Norris v. Taylor, 49 111. 17 ; Talbott v. Hooser, 12 Bush, 408 ; Rippy v. Grant, 4 Ired. Eq. 443 ; Buffalow v. Buffalow, 2 Dev. & Bat. 241 ; Powell v. Cobb, 3 Jones Eq. 456 ; Rumph v. Abercrombie, 12 Ala. 64; Cadwallader v. West, 48 Mo. 483 ; Poston v. Balch, 69 Mo. 115. That a victim of fraud is not barred by complicity, see iifra, § 353. That the inference of imdue influence is strengthened by proof of mental in- feriority of the promisor, see supra, § 104.— Mr. Pollock, 3d ed. 569, following Dew V. Parsons, 2 B. & Aid. 562, says, that in such cases "the question to be decided" "is whether the party was a free and voluntary agent." This, however, is a mistake. A person under influence of one kind is as much, in the eye of the law, "a free and 215 § 159.] CONTRACTS. [chap. IX. of persons who are of weak uiiclerstanding," to adopt the rule as given by Judge Story ,^ " and who are thereby liable to imposition, will be held void in courts of equity, if the nature of the act or contract justify the conclusion, that the party has not exercised a deliberate judgment, but that he has been imposed upon, circumvented, or overcome, by cunning, or artifice, or undue influence." And this is eminently the case when such persons are fraudulently influenced by persons of superior intellect.^ volmitary agent," as is a person under influence of another kind. Unless his capacity of choice is destroyed by in- sanity, or unless he is by physical force constrained to do or not to do a particular act, he is free, as Saviguy shows iu a, passage already quoted, either to succumb to or to resist the influences brought to bear on him. — See supra, §§ 144 et seq. ' Eq. Jur. 12th ed. § 238. 2 Lifra, § 245 ; 1 Sug. V. & P. 8th Am. ed. 275 ; Whelan i/. Whelan, 3 Cow. 535 ; Bunch i. Hurst, 3 Des. 292. That age itself does not alTord a pre- sumption of undue influence, seel Wh. & St. Med. Jur. § 90 ; Cowee r. Cornell, 75 N. Y. 91 ; Shaw r. Ball, 55 Iowa, 55. In Cherbonnier o. Evitts, Md. Ct. of App. 1881, we have the following from Ritchie, J.. "The law is jealous to defeat a fraudulent use of the means afforded by intimacy of association. And it is not inconsistent with the ex- ercise of undue influence or artifice that the instrument assailed was ex- ecuted voluntarily and with a knowl- edge of its contents. The following cases are illustrative in this connec- tion : In the case of Huguenin v. Bose- ley, 14 Ves. Jr. 275, before Lord Chan- eellor Eldon, in which the deed was impeached on the ground of undue in- fluence and the confidential relation existing between the grantor and grantee, Sir Samuel Romilly argued 216 that ' the rule is not confined to attor- neys or persons entitled to reward.' Proof V. Hines, For. Ill, was the case of a tradesman who ofliciously inter- fered ; the relief stands upon a general principle applying to all the variety of relations in which dominion may be exercised by one person over another. He cited Hatch v. Hatch, 9 Ves. Jr. 292, and Bridgeman v. Greene, 2 Ves. Sr. 627, in which there was much evi- dence that the person was perfectly aware of what he was doing, and re- peatedly confirmed it. Upon that Lord Chief Justice Wilmot's observation is ' tliat it only tends to show more clearly the deep-rooted influence ob- tained over him.' Lord Eldon, after referring to those cases with approba- tion, applying the principle to the case before him, in which the grantor w.as a widow in the prime of life, said : ' The question is not whether she knew what she was doing, had done, or proposed to do, but how the inten- tion was produced ; whether all that care and prudence was placed around her as against those who advised her, which from tlieir situation and relation with respect to her they were bound to exert in her behalf.' In the case of Dent V. Bennett, Lord Cottenham quoted Sir Samuel Romilly's language, uttered thirty years before, and incor- porated it in his opinion as an estab- lished principle of equity. 4 My. & Cr. CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 161. § 160. Abuses of personal influence for the undue enrich- ment of the part}' exercising it, have been regarded courts of by equity judges as breaches of trust, falling pecu- equitytake liarly within the province of equitable correction, cognizance Transactions which in courts applying the strict breaches of common law would evade scrutiny, will, if tainted *™^''- by undue influence, be overhauled in equity, and will be set aside if it appear that this influence was used to extort from a dependant an unjust bargain.' In such cases, where undue influence, based "on the circumstances and conditions of the parties," is exercised, and a bargain thus elicited," the transac- tion cannot stand, unless the person claiming the benefit of it is able to repel the presumption from contrary evidence, proving it to have been, in point of fact, fair, just, and rea- sonable."^ § 161. Relief of this kind is given whenever posi- Ruie op- tions of authoritv or trust have been used to ob- plies wher- ever there tain unrighteous advantages ; and under this head areauthori- may be classed undue influence unconscientiously fiduciary and prejudicially exercised by parent over child;' by ■'<^i^*^°'^^- 277. The same doctrine has "been fre- quently announced in American courts. Taylor v. Taylor, 8 How. 183. In Sears V. Schafer, 2 Seld. 268, it is said : ' In some cases undue influence will be inferred from the nature of the trans- action alone ; and in all cases a court of equity interposes its benign juris- diction to set aside instruments ex- ecuted between parties, in which one party is so situated as to exercise a controlling influence over the will, conduct, and interests of another.' Harvey v. Sullens, 46 Mo. 147, is the case of a will. There the court say : ' Where a person is so sick, worn out, and enfeebled that he is a mere passive instrument in the hands of those who produce the will, it is evident such will ought not to he permitted to stand.' We have a number of Mary- land decisions of the same general tenor, viz. . Brogden v. Walker, 2 H. & J. 285 ; Carberry v. Tannehill, 1 lb. 224; Highberger v. Stifller, 21 Md. 352 : Todd v. Grove, 33 lb. 194 ; and Eakle v. Reynolds, decided April Term, 1880 ; as also Stumpf v. Stumpf, of October Term, 1879, unreported. We are convinced from the proof that the mind of the grantor was greatly im- paired, and that its perverted action was fraudulently taken advantage of by means of the deed in question." ' Story's Eq. 12th ed. § 238 et seq. ; Bisp. Eq. §§ 230 et seq. ; Aylesford v. Morris, L. R. 8 Ch. 490; O'Rorke ^. Bolingbroke, L. R. 2 Ap. Ca. 814. ' Lord Selborne, Ch. , in Aylesford i\ Morris, L. R. 8 Ch. 490, adopted in Anson on Contracts, 157. 3 Hoghton V. Hoghton, 15 Beav. 278 ; Baker v. Bradley, 7 De G. M. & G. 597; Wright v. Vanderplank, 8 De G. M. & G. 137 ; Bainbrigge «. Brown, 44 L. T. (N. S.) 705 ; Taylor v. Taylor, 217 161.] CONTRACTS. [chap. IX. an uncle standing in loco parentis over a niece;' by any mem- ber of a family who has acquired an overweening influence over another f by a solicitor or counsel over client f by a 8 How. U. S. 183 ; though see supra, § 157 ; Bergen i. Udell, 31 Barb. 9 ; Berkmeyer u. Kellerman, 32 Oh. St. 239. As to ratification see remarks of Turner, L. .1., in Rhodes v. Bate, cited znfra, § 168. ' Archer t . Hudson, 7 Beav. 560 ; Kempson .'. Ashbee, L. R. 10 Ch. 15 ; Graham r. Little, 3 Jones' Hq. 152. 2 llm-vrj I . Mount, 8 B.-av. 439 ; Todd V. Cirove, 33 Md. 188 ; Martin r. Martin, 1 Heisk. 644. Lord Chelms- ford's ruling, in Tate u. Willi.amson, L. R. 2 Ch. 61, following that of Wood, V. C. (afterwards Lord Hatherly), S. C. L. R. 1 Eq. 528, illustrates the dis- tinction in the text. The complainant in that case, when a young man of twenty-two, was largely indebted, though holding the half of a freehold estate. He wrote to his great-uncle, who sent a nephew, Williamson, to confer with the complainant. Wil- liamson caused a valuation to be made by a survi'yor, according to which the mines under the whole tract were worth £20,000. Without communicating this to the complainant, he purchased the complainant's interest for £7000. The sale was set aside by Wood, V. C, and this was affirmed by Lord Chelmsford, on the ground that there was a rela- tion of confidence in the case which required a disclosure of all the facts. As to the duty of disclosure under such circumstances, see infra, §§ 254- 256 fi. ' Infra, § 426 ; Bispham's Eq. § 236 ; Wh. on Agency, § 574 ; Tyrell v. Bank of London, 10 H. L. Cas. 26 ; Holmau V. Loynes, 4 Deti. M. & G. 270; (Jreen- field's Est., 14 Penn. St. 489 ; S. C. 24 Penn. St. 232, and cases cited irfra, § 218 426. The utmost good faith must be shown to sustain a sale of property in litigation by client to counsel. Walm- esley u. Booth, 2 Atk. 25 ; Savery v. King, 5 H. L. C. 627 ; Whitehead v. Kennedy, 69 N. Y. 462; Merritt ... Lambert, 10 Paige, 352 ; Smith u. Brotherline, 62 Penn. St. 461. That business transactions between client and counsel will be jealously watched, and that counsel cannot purchase client's property without client's full and free consent, see infra, § 426. Dunn ( . Record, 63 Me. 17 ; Lewis c Hilman, 3 H. of L. C. 607 ; Mott r. Har- rington, 12 Vt. 199 ; Mills ... Mills, 26 Conn. 213 ; St. Leger's App., 34 Conn. 450 ; Hawley ( . Cramer, 4 Cow. 717 ; Berrien c. McLane, 1 Hoff. N. Y. 421 ; Barry v. Whitney, 3 Sandf. 696 ; Ford r. Harrington, 16 N. Y. 2S5 ; Boyd c. Boyd, 66 Penn. St. 283; Roman <■. Mali, 42 Mil. 513 ; .Jennings r. McCon- nell, 17 in. 148 ; Zeigler v. Hughes, 55 111. 288; Gray r. Emmons, 7 Mich. 533 ; Riddell v. .Johnson, 26 Grat. 152 ; Bufifalow u. Buffalow, 2 Dev. & B. Eq. 241. "It is the duty of the attorney to protect the interests of his clients, and the client la entitled, while the relation exists, to the full benefit of the best exertions of his attorney ; therefore, an attorney may not bring his own personal interest in any way into con- flict with that which his duty requires him to do, or make a gain for himself in any manner whatever, at the ex- pense of his client in respect to the subject of any transactions connected with or arising out of the relation of attorney and client, beyond the amount of a just and fair professional remuner- CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 161. director or promoter of a company over the company ;' by a partner over a partner, all clandestine dealings by one partner to his exclusive benefit being forbidden ;2 by a trustee over cestui qrie trust f by any person using influence over another to whom he occupies confidential relations ;* by an executor or administrator over the parties whose interests it is his duty ation, to which he is entitled. Kerr on Frauds, page 163. Tet the law does not go so far as to prohibit an attorney from purchasing from his client. That is, he is not incapacitated by virtue of his relation as an attorney to purchase. If, however, he purchases a client's property during the continuance of the relation of attorneyship, which is the subject-matter of such relationship, the burden of proof lies on him to show that the transaction has been perfectly fair, and he must be able to show that a just and adequate price has been given." Horton, C. J., Yeaman ;'. James, Sup. Ct. Kan. 1882. In Holmes' Est., 3 Giff. Ch. Rep. 345, Sir John Stuart, V. C, said : " The law of this court as to gifts by a client to his solicitor, I think, is perfectly established. The principle is, that the relation of solicitor and client is one of such high confidence on the part of the client that the solicitor is considered to have an amount of influence over the mind and action of his client, which, in the eye of tliis court, while that influence remains, makes it al- most impossible that the gift can pre- vail. The principle of influence vitiates the gift ; but the presumption of in- fluence may be rebutted by circum- stances short of the total dissolution of the relation of solicitor and client. That relation is only looked at as creating the influence ; and, as soon as circumstances of evidence are intro- duced which remove all efi'ect of the influence, whether the relation subsists or not, if the influence of that relation is removed, there is no incapacity on the part of the solicitor to become the object of his client's bounty, and to be the recipient from his client of a gift which will be valid at law and in equity." That assignments by a client to his counsel of interests in litigation are void, see infra, § 42(i. ' Imperial Merc. Co. v. Coleman, L. R. 6 H. L. 189 ; Flanagan r. R. R,, L. R. 7 Eq. 116 ; New Sombrero Phosphate Co. a. Erlanger, L. R. 5 C. D. 73. Infra, § 255 a. 2 Story, Partnership, § 172 ; Russell V. Austwick, 1 Sim. 52 ; Getty v. Dev- lin, 54 N. Y. 403 ; Hopkins v. Watt, 13 111. 298 ; King r. Wise, 43 Cal. 629. 3 Coles u. Trecothick, 9 Ves. 234 ; Hunt V. Moore, 2 Barr, 105 ; Diller u. Brubaker, 52 Penn. St. 498 ; Parchell's App., 65 Penn. St. 224 ; Ellis v. Barker, L. R. 7 Ch. 104 ; Thomson v. Eastwood, L. R. 2 Ap. Ca. 236 ; Parker v. Nicker- son, 112 Mass. 195 ; Spencer's App., 80 Penn. St. 332. [nfra, § 378. Thus one trustee cannot purchase the cestui que trust's property at a sale by the other trustee. Davoue u. Fanning, 2 Johns. Ch. 261 ; Gaines u. Allen, 58 Mo. 541 ; Miles v. Wheeler, 43 111. 124 ; infra, § 378. As to the duty of a per- son occupying a fiduciary position to disclose facts, see infra, § 254. * Lewin on Trustees, 337 ; Hobday v. Peters, 8 Beav. 354 ; McClure v. Lewis, 72 Mo. 314. 219 § 161.J CONTRACTS. [chap. IX. to protect ;i by a guardian over a ward ;^ by a child over a de- pendent parent;' by an agent, occupying a fiduciary relation, over a principal ;* by a husband over a wife f by a medical ' Michoud <■. Girod, 4 How. 503; Casey r. Casey, 14 111. 112 ; Read .. Howe, 39 Iowa, 653 ; Statham v. Fer- guson, 25 Grat. 28 ; Scott v. Umbarger, 41 Cal. 410 ; Osborne v. Graham, 30 Ark. 66. 2 Dawson u. Massey, 1 B. & B. 226 Uallatian r. Cunningham, 8 Cow. 361 Eberts v. Eberts, 55 Penn. St. 119 Hunter ;;. Lawrence, 11 Grat. Ill Blackmore c. Shelby, 8 Humph. 439 Womack v. Austin, 1 S. C. 421 ; Ma- lone L\ Kelly, 54 Ala. 532 ; Garvin v. Williams, 50 Mo. 206 ; Meek <•. Perry, 36 Miss. 190. " Settlements made soon after the ward comes of age, and espe- cially before he is in possession of his estate, are viewed by the courts with a watchful and even jealous eye. To sustain such settlements it must ap- pear that the ward had sufficient time and opportunity to examine the guar- dian's accounts ; and that he was either himself competent to make the exami- nation, or was assisted by competent and independent advice." Bispham's Eq. § 234, citing Hylton i. Hylton, 2 Ves. Sr. 547 ; Somes v. Skinner, 16 Mass. 348 ; Kirby v. Taylor, 6 Johns. Ch. 248 ; Elliott c. Elliott, 5 Binn. 8 ; Say V. Barnes, 4 S. & R. 112 ; Stanley's App., 8 Penn. St. 431 ; Cowan's App., 74 Penn. St. 329 ; Andrews t\ .Jones, 10 Ala. 400 ; Meek v. Perry, 36 Miss. 190 ; and see Iloppin r. Tobey, 9 R. I. 42 ; Greenawalt ex parte, 2 (lark, 1. ' Whelan v. Whelan, 3 Cow. 537 ; Highberger ti. Stiffler, 21 Md. 338; Simpler v. Lord, 28 Ga. 52. On the other hand, if " the information which the trustee has is in no way superior to that of the cestui que trust ; if the lat- ter is fully informed of all the facts of the case, and their probable bearing 220 on the value of the property ; and if he is acting on independent advice, and his mind is entirely free from any control of the trustees, and the trans- action be in itself a reasonable one, it may, under these circumstances, be upheld." Bispham's Eq. § 237 ; citing Perry on Trusts, § 195. See Redgrave V. Hurd, L. R. 20 Ch. D. 1. < Infra, § 378 ; Wh. on Agency, §§ 231, 523 ; Lowther v. Lowther, 13 Ves. 103 ; Reed f. Norris, 2 Myl. & Cr. 361 ; Dunne v. English, L. R. 18 Eq. 524; Kimber v. Barker, L. R. 8 Ch. Ap. 56 ; Morgan r. Minett, L. R. 6 C. D. 638; Provost 1'. Gratz, 6 Wheat. 481 ; .Jack- son V. Ludeling, 21 Wall. 617 ; Smith 0. Townsend, 109 Mass. 500 ; Claflin r. Bank, 25 N. Y. 293 ; Bain )■. Brown, 56 N. Y. 285 ; Chorpenning's App., 32 Penn. St. 315 ; Gaines v. Allen, 58 Mo. 541. ' The statutes in most of our states requiring that to make a wife's release of dower valid she should be examined separately from her husband, illustrate the jealousy with which the wife's in- dependence in this respect is guarded. When the wife agrees to convey her separate estate, she having power to do so, to her husband, and he after- wards asks the aid of the law to enforce the bargain, the burden is on him to prove the fairness of the transaction. See Boyd v. De la Montagnie, 73 N. Y. 498. That a husband's threats to com- mit suicide will not avoid his wife's deed thus induced, see Wright c. Re- mington, 41 N. J. L. 48 ; supra, § 148. Mr. Pollock refers to Cobbett v. Brock, 20 Beav. 524 ; Page r. Home, 11 Beav. 227, as showing that there is a fidu- ciary relation in persons engaged to be married ; but that this does not ex- tend to cases of illicit intercourse. Far- CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 161. man over a patient ;' by a priest or othier religious guide over mer ,-. Farmer, 1 H. L. C. 724. That an ante-nuptial contract executed by an intended wife without full disclosure of her husband's circumstances, will not be enforced against her, see Kline V. Kline, 57 Penn. St. 120; Kline's Est., 64 Penn. St. 122; infra, § 399. That agreements of husband and wife providing for separation, are void, see infra, § 395. As to disabilities of mar- ried women, see supra, §§ 76 ei seq. That agreements between husband and wife are at common law void, see supra, §91. 1 Dent V. Bennett, 4 My. & Cr. 269 ; Billage c. Southee, 9 Hare, 534 ; Ahearne v. Hogan, Dru. 310 ; Green- field's Est., 14 Penn. St. 489 ; Crispell !'. Dubois, 4 Barb. 393 ; Cadwallader (-. West, 40 Mo. 483; though see Blackie v. Clarke, 15 Beav. 595, Pratt u. Barker, 1 Sim. 1, 4 Russ. 507, as showing that such gifts freely and intelligently made will be sustained. "A medical attendant who makes with his patient a contract in any way depending on the length of the patient's life is bound not to keep to himself any knowledge he may have professionally acquired, whether by forming his own opinion, or by con- sulting with other practitioners, as to the probable duration of the life." Pollock, 532, citing Popham u. Brooke, 5 Russ. 8. But mere professional re- lationship of this class does not invali- date a contract otherwise fair. Dog- gett V. Lane, 12 Mo. 215. And in a case before the Court of Appeal in 1881 (Selborne, L. C, Bram- well and Baggally, L. J., affirming a judgment of Stephen, J.), where it appeared that atter a gift by a lady to her medical adviser, not made under undue influence, three years elapsed between the donor's death and the close of the relation of patient and medical man between the parties, and where after that relationship had come to an end, and any effect produced by it had been removed, she intentionally abode by what she had done, it was held that the gift was not void but voidable ; and as she must be taken upon the facts to have known that it was voidable and not to have avoided it, the defendant was entitled to judg- ment. Mitchell r. Ilornfrey, 45 L. T. N. S. 694, L. R. 8 Q. B. D. 587. As to ratification, see infra, § 168. "Re- peated decisions," said Baggallay, L. J., "have settled that the rela- tion of a medical man towards his patient is confidential. Therefore the gift in this case being from a patient to her medical man, and without any • independent advice, was originally either void or voidable. But then the jury have found that the relation of medical man and patient ceased when .Jane Geldard went to Barnard Castle in 1872, and that after that relation had ceased, and any eifect produced by it had ceased, she intentionally abode by what she had done. That gets rid of a second principle laid down in Rhodes v. Bate (L. R. 1 Ch. Ap. 257), that, where a confidential relation has once existed, the court will presume its continuance unless some positive act or some complete case of abandonment is shown. Here the jury find that the confidential relation had ceased for more than three years before Mrs. Ueldard's death. Then they find that she, during that period, ' intentionally abode by what she had done.' Now no doubt we have to take that finding with the admission that Mrs. Geldard had no independent ad- vice at any time. But the finding of the jury contains the word 'intention- 221 § 161.] CONTEACTS. [chap. IX. a parishioner or penitent apiplying to hina for counsel ;' and, generally, by a person of authority, applied to for advice, over the person to whom the advice is given. ^ And, as a general rule, a person occupying a position of trust and confidence will not be permitted to use that position to make money out of those whom it is his duty to protect.^ " I take it to be a well- ally.' That must be taken to mean that she knew what she had done, that she approved of what she had done, and that she determined to abide by it. It was an adoption of what she had done, after the confidential rela- tion had ceased for three years, suffi- cient to take it out of the cases where gifts have been invalidated on the grorind of confidential relationship coupled with absence of independent advice." ' Hugenin v. Bazely, 14 Ves. 273 ; but see (jreenfleld'a Est., 24 Penn. St. 232; "Welsh in re, 1 Redf. 238. In Lyon V. Home, L. R. 6 Eq. 655, a gift of £24,000 by a woman of seventy-five years to a spiritualistic director was set aside. As to religious advisers, see further ; Huguenin i\ Bazely, 14 Ves. 273; 2 Lead. Cas. Eq. 556: Turner v. Collins, L. R. 7 Ch. 329 ; Hoghton u. Hoghton, 15 Beav. 278 ; Everitt i>. Everitt, L. R. 10 Eq. 405 ; Taylor v. Taylor, 8 How. U. S. 183 ; Slocum ... Marshall, 2 Wash. C. C. 397 ; St. Le- ger's App., 34 Conn. 434; Stewart v. Hubbard, 3 Jones Eq. 186 ; Graham c'. Little, 3 Jones Eq. 152 ; Davis v. McNalley, 5 Sneed, 583. Nottidge v. , Prince, 2 Giff. 246, was the case of a woman who held that a deposed English clergyman, who had set up an institution called Agapemone, or Free Love, was an incarnation of divinity. Under this belief (she' being sane in other respects) she conveyed large amounts of property to him, she living at the time at the Agapemone where she died. It wis decreed that the 222 defendant had obtained the property by undue influences, and he was or- dered to convey the property to her heirs, notwithstanding he declared in his answer that the conveyance was made without his knowledge or solici- tation. 2 " It is not," said Lord Kingsdown, in Smith u. Kay, 7 H. L. C. 750, as adopted in Anson on Contracts, 160, " the relation of solicitor and client, or trustee and cestui que Untst, which con- stitutes the sole title to relief in these cases. . . . The principle applies to 'every ca>ie ivhere influence is acquired and abusi'd, ichere confidence is reposed and betrayed.^ ^ See also Brown i'. Kennedy, 33 Beav. 133; Tate ,. Williamson, L. R. 2 Ch. 61 ; Turner l: Collins, L. R. 7 Ch. 329; Moxon <■. Payne, L. R. 8 Cli. 881 ; Beynon v. Cook, L. R. 10 Ch. 389 ; Everitt v. Everitt, L. R. 10 Eq. 405 ; Smith ,-. Kay, 7 H. L. C. 750 ; Selden c. Myers, 20 How. U. S. 506 ; Slocum V. Marshall, 2 Wash. C. C. 397 ; Wistar's App., 54 Penn. St. 63 ; Persch u. Quiggle, 57 Penn. St. 247 ; Hetrict's App., 58 Penn. St. 477; Spencer's App., 80 Penn. St. 317; Todd V. Grove, 33 Md. 188 ; MoCormick V. Malin, 5 Blackf. 509 ; Rockafellow V. Newcomb, 57 111. 185 ; Bayliss u. Williams, 6 Cold. 440 ; Deaton v. Munroe, 4 Jones Eq. 39 ; Turner v. Turner, 44 Mo. 535. As to the duty of full disclosure under such circum- stances, see infra, §§ 254 et seq. ' Infra, § 378; Tyrrell v. Bank of London, 10 H. L. C. 26 ; Poillon ». CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§162. established principle of this court, that persons standing in a confidential relation towards others cannot entitle themselves to hold benefits which those others may have confened upon them, unless they can show to the satisfaction of the court that the persons by whom the benefits have been conferred had competent and independent advice in conferring them. This, in my opinion, is a settled general principle of the court, and I do not think that either the age or capacity of the person conferring the benefit, or the nature of the benefit conferred, affects this principle."^ But the term "undue in- fluence" is not to be applied to cases where a party under the influence of well-considered purposes makes settlements on relatives or friends to whom he is bound by peculiar duty or affection.^ § 162. It is not to be supposed that long habits of submis- sion will cease simultaneously with the technical influence cessation of the legal relation on which these habits ^^''^™ . ^ , ° _ estabusnea were originally based. A ward, for instance, on presumed , . ^1 . ... . . , , , to continue reaching his majority, cannot, in most cases, throw off his sense of subordination to his guardian ; nor is a father's influence over a child likely to cease with the child's nominal emancipation. A trustee, also, upon throwing up his trust, may retain his influence. When once a fiduciar}' or advisory relation has existed, it will be so far presumed to continue, that, when a bargain is made peculiarly advantageous to the party in whom the confidence is reposed, the burden is on him to show that the transaction was fair.^ But when the Martin, 1 Sandf. Ch. 569 ; see Tate w. gift of moneys drawn out from a bank- Williamson, L. R. 1 Eq. 528, 2 Ch. ing account kept by the girl in her 55 ; Baker v. Loader, L. E. 16 Eq. 49. own name, it being proved that she ' Turner, L. J., Rhodes v. Bate, L. was a person of strong will and inde- R. 1 Ch. Ap. 257. pendent character ; that others of her 2 Supra, § 159 ; Eakle v. Reynolds, relatives had free, access to her ; and 54 Md. 305 ; Wise v. Swartzwelder, 54 that she had had the advice of an old Md. 292. friend of her father's with regard to In Taylor v. Johnston, 46 L. T. N. S. pecuniary matters ; it was held that 219, where it appeared that an orphan no such fiduciary relationship existed girl, nearly of age, was living with a as would invalidate the gift. married female cousin, to whom on ^ Pollook, 3d ed. 570 ; Dent v. Ben- her death-bed she made an absolute nett, 4 My. & Cr. 277 ; Smith o. Kay, 223 § 163.J CONTRACTS. [CHAP. IX. influence has ceased to operate, an intelligent ratification binds.' § 163. The presumption of continuance, however, applicable to this as well as to all other relationships,^ is not to oncfof"'^ be stretched so as to involve a presumption of un- proof ° °^ fairness in all dealings between a person imposing and a person accepting confidence. There is no such presumption recognized in law; and, as a matter of fact, by far the greater part of the dealings between persons im- posing and persons accepting confidence are fair. Among persons who have been for a time intimately connected there is no business done without confidence imposed and accepted ; and, as a rule, the longer and tenderer the confidence, the more scrupulous the fairness of the dealings of the party in whom the confidence is reposed. All that the law says is, that, when a party in accepting confidence obtains an unequal advantage from the other party, the burden is on him to show that the bargain was made by the other intelligently and without undue pressure.^ In other words, if suit be brought on such a contract, the party suing must prove that the con- tract was made freely and intelligently.^ '• If a gift or con- tract made in favor of him who holds the position of infiuence is impeached by him who is subject to that influence, the courts of equity cast upon the former the burden of proving that the transaction was fairly conducted as if between strangers, that the weaker was not unduly impressed by the natural influence of the stronger, or the inexperienced over- reached by him of more mature intelligence."* 7 H. L. C. 750 ; and see Archer u. of the transaction is on the party who Hudson, 7 Beav. 551; Rhodes c. Bate, is iu a position of active confidence.'' L. R. 1 Ch. 252 ; Grosvenor c. Slier- Indian Evidence Act, cited Pollock, ratt, 28 Beav. 659. 525 ; Erlanger v. New Sombrero Phos- 1 Tnfra, § 168. phate Co., L. R. 3 App. Cas. 1218. 2 See Wh. on Ev. § 1285. As to ratification, see infra, § 168. ' Gibson v. Jayes, 6 Ves. 266. s Lord Penzance in Parfitt v. Law- * " Where there is a question as to less, L. R. 2 P. & D. 468. the good faith of a transaction between " The court," as was said by James, parties, one of whom stands to the L. J., in Kempson v. Ashbee (30 L. T. other in a position of active confidence. Rep. N. S. 749; L. R. 10 Ch. 15), the burden of proving the good faith "has endeavored to prevent persons 224 CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 164. § 164. It has been held in England on high authority that, where a donation is claimed by a person holding a ^j^^^ ^ fiduciary or authoritative relation to another to voluntary "' donation is have been made to him by the person thus under set up, his influence, the burden is on the party setting up party set- the donation to prove its fairness. Such a trans- p°o^ei"Pto° action may be fair, and suitable to the circum- be fair. stances of the parties. But this, it is held, must be shown by the party by whom it is accepted.^ subject to influence from being induced to enter into transactions without inde- pendent advice." S. P. Rhodes v. Bate, L. E. 1 Ch. 252. In Bainbrigge v. Brown, 44 L. T. N. S. 705, the three children of Dr. Bain- brigge, they being aged respectively twenty-five, twenty-four, and twenty- two, and resident under their father's roof, and not emancipated from his control, executed a deed by which they made themselves liable for the interest on certain mortgage debts of their father to his mortgagees, and charged their reversionary interests under their parents' marriage settle- ment for that purpose, and gave the mortgagees a power of sale over such reversionary interests. In considera- tion of receiving the interest payable nnder the deed, the mortgagees agreed to reduce the rate of interest payable on their mortgages. The children brought an action to set aside the deed as against their father and his mort- gagees, on the ground of undue influ- ence exercised by their father. It was held by Fry, L. J. (May, 1881), that, as against the father, the burden of proof lay on him, and that, as he had not discharged it, the deed must be set aside as against him ; but that, as against the mortgagees, the burden of proof lay on the plaintiffs, that they had not discharged it, and that the VOL. I. — 15 deed could therefore not be set aside as against the mortgagees. 1 Lord Romilly in Cooke v. Lamotte, 15 Beav. 234 ; Hoghton v. Hoghton, 15 Beav. 278; S. P. Lord Hatherley in Phillips V. MuUings, L. R. 7 Ch. 246 ; Colburnu.VauVelzer, llFed. Rep. 795. Mr. Pollock, however (Cont. 3d ed. 574), objects to such broad statements of the law, saying that he " has reason to know that they cannot be relied on in practice," and that, "carried to their full extent, they would make an irrevocable gift almost impossible." But the question, so far as concerns the burden of proof, depends upon the way in which the issue is presented. If the donee claims specific performance of such a gift, the burden is on him to prove its fairness. But if the donor seeks to rescind, or to recover back the thing given, he ought to prove some- thing more than a prior fiduciary rela- tion between himself and the donee. The fact that the gift has been carried into execution argues a deliberation and coolness which he ought to rebut by showing that he was at the time not fully advised of his act, and that the act was performed under undue influence. — That, as a matter of law, an executed gift without consideration will be sustained, when not in fraud of other parties, will be hereafter seen. Infra, § 496. 225 §165.] CONTRACTS, [CHAP. IX. § 165. Inadequacy of price is in itself uo ground for setting Gross in- «side a contract. A vendor may conscientiously adequacy depreciate his own property, and to say that he sideration shall not sell at the price he himself fixes is to say tafo-e^Toeof he shall not sell at all.— He may be desirous, also, fraud. q£ benefiting a friend or relative by giving him a property at a low price, the object being not to create a feeling of absolute dependence, but to aid, and at the same time to require exertion of some kind in return; and when such an intention is shown, the conveyance is one which, so far as this question is concerned, should not be set aside. Value, also, is uncertain in its limits ; and unless there be gross inade- quacy, courts are unwilling to make it a condition of the validity of a conveyance.' "The value of a thing," says Judge Story, " is what it will produce ; and it admits of no precise standard. It must be in its nature fluctuating, and will depend upon ten thousand different circumstances. One man, in the disposal of his property, may sell it for less than another would. He may sell it under a pressure of circum- stances, which may induce him to part with it at a particular time. If courts of equity were to unravel all these transac- tions, they would throw everything into confusion, and set afloat the contracts of mankind. Such a consequence would, of itself, be sufBcient to show the inconvenience and impracti- cability, if not the injustice, of adopting the doctrine that mere inadequacy of consideration should form a distinct ground for relief."^ But when there is such gross inadequacy as to lead to the inference that one party either acted in ignorance of what he was doing, or was unduly influenced by ' Infra, §§ 239, 518 ; Story, Eq. Jur. 29 ; Davidson v. Carter, 55 Iowa, 117 ; 12tlL ed. §§ 38 o, 245; Peacock v. Robinson w. Schley, 6 Ga. 515. Evans, 16 Ves. 512 ; Borell ;;. Danu, 2 Story, Eq. Jur. 12th ed. § 245, cit- 2 Hare, 440 ; Harrison v. Guest, 6 D. ing Griffith v. Spratley, 1 Cox, 383 M. G. 424 ; 8 H. L. C. 481 ; Kosher v. Harrison v. Guest, 8 H. L. C. 481 Williams, 1. R. 20 Eq. 210 ; Eyre .... Warner ;;. Daniels, 1 Wood. & M. 110 Potter, 15 How. U. S. 42 ; FoUett u. Hamet i\ Dundass, 4 Barr, 178. That Rose, 3 McL. 332 ; Hutmacher u. Har- the suffiicency of consideration will not ris, 38 Penn. St. 491 ; Baker v. Roberts, ordinarily be determined by the courts, 14 Ind. 552 ; Sohnell v. Nell, 17 Ind. see infra, § 517. 226 OHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 166. the other party, then a court of equity will interfere.* There must, however, be " such unconscionableness or inadequacy" " made out as would (to use an expressive phrase) shock the conscience, and amount in itself to conclusive and decisive evidence of fraud. And when there are other ingredients in the case of a suspicious nature, or peculiar relations between the parties, gross inadequacy of price must necessarily furnish the most vehement presumption of fraud."^ And when there was any mental weakness on the part of the party conveying and he was not independently advised, the conveyance, as against him or his personal representatives, will not be per- mitted to stand. ^ A strong element in the proof of imposition in such cases is the needy circumstances of the vendor, ex- posing him peculiarily to the wary rapacity of a particular party to whom he may apply for aid.' But only the party injured or his representatives, so it has been held, can take advantage of inadequacy of price." § 166. The cases we have been considering are those in which the party seeking the aid of the court asks to have an unconscientious bargain rescinded. In such cases'epe- cases, as this unconscientiousness is the chief ingredi- f^'^ p^''- . = formanee ent in his case, the burden is on him to prove it. win be Another issue is presented when the agreement has not been executed, and when the vendee applies for its specific performance. In such case the court will refuse its aid to enforce a hard bargain, unless it should appear that the de- fendant entered into it intelligently and freely. In the former ' Infra, § 518 ; Rice c. Gordon, 11 4 Des. S. C. 651 ; Mitchell u. Jones, 50 Beav. 265 ; Cookell v. Taylor, 15 Beav. Mo. 438 ; see infra, §§ 516 et seq. 103 ; Tennent u. Tennent, L. R. 2 So. a Supra, §§ 159 et seq. ; CookeU <;. & D. 6 ; Parmelee v. Cameron, 41 N. Y. Taylor, 15 Beav. 103 ; Boyse u. Ross- 392 ; Clark v. Depew, 25 Peun. St. borough, 6 H. L. C. 2 ; Harding u. 509. Handy, 11 Wheat. 113 ; AUore v. .Jew- 2 Story, Eq. 12th ed. § 245, citing ell, 94 U. S. 511 ; Brady's App., 66 Coles V. Trecothick, 9 Ves. 246 ; Under- Penu. St. 277 ; Hough i^.. Hunt, 2 Ohio, hill V. Horwood, 10 Ves. 219 ; Peacock 495 ; Buffalow v. Buffalow, 2Dev. & B. !/. Evans, 16 Ves. 512 ; Howard u. Eq. 241 ; Lester v^ Mahon, 25 Ala. Edgell, 17 Vt. 9 ; Osgood v. Franklin, 445. 2 Johns. Ch. 1, 23 ; 14 Johns. 527 ; •> Wood v. Ahrey, 3 Mad. 423. Mayo V. Carrington, 19 Urat. 74 ; Weld » Davidson, v. Ljttle, 22 Penn. St, V. Rees, 48 111. 428 ; Butler w. Haskell, 245. 227 § 167.] CONTRACTS. [chap. IX. case, the doctrine that a court of equity will not intervene unless in a case clearly made out, tells against the party seek- ing to rescind ; in the latter case the same doctrine tells against the party seeking to enforce. Hence, in the latter case specific performance will be refused in a case where the price is grossly inadequate, as a court of equity will not per- mit itself to be the active agent in enforcing a wrong.' But bare inadequacy of price, without such gross disproportion- ateness as " to shock the conscience," will not be ground to refuse the aid of the court. ^ It is otherwise, however, when the price is pireposterously inadequate.^ A price amounting to only one-fourth of the value has been held inadequate in this sense ;^ and so has a price amounting to one-half of the value.* § 167. Not merely the party imposed on himself, but his , representatives, can contest an engagement which presenta- he has been induced to make improvidentlj' by the contest! undue influence of others.* And the property thus » Bispham's Eq. §§ 371-4 ; Falcke v. Gray, 4 Drew, 651 ; Day v. Newman, 2 Cox, 77 ; Haygarth v. Wearing, L. R. 12 Eq. 320; Summers u. Griffiths, 35 Beav. 27 ; Eyers v. Surget, 19 How. U. S. 313 ; Eastman «. Pluraer, 4B N. H. 464 ; Hamet p. Dundass, 4 Barr, 178 ; Graham v. Pancoast, 30 Penn. St. 89 ; Nace v. Boyer, 30 Penn. St. 99 ; Madison Co. :- People, 58 111. 456; Gasque v. Small, 2 Str. Eq. 72 ; Morris V. Philliber, 30 Mo. 145 ; Mitchell v. Jones, 50 Mo. 439. For an analysis of the conflicting Englisli cases, see Pol- lock, Wald's ed. 543. 2 Bispham's Eq. § 219 ; Harrison v. Guest, 6 DeG. M. & G. 424 ; 8 H. L. C. 481 ; Cathcart v. Robinson, 5 Pet. 264 ; Erwiu u. Parham, 12 How. U. S. 197 ; Bedel c. Loomis, 11 N. H. 9 ; Park v. .Johnson, 4 Allen, 259 ; Powers v. Mayo, 97 Mass. 180 ; Lee v. Kirby, 104 Mass. 420 ; Osgood v. Franklin, 2 Johns. Ch. 1 ; Seymour v. Delancy, 3 Cow. 445 ; Weber v. Weitling, 3 C. E. Gjeen, 441 ; Cummings' App., 67 Penn. 228 St. 404 ; Cribbins v. Markwood, 13 Grat. 495 ; White t,. McGannon, 29 Grat. 511 ; Steele u. Worthington, 2 Ohio, 182 ; White v. Thompson, 1 Dev. & B. 493 ; Barter v. Gordon, 2 Hill Ch. 121. ' Bispham's Eq. § 371 ; Callaghan -'. Callaghan, 8 CI. & F. 374 ; Howard V. Edgell, 17 Vt. 9 ; Osgood u. Frank- lin, 2 Johns. Ch. 23 ; 14 .Johns. 527 ; Shepherd v. Shepherd, 1 Md. Ch. 244 ; Shepherd t'. Bevin, 9 Gill, 32 ; Holland V. Hensley, 4 Iowa, 222 ; Harrison v. Town, 17 Mo. 237. ' Robinson v. Robinson, 4 Md. Ch. 182. ^ Seymour r. Delancy, 6 Johns. Ch. 222 ; see S. C. 3 Cow. 445. ^ Supra, § 146 ; Hunter v. Atkens, 3 M. & K. 113 ; Coutts v. Acworth, L. R. 8 Eq. 588 ; Ford u. Olden, L. R. 3 Eq. 461 ; Holman v. Loynes, 4 D. M. G. 270; Allore o. Jewell, 94 U. S. 506; Ford u. Harrington, 16 N. Y. 185 ; Yard v. Yard, 27 N. J. Eq. 114 ; Haw- kins' App., 32 Penn. St. 263 ; Tracey CHAP. IX. J UNDUE INFLUENCE AND IMPOSITION, [§ 168. obtained may be pursued in the hands of all assignees with notice.' The transaction, however, cannot be contested by third parties,^ nor can it be attacked by the party implicated in the wrong.' § 168. Contracts of this class, like contracts under duress,* can be ratified by the party imposed Upon, after the disturbing influence has been removed ; and this tracts may ma}' be either by continuance in possession of the fruits of the contract,* or by express approval and confirma- tion.^ But to work such ratification it must appear that the mind of the party imposed on was not only relieved from the undue influence under which he was placed, but was enlight- ened as to his true position and the nature of the particular transaction.' V. Sacket, 1 Oli. St. 54 ; Humph v. Abercrombie, 12 Ala. 64 ; Cadwalader V. West, 48 Mo. 483. ■ Huguenin v. Baseley, 14 Ves. 273 ; Whelan v. Whelan, 3 Cow. 537; infra, § 292. 2 Metcalfe's Trusts, 2 De G. J. & S. 122 ; Davidson v. Little, 22 Penn. St. 245 ; Andrews «. Jones, 10 Ala. 419 ; cited Wald's Pollock, 562. ' Infra, § 235. * See supra, § 154. ' Wright V. Vanderplank, 8 D. M. G. 133; Turner v. Collins, L. R. 7 Ch. 329 ; Youst v. Martin, 3 S. & R. 423 ; Hassler ;;. Bitting, 40 Penn. St. 68. As to proof in such cases see §§ 58 et seg., 154. 6 Stump V. Gaby, 2 D. M. G. 623 ; Morse v. Royal, 12 Ves. 355. ' Supra, § 154; Moxon u. Payne, L. R. 8 Ch. 881 ; Kempson v. Ashbee, L. R. 10 Ch. 15 ; Montgomery v. Picker- ing, 116 Mass. 227 ; Price's App., 54 Penn. St. 472; Thompson v. Lee, 31 Ala. 292. That knowledge of law is not , necessary, see supra, § 57. In Mitchell V. Homfrey, 45 L. T. N. S. 694, cited supra, § 161, we have the following from Lord Selborne ; ' ' The case of Rhodes V. Bate (L. Rep. 1 Ch. App. 252), though it goes further than any other, laying down that wherever there is a confidential relationship the beneficiary must show not only that there was no impropriety in the gift, but that the donor had independent advice, does not go on to say that that is necessary if there is a deliberate intention to abide by the transaction after the in- fluence has ceased and any efi'ect pro- duced by the relationship has been entirely removed. There is not much authority to assist us in arriving at our. decision, which is in favor of not disturbing this judgment ; but there is some. The ease of Dent v. Bennett (4 Myl. & C. 269) was a case where the gift was set aside ; but I find this pas- sage in the judgment of the Lord Chan- cellor (Cottenham) at p. 275 : ' There is an absence of all evidence of the testator having at anytime recognized, or in any manner given any proof of approval of the agreement, or of any consciousness of its existence.' That does not go far to show what the efi'ect of such evidence would be ; but at least it shows that it would have been a very material element in arriving at 229 § 169.] CONTRACTS. [chap. IX. § 169. If we place together an expectant heir, in needy cir- cumstances, ready to seize money on any terms, no matter a decision in that case. In the case of Wright i: Vanderplank (8 De G. M. & G. 133) Turner, L. J., who delivered the judgment in Rhodes c;. Bate (L. Rep. 1 Ch. App. 252), says, at p. 146: ' A child is presumed to be under the exercise of parental influence as long as the dominion of the parent lasts. Whilst that dominion lasts, it lies on the parent maintaining the gift to dis- prove the exercise of parental influ- ence, by showing that the child had independent advice, or in some other way.' I do not lay much stress on that ; but I know of no reason for sup- posing that the law on this point as between doctor and patient differs from that as between parent and child. The lord justice continues : ' When the pa- rental influence is disproved, or that influence has ceased, a gift from a child stands on the same footing as any other gift ; and the question to be determined is, whether there was a deliberate un- biassed intention on the part of the child to give to the parent. Applying these considerations to the present case, it is difficult to say that the trans- action could have been maintained if the case had rested upon the mere cir- cumstances which attended the original gift. I think that it could not. I am satisfied that the court would be de- parting from established principles in upholding it. The transaction had its inception at a period when the minority had just terminated. It was completed while the parental influence and au- thority was in full force, and there was no independent advice given to the daughter. The transaction, therefore, was impeachable at and after its com- pletion ; and the only question is, whe- ther it has become unimpeachable by 230 reason of what has subsequently oc- curred. It has been argued at the bar that it has not ; for that some positive act was required to make it so, and that here no such act has been done. I am not of opinion that a positive act is necessary to render the transaction unimpeachable. All that is required is proof of a Hxed, deliberate, and un- biassed determination that the trans- action should not be impeached. This may be proved either by the lapse of time during which the transaction has been allowed to stand, or by other cir- cumstances. Here I have no doubt that there was a fixed, deliberate, and unbiassed determination on the part of the lady that the transaction should not be impeached.' No doubt the fact of the subsequent marriage of the lady who was the donor in that case, and, indeed, the whole of her life, was con- sistent with that judgment. The lord justice continues : ' It is stated on the face of the bill that the daughter had been informed by some of her friends before her marriage that a fraud had been practised on her by the defend- ant. Now she was plainly a woman of strong understanding and capable of transacting business, and it is impos- sible to suppose that she, having been told that a fraud had been practised on her, should not have been aware that the courts could relieve her. And if it were possible to suppose this, the facts of the case exclude the supposi- tion. ' Therefore, it must be taken that in tliat case the donor knew as a fact that the transaction was impeachable. At the same time, that case is very near this one, if we may treat this case , as if there had been a finding of the jury that the donor was indifferent CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 169. how onerous, and a money lender, who has money Necessity . „ , . . 1 i 1 1 J of heir ex- enough to satisfy such greed, cunning enough to nolo, pectant the borrower whom he once entangles in his toils, "uYeto^un- and rapacity enough to extort exorbitant interest, dueinflu- we have the ingredients of another line of cases of undue influence in which the corrective powers of courts of equity have been beneficially employed. Money lenders of this kind occupy positions of authority in reference to an unfortunate client. They are few in number ; when once they are applied to, they occupy a position of power from which it is difficult to eject them. Hence unconscientious bargains by heirs expectant with persons of this class will be set aside.^ The rule includes remainder-men f and it has been extended to younger sons, with no settled estate in remainder, on the expectation that their friends will pay to avert bankruptcy or exposure.^ But under this head do not fall bargains for the purchase of vested interests due at a fixed future period.^ And in England it having been found that the court of chan- cery had pushed the rule to such an extent as to make it unsafe to purchase reversions unless at public auction," an act was passed by parliament, in 1867,' by which it was enacted that no purchase made bona fide, and without fraud or unfair dealing, of any reversionary interest, shall be opened or set aside merely on ground of undervalue. The act, however, says Mr. Pollock, " is carefully limited to its special object of putting an end to the arbitrary rule of equity, which was an impediment to fair and reasonable as well as to unconscionable whether she could set aside the gift or * Parmelee v. Cameron, 41 N. Y. not, so that whether she knew or not 392 ; Cribbins u. Markwood, 13 drat, would be immaterial." S. C. 8 Q. B. D. 495. As to "option" see infra, § 454. 587. 5 Bromley v. Smith, 26 Beav. 644; ' Aldborough v. Trye, 7 CI. & F. 436 ; Foster ;;. Roberts, 29 Beav. 471 ; Nesbit Aylesford v. Morris, L. R. 8 Ch. 484; v. Berridge, 32 Beav. 282; Lord v. Jeff- see Tottenham i'. Emmett, 14 W. R. 3 ; kins, 35 Beav. 7. A sale was set aside Davidson v. Little, 22 Penn. St. 252. after nineteen years ; St. Albyn v. '■ Beynon u. Cook, L. R. 10 Ch. 391 ; Harding, 27 Beav. II ; and another Miller u.Cook, L. R. 10 Eq.641 ; O'Borke after forty years. Salter v. Bradshaw, V. Bolingbroke, L. R. 2 Ap. Cas. 814. 26 Beav. 161. " Nevill u. Snelling, L. R. 15 Ch. D. « 31 Vict. u. 4. 679. 231 § 170.] CONTRACTS. [chap. IX. bargains. It leaves undervalue still a material element in cases in which it is not the sole equitable ground for relief."' And it has been settled that when the transaction is fair, the sale of a contingent legacy, or even of a naked possibility or expectancy of an heir in an ancestor's estate, will be sustained in equity after the ancestor's death,^ though the burden is on the party who thus dealt with an heir expectant to show the good faith and fairness of the transaction.^ The equity is one belonging to the heir who is induced to make an improvident bargain, and it is not lost to him by the fact that his father, after whose death he was to inherit the estate assigned away, consented to the bargain.^ And a party seeking relief of this class is bound to restore that which he received." § 170. Where there is no statue forbidding usury, courts of equity feel it jieculiarly incumbent on them to revise contracts exacting extortionate interest. " One great effect of such repeal was to bring into operation to a greater extent than formerly another branch of the jurisdiction of this court which ex- isted long before; that principle of the court which prevented any oppressive bargain, or any advantage exacted from a man under necessity and want of money, from prevail- Extortion- ate con- tracts more open to revision since repeal of usury laws. 1 Pollock, Sd ed. 596, citing Ayles- ford V. Morris, L. R. 8 Ch. 490 ; O'Rorke V. Bolingbroke, 2 App. Cas. 814. 2 2 Story Eq. § 1040 ; Spence's Eq. Jur. § 852 ; 1 Sug. V. & P. 8th Am. ed. 426 ; Shelly v. Nash, 3 Mad. 232 ; Lord u. Jefikins, 35 Beav. 7 ; Nevill v. Snell- ing, L. R. 15 Ch. D. 679. 3 Cook V. Field, 15 Q. B. 460 ; O'Rorke u. Bolingbroke, L. R. 2 App. Cas. 814; Savery v. King, 5 H. L. C. 627; Ed- wards o. Burt, 2 D. M. & G. 55 ; Jen- kins V. Pye, 12 Pet. 241 ; Poor v. Hazleton, 15 N. H. 564; Boynton ... Hubbard, 7 Mass. 112 ; Fitch y. Fitch, 8 Pick. 480 ; Powers' Appeal, 63 Penn. St. 443; Field .. Mayor, etc., 2 Seld. 179; Bacon o. Bonham, 33 N. J. Eq. 232 614, and other cases cited Bispham's Eq. § 220. « Sugden V. & P. 11th ed. 316; Bispham's Eq. § 220; Aylesford v. Morris, L. R. 8 Ch. 491, modifying King r. Hamlet, 2 My'. & K. 456. That such a transaction is in fraud of the ancestor see Heap v. Morris, L. R. 2 Q. B. D. 630. 6 Wharton v. May, 5 Ves. 27, 68, 69 ; Evans v. Peacock, 16 Ves. 512; Boyn- ton V. Hubbard, 7 Mass. 112 ; Williams ... Man. Co., 1 Md. Ch. 306, 3 Md. Ch. 420. In Pennsylvania, in ejectment to enforce a trust of this class, it seems a previous tender is not necessary. Seylar v. Carson, 69 Penn. St. SI ; SmuU V. Jones, 1 W. & S. 128 ; Hall u. Vanness, 49 Penn. St. 457. CHAP. IX.] UNDUE INFLUENCE AND IMPOSITION. [§ 170. ing against him — the moment the usury laws were repealed, and the lender of money became entitled to exact anything he pleased in the name of interest, from that moment that jurisdiction of the court, which prevailed independently of the usury laws, was likely to he called into active operation."' 1 Stuart, V. C, Barrett v. Hartley, 669 ; cited Leake, 2d ed. 430. As to L. R. 2 Eq. 795 ; Miller v. Cook, L. E. usurious contracts, see infra, §§ 461 10 Eq. 641 ; Tyler v. Yates, L. R. 6 Ch. et seq. 233 CONTRACTS. [chap. X. CHAPTER X. ERROR AND MISTAKE. I. General Principles. Topic one. of peculiar difficulty, § 171. Embarrassed by ambiguity of terms, § 172. Also by confusion of classification, §173. Will and expression must coincide, §174. II. Conscious Error. Promises known to be in jest do not bind, § 175. Error when conscious, exposes to re- scission and action, for deceit, § 176. III. TjNCONSCions Error of Appre- hension. In Roman law unconscious essential error prevents inception of contract, §177. In our own law this view obtains, §178. Error to be distinguished from impos- sibility of performance, § 179. Essential error as to parties precludes contract, § 180. And so as to error as to subject matter, § 181. No title passes when only bare cliarge is given, § 182. No title passes in false personation, § 183. Contract must be made with party suing, § 184. Signature to wrong document does not bind, § 185. 234 Essential error as to identity of thing precludes contract, § 186. And so as to error as to generic char- acter of property, § 187. "Substantial" error does not neces- sarily have this effect, § 188. Nor does error as to quality, § 189. Error as to quantity or price only pro tanto invalidates, § 190. If there be fraud as to quantity or quality, defrauded party may hold to bargain and sue for damages, § 191. Error in accounts, and as to price, may be corrected pro tanto^ § 192. Error in motive not essential, § 193. Error as to collateral or future matters not essential, § 194. Contracts of bailment subject to same rules, § 195. Negligent error does not excuse, § 196. Money paid under mistake may be re- covered back, § 197. Error in law does not avoid, § 198. Error in subsumption of facts not one of law, § 199. Special knowledge not presumed in non-specialist, § 200. Error of law, when acted on fraudu- lently, avoids, § 201. IV. Error of Expression. Error of expression unessential, § 202. Party is estopped from denying that his expressions were correct, § 202 a. Error in time may be corrected, § 203. Patent error cannot be corrected by extrinsic proof, § 204. CHAP. X.] ERROR AND MISTAKE. [§ 171. V. Rectification. Bilateral error maybe corrected, § 205. Concurrent error ground for rectifica- tion, § 206. Rescission granted on proof of unilate- ral mistake ; rectification on proof of bilateral, § 207. Proof should be strong and plain, § 208. Contract requiring distinct modes of proof cannot be inserted, § 209. Obvious mistake may be corrected by context, § 210. Rectification not granted against bona fide purchaser, § 211. I. GENERAL PRINCIPLES. § 171. The subject of error (or mistake, as it is sometimes called) is beset with peculiar difficulties. A liue :j, .^ ^^^ has to be taken in such a way as to avoid two ex- of peculiar tremes, either of which would be fatal to business. If every error in the mind of either party as to a proposed contract prevents its completion, then there could be no con- tract completed. No valid marriage could be solemnized, since there is no marriage in which at least one party is not in some slight error as to the other's qualifications ; no valid sale of goods could be eftected, since there is no sale in which either vendor or purchaser has a perfect idea of the thing sold ; no contract of agency could be instituted, since neither principal nor agent can be absolutely free from error as to each other's capacity. On the other hand, consequences equally disastrous would follow from the position that no error, no matter how essential, prevents a contract from being perfected, and from embracing within its operation any prop- erty to which it might apparently relate. A bargain which A. supposes he is making with B. would give C. a title to A.'s property, if C. should at the time of the bargain succeed in palming himself off to A. as B. A. might hand a diamond to B., by mistake for a glass bead, and B. would take a title which would be unassailable. A. and B., by a transposition of documents, might sign an agreement in which a thousand shares of bank stock are to be sold by A. to B., instead of a barrel of flour, as was intended, and, if no error prevents a contract from being entered into, title to the bank stock would thereby vest in B. On the one hand, therefore, if we adopt the rule that every error prevents a contract from attaching, no title whatever could be made ; on the other hand, if we adopt the rule that no error prevents a contract from attaching, then 235 § 172.] CONTRACTS. [CHAP. X. no ownership would be secure. We must therefore conclude that, while the mere fact of error in the mind of one of the parties does not prevent a contract from being perfected, there are some errors that have this effect. To determine what these errors ai-e will be the object of the present chapter. In a succeeding chapter will be considered the interesting question how far a party, who, by mistake, leads another to make a void bargain, is liable for the loss to which the other party is thereby subjected.' § 172. The question of error is much embarrassed by the ambiguity of the terms used. In cases where there ra™^"by ^^ evidently no contract, there having been no cou- ambiguity gg^^ gf niiuds (as where A. proposes to B., supposing B. to be C, that B. should take command of a ship, B. being a tailor who had never been at sea ; or where A., as in a case already piut, proposes to sell a diamond to B., sup- posing it to be a glass bead), no acceptance on the part of one party to the other's pro[)Osal can make a contract ; yet we are sometimes told that such " contracts" are " voidable" and sometimes that they are " void." " Void" and " voidable" are thus used as convertible terms, though there is this import- ant difference between them, that a " void" contract is no contract at all, whereas a " voidable" contract conveys a title which the party conveying may afterwards ratify, the ratifi- cation relating back to the date of the original transaction, — a title which, even before ratification, may be absolute in the hands of a bona fide purchaser from the person holding the " voidable" contract.^ We hear also of " null contracts," though it is hard to see how there can be a contract which is not a contract. In these pages an effort is made to speak of negotiations which do not ripen into contracts, because the par- ties do not consent to the same thing, simply as " negotiations" or " bargains ;" saying, as in the prior section, that in such cases want of consent prevented a contract from being "en- tered into" or "perfected." Yet, cautious as we may be, it is diflicult always to avoid applying the terms " void" or " in- complete contracts" to such negotiations. They are so called ■ Infia, §§ 1043 et seq. 2 Supra, § 28. 236 CHAP. X.J ERROR AND MISTAKE. [§ 174. in numerous rulings of our courts, and in many of our text- books; and, logically incorrect as is the expression "void contract," it is an expression which has now a definite mean- ing, being understood to be a negotiation which, though on its face a contract, has no binding force, is incapable of rati- fication unless with a new consideration, and is incapable of passing title even to bona fide purchasers. § 173. Another difficulty is the confusion of classification that prevails. As has been pointed out by Savigny, and illustrated with much point by Windscheid, confusion there are three distinct relations in which the ques- caUou*^'"" tion of consent may be considered. These, with their sub-relations, may be thus expressed : — A. Error not induced by misrepresentation or fraud : a. Conscious, e. g., where the transaction is in jest. b. Unconscious, in which case, when essential, no contract is entered into.' B. Error induced by honest misrepresentations. — In this case when the error is essential, then, as under the first head, no contract is entered into. When the error is non-essential, but goes to quantity or quality, then the contract binds, but an action lies on the warranty, express or implied ; or an abatement is made in the price, when sued on ; or specific per- formance will be refused, unless the complainant will make the misrepresentations good ; or, in proper cases, there may be a rescission, saving the rights of the other side.^ C. Error induced by fraud. — In this case, if the error is essential, then, as under prior heads, there is no contract. — If the error is non-essential, then, in addition to the rights speci- fied under head B, the injured party may have an action of deceit against the party imposing on him.^ Much of the confusion observable in our decisions has arisen from the fact that the incidents belonging to one class of error are imputed to another class. To avoid this confusion, Savigny's classification, with some modifications, will be 1 See infra, § 175. » Infra, §§ 232 et seq. ' Infra, §§ 186 et seq. ; 282 et seq. 237 § 174.] CONTRACTS. [CHAP. X. adopted in the following pages, and the cases distinguished on this basis. § 174. To a binding juridical act, we must remember, it is essential that not only should there be a will to do its expres- the act, but the will must be duly expressed. A mere coincide^'' ^^^' *° ^^ ^ thing has no force without the expres- sion. The will, unexpressed, is secret and invisible, and no matter how strong we may imagine it to be in a par- ticular person, or how powerful may be the motives we may conceive of as influencing it, it has no contractual force unless expressed. On the other hand, an expression of will may be robbed of force should it appear that it was unintended. The promises of a person talking wildly in his sleep do not bind him, nor is he bound by promises made by him under radical delusions as to the object of the promise. That this was so may be shown by his subsequent deeds and words. But so essential to society is it that faith should be given to words and deeds as the expression of thought, that the burden of proof is on a party who seeks to show that he acted, when thus apparently expressing his will, under error, or uncon- sciously.^ — In our own law, as will hereafter be seen, while a document is to be construed according to intention,^ this inten- tion is to be gathered from the words used by the parties; and only when there is ambiguity, or when these words were meant to be supplemented by unwritten negotiations based on extrin- sic facts, can either extrinsic facts or unwritten negotiations be put in evidence to explain the written text.^ — In the modern Roman law, the prevailing tendency has been to subordinate the letter to the supposed intent more completely than is the case with ourselves. Recently, however, in view of the loose- ness of construction to which this led, there has been a reac- tion towards the position that when words have been selected by the parties to express their views, these words alone are to decide. This is urged by an intelligent expositor:* (1) on the ground of practical necessity ; (2) on that of logic ; and (3) 1 Savigny, Rom. Recht, § 134. ■i L. Scheiff, Divergeiiz zwisohen 2 Infra, § 657. Wille und Erklarung, Bonn, 1879. '^ See infra, § 629 et seq. 238 CHAP. X.J EKROR AND MISTAKE. [§ 174. on that of positive law. As to the first, the chief example of those who hold that the letter alone is to control, is the case of a person who signs a paper without knowing what it con- tains, in which case, it is urged by Bahr, it is the letter alone that can determine, as there is no intention whatever. To this, Scheifl' adds, that in such cases there is an intention, and that intention is to be bound by whatever shall be placed on the paper.i The same remark may be made as to the sign- ing of a cheque with the amount in blank. It may be said that here there is no intention, and that the letter must necessarily exclusively control. But the answer is that the intention is to be bound by whatever the party entrusted with the cheque shall within a certain range enter in it. (2) The logical ob- jection to the assigning absolute supremacy to the intention is, that, as intention is undefinable and unlimited, it cannot determine legal relations. The law, therefore, can deal with intention only as expressed in words. (3) By the Roman standards intention without expression is as inoperative as is expression witliout intention. — In our own system, while the controversy has not been so radical, there is no question of construction in which it does not emerge. With us, however, the necessity of maintaining intact, for commercial purposes, the sanctity of written terms, is more strongly felt than it was in the old Roman system, in which business was con- ducted mainly by word of mouth, or than it is in Germany and France, where the traditions of the Roman law remain authoritative. The distinctive position taken by our courts is elsewhere discussed in detail.^ ' See infra, § 185. certain conditions destitute of freedom 2 4 Kr. Viert. fiir Gesetz. N S. 160. of will, and several passages in the ' Infra, §§ 655, 658; Wh. on Ev. § Roman standards assign the same 958. The question whether the will quality to persons acting in error, when acting under the influence of "Nulla enim voluntas errantis est," error can he regarded as free, is dis- so speaks one of the jurists (L. 20 de cussed with much suhtlety by Savigny. aqua (39,3) ) ; and to the same effect (Rom. Eeoht, III. § 115.) There is, he several other citations may be given, admits, some plausibility in the posi- But Savigny argues, that the two tion that error is like unconsciousness states — that of ignorance, and that of in this, that a person in error is nncon- unconsciousness — cannot be included scions of what he is about. We hold in the same category. When we say, an infant and a lunatic to be under he argues, that the erroneous concep- 239 § 175.J CONTRACTS. [chap. X. II. CONSCIOUS BEROK. § 175. A promise uttered in jest has no binding force, so far as concerns parties conscious of the fact that it was so uttered. " Verborum quoque obligatio con- stat, si inter contrahentes id agatur: nee enim, si per jocum puta vel demonstrandi intellectus causa ego tibi dixero spondes? et tu responderis sjoondeo, nascetur obligatio."' This is the case, as the context shows, with pro- mises made in dramatic performances, and as part of exercises of instruction in a foreign language.^ Analogous cases, as Promises known to be in jest do not bind. tiou determines the will, this must he taken in a very limited sense. It is the person acting who concedes to the error this controlling force. His free- dom of choice between opposite alterna- tives is unlimited ; no matter what may have been the advantages which the error might foreshadow to him, he could reject them. The right concep- tion of the question rests on distin- guishing the will itself from prior in- fluences in the mind of the person willing ; the will is the substantive fact which must lie at the basis of all juridical relations ; and it is both arbi- trary and unreasonable to confound the fact itself with the mental pro- cesses which precede it. And the con- text of the passages cited from the Roman law shows that error is a ground for relief from the obligation of con- tracts only in peculiar cases where it goes to matters of essence, and that even in those cases it does not relieve from liability when it is culpable. ' L. 3, § 2, de ob. et act. (44,7). On this topic see infra, § 661. * As is noticed by Windscheid (Pand. § 75), the reservatio mentalis is without legal significance, since a purely secret condition of mind cannot be shown. When a person says : " I will do this," it will be presumed he intended what 240 he says until the contrary is objectively shown. According to Windscheid (Pand. § 75), simulation is the expression, for the purpose of bringing about an ap- parent legal relation, of an intention not really entertained. It is possible that the party simulating may have really had another object in view ; and in such case, the question arises whether the latter object may not be effected. The answer to this question depends upon, (1) Whether the ex- pression of intention relied on can be regarded as capable of sustaining the particular interpretation ; (2) Whether the intention so assumed is one which the law can carry out. Two interesting essays by Dr. Joseph Kohler, on mental reservation and simulation, will be found in Ihering's Jahrb. for 1878, vol. 17, pp. 91-158; 325-356. Dr. Kohler takes the ground that mental reservations are inopera- tive, because, (I) The law cannot take cognizance of unexecuted mental states, and, (2) The executed purpose is the only purpose that can be regarded as intended. He contests, with much force, Saviguy's position that "simula- tion " is a bilateral mental reservation, and that mental reservation is a uni- lateral mental simulation. Kohler, on CHAP. X.] ERROR AND MISTAKE. [§ 176. mentioned by Savigny, may be noticed in the Roman con- tracts of mancipation, and similar processes, in which words were used symbolically, and illustrations of the same kind may be found in our own bonds, in which cautionary penalties are inserted.^ The question is, what is the sense in which the promisor knew the promise was accepted by the promisee?^ If both parties knew that the promise was to be inoperative, it does not bind. § 176. A party, however, who consciously and in- Error when tentionally maizes use of false statements to obtain a expo^^J^to benefit, not onlv must submit to have any contract action of ■ -, -i ■ -, ■, 1 1 • ,-1 1 deceit, and thus induced rescinded at the election ot the de- torescind- frauded party, but exposes himself, as will hereafter ^^f^t. '''"^' be seen more fully, to an action for deceit.' the contrary, argues that simnlation falling back on them as a defence, (1) lias nothing in common with mental re- Because they are immoral, (2) Because servation. It involves, he maintains, no to admit such defences would destroy disharmony between expression and business. intention. The actor, for instance, 2. Unintended Divergence. — Here a who promises on the stage to pay a distinction is taken between " confu- hnndred ducats to another actor, simu- sion " and "error" (" Verwirrung " lates, but it is understood that the and " Irrthum ") ; the first being un- whole transaction is unreal. It is conscious action, the second, action otherwise, however, as to the promise under mistake. The latter, which is to which a mental reservation is at- error in its technical sense, is defined taohed. The promise is in no way as a "defective or wrong impression of made inoperative by the mental reser- law or fact," including, therefore, vation. error juris et facti. The distinctions The cases of divergence between in- taken on this point are noticed, infra, tention and expression are thus di- § 177. vided by Scheiff (following in this ' Promises under duress are subject respect Windscheid) : — to similar considerations ; supra, § 144. 1. Intended Divergence. — Under this An indebtedness based on a fact known head fall Jests, parables used for in- to be erroneous, is asserted in such a struction, and simulation. According promise. As against the promisee, to Scheifi', the person making a pro- the party making the promise may mise is just as liable when he ought to contest the truth of its consideration, know that what he said was supposed That an agreement, which both parties by the other party to be in earnest, as know to be impossible, is a nullity, see if he actually knew this was the case, infra, § 307. — Mental reservations fall under this ^ Infra, § 657. head ; and a party is precluded from ' Infra,, §§ 191 et seq. 282.. VOL. I.— 16 841 § 177.] CONTRACTS. [CHAP. X. III. UNCONSCIOUS ERROR OF APPREHENSION. § 177. A consent of two minds to one and the same thing In Roman teing an essential incident of contracts,Mt follows law un- that there can be no contract when the parties differ consciiius , 1 • ji 1 ■ • , essential essentially as to the thing the}' have in view. A ^ludes^con- distinction is made by the old writers in this respect tract. between error and ignorance. Error consists in a judgment which, resting on incorrect information, is a per- version of the truth, while ignorance is a total want of in- formation as to the particular topic ; but ignorance has the same legal effect as error, and may be, therefore, classed under the same head. Error is also, so far as regards the subject Blatter, divided into error of fact, which, when material, avoids, and error of law which usually does not have that effect.^ So far as concerns the parties, error is unilateral, when it affects only one party, and bilateral, when it affects both.^ With regard to the possibility of avoidance, it may be either vincible (vincibilis), or invincible (invincibilis), under which head are classed, not errors which are absolutely unavoidable, for there are none such, but errors which could not be avoided unless by researches unusual with prudent men under similar circumstances.^ Error, also, viewed in relation to the effect it has on the will, is regarded as either essential (error essentialis s. causam dans) when it touches the substance of the negotiation, or unessential (concomitans) when it touches only collateral incidents, or matters of opinion/ That there is no contract when there is an essential error by one of the parties is argued by Savigny to be a settled doctrine of the Roman law. "In omnibus negotiis contrahendis, is error aliquis intervenit, ut aliud sentiat — nihil valet, quod acti sit."* — Savigny's position, that where there is an essential error ' See supra, § 4. The following passages are cited by 2 Hki- §§ 198 et seq. Savigny as bearing on tlie question in s As to rectification see tJi/i-a, §§205, tlie text : "Cum uon consentiant qiri 602. errent. Quid enim tain contrarium con- 1 As to liability for negligence see sensui est quani error qui imperitiani in/™, § 1043. detegit?" L. 1.5, de juris. (2, 1).— s Seeinfra, § 188. " Error enim litigatorumnon liabetcon- 6 L. 67, D. de oblig. et act. (44, 7). sunsum." L. 2, pr. de jud. (5, I).— 242 CHAP. X.] EKROR ANB MISTAKE. [§ 177. by a party, there is no actual consent,' is spoken of by Wind- scheid,^ as " epoch-maliing" in the doctrine of error ; and he is sustained in this by the great body of German jurists.* Windscheid, who occupies (1882) the highest rank as a com- mentator on the Roman law, adopts substantially the same position.* Error, according to his definition, is where a party has no consciousness that he does not really intend that which he professes to intend. "He believes either that what he says has a different meaning from what it really has^ or that he uses different language from what he really does." The promise of a party made under such an error, it is some- times said, is a nullity on account of the error. According to Windschied, however, this is not accurate. The nullity "Nulla enim voluntas errantis est." L. 20, de aqua pluv. (39, 3).—" Non videiitur, qui errant, consentire." L. 116, § 2 de R. J. (50, 17).—" Cum er- rantis voluntas nulla sit." L. 8, c. h. t. — But that these maxims are not to be held to imply that any kind of error prevents any kind of consent to a con- tract, is shown not only by the context, but by the whole doctrine of dolus wrought out with such care and com- pleteness by the Roman jurists. There would be no necessity in any case to prove dolus (fraud) in order to rescind a contract, since, if there were any error, no matter how slight, there woufd be no contract to rescind. But in the Roman law, as well as in our own, fraud is held in many cases as of decisive influence in vacating a con- tract which would otherwise be held good. The party injured can in such cases hold to the contract and sue for damages, or may rescind the contract ; and it is plain, therefore, that error does not as a rule preclude that consent by which contracts must be made. — Error in contracts has been the subject of copious discussion by foreign jurists. The following treatises on error are noticed by Koch : II. 129. Peltz, diss. i. et ii. de errore in contractibus ; Gtindling, iiber die schwere Lehre von dem Irrthum in der Rechts gelerhr- theit ; Leyser, de ignorantia et errore ; Hankopf, de efiectu erroris in contractu emti venditi ; Goetz, de errore in transact, etc. ; Van Maanen, de igno- rantije et erroris natura et etfectibus ; Kern, de errore contrahentium ; Herr- man, von den Wirkungen des Irr- thunis ; Kritz, de erroris facti ; Tliibaut, liber die Wirkung des Irrthums ; Va- lett, Versuche eine von der gewiihn- lichen abweichende und einfachere Theorie von dem Einflusse des error und der ignorantia facti auf die Rechts geschafte aus dem Rom. Rechte und aus der Natur der Sache abzuleiten ; Miihlenbruch, iiber Juris et facti igno- rantia ; Richelmann, commentatio de facti errore in conventionibus. In addi- tion, the topic is discussed at large in the works of Cujaoius, Donellus, Ave ranius, and Gliick. ' System Rom. Rechts, iii. 135-9. = Pandekt. § 76. " Wachter, ii. § 102; Vangerow, iii. § 604; Sinteuis, i. p. 193; ii. 298; Unger, ii. 89. ' Pandekt. 3d ed. § 76. 243 § 177.] CONTRACTS. [CHAP. X. of the promise does not arise from the error, but from the fact that the promise and the intention do not correspond. — The great merit of Savigny, according to Windscheid, is that he brought into prominence the distinction between error in which the intention and the expression coincide, and error in which they are at variance. In the latter case the transaction (supposing tlie error to be essential) is vitiated not because of the error, but because of the variance. If there was another intention, as is usually the case in such errors, such intention cannot be the basis of an obligation ; since intention without words is as inoperative as words without intention. From this follows the important position that nullity is not ex- cluded in cases where the error was negligent, though in such cases negligence may estop.' According to Windscheid, how- ever, it is not sufficient to avoid a promise that it was made under an error; it is necessary that the thing promised either in its entirety (as where a party signs a wrong document), or in one of its essential constituents, was not intended. As essential constituents "Windscheid enumerates: — 1. The nature of the obligation. 2. The person to whom the obligation is made. — N"ullity, however, under this head, is predicated only when the promisee is mistaken by the promisor for another person : not when he has the very person in mind whom his language indicates, and when his mistake is in assigning to such person unreal qualities. Of the latter class of mistakes^ the following stages are noticed : A promise is made to a party who gives an errone- ous Christian name ; to a party who gives an erroneous family name ; to a party who gives the name of another person of whose existence the person promising is not aware; to a party who gives the name of another person whose existence is known to the promisor, or is accepted by him as existing. In the last case, an error as to the person, strictly speaking, cannot be said to exist any more than in the first; but the constituents of personality in the last case are essential, while in the other cases they are non-essential. 3. The object of the obligation. If this object is defined ' As to liability for negligence see infra, § 1043. 244 CHAP. X ] BRROK AND MISTAKE. [§ 177. quantitatively, the» a material variance as to quantity is error that avoids.' 4. So far as concerns, the incidents of the obligation, a dis- tinction is to be taken between such as according to existing business standards constitute the essence of the object, and such as do not. — If the promisor erroneously assigns to the object properties of the first class, then his declaration, as re- lating to something which essentially, if not corporeally, he did not have in mind, is a nullity. An error, on the other hand, as to properties of the second class, does not avoid this obligation.^ An error, for instance, as to the metal of which a vase is composed, brass being mistaken for gold, is essential, and avoids the bargain, the particular kind of metal being here material ; whereas, an error as to the particular kind of wood used for a bucket — e. g., pine or hemlock — is not essen- tial, and does not avoid, unless the contract be for some reason dependent on the kind of wood used. The question whether, when the object of a promise has been injured, its essential properties are changed, depends, therefore, in default of a special bargain, on the particular case.^ The supremacy of Savigny's doctrine is, however, by no means unchallenged. By eminent recent critics* not only is the accuracy of Savigny's commentary on the authorities disputed, but the rale that essential error avoids is declared ' See infra, §§ 188 et seq. elarant has in mind ; the name of this 2 Whether by blundertng he does person ; the name or unessential peeu- not render himself liable in other re- liaritiesof the object of the declaration; speets, will be hereafter discussed, the accessories of such object. — Withre- Infra, §§ 1043 et seq. spect to contracts, asWindscheid (§ 77) ' It is argued by Windscheid that a proceeds to notice, there is an addi- variance only avoids where the inten- tional element of error, viz., when one tion falls behind the expression, not party mistakes what the other party where it exceeds it. Thus a party, ac- has said. Here, if the mistake is es- eording to the Roman standards, who sential, there is no consent. But here, makes a bargain for a pledge on a also, it is not the error that avoids, but bronze vessel, which turns out to be the want of consent. Hence, when the gold, he supposing it to be gold, is difference goes to a non-essential point, bound by his bargain. (L. 1, § 2, D. there is no avoidance. de pign. act. 13, 7.) As unessential * See review in Zitelmann's Irrthum points, according to Windscheid, are to und Rechtsgechaft, eine psyoholo- be considered the peculiarities (Eigen- gisohe-juristisohe Untersuchung, Leip- sehaften) of the person whom the de- sig, 1879. 245 § 177.] CONTRACTS. [CHAP. X. to be subject to so many exceptions as to be practically nusja- tory. These exceptions are: (1) Negotiable paper, bills of lading, etc., are governed, as to third parties, by their words, irrespective of the question of error. (2) A " foreign captain" gives signals of distress by mistake, but under such circum- stances as make it highly probable that such signals would be given by him. A steam-tug is sent to him with a pilot, but he rejects the proffered aid, and arrives safely in port. In the mean time another ship, from this cause losing the services of the pilot and tug, runs ashore. The " foreign captain"^ woukl be liable under the port laws for the expenses of the pilot and tug, notwithstanding he acted under an essential mistake. And this is undoubtedly true, though not neces- sarily on the ground of contract, since the captain in such case would be liable for negligently making signal. (3) Registrator X., to take another case,^ likes "]\[anzipan" (a kind of German cake), and dislikes macaroons (Makronen). In order to be sure he himself writes the order to the con- fectioner, but is surprised at finding a macaroon-tart on the table. It is sent back, but the confectioner produces the order, " Makronentorte," signed by Mr. X. ISTow Mr. X.'s "error in essence" would be no defence to a suit against him on this order. — Another case is as follows: " C. Eicken," during the French-German war, receives an order to buj', in Posen, a large amount of oats at any price. He executes the contract, but, as he is about to forward the oats, he finds that the order was meant not for him, but for "F. Eicken." The party sending the order refuses to accept the oats, which in the mean time have greatly fallen. — In another case a house is offered for rent, according to the written terms, at 1800 marks, payable quarterly, at end of term. As the lessee is about to move in his furniture, the lessor refuses admission on the ground that he did not mean what the writing said, and that it contained two clerical errors: " 1800" for " 2800," and " postnum" for "praenum."— Now, in such cases, it would 1 This illustration is given by Bekker * Ibid, in Kritische Vierteljahrschrift fiir Ge- aetzgebung, 1879, 48. 246 CHAP. X.] ERROR AND MISTAKE. [§ 177. not be pretended that the party from whom the writing pro- ceeds is not bound by the writing. This was substantially ruled in Germany in a famous case/ in which a telegraphic message had in it " buy" instead of " sell." — It is maintained that the common sense view of such transactions is that a party is to be bound by what he writes. It is urged, also, that the whole doctrine of consent, as taught by Savigny, rests on the erroneous hypothesis that it is intention and not expression that constitutes a legal act. This is admitted to be the case with wills, in which the voluntas testaioris is to prevail. It is otherwise with contracts; and, in contracts, the party accepting takes the will of the other as expressed. This is what is relied on by the promisee ; and the promisee acts in consideration of the equivalent that is to be given him for the services called for in the other party's proposal. The error of the prevalent view, so it is insisted, is, that, while it seeks to maintain without restriction the I'ight of the party mistaken to do as he really intends, it allows him to invade at his pleasure the rights of others and subject them to his undeclared and arbitrary will. If this were carried out — if the burden of a mistake fell, not on the party making it, but on the other party — then all business security would be destroyed. An order by telegram could not be tilled without inquiry to see whether or no it was not made under a mis- take, and to these inquiries there might be no end ; or indem- nity might be exacted, which would add greatly to the bur- dens of the transaction. — The reply to this, that a party making a mistake in a written order is liable for culpa in contrahendo^ and in this way he is made to pay the losses incurred by the other side through his conduct, is anticipated by Bekker, who makes in answer the following points: (1) the remedy on the contract is more! simple and eiiective; (2) to have re- course to culpa in contrahendo is to unnecessarily introduce penal remedies into civil jurisprudence. — This is undoubt- edly ingenious; but it should not cause us to overlook the fact that, when the parties do not agree as to the object of their bargain, there can be no contract. If I should intend, for ' Oppenheim v. Weiller. 2 Jnfra, § 1043. 247 § 177.] CONTKACTS. [CHAP. X. instance, to sell a house; and the other party should intend to buy a ship, there is no agreement between him and me. This, however, does not preclude my liability to him for culpa in covtrohendo in case he is damaged by my inaccuracy of expres- sion. ^ In our own law, it is also to be observed, the doctrine of estoppel comes in to impose a liability in such cases on a party wlio, although not bound by force of a specific contract, is precluded by his conduct from denying his liability to a party whom he has induced to assume certain obligations. — The distinction between essential and non-essential error is also discussed by Scheift" in a treatise elsewhere noticed.^ In bilateral obligations, error, according to Scheiif, precludes consent in two cases: (1) where with either party there is an essential variance between intention and expression ; and (2) when in consequence of error the expressions of the parties do not go to the same thing. — Savigny's view is also contested in a work published, in 1880, by Dr. Emil Pfersche.^ Error in substance, it is argued, is simply an error of judgment, and does not involve a variance between intention and expression. The party bargaining under this error intends what he says ; and if the other party says the same thing, then there is a concurrence of the two minds. This is sustained by a copious examination of the Roman standards, which, however, are often subjected, in order to support the author's argument, to forced and unnatural constructions; and while there is no doubt much truth in the position taken by him that error in substantia does not necessarily involve a variance between intention and expression, yet it does in most instances involve a vari- ance between the intentions of the two contracting parties. He further argues, that errors as to the properties of a thing, essential or unessential, are always errors in motive. — The declaration, " I buy this thing," is a normal expression of will, no matter what may have been the mistake of the party ' See my™. § 1043. stantia — Riimiscli-rechtliche Unter- 2 Divergenz Zwischen Wille und suchuug — Graz, Leuschner und Lu- Erklarung, 1879, cited supra, § 174. beiizky. ' Zur Lehre vom. sog. error in sub- 248 CHAP. X.] ERROR AND MISTAKE. [§ 177. as to the properties of the thing. It is true, he admits, the Romans assimilated error in substantia to e7'i-or in corpore. But this was not from the false theoretic stand-point that error in substantia was of the same class as error in corpore, but from practical considerations. Nullity in such cases was not a logical necessity, but an arbitrary fiction, in order to obtain for the purchaser a safeguard, the condictio pretii. In such cases, as, through the condictio pretii, the vendor was indemni- fied from loss, and as between the two theories the only dift'e- rence was, whether the purchase-money was to be obtained by the condictio or by the actio emti, the question was merely pro- cessuel, having no practical consequence, and hence is not discussed on principle by the classical jurists. The rule they laid down was that the purchaser, whether the contract was a nullity or an existing fact, was entitled to recover the price of an article which was deficient in material properties he believed on good grounds and without negligence to belong to it. The old doctrhie of nullity in case of essential misap- prehension was only thrown out speculatively ; was of no practical consequence; and should have no place, as in itself unreasonable, so it is argued, in the Roman common law. By that law, justice is fully done through the rule of warranty, express and implied, that it lays down (Gewalirleistung). The vendor is held for properties which he knew or ought to have known the purchaser believed the goods to possess, and he is obliged, if these properties fail, to return the price p?'0 tanto. — In an article by Brandis,' an authoritative contemporaneous German jurist, the prevailing doctrine in Germany is stated now to be, that error as to the juridical nature of a transaction is always essential, but that error as to a person is only essen- tial when the intention was directed specifically to such person, and error as to properties of a thing (Eigenschaften) is only essential when the contract was made on account of such properties. This view is reiterated by Windscheid, in an edition of his commentary published in 1880, and by Ihering, in an essay published in 1881.^ ITotwithstanding, 1 Kritisohe Vierteljahrsohrift, etc., ' Infra, §§ 1043 et seq. vol. iv. (N. S.) 1881, p. 202. 249 177.] CONTRACTS. [chap. X. therefore, tlie ingenious and plausible criticisms to which it has been subjected, the doctrine that essential error by either of the parties precludes a contract still holds its supremacy in German jurisprudence. Whatever apparent failures of justice may arise from maintaining this view are compensated for by the application of estoppel in eases where a party inequitably attempts to repudiate an engagement into which he negligently led another, and by making him independently liable in such cases in a suit for negligence.' ' Ibid. According to Windsclieid, the error which prevents the inception of a contract is of two kinds ; first, that which exists when the thing done is not intended to be done ; secondly, that which exists when the thing done was intended, but the effect is different from tliat which was intended. Under the fust head falls the use of unintended words, or the doing of unintended acts ; under the second head falls the doing or saying of things which have an effect entirely different from that which was supposed, as is the case where a wrong document is signed by mistake, or where one person is erroneously ad- dressed supixjsing him to be another person. Brinz and Holden, both high authorities, deny that the second of these cases falls under the head of error, insisting that the only error that avoids a contract is that which consists in a variance between the intention and the expression of intention ; when the " Erklarungshandel nioht gewoUt sei." On the other hand, Windsclieid, in subsequent editions, reiterates his old position, though without any addi- tional argument. By Dr. Zitelmann, in a treatise containing 600 pages of ingenious psychological as well as judi- cial exposition (Leipsig, 1B79), the doctrine that error avoids is applied to all cases in which the error goes to the individuation of the object of the con- tract. 250 Dr. Emit Pfersche, in a treatise al- ready noticed, dissents, as we have seen, from the doctrine as to nullity from substantial error. He holds that in all cases of sales the vendor is bound for all the properties of the thing sold which he knew, or ought to have known, that the purchaser sui^posed the thing to possess. This liability, however, only extends to cover the damage which the purchaser might sustain ; though in cases of material mistake, the court may direct the rescinding of the con- tract as an alternative for abatement of the price. He further argues, that a bargain as to a designated object will not be invalidated by the fact that one of the acting parties is in error as to the properties of the object. The prevalent doctrine is contested by d lot a larger number of acres than the lot was estimated at the time to con- tain, and when the price is adjusted at so much per acre, he can recover from the vendee the deficit of price. Jenks V. Fritz, 7 W. & S. 201 ; Fly „. Brooks, 64 Ind. 50. 5 Infra, § 902. 6 Leake, 2d ed. 316 ; Webster v. Cecil, 30 Beav. 62 ; Wycombe R. R. r. Donnington Hospital, L. R. 1 Ch. 268. ' Pollock, 3d ed. 449, citing L. 52 D. (19, 2). CHAP. X.J ERROR AND MISTAKE. [§ 192. party mistaking was not negligent in falling into the mis- take.' Otherwise there is, if not an estoppel, an independent liability for negligence.^ § 191. The cases that have just been stated, are those in which the error was one of mistake not induced by jf there be fraud on the part of the other bargaining party, fraud as to ,,..,. T _£, , quality or In such case, when the thing in the mind oi the quantity one party is different from the thing in the mind of paity'may the other party, there is no consent. But another ^^j^^g^^^'" element is to be considered in case of fraud.' Where sue for a vendor, for instance, fraudulently misstates a fact to the purchaser, it cannot be said that the parties have differ- ent things in their mind. On the contrary, each has the unreal thing in his mind ; the first innocently, the second by a fictitious conception of his own. In such a state of things, not only are we not at liberty to say that there was no com- mon contemplation of the same thing, but we must hold that the party fraudulently exhibiting the unreal thing to the other party, becomes liable for his deception to the other party. If the contract be not rescinded on application of the latter, the former may be compelled to make redress either in an action, to make up the deficiency, or in an action for deceit. In other words, the sale, as between the parties, is not void, but voidable at the purchaser's option.* On the other hand, when purchasers fraudulently obtain goods from a vendor, on an agreement which is on its face a nullity, there being no agree- ment of minds as to the same thing, the contract is not even voidable, so as to give title, even to bona fide third parties. It is true that the party defrauded may elect to hold the other party liable on the bargain, but this is not because there was a voidable contract, but because the party defrauding is estopped by his own conduct from disputing the truth of his assertion." § 192. A settlement of accounts, founded on error, will be ' Infra, § 196. ■" Infra, §§ 282etseq., Pollock (Wald's 2 Infra, § 1043. ed.), 421. » See infra, § 232 et seq. ^ Infra, §§ 234 et xeq. 275 § 193.J CONTRACTS. [chap. X. Error in Corrected pro tanto ;^ and so of an error as to price; and as" to though, as has just been seen, when a lumping price price, may jg ofiercd for a thing, talking it as a mass, this can- be cor- SI.-. 1 reeled not be apportioned in cases where, while the one IT ano. p^j.^y j^gj 1,^ view the whole thing, the other had in view only a part of it.^ § 193. Error in motive is generally not so essential as to prevent a bargain wliich it influences from becom- Error in ' a mi ti motive not ing a valid contract.^ ihe Jtioman law recognizes essential. .• • • i • i i. \ an exception in cases in which a party executes a paper under the mistaken idea that he is compelled to do so ; though this exception does not extend to cases in which the mistake is one of law.^ — In our own law, mistake in motive does not usually avoid. " Care must be taken not to confound a common mistake as to the subject-matter of the sale, or the price, or the terms, which prevent the sale from ever coming into existence by reason of tiie absence of a consensus ad idem, with a mistake made by one of the parties as to a collateral fact, or what may be termed a mistake in motive. If the buyer purchases the very article at the very price and on the very terms intended by iiim and by the vendor, the sale is complete by mutual assent, even though it may be liable to be avoided for fraud, illegality, or otlier cause ; or even though the buyer or seller may be totally mistaken in the motive which induced the assent."^ 1 Stuart V. Sears, 119 Mass. 143; Russell .'. The Church, 65 Penn. St. 9 ; Mounin v. Bernujou, 51 Ala. 196 ; see Wh. on Ev. §§ !i2lj ei seq, 2 Harris o. Pepper.-U, L. R. 5 Eq. 1 ; Webster v. Cecil, 30 Beav. 62 ; supra, §§ 190-1. ' Bispham's Eq. § 191 ; Story's Eq. Jur. § 150; see discussion, supra, § 177. •• L. 5, § 1, D. de act emt. (19, 1) ; L. 3, § 7, D. de cond. causadata (12, 4) ; L. 51, pr. § 1, D. de pact. (11, 14) ; L. 31, D. pec. const. (13, 5) ; 276 Tliibaut, op. cit. 103 ; Koch, ut s-upra, 143. In Jefferys r. Fairs, L. R. 4 C. Q. 448, a party agreed to take a mining lease entitling him to search for and take coal at a settled rent, he sup- posing that a certain vein of coal was to be found under the surface. He was held bound on his lease, tliough it turned out there was no such coal. There was no misrepresentation charged to the lessor. For analogous cases, see infra, §§ 212 et srq. 5 Beuj. on Sales, 3d Am. ed. § 54. CHAP. X.] ERROR AND MISTAKE. [§ 194. § 194. Error as to collateral matters is unessential so long as there is no error as to the thing to which such j-^gj. ^^ ^^ matters are collateral. As an illustration of this collateral or future is given, in the Digest, a case in which it was matters not agreed that to a farm, to be rented or sold, should be added a span of horses, among a number on the farm, but no specilication was given by which the horses could be desig- nated. By what rule was the choice of the horses to be made? According to Labeo, the intention of the vendor is in such case to prevail,^ and the validity of the contract is in no way aft'ected by the mistake of the purchaser as to the horses he was to receive. — In our system, mistake as to mat- ters collateral which are not necessary and essential conditions of the adaptation of the thing for the intended object does not avoid.^ Thus, where specific machines, ordered from the manufacturers, did not possess the qualities which the pur- chasers supposed they did, though without entire failure of adafitation, there being no misrepresentation or warranty by the vendor, it was held that this mistake of the purchasers was no ground for setting aside the contract.^ And it has been stated, as a general rule, that " where each party is equally innocent, and there is no concealment of facts which the other party has a right to know, and no surprise or im- position exists, the mistake or ignorance, whether mutual or unilateral, is treated as laying no foundation for equitable interference."* Even supposing the error be fraudulently promoted by the other side, this does not avoid the contract 1 L. 34, pr. D. de cont. emt. (18, 1). ter." Pollock, 3cl ed. 442, citing Ken- 2 Bispham's Eq. § 191; Kerr on nedy i;. Panama Mail Co., L. R. 2 Q. B. Fraud and Mistake, 408 ; Chanter v. 580. Hopkins, 4 M. & W. 399 ; Prideaux «. a Chanter v. Hopkins, 4 M. & W. Bunnett, 1 C. B. N. S. 613 ; McFerran 399 ; OUivant v. Bayley, 5 a. B. 288 ; V. Taylor, 3 Cranch, 281 ; Henderson Prideaux v. Bunnett, 1 C. B. N. S. V. Dickey, 35 Mo. 120. 613 ; see Scott v. Littledale, 8 E. & B. "In the case of fraud, a fraudulent 815, as criticized in Benj. on Sales, 3d representation of any fact material to Am. ed. § 57. the contract gives a right of rescission ; • Story, Eq. Jur. 12th ed. § 151, cit- but the misapprehension which pre- ing Okill u. Whittaker, 1 De G. & S. vents a valid contract from being 83 ; McAninch v. Laughlin, 13 Penn. formed must go to the root of the mat- St. 371. 277 § 196.] CONTRACTS. [CHAP. X. when tlie error is confined to matters collateral ;^ or when it is a matter of opinion.^ The mistake must be as to the present, not as to the future ; must be as to something immediate, not something remote.^ § 195. In the Roman law the same distinction is applicable to contracts of exchange, an essential error makinsc Contracts . , i • n- of bailment in such cases the bargain a nullity.^ According to subject to Savigny, this obtains also in contracts of hiring; a ml r™** contract, for instance, for hiring silver plate being a nullity should it turn out that the plate was of infe- rior metal. In cases of gifts, a similar distinction is' made. If the donee receives a gilt vessel which the donor believes to be golden, the gift is valid, as the donor suffers no damage from the transaction. If, on the other hand, the owner of a golden vessel gives it away under the impression that it is only gilt, then the gift is void, irrespective of the question whether the donee knew the quality of the metal.'' So as to pawning. If the lender receives in pawn a gilt vessel, which the owner holds to be gold, the lender has a lien on the vessel for his advance.^ This follows from the nature of unilateral contracts, as in this case the inferior security is better than no security at all. § 196. The ground on which the Roman jurists make essen- Negiieent *^^^ error of fact an avoidance is that sucli error is error does sometimes inevitable; " cum facti internretatio pie- not 6XCU,S6 rumque etiam prudentissimos fallat."' But to give this protection there must be no serious laches. It is true that perfect diligence is not required to give relief for mistake; for as there never can be in any matter perfect diligence, there could never be any relief from mistake if perfect diligence were required. Culpa Icvissimn, therefore, will not preclude a party from the protection of courts of equity in cases of this kind.^ It is otherwise, however, where he is chargeable with ' Infra, § 246. " L. 1, § 2, de Pign. act. (13, 7). 2 In/ra, §§ 569 ei seg. 7 Cited Savigny, III. 333. 3 Southwick ,.. Bank, 84 N. Y. 421 ; » Bispliam's Eq. § 191 ; Bell ,-. Gar- in/ra, § 257. diner, 4 M. & Gr. 11 ; Townseiid i . ■> L. 2, de rer. per. (19, 4). Crowdy, 8 C. B. (N. S.) 477 ; Union L. 22, de V. 0. (25, 1). Nat. Bk. u. Sixth Nat. Bk., 43 N. Y. 278 CHAP. X.J ERROR AND MISTAKE. [§ 196. culpa lata, i. e., the lack of that diligence and care which a prudent business man of the same class is accustomed to show under similar circumstances.' Thus, a party who neglects to read a document he signs, cannot have it set aside because it turns out to contain provisions contrary to his intentions f and, as a general rule, " where there has been no misrepresen- tation, and where there is no ambiguity in the terms of the contract, the defendant cannot be allowed to evade the per- formance of it by the simple statement that he has made a mistake."^ Hence, where A. made an offer to B. to take a lease of a specific farm bj' name, stating the farm to contain 250 acres, and where B.'s agent accepted the offer without examin- ing the particulars, it was held that it was no defence to a pro- ceeding to enforce the contract that B.'s ageut intended to lease only 200 acres.* But where a proposal evidently contains a mistake, an acceptor, by snapping at it, will not be per- mitted to take advanta2:e of the mistake.* — So far as con- 452 ; Pardee v. Fish, 60 N. Y. 271 ; Mayer u. N. Y., 63 N. Y. 455 ; Snyder v. Ives, 42 Iowa, 162. See infra, §§ 245, 572, 753. ' This is settled by many rulings in the Roman law : L. 3, § 1 ; L. 6, L. 9, § 2, quod false (27, 6) ; L. 11, § 11, de inter. (11, 1) ; L. 3, pr. ad Sc. Mac. (14, 6) ; L. 15, § 1, de contr. emt. (18, 1) ; L. 14, § 10, L. 55, de aedil. ed. (21, 1). Our own law is to the same effect : Bispham's Eq. § 191 ; Bilbie v. Lumley, 2 East, 469 ; Milnes .,. Duncan, 6 B. & C. 671 ; Beaufort v. Neeld, 12 CI. & F. 248 ; Leuty v. Hillas, 2 De G. & J. 110 ; Person u. Sanger, 1 Wood. & M. 138 ; Diman ;;. R. R., 5 R. I. 130 ; Haggerty V. MoCanna, 25 N. J. Eq. 48 ; Voorhia V. Murphy, 26 N. J. Eq. 434 ; Paulison V. Van Iderstone, 28 N. J. Eq. 306 ; Merchants' Desp. Co. v. Theilbar, 86 111. 71 ; Adams Ex. Co. v. King, 3 III. Ap. 316 ; Lamb v. Harris, 8 Ga. 546 ; Lewis V. Lewis, 5 Oregon, 169. See infra, § 572. That mere negligence does not preclude a party from recover- ing, see infra, § 753, and cf. infra, §§ 245-572. 2 Wh. on Ev. § 1245 ; Kerr on Fraud and Mistake, 407 ; Glenn v. Statler, 42 Iowa, 110 ; Sanger v. Dun, 47 Wis. 615 ; Goetter u. Pickett, 61 Ala. 387 ; supra, § 185. See infra, § 572, as to reading conditions on contracts and tickets. ' Tamplin u. James, L. K. 15 Ch. D. 215— Baggallay, L. J. * McKenzie v. Hesketh, L. R. 7 Ch. D. 675. » Webster v. Cecil, 30 Beav. 62. That a party is presumed to have read a document signed by him, see Andros- coggin Bk. u. Kimball, 10 Gush. 373 ; Lee a. Ins. Co., 3 Gray, 583; Ryan v. Ins. Co., 41 Conn. 168 ; Germania Ins. Co. o. R. R., 72 N. Y. 90; Towner r. Lucas, 13 Grat. 705 ; Woodward v. Fos- ter, 18 Grat. 200; South. Ins. Co. c. Yates, 28 Grat. 585 ; Hartford Ins. Co. V. Gray, 80 111. 28. This is applied to cases of signature by mark in Dorau )'. Mullen, 78 111. 342 ; see Wh. on Ev. § 932. That a signature to a wrong 279 § 198.] CONTRACTS. [CHAP. X. cerns the general questions involved, it may be stated that negligence on the part of a person paying money under a mis- take of fact, is no defence to a suit to recover back the money when the negligence did not prejudice the party sued.' — It is also to be observed, that a party negligently using language that does not express his thoughts, may be estopped, as to parties bona fide acting on his words, from setting up his real meaning.^ § 197. As a general rule, money paid under a mistake of Moneypaid ^'^^^ ™^y ^® recovered back;' though this rule does under mis- not apply, as we will see, to money paid in compro- be recov- mise. Or in mistake of law.* As has just been stated and as will hereafter be more fully seen, mere negli- gence does not in such case preclude a party from recovery.^ It is otherwise as to money paid in mistake of law.' § 198. Error in the view one or both parties may take of the law as bearing on the subject-matter of the pro- iaw°does posed contract does not avoid the contract, or pre- notavoid vent the parties from coming to a common mind contract. _ ^ ^ ~ concerning it. All persons are presumed to know the law, and when this presumption relates to the public law of the land, the presumption is irrebuttable.^ — Judge document does not bind, see supra, § * Infra, §§ 198 et seq., 533. ISf). 6 j„jya, § 753. 1 U. S. V. Nat. Park Bk., 6 Fed. Eep. 6 /„/■,.„_ §§ igg^ 533^ 754. S.52 ; Kingston Bk. u. Elliuge, 40 N. Y. ^ Story's Eq. Jur. 12tli ed. § 112 ; 391 ; Pardee v. Fish, 60 N. Y. 271 ; Wh. on Ev. § 1240 ; Bispham's Eq. Mayer r. New York, 63 N. Y. 455 ; see § 187; Manser's case, 2 Coke, 3 b; Witthaus o. Shack, 57 How. (N. Y.) Stewart o. Stewart, 6 CI. & F. 966; Pr. 310. Infra, § 752. Stokes r. Salomons, 9 Hare, 79 ; Clare 2 Bigelow on Est., 3d ed. 530-44 ; v. Lamb, L. R. 10 C. P. 334 ; Powell v. infra, §§ 202 a, 1043 et seq. Smith, L. R. 14 Eq. 85 ; Kelly v. Solari, 3 Infra, §§ 752 et seq.; and see also 9 U. & W. 54; Eaglesfield c. London- infra, § 520 ; Bell 0. Gardiner, 4 M. & derry, L. R. 4 Ch. D. 693 ; Rogers r. G. 11 ; Lucas v. Worswick, 1 Mood. & Ingham, L. R. 3 Ch. D. 351 ; Hunt v. R. 293 ; Pearson v. Lord, 6 Mass. 84 ; Rousmanier, 1 Peters, 1 ; 8 Wheat. Lazell V. Miller, 15 Mass. 208 ; Waite 174 ; Bank U. S. <.. Daniel, 12 Pet. 32 ; ... Leggett, 8 Cow. 195 ; Burr v. Veeder, Snell ,•. Ins. Co., 98 U. S. 85 ; Freeman 3 Wend. 412 ; Mayor of N. Y. a. Erben, u. Curtis, 51 Me. 140 ; Pinkham r. 38 N. Y. 305 ; Merchants' Bk. r. Mc- dear, 3 N. H. 163 ; Mellish i. Robert- Intyre, 2 Sandf. 431, and cases cited son, 25 Vt. 603 ; Wheaton r. Wheatou, infra, § 752. 9 Conn. 96 ; Shotwell v. Murray, 1 280 CHAP. X.] EREOK AND MISTAKE. [§ 198. Storytells us that "the pi'obable ground for the maxim is that suggested by Lord Ellenboi'ough, that otherwise there is no saying to what extent the excuse of ignorance might be carried;"^ and he adds that, "if, upon the mere ground of ignorance of the law, men were admitted to overhaul or extinguish their most solemn contracts, and especially those which have been executed by a complete performance, there would he much embarrassing litigation in all judicial tri- bunals, and no small danger of injustice from the nature and diflBculty of the proper proofs."* In corroboration of this view may be cited the striking remark of Pascal, that, if ignorance of law excuses, then the more ignorant a man becomes the more immunities he would possess ; and that perfect brutishness, if a man could arrive at it, would invest him with perfect privilege. The only wise man, he argues, would be on thi^ hypothesis the obstinately ignorant ; the only knowledge that it would be desirable to obtain in per- fection would be the knowledge not to know.^ — -By Mr. Aus- tin, the reason of the rule is found in the fact " that, if ignor- ance of law were admitted as ground for exemption, the courts would be involved in questions which it would be scarcely possible to solve, and which would render the admin- istration of justice next to impi-acticable."' — But whatever Johns. Ch. 572 ; Storvs v. Barker, 6 Dougal, 2 Cal. 586 ; Grammage v. Moore, Johns. Ch. 169 ; Champlin «. Laytin, 42 Tex. 170. That an action for money 18 Wend. 407 ; Clarke v. Dutcher, 9 had and received does not lie in such Cow. 674 ; Hall c. Reed, 2 Barb. Ch. cases, see infra, § 754. See generally 501 ; Hampton v. Nicholson, 8 C. E. to same effect, Elliott v. Swartwout, 10 Green, 427 ; Ege v. Koonts, 3 Barr, Pet. 137 ; Norton v. Marden, 15 Me. 109 ; Meuges v. Oyster, 4 W. & S. 20 ; 45 ; Hill v. Green, 4 Pick. 114 ; Clark Good a. Herr, 7 W. & S. 353 ; McAn- .;. Dutcher, 9 Cow. 674; Ahell u. Doug- inch o. Laughlin, 13 Penn. St. 371; lass, 4 Denio, 305 ; Robinson u. Charles- Carpenter V. Jones, 44 Md. 625 ; Goltra ton, 2 Rich. 314. V. Sanasank, 53 111. 456; Glenn u. i Eq. Jur. 12th ed. § 111. Statler, 42 Iowa, 107 ; Lee v. Stuart, 2 2 Citing Bilbie v. Lumley, 2 East, 469. Leigh, 76 ; McMurray v. St. Louis Co., ^ Citing Lyon v. Richmond, 2 Johns. 33 Mo. 377 ; Hubbard u. Martin, • 8 Ch. 51. Yerg. 498 ; Jones v. Watkins, 1 Stew. » See 4th Prov. letter, cited at large 81 ; Dill u. Shahan, 25 Ala. 694 ; in Wh. on Neg. § 413. Gwynn v. Hamilton, 29 Ala. 233 ; s ^ugt. Leot. Jur. 3d ed. i. 498. As Lyon V. Sanders, 23 Miss. 530 ; Dailey exceptional cases may be mentioned V. Jessup, 72 Mo. 144 ; Smith u. Mc- Jones u. Munroe, 32 Ga. 181, where it 281 § 198.1 CONTRACTS. [chap. X. may be the reasons of the maxim, it is a settled principle in our own as well as in all other jurisprudences. Hence money paid under mistake of law cannot be recovered back either in law or equity ;^ though it is otherwise as to money paid under a mistake of foreign law.^ Mistake, also, as to the legal meaning of a document is no defence to an action for its enforcement.^ The fact, therefore, that the legal import of a written document was differently understood by the parties, one of whom eventually turned out to have given it a wrong construction, does not avoid it, since, if it did, few valid con- tracts could be made.* And if the parties disagree in their was held that ignorance, based on a decision of the State Supreme Court, afterwards overruled, was a defence ; Harney u. Charles, 45 Mo. 157, where the plaintiff was helil not to be affected by ignorance tlia't a statute was uncon- stitutional which was ultimately de- cided to be so. Between error in fact and error in law, Savigny notices this distinction, that error in fact must be shown as a substantive fact, while error in law appears from the circum- stances of the case, and can only be made excusatory on proof of facts (e. g., opinions of counsel, etc.) showing that it was not the result of negligence. The two classes of error, therefore, while governed by the same substantive principle, are subject to different rules in respect to the burden of proof. And Savigny goes still further, maintaining that with errors in law, not merely the innocence but the existence of the error require a higher degree of proof than is the case with errors of fact. 1 Bispham's Eq. § 189 ; Story's Eq. Jur. 12th ed. § 112 ; Kerr on Fraud and Mistake, 40 ; Gibbons !'. Caunt, 4 Ves. 849 ; Naylor < . Winch, 1 Sim. & St. 555 ; Stevens u. Lynch, 12 East, 38 ; Perrott u. Perrott, 14 East, 429 Stewart v. Stewart, 6 CI. & F. 966 Rogers v. Ingham, L. R. 3 Ch. D. 351 282 Eaglesfield v. Londonderry, L. R. 4 C. D. 693 ; Bank U. S. v. Daniel, 12 Pet. 32 ; Lamborn i . Commis., 97 U. S. 181 ; Freeman v. Curtis, 51 Me. 140 ; Pink- ham 1. Gear, 3 N. H. 163 ; Haven v. Foster, 9 Pick. 112 ; Northrop v. Graves, 19 Conn. 548 ; Clarke v. Butcher, 9 Cow. 674; Ege v. Koontz, 3 Barr, 102; Real Est. Inst. o. Linder, 74 Penn. St. 371. 2 Haven v. Foster, 9 Pick. 112 ; Wh. on Ev. § 288. ' Story's Eq. Jur. 12th ed. § 113 Stockley o. Stockley, 1 Ves. & B. 23 Powell ('. Smith, L. R. 14 Eq. 85 Mildmay v. Hungerford, 7 Vern. 243 Shotwell f. Murray, 1 Johns, t'li. 512 Lyon u. Richmond, 2 Johns. Ch. 51 Storrs !'. Barker, 6 Johns. Ch. 169 Lanning u. Carpenter, 48 N. Y. 408 Garwood v. Eldridge, 1 Green Ch. 145 Moorman v. Collier, 32 Iowa, 138 Montgomery v. Shockey, 37 Iowa, 107 Martin o. Hamlin, 18 Mich. 354. As to fraud in misstatement of legal mean- ing of document, see infra, § 259. That a party is presumed to know what he signs, see supra, § 196. " Powell V. Smith, L. R. 14 Eq. 85 ; Sawyer v. Hovey, 3 Allen, 331 ; Pitcher V. Hennessy, 48 N. Y. 415 ; Phillip u. Gallant, 62 N. Y. 256 ; Strohecker v. Farmers' Bk., 6 Barr, 41. See as to limitations, infra, § 199. CHAP. X.] ERROR AND MISTAKE. [§ 198. construction of the contract, in a matter not going to its essence, neither of them communicating to the other his dis- tinctive construction, each is bound by the construction ulti- mately imposed upon it by the courts; although equity may relieve in cases where there was a bona fide non-negligent mis- take of rights under an ambiguous document.' And a com- promise of litigated rights, where there is no fraud, will not be subsequently disturbed by the courts, though it turn out that the right surrendered by the party subsequently com- plaining is valid, and is held to be so by the court to whom the appeal for the revision of the compromise is niade.^ The mere fact that one of the parties has misapprehended his legal rights will not by itself shake such a compromise,^ though it is otherwise with a gratuitous surrender of unquestionable rights under a mistaken view of the application of the law to a par- 1 Ibid. ; infra, §§ 199, 654. In Hunt V. Rousmaniere, 8 Wheat. 174, as stated by .Judge Story (Eq. Jur. 12th ed. § 114), " npou the loan of money, for which security was to be given, the parties deliberately took, after consul- tation with counsel, a letter of attorney, with a power to sell the property (ships) in case of non-payment of the money, instead of a mortgage upon the property itself, upon the mistake of law that the security by the former instrument would, in case of death or other accident, bind the property to the same extent as a mortgage. The debtor died, and his estate being in- solvent, a bill in equity was brought by the creditor against the adminis- trators to reform the instrument, or to give him a priority by way of lien on the property, in exclusion of the gene- ral creditors. The court finally, after the most deliberate examination of the case at three successive stages of the cause, denied relief upon the ground that the agreement was for a particular security selected by the parties, and not for security generally ; and that the court were asked to substitute another security for that selected by the parties, not upon any mistake of fact, but upon a mistake of law, when such security was not within the scope of their agreement." S. C. 1 Pet. S. C. 1, 13, 14 ; 2 Mason, 342 ; 3 Mason, 294. 2 Infra, § 533 ; Bispham's Eq. § 189 ; Kerr on Fraud and Mist. 403 ; Stewart c. Stewart, 6 CI. & F. 911 ; Rogers c. Ingham, L. R. 3 Ch. D. 351 ; Clifton v. Cockburn, 3 My. & K. 76 ; Freeman v. Curtis, 51 Me. 140 ; Holcomb v. Stimp- son, 8 Vt. 141 ; Good v. Herr, 7 W. & S. 253 ; Cumberland Co. u. Sherman, 20 Md. 117 ; Stover u. Mitchell, 45 111 213; Trigg v. Reed, 5 Humph. 529 Brandon v. Medley, 1 Jones's Eq. 313 Durham u. Wadlingtou, 2 Strob. Eq, 258; Morris u. Munroe, 30 Ga. 630 Haden ;;. Ware, 15 Ala. 149 ; Bell Laurence, 51 Ala. 160 ; Beall u. Mo- Gehee, 57 Ala. 438. That forbearance is a good consideration, see infra, J 532 ; and so of compromise of doubtful claims, infra, | 533 ; and so of giving up liti- gated document. Infra, § 534. ^ Union Bank v. Geary, 5 Pet. 99 ; infra, § 533. 283 § 199.] CONTRACTS. [CHAP. X. ticular state of facts.' — The whole law of compromise rests on this basis. It is greatly for the good of society that litigated questions should be amicably settled by reciprocal surrenders of rights; for not only in this way is the peace of families and of the community promoted, and business relieved from the paralysis of protracted contests, but the courts are released from a burden of litigation under which they would be crushed. Yet there are few compromises in which one of the parties at least cannot maintain that he acted in ignorance of the law. A point he considered doubtful had to be decided one way or the other; but at the time of the compromise he was ignorant of what the decision would be. If this ignor- ance would set aside a compromise, there is scarcely a com- promise that would not be set aside.^ § 199. It has been already noticed that error on the ques- Erroriu tion, whether a particular case is subject to a par- euhsump- ticular law, is, in this relation, a question of fact, tjon of facts m . one of fact not of law. The subsuraption, as the process of classification is called by the Roman jurists, may sometimes be so simple that it may be difficult to see how it could be induced by error. On the other hand, cases con- stantly occur which are so complicated that counsel of emi- nence and skill may widely differ as to the particular rule of law under which they fall. It would, so argues Savigny, be great injustice to charge those experts, whose opinion in such cases is ultimately disapproved, not only with mistake, but with negligence. He cites to this effect a remarkable ruling in the Roman law, in a case^ in which eminent jurists, through various subsumptions of the facts (concerning which there was no dispute), took opposing views. Are we to hold the view which is finally discarded to be imputable to negligence? The Roman jurists did not so hold, and in the case before us, 1 Infra, §§ 199, 533 ; Saxon Life Ass. 2 Story's Eq. Jur. 12th ed. § 131 ; Soo. in re, 2 J. & H. 408 ; McCarthy v. citing Cann v. Cann, 1 P. Wil. 737 ; Decaix, 2 Rus. & M. 614 ; Naylor v. Naylor u. Winch, 1 Sim. & St. 555 ; Winch, 1 Sim. & St. 555 ; Dunnage v. Pickering v. Pickering, 2 Beav. 31 ; White, 1 Swanst. 137 ; Whelen's App., see fully infra, § 533. 70 Penn. St. 410 ; Jones u. Munroe, ' L. 38, de cond. indeb. 32 Ga. 181. 284 CHAP. X.] ERROR AND MISTAKE. [§ 199. Africaiius, while holding strictly to the principle that error of law is no defence where the error goes to a legal principle, maintains that it may be a defence when it goes to the ques- tion whether, in a doubtful case, a complicated system of facts falls under a particular rule.' In our own practice, this dis- tinction, though not accepted in terms, is practically recog- nized. When the question is whether a particular combina- tion of facts falls within a particular legal rule, then error in this respect may entitle a party to relief in a case where, if the question were purely one of fact, equity would interfere.^ This distinction applies to the construction of dociuments ;' and when an agreement is so framed as not to correctly ex- press the intention of the parties, equity will not be precluded from relieving by the fact that the mistake was one of law.^ Judge Story^ gives as an illustration of the exception just 1 Savigny, op. cit. 340. 2 Story's Eq. 12th ed. §§ 138 a ««se?.,- Evans, note to 2 Peth. Obi. 395 ; Jones V. Clifford, L. R. 3 C. D. 779 ; Kelly v. Solari, 9 M. & W. 54 ; Cooper v. Phibbs, L. R. 2 H. L. C. 170 ; Snell v. Ins. Co., 98 U. S. 85 ; Oliver v. Ins. Co., 2 Curt. C. C. 277 ; Freeman v. Curtis, 51 Me. 140; Howard ... Puffer, 23 Vt. 365; McDaniels v. Bank, 29 Vt. 230 ; War- der r. Tucker, 7 Mass. 449 ; Canedy v. Marcy, 13 Gray, 373 ; Molony v. Rourke, 100 Mass. 190 ; Stockbridge Iron Co. v. Hudson Iron Co., 107 Mass. 290 ; North- rop u. Graves, 19 Conn. 548 ; Blake- man V. Blakeman, 39 Conn. 320 ; Bank of Rochester v. Emerson, 10 Paige, 359 ; Champlain u, Laytin, 18 Wend. 467 ; Mayor of N. Y. c^. Erben, 38 N. Y. 305; McMillan v. Fish, 29 N. J. Eq. 610 ; Logan v. Matthews, 6 Barr, 417 ; Gross V. Leber, 47 Penn. St. 520 ; Huss u. Morris, 63 Penn. St. 367 ; Russell's App., 75 Penn. St. 269 ; Gebb v. Rose, 40 Md. 387 ; Bigelow o. Barr, 4 Ohio, 358; Williams «. Champion, 6 Ohio, 169 ; McNaughton v. Partridge, 11 Ohio, 223; Clayton v. Freet, 10 Oh. St. 544; Golbia V. Sanasack, 53 111. 456 ; Baker u. Massey, 50 Iowa, 399 ; Ledyard v. Phillips, 32 Mich. 13; Fitzgerald v. Peck, 4 Litt. 125 ; Underwood v. Brock- man, 4 Dana, 309 ; Gratz v. Redd, 4 B. Monr. 178 ; Mason v. Pelletier, 82 N. C. 40 ; Garner u. Garner, 1 Dessaus. 437 ; Lowndes v. Chisolm, 2 McCord. Ch. 455 ; Hopkins v. Mazyck, 1 Hill, Ch. (S. C.) 242; Wyche v. Greene, 16 Ga. 49 ; Newell u. Stiles, 21 Ga. 118 ; Haden v Ware, 15 Ala. 149 ; Larking V. Biddle, 21 Ala. 252 ; Dailey v. Jes- sup, 72 Mo. 144 ; State v. Paup, 8 Eng. (Ark.) 129; Moreland ,.. Atchison, 19 Tex. 303 ; Harrell v. De Normandie, 26 Tex. 120. ' Kennard v. George, 44 N. H. 440 ; Molony v. Rourke, 100 Mass. 190 ; Clay- ton V. Freet, 10 Oh. St. 544. See, how- ever, distinction taken, supra, § 198, infra, § 259. * Oliver u. Ins. Co., 2 Curtis, C. C. 277 ; Stockbridge Iron Co. v. Hudson Iron Co., 107 Mass. 290; McKay v. Simpson, 6 Ired. Eq. 452 ; infra, § 205. 6 Eq. Jur. 12th ed. § 122, following Mr. .Jeremy, Eq. Juris, pt. 2, ch. 2, p. 366 ; Leonard v. Leonard, 2 B. & B. 182. 285 § 199.] CONTRACTS. [chap. X. stated, the case of an English eldest son, who is heir-at-law of his ancestor's fee simple estate, and who, in ignorance of the fact, agrees to divide with a younger brother. This agree- ment, it is held, would be void. Judge Story argues that the case (supposing that there was no fraud or imposition) " would exhibit such a gross mistake of rights, as would lead to the conclusion of such great mental imbecility, or surprise, or blind and credulous confidence, on the part of the eldest son, as might fairly entitle him to the protection of a court of equity upon general principles. Indeed, when the party acts upon the misapprehension that he has no title at all to the property, it seems to involve in some measure a mistake of fad ; that IS, of the fact of oionership^ arising from a mistake of law. A party can hardly be said to intend to part with a right or title, of whose existence he is wholly ignorant; and if he does not so intend, a court of equity will, in ordinary cases, relieve him from the legal effects of instruments which surrender such unsuspected right or title." This is virtually the position of the Roman law, that the question of the subsump- tion of a fact under a law is question not of law but of fact.' — ' To the same effect is 2 Pow. on Cont. 19G, citing Lansdown c. Lans- down, Mosley, 364; 2 Jac. & W. 205. Tliis is approved by Gibson, C. J., in Frewall v. Fitch, 5 Whart. 331, cited infra. In Lansdown o. Lansdown, ut .•^upra, the plaintiff, who was the heir- at-laiT to liis grandfather's estate, as eldest son to the eldest son, having differed on the question who was the heir to a deceased younger brother of the uncle, agreed to refer it to a neigh- bor, who was a sehoolnia-ster, who re- ported that the title was in the uncle. The nephew, on thi.s report, agreed to divide tlie property, which was subse- quently done. Lord Chancellor King held that the land and conveyances were "obtained by mistake and misre- presentation of the law." Judge Story thinks " there is great difficulty in sustaining it (the decision) in point of 286 principle or authority," and he pro- perly pronounces untenable the ground of Lord Chancellor King, that the maxim that ignorance of the law does not excuse, does not apply to civil cases. In Hunt ( . Rousmaniere, 8 Whnat. 214, 215, the case is sought to be distinguished on the ground that the plaintiff did not know he was the eldest son, or that he was imposed upon. This meets the view of the text, though on the reasoning of Lord King, if the case can be sustained at all, it must be on the ground that the plain- tiff acted under a mistake of fact as to the family juiority of an eldest son over a living uncle, so far as concerns the latter's younger brother. In other words, the plaintiff may have regarded the uncle, as to junior members, the hi'ad of the family, which may be re- garded as a question of fact. But CHAP. X.] ERROR AND MISTAKE. [§ 199. One of the learned editors of Judge Story's work on Equity Jurisprudence, argues that " the idea of there existing in this class of cases (e. g., cases of mistake in the application of the law to a particular group of facts) a mistake of fact, as well as of law, might perhaps apply to all cases of mistake of law. . . . The mistake of one's title, when that depends upon a pure question of law, is a mistake of law, and nothing else." But what litigated case is there as to which we can say in ad- vance that it depends upon a pure questicm of law ? After the facts are settled, and the testimony in the case closed, this may he said in cases where the facts are not proved in ambig- uous terms ; hut before the settling of the facts and the clos- ing of the case there are always contingencies possible that may take a case out of one category of law and place it in another. Even in the case already cited, where a supposed grandson compromised a litigation with an uncle, on the sup- position that the uncle, a younger brother of the grandson's father, was entitled to take as heir-at-law of a third brother deceased, the question was not a pure question of law. Who could tell, especially under marriage laws so complicated as those of England, that there might not be charged against the particular marriage under which the plaintitf claimed, some flaw that might raise a question of fact ? Who can tell Lansdown c. Lansdown, so far as con- pened." "This," is the comment of cerns the reason given by the court, Judge Story, "indicates a reluctance is disapproved by Lord Cottenham, in to declare that all cases of injustice, Stewart v. Stewart, 6 CI. & F. 966. In produced by the mere mistake of law. Crosier v. Acer, 7 Paige, 143, Chancel- are remediless in a court of equity." lor Walworth, in language repeated And Judge Story afterwards says (Eq. with apparent approval by Judge Story Jur. 12th ed. § 130) : "There may be (Eq. Jur. 12th ed. § 126, noie), says, a solid ground for a distinction between after examining the cases: "If this cases where a party acts or agrees in court can relieve against a mistake in igiMrance of any title in him, or upon law, in any case where the defendant the supposition of a clear title in an- has been guilty of no fraud or unfair other, and cases where there is a doubt practices, which is at least very doubt- or controversy or litigation between ful, it must be in a case in which the parties as to their respective rights, defendant has in reality got nothing In the former cases (as has been already whatever by the mistake, and where suggested) the party seems to labor in the parties can be restored substan- some sort under a mistake of fact as tially to the same situation in which well as of law." they were at the time the mistake hap- 287 § 199.] CONTRACTS. [chap. X. whether there might not be a conveyance from the plaintiff which, by its own force, might raise at least a shadow of a title in some other person ?' Who can say in reference to any particular litigated case, no matter how clearly it may appear to fall under some established principle, that some extraordinary casualty may not occur which will bring the case out of the range of such principle? And if so, a mis- take as to whether a particular case falls within a particular rule is a mistake, which, if common to the parties, will justify the intervention of a court of equity decreeing rectifica- tion.^ Mr. Pollock declares it to be "the true rule, affirmed for the Roman law by Savigny, and in a slightly different form for English law by Lord Westbury,"^ " that ignorance of law, means only ignorance of a general rule of law, not ig- norance of a right depending on questions of mixed law and fact, or on the true construction of a particular instrument."^ Mr. Pollock further says:' "A. and B. make an agreement, and instruct C to put it into legal form. C. does this so as ' Mr. Warren gives an illustration of this in the report of the famous eject- ment case, in " Ten Thousand a Year," in which a deed of confirmation unex- pectedly turns up, and that deed is as unexpectedly excluded on proof of an interlineation. 2 "Where the ofSoers of a public or municipal corporation act officially, and under an innocent mistake of the law, in which the other contracting party equally participated with equal opportunities of knowledge, neither party at the time looking to personal liability, the officers are not in any case liable, nor is the corporation lia- ble." Dillon Munic. Cor. § 176 ; adopted in Humphrey v. Jones, 71 Mo. 66. In Freval v. Fitch, 5 Whart. 332, Ch. J. Gibson said : " It is insisted, however, that a bargain can be set aside only for a misconception of fact, and not of law with which every one is bound to be acqiiainted. That position is disproved by Lansdown v. Lansdown, Mosley, 288 364 ; in whicli a deed executed on the mistaken advice of a school-master, in regard to a point of law, was set aside and the party ordered to convpy. This principle is not peculiar to equity ; for being of the essence of every contract, it is equally enforced at law whenever the court can look at the considera- tion, and when a chancellor has not ex- clusive jurisdiction." See supra, § 186. It was consequently held that where a non-negotiable note was purchased on a misrepresentation of the vendor, how- ever innocent, as to the legal liability of the vendor, the vendor would be liable to refund the money paid in an action for money had and received. » Cooper -'. Phibbs, L. R. 2 H. L. p. 170 ; followed by Beauchamp v. Winn, L. R. 6 H. L. 223 ; Pollock, 3d ed. 409. * That this is so as to construction of document, see Wh. on Ev. § 1241 ; Kos- tenbader u. Spotts, 80 Penn. St. 430 ; Brent i>. State, 43 Ala. 297. 5 Pollock, 3d ed. 421. CHAP. X.] ERROR AND MISTAKE. [§ 199. uot to express the real intention, either by misapprehension of the instructions or by ignorance of law. It is obvious that relief should be given in either case. In neither is there any reason for holding the parties to a contract they did not really make." But in place of terms the parties selected as the expression of their views, other terms giving a different sense cannot be substituted. In other words, it may be shown that the document is not one the parties intended to execute, and the meaning of ambiguous terms may be cleared ; but unam- biguous terms cannot be stricken out and others substituted by parol.^ — According to Mr. Leake,^ "where the parties are under a common mistake of law as to the application of their contract, it can be applied only according to their intention, and not otherwise."^ Hence we may hold that a promise to pay, based on a mistaken belief that certaia facts fall under an acknowledged legal rule, such mistake going to the essence of the contract, is not binding.^— As a rule, it may be asserted that ignorance of a right which is a mixed question of law and fact, is to be treated as ignorance of a fact.' — The Prussian code follows the distinctions in the text. It declares that ^ Wh. on Et. §§ 920 et seq. ; infra, §§ taken subsumption of facts. And so in 205, 662. McCarthy r. Decaix, 2 Eus. & M. 614, 2 2d ed. 347. whicli was the case of a foreigner, who 5 Citing Rodeni). Small Arms Co., 46 after being divorced in Denmark from L. J. Q. B. 213. a wife he married in England, and ^ May V. Coffin, 4 Mass. 346; War- who after the wife's death renounced, in der y. Tucker, 7 Mass. 452; Freeman ignorance of the law, his marital rights, V. Boynton, 7 Mass. 488 ; Haven u. it was held that this did not preclude I'oster, 9 Pick. 112 ; Molony i'. Rourke, him from coming forward in England 100 Mass. 190 ; and see Stoddard v. to assert these rights as his wife's ad- Hart, 23 N. Y. 556 ; Lanning v. Car- ministrator. penter, 48 N. Y. 408 ; Pitcher v. Hen- ^ Bingham u. Bingham, 1 Ves. Sr. nessy, 48 N. Y. 415 ; ZoUman v. Moore, 126 ; Broughton v. Hutt, 3 DeG. & J. 21 Grat. 313 ; Rochester o. Bank, 13 501 ; Cooper v. Phibbs, L. R. 2 H. L. Wis. 432. 149 ; Hurd v. Hall, 12 Wis. 112. In In Kelly v. Solari, 9 M. & W. 54, a Fane v. Fane, L. R. 20 Eq. 698, a re- life insurance policy having lapsed in settlement of family estates was made consequence of nonpayment of pre- by the father, tenant for life, and the mium, and the officers of the company son, tenant in tail in remainder, the par- having, in forgetfuluess of this fact, ties erroneously supposing that a charge paid the insurance, it was held that the for portions was within the power of tlie money so paid could be recovered back father to release. The resettlement by the company. Here there was a mis- was set aside, as founded on mistake. VOL. I.— 19 289 § 200.] CONTRACTS. [CHAP. X. ignorance of a published law sliall be no defence; but it leaves the question open as to the subsuniption of particular facts under a law ignorance of which is not set up.' It declares that error in corpore prevents that consent which is necessary to a contract f but it holds that this does not apply to other cases of error, e. g., errors of motive. — The French code, while apparently holding that all error avoids contracts,^ virtually limits this to error in corporal Error in motive, which goes to the worth and usefulness of an article bought or hired, falls under the general head of lesion, and is not, to a person capax negolii, a defence, though when induced by fraud is ground for rescinding or for damages. Error of law is in all cases put on the same footing as error of fact. — In conclusion, we must remember that if there can be no relief for mistakes of fact involving error of law, there can be no mistake of fact for which relief can be granted, since there is no mis- take of fact in which some mistake of law is not involved. A mistake as to identity of a person, for instance, involves a mistake of law as to his legal relations; a mistake as to the substance of a thing would be of no moment did it not involve a mistake as to the thing's legal incidents.^ The term " law," in the rule that mistake of law is no excuse, is to be restricted to jui'idical law as a rule of action, and is not to be extended to law as a compound of law and fact. There are therefore two extremes, in this vexed issue, to be avoided. On the one side, when we say that mistake of law does not give ground for relief, we must restrict ourselves to such mistake of law as does not involve a mistake of fact. On the other side, when we say that mistake of fact gives ground for relief, we must remember that such mistake must go to some past or existing thing, and not relate to mere opinion of the law. When it does go to a past or existing thing, it does not cease to be ground for relief because it involves a mistake of law. • Einl. § 12. shows that as errors of fact are to he ' L. 4, §§ 75-82. regarded, (1) errors as to the nature of ' Art. 1109. a transaction ; (2) errors as to property ' Art. 1110. though involving title ; and (3) errors 5 This is exhibited with mncli clear- as to identity or incidents of persons, ness in Zitelmann's treatise on Irrthum though these also involve legal rights. (Leipzig, 1879), pp. 433-602. He 290 CHAP. X.J ERROR AND MISTAKE. [§ 201. § 200. If a non-specialist makes a bargain with a specialist as to a topic within the range of the latter's duties, the same knowledge of the law will not be imputed „ . , . Special to both. A lawyer, for instance, making a bargain knowledge with a client, will be chargeable with a special know- eumed'^in ledge of the law bearing on the topic of the bargain, ^i^^^^*^' while the client would be chargeable with no such special knowledge ; and a skilful engineer, contracting with a person ignorant of engineering, would be chargeable with a knowledge of the law bearing on engineering when no such knowledge would be imputable to the other party. So when the question comes up whether a party to a contract is liable for not knowing what it was his duty to know, his liability is measured by his duty. If he claimed to be a specialist, he should have known what a specialist of that class ought to know ; if he claimed only to be a non-specialist, it was neces. sary for him only to have had the knowledge usual to non- specialists.^ When the question of culpa in contrahendo arises, this distinction is of peculiar importance.^ § 201. But whatever we may think as to the foregoing dis- tinctions, it is plain that if one party avails himself ^^^.^^ „ of another's ignorance of law to impose upon him, law when ^,,_,, . ,, -If. ,. . acted on the latter may invoke the aid ot a court ot equity frauduient- for his protection.' This has been held to be the case '^ avoids. with respect to fraudulent representations by a specialist as to the legal effect of a document.^ And there is strong authority to the effect that in such case not only will a contract thus induced be rescinded by a court of equity, but that a court of law will refuse to sustain a suit on such a contract.' 1 Wh. on Neg. §§ 414, 510, 520 ; 579 ; Dagas v. Donaldsonville, 33 La. Wh. on Ev. § 1241. An. 671. 2 Infra, § 1043. i Edwards v. Brown, 1 C. & J. 312 ; ^ Infra, §§ 232 et seg.; Cooper t'. Hirschfield w. E. R., L. R. 2Q. B. D. 1 ; Phibbs, L. R. 2 H. L. C. 149 ; Wheeler see distinction stated, infra, § 259. V. Smith, 9 How. 55 ; Jordon u. Ste- ' Story on Cent. § 526 ; 2 Evans's vens, 51 Me. 78; Freeman v. Curtis, Pothier on Oblig. 409, 437; May v. 51 Me. 140; Woodbury Bank t. Ins. Coffin, 4 Mass. 346 ; Haven k. Foster, 9 Co., 31 Conn. 517 ; Whelen's App. 70 Pick. 112. As to signatures fraudu- Penn. St. 425 ; Tyson v. Tyson, 31 Md. lently induced, see supra, § 185.. 134; Met. Bank o. Godfrey, 23 111. 291 § 202.] CONTRACTS. [chap. X. IV. BEROR OF EXPRESSION. § 202. Error of expression (erroi* in nomine) is unessential when there is no error as to the thina; referred to. Error of ^ = expression This is a settled principle of the Roman law;' and uuessentiiil , , . , i t i i j i the same rule is there applicable to an erroneous de- signation in a record.- In our own jurisprudence we have illustrations of this rule in the numerous cases in which parol evidence is admissible to solve latent ambiguities. What the parties mean is to be carried into eft'ect, no matter what are the words they use.' Hence, while as to strangers, parol evidence is not admissible to vary documents, they are open, as between the parties,* to parol explanations." Parol evi- dence, also, is admissible to show that a document was not executed, or was only conditional, or that it was conditioned on a non-performed contingency ;" want of due delivery, or delivery as an escrow, as well as fraud and duress, may be proved by parol.' A designation of property may, also, when the obscurity is latent, and the error one only of expression, be corrected by parol.* The name is mutable and immate- rial ; it is the thing intended alone that is immutable and material, when the operation of a contract is to be considered.' 1 L. 9, § 1, D. cent. emt. (IS, 1), L. 32, D. de verb. obi. (45-1), supra, § 174. 2 L. 36, 38, D. de cont. emt. (18, 1) ; L. 14, pr. D. de in diem addict. (18, 2) ; L. 46, D. loc. cond. (19,2). ' Supra, §§ 174 et seq. ; infra, §§ 205 ; CUO-l ; Wh. on Ev. §§ 992 etseq., 942; Atty. Gen. ,.. Brazenose Coll., 2 CI. & F. 295 ; Atty. Gen. .■. Drum- mond, 1 Dr. & W. 353 ; Stockbridge Co. V. Hudson Co., 102 Mass. 48 Chester Emery Co. ('. Lucas, 112 Mass 424; Fitz ,.'. Comey, 118 Mass. 100 Drew r. Swift, 46 N. Y. 204 ; Huss „ Morris, 63 Penn. St. 372; Elliott <- Harton, 28 Grat. 766 ; Edwards v. Tipton, 77 N. C. 222 ; Rigstee v. Trees, 21 Ind. 227; Talley ,-. Courtney, 1 Heisk. 715; Russell r. Mixer, 42 Cal. 292 475 ; Altschul i . San Francisco, 43 Cal. 171 ; and other cases cited, Wh. Cr. L. § 942. ' Wh. on Ev. §§ 920etsrg.; infra, §§ 661-2. s Wh. on Ev. § 926. 6 Wh. on Ev. §§ 927 et seq. ' Infra, § 679. 8 Wh. on Ev. § 942 ; Atkinson v. Cummins, 9 How. 479 ; Glass v. Hul- bert, 102 Mass. 34; Bartlett •,. Gas Co., 117 Mass. 533 ; Gump's Appeal, 65 Penn. St. 476 ; Groff . . Rohrer, 35 Md. 327 ; Keith v. Ins. Co., 52 111. 518 ; Edwards v. Tipton, 77 N. C. 222 ; Mc- Pike r, Allman, 53 Mo. 551 ; Hatha- way I'. Brady, 23 Cal. 121 ; see supra, §174. s Snpra, § 174. Infra, §§ 803-4. L. 4, iir. deleg. 1 (30 uu.). CHAP. X.] ERKOK AND MISTAKE. [§ 202. Within the same limits a designation of an individual (demon- stratio) can be corrected by parol, so as to bring out the person intended in the document.' And parol evidence is admissible to show that a grantor executed a deed by other than his real name ;^ that persons named as beneficiaries were not those really intended f that the real buyer or seller in a sale were not those which the memoranda indicated ;* that an undisclosed principal is the real party in a transaction in which the agent is the only ostensible person f though parol evidence is inadmissible to discharge a principal by showing that he was only agent ;^ and that as to third parties, one was principal and the other surety.^ — Parol evidence is admis- sible to prove the oral terms of a contract that is partly oral and partly written ;^ to prove an oral extension of a contract f to show that a conveyance in fee is in trust, or is a mortgage,'" or is subject to a resulting trust ;" and to explain or modify " Infra, §§ 601, 661, 803-4 ; Wh. on Agency, §§ 291, 296 ; Wh. on Ev. §§ 949, 953 ; Mich. State Bk. v. Peck, 28 Vt. 200 ; Scanlan u. Wright, 13 Pick. 523 ; Peabody v. Brown, 10 Gray, 4fi ; Henderson v. Hackney, 23 Ga. 383 ; Tuggle V. McMath, 38 Ga. 648 ; West- holz V. Eetaud, 18 La. An. 285 ; Dun- ham V. Chatham, 21 Tex. 231. 2 Nixon V. Cobleigh, 52 111. 387 ; Aultman v. Richardson, 7 Neb. 1 . ' Atty. Gen. v. Drummond, 1 Dr. & W. 367; Langlois v. Crawford, 59 Mo. 456 ; and cases cited infra, § 803. ' Wh. on Agency, §§ 719 et seq. ; Newell V. Radford, L. R. 3 C. P. 52 ; and infra, §§ 802-3 et seq. 5 Garrett v. Handley, 4 B. & C. 664 Higgins V. Senior, 8 M. & W. 834 Fowler v. HoUins, L. R. 7 Q. B. 616 Button V. Bullock, L. R. 9 Q. B. 572 Nat. lus. Co. V. Allen, 116 Mass. 398 Coleman :,. Bank, 53 N. Y. 393 ; Oel- richs V. Ford, 21 Md. 489 ; Andertdn v. Shoup, 17 Oh. St. 128 ; Ohio R. R. u. Middleton, 20 111. 629 ; and other cases cited iffl/™, § 803 ; Wh. on Ev. § 951. In McCoUin V. Gilpin, 44 L. T. 914 (1881), an agreement between the T. Com- pany and M. was as follows: "In consideration for the advance of the sum of 500/., paid by the said M. to the said company, we the undersigned, three of the directors of the said com- pany, hereby agree to repay the said sum of 500/ And we do hereby assign to the said M., as secur- ity for the said advance of 500/., the machines and tools. . . .As witness our hands, this 5th day of June, 1878. (Signed) A., B., C, di- rectors ; M." The machines and tools mentioned were the property of the company. In an action by M. against A., B., and C, to recover the 500/., it was held, that parol evidence was ad- missible to show whether it was in- tended that the defendants should be personally liable upon the above agree- ment. s Wh. on Ev. ? 95.1. ' lb. I 952. 8 lb. I 1015, 9 lb. I 1016. 1" lb. li 1031-2. " lb. I 1035. 293 § 202 a. J CONTRACTS. [chap. X. the statement of consideration.' Omitted words, also, will be supplied by extrinsic proof;^ and relief will be granted for mistakes of scriveners. ^ § 202 a. The conclusions above stated may be sustained on Party til© ground of estoppel. " When the mistake is that estopped Qf Q,-,g party alone, it must be borne in mind that from deny- i j ■ ' ingthathis the general rule of law is, that whatever a man's were cor- real intention may be, if he manifests an intention ^'^^^' to another party, so as to induce the latter to act upon it in making a contract, he will be estopped from deny- ins: that the intention as manifested was his real intention."* In other words, supposing that there is no fraud or imposition, a party is estojjped from denying his expressions were correct. A unilateral mistake of expression, therefore, of one party, cannot be set up by him as a ground for rescinding a contract or for resisting his enforcement, when his language was accepted by the other party in its natural sense.' But when the blun- der made by the proposer is obvious, an acceptor will not be permitted, by catching it up, to take an unfair advantage. The defendant, for instance, sent a written memorandum, offer- ing to sell certain property for 1100^., he meaning to have written 1200^., as appeared by a hurried calculation of items made by him on a separate piece of paper which he retained. On receiving the acceptance, he at once saw the error, and noti- fied the other party, who knew the actual value of the prop- erty. Specific performance was refused," and the case is sub- sequently stated by James, L. J., as one "where a person 1 lb. § 1044. man v. Cooke, 2 Ex. 654 ; Doe v. Oliver, ' Daniel's Trusts in re, L. R. 1 Tli. 2 Smith's L. C. 671 ; Cornish r. Abing- D. 375 ; Bird's Trusts in re, L. R. 3 ton, 4 H. & R. 54:) ; Van Toll v. R. R., Ch. D. 214; Greenwood c. Greenwood, 12 C. B. N. S. 75 ; and see supra, §196 ; L. R. 5 Ch. D. 954 ; Redfern ,_. Bryn- Bigelow on Est., 3d ed. 530-544; and ing, L. R. 6 Ch. D. 133; see infra, §§ as to negligence, infra, §§ 1043 et seq. 629 et seq., 634. 6 Ibid., 2 Ch. Cent., 11th Am. ed. 3 Infra, § 205 ; Nowlin f. Pyne, 47 1022-23 ; Wh. on Ev. §§ 108.5-7 ; Iowa, 293. As to ciphers and abbrevi- Zuchtmann v. Roberts, 109 Mass. 53. ations, see infra, § 634 ; as to terms of That false representations may be art, infra, § 630. estoppels, see infra, § 234. * Benj. on Sales, 3d Am. ed. §§ 56, « Webster v. Cecil, 30 Beav. 62. 780, citing Lord Wensleydale in Free- 294 CHAP. X.] ERROR AND MISTAKE. [§ 203. snapped at an offer which he must have perfectly well known to be made by mistake."' § 203. It may be, and often is, that time is inserted in a eon- tract, not for the purpose of binding the parties to Mistake in it arbitrarily and irrevocably, but in order to fix a theexpree- date, in such cases it is admissible to show by parol may be what was the time actually intended.^ And even '^°"'^'^ ® • where no such evidence is adduced, a court of equity will re- fuse to permit a forfeiture of rights to take place in conse- queni'c of want of punctunlity of performance, but will regard a performance at a subsequent date, provided the terms be reasonable, as a fulfilment of the duty.' But it is practicable to make time the essence of a contract, in which case, if it is intentionally so fixed, it cannot be varied by parol, or its obliga- tory force weakened by construction.* — As will be hereafter seen, when no time is fixed for performance, a reasonable time is implied;' when a time is designated, the full limit is to be allowed '(^ a promisor disabling himself maj' make himself liable to suit before day fixed f "forthwith" and similar terras are to be construed according to context;' a dilatory party cannot exact a forfeiture for lapse of time, 'and a nominal date is presumed to be right until the contrary is proved.'" > Tamplin o. James, L. R. 15 Ch. D. ' Wh. on Et. §§ 969, 977, 1015, 1026 ; 221, cited Pollock, 3d ed. 450. And infra, §§ 881 et seq. see supra, § 196, infra, § 754, to the ' /;;//■«, § 882 ; Seton v. Slade, 7 Ves. effect that negligent error does not ne- 265 ; Lennou u. Napper, 2 Sch. & L. cessarily estop. As to fraudulent estop- 684; Parkin u. Thorold, 16 Beav. 59; pel, see infra, § 234, Taylor o. Longworth, 14 Pet. 172 ; A late German commentator (Thon, Barnard v, Lee, 97 Mass. 92 ; and other Rechtsnorm, p. 367), in speaking of the cases cited infra, §§ 882 et seq., and undesigned efficacy of words, says : Wald's Pollock, 444. " It is as it is in fairy tales. Only he * ^n/ra, § 887 ; Seton v. Slade, 7 Ves. who knows the magical word can call 265 ; Parkin u. Thorold, 16 Beav. 59 ; the spirit. If the spirit is to be evoked, Taylor v. Longworth, 14 Pet. 172. the catch-word must be uttered. But ' Infra, § 882. the spirit also appears to one who ^ Infra, § 884. utters the catch-word improvidently.'' ' Infra, § 885 a ; see §§ 606, 712. — I may not intend to bind myself, but ' Infra, § 886. bind myself I do If I utter words by ' Infra, § 890. which another is led to do acts to his i" Infra, § 893. detriment. 295 § 205.] CONTRACTS. [chap. X. § 204. Patent er- ror cannot be correct- I'll by ex- trinsic proof, un- less mutual mistalce be proved. As has been elsewhere said,' a patent ambiguity may be regarded as subjective, i. e., an ambiguity in the writer's own mind expressing itself imperfectly; while a latent ambiguity is objective, i. e., an ambi- guity in the thing described, there being several things answering to the description. So far as con- cerns the patent ambiguity, obvious mistakes will be corrected by the context.^ Blanks may be filled in from the context,' and other formal mistakes made good.^ A seal, also, erroneously attached to a partnership note, may in this way be cancelled.' But when the " words of a document are so defective or ambiguous as to be unmeaning, no evidence can be given to show what the author of the document intended to say,"^ unless it should be proved, as will next be seen, that the words in question were used by a mistake com- mon to both sides, and that by strong and clear proof the real meaning intended by both can be brought out.' V. RECTIFICATION. 205. It is a defence, as between parties with notice, that the transaction expressed has a materially different legal character from that intended. Hence, when a loan was intended, it is admissible, as between the parties to show, in the Roman law, that the words used were meant merely to express a loan, though on their face they express a gifi.^ \Yith us we have innu- merable cases to the eflect that deeds in fee may be shown to Bilateral error as to the nature of the transaction may be cor- rected. 1 Wh. on Ev. § 957. 2 Wilson 1!. Wilson, 5 H, L. C. 4(1; De la Touehe in re, L. R. 10 Eq. 599; Marion v. Faxon, 20 Conn. 4SB. See for other cases infra, §§ 632—4, 661 (■( seq. " Langdon v. Goole, .3 Lev. 21 ; Young V. Smith, L. R. 1 Ex. 180 ; Burnside v. Wayman, 49 Mo. 3.56 ; Exuh. Bk. u. Russell, 50 Mo. 531. As to signing blank paper, see supra, § 185 ; as to fill- ing blanks, see inj'ra, §§ 697-700. ■• Infra, §§ 210, 634 et seq. ; Brown v. Gilman, 13 Mass. 158 ; Mitchell v. Kint- 296 zer, 5 Barr, 216; though see Craw- ford r. Spencer, 8 Cush. 418. 5 Lynara <>. Califer, 64 N. C. 572. See infra, §§ 634, 661 et seq. ^ Steph. Ev. art. 91 (citing Shore v. Wilson, 9 C. & F. 365) ; Wh. on Ev. § 1006; Leake, 2d ed. 320; Saunder- son V. Piper, 5 Bing. N. C. 425 ; and infra, §§ 205, 634, G61. 7 Infra, § 205. ' Savigny, op. oit. § 136, citing L. 3, § 1, de 0. et A. (44, 7). See Hill o. Wilson, L. R. 8 Ch. 888. CHAP. X.j ERROR AND MISTAKE. [§ 205. have been merely conveyances in trust, and that even nego- tiable paper may be shown to be merely accommodation paper, oil wiiich a party indorsing may not be liable to an indorsee with notice.* And generally, while an essential bilateral error as to the nature of a transaction avoids a contract based on it,^ a mutual error of mere verbal expression will be ground for proceedings for rectification. But to give an error as to the character of a contract the eftect of thus superseding it, the error must be common to both parties. It is not want of consent that vacates, as when the parties difier as to essential features of the contract. Here the parties do not diii'er. They agree, but they agree to something different from what the written document expresses. And courts of equity, as between the parties, will refuse to permit a document to be enforced when there is this common mistake of expression, or will direct it, if this be asked, to be rectified.' And a mistake of fact, in signing a wrong document, may be ground for relief.^ 1 See Wh. on Er. §§ 1031 et seq., for cases. 2 Cox u. Prentice, 3 M. & S. 344; Miles u. Stevens, 3 Barr, 21 ; supra, § 177. ». Sug. v. & P. Sth Am. ed. 262; Leake, 2d ed. 322; Kerr, Fraud and Mistake, 423 ; Stephens «. Ins. Co., L. R. 8 C. P. 18 ; Traders' Bank < . Ins. Co., 62 Me. 519 ; Barry c. Harris, 49 Vt. 392; Paige ... Sherman, 6 Gray, 511 ; Bryce c Ins. Co., 55 N. Y. 240 ; Kilmer v. Smith, 77 N. Y. 226 ; Wheeler c. Kirtland, 23 N. J. Eq. 13 ; Doniol v. Ins. Co., 34 N. J. Eq. 30; Gower v. Sterner, 2 Whart. 75 ; Huss v. Morris, 63 Penn. St. 367; Whelen's App., 70 Penn. St. 410 ; Kostenbader v. Peters, 80 Penn. St. 438 ; Mcintosh .,. Saun- ders, 68 111. 128 ; Milmine v. Burnham, 76 111. 362; Keith v. Ins. Co., 52 111. 518 ; Wilson v. Hoecker, 85 111. 349 ; Merc. Ins. Co. v. Jaynes, 87 111. 199 ; Sohoonover v. Dougherty, 65 Ind. 463 ; Trammel v. Chipman, 74 Ind. 474 ; Larsen v. Burke, 39 Iowa, 703 ; Van Dusen u. Parley, 40 Iowa, 70 ; Meno- monee v. Langworthy, 18 Wis. 444 ; Burke v. Anderson, 40 Ga. 535 ; Bid- well V. Brown, 48, Ga. 179; Hall v. Hall, 43 Ala. 488 ; G*lover v. McGilvray, 63 Ala. 508 ; Leggett v. Buckhalter, 30 Miss. 421 ; Wood v. Steamboat, 19 Mo. 529 ; Hook c. Craighead, 32 Mo. 405 ; Tcsson V. Ins. Co., 40 Mo. 33 : Exchange Bank i-. Russell, 50 Mo. 531 ; Conaway V. Gore, 24 Kan. 889 ; Gammage f. Moore, 42 Tex. 170. That a court in a bankrupt procedure will rectify a contract and apply it on the above principles, see Boultqn in re, L. R. 4 C. D. 241. In Rudge (■. Bowman, L. R. 3 Q. B. 689, it was held that where a contract was made for the supply of goods according to a sample, which sample contained a latent defect un- known to the parties, the contract was to be construed as intended by the parties, according to the sample sup- posed to be sound. Leake, 2d ed. 343. See infra, §§ 225, 565. * Briggs V. Ewart, 51 Mo. 249 ; Wright o. Macpike, 70 Mo. 175, and cases cited supra, § 185. 297 § 206.] CONTRACTS. [chap. X. § 206. Hence it is settled tliat while a contract may be „ , rescinded on tlie ground of an error of one party, Concurrent ^ i ./ ' error induced or fraudulently tai Infra, §§232a, 282. s Infra, §§ 279, 282, 559 ; Rawle, Covenants of Title, 573 ; Bispham's 308 Eq. § 214 ; Leake on Cont. 187 ; Story's Eq. §§ 142, 193; Bigelow on Fraud, 61 ; Behn u. Burness, 3 B. & S. 751 ; Polhill 1. Walter, 3 B. & Ad. 114; Denny v. Hancock, L. R. 6 Ch. 1 ; Pulsford c. Richards, 17 Beav. 94; Taylor t: Ashton, 11 M. & W. 401; Doggatt V. Emerson, 3 Story, 733 ; Warner v. Daniels, 1 Wood. & M. 90; Smith ... Babcock, 2 Wood. & M. 246; Collins u. Denison, 12 Met. 549 ; Far- nam v. Brooks, 9 Pick. 233 ; Fisher v. Mellen, 103 Mass. 503 ; Rosevelt v. Ful- ton, 2 Cow. 139 ; Marsh o. Falker, 40 N. Y. 562 ; Best ,•. Stow, 2 Sandf. Ch. 298 ; Kennej v. Hoffman, 31 Grat. 442; Lockridge u. Foster, 4 Scam. 569 ; Al- len !■. Hart, 72 HI. 104; Allen r. Yeater, 17 W. Va. 128, Converse v. Blumrich, 14 Mich. 109 ; Thomas r. McCann, 4 B. Mon. 601; Brooks o. Hamilton, 15 Miuu. 26 ; Sledge v. Scott, 56 Ala. 202 ; CHAP. Xr.] REPRESENTATIONS AND WARRANTY. [§ 214. circumstances, to sustain a decree for rescission, should be strong and plain.' — A concurrence of minds as to one parti- cular thing being essential to a contract, it is admissible, therefore, for a party to show that he was misled, when he gave his assent, by the misrepresentations of the other party, and that what he assented to was, therefore, something dif- Van Arsdale v. Howard, 4 Ala. 596; Munroe v. Pritcliett, 16 Ala. 785 ; Lind- sey V. Veasey, 62 Ala. 421 ; Parham v. Randolpli, 4 How. Miss. 435 ; Bufori v. Caldwell, 3 Mo. 477. If a vendee, for instance, is led by the vendor's repre- sentations, no matter liow honest, to believe that he is buying Black-acre, when in fact he is buying White-acre, then there is no sale, since there is no concurrence of minds as to the thing sold. And whenever the misrepresentation goes to a substantial and material fact, then there is no sale. Flight v. Booth, 1 Bing. N. C. 370 ; Jones u. Edny, 3 Camp. 285. In Corntbot v. Fowke, 6 M. & W. 358, a majority of the court of ex- chequer held that a lease was not avoided by an honest misrepresenta- tion of an agent. But this case has not been subsequently followed, and can only be sustained on the ground that the plea averred fraud, which could not be supported by proof of honest misrepresentation. See infra, §§ 269—79. Gornfoot !i. Fowke is elabo- rately discussed in Benj. on Sales, 3d Am. ed. §§ 455, 462 ; and Mr. Benja- min's inclination evidently is to regard it as without authority. He cites to this effect the language of Lord St. Leonards, in Nat. Exch. Co. v. Drew, 2 Macq. H. L. Ca. 103 ; of Lord Camp- bell, in Wheelton v. Hardisty, 8 E. & B. 270 ; and of Willes, .T., in Barwick V. Bank, L. R. 2 Ex. 259. To the same effect is Pollock, 3d ed. 543. See fur- ther, infra, §§ 270-9. In Smith !•. Richards, 13 Pet. 26, the complainant's bill was to rescind a con- tract for the purchase of a tract of land in Virginia," on which there was an al- leged gold mine. The ground for rescis- sion was misrepresentation by the ven- dor. The contract was rescinded, the court saying "the party selling prop- erty must be presumed to know whether the representation he makes of it is true or false, and that it is immaterial to the purchaser whether the misrepre- sentation proceeded from mistake or fraud." ' Infra, §§ 272, 275, 285. In King v. Eagle Mills, 10 Allen, 551, Bigelow, C. J., said : "There can be no doubt that a vendee may rescind a contract for the sale of chattels, and refuse to re- ceive or accept them, if the vendor has been guilty of deceit in inducing the former to enter into the bargain. But to maintain a defence to an action for the price of goods on this ground, the same facts must be proved which would be necessary to maintain an action for damages for deceit in the sale of goods." But this position can no longer be main- tained. See notes to Chandler v. Lopus, 1 Smith's Lead. Cas. 7th Am. ed. 299. In Grim v. Byrd, 82 Grat. 293, V. conveyed certain real estate to P., in consideration of shares of stock in an in- solvent corporation, concerning which B. had made untrue material state- ments. It was held that the contract was to be rescinded; even though B. may have made the misstatements honestly. 309 § 214.J CONTRACTS. [CHAP. XI. ferent from that which the proposition on its face indicates. It is true that the terms of a contract cannot be varied by parol. But it is competent for a party to show by parol that no contract was made. It is a petitio principii to say that a contract, which parol cannot vary, exists between the parties, when whether a contract exists is the very question at issue.' While, therefore, an action for deceit cannot be sustained unless there be proof of fraud or reckless misstaten}ent,^ such proof is not essential to sustain an action to rescind a con- tract, or to defend a suit for specific performance. As was well said by Judge Story, in a case where a suit was brought to rescind a contract of this class on the ground of misrepre- sentation, " the question is not whether he (the defendant) acted basely and falsely, but whether the plaintiff pur- chased on the faith of the truth of his representations."' — It was at one time thought in England that a court of equity would not set aside an executed conveyance on the ground of misrepresentation or concealment unless there be fraud f and it is clear that, if fraud be alleged as a ground for setting aside a transaction, fraud must be proved. ° But the prevalent opinion in England now is that misrepresentation witliout fraud will be sufficient ground to set aside a contract induced by the misrepresentation f and this rule was applied in a case where copyhold had been sold, apparently in good faith, as freehold.'' At the sauie time " there may be a want of diligence on the purchaser's part, which, although not such as to deprive him of the right of rescinding the contract before completion, would preclude him from having the sale set aside after conveyance."^ — The principles above stated were reaffirmed by the English Court of Appeals in December, 1881, on the following state of facts: An advertisement was ' Wh. on Ev. § 927 ; .Jones v. Edney, « Haygatli l: Wearing, L. R. 12 Eq. 3 Camp. 2S5. 320; which was the case of an exe- 2 Infra, § 241. cuteil conveyance " set aside on simple ' Doggett u. Emerson, 3 Story, 733, misrepresentation." Pollock, 3d ed. see infra, § 282. 519. ' Lord Campbell in Wilde v. Gibson, ' Hart v. Swaine, L. R. 7 Ch. D. 42. 1 H. L. C. (i32 ; infra, § 282. « McCulloch v. Gregory, 1 K. & J. 5 S. C. 1 H. L. C. 605. ' 286 ; see infra, § 245. 310 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 214. inserted in the Law Times by Mr. Eedgrave, the plaintiff, a solicitor with a practice of 200/. a j'ear, stating that lie was elderly, and "of moderate practice," contemplated retiring, had no successor, iind would take a partner "who would not object to purchase advertiser's suburban residence, value 1600/." It was added "no premium required for business and introduction. A large field is here open for an efB- eient man." Mr. Hurd, the defendant, another solicitor, attracted by the advertisement, entered into negotiations with the plaintiff, who stated that his business was worth 300/. a year, and that he had a large connection. On the defendant's request for details, the plaintiff allowed him to inspect a bundle of papers which showed a gross business of 200/. a year for the last three years. The plaintiff' added, in answer to other inquiries, that there was other business not entered on the papers submitted, and offered a second bundle of papers (which showed other business of 5/. or 6/. value) for the in- spection of the defendant, who did not examine them, upon which the defendant agreed to purchase the house for 1600/., and took possession of the house and entered on the business, which, was not referred to in the written agreement. — The defendant having afterwards given up possession and refused to complete the purchase of the house, an action for specific performance was brought by the plaintiff", and the defendant counter-claimed for rescission of the agreement. It was held, on appeal (reversing the decision of Fry, J.), that the defend- ant did not act exclusively on the faith of the I'epresentation of the 300/. value, but that he did not give up his reliance on it ; that, having seen the first bundle of papers, he also relied on the plaintiff"'s statement as to the difference between 200/. and 300/. a year being shown by the second bundle; and that his mere negligence to inquire (even if he had the materials before him) was not sufficient to disentitle him from being: relieved from the contract. No fraud was alleged in the case ; the issue beingmisrepresentation. — "According to the decisions of courts of equity," said Jessel, M. E,., " it was not necessary, in order to set aside the contract, to prove that the person who obtained the contract, and who sought to keep it, if he obtained it by material false representation, knew at the time 811 § 214.] CONTRACTS. [CHAP. XI. the representation wa^ made that sucli representation was false. It was put in two wa^'S, either of which was to be sufficient to allow a court of equity to rescind. It was said : 'A man is not to be allowed to get a benefit from a false state- ment which he now admits to be false. He is not to be allowed to say for the purpose of civil jurisdiction that he did not know it to be false ; he ought to have found that out before he made the representation.' That is one way of putting it, and the other way of putting it was this: 'Even assuming that you want moral fraud (this was the doctrine of common law) in order to set aside a contract, you have it where a man, liaving obtained a beneficial contract by a statement which he now knows to be false, insists upon keeping that contract.' That, of course, is a moral delinquency ; no man ought to seek to take advantage of his own falsity. It does not matter which way it is put, but that was the rule in equity. As regards the rule of comnjon law, there is no doubt it was not quite so wide. There were cases in which, even at common law, you could rescind a contract, although you could not show that the man knew the statement or the representation to be false. The cases are variously stated, but I think, according to the later decisions, the statement must have been made recklessly and without care whether it was true or false, and not, of course, at the time with the belief that it was actually true. I think the doctrine in equity was really set- tled beyond controversy, and, if it were necessary to refer to the authorities, I should content myself with referring to the judgment of Lord Cairns, when Lord Justice, in the case of Re Reese River Silver Mining Company, Smith's case,' in which he states the doctrine of equity in the way in which I have stated it."^ — But though a contract may be rescinded on the ground that it was made by one party under a mistake of facts caused by the other's misrepresentations, no action of deceit can be maintained on such misrepresentations if the ■ 16 L. T. Rep. N. S. 549; L. R. 485; L. R. 20 Ch. D. 1. See for further 2 Ch. App. 604. citations, infra, §§ 241, 245 ; cf. Smith ' Redgrave v. Kurd, 45 L. T. N. S. v. Chadwick, 20 Ch. D. 27. 312 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 215. party making them honestly believed them to be true.' But it is otherwise if the misrepresentation was reckless or negli- gent. In such case an action "might bo sustained upon an allegation that the representation was false, although the party making it did not know at the time he made it that it was so."^ — As we will hereafter see,' though a contract may be rescinded on account of an agent's misrepresentations, no action of deceit can be maintained against the principal unless he was cognizant of the fraud. § 215. From representation, as will hereafter appear more fully,'' are also to be distinguished expressions of ^xpres- opinion. There are innumerable matters as to which siousof • II- 1 1- T- opinion intelligent persons may honestly diner in opinion; notrepre- and when opinions in such matters are communicated ^^''^ '°°" as opinion, it being open to the other party to make his own investigations, they are not to be regarded as contractual.' ' "The fraud," said Lord Abinger, in Moens v. Heyworth, 10 M. & W. 155, "which vitiates a contract, and gives a, party a right to recover, does >iot in all cases necessarily imply moral turpitude.'' ' Lord Abinger, Moens v. Heyworth, ut supra; Reese Silver Co. u. Smith, 4 Eng. Ap. 64. As to rescission in gene- ral, see infra, §§ 282 et seq. In Chil- ders i,. Wooler, 2 E. & E. 287, it was held that, "to support an action for false representation, the representation must not only have been false in fact, but must also have been made fraudu- lently." See to same effect, Evans v. Collins, 5 Q. B. 804 ; Western Bank 11. Addie, L, R. 1 Sc. Ap. 145. That honest belief is a defence to an action based on fraud, see, further, Benj. on Sales, 3d Am. ed. § 429 ; Lord ... God- dard, 13 How. U. S. 198 ; McDonald o. Taufton, 15 Me. 225 ; Hanson o. Edgerley, 29 N. H. 343 ; Pike u. Fay, 101 Mass. 134 ; Cooper u. Lovering, 106 Mass. 77; Beach v. Bemis, 107 Mass. 498 ; Binnard v. Spring, 42 Barb. 470; Howell v. Biddlecom, 62 Barb. 131 ; Stilt V. Little, 63 N. Y. 427 ; Boyd t. Browne, 6 Barr, 210 ; Dilworth v. Bradner, 85 Penn. St. 238 ; Merwin V. Arbuckle, 81 111. 501 ; St. Louis R. R. V. Rice, 85 111. 406 ; Bondurant v. Crawford, 22 Iowa, 40 ; Kimbell v. Moreland, 55 Ga. 164. That reckless misstatements are to be regarded as fraudulent, see infra, § 241. That an action for negligence can be main- tained by a party injured by a negli- gent erroneous assertion will appear hereafter. Infra, § 1043. 3 Infra, § 279. < Infra, § 259-263. 5 Anderson v. Ins. Co. L. R. 7 C. P. 65 ; Barker «. Windle, 6 E. & B. 675 ; Learning u. Snaith, 16 Q. B. 275 ; Watts V. Cummins, 59 Penn. St. 84 ; Reed v. Sidener, 32 Ind. 373 ; Drake v. Latham, 50 111. 270; Clark c. Ralls, 50 Iowa, 275 ; McClanahan v. McKin- ley, 52 Iowa, 222 ; Starnes i. Erwin, 10 Ired. 226 ; Bradford ;;. Bush, 10 Ala. 386 ; for other cases, see irifra, §§ 249 et seq.; In McLay v. Perry, 44 L. T. N. 313 § 216.] CONTRACTS. [chap. XI. An erroneous statement of the law by a party not professing to be an expert, therefore, is not a misrepresentation that avoids.' — If a purchaser desires to fix liability on a vendor, for the latter's conjectural statements of opinion, a warranty should be required, or specific averments to which the vendor is notified he will be held.^ And a statement by a vendor, during the negotiation for the sale of a mill and water power, that " the stream would furnish water to run the mill day and night, eight months of the year," has been held, when it turned out to be erroneous, no fraud being shown, not to entitle the vendee to damages.^ § 216. The test laid down as to fraudulent misrepresenta- tions, that they must be material, applies equally to sentatious honest misrepresentations.' ihere is this distinc- S. 152, tlie plaintiffs, having been in- formed by S., a commission agent, that the defendants _had a quantity of old iron in their yard for sale ("about 150 tons") wrote to the defendauts, " We are buyers of good wrought scrap iron, free of light and burnt iron, for our American house, and understand from Jlr. S. that you have for sale about 150 tons. We can offer you 80s. per ton." — There were intermediate letters relating to the place of delivery and expense of carting, and then the defendants wrote, "We accept your offers of the 14th and 19th inst. for old iron, viz,, 80s. per ton. We delivering alongside vrssel in one of the London docks. Please let us know when you can si'nd a man here to see it weighed, and also inform us where to send it." Before S saw the plaintiffs he had seen a heap of iron in the yard of de- fendauts, who were builders, and said, " You seem to have about 150 tons there." The reply was, "Yes, or more." The defendants only delivered forty-four tons, that being the quantity of the heap in the yard, and the plain- tiffs recover(!d 601. damages in an ac- tion for short delivery. It was held by 314 Grove, J., and Lindley, J., that the words "about 150 tons," were merely words of estimate and expectation, and there was no warranty as to quantity, and therefore the defendants were not bound to deliver 150 tons ; that the subject-matter of the contract was not 150 tons of iron, but the iron which S. had seen in the defendant's yard. That a mere representation of quality by seller, without fraud or warranty, will not sustain a suit, see Ormood v. Huth, 14 M. & W. lit;4 ; Dickson .•. Tel. Co., L. R. 2 C. P. D. (i2 ; L. R. 3 C. P. D. 1. Infra, §§ 259-203. That a false opinion is not a false pretence, see infra, § 259. As to error in quantity, see supra, § 190 ; infra, § 898. ' Infra, § 2(j4 ; and see also Reed c Sidener, 32 Ind. 375 ; Drake i,'. Latham, 50 111. 270 ; nor is an erroneous state- ment by a non-expert of the legal effect of a document. See cases cited infra, § 2ij4, and Smither v. Calvert, 44 Ind. 242 ; Clodfatter v. Hulett, 72 Ind. 137. 2 Todd V. Fambro, 62 Ga. 664. » Clark V. Ralls, 50 Iowa, 275. * See infra, §§ 237-242; S. P. Phipps ,;. Buckman, 30 Peun. St. 401 ; Weist u. Grant, 71 Penu. St. 95. ClIAP. XI,] REPRESENTATIONS AND WARRANTY. [§ 216. tion, however, to be repeated, that no action for must have . . been mate- deceit lies against a person making an honest non- rial, and negligent misrepresentation, no matter how material, produced though such misrepresentation is ground to rescind fie injury. a contract based oa it ; whereas when the misrepresentation is fraudulent it not only sustains a rescission, but will support an action for deceit. The injury, also, must be imputable to the misrepresentation. 1 And we may go a step further, and hold that an immaterial misrepresentation, honest or not hon- est, if not contractual, does not bind the party making it, unless by way of estoppel. If it did, few contracts could stand, since there are few contracts that do not contain sur- plusage, which from the imperfection of language, may not be exactly correct. But, as we have just seen, when one party assents to a proposal containing material misrepresenta- tion of facts, the honesty with which these misrepresentations were made, while a defence to an action for deceit, are not a defence to an action to rescind the contract. And when it is a party's duty to know the truth of a particular fact, he can- not, on the ground of ignorance, defend himself on an action based on his misstatement.^ Nor can a vendor hold a pur- chaser to a sale brought about by a material though honest misrepresentation of the vendor.^ — Some conflict of opinion has arisen in England from the tendency of the courts of equity to hold that a party is bound to " make good " repre- sentations made by him in business dealings.^ To adopt the language of Lord Cottenham, " 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 suflicient to entitle him to the assistance of the court for the purpose ' See supra, § 213 ; infra, § 242 et ' Spurr v. Benedict, 99 Mass. 463 ; seq. ; and see notes to Chandler v. Watts u. Cummins, 59 Penn. St. 84 ; Lopus, 1 Smith's Lead. Cas. 7th Am. though see White v. Williams, 48 ed. 299 et seq. ; 'May on Ins. § 184 ; Barb. 222. supra, § 186 ; 1 Story, Eq. Jur. 12th ed. " See Hammersley v. Biel, 12 CI. & F. § 134 a. As to what facts a contracting 45 ; Prole v. Soady, 2 Giff. 1 ; Loffus v. party must disclose, see infra, § 250. Maw, 3 Giff. 592 ; Coverdale v. East- 2 Supra, § 214 ; infra, § 241 ; Bur- wood, L. R. 15 Eq. 121 ; Dashwood v. rowes d. Lock, 10 Ves. 470; Baboook Jerwyn, L. R. 12 Ch. D. 776. V. Case, 61 Penn. St. 436. 315 § 216.] CONTRACTS. [CHAP. XI. of realizing such representation." But as was shown by Mr. Pollock, in 1881, in the third edition of his work on Contracts,' correcting in this respect the views taken in his second edi- tion, these expressions were used in reference to a contract, and are based on an unquestionable contractual relation. Such was the opinion of the case expressed by Lord St. Leonards, who treated the decision as one upon a contract.^ The same. criti- cism is applicable to the rule laid down by Bacon, V C, in 1879.^ "If a man makes a representation, on the faith of which another man alters his ]i08ition, enters into a deed, in- curs an obligation, the man making it is bound to perform that representation, no matter what it is, whether it is for present payment, or for the continuance of the payment of an annuity, or to make a provision by will. That in the eye of a court of equity is a contract, an engagement which the man making it isbound to perform." Here the passage italicized shows that it was only as an ingredient in a contract that the representation was held to be the basis of an action. And in 1880, we have an express decision by Stephen, J., that a representation, if not a term in a contract, or not operatincj as an estoppel, can- not form the basis of a suit.^ Mr. Pollock, rightfully, as has been said, adopts this conclusion, surrendering that previously 1 Pp. 494, 698. ble either to damages or to a decree that 2 Maunsell v. Hedges White, 4 H. L. he, or his representatives, shall give C. 1039. effect to the representation, ^^econdly, 3 Dashwood v. Jerwyn, L. R. 12 Ch. it may operate as an estoppel, preveut- D. 776. ing the person making the representa- * Alderson t. Maddison, L. R. 5 Ex. tion from denying its truth as against D. 293. This was a suit on a promise persons whose conduct has been in- to make a provision by will. It was fluencedbyit. Thirdly, it may amount held by Stephen, J., that if the repre- to a criminal offence." Thc^ ruling in sentation was not a term in a contract, Alderson v. Maddison was, according it amounted to nothing. " It seems to to Mr. Pollock's statement (Pollock, me," he said, " that every representa- 3ded.497), " reversed in C. A. April 13, tion, false when made or falsified by ISSl (29 W. R. 556 ; L. R. 7 Q. B. D. the event, must operate in one of three 174), without discussing this question, ways, if it is to produce any legal con- on the ground that there was no part sequences. First, it may be a term in a performance sufiicient to take the case contract, in which case its falsity will, out of the statute of frauds. Thus the according to circumstances, either ren- general principle that the transaction der the contract voidable, or render the was a true contract or nothing is, if person making the representation lia- anything, tacitly affirmed." 316 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 217. expressed by him. " The true question," he says,^ " is in every case, what were the terms of the contract. But this state- ment is subject to the qualification, that in particular classes of cases there are fixed rules as to what kind of statements shall be deemed part of the contract; and in one or two cases this rule is extended so as to make it an essential term not merely that the information given shall be true, but that all material information shall be fully, as well as truly given." The position in the last sentence, however, I do not look upon as a qualification of that in the first sentence. It is, in fact, an independent proposition ; and my objection to Mr. Pollock's statement, is that he narrows to certain specified cases; e.. g., insurance, suretyship, sales of land, and partnership — that which, as I shall argue in the next section, is a general rule. § 217. The difliculties which meet us in considering the ques- tion of suppression are analogous to those which we , . 1 . , . „ . . Suppres- encounter when considering the question or omission eionoffacts in criminal practice. It is said, and said prop- Mud unless erly, that no man can be made indictable for a mere amounting ■'_ ' _ to distor- omission ; and yet, on the other hand, we meet with tion of 1 • 1 1 ^^ 1 II • • 51 truth. many cases in which what are called "omissions are made the basis of a conviction.^ Yet, when we analyze these cases, we find that they are all of them not mere absten- tions of action, but that they constitute perversions of duty. A switch-tender, for instance, omits to replace a switch, and in consequence a train is wrecked ; but this is not a mere omis- sion, as would be the case if a stranger was charged with the neglect, but it is undertaking to do a particular thing and doing it wrongfully. The same distinction is applicable to omissions by telegraph oflicers to send telegrams, by physicians to attend patients whose care they have assumed, by parties (e. g., municipal corporations) assuming the care of highways to keep such highways in order. There is, in fact, no indict- able act that does not involve an omission, and no indictable omission that does not involve an act. The indictable act in- volves the omission, because doing the wrong thing involves > 3d ed. 497. a See discussion in Wh. Cr. L. 8tli ed. §§ 126 et seq. Infra, §§ 249-50. 317 § 217.] CONTRACTS. [CIIAP. XI. the omission of a legal duty ; the indictable omission involves an act, because omitting a legal duty involves the doing a wrong. The same rule may be laid down with regard to the suppression of truth. ISTo man can be made liable for a mere suppression of any truth he may know, no matter how inter- esting or important such truth may be. Were it otherwise, life would be occupied in the delivery of interminable orations, which would leave no time even for the full acquisition of the truth which it would become the duty of each speaker to tell on tlie first impression. Nor is the test a mere sense of re- sponsibility, unless the suppression amounts to a distortion of the truth. By applying this solution, we find that what are called exceptions are in fact consistent with the rule. It is said, for instance, that insurance, suretyship, sales of land, and partiiershij), are exceptions to the rule that suppression is not in itself actionable, no matter what may be the consequences;^ and cases falling under these heads have been regarded as the greatest stumbling blocks in the way of the general recognition of the doctrine (a doctrine which seems almost a truism), that a man cannot be sued contractually on a representation that is not a term in a contract. But wben we examine the suppres- sions in the excejited cases just noticed, it will be found that they are none of them cases of abstention from telling, amount- ing to mere non-action, but that they are all of them cases of perversion of telling, amounting to distortion of truth. The case is analogous to that of a man employed on a railroad to signalize the approach of a train. He stands at his p)lace of observation, and is to make or cause certain action to designate danger. He continues to stand at his post, but does not make the motion necessary to indicate the approach of danger. This is not omission or suppression, but perversion of truth. So it is with what are called the excepted cases, in'which a supposed bare suppression becomes the foundation of a contractual suit.^ 1 See Pollock, 3d ed. 000 et seq. C. J., said : " Not removing that delu- 2 That withholding a fact when such sion (a njaterial mistake which the withholding makes the attitude of the negotiations showed the purchaser was party holding amount to a negation, under), might be taken as equivalent is a misrepresentation, see Keates v. to an express representation." For Cadogan, 10 C. B. 591, where .Tervls, other cases, see infra, §§ 24!^, 250. See 318 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 217. The most conspicuous of these is that of an applicant for in- surance. He is to make signs, as it were, to indicate certain conditions; if he has certain maladies, he is to tell ; not telling is equivalent to saying he has not thgse maladies.^ So it is with regard to suretyship. I ask another person to go surety for me, and my attitude to him is that of the insured to the insurer ; non-disclosure of my insolvency, for instance, is equivalent to an assertion of solvency. Of family negotiations, also, the same remarks may be made; in negotiations of this class, candor and fulness of explanation are so far required that an omission by a brother, for instance, to state a fact to a brother that the former knows to be important, and knows would be considered important by the latter, is equivalent to a statement that the fact does not exist f and the same obser- vation may be made as to partnership.' So far as concerns sales of land, the position taken by Mr. Pollock hardly author- izes transactions of this class to be regarded, at least in this country, as dilf'erent in this respect from sales of personal property. He tells us^ that "a misdescription, materially aftecting the value, title, or character of the property sold, will make the contract voidable at the purchaser's option, and this notwithstanding special conditions of sale providing that errors of description shall be matters for compensation only.^ It is further alleged that, " on sales of real property, it is generally Attwood v. Small, 6 CI. & F. i See for authorities, infra, § 256. 232 ; Evans v. Edmonds, 13 C. B. 777 ; But the entire omission to answer a Horstall v. Thomas, 1 H. & C. 90 ; question in a written application for Prentiss u. Russ, 16 Me. 30 ; Paddock insurance does not avoid the policy. u. Strobridge, 29 Vt. 470 ; Matthews v. Armenia Insurance Co. o. Paul, 91 Bliss, 22 Pick. 48 ; Otis v. Raymond, 3 Penn. St. 520. Conn. 413; Cogel u. Kniseley, 89 111. 2 Infra, § 256 a; Gordon v. Gordon, 598 ; Van Arsdale v. Howard, 5 Ala. 3 Sw. 400 ; Fane v. Fane, L. R. 20 Eq. 596 ; Herring v. Skaggs, 62 Ala. 180. 698. That a man by paying addresses to a > Pollock, 3d ed. 520 ; Lindley, i. woman affirms that he is unmarried, 579. What has been said in respect to see Pollock v. Sullivan, 53 Vt. 507 ; partnership applies to parties propos- Beunett jj. Beam, 42 Mich. 346. "The ing business {irifra, § 255), and pro- silence of the party must amount to a moters of companies {infr-a, § 255 a). direct affirmation, and must be deemed ■• Pollock, 3d ed. 509. equivalent to it"— Ludlow, .J., aff. in 5 To this is cited Flight v. Booth, 1 People's Bank's App., 93 Penn. St. Bing, N. C. 370. 109. 319 § 218.] CONTRACTS. , [CHAP. XI. the duty of the party acquainted with the property to give substantially correct information, at all events, to the extent of his own actual knowledge, of all facts material to the de- scription or title of the estate otfered for sale, but not of extraneous facts affecting its value: the seller, for example, is not bound to tell the buyer what price he himself gave for the property." But (1) the cases of avoidance of sales cited by Mr. Pollock are cases of actual niisrepresentatioris ; and (2) even supposing the rule to be good in England, where the title to land is not a matter of record, in tljis country the rule does not apply for the reason that the title is a matter of record, to be determined by an official search.' Even in England it was decided, in the House of Lords,^ that a vendor's silence as to a right of way over land sold by him, of which right of way he was not shown to have been aware, is no cause for setting aside the sale. This decision is undoubtedly se- verely criticized by Lord St. Leonards,^ and by Mr. Pollock,^ who says that " it seems an extraordinary, not to say danger- ous doctrine, to say that a vendor is not bound to know his own title, so far, at least, as with ordinary diligence he may know it." But however this may be in England, the position is not applicable to this country, where a record title is all that is sold and all that is bought.' § 218. A condition precedent in its technical sense, as we shall have occasion to see more fully,* precludes such A condi- . . , . tion nega- a concurrence of minds as constitutes an inimedi- eiirrence of ately effective contract. It is, " if a certain state of wilrrauty ^'"^*^ cxists, then we agree that a certain thing shall assumes be done."^ The thing is not to be done unless the concur- . . . ° rence, but condition IS Satisfied. A warriuity, on the other ffives dam- -i -i •__ i- !• • i i • ao-es for hand, implies a concurrence ot minds as to an im- misstate- mediate effect. It is this: " Such a thino- is to be III en t. ~ done, but if a statement made be not correct, the ' See hifra, §§ 249, 2.'i0. 5 That withholding of facts which 2 Wilde V. (iibson, 1 H. L. C. IIOS, business sagacity might discover is not reversing s. 0. nom. Gibson / D'Este, raisrepresentaticfn, see m/i-a, § 24it. 2 Y. & G. 542. 6 {nfra, §§ ^45 et seq. ' " Sag. Law of Prop. 614, 634. ' Supra, § 5. * Pollock, 3d ed. 518. 320 CHAP. XI.J REPRESENTATIONS AND WARRANTY. [§ 218. party imposed upon is to recover damages from the other party for the injury he has sustained." In a larger sense, however, a warranty has been defined to be "a condition the breach of which niiglit liave discharged the contract had it not been so far acquiesced in as to lose its eti'ect for that pur- pose, though it may give rise to an action for damages.'"^ — Bannerman v. White^ is cited^ as a leading case on the dis- tinction between conditions and representations. The suit- in that case was brought on a contract for the purchase of a crop of hops ; and it appeared that when the negotiation began, the defendant asked the plaintiff whether sulphur had been used in raising the crop, and that the plaintiff answered, it had not. It appeared that sulphur, employed as a fertilizer, facilitates the raising of hops, but reduces their market value. The defendant agreed to purchase the crop on the supposition that sulphur had not been used ; but it turned out that sul- phur had been used, for the purpose of trying a new machine, in five acres, the whole crop covering 300 acres, but that the produce of the entire crop had been mixed together. The defendant's statement appeared to have been inadvertently made, he having forgotten the u^e of the sulphur, or having regarded it as so trivial as to be unimportant. The jury found the representation not to have been wilfully false, but that it "was intended by the parties to be part of the con- tract and a warranty by the plaintiff." The court held that the non-use of sulphur was a condition, the non-existence of which vitiated the sale. — " We avoid," said Erie, C. J., "the term loarranty because it is used in two senses, and the term condition because the question is, whether that term is appli- cable; then, the effect is that the defendants required, and that the plaintiff gave his undertaking that no sulphur had been used. This undertaking was a preliminary stipulation ; and, if it had not been given, the defendants would not have gone on with the treaty which resulted in the sale. In this sense it was the condition ujpon which the defendants contracted ; and it would be contrary to the intention expressed by this 1 Auson, 135 ; see May on Ins. § « lo C. B. N. S. 844. 184. 3 Benj. 3d Am. ed. 604 ; Anson, 136« VOL. I.— 21 2,21 219.] CONTRACTS. [chap. XI. stipulation that the contract should remain valid if sulphur had been used. — The intention of the parties governs in the ntaking and in the construction of all contracts. If the par- ties so intend, the sale may be absolute, with a warranty superadded; or the sale may be conditional, to be null if the warranty is broken. And, upon this statement of facts, we think that the intention appears that the contract should be null if sulphur had been used ; and upon this ground we agree that the rule should be discharged."' § 219. No particular words are essential to constitute a warranty.- Any representation made at the time Warranty •' . . needuotbe of a Sale is a warranty if it was understood by the particular parties to bc such.' But estimates of value are not '"*'™^- warranties;'' nor are conjectural opinions or puffs.-' As will hereafter be seen more full^^, an article sold which 1 See, to same effect, Baglehole r. Walters, 3 Camp. 154 ; Brown u. Edg- ington, 2 M. & G. 290; Josling v. Kingsford, 13 G. B. N. S. 447 ; Lyon v. Bartram, 20 How. U. S. 149 ; see infra, §§ .^)49 et seq. 2 Benj. on Sales, 3d Am. ed. §§ 613 ei seq.; infra, §§ 549 et seq. ; Leake, 2il ed. 404 ; Pasley v. Freeman, 3 T. R. bl ; Medina t. Stonghton, 1 Lord Ray. 593 ; Stucley v. Bailey, 1 H. & C. 405 ; Morrill v. Wallace, 9 N. H. Ill ; Hen- shaw V. Robins, 9 Met. 88 ; Warren v. Coal Co., 83 Penn. St. 437 ; Blythe c. Speake, 23 Tex. 430 ; Polhemus i . Heiman, 45 Cal. 573. That no parti- cular words are required to consti tute an express warranty, see, in addi- tion to the above cases, Hillman , . Wilcox, 30 Me. 170 ; Bryant r. Crosley, 40 Me. 18; Randall u. Thornton, 43 Me. 226; Bond ,. Clark, 35 Vt. 577; Chapman u. Murch, 19 John. 290 ; Roberts v. Morgan, 2 Cow. 438 ; Whit- ney V. Sutton, 10 Wend. 412 ; Hawkins V. Pemberton, 51 N. Y. IDS; Weimer V. Clement, 37 Penn. St. 147 ; Horn r. Buck, 48 Md. 358 ; Henson c. King, 3 322 Jones, N. C. 419 ; Carter b. Black, 46 Mo. 384; Kenner v. Harding, 85 111. 2H4 ; Sparling r. Marks, 86 111. 125 ; Clark o. Ralls, 50 Iowa, 275 ; Jack c. R. R., 53 Iowa, 399 ; Robson r. Miller, 12 S. C. 580; Claghorn <. Lingo, 62 Ala. 230. " The question as to whether a statement constitutes a warranty is often a difficult one. It may depend not only upon the words used, but upon the character of the thing sold, the known character of the buyer, his opportunity for inspection, or what- ever else may reveal anything in re- gard to the real understanding of the parties. It is a question for the jury under a proper instruction." Adams, Ch. J., McDonald Man. Co. r. Thomas, 53 Iowa, 561, citing Tewkesbury v. Bennett, 31 Iowa, 83. ' Randall o. Thornton, 43 Me. 226 ; Reed i\ Hastings, 61 111. 266 ; Robin- son !-. Harvey, 82 111. 58, « Infra, § 260. 5 Infra, §§ 259, 263 ; see notes to Chandeler v. Lopus, 1 Smith's Lead. Cas. 7th Am. ed. 299 et seq. CHAP. XI.J REPRESENTATIONS AND WARRANTY. [§ 220. does not answer the desci'iption may be returned,^ or the vendor may be sued on the warranty f an article supplied to* order is warranted to answer the order;' when the vendor is specially trusted, he is liable on implied warranty of fitness •* though it is otherwise when the purchaser buys on his own judgment.' It will be also seen that warranty may be im- plied from usage f that warranty does not cover depreciation in transit;' that conditions imposed by local law must be complied with f that on sales by sample, the article sold must conform to sample;' that the purchaser may I'eject articles that do not correspond to sample ;'" that average corre- spondence with sample is sufficient,'' and that warranty may be added to sample.'^ § 220. A specification of a warranty on one point may ex- clude the impilication of warranty on other points.'^ Warranty Thus a contract to deliver Centre County iron, for a on one full market price, is satisfied if Centre County iron, excludes believed at the time to be good, is delivered." On fmpilea the sale of a fertilizer the following statement was warranty. given : " It is guaranteed to me, as to its ettect on crops, only as to the analysis of the state inspector, as evidenced by his brand on each and every article." It was held in Georgia, in 1 Infra, § 903. " Kirk v. Nice, 2 Watts, 3ti7. Whe- * Infra, § 904. ther a statement that a cow is "all ' Infra, § 905. right" is a warranty is a question of * Infra, § 906. fact for the jury. Tuttle v. Brown, 4 6 Infra, § 907. Gray, 457. In Power ... Barham, 7 C. 6 Infra, § 910. & P. 356, 6 N. & M. 62, 4 Ad. & El. ' Infra, § 911. 476, Lord Denman left it to the jury to s Infra, § 913. determine whether a statement, " Four 8 Infra, § 914. pictures, views in Venice, Canaletti," M Infra, §§ 225, 565. was a warranty. See more fully, " Infra, § 915 et seq. infra, § 249. An opinion (there being '2 Infra, § 918. no fraud) that a mare is kind and " Infra, § 909 ; Benj. on Sales, 3d gentle is not a warranty. Jackson u. Am. ed. § 666 ; Budd v. Fairmaner, 8 Wetherill, 7 S. & R. 480 ; McFarland Bing. 51; Parkinson v. Lee, 2 East, ...Newman, 9 Watts, 55. Nor is an 314; Dickson w. Zizinia, 10 C. B. 602 ; opinion as to value. Infra, § 250; Willard u. Stevens, 24 N. H. 271; Wetherill ?>. Neilson, 20 Penn. St. 448 ; Deming v. Foster, 42 N. H. 165 ; Bald- Whitaker v. Eastwick, 75 Penn. St. win V. Van Deusen, 37 N. Y. 487 ; Gill 229. (/. Kaufman, 16 Kan. 571. 323 § 221.J CONTRACTS. [chap. XI. 1880, that the purchaser could claim on no other warranty than that as to the genuineness of the inspector's brand.' § 221. Supplying for a particular purpose implies fitness Suppiyinij ^^^ ^^^^ purpose in all cases where special confidence forparticu- jg placed in the vendor.^ In point of law, if a per- lar purpose ^ . „ implies son sold a commodity for a specific purpose, and with kno'wledge at the time of sale that it was to be applied to that purpose, he must be understood to warrant that the commodity so sold should he reasonably fit and proper for the purpose for which it was sold.' Even a latent defect, unknown to the vendor, is within this rule. A carriage builder, for instance, who supplies a customer a pole for a carriage, fitting it to the carriage, is to be regarded as war- ranting its soundness, and is i-esponsible for a latent defect, of which he is not aware, which causes the pole to break. ^ But selling for a particular purpose is not to be understood as warranting that the thing sold will be adapted to any peculiar conditions in which it may be placed. General adaptation is all that is implied. ° Xor is a warranty of fitness implied in the sale by a peddler of a patented article.^ — In connection with the above rulings may be noticed a case before the Eng- ' Jackson c. Langston, 61 Ga. 392. 2 Infra, §§ 248, 2i;3 et sir/. As to warranty, § 905. As to articles made fo ordf r, § 903 ; Leake, 2d cd. 404 ; Benj. on Sales, 3d Am. ed. §§ C45 et seq. ,■ Brown o. Edgington, 2 M. & G. 27!) ; Sutton v. Temple, 12 II. & W. 64; Jones u. Bright, 5 Biug. 533; OUivant v. Bayley, 5 Q. B. 288 ; Jones o. Just, L. R. 3 Q. B. 202 ; Smith , . Marrable, 11 M. & W. 5 ; Lomi v. Tiuker, 4 C. & P. 15 ; Deming c. Fos- ter, 42 N. H. 165 ; Doggett v. Emerson, 3 Story, 700 ; Beats v. Olmstead, 24 Vt. 114; Emerson v. Brigham, 10 Mass. 197 ; Wiusor v. Lombard, 18 Pick. 60 ; Mansfield (. Tregg, 113 Mass. 354; Pacific Iron Works u. Newhall, 34 Conn. 67 ; Van Bracklin . . Fonda, 12 Johns. 468; (iallagher c. Waring, 9 Wend. 20; Bounce r. Dow, 57 N. Y. 324 21 ; Rodgers ,:. Niles, 11 Oh. St. 48 ; Byers c. Chapin, 28 Oh. St. 300; Brenton r. Davis, 8 Blackf. 317 ; Leo- pold r. Van Kirk, 27 Wis. 152; Rob- son , . Miller, 12 S. C. 586 ; Byrne -■. Jansen, 50 Cal. 624. That an article made to order must answer order, see injra, § IHi'j. " Lord Tenterden, Gray v. Close, 6 D. & R. 200, < Randall u. Newson, L. R. 2 Q. B. D. 102. See notes to Chandler r. Lopus, 1 Smith's L. C. 7th ed. 299 et seq.; infra, § 903. 5 Chanter r. Hopkins, 4 M. & W. 399 ; Port Carbon Iron Co. v. Groves, 68 Penn. St. 149. « Matthews u. Hartson, 3 Pitts. 86. That when the vendor is specially trusted his representations bind is herealter seen. Infra, § 905. CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 221. lish Court of Appeals in 1881. The plaintiff agreed to take a named steara-tng, towing six sailing barges, from Hull to the Brazils, paying and providing for the crew, and furnishing all necessary instruments. The defendants agreed to pay for these services 1020?. After the starting, the boilers and en- gines of the steam-tug in question turned out to be consider- ably out of repair, and in consequence the voyage occupied sixty days more than it would otherwise have done. The fact of the engines being out of repair was not known to either party at the time of the contract. Judgment was entered by Lord Coleridge for the plaintiff. This, however, was reversed in the Court of Appeals, on the ground that there was no implied warranty by the defendants that the tug should be reasonably efficient for the purposes of the voyage.' ' Robertson v, Amazon Tug Co., 45 L. T. N. S. 317; reversed, S. C. L. R. 7 a. B. D. 598. The reversal, however, was carried hy BjHtt, L. .T., and Cotton, L. J., against Bramwell, L. J., who concurred with Lord Coleridge ; and the question, so far as the weight of authority is concerned, must be considered still open. " The plaintiff," said Lord Coleridge, in the court below, "undertakes to conduct the fleet across the Atlantic, that is, to do under particular circum- stances particular work. He furnishes a great deal of the necessaries inci- dental to the voyage — not the engines or engineers — but he engages the sail- ors, stokers, and trimmers, from Hull to Para. There must be an under- taking on the part of the defendants that the Villa Bella was reasonably fit to do the work on which she was to be engaged. The plaintiff was entitled to say : ' I had an instrument supplied by the defendants to do this work, and such instrument ought to have been reasonably fit to do it.' The contrary contention seems full of difficulties, insuperable difficulties to my mind. Suppose the Villa Bella, undoubtedly incompetent to fulfil the task assigned to her, and with terrible danger to life, occupies a period beyond all time in the contemplation of the parties, a year we will say, instead of seventy days ; yet the captain would be liable, and he would be met with the statement, ' You took the risk and must abide by it,' so that nothing could he recover for the valuable time spent by him, and for losses incurred by making good the defects, and paying for expenses brought about by the protracted voy- age. If the plaintiff at an earlier stage had made himself acquainted with the state of this steamer, and had refused to perform the duties imposed on him on the ground of the impossibility of carrying out the contract, it was said in argument that he would be held liable for such refusal. Now, either the grounds of his refusal would be no answer — the impossibility being short of a physical impossibility ; or they would be an answer to an action at the suit of the defendant company. This shows that there was an implied con tract on the part of the defendants that the Villa Bella should be fit for the 325 § 221.J CONTRACTS. [chap. XI. — The sale by a manufacturer of goods ordered from him in his own specialty implies that these goods were manufactured by him. Thus, in a case' in the English Court of Appeals in purposes of the voyage, and therefore an undertaking on the part of the de- fendants that the Villa Bella should be reasonably fit for the services the plain- tiff undertook to perform in her." In the opinion of Brett, L. J., argu- ing for reversal, ■w have the following : "The Villa Bella VI3.S a vessel with damaged engines at the time the con- tract was made ; it was that vessel with these engines, such as they were, that the plaintiff undertook to conduct across the Atlantic. Now 1 think tliere would be an implied contract on the part of the defendants that they would not, by want of reasonable care, allow that vessel with its damaged engines to get more out of repair at the time the voyage was to commence than it was at the time that the contract was made. I think they were bound by an implied contract to take all reasonable care to keep the vessel as good and as efficient for tlie work it was to do as it was at the time the contract was made. But it would be to say that they were bound to make it better than it was at the time of the contract, if it is to be said that they wci-e bound to hand it over to the plaintiff in a state reason- ably fit for the purpose of the work it was to do. Now, as I understand my lord, he would not imply such a con- tract as that, but if he would, I must say that, with all deference, I cannot agree to it. When there is a specific thing, there is no implied contract that it shall be reasonably fit for the purpose for which it is hired or is to be used. That is the great distinction between a contract to supply a thing which is to be made, and which is not specific, and a contract with regard to a specific thing. In the one case you 326 take the thing as it is, in the other the person who undertakes to supply it is bound to supply a thing reasonably fit for the purpose for which it is made. Therefore it seems to me that the judg- ment of my lord really does, I believe, come to what was the opinion of Lord Coleridge, although in words he nega- tives it. It seems to me that he holds that the defendants were bound to supply this large tug in a condition reasonably fit for the purpose for which the contract was made, and the breach upon which he relies really is that it was not so fit, whereas it seems to me that there was no such implied contract. I wish to put my view as plainly as I can. If there had been evidence in this case that, after the contract was made, the machinery, from -want of reasonable care by the defendants, had become in a worse condition than it was at the time of the contract, I should have thought that there would have been a breach of contract, for which the defendants would have been liable. But I find no such evidence. The only misfortune about the tug was that the machinery at the time the contract was made was in such a condition that the vessel was not reasonably fit for the purpose of taking barges across the Atlantic. Therefore the misfortune which liap- jipued was the result of a risk which was run by the plaintiff, and of which he cannot complain, and consequently he has no cause of action as regards the Villa Bella.'' • Johnson u. Raylton, L. R. 7 Q. B. D. 438. See remarks in Chicago Pack- ing Co. V. Tilton, 87 111. 555 ; and com- ments in Alb. Law J. Nov. 26, 1881, and in Scottish Jour, of Jur. infra, ^ 223. CHAP. XI.J REPRESENTATIONS AND WARRANTY. [§ 221. 1881, the defendants as^reed to buy from the plaintiffs, who were manufacturers of iron plates, 2000 tons of iron ship plates, the iron to be of the quality known as " Crown," to pass on Lloyd's surve}', to be delivered at the defendants' ship-yard. The document containing the contract was headed, "The Moor Ironworks, Stockton-on-Tees," and stamped with the plaintiffs' trade-mark. In consequence of the temporary closing of the plaintiffs' works, they were unable to supply plates of their own manufacture, but supplied plates of the quality known as " Crown," passed at Lloyd's. The defend- ants refused to accept these. Suit was brought on the con- tract. At the trial, the defendants tendered evidence of mer- cantile usage that the manufacturer who contracted to sell could not fulfil his contract by supplying articles manufactured by some one else. This evidence was rejected, and judgment was entered for the plaintiffs. It was held (Bramwell, L. J., dissentiente) that judgment should be entered for the defend- ants, the onus being upon the plaintiff's to show a mercantile usage that the manufacturer who contracted to sell could fulfil his contract by supplying articles manufactured by some one else, and no such evidence having been tendered. In the course of his opinion, Cotton, L. J., said : " If the contention of the plaintiffs is right, they are at liberty to supply goods of any maker, and, therefore, in my opinion, it is not material with reference to the question now under consideration that the plaintiffs in fact proposed to supply plates as good as those manufactured by themselves, though this would be material on the question of damages if the defendants were suing the plaintiffs for breach of their contract. The plaintiffs relied on two recent decisions of the Court of Session, which no doubt are in their favor.i But, although we ought to pay respect to the opinion on a point of law common to both England and Scotland expressed by that court, their decisions cannot be considered binding here, and the authority of these cases is much diminished by the fact that Lord Young dis- sented from the opinions of the majority of the court. I think the view of Lord Young more correct than that of the major- 1 As to these cases see infra, note to § 223. 327 § 222. J CONTRACTS. [CHAP. XI. ity, and I am of opinion that when a purchaser orders goods from a firm which is a manufacturer only of sucli goods, not a dealer in them, then, unless it is shown that in the particu- lar trade, or as regards the particular goods, there is a practice or usage for the manufacturer to supply the goods of other makers, the purchaser must be assumed to have contracted with the particular manufacturers in reliance on the general excellence of the work of their firm, and is entitled, in the absence of any express stipulation to the contrary, to have, in performance of the contract, goods of the manufacturers' own make. It is said that the clause as "to strikes shows on this contract a contrary' intention. But this is not, I think, the necessary or fair construction of this clause. I think the clause rather assumes that stoppage of the manufacturers' works would probably prevent them from performing their contract, though notwithstandiiig tiie stoppage of the works the manufacturers might have plates of their own make which they would supply. The result, in my opinion, is thaf judg- ment should be entered for the defendants ; for it would be for the plaintiffs to show that the custom of the trade enabled them to supply ship plates of other makers, and, as the plain- tiffs objected to the evidence tendered bj' the defendants to show tlie usage of the trade, we ouglit, I think, to assume that the plaintiffs could not adduce such evidence as, in my opinion, is necessary to su^jport their contention." § 222. There has been much discussion on the question wliether there is an implied warranty of whole- Sellmg . ' ■' meat for someness in sales of provisions. We have the high food'iin- authority of Blackstone' to this effect; and in Chitty nis? ^*" "" Contracts the same position is broadly affirmed.^ We have numerous authorities in this country tend- ing in the same direction, so far as concerns articles sold for domestic use f and this view is strengthened by the rulings in ' Com. iii. p. 166. ard v. Emerson, 110 Mass. 321 ; Van 2 Op. cit. 9th ed. 420. Bracklin v. Fonda, 12 Jolm. 468 ; Hart ' injra, § 912; see citations in Benj. l\ \Vriglit, 17 Wend. 367 ; Goldricli u. on Sales, 3d Am. ed. § 671, including Ryan, 3 E. D. Smith, 324; JIos.'S u. Winsor u. Lombard, 18 Pick. 57 ; Mead, 1 Denio, 378 ; Ost,'ood v. Lewis, French v. Vining, 102 Mass. 132 ; How 2 H. & Gill, 498 ; Humphreys u. Com- 328 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 222. criminal prosecutions that it is an indictable offence to expose for human food articles known to be unfit for such food.' In England, however, it is now held that there is no general im- plied warranty on sales of food, except in cases of "victuallers, butchers, and other common dealers in victuals, under the statute 51 Henry III. ;"^ and Mr. Benjamin asserts that "the responsibility of a victualler, vintner, brewer, butcher, or cook, for selling unwholesome food, does not arise out of any con- tract or implied warranty, but is a responsibility imposed by statute, that they shall make good any damage caused by their sale of unwholesome food."' line, 8 Blackf. 516 ; Davis v. Murphy, 14 Ind. 158 ; and see notes to Chandeler v. Lopus, 1 Smith, L. C. 7th Am. ed. 299. > Wh. Cr. L. 8th ed. §§ 1434 et seq. See Ward v. Hobbs, L. R. 3 Q,. B. D. 150, L. R. 4 Ap. Cas. 13 ; holding that sending infected pigs to market is not a deceit at common law. See this case noted infra, §§ 229, 251 , and see French u. Vining, 102 Mass. 135, cited infra, § 249. = Burnby v. Bollett, 16 M. & W. 644. ' Op. cit. § 672; Emmerton c. Mat- thews, 7 H.&N. 586, where the plaintiff, a butcher, bought of a general dealer (tjie plaintiff not buying for domestic use) a carcase of meat consigned to the defendant, which turned out not to be fit for consumption, but which the plaintiff, an expert in such matters, bought on his own inspection. It was held there was no implied warranty. In Burnby v. Bollett, 16 M. & W. 644, it was held tliere was no implied war- ranty, on the ground that the vendor was not a dealer in meat. See infra, § 912. In Lukens v. Freiund, Sup. Ct. Kan. 1882, 25 Alb. L. J. 392, F., the plaintiff below, a farmer, bought of L., the de- fendant below, a miller, a bag of bran for the purpose of feeding his cows. Accidentally and without any negli- gence on the part of L., hut before re- moval from the mill, two copper clasps fell into the bran, were thereafter swallowed by one of F.'s cows, and lodging, one in her paunch and one in her stomach, poisoned and killed her. The bran was not manufactured for P. or upon any contract with him, but was simply sold out of a quantity then on hand belonging to L., and could have been inspected by F. at the time of purchase if he had desired. It was held by the supreme court, after a careful analysis of the authorities, that in the absence of express warranty, F. could not recover for the loss of his cow. After recognizing the position that fitness is implied in sales for human food. Brewer, J., went on to say; "Now the application of this excep- tion to the case at bar is denied ; it is said that the principle upon which the exception rests does not apply where the articles sold are not intended for consumption by man but only for use as food for cattle. No authorities have been found by counsel on either side of this question. We are left, there- fore, to determine it upon general prin- ciples. Upon what ground is an im- plied warranty rested in the case of the 'sale of provisions which does not exist in the case of a sale of other arti- cles ? Obviously it is not upon any 329 § 223.] CONTRACTS. [chap. XI. § 223. Selling by a merchant in the ordinary course of busi- ness implies that the goorls are of the character designated, and are merchantable.' "The fundamental understanding is, property grounds, or because thereby the estate of either party is affected ; but for reasons of public policy, for the preservation of life and health, the law deems it wise that he who engages in the business of selling provisions for domestic use should himself examine and know their fitness for such use, and be liable for a lack of such knowl- edge. One may not place poison where it is likely to be taken by one ignorant of its qualities. Regard for human life compels this ; no more may he sell food unfit to be eaten to a man who he knows is buying it to eat. The same reason controls, to wit, regard for life and health. But this, it will be re- membered, is an exception to the gene- ral rule of the common law, and the exception should not be extended be- yond the reach of the reasons upon which it is based. "If the preservation of human life and health be, as we think it is, the foundation of this exception, then it should not be extended to cases in which human life and health are in no wise endangered. Now the claim of the plaintiff is simply of a property loss, that his estate has been dimin- ished, and that alone is his cause of action. His injury is similar to that which he would have sustained if he had purchased from a wagon-maker a defective wheel, and thereby his wagon had broken down. No matter of life or health of himself or family is involved. We think, therefore, that no recovery can be had under the principles of this third exception. "Still further, it may be remarked that bran comes very nearly within the description given by some of the wit- nesses of it as the mere I'efuse or offal 330 of the mill. It is true the jury call it in their verdict a secondary product resulting from the manufacture of flour. It certainly is not the principal product of the grinding of wheat, nor that for which the mill is worked. It is that which is left after the flour has been manufactured. It is no uncommon tiling in manufacturing establishments, after the principal product is manufac- tured, that there remains a refuse which is of some value, and which is disposed of by the manufacturer as re- fuse, and for whatever it will bring. Now it would seem to enlarge very broadly the . doctrine of implied war- ranty, to extend it to this refuse. It is not that for the manufacture of which the manufacturer engages in business, it is not that to which he devotes his special attention and care, it is always of inferior value. This all parties understand ; they deal upon that basis, and to hold that the manufacturer warrants the quality of this refuse would seem to cast an unnecessary burden upon its disposal." ' /»/>«, §§ 905, 919 rt seq.; Leake, 2d ed. 407 ; Benj. on Sales, 3d Am. ed. §§ B.57, 661, S06, 8.57 ; Laing v. Fidgeon, 6 Taunt. 108 ; Josling v. Kingsford, 13 C. B. N. S. 447 ; Jones ;•. Just, L. R. 3 Q. B. 197 ; Bigge v. Parkinson, 7 H. & N. 955 ; Thrall v. Newell, 19 Vt. 202 ; Ilenshaw , . Robins, 9 llet. 87 ; Gay- lord Man. Co. r. Allen, 53 N. Y. 515 ; Borrekins v. Bevan, 3 Rawle, 23 ; Ed- wards r. Hathaway, 1 Pliila. '47 ; Bat- turs V. Sellers, 6 Har. & J. 249 ; Hyatt r. Boyle, 5 Gill & J. 110 ; Rodgers v. Niles, 11 Oh. St. 48 ; McClung v. Kelly, 21 Iowa, 508 ; Mann v. Evason, 32 Ind. 355 ; Merriam v. Field, 24 Wis. 640 ; Hanks v. McKee, 2 Lift. 227 ; Howie v. CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 223. that the article offered or delivered shall answer the descrip- tion of it contained in the contract. If the subject- g^j^^^^y matter be merely the commercial article or commo- merchant dity, the undertaking is, that the thing offered or merchant- delivered shall answer that description, that is to '^'"'"y- say, shall be that article or commodity, salable or merchant-, able. If the subject-matter be an article or commodity to be used for a particular purpose, the thing offered or delivered must answer that description, that is to say, it must be that article or commodity, and reasonably fit for the particular purpose."' But as will be hereafter seen more fully, when an article is ordered as such from a manufacturer, "if the known, defined, and described thing be actually supplied, there is no warranty that it shall answer the particular purpose intended by the buyer. "^ — It has just been stated that not only is it a condition precedent that goods sold should be substantially what they are described to be,' but there is an implied war- ranty, in cases where there is no opportunity for inspection, that they should be salable. The rule is thus definitely ex- pressed by Lord EUenborough:* "Under such circumstances (i. e., sale without opportunity of inspection), the purchaser has a right to expect a salable article, answering the descrip- tion in the contract. "Without any particular warranty, this is an implied term in every such contract. Where there is no opportunity to inspect the commodity, the maxim of caveat Rea, 70 N. C. 559. See notes to Chan- Whitney v. Boardman, 118 Mass. 242 ; deler v. Lopus, 1 Smith's L. C. 7th Jennings v. Gratz, 3 Rawle, 168 ; Weth- Am. ed. 299 et seq. erill c. Neilson, 20 Penn. St. 448. 1 Per cur. in Randall o. Newson, L. Elaborate notes on this topic will be R. 2 Q. B. D. 109, adopted in Leake, found in Benj. on Sales, 3d Am. ed. 2d ed. 408. In Gossler v. Sugar Re- §§ 600, 661. finery, 103 Mass. 331, it was held that » Benj. on Sales, 3d Am. ed. § 657,. a sale, by an importer, of "Manilla citing Chanter u. Hopkins, 4 M. & W. sugar" to refiners, would sustain a suit 399, discussed infra, § 905; and see for the price agreed on, although tlie notes to Chandeler v. Lopus, 1 Smith's, article delivered contained more im- L. C. 7th Am. ed. 299 et seq. purities than is usual with articles of ' As to conditions precedent, see that class. And this rule applies gen- infra, § 560. erally in oases where the distinctive ■* Gardiner u. Gray, 4 Camp. 144 ; character of the article is not afi'ected. adopted in Benj. on Sales, 3d Am. ed. See Swett v. Shumway, 102 Mass. 365 ; § 656. 331 § 223.] CONTRACTS. [chap. XI. e7nj)to?- does not apply.' He cannot, without a warranty, insist that it shall be of any particular quality or fineness, but the intention of both parties must be taken to be that it shall be salable in the market under the denomination mentioned in the contract between them."— In 1868, after a series of interme- diate approvals, this rule was finally reaffirmed by the Queen's Bench, where the following distinctions were taken :2 First, where there is an opportunity of inspection by the purchaser, and no fraud, there is no implied warranty, even though the defects are latent and the goods not merchantable;^ second, nor is there an implied warranty as to an article even when specifically described, " the actual condition of which is capable of being ascertained by either party ;"^ thirdly, there is no implied warranty as to an article ordered from a manu- facturer, and delivered as described by the purchaser.'' — It has been already seen, that a warranty need not be in any particu- lar words. ^ > On this point Judge Bennett refers, in a note as to sales of packed cot- ton, to Boorman u. Jenkins, 12 AVend. 566 ; Bcebe v. Robert, id. 413 ; Oneida Man. Co. V. Lawrence, 4 Cow. -144; Waring v. Mason, 18 Wend. 42.5 ; Salis- bury r. Stanipr, 19 iil. 1.59 ; as to canned fruit or vegotables, to Boyd u. Wilson, 83 Penn. St. 319; S. P., Whitaker r. McCormick, 6 Mo. Ap. 114. 2 .Jones f. Just, L. R. 3 Q. B. 197. 3 Emmerton a. Matthews, 7 H. & N. 586. 4 Barr -■. (iibson, 3 M. & W. 390. 5 Chanter r. Hopkins, 4 M. & W. 399 ; Ollivant ... Bayley, 5 Q. B. 288, cited in prior section. « .S»/i.-«, § 219. That a repr..s..nta- tion may operate as an estoppel, see infra, § 220; that a sale "with all faults" excludes warranty, infra, J 229 ; and that a warranty of title is implied in a sale, iiij'rn, § 230. — We have already seen that in Johnson !'. Rayltiui, L. R. 7 Q. B. D. 438, it was held by a majority of the court of appeal (see more fully supra, 382 § 221) that on a sale by a manufacturer of goods of a class manufacture. 1 by him, there is an implied contract that the goods were of his manufacture. In Scotland, liowever, it was held, in 1S80 and 1881, that wln-re a manufac- turer tenders goods of equal value with those manufactured by himself, in per- formance of a contract for the sale of suili goods, the purchaser is not enti- tled to refuse them. There is, there- fore, a conllict on this point between the Scotch and the English courts, which will be remitted to the house of lords for settlement. The question is discusse.l in an article in the Journal of Jurisprudence, reprinted in the American Law Record for Jlay, 1882 (vol. X. p. 641). — It is to hv observed, however, that the Scotch judges were not unanimous in the decision they reached, and that those hohling that the manufacturer was not liable agreed that, when he has a peculiar make or brand in the market, or when it can be supposed that there is any pretiayn affec- CHAP. XI.J REPRESENTATIONS AND WARRANTY. [§ 224. § 224. An implied warranty is not to be extended Defects 1 . ■ c _Li 1 op™ to in- to goods open to the inspection ot the buyer, sup- epection posing he has both opportunity and capacity ade- ""I'tM"^" quately to judge, he buying on this inspection.^ — against. Uonis, he is bound to supply goods of his own make, even if there be no stipulation to that effect in the con- tract. "Where the conflict of opinion commences," says the Journal of Juris- prudence, '-is where none of these ele- ments are present, where the article sold has no special repute, or name, or other distinction, but is such that one maker's make is as good as another's." 1 Infra, §§ 227, 245, and 907 ; Benj. on Sales, 3d Am. ed. § 657 ; Jones v. Just, L. R. 3 Q. B. 197 ; Gardiner v. Gray, 4 Camp. 144 ; Deming v. Foster, 42 N. H. 165 ; Vandewalker v. Osmer, 65 Barb. 556 ; Lord v. Grow, 39 Penn. St. 88; see Eight v. Bacon, 126 Mass. 10, cited infra, § 907 ; Morris v. Thomp- son, 85 111. 16 ; Cogel e. Kniseley, 89 111. 598; Robinson Machine Works v. Chandley, 56 Ind. 575 ; Gammell v. Gunby, 52 Ga. 504. In Hyatt u. Boyle, 5 Gill & J. 110, the warranty in such cases is limited to cases where the examination is "impracticable." The rule in Randall i\ Newson, above given, in implying a warranty of mer- chantability, goes beyond the earlier English cases, which limit such war- ranty to cases where there is no oppor- tunity given the buyer of examination. The latter has been the prevalent rule in the United States. Stevens r. Smith, 21 Vt. 90 ; Mixer c. Coburn, 11 Met. 561 ; Lamb t. Crafts, 12 Met. 353 ; Hart V. Wright, 17 Wend. 276 ; Wright V. Hart, 18 Wend. 456 ; Salisbury v. Stainer, 19 Wend. 159 ; Hoe v. San- born, 21 N. y. 552; Van Wyck v. Allen, 69 N. Y. 61. In Howard u. Hoey, 23 Wend. 350, Bronson, C. J., argues that a warranty of merchanta- bility is to be implied in all executory sales; S. P., Moses i'. Mead, 1 Denio, 378 ; and to this effect is the rule in Pennsylvania. Borrekins c. Bevan, 3 Rawle, 23 ; see notes to Chandeler v. Lopus, 1 Smith's L. C. 7th Am. ed. 299 et seq. " It has always been held," said Dickinson, J., in a case in 1881 in Minnesota, McCormick v. Kelly, "that a general warranty should not be con- sidered as applying to or giving a cause of action for defects known to the par- ties at the time of making the war- ranty, and both the weight of authority and reason authorize this proposition, namely, that for representations in the terms or form of a warranty of personal property no action will lie on account of defects actually known and under- stood by the purchaser at the time of the bargain. Margetson i. Wright, 7 Bing. 603 ; Dyer <■. Hargrave, 10 Ves. Jr. 506 ; Schuyler v. Russ, 2 Caines, 202 ; Kenner c. Harding, Sfi 111. 264 ; Williams v. Ingram, 21 Tex. 300 ; Marshall i . Drawhorn, 27 Ga. 275 ; Shewalter «.Ford, 34 Miss. 417 ; Brown r. Bigelow, 10 Allen, 242 ; Story on Contr. § 830 ; Benj. on Sales (2d. ed.), 502; Ghitty on Contr. (11th Am. ed.) 644. A warranty for the breach of the condition of which an action ex contractu for damages can be maintained, must be a legal contract, and not a mere naked agreement. It must be a repre- sentation of something as a fact, upon which the purchaser relies and by which he is induced, to some extent, to make the purchase, or is influenced in respect to the price or consideration. Manuf. Society u. Lawrence, 4 Cow. 440 ; Lindsey v. Lindsey, 34 Miss. 432 ; Blythe v. Speake, 23 Tex. 429 ; Adams u. Johnson, 15 111. 345 ; Ender v. Scott, 333 § 225.] CONTRACTS. [CIIAP. XI. But where there is an express warranty, a vendee is not bound to look for defects. He has a right, when these defects do not obviously appear, to rely on the warranty.' — Where goods have been in the buyer's hands for some time before the sale, no warranty as to defects open to observation will be implied.^ — That in cases open to inspection, a fault, to be covered by an implied warranty, must be latent {vithivt latens), is a settled rule of the Roman law,^ but unless the pur- chaser is an expert, it is enough that it should be of a charac- ter to escape the notice of ordinary observers, " talis tamen morbus sit, qui omnibus potuit apparere."'' The purchaser is bound to exercise the care of a good business man of his class. " Ignorantia emtori prodest, quae non in supinum hominem cad it, ''^ " non dissolntam ignorantiam eratoris excusari opor- tebit."* A party cannot recover for a loss which his own negligence provokes ; and as negligence of this class will be regarded an omission to look at obvious conditions in an arti- cle tendered for inspection. — If a physical defect is skilfully covered up by the vendor, the latter becomes liable in an action for deceit. If it is not covered up, then either the purchaser's negligence is to be chargeable with the loss, or he is to be regarded as having agreed to take the article as it is.' § 225. As we will hereafter have occasion to see ffrnplf fm- more fully, selling by sample implies that the goods plies corre- should Correspond in quality to the sample, and if spondente ^ _ . with sam- there be a material variance, the purchaser may re- scind.* The sample excludes an implied warranty 11 ib. 35 ; Hawkins ... Berry, 5 Gilm. » L. 1, § 6 ; L. 14, § 10 ; L. 48, § 4, 36 ; 2 Add. on Contr. 626 (Morgan's D. h. t. ed.)." And see Pinney v. Andrews, ^ L. 10, § 14, D. h. t. ; Koch, II. 41 Vt. 631 ; Scarborough ,•. Reynolds, 471. 13 Rich. 98; Hameright u. Storer, 31 ' L. 15, § 1, D. de contr. emt. (18, 1). Ga. 300. 6 L. 55_ ;. f. d. j,. t, > Infra, § 227; Benj. on Sales, 3d ' Ibid. Am. ed. § 618 ; citing Tye r. Fynmore, » Infra, § 914. In Nichols t-. Godts, 3 Camp. 462; Heushaw v. Robins, 9 10 Ex. 191, a seller was held responsi- Met. 83 ; see fully for cases, infra, § ble for adulteration of rape oil, sold as 227. rape oil, even though the bulk corre- 2 Dooley v. Gallagher, 3 Hughes, C. sponded with the sample, r.. 214. 331 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 227. on all matters within its range;' but not as to matters outside such range, nor as to matters not discoverable by the sample, in which cases the warranty of merchantability may be im- plied.^ In both description and quality the bulk of the goods must correspond with the sample f but this, when a great mass of goods is sold, will be satisfied by an average correspondence, if the sample fairly represents the aggregate.^ As will here- after be seen more fully, showing sample is not necessarily sale by sample;^ the purchaser may reject if the goods do not correspond with sample,' but an average correspondence with sample is sufficient.' § 226. A false representation may be an estoppel;^ Represen- and so may be a warranty when made with intent beanes- that it should be acted on.' '°pp^^- § 227. When a buyer shows that he relies on his own judg- ment, and takes no express warranty, and invites no opinion from the seller, then a warranty will not be i-anty when implied.'" It is otherwise when reliance is placed on ^g^ds on the seller's statements, if he be an expert in reference Ms own . judgment. to the thing sold." J3ut generally a warranty is not to be stretched to cover patent defects, open to the buyer,'^ ' Infra, §§ 916-18 ; Leake, 2d ed. 408 ; Benj. on Sales, 3d Am. ed. § 667 ; Mody V. Gregson, L. R. 4 Ex. 49 ; Dickson v. Zizinia, 10 C. B. 602. 2 Mody V. GregSon, L. R. 4 Ex. 49 ; Fraley v. Bispham, 10 Penn. St. 320. ' Infra, § 914; Azemar a. Casello, L. R. 2 C. P. 677 ; Henshaw v. Robins, 9 Met. 86 ; Brewer v. Lewis, 19 Barb. 574 ; Moses v. Mead, 1 Denio, 378 ; Hargons v. Stone, 5 N. Y. 73 ; Borre- kins V. Bevan, 3 Eawle, 37 ; Boyd v. Wilson, 83 Penn. St. 319, where, how- ever, it was held that a sale by sample does not warrant quality, but merely similarity with sample, and merchant- ability. « Leonard v. Fowler, 44 N. Y. 289. That in sample sales there should be opportunity of Inspection, see infra, §§ 505, 916. 6 Infra, § 915. ^ Infra, §§ 914 et seq. ? Infra, § 917. 6 Infra, § 234. 9 Infra, § 237. '0 Supra, § 224 ; infra, §§ 245, 907 ; Chanter v. Hopkins, 4 M. & W. 402; Dounoe v. Dow, 64 N. Y. 411 ; Lord t-. Grow, 39 Penn. St. 88 ; Cogel v. Knise- ley, 89 111. 598 ; see Hight v. Bacon, 126 Mass. 10, cited infra, § 907. As to suppression of defects by vendor, see infra, § 250. " Infra, §§ 245, 250 ; Bragg v. Mor- rill, 49 Vt. 45 ; Hoe v. Sanborn, 21 N. Y. 652 ; Bartlett u. Hoppart, 34 N. Y. 118. See Chandeler v. Lopus, 1 Smith's L. C. 7th Am. ed. 299 et seq.; Nye v. Alcohol Works, 51 Iowa, 129. 12 Infra, § 907 ; supra, § 224 ; Dyer v. Hargrave, 10 Ves. 505 ; Margetson u. Wright, 5 M. & P. 606 ; 7 Bing. 603. 335 229.] CONTRACTS. [chap. XI. and examined by him/ though it is otherwise as to mat- ters which the buyer is incapable, from ignorance or infirm- ity, of distinguishing; or which escaped his notice;^ or as to which he is misled.^ Nor is a buyer bound to investigate tliat which is warranted. He is entitled to take the seller's warranty as relieving him, unless in cases of patent and glar- ing defect, from examination.* But it is otherwise when the false statement is an appeal to investigation, and not a war- ranty of a fact.° § 228. Even where there is no warranty, a person selling an article so negligently made by him as to do injury,^ mav'^be 01' o^ whose dangerous properties he, as seller, ought iiai)ie for ^^ ]jg cognizant,' is liable in a suit for negligence; though there is no such liability on the [jart of a vendor, even though he be the manufacturer, to a party in- jured by the thing sold, where there is no contractual relation between the plaintiff and the defendant, or the plaintifl' was not within the defendant's contemplation as the person to use the thing sold.^ § 229. A sale of an article "with all faults" excludes the hypothesis of warranty, and relieves the seller from liability. ' Itifra, §§ 245, 9li7. 2 Infra, § '2-ib ; Story on Gout. § 1057 ; idting Butterfield t. Burroughs, 1 yalk. 211. 3 Infra, j 245. * Benj. on Sales, 3d Am. ed. § 618; Shepherd <-. Kain, 5 B. & Aid. 240; Heushaw «. Robins, 9 Met. 89 ; Mead c. Bunn, 32 N. Y. 273 ; Thorne r. Pren- tiss, 83 111. 99 ; Ruff v. Jarrett, :I4 III. 475 ; and oases cited supra, § 224 ; infra, § 245. 6 Su-fira, § 224 ; infra, § 245. " Benj. on Bales, 3d Am. ed. §§ 431, 904; George c. Skivington, L. R. 5 Exch. 1. See note to Chandeler v. Lopus, 1 Smith's L. ('. 7th Am. ed. 299 ; and see infra, §§ 1043 et aeq. ' Infra, § 241 ; Benj. on Sales, §§ 431, 668 ; Langridge v. Levy, 2 M. & W. 519 ; 4 M. & W. 337 ; Francis o. 836 Cookrell, L. R. 5 Q. B. 184 ; Farrant v. Barnes, 11 C. B. N. S. 553: Hayes v. Porter, 22 Me. 371; Davidson r. Nichols, 11 Allen, 519 ; Wellington o. Downer Co., 104 Mass. 64; Norton r. Sewall, 106 Mass. 143 ; Thomas r. Winchester, 6 N. Y. :ili7. 8 Cattle V. Stockton Water Works, L. R. 10 Q. B. 453 ; Loop r. Litchfield, 42 N. Y. 351 ; Losee v. CUite, 51 N. Y. 494. See comments in Wh. on Neg. §§ 91, 92, 440, 441, 443, 774, 857. That none but a party can sue on a contract, see infru, § 784. In Langridge v. Levy, the representation of soundness (the case being that of a gun which burst) was made to the plaintiff's father, but it was understood at the time thai the gun was for the plaintiff's use. See distinction put in Coughtry u. Globe Woollen Co., 56 N. Y. 124. CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 230., unless there be fraud or unless there be want of adaptation to the purpose of the sale.' And it has been held by the House of Lords, that a sale " with all faults" not an fault's'*'' only covers secret faults, such as miffht be consistent excludes •' JO warranty. with the article being merchantable, but protects the seller in case of a sale of animals which turn out to be unlit for the market in consequence of a contagious disease.^ The identity of the article, however, must be preserved.' § 230. The prevalent opinion in the United States is, that there is a warranty of title in all cases of executory sales, when the owner of goods sells them while in of'tuiiT'^ his possession or in his agent's possession as his own, implied in even though there be no affirmation of title.* "It is also," says Mr. Benjamin,' " universally conceded, that in the sale of an ascertained specific chattel, an affirmation by the vendor that the chattel is his is equivalent to a warranty of title ; and that this affirmation may be implied from his conduct, as well as from his words, and may also result from the nature and circumstances of the sale. But it has been said, thirdly, that in the absence of such implication, and where no express warranty is given, the vendor, by the mere ' Benj. on Sales, 3d Am. ed. §§ 447, rier, 49 N. H. 310 ; Sherman v. Trans. 602, 671 ; Schneider v. Heath, 3 Camp. Co., 31 Vt. 1G2 ; Coolidge v. Brigham, 506 ; Baglehole v. Walters, 3 Camp. 1 Met. 551 ; Shattuck i\ Green, 104 154; Taylor w. BuUen, 5 Ex. 779. Mass. 42; Hoe v. Sanborn, 21 N. Y. 2 Ward :j. Hobbs, L. R. 4 App. Cas. 552 ; McCoy !•. Archer, 3 Barb. 323 ; 13, reversing L. R. 2 Q. B. D. 331, and Burt v. Dewey, 40 N. Y. 283 ; McKnight aff. S. C. 3 Q. B. D. 150 ; see Shepherd v. Devlin, 52 N. Y. 399 ; Doraey o. V. Kain, 5 B. & Aid. 240. In Ward v. Jackman, 1 S. & R. 42 ; Boyd v. Bopst, Hobbs, Lord Cairns, in his Judgment, 2 Dall. 91 ; McCabe v. Morehead, 1 W. held that as the suit was on the war- & S. 513 ; Charnley v. Dulles, 8 VV. & ranty, no fraud being alleged, the war- S. 353 ; Darst v. Brockway, 11 Ohio, ranty must be proved as a matter of 462 ; Eagan u. Call, 34 Penn. St. 236 ; contract, and that a contract, of war- Whitaker v. Eastwick, 75 Penn. St. ranty was excluded by the statement 229 ; Rice v. Forsyth, 41 Md. 389 ; that there was to be no warranty. See Byrnside v. Burdett, 15 W. Va. 702 ; supra, § 222. Williamson i. Simmons, 34 Ala. 691 ; 3 Whitney v. Boardman, 118 Mass. Storm u. Smith, 43 Miss. 497; Mar- 247. shall o. Duke, 51 Ind. Hi; Morris u. * Benj. on Sales, 3d Am. ed, §§ 627, Thompson, 85 111. 16; Chancellor v. 630 ; Story on Cont. § 1062 ; Thurston Wiggins, 4 B. Mon. 201. V. Spratt, 52 Me. 202 ; Sargent v. Cur- s gales, 3d Am. ed. § 627. VOL. I.— 22 337 § 230.] CONTKACTS. [chap. XI. sale of a chattel, does not warrant his title and ability to sell; though all again admit, fourthly, that if in such case the vendor knew he had no title, and concealed that fact from the buyer, he would be liable on the ground oi fraud. " On the other hand, no such warranty is held to exist when the thing sold is not in the possession of the vendor or of his agent.^ — 1 Kent's Com. il. p. 278 ; Huntington „. Hall, 36 Me. 501 ; Emerson v. Brig- ham, 10 Mass. 202 ; MnCoy i'. Artcher, 3 Barb. 323 ; Edick u. Crim, 10 Barb. 447 ; Scranton u. Clark, 39 N. Y. 220 ; Andres v. Lee, 1 Dev. & Bat. Eq. 318 ; Fletcher ?.. Drath, 66 Mo. 126 ; Stephens V. Ells, 65 Mo. 456 ; Long v. Hicking- hottom, 28 Miss. 772. This distinction, however, is repudiated in Eichholz u. Banister, 17 C. B. N. S. 708, and Mor- ley (■. Attenboroiigh, 3 Ex. 500, in Purres t;. Rayer, 9 Price, 488, and in Story on Cont. § 1062, where it is stoutly contested, citing Hammond c. Allen, 2 Sumn. 394 ; 11 Pet. 71 ; Smith I'. Fairbanks, 7 Foster, 521 ; Strong .•. Barnes, 11 Vt. 221 ; Coolidge o. Brig- ham, 1 Met. 551 ; Defreeze v. Trnmper, 1 Johns. 274; Swett ,. Colgate, 20 Johns. 202 ; Ritchie r. Summers, 3 Yeates, 531 ; Willing v. Peters, 12 S. & R. 177 ; Mockbee v. Gardner, 2 Har. & a. 177 ; Payne c. Rodden, 4 Bibb, 304. See notes to Chandeler c. Lopus, 1 Smith's L. C. 7th Am. ed. 299 et seq. In People's Bank v. Kurtz, 11 Weekly Notes, 226, Sup. Ct. Penn. 1882, it was held that while the vendor of stock in his own possession warrants his own title, he does not warrant that the stock was not part of a fraudulent overissue. " It may now," said Sharswood, C. J., " be regarded as well settled, that a party selling as his own, personal prop- erty of which he is in possession, war- rants the title to the thing sold ; and that if by reason of a defect of title nothing passes, the purchaser may re- cover back his money, though there be 338 no fraud or warranty on the part of the vendor. This doctrine is held to apply to clioses in action, as well as other de- scriptions of personal property (Charn- ley c. Dulles, 8 W. & S. 353). "Shares of stock in a corporation are choses in action, giving a right to dividends and an interest in the cap- ital. The certificate is the evidence of such ownership, and there can be no doubt that it the certificate is forged, or the holder is not such bona fide, so that he has no claim on the corpora- tion, the vendor would be liable to his vendee on the implied warranty of title. His possession of the certificate would be as to his vendee possession of the stock, just as possession of a bond or note is possession of the debt wliich they represent. Where, however, there has been a fraudulent overissue of stock, evidenced by certificate under the genuine seal of the corporation, the case presented is somewhat differ- ent. It has been well settled that a corporation is liable to bona fide holders of such fraudulent certificates, because, like individuals, they are responsible for the fraudulent exercise of the power intrusted Ijy them to their officers or agents. It is unnecessary in this case to consider whether they are bound to permit a transfer on their books, and to deliver a new certificate to the bona fide vendee. It may be that where the overissue is in excess of the amount authorized by the charter, they would not be. But it seems to be established, upon principle as well as authority, that the bona fide holder of such a CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 230. "The one controverted question," accordino; to Mr. Benjamin, "is thus narrowed to this point whether in the sale of a chattel fraudulent certificate would have a right of actiou against the corporation, and that his measure of damages would he the market value of his stock at the time the transfer was demanded (Willis ... Philada. & Darby R. R. Co., 6 W. N. C. 461, and cases cited in the opin- ion of Judge Hare). The vendor of such a certificate has then a title which he can transfer, and a remedy against the corporation. Suppose the shares in the case before us had been trans- ferred by an original subscriber, his vendee would have been in the same position as the assignee of shares sub- sequently issued in excess of the char- ter. He would have had a clear right to demand a transfer and new certifi- cate. Such certificate, however, would have been worth to him only the value of the stock in the market at the time. If his transfer had been refused, he would be entitled to the same remedy and the same measure of damages. The vendor of shares of stock certainly does not warrant the solvency of the corporation. Corporations are espe- cially liable to be made insolvent by the embezzlement and frauds of their agents or officers. It matters not whether the loss arises from robbery or embezzlement, or by the fraudulent issue of stock, the value of the stock is depreciated. It matters not whether such fraud or robbery was before or after the sale of the stock, the bona fide vendor cannot, under the rule in ques- tion, be held responsible for the depre- ciation in value. It is one of the risks which are assumed by all dealers in such securities. It is agreed in the case stated that 'the certificates were in the usual form and regular on their face, and were issued by the duly con- stituted officers of the company, and were sealed with the genuine seal of the corporation.' We are of opinion that the implied warranty of title ex- tended no further, and that there was no breach." That on a sale of bonds by telegraph there is a warranty of genuineness, see Donaldson u. Newman, 9 Mo. Ap. 235. That on a sale of accounts there is an implied warranty that they are due, see Gilchrist v. Hilliard, 53 Vt. 592. "In this state," said Ray, J., in a case before the Supreme Court of Mis- souri in 1881, "the principle is well settled, that the purchaser of land, who lias taken a conveyance with cove- nants of title, or a bond for such a con- veyance, and is placed and continues in the undisturbed and undisputed possession thereof, will not be relieved against the payment of the purchase- money, on the mere ground of defect of title ; there being no fraud or false representations as to the title, and no eviction. In all such cases he cannot resist the payment of the purchase- money, without offering to restore the possession, thus acquired by him, to the vendor. Mitchell v. McMiillen, 59 Mo. 252 ; Harvey v. Morris, 63 lb. 475 ; Wheeler v. Standley, 50 lb. 609 ; Con- nor V. Eddy, 25 lb. 72 ; Smith v. Busby, 15 lb. 393. It is equally well settled, in this state, that a purchaser who has paid for land may, where the para- mount title is outstanding, maintain an action against his vendor for a breach of his covenant of warranty, without an actual eviction : ' That is, an actual dispossession, by process of law, consequent upon a judgment, is not necessary, in order that a cove- nantee may maintain an action for breach of the covenant of warranty, 339 230.] CONTRACTS. [chap. XI. an innocent vendor, by the mere act of sale, asserts that he is owner. . . . The negative is stated to be the true rule of In all sucli cases, however, of volun- tary dispossession, or "ouster in pais," where there has been no judgment, the burden of proof is upon the cove- nantee to establish the adverse para- mount title to which he has yielded ; and the possession should only be sur- rendered after claim or demand made therefor.' Morgan v. R. R. Co., 63 Mo. 129, and cases cited. Such also seems to be the law in other states, in like controversies, between vendees and vendors of real estate. Whitney i. Lewis, 21 Wend. 131 ; Lamerson v. Marvin, 8 Barb. 1 ; Estabrook v. Smith, 6 Gray, 572 ; Greenvault i\ Davis, 4 Hill, 643 ; Fowler u. Poling, 6 Barb. 165 ; Hamilton c. Cutts, 4 Mass. 349. It may be remarked, however, that the implied warranty of title, upon the sale of personal property, has been held by the authorities to be analogous to a covenant for quiet enjoyment, in the sale of lands ; and it would seem, from these authorities, that the courts do not maintain a different rule in actions based on a breach of warranty of title, on the sale of personal prop- erty, than is adopted in a like action in the sale of real estate. McGiffln v. Baird, 62 N. Y. 331 ; Bardewell v. Colie, 1 Lans. 145, 146 ; Sweetman v. Prince, 26 N. Y. 232, 233; Striiigham o. Ins. Co., 40 N. Y. 285, 2s(; ; Matheny o. Mason, 12 Rep. 627." As sustaining the rule that "as to goods in possession of the vendor there is an implied warranty of title," the learned American editor of Benjamin on Sales (§ 641) cites, in addition to cases given above, Eldridge v. Wad- leigh, 3 Fairf. 372 ; Huntington v. Hall, 36 Me. 501; Dorr r. Fisher, 1 Cush. 273 ; Bennett v. Bartlett, 6 Cush. 225 ; Vibbard «. Johnson, 19 Johns. 340 78 ; Sweet v. Colgate, 20 .Johns. 196 ; Hoe V. Sanborn, 21 N. Y. 552 ; Payne V. Rodden, 4 Bibb, 304; Gookin ,.. Graham, 5 Hump. 484 ; Inge v. Bond, 3 Hawks, 101; Colcock ,■. Goode, 3 McCord, 513; Cozzins i. Whitaker, 3 St. & P. 322 ; Williamson r. Sammens, 34 Ala. 691. But even where the ven- dor is out of possession at the time of the sale, there has been held to be an implied warranty, unless the goods were held adversely and known to be so by the purchaser. Smith v. Fair- banks, 7 Fost. 521. In Morley v. Attenborough, Parke, B., said : " From the autljorities in our law, to which may be added the opin- ion of the late Lord Ch. J. Tiudal in Ormrod c. Huth, 14 M. & W. 664, it would seem that there is no implied warranty of title on sale of goods, and that if there be no fraud, a vendor is not liable for a bad title, unless there is an express warranty, or an equiva- lent to it by declaration or conduct ; and the question, in each case where there is no warranty in express terms, will be, whether there are such circum- stances as to be equivalent to such a warranty. Usage of trade, if proved, as a matter of fact, would, of course, be suiiicient to raise an inference of such an engagement ; and, without proof of such usage, the very nature of the trade may be enough to lead to the conclusion that the person carrying it on must be understood to engage that the purchaser shall enjoy that which he buys as against all persons." " We do not suppose that there would be any doubt, if the articles are bought in a shop professedly carried on for the sale of goods, that the shopkeeper must be considered as warranting that those who purchase will have a good title to CHAP. Xr.] REPRESENTATIONS AND -WARRANTY. [§ 230. law on this point in recent text-books of deservedly high repute.' Blackstone, however, gives the contrary rule,^ 'if the vendor sells them as his own.' But the authority mainly relied on by the learned authors mentioned in the note is the elaborate opinion given by Parke, B., in the case of Morley v. Attenborough,' where the dicta of that eminent judge cer- tainly sustain the proposition, although the point was not involved nor decided in the case. It is, however, the fact," says Mr. Benjamin (1881), " that no direct decision has ever been given in England to the effect, that where a man sells a chattel he does not thereby warrant the title." He adds that there have been repeated references to the dicta of Parke, B., on this point, and that dissatisfaction with them has been more than once suggested. This conclusion he sustains by a critical examination of the English cases.^ — The question is virtually one of burden of proof. Where chattels are sold, it is maintained on the one side that a warranty of title is implied, unless it be shown from the facts of the case that this never was intended; while it is maintained, on the other side, that no warranty is implied, unless it is shown to have been intended keep the goods purchased But transaction on the latter, unless he in the case now under consideration, had expressly stipulated that it should the defendant can he made responsible be borne by the former. No warranty only as on a sale of a forfeited pledge, of quality or title was consequently eo nomine." implied from the sale either of personal ' Chit, on Cont.414, 9th ed. ; Broom's or real estate." 1 Smith's Lead. Cas. Leg. Max. 766, 4th ed. ; Leake on Cont. 7th Am. ed. 307, citing Howland v. 198 ; 2 Tayl. on Ev. 997 ; BuUen & Doyle, 5 R. I. 33, where Ames, J., Leake, Prec. of PI. 229 ; 6 Co. Lit. 102o, said : " There is no warranty of title, cited Benj. on Sales, § 628. anymore than of quality, implied from " 2 Bl. Com. 451. the mere fact of the sale of a chattel, 3 3 Ex. 500. the. rule of caveat emptor applying to * As is said by the learned American both." But the learned editors add: editors of Smith's Leading Cases (i. 307, " It is notwithstanding generally held 7th ed.), "in the recent case of Eiohholz in the United States that the sale of V. Banister, 17 C. B. N. S. 708, Mor- chattels implies a warranty, unless ley V. Atten borough was qualified if not the circumstances are such as to give overruled." — " The policy of the com- rise to a contrary presumption, as mon law seems to have been to limit the where the vendor merely sells such effect of a sale to the transfer of the right right as he has, without either having of property from the vendor to the pur- or undertaking to give actual or con- chaser, and to throw the risk of the struotive possession." 341 § 230.] CONTRACTS. [CHAP. XI. from the facts of the ease. Now it is hard to conceive of any sale of chattels in which there does not transpire some fact either implying or disclaiming title. The question, therefore, is dependent upon the construction of particular contracts of sale. But so far as the distinction before us goes to assert that the mere fact that goods sold by a party are not at the time of the sale in his possession, or in the possession of an agent, implies a disclaimer of title, it cannot be sustained on principle. If such a sale is for a full consideration, an affir- mation of title is implied.' And it is admitted on all sides that such warranty is excluded in all cases in which it is in- consistent with the attitude of the vendor at the time of the sale. When that attitude is such as to utter the warning caveat emptor, then caveat emptor is the rule.^ Hence, there is no warranty of title by a pawnbroker;^ nor by an officer sell- ing under an execution ;^ nor in sales in bankruptcy'.* But there is a warranty of title in an exchange of articles actually or constructively in possession of the parties exchanging.' — Specific performance, it should be added, will not be enforced if there be a failure of title, and a contract of sale will be set aside on ground of mistake when there is no title to sell.^ — A covenant to convey lands binds to give a good title.' The Roman law on this topic is thus succinctly stated by Windscheid, one of the most authoritative of recent German commentators.'* The vendor is liable in case of the purchaser's ' Such appears to have been Chancel- O'Connor, 29 Oh. St. 651 ; Fore r. Mc- lor Kent's ultimate view, as given in the Kenzie, 58 Ala. 115; Hensley w. Baker, fourth and later editions, of the passage 10 Mo. 157. above cited. See, also, 11 Law Rep. ^ Moser c. Hoch, 3 Barr, 230. 272; 12 Am. .Jur. 311; Benjamin on « Patee u. Pelton, 48 Vt. 182; Hunt Sales, §628; Leake, 2d ed. 402. u. Sackett, 31 Mich. 18; Byrnside r. 2 Purvis V. Kayer, 9 Price, 488; Mc- Burdett, 15 W. Va. 702; cited Benj. Coy r. Archer, 3 Barb. 323 ; Rodrigues 3d Am. ed. § 641. u. Habersham, 1 Sp.-ars, 314. ' 1 Story's Eq. Jur. §§ 143a, 161, 3 Morley!'. Attenborough, 3Ex. 512; 778, 779; tiraham v. Oliver, 3 Beav. Eichholz V. Banister, 17 C. B. N. S. 124. 708. s Rawle on Gov. 565 ; Hill v. Hohart, < Chapman c. Speller, 14 Q. B. 621 ; 16 Me. 170 ; Little v. Peddleford, 13 N. Bagueley ;;. Hawley, L. R. 2 C. P. 625 ; H. 167 ; Carter „. Alexander, 71 Mo. Baker r. Arnot, 67 N. Y. 448 ; Bashore 585. V. Wister, 3 Watts, 490 ; Hicks v. Skin- a Pand. § 391. ner, 71 N. C. 539 ; Mech. Sav. Inst. v. 342 CHAP. XI.] REPRESENTATIONS AND WARRANTY. [§ 231' eviction (Entwehrung), that is to say, he is liable to the pur- chaser in case the latter loses the goods from the vendor's defective title. The vendor is obliged to secure to the pur- chaser not only momentary but permanent possession : praes- tare emtori rem habere licere. 1. The purchaser must lose the thing on account of de- fective title. It is not enough if he loses it on other grounds, e. g., by its destruction, or its seizure by the state, or by a tliird person' through violence. When the eviction is by judi- cial process, then the claim against the vendor is complete, though the vendor may subsequently contest it by showing that the judgment was wrongful and collusive, or had been entered in consequence of the purchaser's negligence.' On the other side, it is not necessary that the defect of title should be declared by a judicial decree; if the purchaser voluntarily gives up the property to an adverse litigant, he can recover from the vendor by proving that the claim against him was one which he could not resist. The proper course for the pur- chaser, in case his title is judicially contested, is to notify the vendor — litem denuntiare — who then is entitled to interplead ; but a neglect to give this notice does not deprive the pur- chaser of his right to indemnity should it appear that the vendor's intervention would have led to a different result. 2. The defect of title must be imputable to the vendor.^ 3. The goods must be actually taken from the purchaser, or he must have been obliged to have made some sacrifice to retain them; " vel daninatus est litis aestimatioiie." It makes no matter what shape the adverse process takes, whether it goes to divest property entire or to impose a lien, provided the purchaser be dispossessed, either in whole or in part. § 231. In our own law (modifying in this respect the Roman rule), the preponderance of authority is that ,j, ^^, . to sustain a suit on a warranty of title, there should suit there be an eviction of the vendee.' When, however, eviction. ' L. 51, pr. D. de evict. ; L. 1, C. de where are cited, Sweetman v. Prince, rer. per. iv. 64. 62 Barb. 256 ; Krumbliaar v. Birch, 83 2 L. 1, C. de peric. (iv. 48) ; L. 11, Penn. St. 426 ; Linton v. Porter, 31 111. pr. D. de evict. 107 ; Gross v. Kierslii, 41 Cal. 111. As ' Benj. on Sales, 3d Am. ed. § 627, to rule in Kentucky, see Payne v. 343 § 231.J CONTRACTS. [chap. XI. there is a fraudulent misstatement of title on the part of the vendor, eviction need not be a condition precedent to suit.^ In Massachusetts, eviction is not a condition precedent to a suit,^ unless in cases where the third party contesting the title is a bankrupt assignee.^ Rodden, 4 Bibb, 304; Chancellor u. Wiggens, 4 B. Mon. 201 ; Tiptou v. Triplett, 1 Mete. (Ky.) 570;. ag to Tennessee, see Wood u. Caviu, 1 Heed, 506. 1 Case V. Hall, S4 Vi^end. 102; Sweetman v. Prince, 62 Barb. 256. 344 '' Grose v. Hennessey, 13 Allen, 389 ; Perkins v. Whelan, 116 Mass. 542 ; S. P. Dryden v. Kellogg, 2 Mo. Ap. 87. ' Fogg V. Willcut, 1 Cush. 300 ; Gay c. Kingsley, 11 Allen, 345. CHAP. XII.l FRAUD. CHAPTER XII. FRAUD. Fraud is an intentional distortion of the truth, § 232. Party defrauded may rescind or sue for damages, § 232 a. Contracts may be divisible in respect to fraud, § 233. False representations may be estoppels, §234. When both parties are involved in fraud, neither can recover, § 235. When there is fraudulent misrepre- sentation, good motives are no de- fence, § 236. False representation must have been with intent to be acted ou by party injured, § 237. Fraud need not have been lucri causa, § 238. Fraudulent intention to be inductively proved, § 239. And so of falsity, § 240. Reckless misstatement imposes respon- sibility, § 241. Must be causal relation between fraud and injury, § 242. Fraud need not be the sole motive, § 242 a. Injury must be actually sustained, § 243. The losing party must believe the false statement, § 244. And must be without immediate means of testing : contributory negligence, § 245. False statement as to collateral matter does not avoid, § 246. Party not bound by third party's mis- statement or fraud, § 247. Fraud may be in conduct as well as in words, § 248. When non-disclosure of qualification leaves statement untrue, this is a false representation, § 249. Non-disclosure of facts which superior business sagacity would discover does not avoid contract, § 250. Party suppressing must, to be liable, actively negative fact suppressed, § 251. Neither party is bound to correct the other's misconceptions, § 252. Nor is a party bound by his silence when not called on to speak, § 253. When there is a fiduciary relation, disclosure becomes necessary, § 254. Proposer of business bound to give fair statement, § 255. So of promoter of company, § 255 a. Applicants for insurance bound to state all material fafcts, § 256. So with parties to family negotiations, §256 a. False promise not a false statement, § 257. Intention not to pay may be a false pretence, § 258. False opinion not n false pretence, § 259. And so of conjectural value, § 260. Misrepresentations to be distinguished from pufiFs, § 261. False representations of solvency bind, §262. And so of false warranty, § 263. General statement of law does not 345 § 23-2.] CONTKACTS. [chap. XII. avoid ; otherwise as to specific opin- ion, § 264. Marriage voidable when under mistake as to person, § 265. Fraudulent marriage settlement may be set aside, § 266. Employment of puffer at auction may be a fraud, § 267. Vendor may set aside auction sale if bidders were kfpt back, § 268. Agent's statement during negotiations binds principal, § 269. False statement in range of .Tuthority binds, § 270. But statements, when contractual, must be coincident, § 271. Statement must be within range of authority, § 272. Reports to principal bind, § 273. (icneral agent may make contractual admissions, § 274. Corporations necessarily so bound, § 275. Shareholders relieved from contract on proof of fraud, § 276. Corporation liable for agent's deceit, but not directors, § 277. Agency must be established by proof aliunde^ § 278. Principal not liable for agent's col- lusive agreements witli third party, nor in deceit for agents' independent false statements, § 279. § 232. Fraud is a distortion of the truth with intent to inflict on another pecuniary damage. '^ It makes no hiU'uHonar ^''^tter whether the fraud is expressed in words or in distortion conduct f nor, if expressed in words, is it necessary that these words should have the fraud unequivo- cally stamped on them. If the intention is to defraud, and this intention is consummated, the party defrauding is re- sponsible, no matter how ambiguous or equivocal may have been the words he used.' — In an oft-quoted passage in the 1 L. 1, § D. h. t. ; L. 1, § 2; L. 7, § 3, 8; L. 8, L. 9, § 2; L. 37, D. h. t. Bright V. Eynon, 1 Burr. 390 ; Fox- croft /■. Devonshire, 1 W. Bl. I'.ig ; Mallary v. Leach, 35 Vt. 1.56. See notes to f'handeler i. Lopus, Smith's L. 0. 7th Am. ed. 299 ; Smith <■. Rich- ards, 13 Pet. 36. Fraud in the Roman law is subjected to the same test as dnress : contracts induced by it are not ipso jn re invalid, but may be invalidated ope exveptionis. Supra, § 145. 2 Infra, § 248. ■■" Lee V. Jones, 17 C. B. N. S. 482 ; 14 C. B. N. S. 386 ; infra, § 242 el xeq. "Fraud is a false representation of fact, made with a knowledge of its falsehood, or in reckless disregard 346 whether it is true or false, with the intention that it should be acted on by the complaining party, and actually in- ducing him to act upon it." Anson, 145. " Fraud generally includes misrepre- sentation. Its specific mark is the pre- sence of a dishonest intention on the part of him by whom the representa- tion is made. In this case we have a mistake of one party caused by a rep- resentation of the other, which repre- sentation is made by deliberate words or conduct with the intention of there- by procuring consent to the contract, and without a belief in its truth." Pol- lock, 3d ed. 524. Mr. Bispham (Eq. § 24), following Lord Hardwicke in Chesterfield v. Jan- CHAP. XII.] FRAUD. [§ 232. Die;e8t/ we have the following definitions: "Dolum malum Servius quidam ita definit, machinationem quandam alterius decipiendi causa, cum aliud simulatur et aliud agitur. Labeo autem posse (et)sinesimulatione idagi, utquiscircumveniatur; posse et sine dolo male, aliud agi, aliud simulari; sicuti faciant, qui per ejusmodi dissimulationem deserviant, et tuentur vel sua vel aliena. Itaque ipse sic definiit, dolum malum esse omnem calliditatem, fallaciam, machinationem ad circumve- niendum, fallendum, decipiendum alterum adhibitam. Labe- onis definitio vera est."^ — Judge Story tells us,' that " it is not easy to give a definition of fraud in the extensive signifi- cation in which that term is used in courts of equity ; and it has been said," he adds, " that these courts have, very wisely, never laid down, as a general proposition, what shall consti- tute fraul." And lie quotes a letter in which Lord Hard- Avicke says: "As to relief against fraud, no invariable rules can be established. Fraud is infinite; and were a court of equity once to lay down rules, how far they would go and no further, in extending their relief against it, or to define strictly the species or evidence of it, the jurisdiction would be cramped, and perpetually eluded by new schemes which the fertility of men's invention would contrive." Judge Story' afterwards^ declares, that "fraud in the sense of a court of equity properly includes all acts, omissions, and concealments which involve a breach of legal or equitable duty, trust, or confidence, justly imposed, and are injurious to another, or by sen, 1 Atk. 301, 2 Ves. 125, divides sentence, for the simple reason, that fraud as follows : " 1. Fraud arising courts of equity have always avoided from facts and circumstances of imposi- circumscribing the area of their juris- tion ; 2. Fraud arising from the in- diction in such cases by precise bound- trinsic matter of the bargain itself ; 3. aries, lest some new artifice, not Fraud presumed from the circum- thought of before, might enable a stances and condition of the parties wrongdoer to escape from the power of contracting ; 4. Fraud affecting third equitable redress." parties not parties to the transaction." i L. L. § 2, D. JV. 3. He declares (§ 197), that "while the 2 in story's Contracts, § 620, follow- general signification of this word ing this, fraud is defined to be "every (fraud) is easily understood, and, in- kind of artifice employed by one person deed, requires no ^planation, it is, for the purpose of deceiving another." nevertheless, diflicult to give any satis- ' Eq. Jur. 12th ed. § 186. factory definition of it in a single * § 187. 847 § 232 a.] CONTKACTS. [chap. XII. which an undue and unconscientious advantage is taken of another." This substantially agrees with the position above taken, that fraud is a distortion of the truth with intent to inflict on another pecuniary damage. To make .such fraud the basis, however, of a civil suit, some pecuniary injury must be actually inflicted i^ though this is not necessary to sustain a criminal prosecution for an attempt.^ § 232 a. A party induced by another's fraud to make a bar- gain, may elect either to rescind the bargain, or may fraudecT" sue the ofi^euding party on a false warranty, or in ™^y J^- an action in the nature of deceit. The remedy of scmd or •' sue for rescission is hereafter distinctively discussed.^ So far as concerns an action for damages based on fraud, it is proper in the first place to observe that no such action lies for an honest misrepresentation, though in such case a contract induced by such misrepresentation may be rescinded.^ To sustain an action for damages caused by another's fraudu- lent conduct, falsity and fraud must be proved,^ and there must be a causal relation between the fraud and the injury sustained.' The distinguishing features of fraud of this class are discussed in detail in succeeding sections ;' it is sufficient how to say that a plaintiff is entitled to damages when he can show that he innocently suffered material injury from an in- tentional distortion of truth by the defendant or his agents,' and, as we will hereafter see, a reckless misstatement of a matter of which the party speaking is ignorant imposes lia- ' Infra, § 242. 3 Znfra, §§ 282 et seq. ' Fraud is definable much more by ' Supra, § 214. the effect it produces than by the ' Infra, §§ 239, 240. features which it exhibits, varying as * Infra, § 242. they do with each case. When, by ' See infra, §§ 244 et seq. the intentional misrepresentation of " See cases cited I'n/ra, §§ 236 e( se?.; one party, the mind of the other is Teague v. Irwin, 127 iMass. 217 ; Spenoe so perverted that there is no meeting v. Baldwin, 59 How. Pr. 375 ; Crosland of intentions on one and the same u. Hall, 33 N. J. Eq. Ill ; Mechanics' object, then the party by whom the Bank a. Man. Co., 33 N. J. Eq. 486 wrong is attempted will not be per- Buschmann v. Codd, 52 Md. 202 mitted to avail himself of it by means Clement v. Boone, 5 111. Ap. 109 of a formal contract the other party Wynne v. Allen, 7 Baxt. 312 ; Watson may have been induced to execute, v. Crandall, 7 Mo. Ap. 133. Knelkamp v. Kidding, 31 Wis. 503. 348 CHAP. XII.] FRAUD. [§ 233. bility as much as does a fraudulent misrepresentation.' Such an action lies on oral fraudulent representations to induce a purchaser to buy property which the statute of frauds requires to be conveyed in writing.^ — The fraud must be causally related to the injury.^ — If after opportunity of in- spection the purchase is made, there being no fraud to divert attention, this bars the remedy.' § 233. A contract may be divisible so that while one part of it may be infected by fraud {dolus incidens), the „ ^^^ ^^ remainder may be valid and binding; and, in such maybe case, by the Roman law, the exceptio doli applies only respect to to the part that is fraudulent. The same rule is ^''^^^■ adopted in our own law.° This distinction, however, does not apply when the fraud goes to material features of the con- tract {dolus causam dans), in which case the defence applies -to the contract as a whole.* It has been held, therefore, that a contract whose consideration is in part illegal is void only as to the illegal consideration.' And where a party agrees in the same document to sell two distinct species of land, each with its specified price, the contract as to one may be rescinded for fraud, while the contract as to the other stands.' But, as a general rule, as is elsewhere more fully stated, a party who 1 Infra, § 241 ; Cotzhausen v. Simon, v. Webber, 64 Me. 191 ; Miner v. Brad- 47 Wis. 103. ley, 29 Pick. 457 ; Clark v. Baker, 5 2 Lamm v. Port Deposit Co., 49 Md. Met. 452 ; Morse u. Brackett, 98 Mass. 233. 205 ; Bartlett v. Drake, 100 Mass. 174 ; 3 Infra, § 242. In Poland u. Brow- State v. Tasker, 31 Mo. 445 ; Donnell nell. Sup. Ct. Mass. 1881, it was held v. Byern, 69 Mo. 468. that to maintain an action for deceit ^ Koch, op. cit. § 76 ; Herbert o. in sale of an interest in a stock of goods Ford, 29 Me. 546 ; Garland v. Spencer, and business, the plaintiff must prove 46 Me. 528 ; Rand v. Webber, 64 Me. that he was induced to buy the stock 191 ; Lynde v, McGrregor, 13 Allen, of goods and a share of the business in 172; Masson u. Bovet, 1 Denio, 69; question by the fraudulent misrepre- Grant u. Law, 29 Wis. 99 ; Brown o. sentation or concealment by the de- North, 21 Mo. 528. fendant of material facts, and that he ? Bradway's Est., 1 Ash. 212 ; see suffered damage therefrom. infra, § 338. * Infra, § 245. s Rand u. Webber, 64 Me. 191. See 5 Johnson v. Johnson, 3 B. & P. 162; Lord v. French, 61 Me. 420. Goodspeed v. Fuller, 46 Me. 141 ; Rand 349 § 235.] CONTRACTS. [CHAP. XII. repudiates a contract must do so in Mo. He cannot appro- priate its benefits and get rid of its burdens.' § 234. A false representation, either by the party himself or his agent, may estop him afterwards from assert- piesenta- ing the contrary, and bind him contractually to the estoppel '"^ position the false representation takes.^ It will not be necessary for the party suing on such representa- tions to prove their truth. "This is no infringement on the rule of law requiring the best evidence, and forbidding secondary evidence to be produced till the sources of primary evidence have been exhausted ; for the estoppel professes not to supply the absence of the necessary instruments of evidence, but to supersede the necessity of any evidence by showing that the fact is already admitted; and so, too, has it been held that an admission, which is of the same natur© as an estoppel, though not so high in degree, may be allowed to establish facts which, were it not for the admission, mus^ have been proved by certain steps appropriated by law to that purpose."' Hence, a party making a statement which induces another to contract with him is bound by such statement whether true or false.' On the other hand, a non-contractual admission, if made under mistake, may be explained or repudiated." § 235. When a transaction is fraudulent on both sides, , neither party, according to the Eoman law, can When both x- i i i parties are rccover trom the other damages for the fraud com- ftaud,"" '° niitted on him individually." It does not follow from neither can this that the contract is ?B.so jure invalid, since, recover. . / ,/ ? > when executed, it cannot be rescinded, and it may convey rights to innocent third parties; all that is declared is that the courts cannot be used by a party implicated to en- force for his benefit a contract fraudulently concocted; this view has been settled by repeated adjudications of our courts.' ' See infra, §§ 338, 511, 552, 899. den v. Money, 5 H. of L. C. 185 ; Salem 2 See for mistakes of negligent es- Bank , . Gloueiwter Bank, 17 Mass. 1 ; toppel, supra, § 202 a, and generally, Wli. on Ev. § 145. infra, §§ 1043 et seq. 6 See Wh. on Ev. § 1088, for authori- » 2 Sm. L. C. «93 ; 3 Wh. on Ev. § ties. 1075-8. 6 L. 3y p. h. t., Koch, § 76. < Cave V. Mills, 7 H. & N. 913 ; Jor- ? Infra, § 340. 350 CHAP. XII.] FRAUD. [| 236. Hence a contract between two parties to defraud a third party, cannot be enforced by either of the contracting parties.' " No one is allowed to set up his own fraud or criminality, to defeat an innoce:nt party, but when both parties are pariicips criminiSj the fraud may be set up and proved by either party, when the unexecuted portion of the contract is sought to be enforced against him."^ " A court of equity will not lend its aid to enforce the performance of a contract which appears to have been entered into by both the contracting parties for the express purpose of doing that which is illegal ; and where such a contract has been executed by one of the parties by conveying real estate, a court of equity will not, in general, interfere, but will leave the title to the property where the parties have placed it."^ The rule, however, does not preclude a dupe or victim from obtaining redress for a wrong sus- tained, though he was nominally party to the wrong. ^ — A fraudulent conveyance to defeat creditors, while bad as against the creditors may bind the parties." § 236. When false representations are knowingly made, and are operative in inducing the party imposed when there upon to agree to a contract, it is no defence that !^ fpudu- ^ " . ' lent mi8- the party using the misrepresentation was influenced representa- by good motives.^ Were it otherwise, there could mouvfs are in no case be any liability for fraudulent represen- °° defence. tation, since there are no fraudulent representations whose > Jones u. Yates, 9 B. & C. 532 ; Deady v. Harrison, 1 Stark. 50 ; Rob- inson 0. McDonnell, 2 B. & Aid. 134 ; Clay u. Ray, 17 C. B. (N. S.) 188; Randall v. Howard, 2 Black, 585 ; Ayer „. Hewett, 19 Me. 281 ; Taylor v. Weld, 6 Mass. 116 ; Nellis v. Clark, 20 Wend. 324; Kisterbock's App., 51 Penn. St. 483; Bixler o. Saylor, 68 Penn. St. 146 ; Lynch's App., 97 Penn. St. 349 ; Gondy v. Gebhart, 1 Oh. St. 262; Bradford o. Byers, 17 Oh. St. 896 ; McQuade v. Rosencrans, 36 Oh. St. 442 ; Boston V. Batch, 69 Mo. 115 ; Hoover „. Pierce, 27 Miss. 13. 2 Boynton, C. J., McQuade v. Rosen- crans, 36 Oh. St. 448. " St. Louis, etc. R. R. u. Mathers, 71 111. 592 ; Compton v. Bank, 96 111 367. * Infra, § 353. 5 Bessey u. Windham, 6 Q. B. 166 Robinson u. McDonnell, 2 B. & Aid 134; Dyer v. Homer, 22 Pick. 253 Reichart u. Castator, 5 Binn. 109 Jackson v. Garnsey, 16 John. 189 Sherk ■;. Endress, 3 W. & S. 255 Worth V. Northam, 4 Ired. L. 102 Dearman v. Ratcliffe, 5 Ala. 192 ; and other cases cited 2 Ch. on Cont. 11th ed. 1038. 5 See this topic discussed in Wh. Cr. L. 8th ed. § 119. 351 § 237.] CONTRACTS. [CHAP. XII. making the maker does not excuse to himself by some meri- torious pretext. But "it is fraud in law if a party makes representations which he knows to be false and injury ensues, although the motives from which the representations pro- ceeded may not have been bad."' ... A party is liable to an action for deceit, therefore, if by an intentional misstate- ment he leads another party to contract with him, no matter how firmly he maj' have believed the matter would ultimately be made right. ^ And the cooperation of other motives consti- tutes no excuse.^ The same rule applies to fraudulent repre- sentations whereby assent to a contract is obtained. If a party making a false representation is aware of its falsity, if he knows that the other party assented to his proposal because he gave it this particular shape, and would not have assented had it not been for this false representation, it is no defence to him to show that in some remote day the transaction would be profitable to the party assenting.' § 237. The causal relation, however, in suits of this class for fraud, is limited to parties whom the defrauding Bentatiou party intended to affect by his fraud. ^ A manufac- b^eeuwftr ^^''^r who scuds out into the market goods with intent to false brands, is not liable to the vendees of his ven- be acted on i • i i by party dces, howcvcr liable he might be to indictment for injure . ^^^^ special Statutory offence of false branding. If every purchaser could sue everybody, no matter how remote, who made deceptive statements about the goods purchased, every person who was concerned io producing or selling such goods, no matter in what rudimental stage, would be liable to every person who should buy such goods, no matter in what stage of transformation. But fraud — dolus — to be the subject of redress, must have been directed especially to the party ' Tindal, C. J., Foster u. Charles, 7 * Peck v. Gurney, L. R. 6 H. L. 409 ; Bing. 105, adopted by Knight Bruce, see Murray r. Mann, 2 Exch. 538. V. C, Gibson r. d'Este, 2 Y. & C. 572. 5 Smith's case, L. R. 2 Ch. 616 ; 2 Polhill (.. Walter, 3 B. & Ad. 114. Collins v. Evans, 5 Q. B. 820 ; Behn v. » Reynell i . Sprye, 1 D. M. G. 708 ; Kemble, 7 C. B. N. S. 260 ; Mahurin v. Hough 0. Richardson, 3 Story, 659 ; Harding, 28 N. H. 128 ; Case v. Bough- Matthews o. Bliss, 22 Pick. 48 ; Turn- ton, 11 Wend. 106 ; infra, § 237. bull V. Gadsden, 2 Strobh. Eq. 14; Smith V. Mitchell, 6 Ga. 458. 352 CHAP. XII.] FRAUD. [§ 237. seeking redress. Hence it has been held that the directors of a company who would have been liable to original allottees of shares for fraudulent representations contained in a prospectus issued by them* were not liable to subsequent vendees of such shares.^ "Every man," so the limitation is stated by Wood, V. C.,^ " must be held liable for the consequenc.es of a false representation made by him to another, upon which a third person acts, and so acting is injured or damnified, provided it appear that such false representation was made with the intent that it should be acted upon by such third person in the man- ner that occasions the injury or loss." The furthest extension of which this liability is susceptible, is where goods are sold to one party, under false representation, for another's use. Hence the vendor of a gun, who sold it for the use of the plaintiff and his sons, falsely representing it to be "good, safe, and secure," and of a particular make, is liable, in an action of deceit, brought by qne of the sons who was injured by the gun's explosion.^ And it may be laid down as a gen- eral rule that it is incumbent on a party claiming that he has suffered by another's false statements, to prove that these false statements were made by the party charged with the inten- tion that he should act upon them.' At the same time it is not necessary, as has been seen, that the false representation should have been made directly to the party injured. It is enough if the party making the representation should know that it is to be communicated to the party to be injured.^ 1 Swift V. Wintertotham, L. R. 8 a. L. R. 6 H. L. C. 377, is not adopted to B. 244 ; Cazeaux v. Mali, 25 Barb. 583. its full extent in this country ; see 2 Peck V. Gurney, L. R. 6 H. L. C. New Y. & N. H. R. R. y. Schuyler, 34 377 ; see Wells v. Cook, 16 Oh. St. N. Y. 30 ; Phelps v. Wait, 30 N. Y. 67, cited Wald's Pollock, 505. Mr. 78 ; Bruff i'. Mali, 36 -N. Y. 200 ; Suy- Pollock cites Way c. Hearn, 13 C. B. dame'. Moore, 8 Barb. 358 ; supra, § 228. N. S. 292, as sustaining Peck v. Gur- ' Pasley t. Freeiman, 3 T. R. 51 ; ney, which case expressly overrules Tapp v. Lee, 3 B. & P. 367 ; Foster v. Bedford o. Bagshaw, 4 H. & N. 538 ; Charles, 6 Bing. 396 ; 7 Bing. 105, and Bagshaw v. Seymour, 18 C. B. 903. oases cited in Bigelow's Lead. Cas. » Barry u. Croskey, 2 J. & H. 1, Torts, 1 ; see Fitzsimmons v. Joslin, 21 adopted in Anson, 152. Vt. 129, where Langridge v. Levy, 2 M. 1 Langridge v. Levy, 2 M. & W. 519 ; & W. 519, 4 M. & W. 336, is criticized, see Proctor u. McCall, 2 Bailey, 298. s ibid. ; Barden v. Keverberg, 2 M. & But the limitation of Peck v. Gurney, W. 63 ; Pilmore v. Hood, 5 Bing. N. C VOL. I.— 23 353 § 239.] CONTRACTS. [chap. XII. § 238. It is not necessary, to impose liability for a fraudu- lent misrepresentation, or to avoid a contract induced Fraud need '■ notheiucri by it, tbat it should have been made for the purpose of gaining a pecuniary benefit. It is enough if it be uttered for the purpose of defrauding the party injured.' Hence that it sbould include an intention to benefit the party making the representation is not essential to constitute liability.^ § 239. When the question of fraudulent intention is mate- Fraudulent ''^^^' ^'^^^ intention is to be proved inductively. No intention ixian who is about to cheat proclaims his intention, to be inductively and even if he did this would not close the matter, ^^^'^ ' as an avowal of an intention to cheat would in most cases be regarded as merely a cheating avowal. TIob inten- tion must be proved inductively from all the circumstances of the case. And whatever facts go to logically prove or dis- 97 ; Crocker v. Lewis, 3 Sumn. 8 ; Bruff V. Mali, 36 N. Y. 200 ; Bartholo- mew V. Bentley, 15 Ohio, 660. In Bank of Montreal u. Thayer, 2 McCrary, 1, the receiver of a railroad executed and placed upon the market certain oertilicates payable to A. or bearer, which contained upon their face certain false representations, in- tended to deceive whoever might pur- chase the same. It was held that a bona fide purchaser, before maturity and without notice, relying upon such fraudulent representations, might re- cover in an action for damages, al- though such receiver had no purpose to defraud and deceive such specilic purchaser when he executed the said certificates. It was furtiier ruled that the fact that the payee A. participated in the fraud would not relieve the maker from liability, nor render it necessary that such payee should be joined in the action as a party defen- dant. It was also held that the repre- sentations contained in such certifl- 354 cates were not warranties upon which an action could be maintained by the purcliaser. See notes to Chandeler c. Lopus, 1 Smith L. C. 7th Am. ed. 2119 et seq.; as to parties, see infra, § 781 et Seq. 1 2 Kent, Com. 489 ; Story on Cont. § 642 ; Pasley v. Freeman, 3 T. E. 51 ; Foster v. Charles, 6 Bing. 396 ; Stiles V. White, 11 Met. 356 ; Collins v. Den- ison, 12 Met. 549 ; Benton u. Pratt, 2 Wend. 385 ; Allen v. Addiugton, 7 Wend. 9 ; Hubbell v. Meigs, 50 N. Y. 480 ; Y'oung ,•. Hall, 4 Ga. 95. See, however, contra, Wilkin r. Tharp, 55 Iowa, 609. 2 Foster c Charles, 6 Bing. 396 ; 7 Bing. 105 ; Wilde r. Gibson, 1 H. L. C. 605. That the test is injury to the party defrauded, not gain to the party defrauding, see infra, § 243. That a money consideration will not validate a fraudulent deed, see infra, § 377 " ; Levick v. Brotherline, 74 Penn. St. 149. CHAP. XII.] FRAUD. [§ 289. prove the hypothesis of fraud are relevant on such an issue.' Hence collateral frauds may be proved when part of a system with that under investigation.^ But system must be first proved to make such evidence admissible.' — It is not neces- sary that fraud, when alleged in a civil issue, should be proved beyond reasonable doubt, even though involving an indictable oft'ence. It will be enough if it is established by preponderance of proofs The burden, however, is on the ' Wh. on Ev. § 33 ; Foster v. Charles, 6 Bing. 396 ; 7 Bing. 105 ; Tapp u. Lee, 3 B. & P. 367 ; Conant v. Jackson, 16 Vt. 335 ; Collins ... Denison, 12 Met. 549 ; Skinner u. Flint, 105 Mass. 528 ; Horton u. Weiner, 124 Mass. 92 ; Gary v. Hotailing, 1 Hill, 311 ; Hall v. Erwin, 66 N. Y. 649 ; Hubbell v. Meigs, 50 N. Y. 480 ; Livermore v. McNair, 34 N. J. Eq. 478 ; Reed v. Lawton, 2 Watts, 56 ; Boyd v. Browne, 6 Barr, 310 ; Lowry v. Coulter, 9 Barr, 349 ; Garrigues v. Harris, 17 Penn. St. 344; Brown v. Shook, 77 Penn. St. 471 ; Battles V. Laudenslager, 84 Penn. St. 446 ; Goshorn v. Snodgrass, 17 W. Va. 717; Massey o. Young, 73 Mo. 269; O'Donnell v. Segar, 25 Mich. 367; Stone V. Wood, 85 111. 603 ; White v. White, 89 111. 460 ; Brink v. Black, 77 N. C. 59 ; Blackwell v. Cummings, 68 N. C. 121 ; Thorpe «. Thorpe, 12 S. C. 154 ; Southern Life Ins. Co. u. Wilkin- son, 53 Ga. 535 ; Nelson <,. Wood, 62 Ala. 175 ; Smalley u. Hale, 37 Mo. 102 ; King v. Moon, 42 Mo. 551 ; Hop- kins V. Sievert, 58 Mo. 201 ; State v. Merritt, 70 Mo. 275 ; Strong v. Hines, 35 Miss. 201 ; Tlrompson u. Shannon, 9 Tex. 536 ; see Young v. Hall, 4 Ga. 95. As to inadequacy of price, see supra, § 165. That the question is for the jury, see MoMichael v. McDermott, 17 Penn. St. 353 ; Vallance v. Ins. Co., 42 Penn. St. 441 ; Ehrlsman v. Roberts, 68 Penn. St. 308. 2 Wh. on Ev. §§ 28 et seq. ; Hunt- ingford v. Massey, 1 P. & F. 690 ; Lin- coln u. Claflin, 7 Wall. 132 ; Cragin v. Tarr, 32 Me. 55 ; Knight «. Heath, 23 N. H. 410 ; Pierce v. Hoffmann, 24 Vt. 524 ; Tyson v. Booth, 100 Mass. 258 Haskins u. Warren, 115 Mass. 514 Waters Co. c. Smith, 120 Mass. 144 Horton v. Weiner, 124 Mass. 92 Snell u. Moses, 1 Johns. 96 ; Benham c. Gary, 11 Wend. 83 ; Gary v. Hotail- ing, 1 Hill, 317 ; Hall ^. Erwin, 66 N. Y. 649 ; Woods v. Gnmmert, 67 Penn. St. 136 ; Stewart k. Fenner, 81 Penn. St. 177; McAleer v. Horsey, 35 Md. 439 ; Stone t. Wood, 85 111. 603 ; Hunter v. Hunter, 10 W. Va. 321 ; Brink u. Black, 77 N. C. 59 ; King v. Moon, 42 Mo. 551. ' Jordan u. Osgood, 109 Mass. 457 ; Edwards u. Warner, 35 Conn. 517 ; Booth (.. Powers, 56 N. Y. 22, and cases cited Wh. on Ev. § 27 ; City Nat. Bk. V. Hamilton, 34 N. J. Eq. 158 ; Liver- more «. MoNair, 34 N. J. Eq. 478. » Infra, § 338 ; Wh. on Ev. § 1245 see Abbey !'. Dewey, 25 Penn. St. 413 Young V. Edwards, 72 Penn. St. 257 Goshorn u. Snodgrass, 17 W. Va. 717 Bixby V. Carskadden, 55 Iowa, 533 Bullard v. Creditors, 56 Gal. 600. That this proof should be clear, see Kain v. Weigley, 22 Penn. St. 179 ; Bentz V. Rockey, 69 Penn. St. 71. 365 § 241.J CONTRACTS. [CHAP. XII. party setting up fraud.' — If a conti-act is fair and honest when made, it cannot be impugned by proof of subsequent fraudu- lent intent.^ § 240, Falsity is shown by proving a contradictory opposite, or by establishing a series of conditions inconsistent feMtv' °^ with the statement alleged to be false, approximating as nearly as possible to an exhaustive exclusion. Thus, in order to prove that a particular bank-note is bad, it is enough to show that the bank issuing it is broken ; it is not necessary to show that none of the stockholders of the bank, and none of its officers, could on any future contingency be made liable.^ Knowledge of the falsity, also, on the part of the party taking advantage of it, must be shown in order to sustain an action for deceit.^ But guilty knowledge in this, as in all other cases where scienter is to be proved, is to be inferred from all the circumstances of the case.' § 241. A party who recklessly states an untruth which he EecWess ^"'^ ^^"^ probable grounds for believing, and thereby misstate- deceives another, is responsible for the deceit, al- poses re- though he had no actual knowledge at the time of sponsibiiity ^^g falsity of the statement." Hence, if the directors of a bank " put forth in their reports statements of importance 1 Shoemaker v. Kunkle, 5 Watts, 40 N. Y. 562. That it is a fraud to 107 ; Bear's Est., 60 Penn. St. 430 ; aver that a party owns property to a Com. f. R. R., 74 Perm. St. 94. specified amount, suppressing the fact ■' Grove v. Hodges, 55 Penn. St. 504; that it is encumbered, see Corbett v. Creveling v. Fritts, 34 N. J. Eq. 134. Brown, 8 Bing. 33 ; 1 Moore & S. 85 ; ^ R. 1'. Spencer, 3 C. & P. 420 ; R. u. see notes to Chandeler c. Lopus, 1 Evans, Bell C. C. 187 ; 8 Cox C. C. Smith's L. C. 7th Am. ed. 299 et seq. 257; R. ( . Burnsides, Bell G. C. 282 ; 6 Anson on Cont. 131; Bispham's 8 Cox C. C. 370 ; R. v. Byrne, 10 Cox Eq. § 214; Leake on Cont. 188 ; Mpens C. C. 369 ; Com. v. Stone, 4 Met. 43. u. Hayworth, 10 M. & W. 147 ; Pulsford < Evans v. Collins, 5 Q. B. 805 Ormrod v. Huth, 14 M. & W. 651 Weir u. Bell, L. R. 3 Ex. D. 243 Dickson v. Tel. Co., L. R. 3 C. P. D. 1 r. Richards, 17 Beav. 87 ; Hine v. Cam- pion, L. R. 7 C. D. 344 ; R. v. Edward, 3 Russ. on Cr. 1 ; R. r. Petrie, 1 Leach, 329 ; R. r. Suhlesinger, 10 Q. B. 670 ; R. V. Philpotts, 1 C. & K. 112 ; R. ,.. Smith r. Richards, 13 Pet. 26 ; Bennett Henderson, 2 Mood. C. C. 192 ; State v. Judson, 21 N. Y. 238 ; Marsh v. u. Blauvelt, 38 N. J. L. 306 ; Merwin Falker, 40 N. Y. 562 ; Hunt r. Moore, , . Arbuckle, 81 111. 501. 2 Barr, 105 ; Allen v. Hart, 72 111. 104 ; s Wh. on Ev. § 30. As to presump- Convi :se v. Blumrich, 14 Mich. 109. tion of knowledge, see Marsh v. Falker, 356 CHAP. XII.] FRAUD. [§ 241. in regard to the affairs of the bank, false in themselves, and which they did not believe, or had no reasonable ground to believe to be true, that would be a misrepresentation and deceit."' And it has been ruled by Lord Cairns, that parties who recklessly miike statements of facts, concerning which they are ignorant, and thereby obtain the confidence of others, are as responsible as they would be if they asserted that which they knew to be untrue.^ And a statement made " with a reckless ignorance whether it was true or untrue," to adopt the words of Wil- liams, J.,^ exposes the party making it to an action for deceit. We may, therefore, hold that when a party recklessly makes statements he does not know to be true, knowledge of their non-truth is to be regarded as notice of their falsity.* " The principle applies not merely to cases where the statements were known to be false by those who made them, but to cases where statements false in fact were made by persons who believed them to be true, if in the due discharge of their duty they ought to have known, or if they had formerly known and ought to have remembered, the fact which negatived the representation made."^ Hence, a rash statement by a party, who once knew the contrary, is a false representation on ' Lord Chelmsford, in Western Bank 138; Indian. R. R. v. Tyng, 63 N. of Scotland v. Addie, L. R. 1 Sc. & D. Y. 653 ; Sharp u. Mayor, 40 Barb. 145. 256 ; Taymon v. Mitchell, 1 Md. Ch. 2 Leake, 2d ed. 371 ; Reese River 498 ; Stone ... Covell, 29 Mich. 359 ; Mining Co. u. Smith, L. R. 4 H. L. 64; Beebe v. Knapp, 28 Mich. 53 ; Wilcox see Smith v. Richards, 13 Pet. 26. v. University, 32 Iowa, 367 ; Frewzel s Behn v. Burgess, 3 B. & S. 751. v. Miller, 37 Ind. 1 ; Miner v. Me.lbury, ■> Wright u. Snowe, 2 De G. & S. 321 ; 6 Wis. 295; TurnbuU v. Gadsden, 2 Taylor u. Ashton, 11 M. & W. 401 ; Strob. Eq. 14 ; Reese r. Wyman, 9 Ga. R. u. Petrie, 1 Leach, 327 ; Hine o. 439 ; Elder v. Allison, 45 Ga. 13 ; Read Campion, L. R. 7 Ch. D. 344 ; Evans v. r. Walker, 18 Ala. 323 ; Thompson u. Edmunds, 3 C. B. 777 ; Reese River Lea, 31 Ala. 292 ; Glasscock u. Miner, Mining Co. v. Smith, L. R. 4 H. L. 79 Beatty v. Ebney. L. R. 7 H. L. 102 Mason v. Crosby, 1 Wood. & M. 352 11 Mo. 655 ; York v. Gregg, 9 Tex. 85 ; Graves o. Bank, 10 Bush, 23 ; Bank- head u. Alloway, 6 Cold. 56 ; though Smith u. Richards, 13 Pet. 26 ; Cabot see Merwin v. Arbuckle, 81 111. 501 ; t.. Christie, 42 Vt. 121 ; Hazard v. Ir- Wilcox v. University, 32 Iowa, 367, win, 18 Pick. 95 ; Lobdell r. Baker, 1 cited in Aldrich's Notes to Anson, 150 ; Met. 193 ; Fisher v. Mellen, 103 Mass. Cotzhausen v. Simon, 47 Wis. 103. 503; Litchfield v. Hutchinson, 117 * Romilly, M. R., Pulsford o. Rich- Mass. 95 ; Bennett v. Judson", 21 N. Y. ards, 17 Beav. 87. 357 § 241.J CONTRACTS. [chap. XII. which he is liable, although at the time of making it he had forgotten it was untrue.' " The afErmation," says Judge Story ,^ " of what one does not know or believe to be true, is equally, in morals and law, as unjustifiable as the affirmation of what is known to be positively false. "^ Hence, the honesty of a misrepresentation, though it may be (there being no reck- lessness) a defence to an action for deceit, ia no defence to a proceeding for rescission.^ — As we have already seen,^ it is not necessary, in order to rescind a contract, to prove that the person who obtained it by material false representation knew at the time the representation was made that it was false, or even made it recklessly and without care.* ■ Burrowes c-. Locke, 10 Ves. 470; Slim V. Croucher, 2 Gifif. 37 ; Foster v. Charles, 6 Bing. 396 ; 7 Bing. 105 ; Taylor v. Ashton, 11 M. & W. 401. To the same effect see remarks of Wells, J., in Fisher v. Mellen, 103 Mass. 506 ; and see further, Twitchell v. Bridge, 42 Vt. 68 ; Cabot ).■. Christie, 42 Vt. 121 ; Savage r. Stevens, 126 Mass. 2U7 ; Gunby /;. Sinter, 44 Md. 237 ; Parmlee V. Adolph, 28 Oh. St. 10 ; iEtna Ins. Co. V. Reed, 33 Oh. St. 283 ; Smith v. Mit- chell, 6 Ga. 458. See notes to Chandcler u. Lopns, 1 Smith's h. C. 7th Am. ed. 2^9. 2 Eq. Jur. 12th ed. § 193. 3 Story's Eq. Jur. 12th ed. § 193, citing Ainslie v. lleiUycott, 9 Ves. 21 ; Pearson u. Morgan, 2 Bro. Ch. 389 ; Taylor v. Ashton, 11 M. & W. 401. * Siipni, § 214. 5 Supra, § 214. 6 Redgrave v. Hurd, L. R. 20 Ch. D. 1 ; cited in detail supra, § ,214, infra, § 245. As will be seen (infra, § 1043), an action for negligence can be main- tained by a party injured by a negli- gent erroneous assertion. In Mathias u. Yctts, 46 L. T. N. S. 503 (1SS2), .Jessel, M. R., said : " The term legal fraud has a much wider signification. It was defined in the case of Evans v. Edmonds (13 C. B. 777, 786), by Maule, 358 J., in a way which has not been ques- tioned, and which has been frequently followed. I may mention especially the late case of Hart v. Swaine (L. R. 7 Ch. D. 142), before Fry, J., a decision which, as I read it, was approved of by the House of Lords in Brownlie !'. Gamp- bell (L. R. 5 Ap. Ca. 92.S). Therefore, even at law, fraud has a wider signifi- cation than that. At law, I take it, it is clear that a man who knew a fact cannot say, if he misstates it, and it is a material fact, that he had forgotten it. It is still fraud at law. If he chooses to take upon himself to state that as true which he ought to have known was not true, you cannot look into his mind to see whether he re- members it or not. It is quite suffi- cient to know that he did know and ouglit to have recollected ; and, if he chooses after that to state it untruly, he must take the consequences. But the case I have referred to goes further. It says that, if a man takes upon him- self to make a material misstatement without inquiry, having the means of ascertaining the truth, it is fraud at law. That is Evans v. Edmonds. Equity has gone much further. In equity it never was necessary that there should be what I will call actual CHAP. XII.] FRAUD. [§ 242. § 242. There must be a causal relation between the fraud and the injury. Of this the first constituent is, that the party injured should have sustained the injury causal reia- in consequence of his reliance on the other's fraudu- j^ee^'^" lent misstatement; in other words, this fraudulent fraud and • IT • ^ 1 • injury. misstatement should have contributed to induce him to assent to the proposal from which the transaction injurious to him sprang. This need not have been the sole motive;' but it must have been a contributory motive, and must have been of such a character that, had its falsity been known, the decision would have been the other way. A fraudulent repre- sentation does not avoid a contract that it did not induce; nor, unless it was operative in inducing the opposite party to take steps to his disadvantage, does it expose the party making it to an action for deceit or to a prosecution for obtaining goods under false pretences.^ — In an English case where this or moral fraud. A man who makes a material misstatement innocently, that is, in the sense that he helieves it to be true, is not thereby exonerated. We have had that over and over again ; and it is hardly necessary to refer to the numerous cases from The Reese River Silver Mining Co. v. Smith (L. R. 4 H. of L. 64) downwards, which have established that proposition. It is laid down in the fullest terms in a number of cas^s ; and, as I read that last case of Brownlie v. Campbell, it is laid down there also. That being so, there is another point to be considered. It must be no doubt a material mis- statement, and the other party must have been induced to act upon it. As it was sometimes said, it must be ma- terial to the inducing of the contract, but it need not be the only induce- ment. If it is a part of the inducement it will do. We had to consider the matter in the appeal court only recently in Redgrave v. Hurd (45 L. T. Rep. N. S. 485 ; 20 Ch. Div. 1). There we said, if a man has a material misstatement made to him which may, from its na- ture, induce him to enter into the con- tract, it is an inference that he is induced to enter into the contract by it." 1 Infra, § 242 a ; R. u. Hewsgill, Dears. 315 ; R. v. English, 12 Cox C. C. 171 ; Matthews v. Bliss, 22 Pick. 48 ; Safford v. Grout, 120 Mass. 20; Mo- Aleer v. Horsey, 35 Md. 439 ; Rogers v. Higgins, 57 111. 244; Rutherford u. Williams, 42 Mo. IS ; Winter v. Bandel, 30 Ark. 362 ; Com. t. Coe, 115 Mass. 481 ; Thomas v. People, 34 N. Y. 351. 2 Attwood V. Small, 6 CI. & F. 232 ; Horsfall ... Thomas, 1 H. & C. 90 ; R. V. Gardner, 7 Cox C. C. 136 ; Collins v. Cave, 6 H. & N. 131 ; R. u. Dale, 7 C. & P. 352; Smith u. Kay, 7 H. L. C. 775 ; Traill u. Baring, 4 D. J. S. 330 ; Doggett V. Emerson, 3 Story, 732 ; Ma- son V. Crosby, 1 Wood. & M. 342 ; Smith V. Richards, 13 Pet. 26 ; Hough v. Rich- ardson, 3 Story, 659 ; Wells «. Water- house, 22 Me. 131 ; James v. Hodsden, 47 Vt. 127 ; Com. u. Davidson, 1 Cush. 33 ; Story d. R. R., 24 Conn. 94 ; Tay- 359 242.] CONTRACTS. [chap. XII. question was mooted/ the suit was on a bill of exchange accepted by the defendant, in payment for a cannon sold by the plaintiff to the defendant, which cannon, it was alleged, was worthless, on account of a defect which the plaintiff had endeavored to conceal by the insertion of a metal plug in the weak spot of the cannon. It was proved that the defendant never examined the cannon, and that therefore the plain tiff''s conduct in covering up the defect could not have influenced him. The court held that, the deceit, not having been an inducement of the transfer, did not avoid the sale. " If the plug," said Bramwell, B., "which it was said was put in to conceal the defect, had never been there, his position would have been the same ; for, as he did not examine the gun or form any opinion as to whether it was sound, its condition did not affect him." It will be observed that the single issue here was whether the bargain was avoided by this particular deceit ; and as the bargain was not induced by the deceit, the deceit did not avoid it.^ — Where fraud which induces a pur- ser V. Guest, 58 N. Y. 262 ; Morris Canal Co. c. Everett, 9 Paige, 168 ; Addiiig- ton V. Allen, 11 Wend. 374 ; People r. Miller, 2 Park. C. R. 197 ; Bruce u. Burr, 67 N. Y. 237 ; State v. Tornlin, 5 Dutch. 14 ; Phipps u. Buckman, 30 Penn. St. 401 ; Burkholder v. Beetens, 65 Penn. St. 496 ; Weist u. Grant, 71 Penn. St. 95 ; Ely v. Stewart, 2 Md. 408; Central Bank v. Copeland, 18 Md. 305 ; Percival r. Harger, 40 Iowa, 286 ; Young v. Hall, 4 Ga. 95 ; Bryan .'. Osborne, 61 Ga. 51 ; Todd u. Fam- bro, 62 Ga. 664 ; Duncan ( . Hogue, 24 Miss. 671 ; Morrison r. Lods, 39 Cil. 381 ; Purdy v. Bullard, 41 Cal. 444 ; Klopenstein .. Mulcaliy, 4 Nev. 29G. To the eifeot that fraud, to be the basis of litigation, should succeed in defraud- ing, see further Neville v. Wilkinson, 11 Bro. Ch. 546 ; Small r. Attwood, 1 Y'oung, 407 ; 6 CI. & F. 232 ; Teague i: Irwin, 127 Mass. 217 ; Vandewalker r, Osmer, 65 Bar)). 556 ; Bacon t. Brou- son, 7 Johns. Ch. 201 ; Dufi'any v. Fer- 360 guson, 66 N. Y. 482 ; Miller v. Barber, 66 N. Y. 558 ; Marsh r. Cook, 32 N. J. Eq. 262 ; Clark v. Everhardt, 63 Penn. St. 347 ; Gunby r. Sluter, 44 Md. 237 ; Bowman v. Carithers, 40 Ind. 90 ; Hale r. Philbrick, 47 Iowa, 217; Noel v. Horton, 50 Iowa, 687 ; Bond r. Ramsey, S!) 111. 29 ; Schwabacker u. Riddle, 99 111. 343 ; TurnbuU v. Gadsden, 2 Strobh. Eq. 14; Tobin v. Bell, 61 Ala. 125; Winter ;■. Bandel, 30 Ark. 362 ; Dunn r. Remington, 9 Nell. 82; and see Po- land c. Brownell, cited supra, § 232. That the fraud must have preceded damage, see supra, § 239. 1 Horsfall v. Thomas, 1 H. & C. 90 (see criticism in Anson, 152). 2 See remarks of Cockburn, C. J., in Smith V. Hughes, L. R. 6 Q. B. 605. That the party injured must have been deceived by ,the false statement, see further Bispham's Eq. § 215 ; Hough ( . Richardson, 3 Story, (!59 ; Veasey v. Doton, 3 Allen, 380; Connersville <. Wadleigh, 7 Blackf. 102; Tuck v CHAP. XII.] FRAUD. [§ 243. chase is proved, the sale will be set aside; as where a grantor orally agrees upon a sale of land at a specific price by the acre, and warrants the quantity at a specific figure, and the deed is made out with such a covenant, and the covenant is then fraudulently erased by the grantor, and the deed is then delivered to the grantee, who is deceived into the belief that the deed contains that covenant. In such a case, equity will intervene and direct a rectification.^ § 2-42 a. It is not a sufficient reply, that a part of the rep- resentations made by the party charged were true. p,.j^mj„gg^ E"o body of representations can be wholly false ; not be sole , . „ , . . , , • ii i. motive. and, in tact, there is no single representation that has not in it some element of truth. "Where a party has induced another to act on the faith of several representations made to him, any one of which he has made fraudulently, he cannot set up the transactio*i by showing that every other representation was truly and honestly made."' "It is not sufficient for him to show that there were other representa- tions or inducements in operation, without further proving that the agreement was due to them only, to the entire exclu- sion of the false representation."' § 243. There must be proof, also, in cases of this class, that injur}' was actually sustained.^ It is, therefore, injury not enough that there should be a mere exposure mustbe to loss, if no loss has accrued,' though it is enough sustained. Downing, 76 111. 71; Attwood t>. Small, Cas. 750; R. v. Hewgill, Dears. 315; 6 CI. & F. 232; Traill ^.,, Baring, 4 R. o. English, 12 Cox C. C. 171 ; State D. J. S. 318 ; Percival v. Harger, 40 o. Mills, 17 Me. 211 ; State v. Duulap, Iowa, 286 ; Hall v. Thompson, 1 Sm. & 24 Me. 77 ; Com. v. Coe, 115 Mass. 481 ; M. 443 ; Clopton v. Cozart, 13 Sm. & People «. Haynes, 14 Wend. 546 ; M. 363. Thomas v. People, 34 N. Y. 351 ; Mor- ' Metoalf V. Putnam, 9 Allen, 97 ; gan v. Skiddy, 62 N. Y. 319 ; Shaw v. Story's Eq. Jur. 12th ed. §§ 113, 120, Stiues, 8 Bosw. 157 ; State v. Thatcher, 138 et seq. 35 N. J. L. 445. ^ Cranworth, L. J., in Reynell u. * See cases cited to last section. Sprye, 1 De G. M. & G. 656; Wh. Cr. ^ Hemingway o. Hamilton, 4 M. & L. 8th ed. § 1176. W. 115 ; Freeman v. Venner, 120 Mass. ' Leake, 2d ed. 379, citing Turner, 424; see Bradley u. Fuller, 118 Mass. L. J., Nicol's case, 3 D. & J. 387 ; and 239 ; Abbey u. Dewey, 25 Penn. St. see to same effect Clarke v. Dixon, 6 C. 413 ; Servis v. Cooper, 4 Vroom, US. B. N. S. 453; Smith v. Kay, 7 H. L. 861 § 244.J CONTRACTS. [CHAP. XII. if a party has been induced by the defendant's fraud to give a security not yet paid,' or to give a higher price than would otherwise have been given." But where no damage appre- ciable in law is sustained, no causal relation between fraud and injury is established.^ A fortiori, a false statement not made until after the bargain is consummated does not ex- pose the party making it to liability." Loss to the party defrauded, not gain to the party defrauding, is the criterion.' Inducing a party, therefore, by arts not in themselves criminal to pay a debt justly due by him is not actionable.'' § '1A4l. Hence, as a general rule, applicable to all cases of The losing false representation, it may be added, that where party Diust the false statement is not believed by the party to believe the . . .,.,,. i • , false state- whom it IS made, or even it believed, is not the con- sideration of the bargain, the party making it is not chargeable with deceit.' Tfeus, Bariium, to take an illus- tration from a recent German writer,' announced some years ago "Washington's nurse" as a show, and the part was per- sonated by an old negress named Joyce Heath. She was not really Washington's nurse, and if the statement had been believed, there was no concurrence of minds as to the thing the visitor paid to see. But the statement was not believed ; or, if it was believed, it was not the consideration of going to ' Huljbard v. Briggs, 31 N. Y. 518. Hayw. 44 ; Farrar v. Alston, 1 Dev. 2 Kerr, F. & M. 73 ; Reese River 69 ; Bailey v. Smock, 61 Mo. 213. Mining Co., L. R. 3 Ch. App. 611 ; < ytate .. Church, 43 Conn. 471 ; Hallows - . Feniie, L. R. 3 E.j. f,36 ; State v. Vanderbilt, 3 Dutch. 328 ; Nowlan ,,-. Cain, 3 Allen, 263 ; Smith State v. Tomlin, 5 Dutch. 14 ; Fulton V. Countryman, 30 N. Y. 655 ; Melendy v. Lofts, 63 N. C. 393. V. Keen, 89 111. 395. " Wells, J., Fisher v. Mellen, 103 3 Bigelow on Fraud, 86-7 ; Foster v. Mass. 505 ; and see Benj. on Sales, 3d Charles, 6 Bing. 396 ; Clarke v. White, Am. ed. § 429, citing Hanson v. Edger- 12 Pet. 178 ; Morgan v. Bliss, 2 Mass. ly, 29 N. H. 354 ; Milliken v. Thorn- 112 ; Fuller 7'. llodgdon, 25 Me. 243 ; dike, 106 Mass. 385 ; Phipps u. Buck- Hutchins u. Hutchins, 7 Hill, 104; man, 30 Penn. St. 402; Bartlett v. Dung o. Parker, 52 N. Y. 494 ; Ely v. Blaine, 83 111. 25 ; see supra, § 238 ; Stewart, 2 Md. 408 ; Marr's App., 78 notes to Chandeler r. Lopus, 1 Smith's Penn. St. 69 ; Meyer v. Yesser, 32 Ind. L. C. 7th Am. ed. 299 et seq. 294; Smith r. Brittenham, 98 111. 188 ; *> Brown v. Blunt, 73 Me. Missouri Valley Co. v. Bushnell, 11 7 See supra, § 212 ; Howell v. Biddle- Neb. 193; Cunningham u. Shields, 4 comb, 62 Barb. 131. ' Merkel, Abhaudlungen, etc. 362 CHAP. XII.] FRAUD. [§ 245. the show. That consideration was the desire for amusement, not obtaining, some particnlar thing. In other words, there must be a causal relation, as has been already stated, between the false statement and the loss.' But when fraudulent state- ments are shown to have been made by one party, to have been acted on by the other party, the burden will be on the former to show that those statements were not believed by the latter.2 On the other hand, when the statement is one which the party to whom it is made has at hand the imme- diate means of testing, he cannot, if he does not obtain an express warranty as a substitute for inspection, recover, if he neglects to use such means. In such case the false pretence must be looked upon as an appeal rather than a statement.' This rule applies to sales of real as well as to sales of personal property. Where, for instance, in a New York case in 1880, a purchaser under an oral agreement to convey was entitled to a deed with covenants of warranty, but after paying the price of the land, and demanding and being refused a war- ranty deed, accepted a deed without a warranty, holding after inquiries of his own that the title was good, it was held that in the absence of proof of fraud, he was not entitled to relief on account of a subsequently discovered incumbrance.'' § 245. It has been said that a false representation, to im- pose liability on its maker, must have been calcu- Aud must lated to impose on a person of ordinary sagacity. ?"^ without _ ^ _ '^ ./ n .7 immediate But this limitation cannot be sustained, as persons means of 1 See supra, § 242. Miller, 102 Mass. 220 ; Dickinson v. s Hammatt v. Mason, 27 Me. 308 ; Lee, 106 Mass. 557 ; Brown v. Leach, Holbrook v. Burt, 22 Pick. 546 ; though 107 Mass. 367 ; Long u. Warren, 68 see Taylor u. Guest, 58 N. Y. 262 ; N. Y. 420 ; Fulton v. Hood, 34 Penn. Taylor v. Fleet, 1 Barb. 471 ; Hunt v. St. 365 ; Ely o. Stewart, 2 JId. 408 ; Moore, 2 Barr, 108 ; Boyd v. Browne, Wright v. Gully, 28 Ind. 475 ; Clod- 6 Barr, 310. felter v. Hulett, 72 Ind. 137 ; Saunders ' Vigers v. Pike, 8 CI. & F. 650 ; u. Hattermann, 2 Ired. 32 ; Moore v. Clapham v. Shillito, 7 Beav. 149 ; Turbeville, 2 Bibb, 602 ; Lythe o. Aberaman Works v. Wiokens, L. R. Bird, 3 Jones, N. C. 222 ; State v. Ch. Ap. 101 ; S. C. L. R. 5 Ex. 485 ; Young, 76 N. C. 258. Slaughter v. Gerson, 13 Wal. 379; " Whittemoreu. Farrington, 76 N. Y. Warner v. Daniels, 1 Wood. & M. 90 ; 452 ; see Lynch v. Rinaldo, 58 How. Hoitt V. Holcomb, 32 N. H. 185 ; Com. N. Y. Pr. 133. u. Norton, 11 Allen, 266 ; Mooney u. 863 § 245.] CONTRACTS. [chap. xri. testing: of less than ordinary sa,gacity are as much entitled to tory"™ii- be sheltered from swindlers as are persons of greater gence. ghrewduess.' Hence, if a party is really imposed upon, and has not in fact negligently exposed himself to imposition, he can obtain redress if damaged by fraudulent representations whose unreality a person of greater intelligence would have promptly discovered.^ But when the facilities of testing the truth of an opinion {e.g., as to coal on land) are equally open to both parties, then, though a misstatement of opinion may preclude the party making it from enforcing the contract,^ yet the contract will not be rescinded on application of the part}^ to whom the misstatement was made.* And this is the case with regard to the misre[iresentation of the legal effect of a deed when the other party has the same opportunitj' of in- specting the deed as the party making the statement,'' and with regard to other misrepresentations whose accuracj' the party imposed on has ample means at the time of testing.^ ' As to undue iBfluence, see supra, §§ 157 et seq. 2 Trower r. Newcorae, 3 Merir. 704 ; R. V. Wickliam, 10 Ad. & E. 34 ; Fen- ton ( . Brown, 14 Ves. 144 ; R. c. AVool- ley, 1 Den. C. C. 559 ; R. v. English, 12 Cox C. C. 171 ; Upton v. Englehart, 3 Dill. 496 ; Slaughter < . Geison, 13 Wall. 379; Mead u. Bunn, 33 N. V. 275 ; Sherwood i>. Salmon, 2 Day, 128 ; Com. o. Henry, 22 Penn. St. 25:. ; Siuitlier V. Calvert, 44 Ind. 242 ; Mat- lock ,-. Todd, 19 Ind. 130 ; Swimm v. Bush, 123 Mich. 99 ; Starkweatlier c. Benjamin, 32 Mich. 305 ; Walsh i . Hall, 6ti N. C. 233 ; Rosenian .•. Cano- van, 43 Cal. Ill ; Juzan /■. Toulmin, 9 Ala. 662; Oswald ... McGehee, 2S Miss. 340 ; Wannell v. Kem,. 57 Mo. 478. That the fact of the falsity of a statement of title could be shown by examining the record does not protect the party making it, see David v. Park, 103 Mass. 501 ; Upsham r. De- bow, 7 Bush, 442 ; Bailey u. Smock, 61 Mo. 213 ; Kiefer r. Rogers, 19 Minn. 364 32. That the mental inferiority of the person acted ou is to be taken into consideration in examining the ques- tion whether the fraud caused the con- tract, see Osmond r. Fitzroy, 3 P.Wms. 130 ; Farnam v. Brooks, 9 Pick. 212 ; Seaver u. Phelps, 11 Pick. 304; Grant V. Thompson, 4 Conn. 204 ; Rice v. Peel, 15 Johns. 303 ; and see supra, §§ 159, 196 ; infra, §§ 259, 572, 753. 3 The Distilled Spirits, 11 Wall. 356; Brown ,-. Leach, 10,7 Mass. 364; Fisher v. Worrall, 5 W. & S. 478 ; Rockafellow c'. Baker, 41 Penn. St. 319. * Infra, § 2S2 ; Watts v. Cnmmings, 59 Penn. St. 91; Cummings's App., 67 Penn. St. 404; Lynch's App., 97 Penn. St. 349. 5 Upton I.. Englehardt, 3 Dill. 496 ; Hmither i'. Calvert, 44 Ind. 242 ; see supra, § 198, iifru, §§ 259, 572, 753, for other cases. « Attwood V. Small, 6 C. & F. 232 ; Mason c. Ditehbourne, 1 M. & R. 460 ; Vigers v. Pike, 8 CI. & F. 650 ; Warner CHAP. XII.] FRAUD. [§ 245. But where the vendor's agent took the purchaser to land which was the subject of negotiation, and pointed out to the purchaser, as an inducement to purchase, certain improve- ments which the vendor knew did not go with the property, he cannot, so it was held in Iowa in 1880, defend himself, when the question of the validity of the sale comes up, on the ground that the purchaser should have made inquiries on his own account.' And where the plaintiff was induced to buy an estate in another state by representations from the defend- ant as to the situation of the estate and the character of the improvements on it, the defendant, before execution of the deeds, saying that he had never seen the estate, it was held in Massachusetts in 1880 that the plaintiff was not precluded from recovery, on a suit for deceit, by the fact that he did hot visit the estate until after the papers were executed.^ But if it sliould appear that the party injured assented to the bar- gain after independent investigations of his own as to the matter falsely represented, then the inference may be that he was influenced, in coming to a conclusion, not by the niis- statement, but by his own observations.' — This exception does not apply in cases where the party so inquiring is misled in his inquiries by the fraud of the other party,* or when his 1'. Daniels, 1 Wood. & M. 90; Tuthill posed, and plaintiff relied on his own V. Babcock, 2 Wood. & M. 298 ; Hoitt judgment and that of a friend. See t). Holcomb, 32 N. H. 202 ; Veasey v. .Gordon c. Parmelee, 2 Allen, 212 ; Doton, 3 Allen, 380 ; Mooney d.' Miller, Pike v. Fay, 101 Mass. 134. See to 102 Mass. 220 ; Cooper v. Lovering, same general effect, Schwabacker v. 106 Mass. 77 ; Moore u. Turbeville, 2 Riddle, 99 111. 343. Bibb, 602 ; Saunders v. Hatterman, 2 ' Carmichael v. Vandebur, 50 Iowa, Ired. 32 ; see infra, §§ 259, 753. 651. In Poland v. Brownell, Sup. Ct. ^ Savage v. Stevens, 126 Mass. 207. Mass. 1881, it was held that a pur- ' Dyer o. Hargrave, 10 Ves. 505; chaser cannot maintain an action for Attwood v. Small, 6 CI. & F. 232 ; deceit in the sale of goods if, having Slaughter v. Gerson, 13 Wall. 379 ; ample opportunity to examine the Mead v. Bunn, 32 N. Y. 275 ; Clark l-. property, he saw fit to rely upon the Everhardt, 63 Penn. St. 347 ; Halls v. statement of the seller concerning the Thompson, 1 Sm. & M. 443 ; infra, value of the thing sold. Brown v. §§ 261 c« sey., 282. Castles, 11 Gush. 350 ; Mooney v. Mil- « Central R. R. v. Kisch, L. R. 2 H. ler, 102 Mass. 217 ; Parker v. Moulton, L. 99 ; Warner v. Daniels, 1 Wood. & 114 id. 99. And this rule was applied M. 90 ; Tuthill v. Babcock, 2 Wood. & in a case where the goods were ex- M. 298 ; Somes v. Skinner, 16 Mass. 365 § 245.] CONTRACTS. [chap. XII. inquiries have been rendered abortive by extrinsic influences, and have been followed by a repetition of the prior fraudulent misrepresentations.^ — "When a false representation is proved 348 ; Watson v. Atwood, 25 Conn. 313 ; Mead <■. Bunn, 32 N. Y. 275 ; Biggs v. Perkins, 75 N. C. 397 ; Wilder o. De Cow, 18 Minn. 470 ; Phelps v. Quinn, 1 Bush, 375 ; Gant v. Shelton, 3 B. Mon. 423 ; Robertson w. Clarksou, 9 B. Mon. 507 ; Bailey c. Smock, 61 Mo. 213. ' David V. Park, 103 Mass. 501 Risch r. Van Lillienthal, 34 Wis. 250 see Manning v. Albee, 11 Allen, 520 Brown y. Castles, 11 Cush. 348; infra, §§ 2-,2 etseq., 286. In Redgrave c. Hurd, L. R. 20 Ch. D. 1, where to an action for specific performance the defendant set up neg- ligence on the part of the plaintiff in examining the papers submitted to him.(see case cited supra, § 214), Jessel, M. R., said: "There is another pro- position of law, of very great import- ance, which I think it is necessary for me to state, because, with great defer- ence to the very learned judge in mat- ters of specific performance from whom this appeal comes, I think it is not quite accurately stated in his judg- ment. If a man is induced to enter into a contract by a false representa- tion, it is not a sufiicient answer to him to say : ' If you had used due diligence you would have found out that the report was untrue. You had the means afforded you of discovering its falsity, which you did not choose to avail yourself of.' I take it, it is a settled doctrine of equity, not only as regards specific performance, hut also as regards rescission, that that is not an answer, of course subject to the exception of the statute of limitations, when it is made a statutory answer on the ground of delay. That, of course, is a different thing altogether. There 366 delay deprived a man of his right, and the only qirestion to be considered was from what time the delay should count. It was decided, and is now so made law by statute, that the time counted from the date when, by due diligence, the fraud might have been discovered. Nothing can be plainer, I take it, on the authorities in equity, than that false representation is not got rid of by the defendant — that is, the person re- sisting its performance, or asking for rescission on the ground of deceit — being guilty of negligence. One of the most familiar instances in modern times, and one which occurs in case after case, both reported and xmre- ported, is this : Men issue a prospectus containing false statements — false statements of the contracts made before the formation of the company, and on similar matters — and then say the con- tracts themselves may be inspected at the office of the solicitors. It has always been held that those who ac- cept those false statements as true are not deprived of their remedy merely because they neglected to go and look at the contracts themselves, though they were told the contracts were in writing and might be inspected if they asked to see them. Another instance with which we are familiar is a false statement as to the contents of a lease ; such a case as a man saying that there was no covenant or provision in the lease to prevent the carrying on, in the house to be sold, the trade which the purchaser was known by the vendor to be desirous of carrying on therein. Although the lease itself might be pro- duced at the sale, or might have been open to the inspection of the purchaser long previously to the sale, it was held CHAP. XII.] FRAUD. [§ 245. to have been made under circumstances likely to impose, the burden is on the party making the representation to show- not only that the other party had independent information, but that he relied on such information, and was not mis- led by the false representation. * And where the owner of a ship, seeking insurance, misrepresented the time of sailing, the insurance based on this representation was held void, though the underwriter could have obtained correct informa- tion from Lloyd's list, since the underwriter was supposed to have reason, until the contrary was proved, to rely on the owner's statement.^ — Even to patent defects warranties may be framed to extend,^ and when there is nothing in the con- dition of things glaringly inconsistent with a statement made, a vendee has a right to rely on such statement ;^ and so where the purchaser, relying on the vendor's statements, waives an examination he might have made."* Where, also, the vendor that tlie vendor could not be allowed to say, 'You were not entitled to give credit to my statement, either by word of mouth or in writing.' It is not sufficient, therefore, to say that a man has had the opportunity of investigat- ing the real state of the case, but has not availed himself of that opportunity. It has been apparently supposed by the learned judge in the court below that the decision of the house of lords in the case of Attwood v. Small, 6 CI. & F. 232, is an authority which con- flicts with that proposition. He says the defendant ' inquired into it to a certain extent, and, if he did it care- lessly and inefficiently, that is his own fault. As in the case of Attwood u. Small, those directors and agents of the company who made ineffectual inquiry into the business which was to be sold to the company were nevertheless held, by their investigation, to have bound the company, so here, I think, the de- fendant, who made a cursory investi- gation into the position of things on the 17th of Feb., must be taken to have accepted the statements which appeared in those papers.' Those are the remarks which are, I think, inac- curate in law ; and, what is more, I think they are not borne out by the case to which the learned judge re- ferred." It is further argued tliat the authority of Attwood v. Small was weakened by the fact of the strength of the dissenting minority. 1 Leake, 2d ed. 381, citing Torrance V. Bolton, L. R. 8 Ch. 118 ; Bates v. Hewitt, L. E. 2 Q. B. 595 ; and see Holbrook v. Burt, 22 Pick. 546. 2 Morrison c. Ins. Co., L. R. 8 Ex. 40. ' Supra, §§ 227 et seq. * Kerr, P. & M. 79 ; Kiseh v. R. R., 3 De G. J. & S. 122; S..C. L. R. 2 H. L. 99 ; Rawlings v. Wickham, 3 De G. & J. 319 ; Smith's case, L. R. 2 Ch. Ap. 614 ; Bean c. Herrick, 12 Me. 262 ; Mead v. Bunn, 32 N. Y. 275 ; Thorne v. Prentiss, 83 111. 99 ; Young V. Harris, 2 Ala. 108. s Tuthill V. Babcock, 2 Wood. & M. 299 ; Mooney v. Miller, 102 Mass. 220 ; Savage v. Stevens, 126 Mass. 207 ; Long II. Warren, 68 N. Y. 426 ; Nowlin 367 § 246.] CONTRACTS. [CHAP. XII. misrepresents through mere heedlessness, he may, if the mis- rejjresentation be material, be preclurled from specific per- formance, although a more cautious person than the purchaser might not have been misled.' § 246. A false statement as to a collateral matter, not enter- ing into the merits of a contract, does not subiect False state- =■ ./,."' ment as to the party makmg it to an action for deceit; nor does mattrrdoes it invalidate a contract which it ought not, sup- not avoid, posing the other party to have acted with ordinary prudence, to have induced such party to make, or whose making it ought not to have determined.^ The question of materiality is to be determined by the tests heretofore given.* It must be recollected that materiality is always relative. "What may be material in one case may be immaterial in another. The question is, adaptability to the purposes of the contract, and whatever touches this adaptability may be said to be material. The standard of discrimination must be that which business men of the same class are accustomed to exercise under similar circumstances. It does not follow that because a party is swayed by whims, therefore, a misstatement as to such whims exposes the party making it to an action for deceit, or taints a contract .so induced in such a way as to leave it open to rescission. If a party acts irrationally, he must bear the con- sequence of his acts; and in addition to this consideration, if we should hold that contracts are vitiated where either party uses untrue expressions of flattery or ingratiation, few con- tracts would stand. We have, therefore, to fall back on the test of materiality. As to this, it has been held that the bur- den is on a party making false statements in the course of a negotiation, to prove that they did not exercise a preponder- ating influence on the other pai'ty, so as to rationally induce o. Snow, 40 Mich. 699; High v. Kist- Neville u. Wilkinson, 1 Bro. Ch. 546; ner, 44 Iowa, 79 ; Estell ^. Myers, 54 Attwood r. Small, 6 CI. k F. 232 ; Miss. 174; see notes to Chandeler ;•. Gedd'es v. Pennington, 5 Dow. 159; Lopus, 1 Smith's L. C. 7th Am. ed. Vane t. Cobbold, 1 Exch. 798 ; Vernon 299. c. Keys, 12 East, 632 ; 4 Taunt. 4SS ; 1 .Tones v. Rimmer, L. R. 14 Ch. D. a case, however, questioned by Mr. 588. Pollock (Wald's ed. 496). 2 Story's Eq. Jur. 12th ed. § 191 ; » Supra, §§ 180-186 et seq. 368 CHAP. XII.] FRAUD. [§ 247. him to agree to the contract.^ But this should be confined to pretences on their face likely to have such an influence. Per- sons engaged in business may use many modes of recom- mendation, the truth of which would not bear scrutiny; yet the fact that such expressions were used, no matter how false they may have been, would not expose the parties making them to an action for deceit, or invalidate contracts in which the expressions were used. It is otherwise, however, as we have seen, when the representations go to the merits of the contract. If so, it is no answer that other motives contributed to induce the party imposed upon to agree to the contract.^ And in any view the question of materiality is one of fact, to be determined by all the circumstances of the particular case,* subject to the general principle that an immaterial misrepre- sentation neither avoids a contl'act nor sustains an action for deceit.* And that which ought, under all the circumstances of the case, to have made no difference in the result, cannot be deemed material.' § 247. ISTor is a contracting party bound by the misstate- ments of a third person, unless agency or confederacy be proved.' ' Williams's case, L. R. 9 Eq. 225, ter v. Gferson, 13 Wall. 379 ; Morris n. ; Kintrea e.T part*', L. R. 5 Ch. 101. Canal Co. u. Emmett, 9 Paige, 168; 2 Supra, § 242 a; Wald's Pollock, McAleer c. Horsey, 35 Md. 439; Hall 500, citing Reynell u. Sprye, 1 D. M. v. Johnson, 41 Mich. 286 ; Bowman i-. G. 708 ; Hough v. Richardson, 3 Story, Caruthers, 40 Ind. 96 ; Winston v. 659 ; Cabot v. Christie, 42 Vt. 121 ; Gwathmay, 8 B. Mon. 19. Matthews v. Bliss, 22 Pick. 48 ; Camp & McAleer v. Horsey, 35 Md. 439 ; V. Pulver, 5 Barb. 91. To same effect Winston v. Gwathmay, 8 B. Hon. 19. see Slaughter v. Gerson, 13 Wall. 379 ; ^ Pollock, 3d ed. 542, citing Stnrge Bowman v. Caruthers, 40 Ind. 90 ; First v. Starr, 2 My. & K. 195 ; Wharton on Nat. Bank v. Yocum, 11 Neb. 328 ; Noel Agency, § 160 ; Leake, 2d ed. 386-7 ; u. Horton, 60 Iowa, 687; Elliot ei.Boaz, Fairlie v. Hastings, 10 Ves. 126; 9 Ala. 772. Thomas o. Roberts, 16 M. & W. 778 ; » Westbury v. Aberdein, 2 M. & W. Chicago v. Greer, 9 Wall. 726 ; Ins. Co.. 267 ; Lindenan u. Desborough, 8 B. & v. Mahoue, 21 Wall. 152 ; Goodman v. C. 586 ; Hough v. Richardson, 3 Story, Eastman, 4 N. H. 458 ; Root ;;. French, 659 ; McAleer v. Horsey, 35 Md. 439 ; 13 Wend. 572 ; Kingsland v. Pryor, 33 Printup V. Fort, 40 Ga. 276. Oh. St. 19 ; Compton t,. Bank, 96 111. 4 Story's Eq. .lur. 12th ed. § 190 ; 301 ; Campbell u, Murray, 62 Ga. 86 ; Geddes v. Pennington, 5 Dow. 159 ; Lindsay v. Veasy, 62 Alai. 421 ; and Winch V. Winchester, 1 Ves. & B. 375 ; other cases cited Wh. on Ew. § 1175.. Foster v. Charles, 6 Bing. 396 ; Slaugh- VOL. I.— 24 269 § 248.] CONTRACTS. [CHAP. XII. Thus a party effecting a life insurance on the life of another is not prejudiced by such other person's indepen- bound by dent false statements, unless concert be established, ty's'ifir' or such liability is specially imposed by the policy.' statements ct There is no case in which a fraud intended by one man shall overturn a fair and bona fide con- tract between two others."^ A bank, to take another illus- tration, which discounts notes, is not affected by frauds between the parties to such notes f nor is an assignee in trust affected by a fraud between one of the trustees and a sti-anger.* On the same reasoning the representations of an agent outside of the range of his ofBce, do not bind his principal.^ And, as a general rule, a false representation, to be imputable, must have been made with intent to be acted on by the party claim- ing redress." § 248. Fraud may be committed as effectually by conduct involving a silent distortion of the truth as by be Inlion^^ words.' A party, for instance, who seeks credit on ductasweii ^.[^g basis of being in a particular profession, may, as in words. _ a l r t j i by adopting the dress or other distinctive marks of that profession, assert his connection with it as emphatically as he could by making the claim in words. ^ Silence, also, may be a contractual admission as effectual!}' as speech, when it involves assent to another person's statements.' A state- ment of quality, also, is implied in offering for sale at a par- ticular price. A jeweller who sells a ring, apparently golden, ' Wheelton u. Hardisty, 8 E. & B. & G. 387 ; Lobdell v. Baker, 1 Met. 232. 193; McCall v. Davis, 56 Penn. St. 2 BuUer, J., Master v. Miller, 4 T. R. 435 ; Croyle r. Moses, 90 Penn. St. 250. 337. 8 R. J.. Giles, l. & c. 502 ; 10 Cux C. 3 Irvine v. Bank, 2 W. & S. 190. C. 44 ; R. u. Hunter, 10 Cox C. C. Ii42 ; * McGuire v. Faber, 25 Penn. St. 436. R. v. Cooper, L. R. 2 Q. B. D. 510 ; R. 6 Infra, § 270. ,-. Story, R. & R. 81 ; R. r. Barnard, 7 6 Supra, § 237 ; see notes to Chande- C. & P. 784 ; R. <•. Bull, 13 Cox C. C. ler o. Lopus, 1 Smith's L. C. 7th Am. 608; Wh. Cr. L. 8th ed.'§ 1170; Wh. ed. 299. Cr. Ev. § 679 ; see Laidlaw v. Organ, ' Supra, § 217. In the Roman law, 2 Wheat. 178 ; Mizner . . Kussell, 29 see to this effect L. 43, § 2 ; L. 66, § 1 ; Mich. 229 ; Chisolm c. Gadsden, 1 D. de contrah. emt. XVIIl. 1. So in Strobh. 220. our own law: Lee ?•. Jones, 17 C. B. N. 9 Wh. on Ev. § 1136. See as to S. 482 ; Crawshay r. Thompson, 4 M. qualification, infra, §§ 249 et seq. 370 CHAP. XII.] FRAUD. [§ 249. at the price of gold, makes the assertion that the ring is of gold as distinctly as if he said, "this is gold."^ A man, also, who courts a woman in view of marriage, implicitly states that he is an unmarried man capable of marrying.^ A party, also, procuring the endorsement of another in order to nego- tiate a hill, is understood to affirm that the person so endors- ing is competent to endorse.^ And when an article is sold for a specific purpose, the suppression by the vendor of a fact that makes it unfit for such purpose may be an actionable deeeit.* A material latent defect, such is the general rule, in a chattel, must be disclosed when it is offered for sale, or the sale will be avoided ;° and though there is in a sale of chattels no implied warranty against latent defects,^ yet a chattel must answer the general object for which it is sold.' In fine, " misrepre- sentations may be as well by deeds or acts as by words ; by artifices to mislead as well as by positive assertion." ' § 249. It may happen that all of a statement may be true, yet from the suppression of important qualifica- -^ij^^ ^^^_ tions, the eftect is to leave a false impression. In (disclosure . ^ of qualifl- this case the imperfect statement of truth is tanta- cations mount to a false statement.' The mere allowing statement 1 Paddock v. Strobridge, 29 Vt. 470 ; Winsor v. Lombard, 18 Pick. 57 ; see HiU V. Gray, 1 Stark. 352 ; Ward v. Hobbs, L. R. 2 Q. B. D. 331. 2 Pollock c: Sullivan, 53 Vt. 507; Bennett v. Bean, 42 Mich. 346 ; cited supra, § 217. , "It has been said that the doctrine of equitable estoppel involves a ques- tion of legal ethics, Welland Canal v. Hathaway, 8 Wend. 483, and this is repeated in Dezell v. Odell, 3 Hill, 225, and in Frost v. Ins. Co., 5 Denio, 154, and is allowed to prevent fraud and in- justice.'' — Danforth, J., Andrews v. Ins. Co., 85 N. Y. 344. » Lobdell V. Baker, 1 Met. 193. * See supra, § 221 ; infra, §§ 254 et seg. 6 Emmerton v. Matthews, 7 H. & N. 586 ; Randall v. Newson, L. R. 2 Q. B. D. 102. ^ Ibid. ; Emmerton i-. Matthews, 7 H. & N. 586 ; supra, § 224. ' Supra, § 221 ; Leake, 2d ed. 360, citing Shepherd v. Kain, 5 B. & Aid. 240. 8 Story's Eq. Jur. 12th ed. § 192. ° Supra, § 217 ; Pidcock v. Bishop, 3 B. & C. 605 ; Peek v. Gurney, L. R. 6 B. L. 392; Clermont u. Tasburgh, 1 Jac. & W. 112 ; Mallory u. Leach, 35 Vt. 156 ; Moore v. Cains, 116 Mass. 396 ; Livingston v. Peru Co., 2 Paige, 390; Smith V. Ins. Co., 49 N. Y. 211 ; Kint- zing V. McElrath, 5 Barr, 467 ; Pearce u. Blackwell, 12 Ired. 49 ; Rhode v. Al- ley, 27 Tex. 443 ; Belden v. Henriquez, 8 Cal. 87. 371 § 249.] • CONTRACTS. [CHAP. XII. untrue,this another, also, without setting him right, to proceed representa- ^xi a false impression derived from the conduct of tion. ^jjQ party taking advantage of the mistake, estops such party from subsequently using this advantage;' and the same rule applies where there is an intentional non-correction of an error into which the other party fell from misappre- hension of a statement which was originally made without the intention to deceive.^ This is eminently the case when facts have occurred which have made a former statement, true when originally made, false at the time of a subsequent conversation, when the intermediate occurrence of these facts is suppressed.^ — It has been held in Massachusetts,* where a father, in a letter, recommended his minor son as deserving of credit, but concealed the fact of the son's infancy, that if this concealment was with the view of getting credit for the son, knowing that if the fact of infancy had been disclosed no credit would have been given, this would be a fraud which would impose liability. And it has been ruled in England, that where a lessor of a mine did not disclose the fact that a material portion of the mine was under ground between high and low- water mark, and the lessee had no means of knowing this defect, this was ground for setting aside the lease.' — As will be hereafter seen, buying without the intention of paying is a fraud which avoids a contract.^ ]iut a suppression of the purchaser's insolvency is not such a fraud. Supposing there is an intention to pay, the fact that upon a full survey 1 Supra, § 217 ; Hill v. Gray, 1 Stark. 530 ; Cecil c. Sparger, 32 Mo. 462 ; 434 ; Keates , . Cadogan, 10 C. B. 591 ; Patterson ,-. Kirkland, 34 Miss. 423, Piekard a. Sears, 6 A. & E. 474 ; Miles and cases cited supra, § 217. See notes <;. Furber, L. R. 8 Q. B. 77 ; Counilian to Chandeler r. Lopus, 1 Smith's L. C. V. Thompson, 111 JIass. 270 ; Rice i>. 7th Am. ed. 299. Barrett, 116 Mass. 312 ; Bcdine v. Kil- » Traill v. Baring, 33 L. J. C. 521 ; leen, 53 N. Y. 93 ; Chapman v. Rase, Hill v. riray, 1 Stark. 352. 56 N. Y. 137 ; Beaupland v. McKeen, ■ Kidney v. Stoddard, 7 Met. 252. 28 Penn. St. 124. ^ Mostyn r. West Mostyn Coal Co., 2 Reynell ^. Sprye, 1 D. M. G. 709 ; L. R. 1 C. P. D. 145. See to same gen- Wald's Pollock, 492, citing Davies r. eral effect Edwards u. McLeay, Coop. Ins. Co., L. R. 8 Ch. D. 475; Petti- 308; 2 Swanst. 287 ; Leake, 2d ed. 362. grew V. Chellis, 41 N. H. 95. To same » Infra, § 258. point see Barron v. Alexander, 27 Mo. 372 CHAP. XII.J FRAUD. . [§ 249. of his aiFairs the purchaser's solvency Is questionable, is one he is not required to disclose.' It is otherwise, however, if there is any active misleading of the vendor f and for B. to induce A. to accept in B.'s place C, an insolvent tenant, B. knowing and concealing C.'s insolvency, is an actionable deceit on the part of B.^ The suppression, also, by a vendor of hay, of the fact that it contains deleterious ingredients, makes him liable for any damage to the vendee's cattle.^ — It has been held in England that a non-disclosure of incumbrances, when the purchaser has no other means of determining the existence of such incumbrances than by the vendor, avoids a contract of sale when the purchaser is misled by the suppression.^ And this is a fortiori the case when there is a negation of the fact suppressed implied in the vendor's statements. Thus, where the vendor of a public house described it as in the occupation of a tenant, without stating that it was under lease to a brewer for a term of eight years to come, specific performance was refused as against a purchaser who had no notice of the lease.^ But in letting a house, the proposed tenant need not be instructed as to the condition of the repairs; this he must find out himself.' A statement, however, as to repairs, sub- jects the maker to liability.* Where, also, there is a registry of incumbrances, which it is the practice for purchasers to search, parties are not called upon to give in detail the burdens 1 Irving V. Motley, 7 Bing. 543; LitcMeld v. Hutchinson, 117 Mass. Whittaker ex parte, L. R. 10 Ch. 446 ; 195 ; Farrel «. Lloyd, 69 Penn. St. 239. Biggs V. Barry, 2 Curt. 259 ; Reding- ' Bruce v. Ruler, 2 Man. & R. 3. ton u. Roberts, 25 Vt. 686 ; Rowley u. ' Frencli o. Vining, 102 Mass. 135. Bigelow, 12 Pick. 307 ; Morrill t). Black- As to suppression of facts going to man, 42 Coiin. 324 ; Lupin v. Marice, wholesomeness of food, see supra, §§ 6 Wend. 83 ; Andrew v. Dieterich, 14 222, 229. Wend. 31 ; Hennequin . Carrugi, 41 Ga. 660 ; Delahay c. Ins. Co., 8 Humph. 684. 5 J.efavom r. Ins. Co., 1 Phila. 558. 6 Supra, §§ 217, 250 ; Carter o. Boehme, 1 W. BI. 593; Pimm v. Lewis, 2 F. & P. 778 ; Foley t . Tabor, 2 F. & F. 663; Haley v. Ins. 388 Co., 12 Gray, 545 ; Boggs r. Ins. Co., 30 Mo. 63. ' May on Ins. 2d ed. § 206, citing McDonald <. Ins. Co., L. R. 9 Q. B. 32.S; Jeffries r. Ins. Co., 22 Wall. 47; Hardy v. Ins. Co., 4 Allen, 217 ; Shaw- mut Ins. Co. i. Stevens, 9 Allen, 332 ; Chaffee y. Ins. Co., 18 N. Y. 376; Columbia Ins. Co. ( . Cooper, 50 Penn. St. 331 ; North Am. Ins. Co. c. Throop, 22 Mich. 146. As to equivocal ques- tions, see May on Ins. 2d ed. §§ 210 et seq. That an agent's concealment is imputable to principal, see May, ut supra, § 213. That evasive answers concealing the truth are misstatements, see Bliss on Ins. 165 ; Cazenove v. Ins. Co., 6 C. B. N. S. 437 ; Perrins <•. Ins. Co., 2 E. & E. 317 ; Smith ,-. Ins. Co., 49 N. Y. 211 ; Hartmau v. Ins. Co., 21 Penn. St. 466. A concealment by an applicant for life insurance of the fact that his proposal for insurance in other offices had been declined, he having been questioned on this point, is mate- rial, and avoids the contract. London Ass. I. Mansell, L. R. 11 Ch. D. 363; 41 L. T. N. S. 225. 8 tii-e Armenia Ins. Co. v. Paul, 91 Penn. St. 520. CHAP. XII.] FKAUD. [§ 257 § 256a. Similar observations may be made as to the parties to family negotiations.^ Alembers of a family, in nego- tiating with each other in respect to a fiimily set- parties to tlement, are supposed to disclose all material facts goyat'iong to each other ; and if one perceives another to be laboring under an essential misjipprehension, the party know- ing the truth is bound to correct such misapprehension. Uiuler such circumstances the non-correction of the misap- prehension is equivalent to its indorsement. " Full and com- plete communication of all material circumstances is what the court must insist on." " Without full disclosure, honest intention is not sufficient,"^ and although, as Mr. Pollock well remarks in commenting on this point, this does not make the communication of mere gossip essential, yet it does make essential the communication of whatever a good business man would deem of importance under the circumstances.' It is otherwise, however, when the parties are not on good terms, and are dealing at arm's length.* — The rule before us applies to all negotiations in view of marriage." Hence all marriage settlements in fraud of marital rights may be avoided.^ But this applies only to settlements in which full disclosure is required. Hence it will require strong proof of active perver- sion of truth to set aside a release of dower for fraudulent suppression of fact by the party obtaining the release.' § 257. When the parties to a contract have the same thing in view, the contract is not avoided by the fact that False prom- one of them makes a promise to do some particular jfenota '■ '^ lalse state- thing (such thing not being a condition precedent ment. ' See supra, i 217. and property of eaoli. If the provision 2 Gordon v. Gordon, 3 Sw. 400. secured for the wife is manifestly uu- ' Poll. 3d ed. 520 ; see Fane v. Fane, reasonable and disproportionate to L. R. 20 Eq. 698; Leonard v. Leonard, the means of the intended husband, 2 B. & B. 180; Greenwood v. Green- it raises a presumption of intended wood, 2 De G. J. & S. 28. concealment, and throws on him the * Irvine v. Kirkpatrick, 7 Bell's Ap. burden of disproving that presump- Cas. 186; and see Brent u. Brent, 10 tion." Merour, J., Bierer's Est., 92 L. J. Ch. 84. Penn. St. 266. 5 Kline o. Kline, 57 Penn. St. 120; « Infra, §§ 266, 399. Kline's Es., 64 Penn. St. 122. " There ? Stine v. Sherk, 1 W. & S. 195 ; must be, in ante-nuptial settlements, Cummins v. Hurlbutt, 92 Penn. St. a full disclosure of the circumstances 165 ; Bierer's Est., 92 Penn. St. 267. 389 § 257.J CONTRACTS. [CHAP. XII. to the act), which thing he does not afterwards do. The false statement must go to the quality of the thing con- tracted for as it actually is, otherwise it does not prevent that concurrence of minds on one thing which is the distinguish- ing feature of a contract, nor does it expose the party making it to an action for deceit, however much he might be liable on the breach of promise.^ No representation of a probable future state of things can be a false pretence as to an existing fact affecting a particular transaction." But a false statement made or implied of a party's intentions at the time may be a fraud that may avoid the contract he may make on the basis of such a statement, or may expose him to an action of deceit. There is no concurrence of minds, and hence there can be no contract. And if a statement of intention to do a particular thing is part of the consideration of a contract, and the party making the statement afterwards changes his intention, he is bound to communicate this fact at the earliest period to the party to whom the representation was made, and is liable for any loss the other party may incur through his change of atti- tude. A contract made on the basis of such misrepresentation ought not to he enforced when the misrepresentation is mute- rial.^ — A party, it should be added, who agrees as considera- tion of a contract to do certain things in the future for the other contracting party, cannot compel, in equity, specific per- formance of the contract when the thing he promised to do is unperformed.'' ' Burrell ex parte, L. R. 1 Ch. D. 552 ; S5 ; State r. Evers, 49 Mo. 542 ; Ryan Feret r. Hill, 15 C. B. 207 ; Grove v. ,■. State, 45 (ia. 128 ; State c. Prather, Hodges, 55 Pcnn. St. 519 ; see fully 44 Ind. 287 ; Keller v. State, 51 Ind. supra, §§ 177 at set]. 187. Ill ; Gage v. Lewis, 68 111. 604; Haz- 2 Jorden , . Money, 5 II. L, Cas. 185 ; lett r. Burge, 22 Iowa, 535 ; see Fisher Vernon <-. Keys, 4 Taunt. 488 ; Burrell u. N. Y. Com. PL, 18 Wend. 60S ; South- ex parte, L. R. 1 Cli. D. 552; R. ,. Lee, wick v. Band, 84 N. Y. 421 ; Morri- L. & C. 309 ; R. u. Woodman, 14 Cox son , . Kook, 32 Wis. 254. C. C. 179; Sawyer f. Prickett, 19 Wall. 3 Traill i: Baring, 4 D. J. S. 318; 146 ; Long ,-. Woodman, 58 Me. 49; Slim v. Croncher, 1 D. F. J. 518; see Pedrick v. Porter, Allen, 324; Pike supra, §§ 149 et seq. ,■. Fay, 101 Mass. 134 ; Mooney r. Mil- 4 Peacock v. Penson, 11 Beav. 355 ; ler, 102 Mass. 217 ; Coil v. College, 40 Lamare u. Dixon, L. R. 6 H. L. 414 ; Penn. St. 445 ; Dillingham r. State, see notes to Chandelor v. Lopus, 1 5 Oh. St. 280; Colly v. State, 55 Ala. Smith L. C. 7th Am. ed. 299 et seq. 390 CHAP. XII.] FRAUD. [§ 258. § 258. If there be an intention at the time of a purchase not to pay for the thing purchased (which is to be ^^^ .^ gathered from all the facts of the case), this is a fraud not to pay which entitles the vendor to avoid the contract and false pre^ exposes the party defrauding to an action for de- *'^°'^^' ceit.' But the intention must be never to pay. If it be not to f)ay at a time designated, but to pay ultimately, the misrep- resentation, unless time be of the essence of the contract, does not avoid it.^ Even a knowledge by a purchaser that at the • Benj. on Sales, 3d Am. ed. § 440 ; Wilson V. Finoh-Hatton, L. R. 2 Eq. D. 336 ; Ferguson v. Carrington, 9 B. & C. 59 ; Noble v. Adams, 7 Taunt. 59 ; Load V. Green, 15 M. & W. 216 ; Ham- mersley v. DeBiel, 12 CI. & F. 45 ; Clough V. R. R., L. R. 7 Exch. 26; Conyers o. Ennis, 2 Mason, 236 ; Parker v. Byrnes, 1 Lowell, 539 ; Don- aldson V. Farwell, 93 U. S. 631 ; Stewart V. Emerson, 52 N. H. 301 ; Hovey r. Grant, 52 N. H. 569 ; Dow v. Sanborn, 3 Allen, 181 ; Kimball u. ^tna Co., 9 Allen, 540 ; Wiggin v. Day, 9 Gray, 97 ; Jordan v. Osgood, 109 Mass. 457 ; Ash V. Putnam, 1 Hill, 302; Hall c. Naylor, 6 Duer, 71 ; Byrd u. Halls, 2 Keyes, 647 ; Hennequin v. Naylor, 24 N. Y. 139 ; Wright v. Brown, 67 N. Y. 1 ; Rogers i\ Salmon, 8 Paige, 559 ; Mackinley v, Maogregor, 3 Whart. 369 ; Rodman v. Thalheimer, 75 Penn. St. 232 ; Powell u. Bradlee, 9 Gill & J. 220 ; Peters v. Hilles, 48 Md. 506 ; Shipman r. Seymour, 40 Mich. 274; see, liowever, contra, Smith o. Smith, 21 Penn. St. 367 ; Backentoss v. Speicher, 31 Penn. St. 324 ; Bidault v. Wales, 19 Mo. 36; Bidault u. Wales, 20 Mo. 546 ; Bell v. Ellis, 33 Cal. 620. That a concealment of an intention not to pay is a fraud, see Stewart u. Emerson, 52 N. H. 301. 2 Mitchell V. Worden, 20 Barb. 253 ; Bidault a. Wales, 20 Mo. 546. It is said in Pennsylvania that mere inten- tion not to pay, without some artifice to get possession, does not avoid a sale when there has been a delivery of the property. Smith i.'. Smith, 21 Penn. St. 367 ; Backentoss ■•. Speicher, 31 Penn. St. 324 ; Pottinger c. Hecksher, 2 Grant, 309 ; but see Hoffman v. Strohecket, 7 Watts, 86. And a mere promise without a, definitive intention as to paying is not a fraud which avoids. Buffington c. Garrish, 15 Mass. 158 ; Griffin ,,. Chubb, 7 Tex. 613. In Whitaker ex parte, L. R. 10 Ch. 446, a trader bought goods at auc- tion on credit, obtaining possession of them, without disclosing the fact that he was then under proceedings in the bankrupt court, having committed an act of bankruptcy. It was held that this by itself did not avoid the pur- chase, and that the goods vested in the bankrupt assignee. It was, however, further said that the buyer "must be taken to have made an implied representation that he intended to pay for the goods, and if it were clearly made out that at the time he did not intend to pay for them, a case of fraudulent misrepresentation would be shown." Leake, 2d ed. 354; see supi-a, 249. As sustaining the text, see further Stewart i'. Emerson, 52 N. H. 801; Kline u. Baker, 99 Mass. 253; Stubbs u. Johnson, 127 Mass. 219 ; Thompson v. Rose, 16 Cbnn. 71 ; Bar- nard V. Campbell, 65 Barb. 286 ; Del- 391 § 259.] CONTRACTS. [chap. XII. time he was insolvent, without any reasonable expectation of paying, does not, by itself, avoid the contract or expose the purchaser to an action for deceit.' It is for the jury to deter- mine " whether the representations (of an insolvent imrchaser) were intended and understood as statements of facts, or mere expressions of opinion or judgment."^ § 259. The fraud must go to a specific fact, as distinguished from a general oiiinion.* It is not a fraudulent mis- False opin- " ^ ion of a Statement, therefore, which avoids a contract, to say fraud that'^ untruly that a particular article is a very good one avoids. q£ ^|g class; though it is a misstatement to say that the article belongs to a class when it does not. To say un- trul}', for instance, of a particular horse, that he is a good horse and serviceable in the vendor's opinion, does not avoid a sale of the horse; but it would be otherwise if the horse was declared to be a particular horse, well known in the market, which he is not.' To say of a flock, "this is a first-rate flock," cannot, no matter how false, be regarded as a fraudu- lent false statement, though it would be otherwise if certain lone .,. Hull, 47 Md. 112; Talcott u. Henderson, 31 Oh. St. 162. That sup- pression of the party's insolvency is not a dec-fit, see supra, § 249. 1 /Supra, § 249; infm, § 2i;2 ; Benj. on Sales, 3d Am. ed. § 441 ; Irving r. Motley, 7 Bing. 543; Whitaker ex parte, L. R. 10 Ch. 446 ; Biggs !'. Barry, 2 Curt. 259 ; Hale v. Ins. Co., 12 Fed. Rep. 359 ; Hodgeden c. Hubbard, 18 Vt. 504 ; Reddington ,-. Roberts, 25 Vt. liMG ; Rowley v. Bigelow, 12 Pick. 307 ; Morrill u. Blackman, 42 Conn. 324; Andrew v. Dieteriek, 14 Wend. 31 ; I-Iennequin r. Naylor, 24 N. Y. 139 ; Rodman v. Thalheimer, 75 Penn. St. 232 ; Powell v. Bradlee, 9 Gill k J. 220 ; Talcott r. Henderson, 31 Oh. St. 1G2; Patton u. Campbell, 70 111. 72 ; Ship- man V. Seymour, 40 Mich. 274 ; (iar- butt I'. Bank, 22 Wis. 3S4. 2 Morton, J.,Morse!-.Shaw, 124 Mass. 59 ; see notes to Chandelor i'. Lopus, 1 Smith's L. C. 7th Am. ed. 299. 392 3 Supra, § 215 ; Citizens' Bankn. BanTc of New Orleans, L. R. B H. L. 3.52; Power u. Barham, 4 Ad. & E. 47tJ ; Jendwine v. Slade, 2 Esp. 573 ; Evans V. Collins, 5 a. B. 805 ; Sawyer ^. Prickett, 19 Wal. 146; Stebbins e. Eddy, 4 Mason, 414; Foster r. Cald- well, IS Vt. 176; Hazard v. Irwin, 18 Pick. 105 ; Watts v. Cummins, 59 Penn. St. 84 ; Clark v. Everhart, 63 Penn. St. 347 ; Savage r. Jackson, 19 lia. 305 ; Stow V. Boseman, 29 Ala. 397 ; Long- shore !'. Jack, 30 Iowa, 298 ; Barlow v. Wiley, 3 A. K. Marsh. 457 ; Townsend t. Cowles, 31 Ala. 428 ; Herring v. Skaggs, 62 Ala. ISO ; Broughton u. Winn, 60 Ga. 486 ; Reel i: Ewing, 4 Mu. Ap. 569. This topic is discussed in its criminal relations in Wh. Or. L. 8th ed. §§ 1154 ef seq., and see supra, § 215. < State V. Mills, 17 Me. 211 ; see Harvey v. Young, 1 Yelv. 21 ; Sieve- king V. Litzler, 31 Ind. 17. CHAP. Xir.] FRAUD. [§ 259. sheep in the flock were falsely declared to be free from disease." So to say untruly that a rope, ottered for sale, is good, and will bear a heavy weight, is not a false representation, but it is otherwise with a statement that the rope has sustained a particular test, or is of a particular quality.^ And an untrue statement of a fact as merely " probable," is not a false repre- sentation, when probability' is not the question at issue. ^ — ■ To say of a document, also, that it has a particular legal meaning, is a matter of opinion, open to both sides to express (neither pretending to be an expert), the expression of which opinion does not ordinarily impose liability on a person not a specialist ;^ though it would be otherwise as to an assertion that a particular line of facts falls within a particular rule.' But when any particular fact is so material that an agreement concerning it is necessary to a consent by the parties to one and the same thing, then any deliberate false statement as to such fact, though in the shape of an opinion, avoids the con- tract, and renders the party making such false statement liable in an action for deceit.* This is the case with regard to a false statement concerning quantity, when this is material;'' though, as will hereafter be seen, a party who receives a less ' People p. Crissie, 4 Denio, 525 ; see means of information." Story's Eq. Lindsay Petroleum Co. i'. Hurd, L. R. Jur. 12th ed. § 197. 5 P. C- 221 ; Moens v. Heyworth, 10 M. " Upton v. Englehardt, 3 till. 343 ; 6 W. 147 ; supra, § 215 et seg. Clemi'. R. R., 9 Ind. 488 ; Smith u. Cal- 2 Bispham's Eq. § 207, citing Sieve- vert, 44 Ind. 242 ; JluUen ti. Park, 64 king V. Litzler, 31 Ind. 17 ; Coon c . Ind. 202 ; Clodfelter v. Hulett, 72 Ind. Atwell, 46 N. H. 510 ; Reid r. Plippen, 137, and cases cited supra, § 198. 47 Ga. 273 ; Allin v. Millison, 72 111. = Supra, §§ 199, 201 ; Edwards u. 201 ; supra, § 215 et seq. Brown, 1 C. & J. 312 ; Hirschfield v. ' Halls u. Thompson, 1 Sm. & M. R. R., L. R. 2 Q. B. D. 1. 443. That expressions of opinion are " Herring v. Skaggs, 62 Ala. 180. not to be regarded as misrepresenta- '' Supra, § 190 ; infra, §§ 601, 898 ; tions, see supra, § 215 ; Person v. San- Irving v. Thomas, 18 Me. 418 ; Whit- ger, 1 Wood. & M. 146 ; Buschmann v. ney v. Allaire, 1 Comst. 305 ; Clark v. Codd, 52 Md. 202.—" Ordinarily," says Baird, 9 N. Y. 183 ; Wiswall v. Hall, 3 Judge Story, "matters of opinion be- Paige, 313; Hill v. Brower, 76 N. G. tween parties dealing upon equal 124 ; Kelly v. Allen, 34 Ala. 663 ; Cox terms, though falsely stated, are not u. Reynolds, 7 Ind. 257 ; Foley v. Cow- relieved against ; because they are not gill, 5 Blackf. 18 ; Shaefifer v. Sleade, 'J presumed to mislead, or influence the Blackf. 178. other party, when each has equal 393 § 259.] CONTRACTS. [CHAP. XII. sum tlian was bargained foe can claim an abatement fro tanto if sued for the price.' A vendor is also thus liable for false statements as to the capacit}' of a niill,^ as to the foundation of a building,^ as to the amount of crops raised on a farm/ and as to the age and essential characteristics of a horse. ^ — What would be matter of opinion when spoken by a non- specialist, may be a matter of fact when spoken by a specialist.^ A vague statement of the value of a picture, for instance, by a mere dealer, would not bind ; but it would be otherwise with regard to a statement by one professing to be a connoisseur, giving an official valuation.^ — ^Ilence, statements made by the president of a railroad corporation, to induce a party to buy stock in the corporation, that the corporation was able to lay its track and provide rolling stock, and pay all bills con- tracted, and that its stock was not for sale, and could not be bought anywliere but of him, are to be regarded as represen- tations of fact, and not as expressions of opinion.' — As matters of opinion, under the present head, are to be classed state- ments as to the utility of particular inventions for which patent rights are offered for sale.^ It is otherwise as to state- ments by vendors as to the practical characteristics of patent rights.'" — Unless there be a fiduciary relation between vendor and purchaser, or unless the party speaking speaks, as we have seen, as a specialist, opinions of value," no matter how exag- gerated, do not impose liability, so long as these opinions consist of estimates, and do not involve warranties or represen- ations of specific facts.'^ Liability, however, attaches, when " Infra, §§ 899 et seq. ' dan, 60 Me. 531 ; Wakeman v. Dalley, 2 Sieveking c. Litzler, 31 Ind. 17; 51N.Y. 27. See § 260 for other cases. Faribault !'. Sater, 13 Minn. 223. 8 Teagne u. Irwin, 127 Mass. 217; ^ Il)id. see Grim ». Byrd, 32 Grat. 293, and see •■ Martin v. Jordan, 60 Me. 531 ; Coon cases cited to § 260. r. Atwell, 46 N. H. 510 ; Mooney v. 9 Hunter v. McLaughlin, 43 Ind. 38. Miller, 102 Mass. 217. "O Bigler v. Flickinger, 56 Penn. St. s R. .■. Keighley, D. & B. 145 ; Reid 279 ; Rose v. Hurley, 39 Ind. 77. n. Flippen, 47 Ga. 273. " Supra, § 2.')4. 6 Haygarth v. Wearing, L. R. 12 Eq. ^ See note to Chandelor v. Lopus, 1 320 ; HubbeU v. Meigs, 50 N. Y. 480 ; Smith's Lead. Cas. 7th Am. ed. 299 et Shaeffer v. Sleade, 7 Blackf. 178. seq. ; Lomi v. Tucker, 4 C. & P. 15 ; 7 Story's Eq. .Jur. § 198, citing Hill Hill v. Gray, 1 Stark. 352 ; Willard u. ,j. Gray, 1 Stark. 352 ; Martin v. Jor- Randall, 65 Me. 81 ; Manning v. Albee, 394 CHAP. XII.J FRAUD. [§ 260. the statement of opinion is by a person occupying a fiduciary position, or by one appealed to as an umpire, or by one under- taking to make inquiries for the party deceived, or as a specialist.^ § 260. "We have noticed in the last section, the limitations under which opinions as to value may bind the .. ., T- , • 1 ■ IT- ■'^D'i SO of party giving them, it may be said, in addition, conjectural that a value given conjecturally, or as an estimate, ^'^^^' or an expression of opinion, by a party negotiating a sale, is not ordinarily to be regarded as a representation of a fact whose falsity exposes the party making it to rescission of the contract made by him, or to an action for deceit,^ unless such value he 11 Allen, 622 ; Cooper r. Levering, 106 Mass. 79 ; Homer j'. Perkins, 124 Mass 431 ; Wolcott V. Mount, 38 N. J. L 496 ; Merwin .-. Arbuclile, 81 111. 501 McClanahan v. McKinley, 52 Iowa, 222 ' Fisher v. Budlong, 10 R. I. 525 Harris r. McMurray, 23 Ind. 9 ; Picard V. MoCormick, 11 Mich. 68 ; Kost v. Bender, 25 Midi. 515 ; see Power c. Barham, 4 Ad. & E. 473 ; Payne ,j. Smith, 20 Ga. 654 ; and cases cited above, see supra, § 254 as to fiduciary relations. In Power u. Barham, 4 Ad. & El. 476, 6 N. & M. 62, 7 C. & P. 356, it was held that where a bill of sale described certain pictures as "Four pictures, views in Venice, Canaletti," it was for the jury to determine whe- ther this was a conjectural opinion or absolute statement that the pictures were by Canaletti (see supra, § 220). In Jendwine v. Slade, 2Esp. 573 (Story on Cont. § 639), Lord Kenyon said: " It was impossible to make this the case of a warranty ; the pictures were the work of artists some centuries back, and there being no way of trac.ing the picture itself, it conld only be matter of opinion whether the picture in ques- tion was the work of the artist whose name it bore, or not." In Power v. Barham, supra, Lord Denman said : "It may be true that, in the case of very old pictures, a person can only express an opinion as to their genuine- ness ; and that is laid down by Lord Kenyon in the case referred to (Jend- wine I'. Slade). But the case here is, that pictures are sold with a bill of parcels, containing the words, ' Four pictures, views in Venice, Canaletti.' Now, words like these must derive their explanation from the ordinary way in which such matters are trans- acted. It was, therefore, for the jury to say, under all these circumstances, what was the effect of the words, and whether they implied a warranty of genuineness or conveyed only a descrip- tion or expression of opinion." 2 Story, Eq. Jur. § 201 ; Sug. V. & P. 543 ; Bramley t: Alt, 3 Ves?. 624 ; Smith V. Clark, 12 Ves. 483 ; Bexwell V. Christie, 1 Cowp. 395 ; Holbrook o. Connor, 60 Me. 578 ; Morrill ,-. Wal- lace, 9 N. H. Ill ; Medbury r. Watson 6 Met. 246 ; Davis c. Meeker, 5 Johns 354 ; People v. Crissie, 4 Denio, 525 Sandford u. Handy, 23 Wend. 260 Sankey v. Bank, 78 p'e'nn. St. 48 Bristol V. Braidwood, 28 Mich. 191 Noetling v. Wright, 72 111. 390 ; Tuck 0. Downing, 76 111. 71 ; Walker v. R 395 § 261.J CONTRACTS. [chap. XII. given by an expert as such;' nor, such is tlie prevalent opinion, is a statement of the price an article brought at a prior sale,^ unless such price be an important factor in determining the question whether a purchase be made.^ And a misrepresenta- tion of the price at which property offered for sale has been let, imposes liability." And when an opinion as to value has a ma- terial influence in the adoption of the contract, and when the party accepting a proposal accepts it on this basis, tlien an intentionally false statement of value avoids the contract and exposes the party making it to an action for deceit.^ Misrepre- § ^61. A misrepresentation is to be distinguished sentations from a pufl". Few articles are sold in the market to be d[s- '^ tinguished without preliminary puffs, express or implied; "puffs." but these puffs are regarded on all sides as mere E., 34 Miss. U5 ; Anderson ,. Hill, 12 Sm. & M. 679 ; Foggart r. Blackweller, 4 Ired. 238; Rioks r. Dillahunty, 8 Port. 134 ; Graffenstein t . Eppstein, 23 Kan. 443. That an affirmation of value is not a warranty, see siijira, §§ 219 et ni'q. ; and see to same effect, Wetlierill V. Neilson, 20 Penn. St. 448 ; Weimer v. Clement, 37 Penn. St. 147 ; Whitaker r. Eastwiok, 75 Peun. St. 229. ' 1 Story, Eq. .Jur. § 198 ; Pilmore V. Hood, 5 Bing. N. C. 97 ; Hill ,-. Gray, 1 Stark. 352; Pike ,-. Fay, 101 Mass. 134; Piokard v. MeCnmiiek, 11 Midi. GS ; Kost v. Bender, 25 Mich. 515 ; Birdsey v. Butterfield, 34 Wis. 52 ; and illustrations given in § 260. 2 Long 1 . Woodman, 58 Mr. 52 ; Bishop r. Small, 63 Me. 12; Holbrook .'. Conner, 60 Me. 578 ; Medbury v. Watson, 6 Met. 246; Hammer ,. Cooper, 8 Allen, 334; Manning c. Albee, 11 Allen, 520 ; Cooper c. Lever- ing, 106 Mass. 79 ; Noetling r. Wright, 72 111. 390. ' See Bigelow on Fraud, 19, citing Elkins V. Tresham, 1 Lev. 102 ; Dobell 396 (■. Stevens, 3 B. & C. 623 ; Bowring v. Stevens, 2 C. & P. 337 ; Lawton i. Kittredge, 30 N. H. 500 ; Hammatt , . Emerson, 27 Me. 308 ; Bacon r Frisbie. 15 Hun, 26 ; Van Epps c. Harrison, 5 Hill, 63 ; McAleer r. Horsey, 35 Md. 439 ; Mi.r.-liead (. Fades, 3 Bush, 121 ; Kost r. Bender, 25 Mich. 525 ; Nowlin (■. Snow, 40 Mich. 699 ; though see Tuck r. Downing, 76 111. 71. As sus- taining text, see Lindsay Co. c. Hurd, L. R. 5 P. C. 221 ; ilorison ,. Thomp- son, L. R. 9 a. B. 480 ; Medbury v. M'atson, 6 Met. 259. ■■ Dimmock <. Hallett, L. R. 2 Ch. 21 ; MrClellan r. Seott, 24 Wis. 81. ' Haygarth v. Wearing, L. R. 12 Eq. 327; Simar c. Cauady, 53 N. Y. 298; Stover r. Wood, 11 C. E. Green, 417 ; Neil /'. Cummings, 75 111. 170 ; Davis v. Jackson, 22 lud. 233 ; Bryan .■. Hitch- cock, 43 Mo. 527; Uifford e. CarviU, 29 Cal. 589 ; (.'ruess v. Fessler, 39 Gal. 336, cited Bigelow on Fraud, 18 ; and see further to same effect, Sandford r. Handy, 23 Wend. 269 ; Kenner .■. Harding, 85 111. 264. CHAP. XII.] FRAUD. [§ 262. vague recommendations, not to be contractually binding.^ Commendatory expressions, therefore, such as are usual in public sales, do not vitiate the contract when they refer to matters open to inquiry on all sides, and are part of the usual pliraseology in which offers to sell are couched.^ And mere commendation or praise, no matter how extravagant, is not to be regarded as imposing liability.' § 262. A false representation of another's solvency, when it is so made as to secure credit, exposes the party „ ^ making it to an action for deceit, and opens any resenta- contract based on it to rescission on apijlication of goiveucy the injured party.'' The same may be said of aver- ^""^' meuts that a party is possessed of certain specified assets.^ But in such cases, the averment must go to some particular fact. Liability is not imposed by the mere statement of a party that he would be willing to trust the person whose solvency is at issue.* But although it has been held in Vermont, that a party's false statement of his own solvency does not sustain an action against him for deceit,^ the preva- lent opinion is, that such a statement is not only actionable, but is ground for rescinding a contract which it induces.' 1 R. V. Ridgway, 3 F. & F. 838 ; ^ r. „. Cooper, L. R. 2 Q. B. D. 510 ; State V. Estes, 46 Me. 150 ; People v. Com. u. Burdick, 2 Barr, 163 ; see Crissie,4 Denio, 525 ; French !■. Griffin, Weeks c. Burton, 7 Vt. 67; Edwards 3 C. E. Green, 279 ; Hunter c. Mc- i>. Owen, 15 Ohio, 500 ; Foxworth v. Laughlin, 43 Ind. 38. Bullock, 44 Miss. 457. ' Dimmock v. Hallett, L. R. 2 Ch. « Gainsford v. Blatchford, 7 Price, 27 (where it was held that "fertile 549; Glover r. Townsend, 30 Ga. 90. and improvable" was a mere opinion) ; ' Dyer u. Tilton, 23 Vt. 313; see Troweru. Newcombe, 3 Mer. 704 ; Tuck State v. Sumner, 10 Vt. 587. V. Downing, 76 111. 71 ; Barlow ^. " Wh. Cr. L. 8th ed. §§ 1135 et seq. ; Wiley, 3 A. K. Mar. 459 ; Schramm v. Bigelow on Fraud, 25 ; R. c. Hender- O'Conner, 98 111. 539. As to value, see sou. Car. & Marsh. 328 ; R. v. Bull, 13 supra, § 260 ; as to descriptive terms. Cox, Cr. C. 608 ; Stewart r. Emerson, see infra, §§ 559, 903. 52 N. H. 301 ; Com. u. Drew, 19 Pick. 3 Bispham's Eq. § 215 ; Irving u. 179 ; Kidney v. Stoddard, 7 Met. 252 ; Thomas, 18 Me. 418 ; Savage c. Jack- Dow v. Sanborn, 3 Allen, 181 . Thomp- son, 19 Ga. 305 ; Halls r. Thompson, 1 son v. Rose, 16 Conn. 71 ; People o. Sm. & M. 443. Kendall, 25 Wend. 399 ; Ash ,'. Put- * Pasley v. Freeman, 3 T. R. 51 ; R. v. nam, 1 Hill, 302 ; State v. Simmons, Henderson, Car. & Marsh. 328 ; People 58 Ind. 98. V. Kendall, 25 Wend. 399. 397 § 264.] CONTRACTS. [CHAP. XII. Insolvency, with an intention not to pay, constitutes, as we have already seen, a false pretence which will avoid a sale.^ But mere insolvency is not a fact which a party, even if he is conscious of it, is bound to state, unless it is accompanied with an intention not to pay.^ § 263. The distinctions above stated apply, a fortiori^ to false warranties. A warranty is distino-uished from And so . , • , X. 1 , false a statement in this, that a lalse statement can only warran y. ^^ g^ed on in an action for deceit, while a false war- ranty can also be sued on as a contract, it not being necessary to prove, if this form of action be chosen, an intention to deceive. But a warranty, when made with intention to deceive, will sustain an action for deceit, or an application to rescind a contract induced by it. In such case, however, there must be a specific assertion of quality attached to a particular thing. A mere conjectural estimate is not a war- ranty.^ On a mere warranty without fraud, therefore, the remedy is not rescission, but a suit on the warranty. If there be fraud, there is a right to rescind, nothwithstanding the warranty. § 264. A general misstatement of law by a vendor, not General amounting to a warranty of title, does not avoid a misstate- sale. Or expose the party makino; it to an action for ment of . ' s. j s law does deceit, even though there be grounds to infer that contract; he kiiew at the time the statement was untrue.^ A afto™'^'' party, for instance, may have strong grounds to specific believe that certain bonds would be held, if the opiniou by , ' specialist, question were adjudicated, to be illegal ; yet a state- ' Supra, § 258. 4 /,,/;■„, §§ 282, 904; Leake, 2d ed. 2 Supm, § 2.58 ; Hennequin v. Nay- 406 ; Street v. Blay, 2 B. & Ad. 456 ; lor, 24 N. Y. 139 ; Patton v. Campbell, Gompertz v. Denton, 1 C. & M. 207 ; 70 111. 72 ; and cases cited supra, § Murray r. Mann, 2 Ex. 538. See notes 258. to Chandelor v. Lopus, 1 Smith's L. C. » R. r. Ridgway, 3 F. & P. 838 ; R. 7th Am. ed. 2fl9. e. Sherwood, D. & B. 251 ; Winsor ;;. » Upton v. Tribilcook, 91 U. S. 45, Lombard, 18 Pick. 60 ; Chadsey v. citing Beaufort v. Neeld, 12 CI. & F. Gr.'ene, 24 Conn. 562 ; McGrew c. 248 ; Smith's case, L. R. 2 Ch. Ap. Forsythe, 31 Iowa, 179 ; see fully 613 ; Denton v. Macneil, L. R. 2 Eq. supra, §§ 219 et seq.; infra, §§ 904. 352. As to errors of law, see supra, et seq. §§ 198-9. 398 CHAP. XII.] FRAUD. [§ 264. merit of his opinion that the bonds were legal would not avoid the contract, since this is' an open matter in respect to which each party must depend upon his own inquiries. It would be difi'erent, however, if a party should falsely say, "there has been a decision of the supreme court validating these bonds." Again, a non-specialist is not expected to know the law, and his statement of the law, therefore, is regarded as merely conjectural, not binding him. A specialist, on the other hand, who fraudulently makes a false statement of title, exposes himself to an action for deceit. And so a general false statement that a certain class of persons have particular legal prerogatives cannot be regarded as a fraudulent false representation, though it would be otherwise if a certain per- son {e. g., a woman claiming to be married) is averred to have these prerogatives. In other words, a general misstatement of the law is not a false pretence, since law, in this sense, it is the duty of all persons to know.' Hence a contract will not be rescinded in consequence of an erroneous construction of a document given by the party claiming to enforce it, unless it should appear that the party giving the construction gave it as a specialist, and that the object of the misstatement was to defraud, or that the terms construed belonged to a foreign law of which the party speaking claimed special knowledge.- ' Supra, §§ 198-9 ; Kerr on Fraud send v. Cowles, 31 Ala. 428 ; Cowles c. and Mistake,. 90 ; Leake on Contracts, Townsend, 37 Ala. 77; Martin v. 182; Bispham's Eq. § 212; Cooper v. Wharton, 38 Ala. 637; Beall v. Mc- Phibbs, L. E. 2 H. L. 170 ; E. <-. Sim- Gehee, 57 Ala. 438 ; People v. San mends, 4 Cox C. C. 277 ; E. v. Davis, Francisco, 27 Cal. 655. That knowl- 11 Cox C. C. 181 ; Kashdall i^. Ford, edge of the applioatory home law L. E. 2 Eq. 750 ; Hirsohfleld v. E. E., (though not of foreign law) is always L. E. 2 a. B. D. 1 ; Bank U. S. v. presumed, see Wh. on Ev. § 1241 ; Daniel, 12 Pet. 32 ; Upton v. Trebil- supra, §§ 198-9. cock, 91 XJ. S. 45 ; Ogilvie v. Ins. Co., 2 Lewis v. Jones, 4 B. & C. 506 ; 22 How. 380 ; Grant u. Grant, 56 Me. Eashdall v. Ford, L. R. 2 Eq. 750 ; 573; Pinkham v. Gear, 3 N. H. 163; Hunter u. Walters, L. E. 7 Ch. 75 ; Starr v. Bennett, 5 Hill, 303 ; Com. u. Eussell c Branham, 8 Blackf. 277 ; Henry, 22 Penn. St. 253 ; .(Etna Ins. Smither «. Calvert, 44 Ind. 242 ; Craig Co. V. Eeed, 33 Oh. St. 283 ; Clem r. v. Hobbs, 44 Ind. 363 ; Bacon v. Mark- R. E., 9 Ind. 488 ; Parker v. Thomas, ley, 46 Ind. 116 ; Clodfelter v. Hulett, 19 Ind. 213 ; Eogers c. Place, 29 Ind. 72 Ind. 137 ; Hawkins v. Hawkins, 50 577 ; Fish v. Cleland, 33 111. 238 ; Cal. 558 ; Am. Ins. Co. v. Capps, 4 Mo. Drake v. Latham, 50 111. 270 ; Town- Ap. 571. 399 § 265.] CONTRACTS. [CHAP. XII. And where an agent claims authority by virtue of his ofBce to do certain acts, the extent of his power being a matter of general law within tlie knowledge of the party whom he addresses, the former is not liable for an opinion as to his power given to the latter.' But when a person, claiming either to be a specialist or to represent the opinions of a specialist, misrepresents the law for the purposes of fraud, then he becomes responsible in an action for deceit, if the other party does not rescind.^ This rule has been held to apply in a case in which an old resident, professing to be familiar with land titles, imposed upon an immigrant, just arrived, by a false representation of title.^ And a party to a written con- tract, claiming to have special knowledge of the meaning of words used in it, is liable for fraud in misrepresenting them to the other party, who was ignorant of their true meaning.'' The same liability is imposed when the false representation is by a party occupying a special pjosition of trust f and when a document is surreptitiously substituted for that which the party signing intended to sign, provided no negligence is imputable to him.^ Miiiriage § 265. Marriage, though founded on contract, is ™1k-u niade ^ fundamental institution whose modification is under mis- ^^q^ within the power of individuals, nor, inter- person. nationally, of particular states. A marriage, to ' Beattie o. Ebury, L. R. 7 Ch. 777 ; « Supra, §§ 185, 20r, ; Wh. on Ev. 7 H. L. 102. § 931 : Foster c. Maekinnon, L. R. 4 2 Hirsohfleld v. R. R., L. R. 3 Q. B. C. P. 704 ; Haigh v. Kaye, L. R. 7 Cli. D. 1 ; Moutrion r. Jefferys, 2 C. & P. 469 ; Chapman c. Rose, 56 N. Y. 137 ; 113; Byer.s r. Daugherty, 40 In,l. U).S ; Christ c. Ditfeiibach, 1 S. & R. 4G4 ; Miller v. Proctor, 20 Oh. St. 442 ; Fulton v. Hood, 34 Penn. St. 365 ; Brown ... Rice, 26 ttrat. 467 ; Townsend Green r. North Buffalo, 56 Penn. St. (. Cowles, 31 Ala. 428; Jones <■. Aus- 110; Wharton r. Douglass, 76 Penn. tin, 17 Ark. 408. St. 273 : Uibhs c. Linabury, 22 llich. 3 Moreland v. Atchison, 19 T.'x. 303. 479; Terry .. Tuttle, 24 Jlich. 206; 1 Calkins v. State, 13 Wis. 389. Kellogg v. Steiner, 29 Wis. 626 ; Nance 6 Story, Eq. § 130 ; Shaefifer v. v. Lary, 5 Ala. 370 ; Shirts i: Over- Sleade, 7 Blackf. 178 ; State w. Hoi- John, 60 Mo. 305 ; and cases cited loway, 8 Blackf. 4.'i ; Peter v. Wright, supra, § 1S5. As to signature to wrong 6 Ind. 183 ; Cooke «. Nathan, 16 Barb, document, see supra, § 185. As to negli- 342 ; Moreland u. Atchison, 19 Tex. gence in such cases of party imposed 303 ; supra, § 254. on, see supra, § 185. 400 CHAP. XII.] FRAUD. [§ 265. be binding, must be of competent persons for life ; and a sexual union dissoluble at will, or for a term of years, no matter what may be the terms applied to it by the parties, is not a marriage. Nor does the well-being of society permit that marriages should be dissolved by agreement, nor that one party to a marriage should be permitted to recover damages from the other for breach of the marriage contract.' By the law of nations, also, based, in this respect, on the necessities of society, mistakes of one party as to the qualifications of another are no ground for dissolving marriages of competent parties when such mistakes do not go to identity. No matter how grossly one party (with this limitation) may deceive the other by false representations of property or standing, this will not avoid a marriage induced by such false representations.^ Nor is a marriage avoided by the fact that one party imposed on the other by a forged license, or by false publication of banns, supposing this does not by statute work an avoidance.' But where a marriage was the result of a con- spiracy for fraudulent purposes, the object being to impose the woman as a pauper on a particular town, she assenting under the eft'ect of false pretences, it was declared void.^ — The prevalent opinion in England is, that ante-nuptial incontinence on the part even of the woman \s no ground for either declar- ing the marriage null, or for granting a divorce.* In Mary- land, divorce is by statute authorized when the woman has before marriage been guilty of illicit intercourse with another man f and in Virginia, when the woman was a prostitute before the marriage.'^ In Massachusetts, under a special statute 1 Wh. Con. of L. § 126. •• Barnes v. Wyeth, 28 Vt. 41.. 2 Ibid. ; Swift v. Kelly, 3 Knapp, 257, ^ 'Graves v. Graves, 3 Curt. Eo. 237 ; 293 ; Bishop, Mar. and Div. 6th ed. i. 7 Eng. Ec. 425 ; Best u. Best, 1 Add. §§ 205, 252, 355 ; Clark u. Field, 13 Eoc. 411 ; 2 Eng. Ec. 158 ; Reeves v. Vt. 460 ; Scott v. Shufeldt, 5 Paige, 43 ; Reeves, 2 Phill. 125, 127. To this Robertson v. Cole, 12 Tex. 356. effect see Leavitt u. Leavitt, 13 Mich. ' Supra, § 180 ; R. u. Wroxton, 4 B. 452 (though see Dawson v. Dawson, 13 & Ad. 640 ; Dormer o. Williams, 1 Mich. 335) ; Wier i.. Still, 31 Iowa, Curteis, 870 ; Clowes v. Clowes, 3 Cur- 307 ; Sehouler, Husb. and Wife, § 27. teis, 185 ; Lane (.. Goodwin, 4 Q. B. ^ 1 Md. Code of 1860, § 25. 361. The question, however, is one ' Code of 1860, § 6. See Bishop, regulated by local statute. Bishop, Mar. and Div. 6th ed. ? 180. Mar. and Div. 6th ed. § 167. VOL. I.— 26 401 § 266.] CONTRACTS. [CHAP. XII. authorizing decree of nullity in cases of fraud, nullity was decreed in a ease where a young man was fraudulently induced to marry a pregnant woman much older than himself' And we may regard it as settled law that, where a woman with child by another man marries without notice of this fact a man supposing her to be chaste, this is a fraud wljich en- titles the party imposed upon to have the marriage decreed null,' though this does uot hold good in cases where the man had sexual intercourse with the woman prior to mar- riage.' But wiiile (with this single exception) a marriage is not invalidated by the fact that it was induced by false repre- sentations, it is otherwise when there is an entire mistake as to the person. If A. should marry B. supposing B. to be C, the marriage would be void ; there is no consent by A. to a marriage with B., and therefore no marriage between A. and B.'' — An action of deceit may be maintained by a woman against a man who fraudulently induces her to contract with him a void marriage." § 266. Either party to a marriage may, prior to the mar- Frauduient ^'^g^i make a settlement of property in such a way marriage as to withdraw it from the control of the other settlement j c -n may be set party." But a woman s settlement of her property, '^■^"^^" in anticipation of her marriage, is invalid, if the fact be fraudulently withheld from the husband.' Fraud, in such cases, as in most other cases, need not be expressly shown ; 1 Reynolds B.Reynolds, 3 Allen, 605. Moss v. Moss, 2 Ired. 55. See supra, To the effect that fraud under such cir- § 180. cumstances may avoid, see Montgomery " Swift v. Kelly, 3 Knapp, 257. V. Montgomery, 3 Ba-i-b. Ch. 132 ; Rit- » Blossom r. Barrett, 37 N. Y. 434. ter V. Ritter, 5 Blackf. 81. « Infra, § 399, and cases there cited. 2 Wald's Pollock, 494, citing Done- 7 Goddard v. Snow, 1 Russ. Ch. 485 ; van V. Donovan, 9 Allen, 140 ; Carris Wrigley r. Swainson, 3 De G. & S. 45S ; V. Carris, 24 N. J. Eq. 516; Morris v. Strathmore, ?'. Bowes, 2Cox, 28; S. C, Morris, Wright, Oh. 630 ; Baker v. 2 Brown C. C. 345 ; Duncan's App. 43 Baker, 13 Cal. 87. See to this effect Peun. St. 67 ; Gregory i . Winston, 23 Page on Div. 161 ; and cf. criticisms in Grat. 1 Parfitt u. Jepson, 46 L. J. C. P. M. 123 ; Gilliat v. Gilliat, L. R. 9 Eq. 529 ; Veazie v. Williams, 8 How. 134 ; 60; Veazie u. Williams, 8 How. 134; Leake, 2d ed. 367. Towle u. Leavitt, 3 Foster, 360 ; Fau- ^ Smith v. Clarke, 12 Ves. 483 ; Flint cett V. Carrier, 115 Mass. 20 ; Trust v. u. Woodin, 9 Hare, 618. 403 § 267.] CONTRACTS. [chap. XII. erty up to a reasonable price is an understood right.' But the great preponderance of American authority is to the effect that the use of pretended bidders, in the guise of boJia fide bidders, entities bona fide bidders who are thus imposed upon to throw up the purchase.^ In the English courts the relaxa- tion of the rule was not permanently accepted, even by the courts by whom it was at first approved ;' and now, by aut of parliament, the common law rule is established in equity as well as in law. The rule is thus judiciously stated in the Indian Contract Act: "If at a sale by auction the seller makes use of pretended biddings to raise the price, the sale is voidable at the option of the buyer."* If the vendor desires to avoid a SHcrilice, this is to be done by withdrawing the thing to be sold if a fixed price is not reached, not by em- ploying fictitious bidders.' At the same time, when no harm has been done by the presence and interposition of a puffer, a sale will not be set aside.* The rule applies, it is said, to judi- cial sales.' But when the fact of an interposition of this kind is discovered, the purchaser must act promptly, and return the property, in order to rescind.' 1 See note to Benj. on Sales, 3d Am. ed. § 474 ; Veazie v. Williams, 3 Story, ti22 (overriiled, 8 How. 134) ; Pliippen (,. Stickney, 3 Met. :-!S7 ; Wolf v. Lys- tfi-, 1 Hall, 146 ; tftr,4e ... EUmaker, 11 S. & R. 86 ; Pennock's App. 14 Penn. St. 446 ; Monorieif v. Goldsborougli, 4 H. &McH. 282; Walsh ,-. Barton, 24 Oh. St. 28; Morclipad l. Hunt, 1 Dev. Eq. 35 ; Woods .■. Hall, 1 Dev. Eq. 411 ; Lee V. Lee, 19 Mo. 420 ; Reynolds v. iJerliaums, 24 Tex. 174. 2 See cases cited sii/im. 3 Mortimer a. Bell, L. R. 1 Ch. Ap. 12 ; Woodward j . Miller, 2 Coll. 279. * Wald's Pollock, 493. 5 Bispham's Eq. § 209. ' .Jennings ,-. Hart, 1 Rns. & Ch. (N. S.) 15 ; Veazie u. Williams, 3 Story, 611 ; Tomlinson <.. Savage, 6 Ired. Eq. 430; cited Benj. on Sales, 3d Am. ed. § 470; and see Story's Eq. Jur. 12th 404 ed. § 201 ; Nat. Fire Ins. Co. v. Loomis, 10 Paige, 431 ; Latham v. Morrow, 6 B. Mon. 630. See .■;»;);■«, § 25 6. And see generally as to the questions in the text, Thornett v. Haines, 15 M. & W. 367 ; Veazie c'. Williams, 3 Story, 611 ; 8 How. 134 ; Nat. Fire Ins. Co. «. Loomis, 11 Paige, 431 ; Pennock's App., 14 Penn. St. 446. As to liability of auc- tioneer when participating in fraud see Heatley v. Newton, L. R. 19 Ch. D. 326 ; 45 L. T. N. S. 455, where it was held that the plaintiff, who hid at a sale at which the auctioneer and the vendor's agent bid up the property be- tween them, could recover back his deposit with interest, though the ven- dor had reserved the right of bidding. 7 Dimmock r. Hallett, L. R. 2 Ch. App. 21 ; Lee c. Lee, 19 Mo. 420. ' Veazie v. Williams, 3 Story, (ill ; Stai..rs I. Shore, 16 Penn. St. 200; CHAP. XII.J FRAUD. [§ 269. § 268. Fair competition being an essential ingredient of sale by auction, a sale will be set aside if by means vendor of false representations parties at the sale were de- "^^^v ^^^ ^ aside auc- terred from bidding, and the property was thus sac- tionsaieif rificed.' — If the buyer hold himself out as buying on ^ere kept a particular trust, that trust may be enforced.^ — As '^^'^'^• will hereafter be seen, agreements to suppress competition at auction cannot be enforced as between the parties.' § 269. An agent's statements during a negotiation bind a principal as much as would his own statements. They are primary evidence, which it is not necessary statements to call the agent to verify.' Nor is it necessary that got7at?ou^" the representations should have been specifically bindprin- authorized by the principal. They may have been made contrary to his directions, yet he will be bound by thera if they were made within the apparent range of the authority with which the agent was intrusted. As to parties without knowledge of such restrictions, the agent binds the principal.' Backenstoss v. Stabler, 33 Penn. St. 251 ; McDowell v. Simms, 6 Ired. Eq. 278 ; and oases cited Benj. on Sales, 3d Am. ed. § 470. ' Levi !). Levi, 6 C. & P. 239 ; Fuller V. Abrahams, 3 B. & B. 116 ; Cocks u. Izard, 7 Wal. 559 ; and cases cited infra, § 443. 2 Bispham's Eq. § 210, citing Ryan u. Dox, 34 N. Y. 307 ; Brown v. Dysiu- ger, 1 Rawle, 408 ; Hayman's App., 65 Penn. St. 433 ; Cook v. Cook, 69 Penn. St. 443 ; Bethel a. Sharp, 25 111. 173 ; Grumley v. Webb, 44 Mo. 444. 3 Infra, § 443. < Supra, I 132 ; Hern c. Nichols, 1 Salk. 289 ; R. v. Hall, 8 C. k P. 358 ; Fountaine v. R. R., L. R. 5 Eq. 316; Mortimer v. M'Callan, 6 M. & W. 58 ; Mechanics' Bk. v. Bk. of Columb., 5 Wheat. 336 ; Cliqnot's Champagne, 3 Wall. 114 ; Demeritt v. Meserve, 39 N. H. 521 ; Barber v. Britton, 26 Vt. 112 ; Baring v. Clark, 19 Pick. 220 ; Bird v. Daggett, 97 Mass. 494; Willard u. Buckingham, 36 Conn. 395 ; New York etc. R. R. u. Schuyler, 34 N. Y. 30 ; Marsh r. Falker, 40 N. Y. 562 ; Ander- son V. R. R., 54 N. Y. 334; Dean o. Ins. Co., 62 N. Y. 642 ; Penns. R. R. „. Plank Road, 71 Penn. St. 350 ; Colum- bia Ins. Co. o. Masonheimer, 76 Penn. St. 138 ; Sturges v. Bank, 11 Oh. St. 153 ; Globe Ins. Co. ... Boyle, 21 Oh. St. 119 ; Cout. Ins. Co. u. Kasey, 25 Grat. 268 ; Mut. Ins. Co. r. Cannon, 48 Ind. 265; Wheeler v. Randall, 48 111. 182; Chicago R. R. ^. Lee, 60 111. 501 ; Pin- nix r. McAdoo, 68 N. C. 56 ; Baldwin V. Ashley, 54 Ala. 82 ; Peck v. Ritchey, 66 Mo. 114; Henderson v. R. R., 17 Tex. 560. * Barwick v. Joint Stock Co., L. R. 2 Exc. 259 ; Maddick u. Marshall, 17 C. B. (N. S.) 829 ; Howard v. Sheward, L. R. 2 C. P. 14S ; Burnham v. R. R., 63 Me. 298; Lobdell r. Baker, 1 Met. (Mass.) 193 ; Mundorfif v. Wickersham, 61 Penn. St. 87. That corporations are so liable, see supra, § 130. 405 270.] CONTRACTS. [chap. XII. False state- ment by agent binds principal when made in range of agent's authoritj. § 270. An assent's false statement, made within the range of his duties, is imputable to his principal, though the statement was not authorized by the principal, and though the agent may not have been aware of the falsity.^ It is true that this was once questioned in England, in a case where the false statement was made innocently and ignorantly,^ but the liability in all cases where the agent is at the time engaged in perform- ing the duties of his agency, and where the false statement falls within his authority, is no longer doubted.^ The ques- tion then is. Was the statement within the range of the agent's authority? If so, the principal, whether a natural person or a corporation, is not only bound contractually by the state- ment, but is liable for it in an action for deceit ; and the other contracting party is as much entitled to rescind, when the false statements are thus made within the range of the agent's authority, as he would be had they been made directly by the principal himself.^ And, in any view, a principal who adopts ' Wh. on Agency, §§ 129, 158, 454, 708 et seg. 2 Cornfoot c Fowke, 6 M. & W. 358, discussed supra, § lil4. ' 2 Sm. Lead. Cases, 7th Am. ed. 1070. Cornfoot v. Fowke, Mr. Pollock tells us (3d ed. 543), " has been prac- tically overruleil by the remarks since made upon it;" citing Willes, .J., in Barwick v. English Joint Stock Bk., L. R. 2 Ex. 2(J2. To same effect see Wh. on Agency, § lliS ; Benj. on Sales, § 462; Nat. Ex. Bk. <,. Drew, 2 Ma.ii. 103 ; Wheeltou . . Hardisty, 8 E. \ B. 270 ; Ludgater l: Love, 44 L. T. N. S. 694, infra; and criticisms supra, § 214. * Wh. on Agency, §§ 168 et seg.; Barwick v. English .Joint Stock Bk., L. R. 2 Ex. 25!) ; Mackay v. Comm. Bk., L. R. 5 P. C. 394; Swire t). Francis, L. R. 3 Ap. Cas. 106 ; Houldsworth r. Bk., L. R. 5 App. Cas. 317 ; Bj-.-tt t. dow- ser, L. R. 5 C. P. D. 376; Veazie a. Williams, 8 How. 134 ; Person v. San- ger, 1 Wood. & M. 147; Hammett u. 406 Emerson, 27 Me. 308 ; Burnham e. R. R., 63 Me. 298 ; Presby u. Parker, 56 N. H. 4u:) ; Fitzsimraon v. Joslin, 21 Vt. 129 ; Fogg V. Gtriffiu, 2 Allen, 1 ; White u. Sawyer, 16 Gray, 586 ; Ben- nett r. Judson, 21 N. Y. 238 ; Griswold /•. Haven, 25 N. Y. 595 ; Allerton c. Allertnn, 50 N. Y. 670 ; Indianap. R. R. .'. Tyng, 63 N. Y. 653 ; Mnndorfif r. Wickersham, 61 Penn. St. 87 ; Tome I . R. I!., 39 Md. 36 ; Lamm r. Port De- posit Co., 49 Md. 2.33; De Voss .. Richmond, 18 Grat. 338 ; Madison R. R. V. Saving Co., 24 Ind. 457 ; Rock- ford, etc. R. R. I . Shunick, 65 111. 224 ; Durant v. Rogers, 87 111. 508 ; Reed c. Peterson, 91 lU. 288 ; Law v. Grant, 37 Wis. 548 ; Scofleld Co. ^. State, 54 Ga. '635 ; Lawrence t. Hand, 23 Miss. 103; Henderson r. R. R., 17 Tex. 560 ; Morton < . Scull, 23 Ark. 289. That Coddington <. Goddard, 16 (iray, 436, does not practically dissent from the rule in the text, see Wh. on Agency, § 170. " The rule of law is, CHAP. XII.] BRAUD. [§ 270. the benefits of an agent's bargain, adopts the misrepresenta- tions by which that bargain was produced.' — It may also be stated, that if A. makes a false statement to B. intending it to be communicated to C, whereby C. is induced to part with money to A., A. is liable to C. for damages.* But in such case authority from A. to B. must be shown.^ An agent's fraudulent misstatements, however, when outside the range of his duties, and when unauthorized by his principal, though that if an agent is guilty of fraud in trausaoting Ids principal's business, the principal is responsible" (Parke, B., Murry v. Mann, 2 Ex. 540); for the fraud of the agent who makes the contract is the fraud of the principal. Per cur. in Wheelton v. Bardisty, 8 E. & B. 260 ; Brockwell's case, 4 Drew. 212 ; Hern u. Nichols, 1 Salk. 289 ; Att- wood V. Small, 6 CI. & F. 232. And this "although the misrepresentation has been made without the authority of the principal, and without his knowl- edge." Leake, 2d ed. 384, citing Udell V. Atherton, 7 H. & N. 172 ; Barwick v. Bank, L. R. 2 Ex. 259 ; Mackay v. Bank, L. R. 5 P. C. 394; Weir v. Bar- nett, L. R. 3 Ex. D. 32. 1 Sug. V. & P. 381 ; Perry on Trusts, § 211 ; Wh. on Ag. §§ 158 et seq. ; Wil- son V. Fuller, 3 Ad. & El. (N. S.) 58 ; Irving u. Motley, 7 Bing. 543 ; Mason u. Crosby, 1 Wood. & M. 342. 2 Watson V. Crandall, 7 Mo. Ap. 233. In Ludgater v. Love, 44 L.T. N. S. 694, decided Jan. 1881 by the court of ap- peals, before Lord Sel borne, C, andBag- gallay and Brett, L. JJ., the defendant's son, acting for the defendant, and with the defendant's authority, represented that certain sheep, which he sold to the plaintiif, were all right. The defendant had fraudulently concealed from his son that the sheep had the rot, and fraudulently gave the son authority to sell them for the best price, intending that the son should represent that they were sound. It was held, that the de- fendant was liable in an action to re- cover damages for fraudulent misrepre- sentation. Brett, L. J., said: "Wewereonthe hearing clearly of opinion that there was ample evidence to justify a finding of fraudulent intention in the defen- dant ; and that the admitted truthful- ness of the plaintiff justified the jury in finding, as we think they did, that the plaintiff was induced to purchase by the representation that the sheep were all right. We took time to con- sider the questions which were dis- cussed as to whether there was such authority from the defendant to his son as was sufficient to bind him by reason of his son's representations to a liability to pay damages in an action for deceit. These questions were to be determined, as it seemed to us, upon the finding of fraud in the father with- out a finding of fraud in the sou. If the son was authorized to make the representations, whether such author ity was express or implied, we are of opinion that the defendant was, by reason of his own fraudulent mind, liable, notwithstanding want of fraud in the son. We are of this opinion, notwithstanding the decision in Corn- foot V. Fowke {ubi sup.), if that decision is contrary to this view. Several of the propositions; however, enunciated as to -the authority to be implied, seemed to us to raise questions of con- siderable difficulty ; but, upon con- sideration, we are of opinion that it is not necessary to determine them." 3 Supra, § 247. 407 270.] CONTRACTS. [chap. XII. if negligently adopted they may be ground for rescission/ do not expose the principal to an action for deceit.^ 1 Supra, § 214. 2 Udell u. Atherton, 7 H. & N. 17'2 ; Western Bank r. Addie, L. R. 1 Sc. Ap. 146 ; Kennedy v. McKay, 43 N. J. h. 2S8. In this case Beesley, C. J., said: " On tlie ground thus assumed, then, the case would he that of a sale made by fraud-doing agents in behalf of an innocent vendor. Whatever un- certainty may at one time have pre- vailed in regard to the legal incidents of such a position, such uncertainty no longer exists, and the rights, under the given circumstances, of both ven- dor and vendee, have been plainly de- fined, and, as I think, firmly settled by recent judicial decisions. In the light of such authorities it is clear that an innocent vendor cannot be sued in tort for till' fraud of his agent in effecting a sale. In such a juncture the aggrieved vendee has at law two and only two remedies ; the first being a rescission of the contract of sale and a reclama- tion of the money paid by him from the vendors, or a suit against the agent founded on the deceit. But in such a posture of affairs a suit based on the fraud will not lie against the innocent vendor on account of the deceit prac- tised without his authority or knowl- edge by his agent. If the situation is such that the vendee can make com- plete restitution so as to put the vendor in the condition with respect to the property sold that he was in at the time of the sale, he has the right to rescind such contract of sale, and if the vendor, on a tender to that effect, re- fuses to return the money received in the transaction, a suit will lie for such money, but such refusal on the part of the v''nd(ir will not make him a party to the original wrong so that he can be 408 sued for the deceit. This is the doc- trine declared with much clearness and force by Barons Bramwell and Martin in the case of Udell v. Atherton, 7 H. & N. 172, and their views on this sub- ject were concurred in and the princi- ple propounded by them adopted and enforced by the house of lords in West- ern Bank of Scotland i . Addie, L. R. 1 Sc. App. 146. In this latter case the action was against the bank for deceit, which was alleged to consist in certain fraudulent representations, charged to have been made on a sale of stock to the plaintiffs by the director of such corporation as its agents. Lord Chelms- ford, in giving his views, said : ' The distinction to be drawn from the au- thorities, and which is sanctioned by sound principle, appears to be this ; Where a person has been drawn into a contract to purchase shares belonging to a company, by fraudulent misrepre- sentations of the directors, and suit is brought in the name of the company to seek to enforce that contract, or the person who has been deceived institutes a suit against the company to rescind the contract on the ground of fraud, the misreiiresentations are imputable to the company, and the purchaser can- not be held to his contract because the company cannot retain any benefit which they have obtained through the fraud of their agents. But if the per- son who has been induced to purchase shares by the fraud of the directors, in- stead of seeking to set aside the con- tract prefers to bring an action of dam- ages for the deceit, such an action cannot be sustained against the com- pany, but only against the directors personally.' Lord Cranworth, in his opinion, puts himself on the same CHAP. XII.J FRAUD. [§ 271. § 271. A statement by an agent maybe either non-contract- ual or contractual. It is non-contractual when it is made by the agent casually, and not as part of a if coiitract- neo;otiation, but as narrating an incident, or as ex- ^'''' '""?'' ^ ' » ' _ be coinci- plaining an alleged right. In such cases, it is put dent with in evidence, not as part of a contract, but as ex- planattrfy of the transaction to which it relates, in the same way and under the same limitations as are admissions of the party himself as to the nature of the transaction in question. To render admissible an agent's admissions of this class, the agent must be either the principal's general representative, or must be specially delegated to speak as to the particular matter.^ When the statement is offered as contractual {i. e., as made as one of the inducements to a contract), it must be shown to have been made during the negotiations. Otherwise, it cannot be received as determining the principal's liabil- ity. ^ The same lifnitation excludes representations made to third persons, in different transactions, or even to the other contracting party, when not made as part of the particular negotiation. Even prior statements by a general agent are not contractually imputable to the principal unless they be shown to have been inducements to the contract forming the basis of the suit against the principal. 3 ground, and says : 'A person defrauded c Williamson, 6 Ired. L. 281; Mc- t)y the directors, if the subsequent Comb f. R. R., 70 N. C. 178. acts and dealings of the parties have ' In Western Bk. of Scotland v. been such as to leave him no remedy Addie, L. R. 1 Sc. & D, 145, as stated but an action for the fraud, must seek by Mr. Pollock, " the directors of the his remedy against the directors per- bank had made a series of flourishing, sonally.' " but untrue reports on the condition of 1 Wh. on Ev. § 1177. its aflairs, in which bad debts were 2 Hern v. Nichols, 1 Salk. 289 ; Fair- counted as good assets. The share- lie V. Hastings, 10 Ves. 125 ; Kirkstall holder who sought relief in the action, Co. V. R. R., L. R. 9 Q. B. 468 ; Stiles had taken additional shares on the V. R. R., 8 Met. 44; Lowell Bk. c. faith, as he said, of these reports. But Winchester, 8 Allen, 109 ; Clark t . it was not shown that they were issued Baker, 2 Whart. 340 ; Penn. R. R. v. or circulated for the purpose of induc- Books, 57 Penn. St. 339 ; McCracken ing existing shareholders to take more u. West, 17 Ohio, 16 ; Chic. B. & Q,. shares, or that the local agent of the R. R. (I. Riddle, 60 111. 534 ; Bowen v. bank who effected this particular sale School Dist., 36 Mich. 149 ; Williams of shares, used them, or was autho- 409 § 272.] CONTRACTS. [CHAP. XII. § 272. An agent's statement made while representing his principal in a business negotiation binds, as has must be been seen, his principal; and in torts his declara- raDffe°of tions coincident with the act charged as tortious are authority, imputable to the principal as defining the princi- pal's liability.' But such statements, to be admissible against the alleged principal, must be made by a general agent, or, if by a special agent, must be shown to have been within the range of such agent's authority, or as part of the res gcstx, or to have been ratified by the principal.^ § 273. Tiiis liability is not afiected by the fact that the R ort b representations were put in the shape of reports by agents to ageuts of the corporation to the corporation, when may bind the reports are published by the corporation as its principal. ^^^^3 ^ jf reports," so is the rule stated by Lord Westbury, " are made to the shareholders of a company by their directors, and the reports are adopted by the share- holders at one of the appointed meetings of the company, and these reports are afterwards industriously circulated; misrep- resentations contained in those reports must undoubtedly be taken, after their adoption, to be representations and state- ments made with the authority of the com[)any, and therefore binding on the company." And Lord St. Leonards says :* "I have certainly come to this conclusion, that, if representations are made by a company fraudulently, for the purpose of enhancing the value of their stock, and they induce a third rized to use them for that purpose, lows: "Misrepresentations made, or Tlius, tlie case rested only on the pur- frauds committed, by ageuts acting in chaser having acted' under an impres- the course of their business for their sion derived from these reports at some principals, have the same effect on former time ; and that was not such a agreements made by such agents as if direct connection between the false such representations or frauds had representation and the conduct in- been committed by the principals ; but duced by it as must be shown in order misrepresentations made, or frauds to rescind a contract." See supra, § committed by ageuts in matters which 237. On this point see Eaton i-. Avery, do not fall within their authority, do 83 N. Y. 31, cited infra, § 279. not affect their principal." Supra, § 269. 1 Wh. on Ev. §§ 1173-4. ■' New Brunswick, etc. Co. t. Cony- 2 Wli. on Agency, § 164. The state- beare, 9 H. L. C. 72.''). ment of the Indian Contract Act, s. * Nat. Ex. Co. of Glasgow i'. Drew, 2 238 (Wald's Pollock, 503), is as fol- Macii. 103. 410 CHAP. XII.] FRAUD. [§ 275. person to purchase stock, these representations so made by them do bind the company. I consider representations of the directors of a company as representations by the company ; and, although they may be representations made to the com- pany, it is their own representation."^ § 274. A party who commits the management of his whole business, or of a particular line of his business, to Qeng^ai an agent, is bound by the admissions of his agent, ageutsmay ' ... . , , . make con- as to the entire business committed to him; nor, tractuaiad- when the agent is the principal's general and con- °"^^' °''' tinuous representative, is it necessary for the admission of such declarations that they should either have been part of the res gestce, or should have been specially authorized.^ § 275. As a corporation can only act through agents, it is necessarily bound by the contractual representations 01 its agents. While a contract obtained by false tionsare representations can be rescinded as against a corpo- "o b'ouna7 ration, a corporation cannot obtain specific perform- ance of a contract induced by the false statements of its agents ; and a corporation is liable in an action of deceit for its agent's false representations by which other parties are injured.^ Hence, '^ if the directors or agents of the company, in the course of their duties or employment, issue a prospectus 1 That when an agent ignorantly ' Supra, §§ 130 et seq. 133; Green's makes a false statement of which the Brice Ultra Vires, 425 ; Hoaldsworth i;. principal knows the falsity, the prin- Bk., L. R. 5 App. Ca. 317 ; Chaples «. cipal cannot enforce a bargain thus Brunswio Benefit Co., L. R. 5 C. P. D. induced, see Wh. on Agency, %, 167 ; 331 ; Nat. Ex. Co. v. Drew, 2 Macij. 103 ; that the agent's false representations Ranger v. R.R., 5 H. L. C. 72 ; Mackay are imputable to principal, so as to ex- v. Bank, L. R., 5 P. C. 394 ; Barwick v. pose the latter to an action for deceit, Bk., L. R. 2 Ex. 259 ; Swift v. Winter- see Wh. on Agency, §§ 171, 478. botham, L. R. 8 Q. B. 244 ; Mechanic's 2 Wh. on Ev. § 1177, citing Kirkstall Bk. v. Bk. of Columbia, 5 Wheat. 336 ; Co. V. R. R., L. R. 9 Q. B. 468. This is McGenness v. Adriatic Mills, 116 Ua&e,. eminently the case with cerporations, 177 ; New Y. & N. H. R. R. i . Schuyler, which can only act through agents. 34 N. Y. 30 ; Anderson c. R. R. 54 N. Dowdall V. R. R., 13 Blatch. 403 ; Morse Y. 344 ; Indian. R. R. c. Tyng, 63 N. Y. V. R. R., 6 Gray, 450 ; Mcttenuess v. 653 ; Peun. R. R. u. Plank Road, 71 Adriatic Mills, 116 Mass. 177; Custar Penn. St. 350; Columbia Ins. Coi v. o. Gas Co., 63 Penn. St. 381 ; Charles- Masonheimer, 76 Penn. St. 138 ; Globa ton R. R. V. Blake, 12 Rich. S. C. 634; Ins. Co. o. Boyle, 21 Oh. St. 119. Northrup v. Ins. Co., 47 Mo. 435. 411 § 277.] CONTRACTS. [chap. XII. or report, or other document inviting subscription for shares, which contains fraudulent misrepresentations, the shareholders who have been induced thereby to talce shares are entitled to avoid their contracts with the company."' § 276. A party (whether a corporation or a natural person) issuing a prospectus for a proposed business adven- Sharehold- ers may be ture, is bouiul to make no statements of facts that fronrcon- Cannot be substantially sustained; and while latitude proof o" ^^ allowed in the statement of opinion, if there be false pros- a material misrepresentation of facts shareliolders pectus. .,.,.,, contracting directly with the party making the mis- statement, are entitled to have their contracts rescinded.' — ■ That a party buying in open market from one of the original sfockliolders, is not entitled to recover on such a prospectus, is settled in England f though in this country there are cases in which this limitation is not recognized.^ § 277. As has been just noticed, a corporation is liable for ^ such misstatements of its aarents as wei-e made Corpora- , , ^ '^ ti.iQ liable within the range of their autliority, although such deceit, but misstatements were not specifically authorized by t'ors'^un?ess '^^'^ ^ director or manager of such corporation, personally however, is not personally liable for such renresen- luterposing . tatious, unless he authorizes them specifically, either directly or by implication.^ But the kgents, directors, and officers who personally express or indorse such false state- 1 Leake, 2d ed. 384, citing Brock- well's case, 4 Drew. .205 ; Ayre's case, 25 Beav. 513 ; New Brunswick, etc. R. R. V. Conybeare, 9 H. L. C. 711; Maokay v. Bank, L. R. 5 P. C. 394 ; Eaglesfield v. Londonderry, L. R. 4 Ch. D. C93; Swire ,-. Francis, L. R. 3 App. Cas. 101), and sec cases cited silprn, §§ 130 et seq. 133. ' New Brunswick R. R. i. Mug- geridgc, 1 Dr. & Sm. 363 ; Central R. R. of Venezuela r. Kisch, L. R. 2 H. L. C. 113 ; Swift f. Winterbotham, L. R. 8 Q. B. 244 ; Paddock v. Fletche-r, 42 Vt. 389; New Y. & N. H. R. R. r. 412 Schuyler, 34 N. Y. 30 ; Briiff r. Mali, 36 N. Y. 200; Suydam <•. Moore, S Barb. S.'iS ; McClellau v. Scott, 24 Wis. 81 ; see fully, xupra, § 255. < Peek c. Gurney, L. R. 6 H. L. C. 377 ; supra, § 237. * New Y. & N. H. R. R. ,-. Schuyler, 34 N. Y. 30; Bruff v. Jl.ili, 36 N. Y. 200 ; Suydam v. Moore, is Barb. 358. See Eaton >:. Avery, cited infra, § 279. 5 Snj.m, § 131. 5 Cargill V. Bower, L. R. 10 Ch. D. 502; Weir v. Barnett, L. R. 3 Ex. D. 32 ; aff. 3 Ex. D. 238, under name of Wier V. Ball, and cases supra, § lol. CHAP. XII.J FRAUD. [§ 279. meiits, are personally liable for the deceit.' And in any view the corporation that takes advantage of its agent's deceit, be- comes liable for it.^ § 278. Agency cannot be established by the agent's own declarations. Thei-e must be proof aliunde of the . . Agency agency, in order to make the agents declarations must bees- admissible.^ Thus, in an action against a railroad by proof corporation for false representations, by which the "'""**• plaintiff was induced to grant a right of way over his land, the representations of directors of the corporation cannot be put in evidence against the corporation until it is shown either that they were authorized to make these representa- tions, or that these representations were made by them as incident to a negotiation authorized by the company.* § 279. A principal is not liable for collusive contracts fraudulently concocted by his agent with third par- pnncipai ties.'' Thus, in a case before the Eng-lish court of "oti'^We " & lor collu- appeal, in 1881, it appeared that a contract entered sive acts of •1 1 -nil fi agBDt, nor into by a local board, provided that payment lor the hideceitfor work executed thereunder, i. e., the making of a afpendent reservoir, should be made by instalments upon the frai . Smith, 32 Vt. 1 ; Gates V. Bliss, 43 Vt. 299 ; Perkins u. Bailey, 99 Mass. 61 ; Kinney r. Kier- nan, 2 Lans. 492; Stickter r. Giildin, 30 Penn. St. 114 ; Hartje v. Collins, 46 Penn. St. 268; Short i. Stevenson, 63 Penn. St. 95 ; Hoopes r. Strashurger, 37 Md. 390 ; Pierce v. Wilson, 34 Ala. 596 ; Foster r. Gressett, 29 Ala. 393 ; Blen o. Bear River Co., 20 Cal. 602; see notes to Chandelor v. Lopus, 1 Smith, L. C. 7th Am. ed. 299. That rescission may be on defective per- 418 formance, see Miller v. Phillips, 31 Penn. St. 218; North Am. Oil Co. t-. Forsyth, 48 Penn. St. 291 ; Forsyth .. Oil Co., 53 Penn. St. 168. That where there is a warranty the warranty should he looked to if redress is sought on the ground of the falsity of the war- ranty, see supra, § 214 ; Freyman r. Knecht, 78 Penn. St. 141. That on a failure of part performance there may be rescission, see r'n/ra, §§ 293, 580, That performance must be in the mode stipu- lated in contract, and that if this be not done, there may be recission, see in/>a,"§§ 869 et seq. But mere insol- vency without fraud will not be ground for rescission; supra, §§ 258, 262; Smith V. Smith, 21 Penn. St. 367 ; Rodman ( . Thalheimer, 75 Penn. St. 232. 2 Wald's Pollock, 507. ' Romilly, M. R., in Pulsford «. Richards, 17 Beav. 96 ; cf. Ungley r. Ungley, L. R. 5 Ch. D. 887. * Moore & De la Torre's case, L. R. 18 Eq. 661. CHAP. XIII.] RESCISSION: RATIFICATION. [§ 283. tives of the contracting parties as by or aj^ainst the contract- ing parties themselves.' — A party, also, who is sued for pur- chase money on a purchase he alleges to have been defrauded in making, may elect to aflBrm the sale, and may set off his damages in abatement of the price.^ — To sustain a decree of a court of equity rescinding a contract, the proof should be strong and plain. The case is in this respect to be distin- guished from a suit for a specific performance. Proof that would preclude a decree for the plaintiff in a suit for specific performance , will not necessarily be suflicient to sustain a decree for the plaintiff" in a suit for rescission. The burden is on the plaintiff' in the latter case to n)ake out a case of fraud or material mistake, and this case must be satisfactorily proved.^ — As we have already seen,^ a contract induced by honest misrepresentations may be rescinded, though no action would lie for deceit. § 283. A contract induced by fraud is voidable, not void, it being within the option of the party defrauded to confirm or repudiate. By the Roman law, as we ind'iiced by have seen, a party defrauded in a contract has the y'oj^^^'fg option of holding on to the contract, with special compensation for its defective consummation caused by the fraud of the other side, or of rescinding the contract, and recoverinsc dama2;es for his entire loss in the whole trans- ' Load c. Green, 15 M. & W. 216; scission, tlxe consideration paid may be Donaldson v. Farwell, 93 U. S. 601. recovered back, see infra, §§ 520, 742, 2 Supra, § 232a; Hill e^. Buckley, 17 ' Edmunds' Appeal, 59 Penn. St. Ves. 394; Kelly c. Pember, 35 Vt. 183 ; 220; Stewart's Appeal, 78 Penn. St. Lord V. BrookfieW, 8 Vroom, 552; 88; Cummins o. Hurlbutt, 9-2 Penn. Brewster u. Brewster, 9 Vroom, 119; St. 165; Lynch's App., 97 Penn. St. Cravens u. Riser, 4 Ind. 512 ; Cox ,j. 349 ; Scott u. Webster, 50 Wis. 53 ; Reynolds, 7 Ind. 257; Earl o. Bryan, Lavassar v. Washbarne, 50 Wis. 200 ; Phill. Eq. (N. C.) 278; Cullum c. Fitz w. Bynum, 55 Cal. 459 ; see Smitb Bank, 4 Ala. 21. The remedies given v. Richards, 13 Pet. 26, where it was by equity, under form of decrees for held immaterial whether the misrepre- rescission and decrees of specific per- sentation proceeded from mistake or formance, are substantially the same fraud ; supra, § 214. Tliat preponder- as those given in the Koman law by ance of proof is sufficient, see supra, § i\ie restitutio in integrum ; 1 Spenoe, Eq. 239. 622 ; Bispham Eq. § 198. That on re- ^ Supra, §§ 214, 241. 419 § 283.] CONTRACTS. [chap. XIII. action. 1 And such is the rule in our own law.^ It was at one time argued in Pennsylvania that a contract induced by fraud is absolutely void, and hence not susceptible of confirma- 1 L. 63, § 1, D. de contrah. erat. xviii., 1— Voet, Com. L. iy. T. 3, § 7. Savigny's views in cases where a bargain has been made under influence of error have been already stated. Supra, § 177. The alternatives, so far as concerns the question now imme- diately before us, he states as follows : The transaction might be regarded as prima facie valid, the party in error to be entitled to impeach it by legal pro- cess ; or the transaction, on account of want of consent, is a nullity. By the Roman law this is the case when fraud precludes assent. Numerous rulings are cited to this effect, among which may be noticed L. 9, § 2, de contr. emt. (18, 1) : . . . "in ceteris au tern nullam esse venditionem puto, quotiens in materia erratur." In L. 11, i3r. eod., the exist- ence of a consensus in such cases is neg- atived. It is the error as to the nature of the thing that requires us to con- clude that the will requisite to a con- tract was wanting. This, however, may be complicated by the introduction of other conditions. There may, for instance, so Savigny goes on to say, be an express warranty of some subordi- nate quality, so that the party giving the warranty may be sued either on the promise or for fraud. The only cases, so Savigny holds, in which errors of this class are held so essential as to avoid all contracts based on them, are cases in which a pur- chaser is in error as to the genus (Uat- tung) of purchased goods, as where he buys a vessel of brass or lead for a vessel of gold or silver, or where he buys vinegar for wine. The result in such cases is the same whether the vendor was or was not participant in the purchaser's error. The main effect 420 of this principle is to protect the pur- chaser from paying a preposterously high price for an inferior article. There are, however, other consequences. If the bargain should be for a golden vessel, and the price be suitable for such a vessel, then the purchaser might wish to treat the contract as binding, and to claim the difference of price ex cnutrucUi ; but this he cannot do, since there was no contract, even in cases where the vendor was in dofo. But fraud in such cases has independ- ent consequences. The vendor would be liable in an action of deceit, and would be required to pay damages to indemnify the purchaser for his loss, even though the contract itself was a nullity. The vendor is obliged to put tlie purchaser in the position he would have been in had there been no such transaction. The nullity of sales of this class was not recognized in the earlier stages of Roman jurisprudence ; it is one of the conclusions, according to Savigny, of that jurisprudence in its more perfect development. By Ulpian and Paulus the doctrine, after much wavering by older jurists, was firmly asserted. L. 9, 11, 14, de contr. emt. (18, 1). See discussion, supra, § 177. '' Oakes o. Turquant, L. R. 2 H. L. 346 ; Clough v. R. R., L. R. 7 Ex. 26 Foreman v. Bigelow, 4 Cliff. C. C. 508 Cooper f. Newman, 45 N. H. 339 Lindsley v. Ferguson, 49 N. Y. 025 and cases cited in the following sec- tions. That a party misled by honest misrepresentations may rescind, see supra, § 214. As to the distinction between voidable and void contracts, see supra, § 28. CHAP. XIII.] RESCISSION: RATIFICATION. [§283. tion,^ though it is otherwise, so it is declared, when the fraud does not consist in- a false pretence as to an individual, but in what is called constructive fraud, as where a trustee buys the cestui que trust's property, while in cases of construc- tive fraud the transaction, being merely voidable, m&j be con- firmed.^ But this exception no longer is maintained in Penn- sylvania,^ and cannot on principle be supported. If adopted it would paralyze business. Few statements made during negotiations are absolutely exact ; there are few negotiations in which each party does not seek to make a good bargain, and does not use language in which a severe critic might not discover at least omissions of facts the statement of which might have caused hesitancy on the other side. If all sales in which false pretences of any kind have been used are so void as to be incapable of subsequent confirmation, it is hard to see what titles would be secure. Fi'aud is easily charged, and depends, as a matter of fact, upon the opinion of a jury based upon the case that may happen to be presented at trial. To say that all sales in which fraud enters are void would expose the title, not only of the fraudulent vendee, but of persons bona fide purchasing from him, to destruction upon contingencies v^'hich no prudence could forecast or vi'ard against.* At the same time it must be remembered that the distinction above noticed holds so far good that, in cases of false personation, no title passes, and, therefore, the trans- action is inoperative as to third parties,' while in cases of 1 Chess I.. Chess, 1 Pen. & Watts, v. Thurlow, 23 Kan. 30. In Moor- 32 ; Jackson v. Snmmerville, 13 Penn. house r. Woolfe, 46 L. T. N. S. 374, St. 359 ; McCaskey v. Graff, 23 Penn. it was held that where a party acting St. 321; McHugh v. Schuylkill Co., 67 as money-lender offers by public ad- Penn. St. 391 ; Seylor u. Carson, 69 vertisement to lend on easy terms, and Penn. St. 81 ; see infra, § 288. then exacts from a borrower peculiarly 2 PearsoU v, Chapin, 44 Penn. St. hard terms, the burden will be on the 9 ; Negley c. Lindsay, 67 Penn. St. lender to prove that the terms of the 217. See as tending to same effect, loan were made fully known to tlie Foster o. Mackinnon, L. R. 4 C. P. borrower. 704; Hunter v. Walters, L. R. 7 Ch. » Supra, § 183; infra, 5 291 ; Cundy Ap. 75 ; Stacy v. Ross, 27 Tex. 3. v. Lindsay, L. R. 3 Ap. Ca. 465 ; Hard- ' Shisler v. Vandike, 92 Penn. St. man u. Booth, 1 H. & C. 803 ; Hollins 447, cited infra, § 288. c. Fowler, L. R. 7 H. L. 757 ; Moody v. * See Bigelow on Fraud, 421 ; Myton Blake, 117 Mass. 23 ; Barker u. Dins- 421 § 284.] CONTRACTS. [chap. XIII. fraud by false pretences a title to the goods obtained passes, though the party obtaining the goods is exposed to a prose- cution for false pretences, and to an action of deceit, as well as to a rescission of the contract.' This distinction, however, only applies to title. So far as involves the relations of the parties concerned in the bargain, the mere fact that the con- tract may be subsequently rescinded does not prevent its intermediate efficiency.^ § 284. A [larty who claims to be defrauded in a contract must exercise his election to rescind within a reason- must be in able time. By letting his claims lie dormant after Mme""'^''''' he has notice of the fraud, he may be estopped from contesting the contract, so far, at least, as bona fide third parties are concerned, or when the other party has been misled by this supine acquiescence.' For a party imposed upon to delay unnecessarily his repudiation of the contract by which he was defrauded is evidence from which a ratifi- cation may be inferred ;^ though mere length of time does not by itself give ground for this inference, without proof of su- pine acquiescence.' There must have been knowledge of the fraud to make lapse of time by itself a bar.° And knowl- more, 72 Penii. St. 427 ; c-itpd Wald's Pollock, 409 ; and see other cases cited supi'a, § 183 ; infra, § 291. ' Supra, §§ 183 et seij. As to dis- tinction between void and voidable, see further supra, § 28 ; infra, § 291. 2 Infra, § 2SS. » Infra, § 289 ; Central R. R. r. Kish, L. R. 2 H. L. 99 ; Heymann r. R. R., L. R. 7 Eq. 154 ; Bwlch-y-Plwm Lead Co. r. Baynes, L. R. 2 Ex. 32(5 ; Clough ,.. R. R., L. R. 7 Ex. 34; Morrison t., Ins. Co., L. R. 8 Ex. 2(13; Upton u. Trebilcock, 91 U. S. 45 ; Pence v Langdon, 99 U. S. 578; Weeks v Robie, 42 N. H. 316 ; Manahan o. Noyes, 52 N. H. 232 ; Matteson v. Holt 45 Vt. 336 ; Wbitcomb v. Denio, 52 Vt, 382 ; Bassett v. Brown, 105 Mass. 551 Degraw ;•. Elmore, 50 N. Y. 1 ; Ham- mond V. Pennock, 61 N. Y. 145 ; Wil- 422 liamson ,■. R. R., 29 N. J. Eq. 311; KoUock [■. Knowlton, 1 Weekly Notes, 514 ; Learning v. Wise, 73 Penn. rit. 173 ; Jlorgan v. WcKee, 77 Penn. St. 228; Hunt t. Stuart, 53 Md. 225; Heald u. Wright, 75 111. 17 ; Gatling r. Newell, 9 Ind. 572; Watson Coal Co. V. Casteel, 68 Ind. 476 ; Hall r. Pul- lerton, 69 111. 448 ; Barfield .-. Price, 40 Cal. 535 ; Memphis, etc. R. R. '.■. Neighbors, 51 Miss. 412 ; Crutch- field ... Stanfleld, Sup. Ct. Tex. 1881 ; see infra, § 752. < Blight V. Legerton, 2 D. F. J. 606. 5 Charter u. Trevelyan, 11 01. & F. 714. 5 Infra, § 289 ; Lindsay Petrol. Co. r. Hurd, L. R. 5 P. C. 221 ; Wright v. Vanderplank, 8 D. M. G. 133 ; Camp- beU o. Fleming, 1 Ad. & El. 40; Veazie v. Williams, 8 How. 134 ; CHAP. XITI.] RESCISSION : RATIFICATION. [§ 285. edge of facts of which the party was bound to take notice will be inferred.' But " acquiescence and waiver are always questions of fact. There can be neither without knowledge." Nor can the wrong done in such cases exact perfect vigilance on the part of the other contracting party. Ordinary business sagacity is all that is required.^ The question of reasonable time is one of mixed law and fact.' § 285. A party seeking to rescind must, as an ordinary pre- requisite to recover, otter to return before trial what- party le- ever he may have obtained from the contract he thus ^u"j'^f applies to repudiate ;* and in cases of conveyance of equity. land, must tender a reconveyance.^ The party from whom the relief is claimed must be put, as far as is possible, in the position he was in before the transaction complained of.° Grymes v. Sanders, 93 U. S. 55 ; Mat- teson V. Holt, 45 Vt. 336 ; Boughton v. Standish, 48 Vt. 594 ; Baker c. LeFer, 67 N. Y. 304. 1 Upton V. Trebilcook, 91 U. S. 45 ; Whitney v. Allaire, 4 Denio, 554 ; Baker o. Lever, 67. N. Y. 304. 2 Pence o. Langdon, 99 U. S. 581 ; see infra, § 289 ; and see De Bussolie v. Alt, L. R. 8 Cli. D. 314. 3 Rothschild v. Rowe, 44 Vt. 389 ; Pratt V. Farrar, 10 Allen, 519; Wil- liams V. Powell, 101 Mass. 467 ; Hedges u. R. R., 49 N. Y. 223 ; Morgan v. McKee, 77 Penn. St. 228. "What is a reason- able time or undue delay, when the facts are not disputed, is a question of law to be determined by the court. Morgan o. McKee, 77 Penn. St. 228. When the facts are in dispute, the question necessarily goes to the jury, and if a party wishes specific instruc- tions respecting reasonable time or undue delay, he may secure them by putting proper points." Trunkey, .J., in Davis J). Stuard, Sup. Ct. Penn. 1882, 11 Weekly Notes, 367. * Infra, § 919 ; Bwlch-y-Plwm Lead Co. B. Baynes, L. R. 2 Ex. 324 ; Clough V. R. R., L. R. 7 Ex. 26 ; Gay v. Alter, 102 U. S. 79 ; Cushman v. Marshall, 21 Me. 122 ; Emerson v. McNamara, 41 Me. 565; Cook u. Gilman, 34 N. H. 556 ; Poor u. Woodburn, 25 Vt. 234 ; Coolidge V. Brigham, 1 Met. 547 ; Esta- brook V. Swett, 116 Mass. 303 ; Burton I'. Stewart, 3 Wend. 236 ; Cobb u. Hat- field, 46 N. Y. 533 ; Parkinson v. Sher- man, 74 N. Y. 72 ; Turnpike Co. v. Com., 2 Watts, 433; Roth o. Crissy, 30 Penn. St. 145 ; Babcock u. Case, 61 Penn. St. 427 ; Beetem u. Burkholder, 69 Penn. St. 249 ; Morrow v. Bees, 69 Penn. St. 368 ; Jennings v. Gage, 13 111. 610 ; Williams v. Ketchum, 21 Wis. 432. 5 Kimball v. Cujmingham, 4 Mass. 502 ; Nicholson „. Halsey, 1 John. Ch. 417 ; PearsoU v. Chapin, 44 Penn. St. 9 ; Wilbur v. Flood, 16 Mich. 40 ; Parks V. Evansville R. R., 23 Ind. 567 ; Bla- ney u. Hanks, 14 Iowa, 400 ; Mitchell c. Moore, 24 Iowa, 394. * Bigelow on Fraud, ch. xi. § 5 ; Bellamy ,•. Sabine, 2 Phill. 425 ; Sa- very v. King, 5 H. L. C. 627 ; Neblett a. Maofarland, 92 U. S. 101 ; Ayers ( . Hewett, 19 Me. 281 ; Farris v. Ware, 60 Me. 482 ; Potter t: Titcomb, 22 Me. 300 ; Sumner v. Parker, 36 N. H. 449 ; Willoughby v. Moulton, 47 N. H. 205 ; 423 § 285.J CONTRACTS. [chap. XIII. This, however, does not mean that things should be replaced in every sense as they were, as this is impossible, but that the injured party should restore wbatever he has received that he can restore, and surrender any advantages he may have re- ceived.' That absolute restitution is impossible, is no bar when fraud is shown f but a tender of performance is not ne- cessary in cases where the defendant has admitted his inability to perform.' Nor is a tender of reconveyance necessary when there is no interest to reconvey,^ or when the thing in question is worthless.' In any view, however, possession of a thing bought, when such thing is of value, must be surrendered or Rowley v. Bigelow, 12 Pick. 307 ; Per- ley V. Balch, 23 Pick. 283 ; Thayer v. Turner, 8 Met. 550 ; Dailey i . Green, 15 Penn. St. 118 ; Buffington v. Quan- tin, 17 Peun. St. 310 ; Rensliaw v. Leflferman, 51 Md. 277 ; Smith o. Brit- tenham, 98 111. 188 ; Oatling v. Newell, 9 Ind. 572 ; Hyslip a. French, 52 Wis. 513 ; Johnson c. Jones, 13 Sm. & M. 580; Piloher ..Smith, 2 'Head, 208; First Nat. Bank c. Yocum, 11 Neb. 328. Tliat the identical currency re- ceived need not be tendered, see Miclii- gan, etc. R. R. v. Dunham, 30 Midi. 128. That a party seeking to recover back consideration paid on forged in- strument, must offer to return it to defendant before suit brought, see Roth .'. Crissy, 30 Penn. St. 145. And so where the object is to rescind a pur- chase of stocks alleged to be fraudulent, unless the stocks are absolutely worth- less, which is a question for the jury. Babcock v. Case, 61 Penn. St. 427 ; Beetem !>. Burkholder, 69 Penn. St. 249 ; Morrow v. Rees, 69 Penn. St. 368. ' Downer v. Smith, 32 Vt. 1 ; Martin c. Roberts, 5 Cush. 126 ; Masson c. Bovet, 1 Denio, 69 ; Galling o. Newall, 9 Ind. 572. 2 Ibid ; Myriok v. Jack, 33 Ark. 425. 3 Kerst V. Ginder, 1 Pitts. 314 ; Cross- 424 grove V. Himmelrich, 54 Penn. St. 203. See supra, §§ 312, 603, 716-747. It is otherwise when there is no such ad- mission as shows the performance of the contract on the defendant's part is impossible. Irvin u. Bleekley, 67 Penn. St. 24. See infra, § 605. « Bates <■. Graves, 2 Ves. Jr. 287 : Perley v. Balch, 23 Pick. 283 ; McCabe c. Burns, 66 Penn. St. 356 ; 77 Penn. St. 309. That rescission of a written contract may be by parol, see Laner v. Lee, 42 Penn. St. 165 ; though it is otherwise as to a written contract for sale of land, followed by entry and im- provement. Cravender r. Bowser, 4 Barr, 259. Infra, §§ 325, 661, 995. 5 Thurston c. Blanohard, 22 Pick. 18 ; Duval v. Mowry, 6 R. I. 479 ; Frost u. Lowry, 15 Ohio, 200 ; but see Cook V. Gilman, 34 N. H. 556. If the thing, however, can be made use of as an advantage in any way, or if its loss would be a disadvantage to the party by whom it was sold, tender should be made. Morse r. Brackett, 98 Mass. 205 ; 104 Mass. 494 ; Bassett i\ Brown, 105 Mass. 551. That tender is not necessary in an action for deci'it, see Clarke ,. Dickson, E. B. & E. 148 ; Western Bank of Scotland c. Addie, L. R. 1 Sc. k D. 169 ; Bacon v. Brown, 4 Bibb, 91. CHAP. XIII.] RESCISSION: RATIFICATION. [§ 235. the thing tendered back before a rescission of the contract ot purchase can be attempted.^ But when a tender is impossible, and the transaction is imputable to the defendant's fraud, the tender will not be insisted on as a condition precedent.^ !Nor is a party defrauded compelled to keep perishable property in good condition as a prerequisite to a bill for rescission.' A tender of purchase money, also, is not requisite when, in the transaction complained of as fraudulent, the party charged with the fraud received from the complainant a sum iis great as the purchase money.'' — ^A tender at trial is sufficient in all cases where the form of suit does not require the tender to be previously made.' And in other cases, a party who, by his misconduct, prevents a tender from being made before trial, cannot object that it has been delayed until the trial opens.* As a general rule, also, no tender is necessary when the judg- ment asked for involves a restoration to the defendant of all that he had received.' — ^A party who can secure the full per- 1 Vigers o. Pike, 8 CI. & F. 562 ; Norton v. Young, 3 Greenl. 30 ; Gush- ing V. Wyman, 38 Me. 589 ; Miner v. Bradley, 22 Pick. 457 ; Perley v. Balch, 23 Pick. 286 ; Ladd u. Moore, 3 Sandf. 589; Gould ,;. Bank, 21 Hun, 293; Smith u. Webster, 2 Watts, 478; Jackson r. McGinnis, 14 Penn.St. 331 ; Stewart v. Keith, 12 Penn. St. 238; Haase o. Mitchell, 58 Ind. 213 ; War- ren !'. Tyler, 81 111. 15. As to tender see infra, § 987. 2 Smith V. Smith, 30 Vt. 139 ; Chand- ler V. Simmons, 97 Mass. 508; Bartlett c. Drake, 100 Mass. 174; Masson r. Bovet, 1 Denio, 69. Infra, §§ 661-995. 3 NeMettv. Macfarland, 92 U.S. 101. ''Montgomery r. Pickering, 116 Mass. 227. See infra, § 989. ' Infra, §§ 998 et seg.; Kiefer v. Rogers, 19 Minn. 32 ; Martin v. Martin, 35 Ala. 560. « Southworth v. Smith, 7 Cusli. 391 ; Smith V. Holyoke, 112 Mass. 517; Hammond v. Pennock, 61 N. Y. 145 ; Baney u. Killmer, 1 Barr, 30 ; Frost p. Lowry, 15 Ohio, 200 ; Martindale v. Harris, 26 Oh. St. 379. Injra, §§ 312, 603, 716, 995. ' AUerton v. Allerton, 50 N. Y. 670 ; Harris v. Ins. Co., 64 N. Y. 196. See generally as to tender §§ 970 et seij. It has been said by courts of high author- ity that when there has been actual fraud on the purchaser's part, the vendor is not required to tender the money received by him as a prere- quisite to suit for rescission. Weedeu u. Havves, 10 Conn. 50 ; Sands c'. Cod- wise, 4 .Tohns. 536 ; McOaskey v. Graff, 23 Penn. St. 321 ; Seylor v. Carson, 69 Penn. St. 81 ; Forniquet v. Forstall, 34 Miss. 87. This, however, is based on the assumption that a sale induced by fraud is absolutely void, which, as is else- where argued, cannot be accepted as a general rule. Supra, §§ 28, 283 ; infra, §§ 291 et seq. And it is hard to see how a party can claim relief from fraud com- mitted on him when he seeks to retain the profits which the fraud put in his hands. See Bigelow on Fraud, 423. 425 § 286.] CONTRACTS. [CHAP. XIU. formance of a contested contract on his own part, cannot, after a partial performance, demand a rescission and return of what he has ah-eady paid.' — The vendee of stock in a cor- poration, who rescinds on the ground of fraud his contract of purchase, is not bound to tender the stoclv left on deposit for him by the vendor before bringing an action to recover the purchase money. ^ — "Where one of the parties elects to rescind, the other party can recover back the money paid on account.^ § 286. A party cannot compel rescission if he has kept his Resci.ssion intention in this respect quiet until the other party not granted ]^^g ^ong or left uudone things on the basis of the when by " ^ ^ complain- coutract which would expose him to irreparable other par- loss if the contract is rescinded.^ Thus an insurance be%xpo"ed policy may be voidable on the ground of fraudu- toio.ss. ]g„(- concealment by the insured; but the insurer who knows of this concealment, and apparently acquiesces in it, cannot, when the insured would thereliy lose the opportu- nity of insurance, rescind it.' " Or the interest taken under the contract by the party misled may have been so dealt with (with his assent) that he cannot give back the same thing he received. On this principle, a shareholder cannot repudiate his shares if the character and constitution of the company have iu the mean time been altered."^ In such cases it has been held too late to repudiate the shares, the only remedy being an action of deceit against the directors personally for the false state- ments.' And a party who makes restitution impossible can- not compel restitution,' though it is otherwise when such resti- tution is made impossible by the party to whom the original ' Pierce r. Jarnagin, 57 Miss. 107. ' Morrison c. Ins. Co., L. R. 8 Ex. 2 Pence r. Laugdon, 911 U. S. 578. 206, 3 Infra, §§ 520, 74U ; Hudson v. Reel, « Pollock (Wald's ed.) 511, citing 5 Barr, 279 ; Feay u. De Camp, 15 S. Clarice v. Dickson, E. B. & E. 148. 6 R. 227. ' Ibid. ; Clarke < . Dickson, B C. B. 4 Clough v. R. R., L. R. 7 Ex. 26; (N. S.) 453; West. Bank of Scotland Baker v. Lever, 67 N. Y. 304 ; Bond v. ,-. Addie, L. R. 1 So. & D. 145. Ramsey, 89 111. 29 ; Bulkley v. Morgan, « Vigers u. Pike, 8 CI. & F, 562 ; 46 Conn. 393; Meoke i: Ins. Co., 8 Nickel Co. o. Uuwiu, L. R. 2 Q, B. D. Phila. 6 ; see Knight v. HougUtalling, 214 ; JlcCrillis r. Carlton, 37 Vt. 139 ; 85 N. C. 17. infra, §§ 312, 603-4, 661, 716, 747, 901. 426 CHAP. SIII.] RESCISSION: RATIFICATION. [§ 287. fraud is imputable." The same rule is adopted in the Roman law in respect to the restitutio in integrum^ and is affirmed in the Scotch law. " It can only be had where the party seeking it is able to put those against whom it is asked in the same situation in which they stood when the contract was entered into. This is necessarily to be inferred from the expression restitutio in integrum ; and the same doctrine is well understood and constantly acted on in England."^ But the mere posses- sion of property taken under a contract of sale does not pre- clude the purchaser from contesting the sale on ground of fraud. In decreeing rescission, the court can give compensa- tion by an account of rents and profits.^ " So long as he has made no election, he retains the right to determine it either way; subject to this, that if in the interval, wiiilst he is so deliberating, an innocent third party has acquired an interest, or if in consequence of his delay, the position even of the wrong-doer is aifected, it will preclude him from exercising his right to rescind ; and lapse of time without rescinding will furnish evidence that he has determined to affirm the contract."^ A party, also, implicated in a fraud, cannot ob- tain relief from a contract the fraud induced,' unless he was a dupe or victim of the fraud. ^ § 287. A party who seeks to rescind on ground of fraud must give notice within reasonable time of his inten- tion.' If he resist the contract on this ground, and seindinsr if he set up the fraud as a defence, this, if it goes to ^o°,"g'^ ^'^^ the whole case, is a sufficient disavowal to amount to a notice of rescission.' A suit to annul the contract on account of fraud is a sufficient rescission,' and so is the plea I Hammond ^. Pennock, 61 N. Y. 5 Stipra, § 235 ; infra, § 340. 145. ' Infra, § 353. ■' Lord Cranworth, in Western Bk. of ' Herrin v. Libby, 36 Me. 350 ; Mas- Scotland V. Addle, L. R. 1 So. & D. 164. son i'. Bovet, 1 Denlo, 69 ; Morrow u. » Lindsay Petroleum Co. u. Hurd, L. Rees, 69 Penn. St. 368 ; Moral School R. 5 P. C. 240 ; King v. King, 1 M. & ,;. Harrison, 74 Ind. 93. K. 442; Met. K. R. Co. v. Defries, L. » Clough v. R. R., L. R. 7 Ex. 36; R. 2 Q. B. D. 189. see Dawes u. Harness, L. R. 10 C. P. < Per cur. in Clougli u. R. R., L. R. 166. 7 Ex. 35 ; adopted by the court in Mor- ' Reese River Co. v. Smith, L. R. 4 rison v. Ins. Co., L. R. 8 Ex. 204. H. L. 73. 427 § 288.] CONTRACTS. [chap. xiir. of fraul to a suit on the contract.^ But the notice must not be ambiguous, and should imply a determination to contest the contract as invalidated by the fraud. ^ A sale to another party is notice, and the second purchaser will be protected against the first, when the first purchase was fraudulent.' As the plea of fraud imports an avoidance of the contract, it is necessary, to support it, to show some act of avoidance, as the return of the goods, or other circumstances showing the repu- diation of the contract.'' Hence, in an action by a company against a shareholder on calls, a plea alleging that he was in- duced Ijy fraud to take shares is not sufficient; repudiation as far as possible should be alleged.' § 2S8. A contract impeachable for fraud may be ratified by the party injured, after a knowledge of the fraud, Ratiflratiou . p ' i /. i - « "i • may bo by accepting ot any benefit under it , or by in any way conduct. acting upon it after sucii knowledge of the fraud ;' 1 Clough r. R. R., L. R. 7 Ex. 35 ; Morrison v. Ins. Co., L. R. 8 Ex. 205. « Asliley's cast-, L. R. 9 Eq. 263; MoNiL4r3 case, L. R. 10 Eq. 503 ; see Pawlf'a case, L. E. 1 Ch. 497 ; May- nard <■. Eaton, L. R. 9 Cli. 414. In Nevada a notice of rescission is not void because given on Sunday. Pence c. Langdon, 99 U. S. 598. 3 Wliitn.^y V. Roberts, 22 111. 381. Where an engine was to be delivered at P. for the use of a particular rail- road, and the engine was taken by the purchaser on trial, and found nut to correspond to the warranty, it was held .sufficient rescission of tlie con- tract to give notice of the non-accep- tance of the engine to the vendor at P., that being his place of liusiuess, with- out sending back and tendering the en- gine there. Starr v. Torrey, 2 Zab. 190. * Deposit Ass. Co. c Ayscough, 6 E. & B. 7B1 ; Bwlch-y-PIwm Mining Co. '-. Baynes, L. R. 2 Ex. 324 ; Dawes v. Harness, L. R. 10 C. P. 1««. ^ Deposit Ass. Co. V. Ayscough, 6 E. &B. 701. 4-8 ' Briggs ex parte, L. R. 1 Eq. 483 ; Blackburn v. Smith, L. R. 2 Ex. 7x3 ; Schooley i. R. R., L. R. 9 Eq. 2HG, u. ; Scliolefield r. Templer, 4 De G. & .J. 429 ; Oakes v. Turquand, L. R. 2 H. L. 346 ; Selway .:. Fogg, 5 M. & W. 83 ; Ogilvie (. Ins. Co., 22 How. 380, Mas- son r. Bovet, 1 Denio, 69 ; .loselyn v. Cowee, 52 N. Y. 90; ;^eal u. Duffy, 4 Barr, 274; Mecke -. Ins. Co., 8 Pliilada. 6 ; Filby v. Miller, 25 Penn. St. 264 ; Crane r. Kildorf, 91 111. 567 ; .Jackson c. .lackson, 47 Ga. 99 ; Davis V. Evans, 62 Ala. 401; Evans c. Fore- man, 60 Mo. 449. That successors are barred by their jiredeiessors' larlies, see Skottowe r . Williams, 3 D. F. G-. 535. As to ratification in otlier cases see §§ 58 et seq. ' Campbell c. Fleming, 1 A. & E. 40 ; Gray v. Fowler, L. R. 8 Ex. 249 ; Sharpley v. R. R., L. R. 2 Cli. D. 663 ; Clough r. R. R., 7Ex. 34; Selway f. Fogg, 5 JI. & W. 83 ; Blydenburgh ,-. Welsli, Baldw. 331 ; Northrop v. Bush- nell, 38 Conn. 498 ; People r. Stephens, 71 N. Y. 527; Moffat r. Winslow, 7 Paige, 124; Mecke v. Ins. Co., S Pliila. CHAP. XIII.] eescission: ratification. [§ 288. or by laches which affect the position of others holding under the contested title;' or by bringing suit for the purchase money on a contract of sale, or in other way suing to en- force the contract;^ or by making a compromise or other set- tlement as to the alleged imposition f or by acting under a contract for work and labor after the imposition was known ;* or, generally, by continuing freely to deal with the party defrauding after the fraud was discovered.* But the mere transient and temporary use of an article the plaintiff was fraudulently induced to take, does not preclude him from rescinding.^ — In any view, a party is not estopped by an af- firmance before discovery of the fraud.' — As has been already noticed,^ it was at one time held in Pennsylvania that a fraudulent contract is not susceptible of ratitication.' This, however, except as to frauds which involve a crinie, is now overruled.'" " Where the fraud is of such a character as to involve a crime, the ratification of the act from which it sprung is opposed to public policy, and, hence, cannot be permitted ; but where the transaction is contrary only to good faith and fair dealing, where it affects individual interests and nothing else, ratitication is allowable."" 6 ; Rogers v. Higgins, 57 111. 244 ; u. Robinson, 5 Greenl. 127 ; Duncan v. KnuckoUs u. Lea, 10 Humpli. 577 ; McCnllough, 4 S. & R. 483 ; Adams v. Thweatt v. McLeod, 56 Ala. 375 ; Bobb Shelley, 10 Ala. 478 ; People ,. Steph- V. Woodward, 50 Mo. 95. ens, 71 N. Y. 527. ' Badger v. Badger, 2 Wal. 87 ; Wil- « Matteson v. Holt, 45 Vt. 336 ; Yeates loughby (.. Moulton, 47 N. H. 208; v. Pryor, 6 Eng. (Ark.) 58. Weaver v. Carpenter, 42 Iowa, 343. ' Doggett ;;. Emerson, 3 Story, 740 ; ' Ferguson v. Carrlngton, 9 B. & C. Pratt <,. Phillbrook, 41 Me. 132 ; Mac- 59 ; Gray ... Fowler, L. R. 8 Ex. 249 Dibblee u. Sheldon, 10 Blatch. 178 Bank of Beloit l: Beale, 34 N. Y. 473 Coleman v. Oil Co., 51 Penn. St. 77 kinley i: McGregor, 3 Whart. R. 369 ; Pierce v. Wilson, 34 Ala. 596 ; and cases cited in prior notes to this sec- tion. Reed i. McGrew, 5 Ohio, 375 ; Wald's « Supra. § 283. Pollock, 507. ' McHugh v. Schuylkill, 67 Penn. 3 Vigers v. Pike, 8 CI. & F. 562; St. 391. As to distinction between Hough V. Richardson, 3 Story, R. 695. "void" and "voidable" see supra, » Saratoga R. R. v. Row, 24 Wend. § 28. 74. ^0 Shisler v. Vandike, 92 Penn. St. 6 Story's Eq. Jur. 12th ed. § 203a; 447. Vigers v. Pike, 8 CI. & F. 562 ; Dingley '■ Ibid. 449, Gordon, J. 4^9 § 289.] CONTRACTS. [CHAP. XIII. § 289 When fraud is successfully concealed, no length of time, no matter how great, will preclude relief to a Mere lapse ,11 "" 1 1 • • <. 1 of time pai'ty wlio has been thus kept in ignorance ot the estop""' true state of facts.' Mere non-discovery of the facts, however, will not prevent the running of the stat- ute " unless the relation of the parties is such that it was the duty of the party complained of to make the disclosure."^ And where there is a discovery of the fraud, the disaiErmance should he prompt.^ Reasonable time, however, will be al- lowed to a party, after discovery of a fraud, to assure himself of its reality.* " Lapse of time without rescinding will furnish evidence that he has determined to affirm the contract; and where the lapse of time is great, it probably would in practice be treated as conclusive evidence to show that he has so deter- mined. "° "But in every case, if an argument against relief which otherwise would be just is founded on mere delay, the validity of that defence must be tried upon principles sub- stantially equitable. Two circumstances always important in such cases are, the length of the delay, and the nature of the acts done during the interval which might aifect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy."^ Hence, where a shareholder applies to have his contract to take shares rescinded on account of fraud, while the application will be refused if dilatory,'' " it is difficult to lay down any ' Se« supra, § 284 ; infra, §§ Ii03, son ». Bovet, 1 Deiiio, 69 ; Fisher v. 716, 747, 752; Wright's case, L. R. 7 Wilson, 18 Ind. 133 ; Williams v. Ket- Ch. 55 ; Charter v. Trevelyan, 11 CI. & chum, 21 Wis. 432 ; Moore r. Holt, 3 F. 714 ; Michoud v. Girod, 4 How. 561 ; Ten. Ch 248 ; Noble v. Noble, 26 Ark. Nealon u. Henry, 131 Mass. 153 ; 317. Ralf V. Eberly, 23 Iowa, 467; Cocky. ■> Partridge v. Usborne, 5 Russ. 195; Van Etten, 12 Minn. 522. Torrance .. Bolton, L. R. 8 Ch. App. 2 Bisph. Eq. § 203; Meader r. Nor- 118; Doggett r. Emerson, 3 Story R. ton, n Wal. 443 ; Veazie r. Williams, 74(1 ; Story on Cont. § 622. 3 Story R. 611 ; Hough v. Richardson, 6 Per cur. in Clough c. R. R., L. R. 3 Story R. 695 ; Callis ,•. Waddy, 2 7 Ex. 35, adopted in Morrison u. Ins. Munf. 511; Humphreys v. Mattoon, 43 Co., L. R. 8 E.\;. 204. Iowa, 556 ; Wilson r. Ivey, 32 Miss. « Lindsay Pet. Co. u. Hurd, L. R. 5 233 ; see infra, § 752. P. C. 240, adopted Leake, 2d ed. 393. 3 Ibid. ; Gates ... Bliss, 43 Vt. 299 ; ? Venezuela R. R. „. Kisoh, L. R. 2 H. Bulkley v. Morgan, 46 Conn. 393 ; Mas- L. 99 ; Heyman v. R. R., L. R. 7 Eq. 154. 480 CHAP. XIII.] RESCISSION : RATIFICATION. [§ 290. general rule as to the time within which objections of this chiiracter should be made the ground of repudiation of shares after they once have been discovered ; in every case attention must be paid to circumstances."' In any view a party will not be permitted, after notice, to remain quiet and wait until the question of success is determined. " Although it is the undoubted duty of the court to relieve persons who have been deceived by false representations, it is equally the duty of the court to be careful that, in its anxiety to correct frauds, it does not enable persons who have joined others in specula- tions, to convert their speculations into certainties at the expense of those with whom they are joined."^ Unless the circumstances be such as properly to lead to an inference of assent, acquiescence is not to be imputed.^ What has been said with regard to rescission on ground of fraud applies to rescission on ground of non-performance of conditions prece- dent by the other side.^ § 290. An election either to aflBrm or disaffirm a contract when once made is final. It is a question with which a party who claims to be defrauded cannot flnai and must be single. play fast and loose." Hence it has been held that a party who sets up fraud in a sale of goods cannot, before the expiration of the credit on the sale, sue for the price of the goods ; his remedy, if the sale be disaffirmed by him as fraudulent, is to repudiate the sale and to sue in trover.* Nor can a contract be ordinarily affirmed in part and disaffirmed in part.' But it is otherwise when a contract • Cairns, L. C. Ogilvie v. Currie, 37 ^ Ferguson c. Carriiigton, 9 B. & C. L. J. C. 541, quoted Leake, 2d ed. 394. 59 ; Wald's Pollock, 507, citing Dellone * Turner, L. J. in Jenning v. Bough- o. Hull, 47 Md. 112, Kellogg r. Turpie, ton, 5 D. M. & G. 140, adopted Leake, 2 Bradw. 55, concurring, and Wigand 2d ed. 394. v. Sichel, 3 Keyes, 120, as diss. ; S. P. ' DeBussche v. Alt, L. R. 8 Ch. D. Potter „. Titcomb, 22 Me. 300 ; Mc- 314 ; see Pence <•■. Langdon, 99 U. S. Crillis v. Carlton, 37 Vt. 139 ; Evans 581. V. Montgomery, 50 Iowa, 325. « Infra, § 919. ' Kerr on F. and M. 52 ; Bisph. Eq. 5 Clougli V. R. R., L. R. 7 Ex. 26; § 204; Great Luxembourg R. R. «. see Bigelow on Fraud, 425 ; Ogilvie v. Magnay, 25 Beav. 586 ; Farmers' Bk. Currie, 37 L. J. C. 541 ; Selway v. v. Groves, 12 How. 51 ; Potter v. Tit- Fogg, 5 M. & W. 83. comb, 22 Me. 300 ; Miner u. Bradley, 431 § 291.] CONTRACTS. [chap. XIII. is divisible, in which case the fraudulent branch of the con- tract may be singly repudiated.' When, on the other hand, the contract consists of conditions reciprocally dependent, "it cannot be rescinded in part and stand good for the residue. If it cannot be rescinded in toto, it cannot be rescinded at all, but the party complaining of the nonperformance, or the fraud, must resort to an action for damages."^ — A contract cannot be rescinded as to one party and remain effective as to the other.' — Affirmance merely precludes the right to rescind. A suit for damages for misrepresentation or fraud remains oj)en.^ § 291. Supposing a contract is so indivisible that if one Kescissiou P'^^'*' ^^"® ^'^ *''® ^'^^^ ^^^'® With it, then, if third parties without notice and for a good consideration innocently acquire rights under a voidable contract, this contract cannot be set aside by the party de- frauded. Even assuming there was no negligence on his part, yet, between himself and innocent third parties, the loss should equitably fall on him in cases where his conduct led to the loss. This rule is applied in favor of a bona fide purchaser of a chattel from a party who has fraudu- lently obtained the property with the owner's consent.' "It cannot be granted if rights of third parties intervene. 22 Pick. 457 ; Filby v. Miller, 25 Penn. St. 2i;4 ; Kellogg v. Turpie, 93 111. 265. See, however, contra, Roth c. Palmer, 27 Barlj. 6.W ; Wigand v. Sicliel, 3 Keyes, 12fl. ' /,;/,<-, § 338; Bellamy v. Sabine, 2 Phillips, 425. ^ Per cur. in Nickel Co. f . Unwin, L. R. 2 Q. B. D. 214 ; citing Clarke v. Dickson, 1 E. B. & E. 148 ; see supra, § 276 ; infra, § 919 ; S. P. Junkiiis v. Simpson, 14 Me. 364 ; Voorhees ^•. Earl, 2 Hill, N. Y. 292. And see Brin- ley V. Tibbetts, 7 Greenl. 7U ; Barry v. Palmer, 19 Me. 303 ; Laurence r. Dale, 3 Johns. Ch. 23 ; Knight v. Houghtal- ling, 85 N. C. 17. 3 Coolidge c. Brigham, 1 Met. Mass. 550 ; Bishop r. Stewart, 13 Nev. 25 ; supra, § 32 ; infra, § 523. 43i? * Benj. on Sales, § 452; Herrin (■. Libby, 36 Jte. 357 ; Miller , . Barber, 66 N. Y. 558 ; Weimer o. Clement, 37 Penn. St. 147 ; Foulk v. Eckart, 61 111. 318 ; Peck c. Brewer, 48 111. 55. 5 Supra, § 211 ; White ).'. Garden, 10 C. B. 919 ; Moyce v. Newington, L. R 4 Q. B. D. 32 ; Stevenson c. Newnham 13 C. B. 285 ; Load .-. Green, 15 M. & \y. 216; Ditson c Randall, 33 Me 202 ; Titcomb r. Wood, 38 Me. 561 ; Cooper r. Newman, 45 N. H. 339 ; Row- ley V. Bigelow, 12 Pick. 307 ; Moody v. Blake, 117 Mass. 23 ; Dows v. Greene, 32 Barb. 490; Paddon ... Taylor, 44 N. Y. 371 ; Devoe u Brandt, 53 N. Y. 462; Barnard v. Campbell, 58 N. Y. 73 ; Sinclair v. Healey, 40 Penn. St. 417 ; Hall r. Hinks, 21 Md. 406 ; Wil- liams V. Given, 6 Grat. 268 ; Old Dom. CHAP. XIII.] RESCISSION: RATIFICATION. [§ 291. is quite clear that when a vendee obtains possession of a chat- tel with the intention by the vendor to transfer both the prop- erty and the possession, although the vendor has committed a false and fraudulent misrepresentation in order to effect a contract or to obtain the possession, the property vests in the vendee until the vendor has done some act to disaffirm the transaction ; and the legal consequence is, that, if before the disaffirmance the fraudulent vendee has transferred over the whole or part of the chattel to an innocent transferee, the title of such transferee is good against the vendor."' — The reason is this r On the one side all property would be destroyed if a thief could pass title to stolen goods. On the other side all business would be destroyed if a bona Jide purchaser of a chattel had imputed to him the false representations by which his vendor obtained the chattel. The difficulty is solved by the intermediate position above stated. A party who parts with property as well as possession cannot pursue goods into the hands of bona fide vendees.^ But a party who receives prop- erty from a fraudulent vendee in payment of an antecedent debt takes it subject to the owner's rights f and so, a fortiori, as to an assignee taking with notice of the fraud,* or taking without consideration." — Even when goods fraudulently ob- tained are levied on as the property of the person fraudulently obtaining them, the owner is entitled to tlie goods in the St. Co. V. Burokhardt, 31 Grat. 664 ; above rule was correct, it did not apply Dean u. Yates, 22 Oh. St. .388 ; Jen- to the facts in evidence. In Oakes u. nings o. Gage, 13 111. 610 ; Chicago Turquand, L. R. 2 H. L. 325, Kent c. Dock Co. V. Foster, 48 111. 507 ; Dicker- Freehold Land Co., L. R. 3 Ch. 493, son u. Evans, 84 111. 451 ; Hutoliiman the principle in tlie text was applied V. Watkins, 19 Iowa, 475 ; Gregory v. to sales of shares in companies as Schoenell, 55 Ind. 101 ; Kern u, Thur- against shareholders in conflict with her, 57 Ga. 172 ; Nicol v. Crittenden, creditors after an order for winding up 55 Ga. 497 ;. and other cases cited of the company. Benj. on Sales, 3d Am. ed. § 433. ' Leask .,. Scott, L. R. 2 Q. B. D. ' Per cur. in Kingsford ;'. Merry, 11 376 ; Stevens u. Brennan, 79 N. Y. Ex.577. Mr. Leake (2d ed. 398) cites 254; Shewmake y. Williams, 54 Ga. further to this point, Pease v. Gloahec, 206 ; see Barnard v. Campbell, 58 N. L. R. 1 P. C. 219. Y. 73. 2 In Kingsford v. Merry, 1 H. & N. * Crocker v. Crocker, 31 N. Y. 507. 503, the ruling in 11 Ex. 577 was re- « Ibid, versed on the ground that, while the VOL. 1.-2.^ . 433 § 292.] CONTRACTS. [chap. XIII. hands of the officer, notwithatantling the levy.' And, as a general rule, parties who are implicated in the fraud, or who take with notice of the fraud, acquire no rights beyond those of their fraudulent assignor.^ ISTor can the fraudulent vendee by selling to an innocent third party, and then buying back from him, obtain a good title against the true owner.' Nor do purchasers without consideration take any better title than their assignors.^ § 292. A party, therefore, who takes no title to a chattel, cannot ordinarily (excepting in cases of market outtnie' " overt, which in this country does not exist),' or in tm""'^^^^ cases where the owner is estopped by negligence, pass title to an assignee.*' Thus A., who by falsely pretending to B. that he is sent by C. for goods bought by C. from B., obtains such goods from B., passes no title by selling such goods to D., though D. buys bona fide ;' and the same rule has been held to apply to cases where A. obtains goods by false personation f and by a bare fraud without any con- tract to transfer property, or any transfer of property.' Hence, where goods were obtained on the pretence of the party ob- 1 Jordon v. Parke, 56 Me. 557 ; Field V. Stearns, 42 Vt. 106 ; Wiggin !>. Day, 9 Gray, H7 ; Whitman c. Merrill, 125 Mass. 127 ; Hitclicocl!; v. Covill, 20 Wend. 167 ; 23 Wend. 611 ; Devoe ... Brandt, 63 N. Y. 462 ; Am. Ex. Co. u. Willsie, 79 111. 92. 2 Supra, § 233 ; Clougli v. R. R., L. R. 7 Ex. 26 ; see Babcock v. Lawson, L. R. 4 Q. B. D. 394 ; Negley u. Lind- say, 69 Penn. St. 217 ; Lepper v. Nutt- man, 35 Ind. 384 ; Mendenliall v. Treedway, 44 Ind. 13-1. 3 Schutt V. Large, 6 Barb. 373. ■> Supra, § 211 ; Adams v. Stevens, 49 Me. 362 ; Root u. Bancroft, 8 Gray, 619 ; White u. Wilson, 6 Blackf. 448 ; Burke v. Anderson, 40 Ga. 535 ; Young u. Cason, 48 Mo. 259. 6 Infra, § 734. 6 See supra, §§ 182, 211 ; infra, §§ J33, .793. 434 ' Higgons V. Burton, 26 L. J. Ex. 342 ; Hollins o. Fowler, L. R. 7 H. L. 757 ; R. r. Gillings, 1 F. & F. 36 ; R. v. Bench, R. & R. 163 ; Cunday v. Lind- say ,'L. R. 3 Ap. Cas. 459 ; afif. Lindsay u. Cunday, L. R. 2 Q. B. D. 96 ; Hard- man V. Booth, 1 H. & C. 803 ; Moody v. Blake, 117 Mass. 23; Lecky v. McDer- mott, 8 S. & R. 500 ; Barker u. Dins- more, 72 Penn. St. 427 ; Striker v. Mc- Michael, 1 Phila. 89 ; State v. Linden- thai, 5 Rich. 237 ; State i-. Brown, 25 Iowa, 561. As to bona fide purchasers see supra, §§ 211, 291 ; infra, 347, 352, 733. That goods fraudulently obtained may be pursued, see infra, § 734. s Kingsford r. Merry, 1 H. & N. 503 ; Cunday v. Lindsay, ut supra; infra, §§ . 730-2. See Thoroughgood's case, 2 Co. 9 a ; Foster v. Mackinnon, L. R. 4 C. P. 704. 9 Ibid. CHAP. XIII.J RESCISSION : RATIFICATION. [§ 293. taining being known to the seller, (there being a mistake of identity induced by the buyer's fraud, it was held that the goods could be recovered from a third party, to whom they had been bona fide sold.' — This distinction is clearly put by Mr. Benjamin.^ The vendor " may sue in assumpsit for the price, and this affirms the contract, or he may sue in trover for the goods or their value, and this disaffirms it. But in the mean time, and until he elects, if his vendee transfer the goods in whole or in part, whether the transfer be of the general or of a special property in them, to an innocent third person for a valuable consideration, the rights of the original vendor will be subordinate to those of such innocent third person. If, on the contrary, the intention of the vendor was not to pass the property, but merely to part with the possession of the goods, there is no sale, and he icho obtains such possession by fraud can convey no property in them to any third person, however innocent, for no property passed to himself from the true owner." The test is, did the alleged vendor intend to pass the property to the party taking? If so, the property passed, no matter how great was the fraud practised on him.^ And where there is an intention by the vendor to pass the title, no matter how fraudulently false may have been the transferee's representation of his condition and means, the title passes.' § 293. As will be hereafter more fully seen," when a con- tract is to be performed in successive instalments or deliveries, and when these instalments and deli- maybe veries are interdependent, so that failure in one fauure'in°" makes succeedina; instalments or deliveries compa- partper- . formance. ratively valueless, then such failure by the promisor entitles the promisee to rescind. But the insolvency of a purchaser, on an executory contract, does not of itself imply ■ Cunday v. Lindsay, ut supra ; and ■* Attenborough v. St. Katherine's see fully supra, §§ 182, 211, 291 ; infra, Dock Co., L. R. 3 C. P. D. 450. See §§ 347, 352. Babcock ,,. Lawson, L. R. 5 a. B. D. ' Sales, 3d Am. ed. § 433. 284 ; and cases cited supra, §§ 182, 211, 3 Clough u. R. R., L. R. 7 Ex. 26. 291 ; infra, §§ 347, 352. That there is That bona fide receivers for value of no market overt in this country, see articles lost or stolen receive no title, infra, § 734. see Benj. on Sales, 3d Am. ed. § 6. = Infra, §§ 580, 601, 898, 919. 435 § 293.] CONTRACTS. [CHAP. XIII. an assent on his part to a rescission of the contract. ISTotvvith- standing his insolvency, the purchaser may be able to pay for the thing purchased ; and to assume that insolvency by itself implies permanent disability, would be to assign to it the in- cidents of civil death, and to invest it, therefore, with per- manent disqualifications utterly inconsistent with a system which, as is the case in England and the United States, main- tains the continued civil existence of the insolvent, and pro- vides for his restoration to business activity. But an insolvent may by implication throw up a contract of purchase by which he is bound, and this implication is held to exist where the insolvent, in notifying the vendor of his insolvency, says nothing of his desire to hold on to his bargain.' 1 Morgan v. Bain, L. R. 10 C. P. 15 ; 1031 et seq. That there may be rescis- Chalmers ex parte, L. R. 8 Ch. 294; sion by lapse of time, see infra, § 1042. Tondpur ex parte, L. R. 5 Eq. 100. On As to rescission by novation, see §§ 852 the subject of rescission by rectification et seq. see infra, § 061 ; by release, infra, §§ 436 CHAP. XIV.] IMPOSSIBILITY. CHAPTER XIV. IMPOSSIBILITY. Original impossibility may be either subjective or objective ; may be tem- porary or permanent : may be par- tial or absolute, § 296. Subsequent impossibility may be either culpable or non- culpable ; temporary or permanent ; partial or absolute, §297. Non-existence of thing at the time a defence, § 298. And so of non-alienability of thing dis- posed of, § 299. When essential quality of thing pro- mised is destroyed, contract is void, § 300. When both parties know of impossi- bility, this avoids, § 301. If promisor knows or ought to know of impossibility, this is no defence, § 302. Otherwise, when promisee knows or ought to know of impossibility, § 303. Mere improbability does not vacate, § 304. Subsequently occurring legal prohibi- tion a defence, § 305. Otherwise as to foreign prohibition, § 306. Legal impossibility induced f)y prom- isor's negligence no defence, § 307. Casus is a disaster which due diligence could not avert, § 308. No defence when negligently encoun- tered, § 309. But perfect caution not required, § 310. Casus not a defence when the risk is one promisor took, § 311. Party making performance of a con- tract impossible cannot complain, § 312. Casual impossibility must be perma- nent and absolute, § 313. Impossibility of delivery a defence, § 314. But not of fungible things, § 315. Subsequent non-producibility of goods a defence, § 316. After completion of sale loss falls on purchaser, § 317. Covenant of tenant not defeated by casus, § 318. Exception in case of public war, § 319. Casus a defence to suit against bailee, § 320. Bail bonds and other guarantees re- lieved by casus or necessity, § 321. Subsequent impossibility a defencfe to a suit on contract for work, § 322. Subjective incapacity no defence to duty not exclusively personal, § 323. Incapacity for marriage a defence to an engagement to marry, § 324. Incapacity self-inflicted no defence, § 325. Work to be paid for though thing is subsequently destroyed, § 326. Common carrier may defend on ground of casus but not of fire, § 327. When there is an alternative still open, impossibility does not exist, § 328. 437 . § 297.] CONTRACTS. [chap. XIV. Bond with an impossible condition is void, § 329. Partial impossibility abates -pro tanto, § 330. Impossibility may be permanent or temporary, § 331. imposeibili- ty may be either sub- jective or objective ; may be temporary or perma- nent ; may be partial orabsolute. § 296. Impossibilitt may be either original or subsequent ; Original ^^^ ^I'^t being when the impossibility existed at the time of the making of the contract, the second coming into existence subsequent to that period. Original impossibility may be either objective or subjective; the first being where the thing which is the object of the contract is not capable of being done ; the second where the parties are incapable of doing such thing. Original impossibility, also, may be either temporary or permanent ; and may be partial or absolute.^ As will be hereafter more fully seen, temporary necessity only temporarily suspends the remedy,^ and partial necessity only abates pro tanto.^ % 297. "With regard to subsequent impossibility the main Subsequent qucstion is, whether or no the impossibility is im- putable to the promisor's misconduct. If there be no such imputability, the promisor, as will be here- after seen, is not liable." Subsequent impossibility, also, may be either temporary or permanent, partial parHai°o?'' ^r absolute.^ By the Roman law, liability ceases absolute. when the particular thing promised in the obliga- tion becomes without fault impossible. " Quod nullius esse potest, id ut alicujus fieret, nulla obligatio valet efficere."' impossibili- ty may be either culpable or non-culpa- ble ; tem- porary or 1 For illustrations, see Jn/ra, §§ 298 et seq. ; Windsclieid, Pandekt. § 2i)4, where are cited a series of authorities from the Roman law establishing these distinctions. In Koch's Forderungen, ii. § 1(17, it is stated in general terms, that if the act is itself objectively impossible, no obligation arises, but that the promisor is liable when either the impossibility is purely subjective, dependent upon his own incapacity, or when he brings about by his own act an objective impossibility. The subject is discussed with great fulness and 438 subtlety by Mommsen, in his treatise on Die Unmngliohkeit der Leistnng (1853) (pp. 420), to which numerous references will be made in this chapter. s Infra, § 331. 3 Infra, § 330. " Infra' §§ 308 et seq. s htfra, §§ 330-1 ; Trest ;■. Orono, 26 Me. 217 ; see Woodward v. Cowing, 13 Mass. 216 ; Colville <-. Besly, 2 Denio, 139 ; Murray o. Carrot, 3 Call, 373 ; Wharton v. O'Hara, 2 Nott. & McC. 65. 6 L. 182, D. deR. J. (50, 17). CHAP. XIV.J IMPOSSIBILITr, [§ 298, When the thing to be done is specifically limited, and this becomes impossible, an equivalent cannot be called for. The rule is tersely expressed by Celsus:' " Impossibiliura nulla obligatio." The meaning of the rule, so argues Mommsen,^ is clear, if limited to unilateral obligations to do a single thing. The whole duty in such cases falls away when impossi- bility intervenes. According to Puchta,^ obligations, in this relation, are to be divided as follows: — 1. Obligations which are specifically contracted, being immediately contemplated by the parties. — 2. Obligations which take their origin from an act of the parties, without being expressly designed. Under this head fall the obligations of an agent incidental to the assumption of the agency. — 3. Obligations which originate in a condition, such as joint ownership. — With regard to the first, viz., obligations specifically contracted, the primary in- quiry is, whether, at the time of the contract, the parties knew of the impossibility. If they did, the whole transaction is inoperative.* It is otherwise, however, when the promisee was at the time ignorant of the impossibility.' § 298. Suppose the thing contracted for did not exist at the time of the agreement, are the parties bound ? If Nonexist- they were ignorant of such non-existence, not only ™ce of cannot specific performance be required, but a bind- time is a ing contract cannot be said to have been consum- mated.' This is the rule where the thing bargained for never existed ;' and where, having existed, it was destroyed at the time of the agreement.' "The assent of the parties, being founded on a mutual mistake of fact, was really no assent."' This has been held to be the case where A. sold B. a cargo of goods which, at the time of the bargain, had been lost at sea, 1 L. 185, D. deE. J. (50, 17). Allen u. HammoBd, 11 Pet. 63, 71; 2 Op. cit. 103. Thompson o. Gould, 20 Pick. 139 ; 3 Pandekten, § 249. Rice v. Dwight Man. Co., 2 Cush. 80, * See infra, § 301 ; and see an illus- 86 ; Franklin v. Long, 7 Gill & J. 407 ; tration of this in L. 31, D. de 0. et A. Walker v. Tucker, 70 111. 527. (44, 7). ' Hitchcock v. Giddings, 4 Price, 6 Infra, § 303. 135 ; Rice v. Man. Co., 2 Cush. 80; 6 Supra, §§ 181 et seg. Marvin v. Bennett, 8 Paige, 312. ' Hills V. Sughone, 15 M. & W. 253 ; » Benj. on Sales, 3d Am. ed. § 77. Clifford V. Watts, L. R. 5 C. P. 577 ; 439 § 298.] CONTRACTS. [CHAP. XIV. neither party being aware of the fact.' Bankrupty of a cor- poration, also, unknown at the time by vendor and purchaser of certain of its shares, will be a defence to a suit on the con- tract of purchase f and so of an agreement to take shares in a company which has no power to issue such shares f and of an agreement to sell a horse which (neither party knowing the fact) is, at the time of the bargain, dead.* It has also been ruled that where a party holding an estate for another's life, agrees to sell his interest in such estate in ignorance that such other person is at the time dead, the agreement is void ;° and that an expired life insurance of a deceased person is not re- vived by the paying and receiving, after his death, by the insurers, of a premium, the party paying and the party receiv- ing being, at the time, ignorant of the death. ^ But a specific agreement to pay rent is not vacated by the fact that the pro- perty leased turns out, without fault of the lessor, of far less value than was supposed. This, as is elsewhere seen, is the case with leases of imj)roved land when the improvements have been destroyed by fire ;' and the same rule is applied to leases of mines when the mine turns out to be unworkable, which, if there be a lease covenanting to pay a fixed rent, is no defence to the covenant.' On the other hand, when rent is payable in the shape of a royalty on minerals in the soil, no 1 Hastie c. Couturier, 9 Exch. 102 ; lins, L. R. 7 Q. B. 144 ; see supra, §§ Couturier v. Hastie, 5 H. L. C. 673; 181-8. see Gibson v. Pelkie, 37 Mich. 380. « Pritchard v. Ins. Co., 3 C. B. N. S. 2 Emerson's case, L. R. 1 Ch. 433 ; 622. Mr. WaM (Wald's Pollock, 427) Pollock, Wald's ed. 425, citing ex- cites to same effect. Mutual Insurance planation in L. R. 3 Ch. 291, by Page Co. v. Ruse, 8 Ga. 534. With the cases Wood, L. J. in the text may be grouped Allen r. " Bank of Hindustan t!. Alison, L. R. Hammond, 11 Pet. 63, 'where it was 6 C. P. 54, 222 ; Alison ex parte, L. R. held that an agreement with an attor- 15 Eq. 394 ; 9 Ch. 1 ; Campbell ex parte, ney to prosecute, for a percentage, a L. R. 16 Eq. 417 ; 9 Cli. 1. claim against a foreign government, " 1 Story Eq. Jur. § 143 ; Pothier, would be vacated when it turned out Cont. de Vente, § 4, cited Couturier v. that at the time of the agreement the Hastie, 5 H. L. C. 673. claim had been allowed. 5 Strickland v. Turner, 7 Ex. 208 ; ' Infra, § 318. Hitchcock u. Giddings, 4 Price, 135 ; ' Bute v. Thompson, 13 M. & W. Cochrane v. Willis, L. R. 1 Ch. 58 ; see 487 ; Ridgway v. Sneyd, Kay, 627. Jones V. How, 9 C. B. 1 ; Coates v. Col- 440 CHAP. XIV.] IMPOSSIBILITY. [§ 298. royalty is payable when no minerals are found. And a cove- nant to work a mine cannot be enforced if it turn out that the mine is exhausted.* Where an insurance was effected on certain goods on a particular ship, and there were no such goods on board that ship, it was held that the premium might be recovered back.^ And when a thing sold is absolutely valueless at the time of sale, this avoids the contract.' But when the consideration has been in part received, but its full reception made impossible by casus, the price paid cannot be recovered back." Non-existence at the time of sale, it should be remembered, is no defence when the party insures the pro- duction of the thing at the time of the delivery ;° and when the tiling has " a potential existence, that is, things which are the natural product or expected increase of something already belonging to the vendor."* Hence, a lessee may convey to a lessor all the crops which may be grown on the leased land during the term, and no delivery of the crops after they are harvested is necessary even against attaching creditors.' A sale of a colt to be hereafter foaled from a certain mare is valid even against creditors of the owner.' ' Kidgway o. Sneyd, Kay, 627 ; ' Hull v. Hull, 48 Conn. 250 ; Fon- Clififord I. Watts, L. R. 5 C. P. 677 ; ville v. Casey, 1 Murph. N. C. 389. In Walker v. Tucker, 70 111. 527. Hull u. Hull, ut supra, the court said : 2 Hammond v. Allen, 2 Sumn. 396; "It is well settled that a valid sale Park on Ins. 6th ed. 1809. As to re- may be made of the wine a vineyard is covery hack, see generally infra, §§ expected to produce, the grain that a 742 et seq. field is expected to grow, the milk that ' Leger u. Bonnaff^, 2 Barb. 475 ; a cow may yield, or the future young infra, §§ 742-4. born of an animal. 1 Pars, on Cont. * Infra, § 745. (5th ed.) 523, note k, and cases there 5 Infra, § 311. cited ; Hilliard on Sales, § 18 ; Story ' Benj. on Sales, 3d Am. ed. § 78 ; on Sales, § 186. In Fonville v. Casey, Robinson v. Macdonnall, 5 M. & S. 1 Murphy N. C. 389, it was held that 228 ; Smith contract ■' . IS void. undertook to dig from the leased premises not less than 1000 tons of clay annually, paying a specific royalty. It was held a defence that there never was as much as 1000 tons of clay on the land.' This would have been the law even sup- posing both parties were innocently ignorant of the non-exist- ence of the clay. But the defendant's case was strengthened by the fact that this non-existence was a circumstance of which the plaintiff, with due diligence, could have been aware.^ § 304. " If a man is bound to another in 20^. on condition quod pluvia debet pluere eras, there si pluvia non-pluit -^^^ . eras, the obligor shall forfeit the bond, though there probability was no default on his part, for he knew not that it vacate would not rain. In like manner, if a man is bound to ''sreement. me on condition that the Pope shall be here at Westminster to- morrow, then, if the Pope comes not here, there is no default on defendant's part, and yet he has forfeited the obligation."^ It is true that if there are wagering contracts, they will not be enforced. But it is competent for one party to undertake to indemnify another, should a certain improbable contingency occur. All insurance contracts are to this effect.- — But to con- stitute impossibility in the sense in which the term is here considered, it is not necessary to prove that there is no possible way in which the event in question could occur. It is enough if, according to the ordinary operation of natural laws, as they existed at the time in litigation, the event in question could not have been expected without what would be equiva- lent to a supernatural interposition. Of course we must take the tests of the specific period in determining the limits of these natural laws. Fifty years ago it was impossible for an > Cliflford V. Watts, L. E. 5 C. P. Sneyd, Kay, 627 ; Walker v. Tuoker, 577. 70 111. 527. « See to same effect Eldgway v. ' Brien, C. J., Mich. 22 ed. 4-26, adopted in Pollock on Cont. 3d ed. 372. 447 § 305.] CONTRACTS. [CHAP. XIV. event occurring in London this morning to be known in New York this afternoon ; now there are no business contracts that are not affected by intelligence so received. The term " im- possible," therefore, is not to be used in an absolute sense ; and it is enough to constitute impossibility that the event is so unlikely to occur that no business man could be influenced by the possibility of its occurrence. — "In matters of business a thing is said to be impossible when it is not practicable; and a thing is impracticable when it can only be done at an ex- cessive or unreasonable cost." " A man may be said to have lost a shilling when he has dropped it into deep water, though it might be possible, by some very expensive contrivance, to recover it. So, if a ship sustains such damage that it would not be i-easonably practicable to repair her, having regard to the cost, the shi]) is said to be totally lost."' But this does not apply, as will presently be seen, to risks taken by a party ,^ nor to cases in which there is an alternative still open.^ § 305. To a contract to do a particular thing it is also a defence that the service promised has subsequently quentij' been absolutel}' prohibited by law." In a modern leg^pro? English case, the defendant had leased certain land defence"' with a Covenant that only ornamental buildings should be erected by him on certain adjacent land he retained. This adjacent land, however, was taken and used for a station by a railroad company, under a parliamen- tary power. It was held that this intervention of the legis- lature relieved the defendant from his obligation to keep the land free from any buildings that were not ornamental.'^ And to a suit on a recognizance alleged to be forfeited, it is a > Maule, J., Moss r. Smith, 9 C. B. Boston, 16 Pick. 357 ; Jones <■. Judd, 103, cited Leake, 2d ed. 682. 4 N. V. 412; Presb. Ch. u. N. Y., 5 2 Infru, §§ 308, 311. Cow. 538 ; Claney v. Overman, 1 Dev. ' Infra, § 328, 629. & Bat. 402; Stone v. Dennis, 3 Porter, " Wood u. Griffith, 1 Swanst. 55 ; 231 ; Brown v. Dillahuntj, 4 Sm. & Brown v. Mayor, 9 C. B. N. S. 726 ; M. 714. As to bail-bonds, see mfra, Anglesea v. Rugeley, 6 Q. B. 107 ; § 321. Davis c. Carey, 15 Q. B. 418 ; Wynn 5 Baily v. De Crespiguy, L. R. 4 Q. o. R. R., 5 Ex. 420 ; Baily ... De Cres- B. 180 ; see Mills v. East London pigny, L. R. 4 Q. B. 180 ; Baylies i: Union, L. R. 8 C. P. 79. Kettyplace, 7 Mass. 325 ; Sears i/. 448 CHAP. XIV.] IMPOSSIBILITY. [§ 305. defence that the party whom the bail undertook to deliver ■was intermediately taken out of the custody of the bail by legal process in the state to whose laws the recognizance was subject.^ It is otherwise, as will be seen, when the arrest is in a foreign state.^ — It may happen that an injunction, at the suit of a third party, is served on a party to a contract, pro- hibiting from performing his part in the contract. If so, this is a defence to a suit for specific performance, though it might not be a defence to a suit for damages if the party enjoined, by his negligence or other improper conduct, exposed himself to the injunction. Or, aside from the question of injunction, the doing of the thing contracted may be made subsequently to the contract illegal, as when during the pendency of a foreign war the furnishing of supplies of a particular kind is inter- dicted.^ Whenever, in any way, performance becomes illegal, then performance cannot be exacted.^ — In a suit against a carrier, it is a good defence that the goods were taken from the carrier by legal process.' — An embargo which prevents the performance of a contract only suspends, but does not extinguish the obligation;' and so of a war between the countries of the obligor and of the obligee.' And a party who insures against a particular event is not relieved by the fact that the event in question is brought about by the action of the public authorities.' Subsequent legislation also does ' Infra, § 321. v. Goodloe, 101 D. S. 612. See more 2 Ibid. fully, infra, §§ 319, 473. 3 See infra, § 473. s Hadley v. Clarke, 8 T. R. 259 ; * Jones V. Judd, 4 N. Y. 412. That Baylies c Fettyplace, 7 Mass. 325 ; a contract to violate a statute cannot see Geipel t. Smith, L. R. 7 Q. B. 404 ; be enforced, see infra, §§ 360 et seq. Jackson !j. Ins. Co., L. R. 10 C. P. 125 ; That ordinarily a, contract cannot be The Teutonia, L. R. 3 Ad. & E. 394 ; modified by subsequent litigation, see L. R. 4 P. C. 171. infra, § 367. ' Infra, § 476 ; Reid v. Hoskins, 4 E. 5 Savannah, etc., R. R. v. Wilcox, & B. 979 ; 6 E. & B. 953 ; Esposito v. 48 Ga. 432. A lessee who is dispos- Bowden, 7 E. & B. 763 ; and cases sessed by military authority during cited infra, § 476. That temporary war, his lessor having gone within the impossibility only suspends remedy, enemy's lines, is released from the see infra, § 331. payment of the rent accruing during s Brown c. Ins. Co., 1 E. & E. 853; the period of his dispossession. Gates infra, § 311 ; see infra, §§ 473 et seq. VOL. I.— 29 449 § 306.] CONTRACTS. [CHAP. XIV. not excuse when it merely makes the duty burdensome and expensive.' § 306. It has been said that " the law which renders the per- formance impossible, and, therefore, excuses failure, as to for- must be a law operative in the state where the obliga- Mtion^™*^'" ^^^^ ^^"'^^ assumed, and obligatory in its efiect upon her authorities ;"^and for this reason it has been held that to a suit on a recognizance that an arrested party would appear to take his trial in a particular state, it is no defence that after the recognizance had been given he voluntarily went into another state, and was there arrested and delivered up on a requisition from a third state where he was convicted and sentenced, and thus taken out of the power of his bail.* It has been also held that confiscation of goods at a foreign piort is no defence to a suit for non-delivery of the goods, such confiscation not being in any way imputable to the shipper ;'' and that quarantine prohibition at a port to which a vessel was chartered is no defence to a suit against a freighter for not furnishing a cargo.' Where, also, " a cargo of petro- leum was shipped under a bill of lading for delivery at a for- eign port, stipulating that it should be taken out by the shipper within a fixed time, it was held that the freight was earned upon arrival ready for delivery, and that the shipper was not excused from taking the cargo and paying the freight by reason of a prohibition at the port against landing such a cargo."^ But where an unloading is to be by concurrent act of both parties, and it is forbidden by the port authorities on account of a threatened bombardment, neither can -recover.' "The delay having happened without default on either side, and neither having undertaken by contract, express or im- i Baker ... .Johnson, 42 N. Y. 126; * Spence v. Chodwiok, 10 Q. B. 517 ; Haslcill u. Sevier, 25 Ark. 152 ; Jaco- Splidt v. Heatli, 2 Camp. 57. ■way r. Denton, 25 Ark. G25. * Barker v. Hodgson, 3 M. & S. 267. 2 See infra, § 321. See Blight u," Page, 3 B. & P. 295 ; 3 Taylor c. Taintor, 16 Wall. 366; Knowles v. Dabney, 105 Mass. 437. S. C, 36 Copn. 242 ; State r. Horn, 70 e Cargo ex Argos, L. R. 5 P. C. 134. Mo. 466 ; Wh. Cr. PI. & Pr. §§ 28-33 ; The statement of this point is taken see contra, Belding c. State, 25 Ark. from Leake, 2d ed. 714. 315 ; and for further distinctions, infra, ' Ford u. Cotesworth, L. R. 4 Q. B. ,| 321. 127. 450 CHAP. XIV.] IMPOSSIBILITY. [§ 308.' plied, that there should be no delay, the loss must remain where it falls."' No doubt when the question arises in what way a contract is to be construed, the courts of one state will refuse to be bound by the action of the authorities of another state; and no doubt the prevalent opinion now is that no state is called upon to give effect to another state's revenue lawa.2 But it is by no means clear that the principle that the prohibition of a foreign state is no defence to a suit for non- performance of a contract is not unduly extended when it is applied to contracts to be performed in such state. The better view is that in all that concerns the performance of a contract the law of the place of performance is to determine.' And the cases here cited, so far as they conflict with this rule, may be explained on the ground, hereafter to be considered, that the promisor, in such cases, took on him the risk.^ § 307. In accordance with the distinction already taken, a legal incapacity resulting from the promisor's negli- gence, is no defence. Thus a railroad company pofslbiuty which permits its power to purchase land to expire p°omi6or'7 by leerislative limitation, cannot set up such loss of negligence 1/. -r-i -Pii-^o defence power as a defence to a suit for the price of land it previously agreed to purchase.^ § 808. Casus is a disaster so extraordinary that its contin- gency would not be looked to by good business men in the particular specialty as something within the disaster range of probability. As convertible with casus is Jj^'^ence^ frequently used the term "act of Grod." As "acts eouidnot of God" are understood such extraordinary disturb- ances as " could not have been prevented by any amount of fore- sight and pains and care reasonably to be expected" from the party setting up this disturbance as excusatory.* " Inevitable accident" is a term also used to express the same idea;^ but there are cases {e. g., unexpected interference of strangers, ' Ibid. ; Leake, 2d ed. 695, 714. « Hawkes v. R. R.. 1 D. M. & G. 737 ; 2 Wh. Con. of Laws, § 484. aff. S. C, 3 De G. & S. 743. ' Wh. Con. of Laws, § 403, and oases * James, L. J., Nugent v. Smitli, 1 there cited. C. P. D. 423. See to same effect Nichols * Infra, § 311. v, Marsland, 2 Ex. D. 1. ' See Wh. on Neg. § 553. 451 § 308.] CONTEACTS. [cHAP. XIV. against which no reasonable prudence could guard) which might be called " inevitable accidents," but could not, in the ordinary sense of the words, be spoken of as " acts of God." It should be remembered, also, that the term "act of God" is used in a popular, and not in either a theological Or a scientific sense. By a theist all things are regarded as coming more or less directly from God. By those rejecting belief in a sujireme being, the term would be discarded altogether. In a scientific sense, also, the distinction is absurd, since all that science can deal with is government by law ; and waiving the position that a government by law is far from excluding the idea of a supreme lawgiver, it cannot be supposed that there is any occurrence not explicable on the hypothesis of a system of order by which the equilibrium of the universe is maintained. But what concerns us more in the present issue is the fact that the term " act of God," as well as that of " inevitable ac- cident," narrows with the gradual discovery of agencies by which catastrophies formerly supposed to be inevitable are now averted. One hundred years ago casus would be a good defence to an action against a carrier for a loss which, had the telegram existed in those days, could have been readily averted by summoning aid which it would be negligence in the carrier now not to summon. One hundred years hence the domains of casus will be still further restricted. The question oi casus, therefore, depends upon the diligence shown at the period in litigation by the party setting it up as a defence.^ 1 See authorities cited in Wh. on in the wide sense, there would be few Neg. §§ 114, 553 ; Carstairs i . Taylor, cases of accidrnt in which equity could L. R. 6 Exch. 217; Street v. Holyoke, interfere, since there are few cases of 105 Mass. 82; Gray w. Harris, 107 Mass. accident whose contingency could not 492. " Accident," as a ground of equi- be in some sense foreseen. (See dis- table interference, is defined by Mr. cussion in Wh. on Neg. §§ 74 et seg.) Spence (1 Spence's Eq. i;2S) to be an In The Love Bird, 44 L. T. 650 (1881), unforeseen and injurious occurrence, it was held that under the English not attributable to mistake, neglect, or sailing rules of Sept. 1880, a loss which misconduct ; and this definition is ap- might have been prevented by the use proved by Mr. Bispham (Bisp. Eq. of the mechanical fog-horn ordered by 174). To this, however, it may be ob- those rules, was imputable to the neg- jected that if "unforeseen" be taken ligent ship. 452 CHAP. XIV.] IMPOSSIBILITY. [§ 309. § 309. It may happen, however, that a person who contracts to do a particular thing, does it in such a way as to p„^„g^Q encounter an obstacle which prevents the perform- defence '■ '■ . when negli- ance. When two or more ways are open to him, he gently en- iraprovidently takes one in which the difficulty is encountered; or he delays action so that he meets a risk he would otherwise have avoided. In such cases the casus is no defence. This is the rule in the Roman law,' and in our own.- If a ship, for instance, collides with another in port through the violence of a storm, no negligence being im- putable, this is casus; but if she is negligently moored or anchored, so that she is cast loose unnecessarily, then her loss is to be charged to those by whom she was thus left exposed.' If the casus by which goods are destroyed while in the course of transportation could have been avoided by the exercise, on .the part of the carrier, of the diligence usual to good business men of his class, then it constitutes no defence to a suit for a breach of the contract of carriage.* But it is not enough, to overcome the defence of casus, to say that the casus might have possibly been avoided. Such excessive precautions as would make transportation impracticable a carrier is not required to adopt. This duty is satisfied if he take such pre- cautions as are in the long run most conducive to the safe management of the business in which he is concerned.' — The ' L. 22, D. de neg. g. (3, 5) ; L. 10, a loss imputable to himself, see §§ 312, § 1, de L. Rhod. (14, 2). 603-4, 716, 747, 901. 2 Story's Eq. Jur. § 105 ; Bispham's » L. 29, § 2, D. at Leg. Aq. Eq. 175 ; Cafifray v. Darby, 6 Ves. 496 ; « Nugent v. Smith, L. R. 1 C. P. D. Hadley v. Clark, 8 T. R. 259 ; Davis v. 423 ; Denny <•. R. R., 13 Gray, 481 ; Garrett, 6 Bing. 716 ; Parker I'. James, Hoadley u. N. Trans. Co., 115 Mass. 4 Camp. 112 ; Bailiffs of Romney Marsh 304; Hubbard v. Harnden's Ex. Co., o. Trinity House, L. R. 5 Exch. 208; 10 R. I. 244; Michaels o. R. R., 30 N. Converse u. Brainard, 27 Conn. 607; Y. 564; Austen u. Steamboat Co., 43 Beebe v. Johnson, 19 Wend. 500 ; New N. Y. 75 ; Bostwick o. R. R., 45 N. Y. Brunswick St. Co. v. Tiers, 4 Zab. 697 ; 71.2 ; Morrison v. Davis, 20 Penn. St. Hand v. Baynes, 4 Whart. R. 204; 175 ; Read r. R. R., 60 Mo. 199 ; Pruitt Davis V. Davis, 6 Ired. Eq. 418 ; Helm i.. R. R., 62 Mo. 528. See as to casus V. Wilson, 4 Mo. 41 ; Vail v. R. R., 63 generally, Wh. on Neg. §§ 553 et see/. Mo, 230 ; Nashville, etc. R. R. v. David, ^ Railroad Co. v. Reeves, 10 Wall. 6 Heisk. 261 ; Seigel v. Eisen, 41 Cal. 176 ; Denny u. R. R., 13 Gray, 481 ; 109. That a party cannot recover on Morrison v. Davis, 20 Penn. St. 171. 458 § 310.] CONTRACTS. [CHAP. XIV. rule before us is apjilicable to all cases in which a party by un- necessary dela3' puts it out of his power to perform a promise. Hence, a party who ao-rees to have his life insured within a certain time is not, if he has unduly delayed his application, relieved from his as^reement b}' the fact that his health be- came so bad before the expiration of the time that his life was uninsurable.^ § 310. Perfect caution, however, is not required. Were it required, business could not be etBciently conducted. But perfect ' . ^ -i i caution not It would be possible, for instance, tor a railroad coni- leq ue . pany not only to place watchers alonw the whole line of their road, but to place watchers to watch the watchers. To require this, however, would be to stop railroad transpor- tation, as no raili'oail company could carry such a burden. It would be possible, also, to prevent wooden houses from being burned by keeping them perpetually drenched in water; but this would be equivalent to saying that no wood should be used in the construction of houses. Hence it is not necessary to sustain the defence of casus, that the calamity could not have been possibly averted. It is enough if it could not have been averted by the exercise of that diligence which is usual among jirudent and competent persons charged with the parti- cular duty whose non discharge is in the case in question ex- cused by vasus.'^ Thus where a sudden frost closes the naviga- ' Arthur V. Wynne, L. R. 14 Cli. D. them, rendered hiui liable for their G'i3. In Lilley t. .Doubleday (L. R. 7 destruction by means of a fire which Q. B. D. 510), the plaintiff was shown they would have escaped if they had to have forwarded to the defendant been warehoused in accordance with goods for the purpose of being ware- the contract. The court ruled this housed. The contract between the par- point against the defendant. "If a ties was, that the goods should be bailee," said Mr. Justice Grove, " elects deposited by the defendant at a store to deal with the property entrusted to at a specific place ; instead of which he him in a way not authorized by the deposited a part of them in a place bailor, he takes upon himself the risks where, without any particular negli- of so doing, except where the risk is gence on his part, a fire took place by independent of his acts, and inherent which they were destroyed. The only in the property itself." See comments point at issue was, whether the fact in London Law Times, Feb. 18, lb82. that the defendant had deposited the ' Wb. on Neg. §§ 116, 123; Idle v. goods in a different place from that in Thornton, 3 Camp. 274 ; Nichols ( . which he had contracted to deposit Marsland, L. R. 10 Ex. 255 ; Railroad 454 CHAP. XIV.] IMPOSSIBILITY. [§ 311. tioii of a river a month earlier than usual, this is a defence to a carrier, though it is possible he might have delivered the goods had he started them two months earlier. "^ So it is a de- fence that a rail has been broken by a cold snap utterly unpre- cedented in its severity and earliness; though it is possible to conceive of rails constructed of such a temper and encased with such care as to resist even the extremest cold-.^ On the otlier hand a collision, which might have been avoided had a proper chart been taken f an explosion of a boiler, which might have been avoided by a proper supply of water ;* or a destruction by freezing, which might have been avoided by the packing prudent carriers under such circumstances are accustomed to give ;° cannot be imputed to casus.^ § 311. If a party guarantees against an event, he cannot defeat a suit for damages for non-performance on the ground that the event hajipened.' Thus, where feuee when a charterer undertakes to unload within a particular t^enskis 1 one the time, it is no defence to a suit for a bteach of con- promisor tract in this respect that he was prevented by a storm which was within the ordinary range of anticipation at the time of his contract.' It is no defence, also, to a suit on a charter party requiring a ship to be loaded with usual dis- patch, that a frost stopped transit through a canal by means of which the cargo would in the ordinary course of travel have been brought to the ship f nor is the burning of a house under construction any defence to a suit against the contract- or for non-construction.'" Nor can the promisor defend him- Co. ... Reeves, 10 Wall. 176 ; Denny v. = Wing v. R. R., 1 Hilton, 235. R. R., 13 Gray, 481 ; Morrison v. Davis, ' See other cases in Wh. on Neg. § 20 Penn. St. 171 ; Bain v. Lyle, 58 559. Penn. St. 68 ; Morrow v. Campbell, 7 ' See Leake, 2d ed. 697 ; Jones v. St. Port. 41; Selden (7. Preston, 11 Bush, John's College, L. R. 6 Q. B. 115; 191 ; McEvers v. Steamboat, 22 Mo. School Dist. v. Dauchy, 25 Conn. 530 ; 189. Tompkins v. Dudley, 25 N. Y. 272; ' Crosby v. Fitch, 12 Conn. 410 ; Baker <.. Johnson, 42 N. Y. 126 ; Bowman v. Teall, 23 Wend. 306 ; Swet- Clancy v. Overman, 1 Dev. & B. 402. land V. R. R., 102 Mass. 276. « Thiis v. Byers, L. R. 1 Q. B. D. ' McPadden v. R. R., 44 N. Y. 478. 244. 5 Williams v. Grant, 1 Conn. 487. » Kearon v. Pearson, 7 H. & N. 386. * Siordet v. Hall, 4 Bing. 607 ; 1 M. 1° Adams v. Nichols, 19 Pick. 275. & P. 561. 455 § 311.] CONTRACTS. [chap. SIV. self on the ground thut there was an accumulation of unforeseen difficulties in his way which either absolutely prevented his per- formance of his contract, or made its performance possible only at a ruinous sacrifice.^ And where a freighter undertakes spe- cifically that he will not detain a ship beyond a designated period, he becomes liable for damages, although tlie delay may have been caused by events beyond his control and with- out any fault. ^ And a contractor cannot set up as a defence to a suit on his contract to have a particular building ready at a fiarticular time, that it was destroj'ed when near com- pletion by lightning.^ " The act of God will excuse the not doing of a thing where the law had created the duty, but never where it is created by the positive and absolute contract of the party."^ Tliis is eminently the case in contracts where there is a deliberate election to take certain risks,' as in in- surance cases f and in charter parties and contracts of ear- ■ Bullock < . Doramit, 6 T. U. 650 ; Atkinson .-. Ritchie, 10 East, 530; Thorn r. City of London, L. R. 1 Ap. Ca. 120; Jones u. U. S., 96 U. S. 24; Dermott c'. Jones, 2 Wall. 1 ; (iilpins o. Conseqna, Pet. C. C. 86 ; Eddy , . Clement, 38 Vt. 486 ; Adams r. Nichols, 19 Pick. 275; Mill Dam Foundry ,. Hovey, 21 Pick. 441 ; Bigelow r. Colla- more, 5 Cush. 231 ; Lord ,-. Wheeler, 1 Gray, 282 ; Kramer v. Cook, 7 (^ray, 550 ; Wareham Bk. u. Burt, 5 Allen, 113; Wells v. Calnan, 107 Mass. 514 ; Thomas u. Knowles, 128 Mass. 22 ; Beebe v. Johnson, 19 Wend. 500 ; Harmony i'. Bingham, 2 Kern, 107; Tompkins <. Dudley, 25 N. Y. 275; Dexter v. Norton, 47 N. Y. 62 ; Booth (.. Mill Co., 60 N. Y. 489 ; Kemp «. Ice Co., 69 N. Y. 45 ; Wheeler r. Ins. Co., 82 N. Y. 543 ; School Trustees u. Ben- nett, 3 Dutch. 515 ; Anspach v. Bast, 52 Penn. St. 356 ; Levering i'. Coal Co., 54 Penn. St. 291; Peterson v. Edmonson, 5 Harring. 378 ; Kribs : . Jones, 44 Md. 396 ; Linn v. Ross, 10 456 Ohio, 412 ; Wood r. Long, 28 Ind. 314; Brumby .•. Smith, 3 Ala. 123 ; Davis c'. Smith, 15 Mo. 467; Duncan c. Gib- son, 45 Mo. 352 ; Wilson c-. Knott, 3 Humph. 473 ; Peck v. Ledwidge, 25 111. 112 ; and see cases cited Wald's Pol- lock, 356 ; and in/ra, § 321. ' Randall u. Lynch, 2 Camp. 352 ; 12 East, 179 ; Thiis (•. Byers, L. R. 1 Q. B. D. 249 ; Straker v. Kidd, L. R. 3 Q. B. D. 223. ' School District v. Dauchy, 25 Conn. 630. ' Ibid., per Ellsworth, J.; see limita- tions, infra, §§ 314 et secj. 5 Castle V. Playford, L. R. 7 Ex. 9S : Martineau v. Kitching, L. R. 7 Q. B. 436. 6 Brown v. Ins. Co., 1 E. & E. 853; Medeiros r. Hill, 8 Bing. 231 ; Tuf- nell ,: Constable, 7 Ad. & El. 7:iS ; Adams r. Nichols, 19 Pick. 275 ; Baker V. Ins. Co., 12 Gray, 603; Brown v. Kimball, 12 Vt. 617 ; Martin v. Sclioen- herger, 8 W. & S. 367. As to guarau- tees, see infra, § 311. CHAP. XIV.] IMPOSSIBILITY. [§ 311. riage;' and when the promisor hy due diligence could have made himself acquainted with a defect in the materials which he was to use which made performance impossible, this im- possibility is no defence.^—-" Where a party has either ex- pressly or impliedly undertaken without any qualification to do anything, and does not do it, he must make compensation in damages, though the performance was rendered impractica- ble by some unforeseen cause over which he had no control."^ — Another illustration of the principle before us may be found in a case decided in Michigan in 1880. S. agreed to locate and enter pine lands in the name of A. & P. to an amount not exceeding 10,000 acres, they to pay him expenses, and to convey to him an undivided fifth in the land located and entered. The panic of 1873 intervening, A. & P. were 1 Leake, 2d ed. 697; Sliubrick v. Salmond, 3 Burr. 1637 ; Kearon v. Pearson, 7 H. & N. 386 ; Jones v. Adamson, L. R. 1 Ex. D. 60 ; and eases cited, Wh. on Neg. § 550 ; infra, §317. 2 Dermott v. .Tones, 2 Wall. 1 ; see Hills V. Sughrue, 15 M. & W. 253. In Thorn v. Mayor of London, L. E,. 9 Ex. 163; L. R. 10 Ex. 112; L. R. 1 Api^. Cas. (H. of L.) 120, the engineer of the city of London pre- pared certain specifications in a con- tract which the plaintiff undertook to execute, but which, when the work was in the course of performance, were foun^ to contain impracticable conditions. The contractor sued the city for the loss he had incurred in his attempt to fill what turned out to be an impossible undertaking, but it was held, both in the Exchequer Chamber and the House of Lords, that the risk was one which he himself assumed. In Bailey u. De Crespigny, L. R. 4 a. B. 185, the court said: "There can be no doubt that a man may by an absolute contract bind himself to per- form things which subsequently be- come impossible, or to pay damages for the non-performance, and this con- struction is to be put upon an unquali- iied undertaking, where the event which causes the impossibility was or might have been .Tnticipated or guarded against in the contract, or where the impossibility arises from the act or default of the promisor. But where the event is of such a character that it cannot reasonably be supposed to have been in the contemplation of the contracting parties when the contract was made, they will not be held bound by general words which, though large enough to include, were not used with reference to the possibility of the par- ticular contingency which afterwards happens." See, further. White v. Mann, 26 Me. 361 ; Lord v. Wheeler, 1 Gray, 282; Carpenter o. Stevens, 12 Wend. 589 ; Harmony o. Bingham, 2 Kernan, 106 ; Scully u. Kirkpatrick, 79 Penn. St. 324 ; Clark v. Franklin, 7 Leigh, 1 ; Brumby u. Smith, 3 Ala. 123. " Per cur. Ford v. Cotesworth, L. R. 4 Q. B. 134 ; Leake, 2d ed. 693. To same effect is Harmony u. Bingham, 2 Kernan, 106. 457 § 312.] CONTRACTS. [CHAP. XIV. unable to furnish funds. It was held that the panic was a risk they took, and was no defence to them when sued on their contract.' — Insanity of the insured, by which pay- ment of premiums is dropped, does not prevent the forfeiture of the policy conditioned on such payment.^^It should also be remembered, as we will see hereafter, that personal cams is no excuse when the condition can be performed by a substitute or an attorney.' § 312. A party to a contract, who, by his own action, inter- poses an insuperable bar in the way of the perform- making ance of the contract by the other party, cannot ance'o^'a claim damages for such non-performance. The imm™ibie pi'oiiisor, in other words, is excused to the extent cannot jn which performance is made impossible by the complain. . .mi ,. i ,■ promisee.'' ihe same rule applies where the obligor of a bond makes the performance of its condition impossi- ble f and where an employer interferes so as to prevent the performance of his work by the contractor ;'' and where an author is prevented from contributing to a periodical by the abandonment of the periodical by the publisher.^ " It is a clear principle of law that if by any act of one of the parties the performance of a contract is rendered impossible, then the other side may, if they choose, rescind the contract ; and it appears sufficient if the contract cannot be performed in the manner stipulated, though it may be performed in some other 1 McCreery r. Green, 38 Mich. 172. 116 ; Hurd <.. Gill, 45 N. Y. 341 MVhwler !.. Ins. Co., 82 N. Y. 547. Stewart f. Keteltas, 36 N. Y. 388 ' Infra, § 323; Wolf v. Howes, 20 Tone r. Doelger, 6 Rob. (N. Y.) 251 N. Y. 197 ; Clark v. Gilbert, 26 N. Y. Johnson v. Somerville, 33 N. .1. L. 152 279 ; Spalding v. Rosa, 71 N. Y. 40 ; Kline u. Culter, 34 N. J. E(i. 329 Wheeler v. Ins. Co., 82 N. Y. 547. Navigation Co. v. Wilcox, 7 -Tones L, * /»/«/, §§ 603, 712 ; Wald's Pollock, 481 ; Tewskbury c. O'Connell, 21 Cal ut supra, 371, and cases there cited; 60; Reynolds o. R. R., 11 Neb. 186 Arthur V. Wynne, L. R. 14 Ch. D. 603; and cases cited infra, §§ 716-747, 901. Roberts!). Bury Com., L.R. 4 C. P. 755; ^ Boswick ... Swindells, 3 A. & E. 5 C. P. 310 ; Giles v. Edward, 7 T. R. 881 ; Pindar , . Upton, 44 N. H. 358 ; 181 ; Holme v. Guppy, 3 iVI. & W. 387 ; Tasker v. Bartlett, 5 Cush. 359. Ellis V. Hamlen, 3 Taunt. 53 ; Ray- 6 Thornhill v. Neata, 8 C. B. N. S. mond V. Minton, L. R. 1 Ex. 244; 831. Clearwater u. Meredith, 1 Wall. 25 ; ^ Planche v. Colburn, 8 Biug. 14 ; Johnston v. Caulkins, 1 Johns. Cas. Leake, 2d ed. 65 709. 458 CHAP. XIV.J IMPOSSIBILITY. [§ 313. manner not very different."^ And, as a general rule, a per- formance conditioned on an impossibility created by the other side cannot be compelled.^ § 313. The rule casus non ■praestantur, according to Momra- sen,^ is to be considered as prescribing that, in cases ^ 11 TT 1- 1 1 • \ Casual im- of casual impossibility (casuelleu Unmoglichkeit), possibility the promisor shall not be liable in damages. But permanent the impossibility must be commensurate with the ^"^^j^jg duty. Where the impossibility is only partial, it relieves from liability only pro tanto.* The questions, what abatement of price is to be made in cases of partial perform- ance, and whether in such cases the contract can be rescinded, are elsewhere distinctively discussed.' As a rule, fractional impossibility only abates pro tanto.^ To make casual impossi- bility in such cases a ground for release in toto, it must go to the whole claim. It must also be permanent. It is true that to its permanency it is not essential that there should be absolutely no prospect of its future removal. But if the im- pediment be of a continuous character, then, as has been already shown in reference to continuous impediments existing at the time of the contract, it vacates the contract; nor can such a contract be subsequently, at some remote period, called into activity by the removal of an impediment of an apparently permanent type. Whether, when the impediment is tempo- rary, this vacates the contract, depends upon whether the performance of the contract falls within the time during which the impediment exists. If it does, the impediment is regarded in the same light as a permanent impossibility.'' But when the performance is not limited to be within this specified period, its efficacy is not affected by the temporary impediment.^ ' Mellish, L. J., Panama Tel. Co. v. cond. Indeb. (12, 6) ; L. 21, D. de India Rubber Telegraph Works, L. R. hered. vend. (18, 4). 10 Ch. 532, citing Planclig v. Colburn, = Infra, §§ 580, 899. 8 Bing. 14; Leake, 2d ed. 708. « Infra, § 330. 2 Infra, § 547 ; and see infra, §§ ? L. 9, § 4, L. 133, 34, D. locati 603-4, 716, 747, 901. (19, 2). 3 Op. oit. § 25, p. 286. « gge supra, §§ 298 et seq. « Infra, § 899 ; L. 40, § 1, D. de 459 § 314.] CONTRACTS. [CHAP. XIV. § 314. If by a casus which involves no culpability or guarantee in a party contracting to deliver a thing, ityofdeii-" such thing has ceascd to exist, the contract falls. que'utuMn- Thus in a case already noticed, where the proprietor tervenino; of a music hall agreed to let the plaintiff have the a defence. . use of it for concerts on certain days, it was held that the destruction of the hall by fire was a defence to a suit for breach of contract.' A contract, also, for the delivery of a certain quantity out of a specific crop of potatoes is p?'o tanto avoided by a failure of the crop, so that the specified quantity is not produced.^ But, as we have seen, such impossibility is no defence to a suit on a contract to do a specific thing, unless all things of that class are made impossible.' Thus, it is no defence to a suit to build a house, that the house when build- ing was burned, though it would be otherwise if by casus or vis major, the building of all houses in that place was made impossible.'' — Vangerow' takes the following positions: — I. When a casual impossibility occurs without any fault of the debtor, then the ci-editor bears the loss (res ereditoris peri- culo est, res creditori perit); nor can he claim damages, or even recover back what he has paid. On the other hand, the debtor bears the loss (res debitoris periculo est, res debitori perit) when in cases of casual impossibility he has guaranteed the risk, or has in any way provoked it. As we have seen, the same distinction obtains in our own law.^ II. Various attempts have been made to reduce the rules relating to ■periculum to a leading principle, but without suc- cess. By many of the older authorities the maxim casum sentit doiiwius is invoked; but this maxim, even in its widest acceptation, can be only understood to mean that a claim.ant loses his claim on the destruction of the thing from which it ' Taylor <;. Caldwell, 3 B. & S. S2G ; 70 111. f.27. See, also. Lord <•. Wheeler, stijim, § 300. 1 Gray, 282 ; Oakley v. Morton, 1 Kern. 2 Howell L-. Coupland, L. R. 1 Q. B. 25 ; and cases cited supra, § 300. D. 258 ; siijira, § 290 ; infia, § 330. To 3 Su,,,;,, § 313 ; infra, § 330. the same point Mr. Wald, in his notes * Adams v. Nichols, 19 Pick. 275 ; to Pollock on Cont. p. 362, cites Wells supra, § 311. V. Calnan, 107 Mass. 514 ; School Dist. 6 Pandekt. iii. § 591. V. Dauchy, 25 Conn. 530 ; Dexter r. " Jiiijira, § 311. Norton, 47 N. Y. 62 ; Walker v. Tucker, 460 CHAP. XIV.] IMPOSSIBILITY. [§ 314. BprhiEfs, and cannot be stretched so as to determine the in- fluence that the destruction of the res debita has on an obliga- tion. In fact, the champions of this maxim are obliged to subject it to so many restrictions and exceptions that little of it remains. — "Wachter and others fall back upon the maxims impossibilium nulla ohligatio est,^ and casus a nullo praestanturf but, in reply, it may be said (1) that these maxims are nega- tive, and, therefore, not adapted to the decision of the ques- tion before us; and (2), that while they affirm the debtor's liberation in case of the casual destruction of the thing from which the obligation flows, they do not determine how far in such cases the creditor continues bound. — Madai lays it down as a rule that the party to whom performance is possible must perform, but that the party whose performance becomes im- possible is freed from liability. Vangerow replies that while this principle is not incorrect in respect to those obligations which relate to the delivery of a thing, it leads in other cases (e. g., in the locatio conductio) to erroneous results, and cannot be, therefore, accepted as giving a universal rule. Koch, Fuchs, and others adopt, as decisive, the rule that when per- formance becomes impossible without the promisor's fault, then the obligation may by fiction be regarded as fulfilled. But, according to Vangerow, the proof passages adduced do not sustain this view, and the solution itself does not reach many important bailments. Vangerow, therefore, holds that no common rule for determining necessity in all cases can be found, but that each case depends upon the terms of the par- ticular class of obligations to which it belongs. III. In unilateral obligations the rule is that with the casual destruction of the object the obligation falls, and, therefore, in such cases the creditor takes the loss.' ' L. 185, de R. J. effect are also noticed. From the na- 2 L. 23, fin. eod. ture of the case, however, this rule " He cites to this point L. 107, de only applies in cases where a speciiic solut. (46, 3), where Pomponius says: thing is the object of the obligation. " Verborum obligatio . . . resolvitur When the description is by quantity or naturaliter veluti solutione, aut quum genus, then the debtor is not liberated res in stipulationen deducta sine culpa by the casual destruction of the res promissoris in rebus humanis esse debita, quia genus non peril. desiit." Other passages to the same 461 § 314.J CONTRACTS. [CHAP. XIV. IV. With regard to bilateral obligations for the transfer of things, a party who without fault or guarantee is prevented from fulfilling his contract by the casual destruction of the goods, is entirely freed from the duty. Whether the other party continues bound is the subject of conflicting opinion. (1.) In contracts of sale the rule is repeatedly given in the Roman standards, that as soon as the contract is com- pleted the risk passes to the purchaser, and that, therefore, when the goods are casually destroyed, the purchaser is bound to pay their price. (2.) The same rule applies to what are technically called innominat-contracts. Vangerow concludes that as contracts for sale and innominat-contracts are almost the only bilateral contracts for the transfer of things, the rule before us may be regarded as of general application. It rests, he argues, on a sound reason. If both obligations entering into such a con- tract are fulfilled on both sides, then, when after delivery the thing is accidentally destroyed or injured, the loss is to fall on the receiver ; and that which is right in cases of iiaiae- diate delivery, remains right in cases in which delivery is rightfully excused, the more so because from the time of the completion of the contract the promisee has the disposal of the thing. If, however, the delivery of the goods is negligently delayed, then the vendor has to take the risk. V. The rules above stated are modified in cases in which a sale is conditional. If the condition has not taken efl'ect, the transaction is still open, and a casual loss falls on the promisor. If the condition is complied with, the loss falls on the prom- isee.' When, however, the accident to the res debita occurs while the condition is still pending, a distinction is to be made between periculum interitus, and periculum deteriorationis. If the res dehita ceases to exist during the pendency of the con- dition, then the contract is on both sides released. If after the casus the condition ceases to operate, then the obligation 1 " Quodsi sub conditione res venie- toris esse periculum ajunt ; idem Pom- rit, si quidem defecerit conditio, nulla ponius libro nono probat." L. 8, de est emtio, sicuti nee stipulatio ; quodsi per. et comm. rei vend, extiterit, Proculus et Octavenus em- 462 CHAP. XIV.] IMPOSSIBILITY. [§ .315. can never be perfect, since, when on its face it becomes ope- rative, it has no object on which to act. § 315. An agreement fo deliver fungible articles, e. g. gold, is not released by the loss of such articles by the •^ . •' But not of party so agreeing. JNo matter what calamity may fungible overtake him, or how completely he may be "°^^' stripped of his possessions, he continues bound. Even when he designates the coin he has to deliver, the conclusion, according to the Roman law, is the same. There may be even no coin of the stamp specified any longer in existence ; but this would not relieve him, if the coin was designated by him as repre- senting a certain amount of moneiy. It would be otherwise if the coin was to be delivered as a curiosity, or as a specific arti- cle of distinct value.' An illustration of the rule before us is to be found in a recent English case already cited. V. agreed in March to sell to P. 200 tons of potatoes, to be grown on cer- tain designated land of V. In consequence of the potato blight, V. was able to deliver only 80 tons, that being the sole produce of the land in question. It was held that he was only bound to this amount, though it would have been otherwise had he agreed to deliver 200 tons of potatoes without this re- striction. — "The contract was for 200 tons of a paiticular crop in particular fields" . . . "not 200 tons of potatoes sim- ply, but 200 tons off particular land," . . . "and therefore there was an implied term in the contract that each party should be free if the crop perished."'' • Mommsen, op. cit., 50 ; Lloyd v. of the material facts on which they Gruibert, L. R. 1 Q. B. 121 ; Youqua v. were based. Eberliard, Abhand. von Nixon, Pet. C. C. 221 ; Gilpins v. Con- der Klausel, rebus sic stantibus, in sequa. Pet. C. C. 91 ; Lovering v. Coal dessen Beitragen znr Erlaiiterung der Co., 54 Penn. St. 291. Deutschen Rechte, Th. I. S. 1 ; Barbosa, 2 Howell V. Coupland, L. R. 9 Q,. B. thesaur. Lib. XIV. cap. I. ax. 14 ; 462; aff. on app., 1 Q,. B. D. 258; as Cocceji, de clausula, rebus sic stauti- cited and adopted in Pollock on Cont. bus, Tom. I. disp. 15 ; Koch, Porder. Wald's ed. 364-5 ; supra, § 314 ; § 137, II. 506. That the maxim can- infra, § 330. By somiS of the old jurists not be maintained as a general rule is it was maintained that in all contracts shown by Grotius, de jure belli ac pacis, the clause rebus sic stantibus or si res Lib. II. cap. 16, § 24, and more recently maneant quo sunt loco, was tacitly under- by Weber, Systematische Entwicke- stood ; and that all contracts, therefore, lung der Lehre von der natiirliohen were conditioned upon the continuance Verbindlichkeit, § 90 ; and it is repu- 463 § 317.] CONTRACTS. [CHAP. XIV. § 316. When the delivery of a specific article is undertaken ^ , (there being: no absolute guarantee to deliver), tliis is Subsequent ^ o " _ ^' non-piodu- dependent on the power of the contracting party to goods Vde- deliver the article. If it has been without his fault lence. withdrawn from his control after the promise was made, this is a defence. This, in the Roman law, has been held to apply to the carrying oiF of goods by robbery, theft, and embezzlement.' It applies, also, to cases where from some unforeseen cause, amounting to casus, the specific article, though there had been every reason to expect it, could not be obtained by the vendor at the time of the proposed delivery.^ — This rule, however, does not, as we have seen, apply to fun- gible articles. All the wheat a party may have on hand at the time of a contract to deliver a certain amount of wheat, may be destroyed by casus. This does not excuse him from his contract. Wheat can be procured elsewhere, and it must be procured.^ S 317. The rule of the Roman law, that if a sale After com- pletion of IS completed, the loss, in case of destruction, falls on falls oif the purchaser (there being no blame on either side) purchaser, although there has been no delivery, has beep much criticized, and various eiforts made to reconcile it with the position that in contracts of hiring the lessee is excused 2^ro tifitio by the destruction of the thing hired. The older jurists held fast to the maxim casum sentit dominus, to which they re- garded the Roman rule as to sale as au anomalous exception. — By some the exception was based on the rule debitor- speciei diated as such by later German autho- either party may rescind. In this case rities and codes. Koch, Ford, iit supra, rescission is permissible without either According to Weber, the clause rebus party having a right to damages. As sic slinilihus is only to be implied in to the conditioning of performance on cases where by either the nature of the delivery, see infra, § 579. contract or its express terms the con- i Mommsen, op. cit. 30. tract would be inoperative without such ^ Howell r. Coupland, L. R. 9 Q. B. assumption. In the German Laiidrecht, 462; S. C. aff. in'Ct. of Ap., 1 G B. D. § 378, the rule is thus stated : When 258 ; and other cases cited supra, §§ by such unforeseen change of oircum- 300-315. stances it becomes impossible to per- ^ gg^ supra, § 315. form the contract on either side, then 464 CHAP. XIV.] IMPOSSIBILITY. [§ 317. liheratur interitu rei} More recently the rule governing sales has been declared to be founded on reason, that governing leases being exceptional.^ The reason given is that only the delivery, not the payment, becomes impossible, and that the latter, therefore, remains due. Others base the Roman doc- trine of sale on the fiction of a performance. Mommsen re- pudiates the first of these views on the ground that the obliga- tion of payment is dependent on the performance of the obli- gation of delivery.- — He explains, however, the distinctive Roman ruling as to sales on the ground that when a sale is complete, there is nothing in the way of immediate perform- ance. The obligation, therefore, could be regarded as actually performed, supposing that the delay in delivery is not imputa- ble to misconduct of the vendor. This, however, is not the case with incomplete sales and with hiring. — An incomplete sale cannot be spoken of as so consummated that the property passes to the purchaser. When goods are hired out, also, it is for a continuous period in which the obligation of the lessee is from time to time renewed ; an instantaneous performance of the contract is impossible from the necessity of the case. It follows that the rule governing complete contracts of sale (that impossibility of delivery based on casus is equivalent to a performance of the contract) cannot have the general appli- cation claimed for it. It is, indeed, not limited to contracts for sale. But it assumes as conditions precedent (1) that there is no incompleteness or condition in the obligation ; and (2), that there is nothing in the transaction forbidding immedi- ate delivery. If either of these conditions fail, the fiction of delivery also fails, and with it fails the duty of payment. By Vangerow, as we have alreadj' seen, the rule is based on the reason that if the purchaser bears the loss when the goods have been delivered, he should bear it when delivery is prevented by causes for which the law does hot hold the vendor responsible ; and this view is strengthened by the fact that from the time when the sale is completed, though" before delivery, the vendee has the disposal of the goods.^ In our own law the same result is 1 Voet. comm. ad. tit. periculo, M. 1, Pothier, Traits de la rente, § 307 ; cited by Mommsen, op. cit. 346. Molitor, les Obligations, i. § 282. 2 Waehter, Archiv. civ. Pr. xv. 189 ; ^ Supra, § 314. VOL. I. — 30 465, 317.] CONTRACTS. [chap. XIV. reached by the position that when by the terms of a contract the goods are to be deposited in a particular jjlace, or given to a particular carrier (and unless there be some immediate disposal of the custody of the goods the contract cannot be regarded as complete), there is a constructive delivery.' — By our own 1 See Wh. Con. of L. § 417. Where the defendant had a horse on trial, with the right to return in eight days if not satisfied, and the horse died on the third day witliout the fault of either party, it was held that the plaintiff, being the vendor, could not recover the price. Elphick u. Barnes, L. R. 5 C. P. D. 321. On the topic in the text the following observations by Momraseu are worthy of study : In the Roman law, if de- struction by casus occurs sfier the sale of the thing, not only is the vendor relieved from delivering the thing, bat may recover not only the price, but the expenses he had been at in relation to the thing after the sale. Cf. Mackenzie, Rom. Law, 221. Thus the vendor of a slave, which before tradition has died without fault of the vendor, may re- cover from the purchaser the price of the burial of the slave. L. 13, § 22, D. de act. empti. (19, 1). Mommsen cites a series of passages in which it is ruled that the purchaser is bound to pay the price when the thing sold can- not be delivered through causes for which the vendor is not to blame. — It is frequently ruled, so he declares (op. cit. 330), that, if the sale is perfected, the purchaser takes the risk (peri- culum) ; and that under such circum- stances -the purchaser can obtain no indemnity, but must pay the price. — This rule applies a fortiori in cases where the thing is only partially destroyed. It is otherwise, however, with an imperfect sale — imperfecten Kaufcon- tract. In this case, it is true, if there 466 be an impossibility based on casus, no damages can be claimed from the ven- dor ; but, on the other hand, the piir- cliaser also is freed from his obligation. As cases of imperfect sales are enume- rated the following : — 1. Conditional sale. As long as the condition is not complied with, the risk is on the vendor. If performance becomes, without the fault of the ven- dor, impossible before the condition is satisfied, the contract is void, and the purchaser is not bound. L. 8, pr. D. de peric. et comm. (18, 6). The same rule is applied in cases of partial im- possibility, and of temporary impossi- bility, even when the impossibility rests on the quality of the things to be delivered. It is true that it is ruled that the purchaser must take the risk of a depreciation of value which oc- curred without the vendor's fault, and that he must pay the entire purchase- money when the goods at the time of the occurrence of the condition could be delivered to their full superficial extent, but had intermediately suffered a deterioration. This, however, is to be limited to cases in which the quality of the goods at the time of the obliga- tion does not expressly enter into the contract. There is, therefore, here no contradiction with the rules above given, since the deterioration of the goods creates only a, partial impossi- bility of performance in cases where the contract designates the quality. 2. Imperfect contract in reference to the }irice. As long as the price is unset- tled, the sale is imperfect. A case specifically mentioned is that where CHAP. XIV.] IMPOSSIBILITY. [§ 317. law, the risk of casus, after a sale is completed, falls on the purchaser.^ " When the terms of the sale are agreed on and the bargain is struck, and everything that the seller has to do with the goods is complete, the contract of sale becomes absolute without payment or delivery, and the property and risk of accident to the goods vest in the buyer. "^ "In an actual sale," so is the rule stated by Mr. Benjamin,' " the property passes, and the risk of loss is in the purchaser, while in the agreement to sell, or executory contract, the risk remains in the vendor." " Generally," so it is said by Bayley, the price is made dependent upon tlie quantity of the goods sold. If the casus intervenes before measurement, the vendor bears the loss, and has no claim against the purchaser. L. 35, §§ 5, 6, D. de oontr. emp. (18, 1). But the purchaser bears the risk of depreciation. 3. Imperfect sale in reference to the goods. Under this head, Mommsen (op. cit. 339) specifies the following : — (a) Sale of-a resfutura. In this case the perfecting of the contract depends upon the thing coming into existence, on which event all the incidents of perfect sales are to be assigned. It follows, therefore, that when the thing, without the vendor's fault, does not come into existence, there is no binding obligation, and consequently no claim against the purchaser. (b) Sale of a genus. If the article is designated only by its class, and that class unlimited, objective impossibility cannot be set up. It is otherwise when the class is limited, as when wine iSi sold of a particular vintage. In such case, when none of the class is obtain- able, all being destroyed subsequently to the contract, and this without the vendor's fault, then, if the question be considered on principle, the loss falls on the purchaser. We have, however, rulings of the Roman jurists to the effect that when a certain quantity of wine is sold, out of a particular cask, the vendor takes the risk down to the time of the measurement of the wine. L. 35, § 7, D. de contr. emp. (18, 1) ; L. 5, D. de periculo (18, 6). While the Romans, therefore, so comments Mommsen (op. cit. 344), regarded the alternative obligation as unconditioned and therefore perfect, they held the obligatio generis to be conditioned on the due separation of the object to be delivered from the class to which it belonged ; and they applied, therefore, to the sale of a genus the principles adopted in reference to conditional sales, so that the risk does not attach to the purchaser until the measure- ment. But the purchaser must bear the risk of deterioration falling on the particular class. The deterioration, however, must be of all that class. Thus, if two pipes of a wine in a par- ticular cellar are sold, the purchaser does not bear the risk when only one or more of the casks of this wine are injured, so long as the injury does not extend to other casks. ' Adams v. Lindsell, 1 B. & Aid. 681 ; Mactier u. Frith, 6 Wend. 103 ; Phillips V. Moor, 71 Me. 78. 2 Kent's Com. ii. 492, adopted Wing V. Clarke, 24 Me. 366; Phillips v. Moor, 71 Me. 81. » Sales, etc., 3d Am. ed. § 78. 467 § 318.] CONTRACTS. [CHAP. XIV. J.,' " where a bargain is made for the purchase of goods, and nothing is said about payment or delivery, the projxrty passes immediately^ so as to cast upon the purchaser all future risk, if nothing remains to be done to the goods, although he cannot take them away without paying the price. "^ § 318. "Whether a covenant of a tenant is vacated by his ejection by a public enemy, will be hereafter eon- of teiuiut sidered.' We have in this section to consider, who, ed by'fus^is ^^ '^^^^ ^^ ^'^^^ ^^ either fire or hurricane, is to bear the burden? Land is leased with buildings on it on a covenant to pay rent. The buildings are burned, and the tenant loses the use. There is a hardship either way : either the landlord or the tenant must bear the burden. Now on a lease of land, with an express covenant to pay rent, with no provision as to the party on whom the repairs are to fall, there can be little question that the tenant takes the risk of fire. In any view, he enjoys the land ; and if he has not insured, and has not taken such precautions as preclude fire, it is his misfortune, but the loss must fall on him.* " When the law creates a duty," so is the rule stated on high authority, "and the party is disabled to perform it without any default in him, and he has no remedy over, the law will excuse it, as in waste, if a house be destroyed by tempest or by enemies, the lessee is excused ; so in escape, if a prison be destroyed by tempest or enemies, the jailer is excused ; but»when the party by his own contract creates a duty or charge upon himself, 1 Simmons v. Swift, 5 B. & C. 862, ' See infra, § 319, and see Paradiue adopted in Benj. on Sales, 3d Am. ed. v. Jane, Aleyn, 26 ; Harmony v. Bing- § 315, citing Arnold v. Delano, 4 Cusli. ham, 12 N. Y. 99 ; Bayly v. Lawrence, 33 ; Willis v. Willis, 6 Dana, 48 ; Hall 1 Bay, 499. V. Richardson, 16 Md. 396. < Smith's Land, and Tenant, 202 ; 2 See to same effect. Park, J., in Loft u. Dennis, 1 E. & E. 478 ; Leeds «. Dixon V. Yates, 5 B. & Ad. 313, and Cheetham, 1 Sim. 146 ; Fowler v. Bott, numerous cases cited in Benj. 3d Am. 6 Mass. 63 ; HaUett v. Wylie, 3 Jolins, ed. § 315. The risk attends the title. 44 ; Gates u. Green, 4 Paige, 355 ; Rugg V. Minott, 11 East, 210 ; Thayer Harmony o. Bingham, 12 N. Y. 99 ; 0. Lapham, 13 Allen, 26 ; Joyce u. Calloway ;;. Hamby, 65 N. C. 631 ; Adams, 4Seld. 296; Terry d. Wheeler, Dowdy u. McLellan, 52 Ga. 408; Ely 25 N. Y. 520 ; Whitcomb v. Whitney, v. Ely, 80 111. 532 ; and other oases 24 Mich. 480 ; Willis v. Willis, 6 Dana, cited, Wald's Pollock, 358 ; Bisph. 49- Eq. 175. CHAP. XIV.J IMPOSSIBILITY. [§ 318. he is bound to make it good, if he may, notwithstanding any accident by inevitable necessity, because he might have pro- vided against it by his contract. And, therefore, if a lessee covenant to repair a house, though it be burnt by lightning, or thrown down by enemies, 3'et he is bound to repair it."' Hence, when there is an express covenant to keep in repair, destruction of pi'emises by casus is no defence to a suit on the covenant.^ Even a covenant to rebuild a bridge is not excused by de- struction caused by extraordinary storms.' It is no defence, also, to an action for re'nt that the premises had been de- stroyed by fire, and that the landlord had recovered the in- surance money.* On the other hand, where simply a building is let on a short lease, the lessee having no right over the soil, and being subjected to no duty to repair, he is not bound for rent after the building is destroyed by a fire for which he is in no way responsible.* The reason is, that in the first contract the implication is that it is the land which the lessee takes, and of which he must bear the burdens as well as the benefits, ■while in the second, he takes only the building, and when that is gone, possesses nothing which is of any value to him. Special minor covenants, also, dependent on the continuance of the building may be defeated on the destruction of the building.^ Hence, a lessee of coal mines, covenanting to work them during a stated period, is relieved from his covenant by ' Williams, Serg., 2 Saund. 69; Fisher d. Milliken, 8 Barr, 121 ; Dyer adopted in Hoy v. Holt, 91 Penn. St. v. Wightman, 66 Penn. St. 427 ; Buss- 91. man v. Ganster, 72 Penn. St. 285. '- Bullock V. Dommitt, 6 T. R. 650 ; « Stockwell v. Hunter, 11 Meto. 448 Leeds v. Cheetham, 1 Sim. 146 ; Digby (a lease of a cellar) ; Shawmut Bank V. Atkinson, 4 Camp. 475 ; Darrell v. v. Boston, 118 Mass. 125 ; Graves v. Tibbetts, L. R. 5 Q. B. D. 560 ; Phillips Berdan, 26 N. Y. 498 (a lease of upper u. Stevens, 16 Mass. 238 ; Hoy v. Holt, rooms) ; Kerrw. Exchange Co., 3 Edw. 91 Penn. St. 88 ; Moyer v. Mitchell, 53 315 (a lease of rooms in a merchant's Md. 171 ; Linn v. Rose, 10 Ohio, 412 ; exchange) ; Winton t>. Cornish, 5 Ely V. Ely, 80 111. 532. In Whitaker Ohio, 477 (a lease of cellar and store- V. Hawley, 25 Kan. 674, it is doubted room) ; Bayly v. Lawrence, I Bay, whether the common law on this point 499 ; McMillan v. Solomon, 42 Ala. is in force in Kansas. 356. ' Brecknock Co. v. Pritchard, 6 T. « Pollock, op. cit. 359. R. 750. * Magaw V. Lambert, 3 Barr, 144; 469 § 318.] CONTEACTS. [chap. XIV. the exhaustion of the mines before the expiration of the period assigned.' — It has also been held in Indiana, that where, after a lease of a saw-mill and one room of an adjoin- ing factory, both factory and saw-mill were destroyed by fire, the tenant was relieved from the rent of the room, but not from the rent of the saw-mill.^ And in Kansas, where the existence of the common law rule as above stated is ques- tioned, it is held that where real and personal property are leased in a gross amount in a single contract, and where both are destroyed by casus, the tenant is entitled to an apportion- ment of the rent.' — Unless the covenant to repair is express, the tenant is not bound to repair in case of destruction by casus ; and no such duty, it has been held, is imposed on the tenant by a mere covenant to restore to the lessor the property in the same condition as when taken.'* ' Walker v. Tucker, 70 111. 527 ; see Clifford V. Watts, L. R. 5 C. P. 577. That where a building is let for a special jjurpose, destruction may be a defence, see supra, § 300. As to non- existence of tiling contracted for, see generally, supra, § 298. 2 Womack c. McQuarry, 28 Ind. 103. It was said by the court: "This ex- ception applies only to cases where the demise is of part of an entire building, as a cellar or upper room ; and it ia founded upon the idea that in such cases it is not the intention of the lease to grant any interest in the land, save for the single purpose of the en- joyment of the apartment devised, and when that enjoyment becomes impossi- ble by the destruction of the building, there remains nothing upon which the demise can operate." See article iu 24 Alb. L. J. 364. -'■ Whitaker r. Hawley, 25 Kan. 674. ■• Warner v. Hutchins, 5 Barb. 66B ; Maggort V. Hansbarger, 8 Leigh, 536 ; Graham u. Swearinger, 9 Yerg. 276 ; Levey v. Dyess, 51 Miss. 501 ; Howetli V. Anderson, 25 Fox, 557 ; Miller i.. 470 Morris, 5 Tex. L. J. 113. In Miller r. Morris, ut supra, the court said: "In Nave V. Berry, 22 Ala. 390, the distinc- tion was recognized and adopted be- tween an obligation ' to repair and deliver up,' and one ' to deliver up.' That whilst the former binds the ob- ligor to rebuild in case of loss by fire during the term, Phillips i'. Stevens, 16 Mass. 23S, the latter is construed to mean simply an obligation against holding over, and if the buildings are burned or destroyed, without the fault of the lessee, he is not bound to rebuild or pay for the improvements so de- stroyed. In Maggort v. Hansbarger, 8 Leigh, 536, the covenant was ' to return the said property with all its appurte- nances.' The property was destroyed by fire. Held, that this was not a covenant to rebuild or to deliver the demised premises in good order, but simply a covenant or agreement to re- turn the property with its appurte- nances. A distinction was drawn be- tween that case and Boss v. Overton, 3 Call, 309 ; Phillips v. Stevens, 16 Mass. 238 ; Bullock v. Commit, 6 T. R. 650 ; CHAP. XIV.] IMPOSSIBILITY. [§ 319. § 319. To the rule that possession by a third party does not constitute impossibility, so as to extinguish liability, the Roman Digly r. Atkinson, 4 Camp. 275, and others of like character, in which there was an express covenant to re- pair. Tlie learned judge in delivering the opinion said, ' that even when there were such express covenants to repair, it has seemed to some a strained and doubtful construction to extend them to the case of rebuilding.' In Wainscott v. Silvers, 13 Ind. 500, the rule is stated, that the tenant is not responsible for buildings accidentally burned down during his tenancy, un- less he has expressly covenanted or agreed to repair. That it is not suffi- cient to charge him that he agreed or covenanted to surrender the premises at the end of his term in the same repair or condition that they were in at the time of the contract. In War- ner V. Hitchins, 5 Barb. 666, the cove- nant was to surrender up the possession of the premises, at the expiration of the lease, in the same condition they were in at the date of the lease, natural wear and tear excepted. The building was destroyed by flre. In an elaborate opinion, the leading cases in both Eng- land and this country were reviewed, and it was held that the covenant did not amount to one to repair, and that the tenants were not bound to rebuild. Mcintosh u. Lown, 49 Barb. 554." " The cases of leases of real and per- sonal property are very rare. In Buss- man V. Ganster, 72 Penn. St. 285, it is said, obiter : ' Even in the case of a, lease of chattels with a house, where the chattels are all destroyed without any fault of the tenant, the better opinion seems to be that it affords no ground for defence pro tanto.' In Fay V. HoUoran, 35 Barb. 295, it is said: ' Rent cannot be reserved out of chat- tels personal. If such chattels are demised with land, at an entire rent, the rent issues out of the land only.' So in respect to a similar lease, it is held in Jones d. Smith, 14 Ohio, 606, that the rent cannot be apportioned between lessor and assignee ; but this was where the assignment did not mention the personalty. ' If the plain- tiff recover, it is because the rent re- served is in respect to the land, and not increased by the personalty.' To the same effect are Sutliff v. Atwood, 15 Ohio St. 186 ; Farewell v. Dickenson, 6B. & C. 251. "On this point the court in the principal case cite Taverner's case, 1 Dyer, 56, where the lease being of sheep and land, and the sheep died, the rent was apportioned, and con- clude : ' Indeed, there would seem to be no just reason for denying appor- tionment, even though the common law doctrine in respect to leases of real estate be conceded. Mingling real and personal property in a single lease ought not to prevent the accepted rules concerning the hiring of each to be applied whenever application is possi- ble.' " 24 Alb. L. J. 364. In the Roman law the rule that the pay is to be" apportioned to the occu- pation has application when the occu- pation becomes impossible in conse- quence of acts in any way imputable to the owner. L. 55, § 2, D. locati (19, 2.) • • ■ If the occupation is only par- tial, the lessee is not bound to pay the entire rent. Whether he has a right, in case of such partial eviction occur- ring through casus, to throw up the contract, depends on whether his occu- pation has been materially hindered. But mere trivial depreciations, though coming through casus, are not cause for abatement of rent ; L. 27 pr. D. lo- 471 § 319.] CONTRACTS. [CHAP. XIV. law recognizes an exception where the thing bargained for is in the viossession of a public enemy. The reason Exception ' . . ., , in case of is that in such case delivery IS impossible, not merely pu icwar. ^^ ^^^ person contracting, but to all other persons within the same jurisdiction.' But under our present sjstem of international law, by which the right of suit is only sus- pended during war, and revives on jieace,^ the Roman rule in this respect must be viewed as moditied. Impossibility can- not be predicated of an act which may be possible to-morrow.' — Ill England expulsion by a j)uhlic enemy has been held no deteuce to an action for rent.* And it has been held in this country that an exception in a jiolicy of insurance that no action sliall be sustained unless begun within twelve months after loss, is not expanded bj' war between the countries of the contracting jjarties, so as to extend the right to sue till the close of the war.* But a lessee who was expelled by the military authorities, during the late civil war, from the leased estate, his lessor being in the insurgent territory, was held not liable for rent due for the period during which he was dispossessed.* — It is a defence to an action against a common carrier that the goods were seized by a public enemy, or by a pirate appearing in sufficient force to exact submission,' there being no neslitrence or default on either side. But if the ex- cati (17, 2) ; a fortiori not of rescinding ' Semmes v. Ins. Co., 13 Wall. 158. of contract. Temporary impossibility, 6 Gates c. Goodloe, 101 U. S. 612. so far as it excludes occupation, is, as As to effect of war in suspending re long as it lasts, to be placed on the medy, see supra, § .305. Pollard c. same footing as absolute impossibility, Sehaffer, 1 Dall. 210, rules that de- and when the exclusion is for a ma- struction of premises by a public terial length of time, the contract can enemy excused from contract to deliver be rescinded. Mommsen, op. cit. ZH. up in good repair. See this case dis- ' L. 72, § 1. D. de contr. empt. (18, tinguished from destruction by fire in 1). Hoy V. Holt, 91 Penn. St. 91. 2 Iiifrn, § 473. 7 Infra, §§ 820, 329 ; Magellan Pi- ' Mommsen, op. cit. 16. rates, 18 Jur. 18 ; 25 Eng. L. & Eq. ■i Paradine v. .Jane, Aleyne, 26. But 595 ; Hubbard r. Harnden's Ex., 10 R. see Harrison v. Meyer, 92 D. S. Ill ; I. 244 ; Lewis v. Ludwick, 6 Cold. 368 ; Bayley r. Lawrence, 1 Bay, 499. That Weakley v. Pearce, 5 Heisk. 401 ; Nash- trading with public enemy is illegal ville, etc. R. R. <■. Estis, 7 Heisk. 622 ; during war, see infra, § 473. Sugarman v. State, 28 Ark. 142. 472 CHAP. XIV.] IMPOSSIBILITY. [§ 321. posure to a public enem}' was through the negligence of the party charged, vis major is no defence.' § 320. A bailee or other depositary of goods is not regarded as an insurer, but is responsible only for loss caused by his own negligence or mistake; and is not liable fence to if he has shown the diligence usual with good busi- baiiee^""^^' ness men under similar circumstances.^ A ware- houseman, it has been said, by the custom of a particular trade, may be liable as insurer.^ But this custom must be brought home to the parties so as to make part of the con- tract. Ordinarily a warehouseman is on]y liable for losses produced by a lack of those precautions which are undertaken by prudent storers of goods under similar circumstances.^ And this has been held in respect to bailees of horses ;° even the buyer of a horse with a right to return on breach of war- ranty not being divested of the privilege of rescission by the intermediate injury of the horse through casus.^ § 321. We have elsewhere seen that impossibility is no defence to an action on a contract in the nature of a guarantee.^ This is eminently the case with guar- and other antees that third parties should do a particular f"f™g^^bv thing.' It is otherwise when the third party is cn.m.fOT 1 ■ -r-T.-ii necessity. prevented trom doing the specined thing by the action of the legal authorities having jurisdiction, as where a party for whom bail have entered into a recognizance has been convicted and imprisoned by a tribunal of the state having jurisdiction of the recognizance, and is thus prevented 1 Wh. on Neg. § 561 ; Ford v. Cotes- 278 ; Scott v. Bank, 12 Penn. St. 471 ; worth, L. R. 4 Q. B. 127 ; Colt v. Mc- and cases cited Wh. on Neg. § 461 et Mechen, 6 Johns. 160 ; Railroad Co. u. seq.; 569 et seq. Reeves, 10 Wall. 176 ; HoUaday v. ' North Brit. Ins. Co. v. London Ins. Kennard, 12 Wall. 254; Denny v. R. Co., L. R. 5 Ch. D. 569. R., 13 Gray, 481 ; Morrison u. Davis, ■> Wh. on Neg. §§ 573 et seq. 20 Penn. St. 175 ; South. Ex. Co. v. 5 Leake, 2d ed. 707 ; Williams o. Craft, 49 Miss. 480. Lloyd, W. Jones, 179. 2 Coggs V. Bernard, L. Ray. 909 ; « Head v. Tattersall, L. R. 7 Ex. 7. Gihlin v. McMuUen, L. R. 2 P. C. 317 ; ' See supra, § 311. Doorman u. Jenkins, 2 A. & E. 256 ; " Lamb's case, 5 Co. 23 b ; Thorn- Field u. Brackett, 56 Me. 121 ; Foster bury v. Bevill, 1 Y. & C. 564 ; Lloyd v. V. Bank, 17 Mass. 500 ; Smith v. Bank, Crispe, 5 Taunt. 249 ; see M'Neill v. 99 Mass. 605 ; Edson v. Weston, 7 Cow. Reed, 2 Moore & S. 89 ; 9 Bing. 68. 473 § 321.] CONTRACTS. [chap. XIV. from attending court in compliance with the conditions of the recognizance.' The death, also, or mortal sickness of the principal, is a bar to the suit;^ though not, it is said, the prin- cipal's insanity, in cases where a habeas corpus could be main- tained to bring him into court f though a commitment by the proper local authorities to an insane asylum would be a defence.^ That the principal has been convicted and impris- oned by a court of the same state having jurisdiction, has been repeatedly ruled to be a defence ;° though it is otherwise when the imprisonment is for a short duration, which is ground only for a continuance in a suit against the bail.^ Innirisonment of the principal in another state from that in which the bail is entered is no excuse, since the principal could, by going to another state, in this way relieve himself at his own will f though such is not the case when he is sur- rendered by the state having jurisdiction of the bail bond.' The rule is, that " the bail is entitled to relief when the sur- render is made impossible by the act of the law, where the plaintifi' loses nothing by the omission of any act which it is in the power of the bail to perform; the governing principle being that as the power of making the surrender is taken away by an act of the law, the obligation to surrender is thereby discharged by law ; as the surety cannot, by law, sur- render his principal, he cannot, by law, be held answerable for not surrendering."' Hence, compliance with the bond cannot be said to be impossible when the principal could have 1 See supra, § 305. v. Griffin, 3 Harring. 333 ; Caldwell's 2 People .'. Manniiig, 8 Cow. 297; case, 14 Grat. 698; State (;. Adams, 3 People , . Tubbs, 37 N. Y. 586 ; Scully Head, 259 ; Belding .-. State, 25 Ark. u. Kirkpatrick, 79 Penii. St. 324; 315 ; Cooper r. State, 5 Tex. Ap. 215. Mather v. People, 12 111. 9 ; State o. 6 phcenix Fire Ins. Co. v. Mowatt, 6 Cone, 32 (ia. 331. Cow. 599. That imprisonment of a 3 Adler u. State, 35 Ark. 517. See principal by a provost marshal during Hamilton o. Dunklee, 11 N. H. 172; the late civil war excused the bail, see Brandt on Suretyship, § 428. Com. v. Webster, 1 Bush, 616. * Fuller r. Davis, 1 Gray, 612. ^ See supra, § 306. 6 Way V. Wright, 5 Met. (Mass.) s state r. Allen, 2 Humph. 258. 380 ; People v. Bartlett, 3 Hill, 570 ; 8 Van Syckel, J., Steelman v. JIattix, Wilhelm c. Caul, 2 W. & S. 26 ; Cauby 38 N. J. L. 247. 474 CHAP. XIV.] IMPOSSIBILITY. [§ 321. complied with its stipulation but neglected to do so.^ — A voluntary enlistment in the army by the principal does not relieve the bail any more than would any other voluntary escape by the principal.^ Compulsory conscription of the principal, however, excuses the bail.^ — Escape, before there has been a formal surrender, does not discharge the bail,* though it is otherwise when there has been a formal surrender made and accepted.' — When the principal, as is alleged, has fled from mob violence, this is no defence, so it is maintained, unless the government is unavailingly appealed to for protec- tion. In a case in Kentucky, in 1881, where this defence was interposed,' it was said by the court: "The evidence shows that at that time the county of Elliott, in which the proceed- ings were had, was overrun by a band of so-called regulators, that they had killed several persons and had shot and seriously wounded the accused, and had threatened to take his life whenever they might find him, and that by reason of these threats the accused was compelled to abscond. It is contended by counsel that as it is the duty of the Commonwealth to protect the lives of her citizens, it ought not to require the citizen to discharge any duty or to comply with any obliga- tion when such protection is not extended, and that the bail should be exonerated as in case of sickness of the accused, which renders it physically impossible for him to attend in response to his bond. This ought unquestionably to be true when the constituted authorities are unable or indisposed, when properly called upon, to protect the citizen in the dis- 1 Ibid. See State v. Merrihew, 47 stances tlie suit against the bail may be Iowa, 112. See generally as to liabil- continued, see Gingricb v. People, 34 ity on bail bond, Brandt on Suretyship, 111. 448. §§ 428 etseg.; Bailey v. De Crespigny, ' Alford v. Irwin, 34 Ga. 25. L. R. 4 Q. B. 180 ; Pres. Ch. v. New » State v. Tiernan, 39 Iowa, 474 ; York, 5 Cow. 538 ; Bennett u. Wool- Lee v. State, 51 Miss. 665 ; State k. folk, 15 Ga. 213. For analogous cases, Norment, 12 La. 511. see supra, § 305. ^ See Com. u. Coleman, 2 Met. (Ky.) 2 Harrington u. Dennis, 13 Mass. 93 ; 382; Askins v. Com., 1 Duvall, 275; State V. Beany, 13 Md. 230 ; State v. Smith o. Kitchens, 51 Ga. 158 ; and Scott, 20 Iowa, 23 ; Shook v. People, 39 oases cited, Brandt on Suretyship, § 111. 443; Huggins u. People, 39 111. 433. 241 ; contra, People v. Cook, 30 How. ^ Weddington o. Com., 3 Ky. Law Pr. 110. That under such oiroum- Rep. 441. 475 § 322.] CONTKACTS. [CHAP. XIV charge of the duty, but in this case appellants made no appli- cation for protection to the accused, and do not in any way show that the authorities were either unable or unwilling to extend the protection necessary to enable the accused to appear. It does not come in the category of cases where the accused is prevented from appearing by the act of God." — On the same reasoning, permanent illness of an apprentice, making his performance of his covenants impossible, is a de- fence to his father when sued as surety.^ A person, also, who undertakes to introduce another person into a partnership of which he is a member, guarantees the assent of the other members of the partnership to the introduction.^ — " I entirely agree witli the principle that where a covenant is made that a stranger shall do or accept particular acts, that covenant must be performed at the peril of the covenantor."^ § 322. With alternative and generic obligations impossi- „ , bility is not a defence, unless it meets every contin- Subsequent •' , ' •' impossibii- gency in which the work promised could be per- formance a formed. An example of the generic obligation is suit 0*1^ *° to be found, in the Roman law, in the promise of contract ovevae, when the day in which the operae are to be for work. c t ■ ■ performed is not designated, or the person who is to perform the operae is left undetermined.* In the last case ■applies the maxim genus non perit ; impossibility caimot be a defence, since it cannot be said that obtaining a laborer of an indeterminate class is impossible. — It may be, however, that a contract for work is made dependent upon some particular thing which has ceased to be." Transport, for instance, is to be effected in a particular ship, which ship alone has contri- vances adapted to the due conveyance of the particular kind of goods to be carried. The loss of this ship, without fault of the party so contracting, would be a defence to a suit for ' Boast u. Firth, L. R. 4 C. P. 1, » Bayley, J., Hughes v. Humphreys, cited supra, § 300 ; infra, §§ 323, 613. 6 B. & C. 680 ; and see supra, § 311. See Simeon v. Watson, 46 L. J. C. P. * L. 54, § 1, D. de V. 0. ; Mommsen, 679 ; Caden v. Farwell, 98 Mass. 137. op. cit. 53. * M'Neill V. Reid, 9 Bing. 68 ; Leake, * See for cases where covenants to 2d ed. 698. mine are vacated by failure of miner, 476 supra, § 298. CHAP. XIV.] IMPOSSIBILITY. [§ 322. failure in carrying these goods in this way.* "Where, in other words, the sole agency of performing a contract for work is destroyed, without fault of either party, there is a cause of action to neither.^ Hence, a fatal contagious disease at a place where a workman contracted to work, may be set up as a defence to a suit against him for non-performance of his con- tract.^ It is otherwise, however, when other modes of per- forming the work can be found, though at great additional cost to the promisor ; and, hence, the burning of a house under construction is, as is elsewhere seen, no defence to a suit against a contractor for non-performance of his contract to build the house.* — Hiring of labor {locatio operarmn) has a close relationship, in this connection, so Momrasen argues,' to hiring of things. It is of the essence of both contracts that they should not be regarded as fulfilled until the work is performed. The transaction is to be completed in futiiro. "Opera in actu consistit; nee ante in rerum natura est, quam si dies venit, quo praestanda est ; quam admodum cum stipulamur, quod ex Arethusa natum erit." Nor is the likeness limited to this feature. The several parts of the service in the locatio ope- rarum corresponded with the several parts of the price paid in the same way as the several periods of the enjoyment of a thing hired correspond with the several parts of the price paid for the hiring. Hence, the duties of the employee, in the contract for labor, are divisible, as are the duties of the lessee of a thing. After a critical and elaborate review of the authorities to this effect, Mommsen states the conclusion to be that the employee {locator operarum), in cases where the further performance is broken up by casus occurring without his fault, cannot recover the price of services beyond those actually rendered; but that he can recover damages for his losses on the whole contract in all cases in which performance is arrested by the misconduct of the employer, or by the em- ployer throwing up the contract unless under the stress of > Mommsen, ut supra; see supra, § 308. ' Lakeman v. Pollard, 43 Me. 463. 2 Supra, § 300 ; Appleby v. Meyers, ■* Adams v. Nichols, 19 Pick. 275 ; L. R. 2 C. P. 651 ; Brumby v. Smith, 3 see infra, §§ 326, 714. Ala. 723. ' Op. cit. 353. 477 § 323.] CONTRACTS. [CHAP. XIV. necessity. On tbe other hand, the employee cannot recover for services whose performance became impossible without the employer's fault ; and, hence, when a laborer ia employed to work for a series of days in a particular building, the burning of the building stops the employer's liability for wages. In such case wages can only be recovered for the work actually performed. Whether, however, when the price is fixed for the entire period, time is the sole standard of reduction, de- pends upon the peculiar terms of the contract and the circum- stances of the concrete case. Frequently, in contracts of this class, there is a rising scale of prices, conditioned upon the assumed growing capacity of the employee. In such cases, the sum to be recovered by the employee, if the employer is held liable, may be larger than it would be if the contract price alone was followed. — In case of the employee's temporary sickness, then, if the wages are so much for each day's work, he can only recover for the days he was working ; though, when the wages are not so adjusted, but a salary is fixed for a specific extended period of time, then the inference is that short sicknesses are not to be deducted. Whether the con- tract can be rescinded depends upon whether the casus is such as to interfere with the future performance of the contract. The question in our own practice is hereafter distinctively considered.* § 323. Subsequent impossibility is a defence to a suit for a personal duty when the contracting party becomes, incapacity without his owu fault, incapable of performing his to°duty°not Contract. He may become actually incapable of exclusively business. Or, though he may not be thus incapable, personal. i r j he may not stand in a relation to the thing promised which enables him to dispose of it. Under the last head fall cases in which the party contracting has not the absolute con- trol of the thing he undertakes to alienate. This, according to the Roman law, does not afi'ect the validity of the obliga- 1 See infra, § 714 ; supra, § 311 ; and 25 Conn. 188 ; Wolfe v. Howes, 20 N. see Farron v. Wilson, L. R. 4 C. P. Y. 197; Alexander v. Smith, 4 Dev. 744 ; Knight v. Bean, 22 Me. 531 ; Hub- 364 ; Green v. Gilbert, 21 Wis. 395 ; bard v. Belden, 27 Vt. 645 ; Fuller u. and cases cited Benj. on Sales, 3d Am. Brown, 11 Met. 440 ; Ryan o. Dayton, ed. § 571. 478 CHAP. XIV.] IjiPOSSIBILITT. [§ 323. tion. "Siquis promittat (mihi rem) cujus commercium non habet : ipsi nocere, non mihi."' The damage is to fall on the party contracting to deliver a thing he was incapable of deliv- ering. This principle has been applied to contracts of ex- change,^ and of bailments generally'.' Subsequent loss of means to pay a debt, therefore, is no defence to a suit for the debt ; subsequent sickness is no defence to a suit to do a par- ticular thing in all cases where the thing could have been done by others than the promisor, and in which, therefore, it was not to be inferred from the contract that the agreement was only binding when capable of being performed by him personally.^ Hence, " when the thing or work can be done by another person, then all accidents are at the risk of the promisor."^ " Where a party contracts to do anything which does not absolutely require him to do it in person, sickness does not excuse : for he ought to have provided for it in the contract itself."^ It is otherwise, however, when the duty imposed is one that was to be exclusively performed by the promisor, and could only be performed by him.'' Where, therefore, the services promised are such as can only be ren- dered by the person promising, his subsequent intervening incapacity, for which he is not responsible, is a defence to an action against him for breach of contract. This rule was ap- plied in a suit against a pianist of peculiar excellence for fail- ure to perform at a concert from which he was kept by a » L. 34, D. de V. 0. (45-1). A sim- « Robinson v. Davison, L. R. 6 Ex. ilar ruling is contained in L. 49, § 3, 269 ; Boast v. Firth, L. R. 4 C. P. 1 ; D. de legat. (2, 31). Dickey v. Linsoott, 20 Me. 453 ; Knight « L. 1, § 1, D. rer. per. (19-4). v. Bean, 22 Me. 531. 3 L. 9, pr. L. 15, § 8, D. locati (19, 6 Miller, J., Wheeler u. Ins. Co., 82 2). See to same effect, Wilkinson u. N. Y. 550 ; citing Wolfe v. Howes, 20 Lloyd, 7 Q. B. 27 ; and supra, § 311 ; N. Y. 197 ; Clark ^. Gilbert, 26 N. Y. White V. Mann, 26 Me. 361 ; Leonard 279 ; Spalding u. Rosa, 71 N. Y. 40 ; V. Dyer, 26 Conn. 172. That insol- S. P. Alexander v. Smith, 4 Dev. 364. veucy is not a defence, see Lewis v. ^ Per cur.. Smith v. Ins. Co., Sup. Ins. Co., 61 Mo. 539; whether an as- Ct. Penn. '1882; 13 Rep. 607; citing signee can recover on an executory Scully v. Kirkpatrick, 79 Penn. St. 324. contract dependent on action by as- ' Dickey v. Linscott, 20 Me. 453 ; see signer, see infra, § 848. infra, § 848. 479 § 323.] CONTRACTS. [CHAP. XIV. dangerous illness.' And the same principle is applicable to an engagement by an actor of a particular type to play for the manager of a theatre a particular line of parts. ^ A contract, also, by R. with S., the proprietor of a theatre, to give a cer- tain number of performances, ceases to be obligatory on the supervening incapacity of the principal performer and chief attraction in R.'s company.^ This rule is a fortiori applicable in cases where the promisor in a personal contract dies.^ Entire incapacity, also, of a party to receive services, — e. g. tuition, — coupled with the non-rendering of such services, — is a defence to a suit for the price of such services.^ And when the person thus exclusively qualified to perform a particular service fails from sickness or other incapacity in performing the service, the promisee can rescind the contract.* "■ Where personal considerations are of the foundation of the contract, as in the cases of principal and agent and master and servant, the death of either party puts an end to the relation f though it has been held by several courts that acts bona fide executed for the principal, before notice of his death, bind his estate as against bona fide third parties.^ A partnership, also, is dissolved by the death of one of its members, notwithstand- ing that it is by its terms to continue for a period as yet unexpired.' In case of the sickness or death of a contractor, 1 Robinson v. Davison, L. R. 6 Exch. Spiers, L. R. 1 Q. B. D. 410 ; Knight 269 ; and see Spalding c. Rosa, 71 N. i. Bean, 22 Me. 531 ; infra, § 919. Y. 401 ; Stubbs v. R. R., L. R. 2 Ex. ' Farrow v. Wilson, L. R. 4 C. P. 311 ; Howell v. Coupland, L. R. 9 Q. B. 744 ; Blades ». Free, 9 B. & C. 167 ; 469 ; see infm, § 84s. Campanari v. Woodburn, 15 C. B. 400 ; ^ De Rivafinoli v. Corsetti, 4 Paige, Clarke u. Courtney, 5 Peters, 319 ; 264 ; see Lumley v. Wagner, 1 D. M. Uale r. Tappan, 12 N. H. 145 ; Marlett & U. 604; Hamblin u. Dinneford, 2 i.. Salkman, 3 Allen, 287; Saltmarslx Edw. 529. V. Smith, 32 Ala. 404 ; i'erris v. Irving, » Spalding v. Rosa, 71 N. Y. 40. 28 Cal. 645. •< Hall c. Wright, E. B. & E. 791. s Cassiday v. M'Kenzie, 4 W. & S. " Boast V. Firth, L. R. 4 C. P. 1 ; 282; Carriger u. Whittington, 26 Mo. cited supra, § 300 ; infra, § 613 ; Simeon 311 ; Ish r. Crane, 8 Oh. St. 520 ; 13 V. Watson, 46 L. J. C. P. 679 ; Stewart Oh. St. 576 ; see Wh. on Ag. §§ 103-1. w. Loring, 5 Allen, 306. That the other ' Lindley on Part. 2d ed. 492; party is discharged, see .Jackson v. Ins. Holme v. Hammond, L. R. 7 Ex. 218 ; Co., L. R. 10 C. P. 144 ; infra, § 613. infra, § 848. 8 Leake, 2d ed. 705 ; Poussard v. 480 CHAP. XIV.] IMPOSSIBILITY. [§ 323. bound by a personal service of this class, which service is to be performed and paid for in instalments, that portion of the work that has been completed before the incapacit}^ intervened is to be paid for either under the contract or on a quantum meruit.^ A master's death, also, terminates his liability on a contract of apprenticeship ;^ and a contract for the services of a farm bailiff, which by its terms is determinable by six months' notice, or paj'ment of six months' wages, is dissolved by the death of the employer, without leaving any claim on the part of the bailiff to be continued in the service, or for six months' ■wages.^ In the Roman law, not only death, but loss through casus of the capacity of the employee, is a defence on a contract to render particular services, as where an artist who undertakes to paint a particular picture loses the use of his hand by an accident. Temporary incapacity, however, only vacates the contract when it extends over the period within which the services are to be performed. Of course, such personal inca- pacity is not a defence when the work can be done by a sub- stitute, and the appointment of a substitute is practicable. — The circumstances, as is noticed by Mommsen,' from which it is to be determined whether a contract of service is distinct- ively personal are various. It is requisite to take into account, in such cases, the personal qualities of the parties, the custom in similar cases, the local usage under analogous circum- stances. The nature of the service itself is to be first con- sidered ; and this is brought prominently forward in L. un. § 9, C. de caducis tollendis (6, 51). — Some contracts derive a distinctively personal character from the peculiar legal rela- tions by which they are environed. Of these a marriage con- tract is an illustration ; a hindrance in the way of one of the parties being distinctively personal, a substitute not being 1 Stubbs V. R. R., L. R. 2 Ex. 311 ; ^ whinoup < . Hughes, L. R. 6 C. P. Fenton u. Clark, 11 Vt. 557; Patrick 78. As to apprenticeship, see infra, § V. Putnam, 27 Vt. 759 ; Clarke v. 603. Gilbert, 26 N. Y. 279 ; and other cases ^ Farrow v. Wilson, L. R. 4 C. P. cited in Wald's Pollock, 370 ; and see 744 ; infra, § 848. Whincup V. Hughes, L. R. 6 C. P. 78. ■> Op. cit. 72. VOL. I.— 31 • 481 § 323.] CONTRACTS. [chap. XIV. from the nature of things allowed.^ Insanity, therefore, is a defence to such a contract.' — Another illustration is to be found in cases where one party bears a peculiar personal rela- tion to the other party, involving duties such as the operae officiales which freedmen owed to their patrons.^ The princi- pal distinction, however, rests in the character of the work to be done. Some services are independent, from the nature of things, of the personal qualities of the employee, as is the case where A. agrees to pay a debt of B., or to buy an article for B. at a fixed price. The same may be generally said of mechanics. A man agrees to do a particular piece of car- penter work. The fact that he is taken sick does not relieve him if he has the opportunity to provide a substitute, but neglects so to do. On the other hand, a commission that requires peculiar artistic, literary, or scientific skill for its execution assumes that the work will be done by the specific employee, the substitution of another not being contemplated. Hence, when an author is employed to write a particular book for a publisher on a topic in which the author is an expert, or a specialist in surgery to perform a particular operation, sickness, producing incapacity, would be a defence to an action for non-performance, such sickness not being imputable to negligence. Certain parts of a particular work are distin- guishable in this respect — as a sculptor may delegate some portions of his undertaking to others, while portions requiring his distinctive touch he must execute himself. By Mommsen it is declared, as a general rule,^ that the greater the discre- tion given to the employee, the more exclusively is the com- mission to be regarded as personal. With regard to mechan- ics, we have the following:' "Inter artifices longa ditierentia est et ingenii, et naturae, et doctrinae, et institutionis. Ideo si navem a se fabricandam quis promiserit, vel insulam aedifi- candam, fossamve faciendam, et hoc specialiter actum est, ut suis operis id perficiat; fide jussor ipse aedificans vel fossam fodiens, non consentiente stipulatore, non liberavit reum." 1 See infra, § 324. i Op. cit. 77. 2 L. un. § 9, C. de cad. toll. (6, 51). 6 l. 31^ d. de solut. (46, 3). Ulp. 3 L. 9, § 1, D. de operis liijert. 1, 7, Disputal. — Mommsen, op. cit. S2. (38, 1). 482 CHAP. XIV.J IMPOSSIBILITY. [§ 324. In this passage the various gradations of skill in mechanical industries are expressly noticed ; but at the same time it is treated as settled that the right of an employee to substitute another in his place exists unless otherwise expressly stipu- lated. And it is elsewhere directly stated that he who under- takes an ojMS, or a piece of job-work, may employ others to do it in his place.^ Hence a workman engaged in such a task must, if personally hindered, find some one as a substitute ; nor, if such substitute can be found, can he set up his personal hindrance as a defence, no matter how inevitable was the casus that hindered him. This, of course, is subject to the qualification that no such duty of substitution exists when the employee was selected on the ground of distinctive quali- fications of high grade, being the object of special confidence from the employer, and with no power of delegation given him in case of his incapacity to act. — As will be hereafter seen, the question whether the assignee of an executory con- tract can recover depends upon whether the duty is one which the assignor alone can perform.^ § 324. A person who, knowing himself to be incapable of marriage by reason of a prior marriage on his part, incapacity of which the woman to whom he is engaged was fo'' ""»'- . , D = riage a de- ignorant at the time ot the engagement, is liable to fence to an an action for damages for breach of promise,^ though me^nt'^to the more proper form of action would be an action ™^''''y- for deceit. As death of either engaging party is a bar to such a suit, the executor of a deceased party acquires no right, and is exposed to no liability even when the breach of prom- ise was before death.^ — In such suits the defendant cannot object that performance of the engagement was not demanded from him by the other party .= — Whether a subsequently ac- cruing incapacity to marry is defence to an engagement to marry was mooted in England iu a case in which the Queen's ■ ' L. 12, § 6, D. de usu et habit, ward u. Littlewood, 5 Ex. 775 ; and (7, 8); L. 48, pr. D. locati (19, 2); oases cited in/i-a, §§ 575, 606. and other passages cited in Mommsen, » Chamberlain v. Williamson, 2 JI. op. cit. 82. & S. 408. 2 See infra, § 848. s /„yra, §§ 575, 606. ' Wild V. Harris, 7 C. B. 999 ; Mill- 483 § 324.] CONTRACTS. [CHAP. XIV. Bench was equally divided, and in which a mnjority of four to three in the Exchequer Chamber held that bodily disease making a man unlit for marriage is not a defence to a suit for breach of promise.' It was not a condition, so it was ruled, to the marriage contract that there should be a state of health "as makes it not improper to marry." The conclusion of the majority rests on two positions: — first, that the defendant's bad health made marriage not impossible, but only impru- dent ; secondly, that the social position incident to marriage, is a primary object with a woman in marrying, and that a person promising to give this position to a woman would be bound to malvC the promise good, though he failed in other qualifications. As to the first position it may be observed that, if "imprudence" is a defence to a suit for breach of promise of marriage, then there are few suits of this class that could be maintained. But supposing it should appear, as a matter of fact, that the defendant was physically impiotent, is the promise one he ought to perform, and for non-performance of which he should be compelled to pay damages ? On this point, Mr. Pollock^ justly observes, that "it cannot be main- tained, excepit against the common understanding of man- kind, and the general treatment of marriage by the law of England, that the acquisition of legal or social position by marriage is a principal or independent object of the contract. Unless it can be so considered, the reason cannot stand with the principle affirmed in Geipal v. Smith,^ thatwhen the main part of a contract has become impossible by an excepted cause, it must be treated as having become impossible alto- gether. The decision itself can be reviewed only by a court of ultimate appeal ; but it is so much against the tendency of the later cases that it is now of little or no authority beyond the pjoint actually decided, which, for the obvious reasons in- dicated in some of the judgments, is not at all likely to recur." To this, it may be added, that if impotency is a ground for annuljing a marriage, no engagement to marrj' should be held binding on a person who after the engagement ' Hall V. Wriglit, E, B. & E. 740 , 2[l 2 SJ ed. 393. L. J. Q. B. 43. 3 L. R. 7 Q. B. 404. 484 CHAP. XIV.J IMPOSSIBILITY. [§ 325. turns out to be impotent, or whose health is such that mar- riage would be likely to have a physical action destructive of life. A luoman would not be bound by a promise to marry under such circumstances ; it is hard to see why a man should be held bound if it should appear as a matter of fact, that his life would be imperilled by sexual cohabitation, or if 'sexual cohabitation was impossible to him. Of course, a party who entered into an engagement of marriage cognizant of such circumstances would be liable in an action of deceit.^ § 325. It is elsewhere observed that casus is no defence when it is induced by the misconduct of the party setting it up as a ground of impossibility, mark may be made on the question of subjective ^^fj^gfe'^Qee. incapacity. A party who by his misconduct makes himself incapable of performing a contract he has made, is liable in damages for such misconduct, even though the time , mi Incapacity, ^ ihe same re- when seif- 1 Supra, § 248. In Allen r. Baker, 86 N. C. 91, the defendant failed to fulfil a contract of marriage upon the ground that he was afflicted with a venereal disease which rendered him unfit for the married state. Hnld, that he would he answerable in damages if the disease was contracted subsequent- ly to the time of making the promise, or if before and he knew his infirmity was incurable ; but if it was contracted prior to thp promise and he had reason to believe it was temporary only, he would be excusable. The court said : "We cannot understand how one can be liable for not fulfilling a contract, when the very performance thereof , would in itself amount to n, great crime, not only against the individual, but against society itself. . . . The usual, and we may say legitimate, ob- jects sought to be attained by such agreements to marry, are the comfort of association, the consortium vitin, as it is called in the books ; the gratification of the natural passions rendered law- ful by the union of the parties ; and the procreation of children. And if either party should thereafter become, by the act of God and without fault on his own part, unfit for such a relation and incapable of performing the duties incident thereto, then the law will ex- cuse a non-compliance with the prom- ise — the main part of the contract having become impossible of perform- ance, the whole will be considered to be so." The court disapproved Hall r. Wright, which, however, seems to be supported by Boast t. Firth, L. R. 4 C. P. 8, where Montagu Smith, J., says : " In the case of a contract to marry, the man, though he may be in a bad state of health, may nerer- theless perform his contract to marry the woman, and so give her the benefit of social position, so far as in his power, though he may be unable to fulfil all the obligations of the mar- riage state ; and it rests with the woman to say whether she will eu force or renounce the contract." ' 2 Supra, § 312; infra, §§ 603, 716, 747, 901. 485 § 326.] CONTRACTS. [chap. XIV. for performance has not yet arrived. ^ Hence, where a business was to be paid for by instalments, dependent upon the amount of the profits, it was held an implied undertaking that the buyer should carry on the business, and that by discontinuing it, so as to prevent an account, he became liable in damages for the price.^ The action in such case is not for specific per- formance, but for damages for non-performance ; and, in such cases, it is not necessary for the plaintiff to demand perform- ance.' ITor in such case can the party disabling himself set up a technical default on the other side.'* § 326. The fact that a thing on which work is expended, as Work to be ^ divisible contract of labor, has been destroyed paid for, without fault of either party, before the work is thOUl;li _ J: ''_' thiny- Complete, is no defence to a suit for the payment of issubse- the work so far as done,' nor can, a fortiori, the ' AV aid's Pollock, ut supra, 371, citing Leake on Contracts, 351, 4lj0 ; Newcomb «. Brackett, 16 Mass. 101 ; Buttrick r. Hol.len, 8 Cush. 233 ; Harriss r. Wil- liams, 3 Jones, L. 483 ; S. P., Beswiek . . Swindells, 3 A. & E. 883. ^ Telegraph Despatcli Co. v. McLean, L. R. 8 Ch. 658 ; Maclure ex parte, L. R. 5 Ch. 737. ' Infra, §§ 575, 606. J Infra, § 606. 5 hifrn, § 714 ; Garretty c. Brazell, 34 Iowa, 100 ; Schwartz r. Saunders, 40 111. 18 ; Rawson r. Clark, 70 111. 656 ; Cook .'. iMcCabe, 53 Wis. 250 ; Hollis c. Cliapman, 36 Tex. 1. Tliat subse- quent impossibility of performance is a defence to a contract of work, see supra, § 322. In Cook v. McCabe, ut supra (see statement in 25 Alb. L. J. 246), tlie plaintiffs, wlio were builders, were to assist in building a house for the defend- ant, and as their special share were to do all the mason work thereon, and such building work as defendant was not to do, and to furnish such material as de- fendant was not to furni.slu Defendant was to furnish some of the material for the mason work, and to haul certain 486 of that furnished by plaintiffs. They were not to do any of the carpenter or joiner work or any of the painting or glaziug. They were to have the i-ntire work done by them completed by Oc- tober 1, 1878, and were to receive their pay, which was to be $580, after the completion of the work. The contract stipulated for §251.1 damages in case either party failed to comply therewith. The complaint alleged that by reason of a neglect on the part of defendant to do his portion of the work, plaintiffs were hindered, but ■ that they had nearly completed tlie work they were to do on the 19th of October, 1878; that on the 20th of October, without fault on their part, the building was destroyed by iire. They asked to re- cover for the value of the work and materials they had furnished. The answer, among other things, denied performance of the contract. Judgment was given for plaintiffs, from which defendant appealed. This was affirmed by the supreme court. From the opin- ion of Cassaday, J., the following pas- sages are extracted : — " So ' where a person contracted to CHAP. XIV.] IMPOSSIBILITY. [§ 826. money paid by the owner to the operative for such quentiy de- partial performance be recovered baek.^ The ques- ^ ™^'' build a house on the land of another, and the house was, before its comple- tion, destroyed by fire without his fault, it was held that he was not thereby discharged from his obligation to fulfil his contract.' Adams v. Nich- ols, 19 Pick. 275. ' ' Such cases are distinguishable from one where the contractor agrees to re- pair another's house already built, and it burns before completion of the repairs. Lord v. Wheeler, 1 Gray, ■2S-1 ; Wells i. Calnau, 107 Mass. 517. But the case at bar is not one of an entire contract to complete an entire building. It is more like Brumby u. Smith, 3 Ala. 123, in which it was held that ' where a workman agrees to com- plete the carpenter's work on a house, and to receive a certain sum on the completion of the work, his employer furnishing the materials, and the house and materials were destroyed by fire, without the fault of the workman, the house being in the possession of the employer, the workman could not re- cover a pro rata compensation for the work actually done. ' "The opinion in that case is based upon Cutter v. Powell, 6 Durnf. & East, 32U, and Menetone v. Athawes, 3 Bur- rows, 1592. In Cutter v.. Powell, the sailor was to be paid the sum named, ' provided he proceed, continue and do his duty on board for the voyage ;' and that case, in the language of Allen, J., in Wolfe r. Howes, 20 N. Y. 200, ' is distinguishable in this : that by the peculiar wording of the contract it was converted into a wagering agreement, by which the party, in consideration of an unusually high rate of wages, undertook to insure his own life, and to render at all hazards his personal service during the voyage, before the completion of which he died.' "Lord Kenyon, in deciding Cutter u. Powell, refers to the peculiar terms of the contract, and says ' it was a kind of insurance.' Page 324. See Taylor u. Laird, 25 L. J. Ex. 329. In the other case referred to — Menetone v. Athawes — the shipwright took the ship into his own dock for repairs, the owner agreeing to pay a sum named for the use of the dock, and also for the repairs ; and it was held that ' the value of repairs may be recovered though the ship be burnt in dock.' "In Niblo (.. Binsse, 3 Abb. N. Y. App. Dec. 375 ; S. C, 1 Keyes, 476, it was held that ' if the owner of a build- ing contracts for labor upon it, he is under an implied obligation to have the building ready and in a condition to receive the labor contracted for ; and if, before the work is completed, the building is destroyed by fire, without the fault of the contractor, the owner is in default, and the contractor can recover for all that was done up to the time of the Are.' In that case, as well as this, the time of performance had been extended by the mutual assent of the parties to the contract. Schwartz V. Saunders, 46 111. 18, was a case where ' the plaintiff entered into a con- tract with the defendant to do the car- penter work and furnish the materials therefor upon a brick building ; the mason work was to be done by another and independent contractor. After the brick work was nearly completed and a part of the carpenter work done, the brick walls were blown down. Held, that the loss of the carpenter work fell ' Anglo-Egyptian Nav. Co. cussed infra, § 745. , Rennie, L. R. 10 C. P. 271. See this case dis- 487 326.] CONTRACTS. [chap. XIV. tion, under such circumstances, depends upon the divisibility of the contract. If the contract be divisible, and if a part of upon the defendant.' The court prop- erly distinguished the case from some of the cases cited above; on the ground that ' the plaintiff had not undertaken to erect and finish this building and deliver it.' " In Rawson v. Clark, 70 111. 656, the contractors agreed to manufacture and put into a building, then in process of construction, certain iron work, but wcri" prevented from completing their contract by the building being de- stroyed by fire without their fault, and the court held they could recover pro tanto, and witliout performing the bal- ance of their contract. "HoUis V. Chapman, 36 Tex. 1, was a case where the plaintiff, a carpenter, undertook to furnish materials and do the wood work necessary to finish the defendant's brick building, and to turn over the building complete by a given day, for a specified gross sum. When the plaintiff had nearly completed the work, the building was destroyed by fire, without his fault, and the court held that the plaintiff was entitled to recover for the materials furnished and work done hy him. Stress was there laid upjon the fact that the contract was conditional — that is, dependent upon the execution of another con- tract — and hence it was held to he ap- portionable, and the contractor entitled to a pro rata pay for his work. "The facts stated clearly distinguish the case from Jackson v. Cleveland, 15 Wis. 107, and all the other cases cited by the counsel for the appellant, unless it is Brumby v. Smith, 3 Ala. 123, and that, in our judgment, is not sustained by principle or authority, and should, therefore, be disapproved. Upon prin- ciple as well as the authorities cited, 488 we are induced to hold that — (1) Where there is a positive contract to do a thing, not in itself unlawful, the con- tractor must perform it or pay damages for not doing it, although in conse- quence of unforeseen accidents the per- formance of his contract has become unexpectedly burdensome or even im- possible. (2) But this rule is only applicable when the contract is positive and absolute, and not subject to any condition, eitlier express or implied. (3) Where from the nature of the con- tract it appears that the parties must, from the Ijrginning, have known that it could not be fulfilled, unless, when the time for the fulfilment of the con- tract arrived, some particular specified thing continued to exist, so that when entering into the contract, they must have contemplated such continuing existence as the foundation of what was to be done ; then, in the absence of any express or implied warranty that the thing shall exist, the contract is not to be construed as a positive con- tract, but as subject to an implied con- dition that the parties shall be excused in case, before breach, performance be- comes impossilile from the perishing of the thing without default of the eon- tractor. (4) Where, as here, one hav- ing nothing to do with the painting, glazing, carpenter or joiner work, con- tracts to furnish materials for tin; ma- son work of a building and perform the labor thereon, except that the owner, for whom the same \ras to be constructed, was to furnisli upon the grouud all the sand, stone, and a cer- tain quantity of lime, and haul all the brick, and the building, not being in the exclusive possession of such con- tractor, just before completion is de- stroyed by fire, without the fault of the CHAP. XIV.] IMPOSSIBILITY. [§ 326. it remains incomplete in consequence of the occurrence of an event for which neither party is responsible, then there may be a recovery for the. portion performed.' When, however, a contract is indivisible, the cessation of the existence of the object of the contract, if imputable to casus, is " a mis- fortune equally aifectin^ both parties, excusing both from further performance, of the contract, but giving a cause of action to neither. "^ — On the general principle above stated, a substitute soldier, who agreed to serve for a year, but was released by the termination of the war, was held entitled to the full amount to be paid, he having abandoned other em- ployments and devoted himself to this.^ But if a pupil is taken sick so as to be unable to attend a school in wiiicli he has engaged a place, this is an excuse for payment of the tuition fees, unless it should appear that the place was taken to the exclusion of some one else.^ — In the Roman law, contracts of labor {locatio operarura) by which a party agrees to work for a particular length of time, are dis- tinguishable from jobbing contracts {locatio operis), or con- tracts to work at a particular thing, in this, that in the latter the contract is usually indivisible. Until the work of the locatio operis is finished, there is no performance. Hence, if the thing to be worked at is casually destroyed before its completion (as where a tailor undertakes to make a coat out of materials which are casually destroyed before the coat is made), the employee has ordinarily no claim for compensation. On the other hand, contracts of this class (contracts to work at a particular thing) are subject, as soon as the work is com- pleted, to the rules applicable to contracts of sale of existing things. But before completion, such contracts of labor are likened to contracts for the sale of a res futura. And in the Roman law, work which is undertaken for a fixed price on materials furnished by the employee is treated as a sale. — contractor, the loss must fall upon the ' Infra, § 714. owner, especially where he has the ^ Appleby v. Meyers, L. E. 2 C. P. same insured at the time for his bene- 651 ; and see Adams v. Nichols, 19 Pick. fit ; and such owner cannot require the 275, cited supra, § 322. completion of the balance of the build- ' Leas v. Patterson, 38 Ind. 4G5. ing without restoring the parts which * Stewart v. Loring, 5 Allen, 306. were so destroyed." 489 § 326.] CONTRACTS. • [CHAP. XIV. When the contract is to make a particular thing of a par- ticular kind of material (e. g. a coat of broadcloth), then the casual destruction of stuff selected by the employee is no defence to a suit against him for damages for non-performance of his contract. The employee, in such cases, takes the risk of such destruction. It is otherwise when specific material is designated by both parties for the opus. If this material (e. g. a particular piece of cloth selected by the employer) is de- stroyed without the fault of either party, the employee, on his part, is not bound to pay damages to the employer to indemnify the latter for his loss in the non-delivery of the article, while the employee cannot recover wages for the time spent by him on the article, supposing the work to be indivis- ible. But, according to Mommsen,^ when the work is com- pleted, the risk passes to the employer, so that if then the fin- ished article is destroyed without the fault of either party, he becomes liable on his contract to pay for the labor expended bj' the employee. This is assuming that the work is done in compliance with the employer's directions, othenvise the con- tract is not complete, nor the risk transferred. — If acceptance is conditioned on approval, then the risk is ou the employee until approval.^ From this rule are to be excepted cases in which the delay in approval is caused by the negligence of the employer. The conclusion at which j\Iommsen^ arrives, ' 3d eil. 401. praestari locatori oporteat, quam quod 2 To this point the followiug citations sua ouraatque opera cousecutus esset." are made by Mommsen, p. 371: L. 3(3 — "Si prius quam locatori opus pro- D. locati (19, 2) Florentin. 1, 7 Instit. ; baretur, vi aliqua cousumptum est, L. 37 D. eodem Javolen. I. 8 ex Cassio. detrimentum ad locatorem ita pertinet, " Opus, quod aversione locatum est, si tale opus fuit, ut probari deberet." donee adprobetuv, oonductoris pericu- In the first case a distinction is taken lum est. Quod vero ita conductnra sit, between cases in which tlie work is ut in pedes mensurasve praestetur, assumed ;)^'r arecsiOHcm, so that it is to be eatenus conductoris periculo i>st, qua- delivered and submitted to approbation tenus admensum non sit : etinutraque as a whole, and cases in wliich the causa nocituruni locatori, si per I'um work is to be delivered by the foot or steterit, quo minus opus adprobetur measure. In both cases the employee vel admetiatur. Si tamen vi majore bears the risk until approval, condi- opus prius interciderit, quam adpro- tioned, when the contract requires, on baretur, locatoris periculo est: nisi si measurement, aliud actum sit : non enim amplius ' P. 377. 490 CHAP. XIV.] IMPOSSIBILITY. [§ 327. after an elaborate examination of the authorities, is that tlie employer, in cases in which the thing is destroyed by casus before completion, is not bound to pay the price of the labor, though it is otherwise as to destruction after approval. If the destruction occur after completion of the work, but before approval, the employee is only entitled to recover in case the work done was such as necessitated approval. — When delivery is to be in instalments {in pedes mensurasve), the measurement may be construed as an approval ; the employer takes the risk from the time of measurement under his direction ; so that, if after such measurement the thing measured is destroyed, he is bound to pay a proportionate price to the employee. The employer, therefore, in case of non-culpable destruction of the thing contracted for, cannot claim damages for the loss in- curred by him, and is not liable to the employee, in such case, until the M'ork is completed according to the terms of the contract. Liability, however, from the employer to the em- ployee, arises in cases in which the employer has given to the employee defective material, or has provided an unsuitable place. § 327. A common carrier, by our law, is an insurer of goods committed to him for carriage so far as to be re- sponsible in all cases of non-delivery, unless such non- carrier may delivery results from casus or vis major} ISTeither ^roulfd'of fire, unless communicated by lightnina: or some sim- """s b«t ./ o !-> not of Are. liar extraordinary interposition,^ nor theft,^nor hid- den rocks of which the carrier might have taken notice, are held to be casus} That seizure by a public enemy is a defence is elsewhere seen.' > Wh. on Neg. § . 562 ; Forward v. Bailments, § 528 ; De Rothschild v Pittard, 1 T. R. 27. Royal Mail, 7 Exch. 734 ; Amer. Steam- 2 V^^h. on Neg. § 554 ; Forward v. ship Co. v. Bryan, 83 Penn. St. 446. Pittard, 1 T. R. 27 ; Hyde v. Trent. Co., " Wh. on Neg. § 555 ; Williams v. 5 T. R. 389 ; Hollister v. Nowden, 19 Grant, 1 Conn. 487. Wend. 234; Condict v. R. R., 54 N. Y. 6 g^e supra, § 319 ; Wh. on Neg. § 500; Mershon v. Hobensack, 2 Zah. 560. In Williams u. Vanderbilt, 28 372 ; Am. Trans. Co. i . Moore, 3 Mich. N. Y. 217, the defendant undertook to 368 ; Cox V. Peterson, 30 Ala. 608 ; carry the plaintiff from New York to Hibler v. McCartney, 31 Ala. 502. San Francisco, via Panama. The ves- " Wh. on Neg. § 554 a ; Story on sel that was to have carried the plain 491 § 329.] CONTRACTS. [chap. XIV. is an alter- native still open, im- possibility does not exist. § 328. When there are several modes of performing a con- Wh th ti'act, the defence of impossibility cannot be set up as long as any one of these is open.^ The alterna- tive that is possible must be pursued,^ unless the alternative be so remote as apparently not to have been within the intention of the parties.' The same rule applies to bonds with alternative conditions.^ Where a lessee of coal mines covenanted to raise a certain amount of coal each year and pay a royalty, or to pay a fixed sum as rent whether the coal was produced or not, the rent was held due though the mine was worked out." § 3'-:!9. As in our modern practice the condition of a bond expresses the real indebtedness of the obligor to the au'impossi- Obligee, the penalty being merely cautionary, if the biecondi- condition turns out subsequently to be impossible, the bond itself is void. The obligation is dependent on the condition, and when the condition falls, the obligation falls." Hence, when the law of the place to which a recogni- zance of bail is subject, by imprisoning the principal, makes his delivery by the bail impossible, the recognizance ceases to ■ be obligatory.' And generally the bond is subject to the rules heretofnre presented as controlling contracts to do tilings which subsequently become impossible. On the other hand, tiff on the Pacific side was burned, without any fault or negligence of the defendant or his servants. It was held that this was no defence to the plain- tiff's suit, based on the damage sus- tained by him through his detention at Panama, since the defendant could have obtained, though it may have been with great difficulty, another ship. 1 Leake, 2d ed. 710; {n/iu, § (124; see The Tentonia, L. R. i P. C. 171 ; Jones V. Holm, L. E. 2 Ex. 335. 2 Barkworth o. Young, 4 Drew, 1 ; DaCosta c. Davis, 1 B. & P. 1142 ; Wil- liams r. Vanderbilt, 28 N. Y. 217, and cases cited, infra, § 624. 5 Barkworth v. Young, 4 Drew, 1. See Erie R. R. c. Express Co., 6 Vroom, 240. 492 * Mill Dam Foundry u. Hovey, 21 Pick. 417. 6 Bute V. Thompson, 13 M. & W. 4S7. ^ Infra, § 547, where the authorities are given at large ; 1 Wms. Saunders, 238 ; Brown v. Mayor of London, 9 C. B., N. S. 726; Poussard r. Spiers, 1 Q. B. D. 410; People u. Bartlett, 3 Hill, 570; Scully v. Kirkpatrick, 79 Penn. St. 324 ; Mizell ,•. Burnett, 4 Jones N. C. 240. If the non-possibility arise from the obligor's act, it cannot be set up as a defence. Beswick '■. Swindells, 3 A. & E. 881. See sujira, § 325. ' Taylor < . Taintor, 16 Wall. 366 ; Way D. Wright, 5 Met. 380 ; Fuller v. Davis, 1 (iray, 612 ; see supra, §§ 307, 321. Partial im- possibility a del'eiice 2iV0 tanto. CHAP. XIV.] IMPOSSIBILITY. [§ 330. it is laid doAvu in the old books that when the condition is on its face impossible, then the obligation is absolute.^ But sup- posing both parties knew of the impossibilit}- of the condition, the obligation, on the reasoning already given, cannot be re- garded as operative.^ § 330. So far as concerns even a non-culpable vendor, par- tial impossibility constitutes no defence. lie has contracted for a specific price to sell a particular thing. Events for which he is not responsible pre- vent him from, selling more than a part of this thing. If tlie value can be proportionally assessed, he cannot complain if he is compelled to deliver that which he is capa- ble of delivering at its proportionate price. To this he is bound. It is otlierwise with the purchaser. If he knew at the time of the contract that it could only be partially per- formed, then we have a right to assume that he expected to obtain only so much of the thing contracted for as could be delivered. This, however, cannot be supposed in cases where he was ignorant of this partial impossibility. It by no means follows that because he wanted the whole, therefore he wanted a part. In many cases a part would l^e useless without the whole ; in no case can it be assumed to be the object of a con- tract when the whole is contracted for. At the same time there may be cases in which the part which it is impossible to deliver is so insignificant that we may hold that the con- tract is not dependent upon its delivery.' In our own law, 1 Pollock, op. cit., 377, citing Co. Lit. Neratius ait, hano qiiestlonem multum 206, 6 ; Sliepp. Touch. 373. See Hughes interesse, quanta pars domus incendio V. Edwards, 9 Wheat. 489. consumptae permaneat ; ut si qiiidem 2 See supra, § 30. amplior domus pars exusta est, non 3 See iiifra, §§ 579, 605, 716, 899. compellatur emptor perficere empti- The following passage in the Pan- onem ; sed etiam, quod forte solutum dects is given by Mommsen (p. 164) as ab eo est, repetet. Sin vero vel cKniidia the leading authority on this topic: pars, vel minor quam dimidia exusta L. 57, D. de contr. empt. (18, 1), fuerit, tune coartandus est emptor vendi- Paulus I. 5, ad Plautium. " Domum tionem adimplere, aestimatione viri boni emi, cnm earn et ego et venditor com- arbitratu habita, ut quod ex pretio bustam ignoraremus — Nerva, Sabinus, propter incendium de cresoere fuerit Cassius, nihil venisse guamris area man- inveutum, ab hujus praestatione libe- ea<; pecuniamqnesolutamcondici posse refer. — § 1. Sin autem renAVor quidem ajunt. Sed si pars domus maneret, sciebat domnm esse exustam, emptor 493 330.] CONTRACTS. [chap. XIV. when a consideration is incapable of division, if a part per- formance is impossible, then, the whole consideration falling, autem ignorahat, nullam venditionem ■ stare, si tota domus ante venditionem exusta sit ; si vero quanta cnrnque pars aedificii reraaneat, et stare vendi- tionem et venditorem emptori quod interest restituere. § 2. Simili quoque modo ex diverse traotari oportet, ubi emptor qui dem sciebat, venditor autem ignorabat ; et hie enim oportet, et venditionem stare, et omne pretiam ab emptore venditori, si non depensum est, solvi : vel, si solutum sit, non repeti. § 3. Quod, si uterque sciebat, et emptor et venditor, domum esse exustam totam, vel ex parte, nihil actum fuisse, dolo inter utramque par- tem compensando : et judioio, quod ex bona fide descendit, dolo ex utraque parte veniente, stare non coucedente." In this extract we have considered several aspects of the question of im- possibility of performance through the burning of a house contracted to be sold. The following conditions are presented : — 1. The house is wholly consumed. But the impossibility of performance is only partial, as the area remains : " quamvis area maneat." Neverthe- less the case is treated as one of entire impossibility. The will of the pur- chaser is supposed to have been di- rected to the purchase of the house; the a7-ea is not his object, but the building. The contract, therefore, is invalid, not only where both parties were ignorant of the fire, but where the vendor knew it, but fraudulently concealed his kuowledge. 2. The burning is but jtrarticJ. Here the following distinctions are noticed by Mommsen : — («) Both parties are ignorant of the burning. If more than half is burned, then the purchaser cannot be com- 494 pelled to execute the contract. He has the choice of throwing it up or of con- firming it. If he elects the former course, he can recover the part of the purcliase-money he has paid ; nor can he, according to the Roman law, be indemnified for any loss he may have sustained in the transaction. If, how- ever, he elects to confirm the contract, then he is entitled to a proportionate abatement of the price. If half only, or less than half, is burned, then th' contract is held to be in force, the price being proportioually abated. (b) If the vendor alone knew that the house could not be delivered com- jilete in consequence of the burning, the contract binds him so far as con- cerns the part of the house that re- mains ; the purchaser is entitled to possession, with damages to compen- sate him for the loss of the part whose destruction was not communicated to him. The vendor has fraudulently concealed this partial burning. Had the purchaser known it, he either would not have made the purchase, or would have made it at a less price. And at the same time the purchaser has a right to call for a rescission of the entire contract on the ground of fraud. (c) Had the purchaser alone infor- mation of tlie burning, the contract would be binding so far as concerns the purchaser, who is compellable to pay the whole price. The case, it should be remembered, is that of a partial burning. The supposition in such case is that the purchaser, being a\\are at the time of the partial burn- ing, had his eye fixed, for the purpose of purchase, on the building as thus partially dilapidated. And though it is possible that he may have had other CHAP. XIV.] IMPOSSIBILITY. [§ 330. the contract will not be enforced.' It is otherwise when the con- tract is divisible.^ Thus a master of a vessel who has agreed to views, yet, if he suppressed the fact of which he was cognizant, he cannot afterwards take advantage of this sup- pression. But this only applies to a partial burning. If the building was wholly burned, and the purchaser was cognizant of the fact, and the object was simply possession of the building, then the whole contract falls for want of consideration. And in any view the vendor is bound, in all cases of partial burning falling under this head, to deliver, if required, to the purchaser the area with the remaining portion of the building. (d) Both parties knew that the house was consumed. (L. 57, § 3.) Here tlie contract is invalid through- out. Even if each party concealed his knowledge of the fact from the other, his fraud cannot give him a right of action. This conclusion, however, does not apply in cases where a part of the building is spared, and is the real object of the contract. Another passage is as follows : — L. 58, D. de contr. empt. Papin. (1-10). Quaest, "Arboribus quoque vento dejectis, vel absumptis igne dictum est, emptionem fundi uou videri esse contractam, si contempla- tione illarum arborum, veluti oliveti, fundus comparabatur ; sive sciente, sive ignorante venditore : sive autem emptor sciebat vel ignorabat, vel uterque eorum, haec optinent, quae in superioribus casibus pro aedibus dicta sunt." This is the case of the sale of a nursery-garden in which the trees were as much the principal object of the bargain as the superficies in the bargain of the sale of the superficies. Such being the view of the parties, it follows that, when the trees are blown down or burned after the closing of the contract, the same rule is applied as in. the former case of the burning of the house. It should be observed also that the ruling in respect to the burned house is to be limited to the particular state of facts. A house partially burned may be rapidly restored. There may, however, be cases where a destruction of a fraction may be really the destruc- tion of the whole ; and to such cases the ruling before us does not apply. There may also be cases in which restor- ation is impossible, as where a picture by an old master is partially burned. In such oases it would be absurd to talk of measurement as a mode of determining whether the purchasfr continues bound by the bargain ; the true test is the relation sustained in value to the whole by the part whose delivery is still possible. And, in ad- dition, it is essential to determine what is the primary object of the contract. If this can be effected, impossibility of performing a trivial and comparatively insignificant condition does not affect the validity of the contract, though it may touch the question of price. When the contract relates to a plu- rality of things, impossibility to deliver one of these things is determined by the rules above stated in all cases in which that thing was the principal object in executing the contract. If, however, the impossibility of delivery 1 Infra, §§ 579, 580, 714, 899 ; Adlard v. Booth, 7 C. & P. 108 ; Lord Wheeler, 1 Gray, 282. 2 Howell V. Coupland, L. R. 1 Q. B. D. 258 ; supra, 313-4. , 495 § 331. J CONTRACTS. [CHAP. XIV. load the vessel in a foreio;n port at a stipulated freight, but who is prevented by causes beyond his control from obtaining a complete cargo, can recover the freight earned by the cargo he carried. 1 And in case of part performance of a divisible contract of sale, the unperformed part of the contract having become impossible, the defendant is entitled to recover the pro- portion of the contracted price, subject to such abatement as is required by the imperfection of the work as completed.- § 331. It may be that the impossibility presents an impedi- j ii ii iTient that can never be removed, as where there is a itymayiie contract to deliver a thing which never can exist. permanent . ., -i. or tempo- On the other hand, the impossibility may be only ^"^' temjiorary, as where the contract is to sell a thing on which there is a temporary embargo.' On this question subtle distinctions have been taken in the Roman law. In the first place are distinguished those cases in which the parties, at the time of the completion of the contract, took no notice of the probable future cessation of the impossibility. On this point two opposite theories may be noticed.* We may on the one side hold to the nullity of all transactions which, at the time of contracting, cannot possiblj' be per- formed ; or we may, on the other side, hold that only those transactions are null in which the impossibility of perform- ance is permanent. But the first of these hypotheses cannot be accepted. Even supposing that the parties wore at the time ignorant of the temporary hindrance in their waj-, we have no right to assume as a rule that the contract would not have been made by them had the}^ been aware of the hin- drance. The vendee, for instance, in a case of sale, may find it far better for him to obtain the article he desires, though later than he expected, than it would be to lose it altogether; the vendor cannot complain if the delivery is not exacted from him until after the period first designated by him. Yet relates to suljordinate accessary arti- ' See Thornton v. Place, 1 Moo. & R. cles, then, when the parties were at 218; Mondel i'. Steel, 8 M. & W. S7U ; the time of the contract ignorant of Stewart - . Fnlton, 31 Mo. 59. As to the impossibility, the contract stands divisibility, see supra, § 233 ; iiifni, with an abatement of price. §§ 338, 511, 552, 899. I Ritchie -■. Atkinson, 10 East, 295; ' See supra, § 319. supra, §§ 313-4. * Mommsen, op. cit. 143. 496 CHAP. XIV.] IMPOSSIBILITY. {§ 331. to the hypothesis that the nullity of the transaction cannot be pronounced until the impossibility is determined to be abso- lute and final, there are also serious objections. The question of the validity of many contracts will remain in abeyance until some often remote contingencies are settled. The inten- tion of the parties usually is that the transaction in which they are engaged shall be either at once consummated or at once abandoned, so that their hands should be free for other engagements ; but this intention would be defeated if they should be tied up by a suspended contract until some distant future event shall determine whether they are bound or free. It is not good, also, for the business community that negotia- tions of this class should be kept in this condition of paralysis. To avoid the difficulties inherent in both these opposing theories, the Roman jurists hit upon an intermediate view which is expressed in the following passages: § 2. L. de inut. stip. (3,19). "Idem juris (aeque inutilis) est (stipulatio), si rem sacram aut religiosam, . . . vel publicam, quae usi- bus populi perpeiuo exposita sit, . . . vel liberum homi- nem, quem servum esse credebat, vel cujus commercium non habuerit, vel rem suam dari quis stipuletur. K"ec in pendenti erit stipulatio ob id, quod publica res in privatum deduci, et ex libero servus fieri potest, et commercium adipisci stipulator potest, et res stipulatoris esse desinere potest : sed protinus inutilus est."— L. 83, § 5, D. de V. 0. (45, 1), Paul. I. 72 ad edict. " Sacram, vel religiosam rem, vel usibus publicis in perpetuum re.lictain, ut forum, aut basilicam, aut hominera liberum, inutiliier stipular ; quamvis sacra prof ana fieri, et usibus publicis relicta in privatos usus reverti, et ex libero servus fieri potest." From these rulings we may infer, argues Mommsen,' that on the one side the mere possibility of a future removal of an impediment does not validate an impossible contract, and on the other side that the contract will not be a nullity when the impediment is merely transient. Thus it is expressly declared that the promise of a res publica is void only in those cases in which the thing promised is devoted " in perpetuum" to pub- ' Op. oit. 145. VOL. I.— 82 497 § 331.] CONTRACTS. [chap. XIV. lie use. And this view is still more distinctly asserted in the following: L. 85, § 1, D. de V. 0. (45, 1) Paulus 1. 12 ad Sabin. " Item, quod leges fieri prohibent, si perpetiiam causam serva- turum est, cessat obligatio." We have, then, to distinguish between transient and perma- nent impediments, and as to the line to be here drawn some differences of opinion exist. Savigny' holds that permanent impossibility cannot be assumed in cases in which the possi- bility of the event in question may be looked upon as some- thing within the range of ordinary expectation. Mommsen^ holds, on the other hand, that to make impossibility of per- formance a ground of nullity, such impossibility must be of a permanence which is continuous. A mere temporary inhibi- tion of sale, therefore {e.g. an embargo), would not fall within this category ; though it would be otherwise with a permanent inhibition (e. g. in case of laws prohibiting the sale of intoxi- cating or poisonous liquors or drugs). When, also, an obliga- tion depends upon the co-operation of a particular person, his temporary sickness would not annul the contract, though it would be otherwise with his permanent insanity. — What has been said applies only to those cases in which the contract contains no provisions as to its efficiency in case of the re- moval of an intervening impediment. It is competent for the parties to provide that certain things shall be done on the removal of an impediment which is on its face continuous, provided the contingency of such removal be not absolutely impossible, and provided that the contract is not against good morals, as is a contract to sell goods whose sale the state, on grounds of policy, prohibits.^ 1 Syst. III. p. 167. ing operation of contract, stipra, § 305, •' Op. cit. 147. infra, § 47ti. ' See as to effect of war in suspend- 498 CHAP. XV. ILLEGALITY, CHAPTER XV. ILLEGALITY. I. General Pkinciples. Unlawfulness and indictability not con- vertible, § 335. Void contracts distinguished from ille- gal, § 336. Where a contract is susceptible of an illegal and a legal construction, the latter is to be adopted, § 337. Illegal stipulations may be severed from legal, § 338. Divisibility of insurances, § 338 a. Concurrence of other considerations no defence, § 339. Party to illegal agreement cannot sue on it, § 340. So of money contributed to illegal pur- poses, § 341. And of price of goods contributed to ille- gal purposes, § 342. Mere knowledge that supply goes to illegal purpose does not preclude re- covery, § 343. Complicity and illegality may be infe- rentially shown, and by preponder- ance of proof, § 344. No distinction as to turpitude of offence, §345. Complicity in collateral matters not to be imputed, § 346. Illegality does not attach in rem, or to parties without notice, § 347. Landlord cannot recover rent of house to be illegally used, § 348. Parnership in illegal enterprise will not be enforced, § 349. Insurances on illegal voyages are void, and so of illegal sales, § 350. Subsequent securities infected with ille- gality, § 351. Executed contract cannot be overhauled on account of illegality, § 352. Complicity does not bar dupes or vic- tims, § 353. Money paid on executory illegal agree- ment may be recovered back, § 354. Goods deposited for an illegal purpose may be recovered back, § 355. But not when the mere supply was a crime, § 35p. Agent cannot hold back from principal on the ground that transaction was illegal, § 357. II. Violation op Statdte. Contract to violate statute is illegal, § 360. In conflict lex loci solutionis prevails, §361. Evasions of statute invalidate, § 362. Not necessary that penalty should be prescribed, § 363. Mere penalty imposed does not make contract illegal, § 364. Otherwise when act is made unlawful, § 365. Party protected by statute may sue, §366. Agreement cannot be made unlawful by subsequent legislation, or change of judicial opinion, nor can it be vali- dated by subsequent legislation, §367. Void contract cannot be validated, §368. 499 CONTRACTS. [chap. XV. III. Immorality. Agreements to induce immorality void, §370. So of immoral agreements amounting to indictable conspiracies, § 371. So as to agreements for libels, § 372. So as to agreements for illicit cohabita- tion, § 373. So as to goods or houses furnished for immoral purposes, § 374. IV. Cheating and Fraudulent Insol- vency. Agreement to defraud void, § 376. Conditions of voidability on ground of fraud, § 377. Contract of agent to his private profit void against principal, § 378. Agreements in fraud of bankrupt law void, § 379. Agreements in insolvency for prefer- ences void, § 380. v. Violation of Sunday Law. Sunday contracts in some states void, § 382. Statutes do not affect executed contract, § 383. So as to Sunday transfer of property, §384. When statute relates to "ordinary' calling it does not invalidate collate- ral contracts, § 385. Indorsee without notice not bound, § 386. Parties dealing bona Jide protected, § 387. Exceptions to be liberally construed, § 388. Sunday contracts cannot be ratified, § 389. Date may be corrected by parol, § 390. Duration of Sunday determined by statute, § 391. VI. Inteeference with Family Rela- tions. Agreements modifying marriage are void, and so are agreements for di- vorce, § 394. 500 Agreements providing for separation void, § 395. Contracts in restraint of marriage void, § 396. Partial limitations may be valid, § 397. Marriage brokerage contracts void, § 398. Marriage settlement in fraud of marital rights will be set aside, § 399. Father cannot divest himself of custody of children, § 400. VII. Injouey to Public Service. Agreement privately to influence legis- lature invalid, § 402. And so of agreement to influence execu- tive, § 403. Professional services as to pardon per- missible, § 404. Agreements to influence public oflicers void, § 405. And so of agreements to bribe voters, § 406. So of sales of public oflices, § 407. So of sales of trusts, § 408. So of agreements by administrators to give preferences, § 409. Agreement to withdraw from contesting election void, § 410. So of assignments of salary, § 411. Otherwise as to pensions, § 412. Agreement by public oflicers to receive private payment invalid, § 413. Railroad bargains as to stations may be invalid, § 414. Agreement ' to obstruct justice void, §415. Condition not to have recourse to law void, § 416. So as to agreement to finally arbitrate, §417. VIII. Chahpeety and Maintenance. Champerty is illegal sharing of profits of litigation, § 421. Maintenance is stirring up of unfounded litigation, § 422. Agreement to sell claims on shares not invalid, § 423. CHAP. XV.] ILLEflALITY. Purchase on speculation of suit void, §424. Parties jointly interested may bind themselves to expenses of litigation, §425. Attorney cannot purchase client's inte- rest, § 426. Agreement for contingent fees not ne- cessarily invalid, § 427. Barrister can recover for services, §428. Objection of maintenance cannot be set up by stranger, § 429. IX. Kesteaints of Trade. Agreement to surrender inalienable rights is void, § 430. Agreement binding party not to do business in a particular place may be sustained, § 431. No objection to such agreement that it is unlimited as to time, § 432. Reasonableness of restraint is a ques- tion of law, § 433. Must be valuable consideration, § 434. Party may be enjoined for breach of trust, § 435. Patent rights and secret processes may be sold without limitation, § 436. Parties may bind themselves to deal exclusively with each other, and employee may bind himself to give his whole services to employer, § 437. Agreements relieving from liability for negligence are void, § 438. Agreements limiting prices of labor void, § 439. Agreement not to labor except at a cer- tain price, or for a particular person, is invalid, § 440. And so of combination of employers, §441. Agreement to absorb a staple, or to fix prices, invalid, § 442. And so of agreement to absorb transpor- tation, § 442 a. Agreement to suppress bids at auction and public proposals void, § 443. Agreement to make joint bids not in- valid, § 444. Foreign revenue laws will not be en- forced, § 445. Intended invasion of home revenue laws does not vitiate contract when this is Tiot the consideration, § 446. X. Wagers and Gambling. Wagers on matters which ought not to be investigated are illegal, § 449. And so of wagers on matters which it is against the policy of the law to have acted on, § 450. By statute wagers are illegal, § 451. In this country tendency is to hold all wagers illegal, § 452. A contract to purchase stocks or other chattels without intention of deliver- ing is void, § 453. "Options" not necessarily illegal, § 453 a. Otherwise as to "corners," § 453 6. Securities given for gaming debts void, but money paid cannot be recovered back — price of gambling material, §454. By statute marine insurance without interest void, § 455. So of insurances of life, § 456. And so of fire insurances, § 457. Contracts based on lotteries illegal, § 458. XI. Usury. Usury laws local, and to be strictly construed, § 461. Between conflicting laws, that least onerous is to be applied, § 462. Law of place of performance controls, §463. Mistake in fact will not avoid contract, otherwise as to mistake in law, § 464. Stranger cannot avail himself of stat- ute, § 465. Contract not in itself valid not affected by subsequent usurious receptions, § 466. 501 § 335.] CONTRACTS. [chap. XV. Statute cannot be evaded by disguising or reconstructing loan, § 4ij7. Statutes do not apply to any transac- tions but loans, § 468. Borrower in usurious contract cannot defend without doing equity, § 46fl. Question one of exaction, not of pay- ment, § 470. XII. Teading with Ekemy ; Breach of Neutkality. Trading with public enemy void at common law, § 473. Rule applicable to belligerent insur- gents, § 474. License validates trade with enemy, § 473. Contract suspended during hostilities, §476. Insurance of enemy's ship and goods illegal, § 477. Alien enemies cannot sue during war, §478. Contracts for breach of neutrality void, § 479. Contracts to run foreign blockades not illegal, § 480. XIII. CoMPOuNnixG Offences. Contracts to compound offences void, §483. Distinction between felonies and mis- demeanors obsolete, § 484. Approval of magistrate does not legal- ize, § 485. Settlement of private suit not pre- cluded by the fact that criminal prosecution lies for same act, § 486. Question dependent upon local law of nolle prosequi^ § 487. Criminal prosecutions should not be used for collection of debts, § 488. I. GENERAL PRINCIPLES. § 335. As is elsewhere shown,^ immorality and indictabil- Uniawfui- i^-y ^'"^ '^'^t convertible terms, since there are many ness and immoral acts which are not indictable, and some indictabili- . . . ' ty are not indictable acts which are not immoral. We may also say that unlawfulness (meaning by unlawful- ness exclusion from legal aid) and indictability are not con- vertible, since there are in this sense many unlawful acts which are not indictable. Cheats by false pretences, for in- stance, are not indictable at common law; yet no one would pretend to say that a person cheating another by false pre- tences could recover at common law the fruits of his fraud. So fornication is not indictable at common law, yet at com- mon law no suit lies to recover the price of fornication. "A thing may be unlawful in the sense tbat the law will not aid it, and yet that the law will not immediately punish it."^ And as we will hereafter see more fully, it is not necessary to ^ Wh. Cr. L. 8th ed. § 14 a. L. R. 2 Ex. 236 ; adopted Pollock, 3d 2 Bramwell, B., Cowan u. Milbourne, ed. 250. 502 CHAP. XV.] ILLEGALITY. [§ 338. tract is dis- tinguished from il- legal. make an act unlawful, that a penalty should be imposed on its commission.^ § 336. A void contract is to be distinguished in this respect from an illegal contract. Money paid in furtherance voidcon- of an illegal contract cannot be recovered back.^ But it is otherwise as to money paid in furtherance of a contract which by statute is void, but not il- legal f as is the case with contracts void under the statute of frauds.* An illegal contract may be repudiated by either party ;° though a court of equity may impose terms on a party seeking to set aside a contract on the ground of illegal- ity. ° But as a rule, no case, either when presented by way of suit, or of set-off, or of defence, can be sustained on an illegal agreement.'^ § 837. It is not to be supposed that the parties to '^•^ere a *. contract is a contract intend in making it to violate the law ;' susceptible and, hence, " where a contract is capable of two con- and°a' iSlx structions, the one making it valid and the other f.o°struc- ' " tion, the second is to be adopted. be void, it is clear law that the first ought to adopted."^ § 338. "When there are several stipulations in a particular agreement, the fact that one of these stipulations is •1? 1 T ^ r- 1 , , Illegal stip- illegal does not deieat a recovery on the other, when uiations ' Infra, § 363. That agreements against public policy are void, see infra, §§ 394 et seq. ; Tracy v. Talmage, 14 N. Y. 162 ; Hull v. Euggles, 56 N. Y. 424 ; Stropes i;. Board, 72 Ind. 42. 2 rnfra, §§ 340, 741. ' Leake, 2d ed. 763 ; Jessopp v. Lut- wyche, 10 Ex. 614 ; Rosewarne u. Billing, 15 C. B. N. S. 316. As to dis- tinction between " void" and "voida- ble," see supra, § 28. * Pawle V. Gunn, 4 Bing. N. C. 445. 5 Cowan V. Millbourn, L. R. 2 Ex. 230. 6 Cork, etc. R. R. in re, L. R. 4 Ch. 762 ; see infra, § 340. ' Leake, 2d ed. 771 ; Thomson c. Thomson, 7 Ves. 470 ; Fivaiz v. Nich- olls, 2 C. B. 501 ; Begbie v. Phosphate Co., L. fi. 10 a. B. 491 ; Taylor ;.. Chester, L. R. 4 Q. B. 314; and cases cited infra, §§ 340. 8 Infra, § 655 ; Wh. on Ev. § 1249 Lewis 1'. Davison, 4 M. & W. 654 Mittelholzer v. Fullerton, 61 Q. B. 989 1022; Richards v. Bluck, 6 C. B. 441 Marsh v. Whitmore, 21 Wall. 178 Kellogg V. Miller, 2 McCrary, 395 ; Fos- ter f. Rockwell, 104 Mass. 167 ; Loril- lard V. Clyde, 86 N. Y. 387 ; Bessent v. Harris, 63 N. C. 542. ' Erie, J., Mayor of Norwich v. E. R., 4 E. & B. 397 ; Kenton Co. o. Bank Lick Co., 10 Bush, 529. See for other oases, infra, § 655. 503 § 338.] CONTRACTS. [chap. XV, maybe tj^e Stipulations are divisible, and the consideration severed ' • i V from legal, is not as a whole illegal.^ In other words, "in cases where the consideration is tainted by no illegality, but some of the conditions or promises are illegal, the illegality of those which are bad does not communicate itself to or contaminate those which are good, except where, in consequence of some peculiarity in the contract, its parts are inseparable or de- pendent upon one another."^ A fortiori^ when a transaction is separated by the parties into two agreements, one legal and the other illegal, the legal agreement can be enforced, and the transaction pro tanto sustained.' It is otherwise where the stipulations, legal and illegal, are so interwoven that the legal cannot be sustained without sustaining the illegal.^ "The general rule is, that where you cannot sever the illegal from the legal part of a covenant, the contract is altogether void ; but where you can sever them, whether the illegality be created by statute or by the common law, you may reject the bad part and retain the good."^ — So far as concerns the statute ' Green v. Price, 13 M. & W. 695 ; Price V. Green, 16 M. & W. 346 ; Bank of Australasia c. Breillat, 6 Mo. P. C. 152 ; Mayfleld «. Wadsley, 3 B. & C. 361 ; 5 D. & E. 228 ; Kerrisou v. Cole, 8 East, 231 ; M'Allen v. Churchill, 11 Moore, 483 ; Gelpke u. Dubuque, 1 Wallace, 175 ; Goodwin v. Clark, 05 Me. 280 ; Carleton u. Woods, 28 N. H. 290 ; Van Dyck v. Van Beuren, 1 Johns. 362 ; Leavitt v. Palmer, 3 N. Y. 19 ; Saratoga Bank v. King, 44 N. Y. 87 ; Hook V. Gray, 6 Barb. 398 ; Tracy u. Talmage, 14 N. Y. 162; Leavitt •■. Blatohford, 5 Barb. 9 ; Lange v. Werk, 2 Ohio St. 519 ; Widoe v. Webb, 20 Ohio St. 431 ; Hynda v. Hayes, 25 Ind. 31 ; Kembrough o. Lane, 11 Bush, 556 ; Newberry Bank v. Stegall, 41 Miss. 142; Rosenblatt v. Townley, 73 Mo. 536 ; Valentine v. Stewart, 15 Cal. 387. See Mallan v. May, 11 M. & W. 653 ; Benj. on Sales, § 505. That an illegal consideration vitiates see infra,. § 509 ; and see Carrigan v. Ins. Co., 53 Vt. 504 418, cited infra. As to divisibility in other cases see supra, § 233 ; infra, §§ 511, 552, 899. 2 Smith's L. C. 7th Am. ed. 681. 3 Odessa Co. v. Mendel, L. R. S Ch. D. 235. •" 1 Wms. Saund. 66, n. (4) ; Waite v. Jones, 1 Scott, 59 ; Neumau . . Neu- man, 4 !\I. & S. 66 ; Gaskell „. King, 11 East, 165 ; Wigg a. Shuttleworth, 13 East, 87 ; Ladd v. Dillingham, 34 Me. 316 ; Woodruff v. Hinman, 11 Vt. 592 ; Saratoga Bank u. King, 44 N. Y. 87 ; Rose V. Truax, 21 Barb. 361 ; Donallen u. Lenox, 6 Dana, 91 ; Langdon ji. Gray, 52 How. N. Y. Pr. 387; Frazier c Thompson, 2 Watts & S. 235 ; Tobey V. Robinson, 99 Rl. 222. That when the consideration is illegal this vitiates the contract, see infra, § 509. 5 Willes, J., in Pickering t-. R. R., L. R. 3 C. P. 250 (adopted in Leake, 2d ed. 781), citing Maleverer v. Red- shaw, 1 Mod. 35 ; Collins v. Blantern, 2 Wils. 351; Gelpke v. Dubuque, 1 CHAP. XV.] ILLESALITY. [§ 338, of frauds the same test is applied. When part of a contract is invalidated by that statute, and the contract is severable, then the invalidation is only pro tanto ; though it is otherwise when the contract cannot be severed.' Thus, where C, hav- ing contracted to do certain work for E., but the work being suspended on account of failure on E.'s part to pay, and T. having asked C. to finish the work promising to pay him in full, it was held that C. could recover from T. for the work done after the promise, but not for that done before the promise.^ And generally the fact that a deed contains powers or conditions that are illegal, does not avoid the deed unless these powers or conditions qualify the whole conveyance. If they are independent, and can be severed without injuring the contract, their illegality does not vitiate the other portions of the deed.^ — It is said by Mr. Pollock,'' that where any part of the consideration for a promise or set of promises is unlawful, the whole agreement is void. This undoubtedly holds good in cases in which the unlawful consideration permeated the whole contract, as where, for instance, as in the case put in the next section, the consideration of a promise (or a series of promises) is (1) illicit cohabitation, and (2) the securing the services of a housekeeper. But it is otherwise where the illegal consider- ation does not permeate the whole contract. Supposing, for instance, A. agrees to pay B. $100 for goods sold, part being sold on Sunday and part on a Monday. Now, for the Monday sale the vendee could have a decree of specific performance ; and if so, the fact that the transaction was turned into a com- mon account with the Sunday sale, is no reason why the ven- dor, who would be liable in this suit for specific performance, should not be entitled to his remedy for the Monday sale Wall. 221 ; U. S. v. Bradley, 10 Pet. ■■ Mayfield v. Wadsley, 3 B. & C. 361 ; 343 ; Deering !). Chapman, 22 Me. 488 ; S. C, 5 D. & R. 228; Lexington w. Eoby V. West, 4 N. H. 285 ; Coburn v. Clarke, 2 Vera. 223. Odell, 30 N. H. 540 ; Woodruff v. Hin- s Rand v. Mather, 11 Cash. 1. man, 11 Vt. 592 ; S. P. Frazier u. « Pickering „. R. R., L. R. 3 C. P. Thompson, 2 Watts & S. 235 ; Raguet 235 ; Payne v. Brecon, 3 H. & N. 572 ; u. Roll, 7 Ohio, 76 ; Everhart v. Puekett, Greenwood v. Bp. of London, 5 Taunt. 73 Ind. 409 ; Anderson v. Powell, 44 727. Iowa, 20 ; MoBratney v. Chandler, 22 < 3d ed. 338. Kan. 692. 505 § 338 a.] CONTRACTS. [chap. XV. against the vendee. And it is hard, also, to see why this right to recover for the Monday sale should be affected by the fact that the vendor took for both transactions, embracing the Sunday sale and the Monday sale, a single note. Un- doubtedly, part of the consideration is illegal ; but if the ven- dee, on the untainted part of the transaetion, could sue the vendor, so can the vendor sue the vendee. And there is high authority to this effect. Thus, in Pennsylvania, no action, by statute, can be sustained upon a note given for a tavern reck- oning exceeding twenty shillings; but if a note beyond that amount covers other items of lawful indebtedness, there can be a recovery for the latter items.^ And when a note is founded on several considerations, each fixed by a separate contract, the note is valid to the extent of the lawful consider- ation.^ And when a note has been given in part payment of an account, it is no defence that part of the account was illegal, if the amount of the note is less than the amount of the legal part of the account.' — A contract may be fraudulent or other- wise illegal as to the parties, yet bind as to third persons inno- cently taking title under it.* And a contract may be divisi- ble so as to be bad as to the parties, but good as to strangers acting bona fide on it.' § 338 a. Whether an insurance policy, covering several Illustrated objects, one of which is illegal, is invalid in Mo, 1 Yundt u. Roberts, 5 S. & R. 139 ; 3 Warren v. Chapman, 105 Mass. 87. Duchman ;;. Hagerty, 6 Watts, 65 In Carrigan u. Ins. Co., 53 Vt. 418, it (ovprruling Ogden u. Miller, 1 Bro. was held that while an insurance of 147) ; Chase t . Burkholder, 18 Peun. liquors for illegal sale is invalid, in a St. 48. case where the assured was a druggist, 2 Frazier v. Thompson, 2 W. & S. and only a small proportion of the 235 ; S. P. Hynds v. Hays, 25 Ind. 31 ; property insured was liquor, and no- and see Warren I!. Chapman, 105 Mass. thing of illegality, appearing in the 87. See contra, ^Peering v. Chapman, contract, or in the design in entering 22 Me. 488 ; Widoe <,.. Webb, 20 Oh. into it, and the contract being colla- St. 431 ; overruling Doty u. Bank, 16 teral to the occasional acts of unlawful Oh. St. 133. Compare criticism of Mr. selling, it is not invalid ; and the na- Wald, Wald's Pollock, 318. In Bixby ture and purpose of the insurance V. Moor, 51 N. H. 402, it was held that should be submitted to the jury, whe- there could be no quantum meruit re- ther collateral to, or in aid of, a viola- covery of wages when part of the work tion of law. was illegal selling of liquor. < Supra, § 291 ; infra, § 352. 5 Bradway's Eat., 1 Ash. 212. 506 CHAP. XV.] ILLEGALITY. [§ 338 a. depends upon the construction of the policy. If it '° insur- i»irt/i ••/> SiHCG poll- appear from the policy itself, or from extrinsic facts, cies. that the insurer took the risk as a whole, it not being ade- quately shown that he would have granted a policy for the objects separately, then the contract must fall as a whole. In such case fraud as to one item of the insurance covered by the policy avoids the whole contract,' and so of material con- cealment as to one item,^ and so of any misrepresentation that goes to the whole contract.^ But a misrepresentation without fraud as to one article does not avoid as to others.^ The ques- tion ought to be, in such cases, was there such fraud as per- vades the whole transaction, or, if not, were the objects in- sured so interdependent as to make the representation made as to one an inducement for granting a policy on the other? If there be no fraud attempted, and if the objects insured are so independent of each other that a separate policy for each would probably have been granted if applied for, then it is hard to say why a misstatement as to one object should pre- vent a recovery for the others.* — So far as concerns avoidance by subsequent alienation, it may be held that where the pre- mium is entire, and the objects insured are contiguous, subject to the same risks, an avoidance as to one of the objects avoids as to all ; though it is otherwise when the objects are separately assessed and are not reciprocally dependent.^ On a policy thus 1 Lovejoy u. Ins. Co., 45 Me. 472; man c. Ins. Co., 36 Wis. 159; Schur- Gonld v. Ins. Co., 47 Me. 403 ; Gotts- milsch v. Ins. Co., 48 Wis. 26. See man v. Ins. Co., 56 Penn. St. 210 ; May on Ins. 2d ed. § 277, and discus- Moore u. Ins. Co., 28 Grat. 508, 524. sion in 25 Alb. L. J. 224. See Bowman v. Ins. Co., 40 Md. 620. '' Plicenix Ins. Co. v. Lawrence, 4 To the same effect see Cashmau v. Ins. Met. Ky. 9 ; Burrill ;;. Ins. Co., 1 Edm. Co., 5 Allen, N. B. 246; Clement's Sel. Ca. 233 ; Rowley u. Ins. Co., 3 Ins. Dig. 92. Keyes, 557 ; Koortz v. Ins. Co., 42 Mo. 2 Gore Ins. Co. v. Samo, 2 Can. Sup. 126. But Gottsman v. Ins. Co., 56 411 ; Friesmuth u. Ins. Co., 10 Cusli. Penn. St. 210, tends to the position 587; Smith w. Ins. Co., 25 Barb. 497 ; that mere misrepresentation as tu a, though see contra, Lochner v. Ins. Co., single article avoids. 17 Mo. 247 ; 19 Mo. 620. 6 Tq this effect see also Koortz v. 3 Bowman v. Ins. Co., 40 Md. 620 ; Ins. Co., 42 Mo. 126 ; Daniel i/. Rob- Richardson v. Ins. Co., 46 Me. 394; inson. Batty, 650; May on Ins. §§ 189, Barnes v. Ins. Co., 51 Me. 110 ; Fries- 277 ; Wood on Ins. § 328. muth V. Ins. Co., 10 Cash. 587 ; Hin- ' Friesmuth v. Ins. Co., 10 Cush. 507 § 338 a.] CONTRACTS. [chap. XV. divisible, it has been held that subsequent alienation of a por- tion of the property insured, though in violation of a limita- tion of the policy, does not avoid it as to the property not alienated.^ It is otherwise when the objects insured are inter- dependent.^ — In New York, in 1878, where a policy covered $6000, divided in specific insurance on buildings and several articles of personal property, it being provided that if the property should be incumbered by mortgage it should be void, 589. lu this case the court said : " Tlie conti'aot of insurance on tlie part of the defeudants was not distinct and separate on each class or subject em- braced in the policy. It was separate and distinct so far only as to limit the extent of the risk assured by the de- fendants on each kind of property. In other respects it was an entire con- tract. This is manifest from the fact that the premium and deposit are des- ignated as entire sums without any reference to the different kinds of prop- erty covered by the policy on the sepa- rate sums insured in each. There is nothing in the application or policy from which it can be ascertained how much of the deposit note was made up of the rate of insurance charged on the real estate, and how much of that on the personal property. The con- sideration of the contract was regarded by the parties as an entirety, of which they did not contemplate a separation or apportionment. It was in considera- tion of the entire sum for which the deposit note was given, and the liabil- ity of the assured to assessment on that amount in case of losses, that the de- fendants assumed all the risks con- tained in the policy. They had the right to look to their lien on each and all the different kinds of property in- sured by them for the security of the whole amount of the deposit notes." 1 Quarrier v. Ins. Co., 10 W Va. 507 ; Commer. Ins. Co. v. Spankneble, 52 111. 53. 508 ' In Fire Ass. v. Williamson, 26 Penn. St. 196, there were three adjoin- ing houses insured in one policy for a specified sum each, with a stipulation against the storing of gunpowder. In one of the houses gunpowder was sub- sequently stored. It was held that this vitiated the whole contract, which the court held was indivisible. "Al- though," said Knox, J., "three build- ings were insured, the contract was an entirety, and as the cause of the injury to the three buildings was identical, it is of no consequence whatever in which of the three it had its origin." The loss occurred through the explosion of the gunpowder thus improperly stored. Bxit had the buildings been separate, this reasoning would not apply. And the true ground of the decision in such case should be not the indivisibility of the contract, but the fact that the loss was attributable to the plaintiff's neg- ligence in not preventing his tenant from thus perverting the use of the building. As holding that the appro- priation of one of several buildings to a hazardous prohibited use vitiates as to the whole, see Lee v. Ins. Co., 3 Gray, 583; Kimball ... Ins. Co., 8 Gray, 33; Associated Firemen's Ins. Co. u, Assum, 5 Md. 165 ; and cases cited May on Ins. § 277 ; though it is admitted that it would be otherwise if there were two distinct policies. Franklin Ins. Co. v. Brook, 57 Penn. St. 74. CHAP. XV.] ILLEGALITY. [§ 339. and where a mortgage was given covering the buildings, it was held that the contract was not entire, but was divisible ; and that the breach of the condition did not apply to the items not embraced in the mortgage.' On the other hand, it has beeii held that a policy for " $1000, say $700 on books and $300 on music," with the clause that if the assured should thereafter make any other insurance on the property the policy should be void, unless notice should be given, is vitiated throughout by a second insurance without notice as to any one of the items insured.^ § 839. We have already seen that when fraudulent inten- tion is proved, it is no defence that there were other concur- motives more or less innocent prompting to the same rence of ^ i = other con- act.^ It is no reply, also, to a plea that a contract siderations n n (^ p f PTi p was illegal, that there were other considerations besides that which was illegal.* A contract to indemnify for publishing a criminal libel, for instance, is not relieved from illegality by the concurrence of other venial motives on the part of the person indemnifying ;^ and a contract for illicit cohabitation is not made any the less inoperative by the fact that the person contracted with is also engaged to act as housekeeper.' But, as we have already incidentally seen, where there are several concurrent promises which may be attached to the several parts of the consideration respectively. ' Merrill u. Ins. Co., 73 N. Y. 452 ; afif. 10 Hun, 428; S. P. Holmes u. Drew, 16 Hun, 491 ; Dacey v. Ins. Co., 21 Hun, 83; Clement's Ins. Dig. 92. See contra, Plath v. Ins. Co., 23 Minn. 479. See to tlie effect that alienation of one of several articles separately insured avoids the whole policy, Bald- win V. Ins. Co., 10 Ins. L. J. 433. 2 Associated Ins. Co. v. Assum, 5 Md. 165. To same effect see Kimball V. Ins. Co., 8 Gray, 33. ' Supra, § 236. « Scott V. Gilmore, 3 Taunt. 226 Hopkins u. Prescott, 4 C. B. 578 Waite u. Jones, 1 Bing. N. C. 662 Armstrong u. Toler, 11 Wheat. 258; 4 Wash. C. C. 297; Ladd v. Dilling- ham, 34 Me. 316 ; Prescott v. Norris, 32 N. H. 101 ; Bixhy v. Moore, 51 N. H. 402 ; Woodruff v. Hinman, 11 Vt. 592; Dixie v. Abbott, 7 Cush. 610; Perliins u. Cummings, 2 Gray, 258 ; Raguet V. Roll, 7 Ohio, 77 ; Donellen V. Lenox, 6 Dana, 91 ; Chandler v. Johnson, 39 Ga. 85. 5 Shackell v. Rosier, 2 Bing. N. C. 634; see infra, § 372. s R. preclude law, that any person who contributes to the per- formance of an illegal act by supplying a thing with the knowledge that it is going to be used for that purpose, cannot recover the price of the thing so supplied."' But this must be taken with some limitations. To furnish ammunition to a belligerent in violation of a neutrality statute is unques- tionably illegal when the ammunition is directly forwarded to the belligerent ; but the mere fact that a manufacturer of fire- arms knows that his fire-arms are likeh' to be used for bellige- rent purposes does not make it illegal for him to put them on the market.^ It may be, also, that an importer of alcohol knows that a large proportion of alcohol sold by him will be illegally peddled; but this will not vitiate sales he may make to intermediate dealers. To annul a contract which promotes ail illegal object, not only must there be knowledge that the object is illegal, but there must be complicity in the perform- ance of an illegal act.^ — It has been also said that " the agree- ment is void not merely if the unlawful use of the subject- matter is part of the bargain, but if the intention of the one party so to use it is known to the other at the time of the agreement."'' It may be that a knowledge of the intention of the party supplied to use the supplies illegally is essential to put the party supplying in the position of a, 2^articeps criminis. But the mere knowledge of such intention will not by itself suffice for this purpose. The unlawful intention must have ' Pollock, C. B., Pearce v. Brooks, L. 125 Mass. 473 ; Whitlock v. ^Yorkmell, R. 1 Ex. 213. 15 Iowa, 351 ; Lewis v. Alexander, 51 2 Tnfr,,, § 479 ; Wli. Cr. L. Sth ed. T<-x. 57S. §§ 154-5, 168. ■! Wald's Pollock, 320, citing Cannan Waugli ,:. Morris, L. R. 8 Q. B. v. Bryce, 2 B. & Aid. 179 ; Cutler o. 202 ; Feret v. Hill, 15 C. B. 207 ; Bar- Welsh, 43 N. H. 497 ; White .•. Buss, nard c. Field, 4li Me. 526 ; Savage i\ 3CuEh.443 ; Ruckman i-. Bryan, 3 De- Mallory, 4 Allen, 492 ; Adams f. Couil- nio, 340 ; Critcher < . HoUoway, 64 N. lard, 102 Mass. 167 ; Frank v. O'Neil, C. 526, and other cases. 514 CHAP. XV.] ILLEGALITY. [§ 843. been in some sense executed.* Cogitationis poenara nemo pa- titur.^ There must be a union of purposes between the party supplying and the party supplied in order to infect the former with the latter's criminality. A money-lender may know that the person to whom he lends money intends to spend this money in gambling or in the purchase of illegal stimulants ; but this will not prohibit his recovery in a suit on the loan. A capitalist may know that it is the intention of a foreign government with whom he is negotiating a loan to apply the money borrowed to belligerent purposes ; but this knowledge, if war has not yet broken out, does not infect the lender with complicit}'. The lender of money on a mortgage on a store is not precluded from recovering it by the fact that he knows the mortgagor intends to open gambling tables, or to store prohibited drugs on the premises. It is not enougli, therefore, in order to establish such complicity as defeats a right to re- cover in such cases, that the party supplying the goods or money knows that the party supplied intends to use them for an illegal purpose. There must be a combination between them to eft'ect such purpose.^ A fortiori, there may be a re- covery when the vendor did not know of the illegal purpose.* — It is submitted with much deference that the later English cases are not so inconsistent with the earlier as is supposed by 1 Infra, § 3.54-5. N. C. 294 ; Wallace v. Lark, 12 S. 2 L. 18 D. de poenas, 48, 13, 2. C. 576 ; MoGavock c Puiyear, 6 Cold. " Wh. Cr. L. §§ 225 et seq.; Holman 34; Henderson r. Waggoner, 2 Lea, V. Jolmsou, 1 Cowp. 341 ; Waymell c.. 133 ; Kottwitz u. Alexander, 34 Tex. Reed, 5 T. R. 599 ; Pellecat v. Angell, 689 ; Lewis v. Alexander, 51 Tex. 578. 2 C. M. & R. 311 ; Armstrong v. Toler, That a loan is subject to the same rule, 11 Wheat. 279; Planters' Bk. u. Union see supra, § 841; Oxford Iron Co. r. Bk., 16 Wall. 483 ; McBlair v. Gibbes, Spradley, 46 Ala. 99 ; Michael o. Ba- 17 How. (U. S.) 236 ; Brooks v. Mar- con, 49 Mo. 343. tin, 2 Wall. 90 ; Hill ... Spear, 50 N. •' Prescott «. Norris, 32 N. H. 101. H. 253 ; Aiken v. Blaisdell, 41 Vt. 658 ; Where a contract, not in itself immoral, Foster v. Thurston, 11 Gush. 322 ; Mcln- is prohibited by statute, so far as con- tyre V. Parks, 3 Met. 207 ; Lestapies cerns one of the parties only, the other V. Ingraham, 5 Barr, 7L ; Thomas o. party may recover back from the party Brady, 10 Barr, 164 ; Powell ;;. Smith, so prohibited any money paid under 66 N. C. 401 ; Walker v. Jefferies, such a contract. Walan v. Kerby, 99 45 Miss. 160 ; Brunswick v. Vallean, Mass. 1 ; Schermerhorn v. Talman, 4 50 Iowa, 120 ; Williams v. Garr, 80 Kern. 93. 515 § 343.] CONTRACTS. [CHAP. XV. both Mr. Pollock and Mr. Benjamin.' " The merely selling goods," said Sir J. Mansfield, in 1813, adhering to the earlier rule, " knowing that the buyer will make an illegal use of them, is not sufficient to deprive the vendor of his just use of payment, but to effect that, it is necessai^y that the vendor shonhi be a sharer in the illegal transaction."^ — So far as concerns the ital- icized condition, if "sharer" means "continuing partner," this is no longer the law.^ But in spite of the breadth of expres- sion with which this point has been ruled in the later cases, it can hardly be supposed that it is intended to aflix the stigma of illegality to all sales of articles where the vendor, at the time of sale, knew that the vendee intended to put the article purchased to an illegal use. In the first place, knowl- edge of this kind is always a matter of inference ; and unless there be complicity in the illegal transaction, such knowledge, in sales of articles partially prohibited, does not usually im- press the party to whom it may occur. If I am prohibited from selling a particular article, then the sale is illegal ; but if I am not so prohibited, then the knowledge that a purchaser will violate the law with the article does not make me a party to his conduct unless I combine with him for the purpose. Of course, combination may be inferred when his intention to break the law is known to me, and I give the article to him for this purpose. But knowledge that such an illegal use of the article is probable does not make me a confederate. The illegality rests in such case not on the knowledge, but on the confederacy.^ If mere knowledge, also, more or less imper- fect, of probable future illegal use, invalidates a sale, neither powder, nor fire-arms, nor poison could be sold in bulk.' N"o doubt some part of the aggregate of a large sale will be ille- gally used ; and this will vitiate the whole. And a borrower could repudiate all loans whenever he could show that his ' Sales, 3d Am. ed. § 507. v. Brooks, L. R. 1 Ex. 213 ; Taylor v. 2 Hodgson V. Semple, 5 Taunt. 181. Chester, L. R. 4 Q. B. 309. ' Langton v. Hughes, 1 M. & S. 593; < See Hill v. Spear, 50 N. H. 283; Cannan v. Bryce, 3 B. & A. 179 ; Pearce Gaylord r. Sorageu, 32 Vt. 110. " See infra, § 446. 516 CHAP. XV.] ILLEGALITY. [§ 344. creditor knew he would be likely to use part of the money in illegally buying liquor, or in other illicit indulgence.' § 344. It is not necessary, however, that complicity should be 'shown by proof of an express combination be- . „ -TTT-, • Complicity tween the parties.^ When two persons, in corre- andiUesai- spondence with each other, are apparently pursuing ^CTeutiany" the same obiect, in part by the same means, one per- shown and forming part of an act, the other completing it, for deranee of the attainment of the object, the inference of com- plicity may be drawn.' But the use of unlawful means to carry out an agreement does not necessarily stamp the agree- 1 See McGavock v, Puryear, 6 Cold. 34. In Gaylord p. Soragen, 32 Vt. 110, an action for selling liquor in bulk in New York, where the sale was legal, to be retailed in Vermont, where the sale would be illegal, Aldis, J., said : ' ' Although mere knowledge of the un- lawful intent of the vendee by the vendor will not bar him from enforcing his contract to recover for the goods in our courts, yet it is well settled that if he in any way aid the vendee in his unlawful design to violate our laws, such participation in the illegal enter- prise will disqualify him from main- taining an action on his contract in this state. The participation by the vendor must be active, to some extent ; he must do something, though indi- rectly, in furtherance of the vendee's design to violate our laws. Mere omis- sion to act is not enough ; but positive acts in aid of the unlawful purpose, however slight, are sufficient." See to same effect Green v. Collins, 3 Cliff. 494; Aiken u. Blaisdell, 41 Vt. (J56 ; Tuttle V. Holland, 43 Vt. 642 ; Hill v. Spear, 50 N. H. 253.— In Adams v. Couillard, 102 Miss. 167, Colt, J., said : "Clearly it is not enough if he has only reasonable cause to believe that a violation of law is intended." In Webster v. Munger, 8 Gray, 587, Thomas, J., said: "The distinction is sound between a case where a seller simply has knowledge of the illegal design — no more — and where he makes a sale with a view to such design, for the purpose of enabling the purchaser to effect it." In Green o. Collins, 3 Cliff. 494, Judge Clifford argues with great force that mere knowledge of future illegal use does not vitiate, un- less it is an ingredient of the contract that the law should be violated, or the seller combines with the purchaser to violate the law ; citing to this effect Sort«i-ll I-. Hughes, I Curt. 245. To the same point the learned American editor of Benjamin on Sales, § 511, note d, cites Harris v. Runnels, 12 How. U. S. 79 ; Smith i<. Godfrey, 28 N. H. 379; White .. Buss, 3 Gush. 443; Peck u. Briggs, 3 Denio, 107; Tracy v. Talmage, 14 N. Y. 173 ; Curtis o. Leavitt, 15 N. Y. 15 ; Cheney o. Duke, 10 Gill & J. II ; Rindskopf v. De Ruyter, 39 Mich. I ; Bishop v. Honey, 34 Tex. 245. 2 R. 0. Parsons, 1 W. Bl. 392 ; R. v. Whitehouse, 6 Cox C. C. 38 ; Aiken v. Blaisdell, 41 Vt. 658 ; Foster u. Thurs- ton, II Cush. 322; Kelley <-. People, 55 N. Y. 566 ; Bloomer v. State, 48 Md. 521 ; and see Wh. on Ev. § 7. ' See Wh. Cr. L. 8th ed. §§ 1398 et 517 § 345.J CONTRACTS. [CHAP, XV. merit with illegality.' — It is admissible to prove by extrinsic facts that a contract, however innocent in terms, is illegal either by statute or by common law.- It may be also shown that the consideration was immoral or illegal by statute.^ — It is sufficient if illegality is established by a preponderance of proof. It is not necessary to establish it bej'ond reasonable doubt.^ But the burden of proof is on a party seeking to set up the illegality of a transaction.^ § 345. A distinction has been taken between " crimes in- volving great moral turpitude," and other oft'ences «ou'^rs'tT' " "^^t amounting to felony," and it is argued that turpitude complicity in the latter does not preclude a party of offence. , • « -A i: J from suing on the transaction.^ But a conspiracy to commit a misdemeanor is as indictable as is a conspiracy to commit a felony, and hence a civil suit to further the former kind of conspiracy cannot be tolerated any more than a civil suit to further the latter. The question, when a party seeks to sue on an illegal adventure, is not the grade of the offence, but the fact of illegality. The distinction between felony and misdemeanor is no test. It is abandoned in many jurisdictions, and will soon be abandoned in all jurisdictions;' and many misdemeanors are more heinous than some felonies. Nor is there any line of turpitude that can be drawn that can be relied on as a satisfactory basis of distinction. If, in a suit of this kind, it should appear that the plaintiff is suing for the purpose of putting in operation an illegal adventure, or of recovering the fruits of such adventure, then his suit cannot ' Fraser v. Hill, 1 Maeq. 392. 411 ; Badgley v. Beale, 3 Watts, 263 ; 2 Wh. on Ev. §§ 927-931 ; Smith's see Smith's L. C. 7th Am. ed. 700. L. C. 7th Am. ed. 700 ; Rohy v. West, * Supra, § 239; Wh. on Er. § 1245, and 4 N. H. 285 ; Bayley v. Taber, 5 Mass. cases there cited ; Ware D.Jones, 61 Ala. 286; Farrar D. Barton, 5 Mass. 395; 2SS ; Bixbyu. Carskadden, 55 Iowa, 533. Wheeler v. Eitssel, 17 Mass. 258 ; 6 Beetem r. Burkholder, 69 Penn. St. Dexter v. Snow, 12 Cash. 594 ; Bloss 249 ; Wh. on Ev. § 358. u. Bloomer, 23 Barb. G04. « Wald's Pollock, 365, citing Tracy 3 Ibid. ; Cannan t,. Bryce, 3 B. & v. Talmage, 14 N. Y. 162 ; Bickel v. Aid. 179 ; M'Kinuell v. Robinson, 3 M. Sheets, 24 Ind. 1 ; Michael u. Bacon, & W. 434 ; Kennett v. Chambers, 14 49 Mo. 474 ; Steale c. Curie, 4 Dana, How. U. S. 38 ; Perkins v. Savage, 15 381 ; Armfield u. Tate, 7 Ired. L. 258 ; Wend. 412 ; Staples v. Gould, 5 Sandf. Hubbard v. Moore, 24 La. An. 591. ' Infra, § 484. 518 CHAP. XV.] ILLEGALITY. [§ 345. be maintained, no matter what may be the degree of the turpitude of the offence in which he is concerned.* The dis- tinction, also, between statutory and common law offences in this respect is no longer maintained.^ Whatever may have been once thought, " there is no valid distinction in the appli- cation of the law upon the subject between mala prohibita and m.ala in se ; and if it were ever regarded, it has now been wholly laid aside in the decision of the later English cases. "^ The only distinctions to be recognized are the following : (1) Of contracts which are not prohibited by law or immoral, . there are some which it is against the policy of the law to enforce, and yet the fruits of which a person can obtain from a party unjustly holding them. It may be against the policy of the law to specifically execute such contracts, yet it may not be against the policy of the law to treat them when executed as giving title. In such cases "the circumstance that the relief is asked by a party who is 2M'>'ticeps crirninis is not in equity material. The reason is, that the public interest re- quires that relief should be given ; and it is given to the public through the party.* And in those cases, relief will be granted not only by setting aside the agreement or other transaction, but also, in many cases, by ordering a repayment of any money paid under it."f — (2) Dupes and victims of an illegal transaction are not preciiided from suing on it.^ They have this privilege, not because the illegality of the transac- tion is not of a heinous type, but because they are not per- sonally tainted with the heinousness. (3) M'ere knowledge of a contingent illegal application of supplies given, does not defeat a suit for remuneration.' 1 See Finch v. Mansfield, 97 Mass. * St. John v. St. John, 11 Ves. 535 ; 89 ; Suit V. Woodhull, 113 Mass. 391. Smith t. Bromley, Doug. 696 ; Hatch •■' Cannau u. Bryce, 3 B. & A. 179 ; u. Hatch, 9 Ves. 292 ; Morris ". Mac- and cases cited Benj. on Sales, 3d Am. CuUock, 2 Eden, 190; Reyuell v. ed. § 507 et seq. Sprye, 1 DeU. M. & G. 660. 3 Foster, J., Hill v. Spear, 50 N. H. = Story, Eq. Jur. 12th ed. § 298 ; 253 ; and see Bank U. S. v. Owens, 2 Reynell v. Sprye, 1 De G. M. & G. 660. Pet. 527; Clark c. Ins. Co., 1 Story, « Infra, § 353. 109 ; Greenough v. Balch, 7 Greenl. 7 Supra, § 343 ; infra, § 346. 462 ; Vi^hite v. Buss, 3 Cush. 448. 519 § 347.] CONTRACTS. [CHAP. XV. § 346. Even.supposiog that out of a sale of goods or loan of Complicity ™oney, illegal acts spring, these acts are not impu- in collate- table to.the party furnishing the supplies unless de- ral matter t j _ o i i nottobe signed by him at the time the sui^plies were lur- impute . -[jigiiej^ jjig position is that of an accessory before the fact ; and an accessory before the fact is not responsible for crimes collateral to and not involved in the act which he specifically counsels.^ The unlawful act, in other words, in order to infect him with complicity, must be part of a scheme to which he designedly contributes. There must be "a unity of design and purpose, such that the agreement" of sale or loan, " is really part and parcel of one entire unlawful scheme. "- Hence, a bill for an account of partnership profits cannot be barred by the fact that in some particular transaction in which these profits were augmented, there was collateral illegal conduct.' ISTor is an actor, who, unaware that a the- atrical exhibition is unlicensed, contracts to perform with the managers of the exhibition, barred from recovery on the contract.^ § 347. The taint of illegality, as far as concerns a contract, iiieo-aiity Only afFects the parties to the contract, not reaching, does not unless proceediuEfs by way of confiscation are di- attach m ' . . rtin, or to rected, to the thing which is the object of the con- without tract.'' Hence, a party who has smuggled goods can notice. recover the price of them on a contract of sale with a third party who was not implicated in the smuggling.^ A purchaser, also, as a general rule, of personal property fraudu- lently obtained, is not, if he buys without notice, and for a ^ Wh. Cr. L. 8th ed. §§ 212, 229 ; As to what is collateral, see Fisher v. Wangli V. Morris, L. R. 8 Q. B. 2(i2 ; Bridges, 2 E. & B. 118 ; 3 E. & B. Sewell ('. Ins. Co., 4 Taunt. 856 ; G42. People V. Knapp, 2H Mich. 112; Saw- ^ Sharp c Taylor, 2 Phill. 801. yer v. Taggart, 14 Bnsh, 727. * Roys v. Johnson, 7 Gray, 162 ; see " Pollock,Wald'st'd. 322, citing Arm- supra, § 343. strong /■. Toler, 11 Wheat. 258 ; McBlair 6 Sre Tenant v. Elliott, 1 Bro. & P. ( . Gibbes, 17 How. 232 ; Miltenber<;pr 3 ; Fisher r. Bridges, 3 E. & B. 642. V. Cooke, 18 Wal. 421. To same effect, « Armstrong v. Toler, 11 Wheat, see Emery c. Kempton, 2 Gray, 257. 258, 271. 520 CHAP. XV.] ILLEGALITY. ■[§ 349. Landlord cannot re- cover rent of house to be illegally used. valuable consideration, infected by the fraud. ^ And a note given for intoxicating liquors is good, under the Maine statute, in the hands of a bona fide endorsee for value.^ On the other hand, an assignee or endorsee is subject to all equities of which he has notice.^ § 348. We will elsewhere see that a landlord cannot recover the rent of a house leased by him to be used as a house of ill-fame.^ On the same reasoning, rent can- not be recovered when the object was to establish what the lessor at the time of the lease knew would be an illegal nuisance, in whose profits he was to share ;° as where the house was to be used to sell intoxicating liquors in violation of license laws.' ]^or when a building is let in violation of a statute can the lessor recover on any covenant in the lease.' But it is not enough, to vitiate such a lease, that the landlord should regard it as probable that illegal acts would be done in the premises demised, for if so, few leases could escajDe impeachment. The lease, to be thus void, must have been made for the express illegal purpose, and with the intention of sharing the illegal profits.^ Nor is a lease avoided by the lessee, subsequently to the execution of the lease, using the premises for an illegal purpose, even though he may have intended this at the time of the lease.^ § 349. In accordance with the distinctions main- p^rtner- tained in respect to agency,^" the courts will not en- ^.^P \" force a contract of partnership for conducting an terprise illegal enterprise, or compel an account of profits entbrc'ed. ^ ' Supra, §§ 211, 291 ; ivfra, § 733. As to market overt, see infra, § 734 ; Story, Eq. Jur. 12tli ed. §§ 431-AZi, 436. 2 Cottle V. Cleaves, 70 Me. 256 ; and so as to duress, supra, § 146. Story, Eq. Jur. 12tli ed. §§ 395-8 ; Murray u. Ballou, 1 John. Ch. 566 ; Heatley v. Finster, 2 John. Ch. 158. As to notice, see Story," ut supra, §§ 401 et seq. * See infra, § 374. 5 Flight u. Clarke, 13 M. & W. 155 ; Cowan V. Melbourn, L. R. 2 Ex. 230 ; Riley v. Jordan, 122 Mass. 231 ; Rals- ton V. Boady, 20 Ga. 449. As to dis- tinctions see supra, § 343. 6 Ritchie v. Smith, 6 C. B. 462. ' Gas Light Co. v. Turner, 5 Bing. N. C. 666 ; 6 ib. 324. 8 Supra, § 343. 8 Feret o. Hill, 15 C. B. 207 ; see Cowan V. Milbourn, L. R. 2 Ex. 230. i» See irfra, § 357. 521 § 350.] CONTRACTS. [chap. XV. of such transactions.! Such a partnership will be a nullity, so far as concerns all executory action.^ The same rule applies when the structure of a partnership is technically illegal, rieuce, under a statute requiring the names of all pa^Ynbrokers to be printed over the doors of their shops, it was ruled that an agreement for a pawnbroker partnership with dormant partners is illegal ;' and the same rule applies to a partnership as attorneys, by parties made by statute to be incompetent to act as such.^ — A partner in an illegal trans- action cannot enforce any executory action on the other partners.^ But when the partnership affairs are closed, one partner cannot excuse himself from accounting to the other on the ground that one of the objects of the partnership was illegal.^ § 350. An insurance of an illegal voyage is void ; and the insured cannot recover in case of loss s'' nor can the underwriter recover the premium, which, if the voyage was illegal, was without consideration.^ But the illegality is not imputable to either ship-owner or insurer if caused by the act of the master alone, without their cognizance or connivance.' — An insurance of Insurances on illegal ■voyages are void, and so of illegal sales. ' Knowles r. Haughton, 11 Ves. 168 Ewing t;. Osbaldistone, 2 M. & Cr. 53 Syk.'s r. Beadon, L. R. 11 Ch. D. 170 but see Brooks v. Martin, 2 Wall. 70, and criticism in Wald's Pollock, 329 Dunham .-. Presby, 120 Mass. 28.5 Anderson i . Powell, 44 Iowa, 20 ; Mc Williams v. Bryan, 21 La. An. 211 Seely r. Beck, 42 Mo. 143. 2 Story on Part. 7tli ed. § 6 ; citing Gordon v. Howdeu, 12 CI. & F. 237 ; Watson (■. Fletcher, 7 Grat. 1 (a case of a gaming partnership) ; MoPherSon V. Puijiljcrton, 1 Jones, N. C. 378. " Armstrong v. Armstrong, 3 Myl. & K. 45 ; Armstrong v. Lewis, 2 Cr. & M. 274. ■■ Williams r. Jones, 6 B. & C. 108 ; Joyce ex parte, L. R. 4 Ch. D. 596. 522 5 Story on Part. 7th ed. § 6 ; De Begnis v. Armistead, 10 Bing. 107; Stewart v. Gibson, 7 CI. & F. 107; Watson V. Murray, S C. E. Green, 257. ^ See infra, § 3.'i7 ; Watts ... Brooks, 3 Ves. 612 ; Sharp v. Taylor, 2 Pliill. 801 ; Harvey v. Varney, 98 Mass. 118 ; Sampson v. Shaw, 101 Ma.ss, 148 ; Snell u. Dwight, 120 Mass. 9 ; King i'. Win- ants, 71 N. C. 469 ; Belcher c. Conner, 1 S. C. 88 ; Pfeiffer c. Maltby, 38 Tex. 523. Tliat illegal may be severed from legal items in an account, see Anderson V. Powell, 44 Iowa, 20 ; supra, § 338. ' Brandon v. Nesbitt, 6 T. R. 23 ; Furtado v. Rodgers, 3 B. & P. 191. 8 Jenkins v. Power, 6 M. & S. 282. 9 Dudgeon . . Pembroke, L. R. 9 Q. B. 581 ; see infra, § 353. CHAP. XV .J ILLEGALITY. [§ 352. nquors meant for illegal sale is invalid when the insurance is part of an arrangement to further the illegality.' § 351. All subsequent securities, given for a prior illegal indebtedness, are, as between the parties, infected ^^^^^ ^^^^ with the illegality of the original transaction.^ securities This is the case with bonds,' and with judgments as withiiie- between the parties.'' ITegotiable paper, however, s*^'*^- so far as concerns bona fide holders without notice, is relieved from the taint of illegality, which operates between the im- mediate parties.' § 352. Supposing that a contract is executed, it cannot be overhauled by either of the parties on proof of illegality of consideration ; nor can a transfer of contract property when once made be invalidated on the overhauled ground of illegality of the consideration.^ It is onue'gaT' otherwise, however, when a party defrauded seeks 'ty ; ^°'' ' . . , , can either restoration and restitution on ground of fraud.' — party re- Between an unexecuted and an executed illegal agreement there is this wide difference, that property passed under the former is held as by a mere stakeholder, without consideration received, while property passed under the latter is transferred absolutely, on a consideration which, however illegal, was deemed bj' the parties adequate. And the rule is that when property so passes it cannot be recovered back.' This has been held to be the case with regard to money paid to trustees for a woman on account of past illicit cohabita- 1 Carrigan v. Ins. Co., 53 Vt. 418. 320 ; Story, Eq. Jur. § 296 ; Ayerst c. 2 Chapman v. Black, 2 B. & AM. Jenkins, L. R. 16 Eq. 275 ; Howson v. 588 ; Wynne v. Callander, 1 Russ. 293 ; Hancock, 8 T. R. 575 ; Waun o. Kelly, Graeme v. Wroughton, 11 Ex. 146 ; 2 McCrary, 628 ; Phelps v. Decker, 10 Geere v. Mare, 2 H. & C. 339 ; Dewitt Mass. 267 ; VPorcester v. Eaton, 11 u. Brisbane, 16 N. Y. 508. Mass. 368 ; Fox v. Cash, 11 Penn. St. » Fisher v. Bridges, 3 E. & B. 642 207 ! Gisaf v. Neval, 81 Penn. St. 354; (reversing S.C, 2 E. & B. 118) ; Geere Pfeuffer a. Maltby, 54 Tex. 454. V. Mare, 2 H. & C. 339 ; Amory ;;. Mery- ' Supra, §§ 282, 340 ; infra, § 353. weather, 2 B. & C. 573. « Infra, § 733 ; Howson o. Hancock, " Hutchinson v. Ledlie, 36 Penn. St. 8 T. R. 575 ; Vandyke v. Hewett, 1 112. East, 97 ; Taylor v. Chester, L. R. 4 Q. s Supra, § 347. B. 314 ; Scarfe u. Morgan, 4 M. & W. 6 Infra, §§ 377, 384 ; Pollock, 269, 281. 523 § 353.] CONTRACTS. [chap. XV. tion •/ to contracts with a public enemy ;^ to premiums on illegal insurance after the risk is determined;^ and to money paid on an illegal insurance on account of loss.^ — Whether a title can vest under an illegal contract has been disputed. It has been held by the Supreme Court of the United States that a party who obtains possession of goods by a contract with a public enemy, which is void by the lex fori, cannot, if such goods are taken from him without right by a third party, recover them from such third party.' But the better view is that, when a party acquires property through an illegal contract, he can recover such property from a third person who has taken it from him without right.^ It is true that, as against the rightful owner, a party without title cannot pass title.' But title resting on possession may be as- serted against a third party who is a mere wrongdoer.* It' has also been held that partners to a contraband contract may obtain the assistance of the courts in adjusting their accounts in which such a contract forms an item.^ § 353. To the rule that parties implicated in an executed Complicity illegal transaction have no remedy against each bar dupes Other, an exception is recognized in cases where one or victims, jg i}^q victim of duress, or fraud, or superior influ- ence.'" A party, for instance, who buys spirituous liquors ' Ayerst v. Jenkins, L. R. 16 Eq. is paid on a contract which is merely 275 ; infni, § 373. prohibited by statute, and the receiver " Infra, § 473. is the principal offender, he may be 3 Andre <■. Fletcher, 3 T. R. 266; compelled to refund." "Where the Allkins V. Tupe, L. R. 2 C. P. D. parties are not in pari delicto, the rule 375. potior est conditio dcfcndi^utis is not appli- < Tenant r. Elliott, 1 B. & P. 4. , cable." See Lovell v. R. R., 23 Pick. 6 Montgomery r. U. S., 15 Wal. 395 ; 32 ; Sampson u. Shaw, 101 Mass. 150 ; Whitfield .. U. S., 92 U. S. 165; Tracy r. Talmage, 4 Kernan, 162; Desmore u. U". S., 73 U. S. 605. Schermerhorn i. Talman, 4 Kernan, 6 Tenant v. Elliott, 1 B. & P..3; 93. As to distinctions ot turpitude, see Merritt v. Millard, 4 Keyes, 208; Rob- supra, § 345. inson v. Ins. Co., 42 N. Y. 54; Clem- » De Leon ;;. Trevino, 49 Tex. 88; ents V. Yturria, 81 N. Y. 285 ; Pfeuffer infra, § 357. ... Maltby, 54 Tex. 454. i» Smith u. Bromley, Doug. 698; ' Sujjra, § 292. Browning v. Morris, 2 Cowp. 790 ; Pres- 8 Sec Wh. Or. L. 8th ed. § 945. In cott r. Norris, 32 N. H. 101 ; Lowell v. White u. Franklin Bank, 22 Pick. R. R., 23 Pick. 32; Walan ,.-. Kerby, 186, Wilde, J., said: " Where money 99 Mass. 1; Sampson v. Shaw, 101 524 CHAP. XV.] ILLEGALITY. [§ 353. illegally sold is not, if he were at the time imposed on, neces- sarily so implicated in the illegality that he may not sue for money paid on the sale, or for false warranty.^ A dehtor, also, who, when in great difficulty, in order to get the consent of an unscrupulous creditor to a settlement, secretly pays such creditor a bonus in fraud of other creditors, can recover back the money so paid ;^ and the same rule applies where a defen- dant pays money to get rid of a criminal prosecution or a penal suit,^ to usurious contracts which the borrower has been compelled by the creditor's harshnebs to accept ;* and to cases where bankrupts pay money to buy off au opposing creditor.' Mass. 150 ; Phalen u. Clark, 19 Conn. 421 ; Schermerhorn i\ Talman, 4 Kern. 93; Deming o. State, 23 Ind. 416; Davidson t). Carter, 55 Iowa, 117 ; Heck- man V. Swartz, 50 Wis. 267 ; Poston v. Baloh, 69 Mo. 115. • Prescott V. Norris, 32 N. H. 101 ; Walan v. Kerby, 99 Mass. 1. See infra, §354. 2 Atkinson v. Derby, 7 H. & N. 934 ; Leuzberg's Policy in re, L. E. 7 C. D. 650 ; Beau v. Amsink, 10 Blatch. 361 ; Crossley v. Moore, 40 N. J. L. 27 ; and cases cited Wald's Pollock, 331 ; infra, § 737. 3 Unwin v. Leaper, 1 M. & G. 747 ; infra, § 737. * Vandyck c. Hewitt, 1 East, 98; Astley V. Reynolds, 2 Str. 916 ; Brown- ing u. Morris, 2 Cowp. 792 ; infra, § 469. ^ Smith V. Bromley, Doug. 696 n ; Sievers c. Boswell, 3 Man. & fir. 524. On the whole question see 1 Story Eq. Jur. 12th ed. § 321. As to gambling debts, see infra, § 454. As conflicting with the text may be noticed Hackett v. Chellerton, 13 R. I., where it was ruled that an action does not lie by an infant on a contract of service forbidden by statute. The dis- tinction is thus stated by Durfee, C. J. . " The law, however, while it will' give no remedy on the illegal contract, does not always utterly refuse relief. It is settled that where a party has paid money or delivered personal property on a contract which is illegal because it involves the violation of a statute, he can recover it back in an action commenced while the contract remains simply executory, the recovery being had not under the contract, which is void, hut in disaffirmance of, it, on a promise implied or right existing inde- pendently of it. Congress & Empire Spring Co. u. Knowlton, 103 U. S. 49 ; Chitty on Cent. 11th Am. ed. 944. The case at bar does not fall under this rule, for in the case at bar the plaintiff has himself executed the contract. There are cases which go further and hold that money so paid or property so delivered can be recovered back, even after the contract has been fully exe- cuted, if the plaintiff is an innocent party or is not in pari delicto with the defendant. Tracy v. Talmage, 14 N. Y. 162. In this case also the recovery is had not under, but independently of the contract, the contract iieing treated as a nullity. Can the plaintiff recover on the authority of these latter cases, recovering of course on a quantum meruit the value of his services ? Can he be regarded as an innocent or compara- tively innocent and unoffending party ? We think not. The cases which sup- 525 § 353.] CONTRACTS. [chap. XV. In equity this protection has been extended so as to cover all cases of imposition. " Where the parties to a contract against public policy or illegal are not in pajn delicto (and they are not always so), and where public policy is considered as advanced by allowing either, or at least the most excusable of the two, to sue for relief against the transaction, relief is given to him."^ " One party," says Judge Story, taking the same distinction, " may act under circumstances of oppression, imposition, hard- ship, undue influence, or great inequality of condition or age ; so that his guilt may be far less in degree than that of his associate in the oftence. And besides, there may be, on the part of the court itself, a necessity for supporting the public interests or public policy, in many cases, however reprehensible the acts of the parties may be."^ port the doctrine last stated are cases where the statutory prohibition is di- rected solely against the defendant. That is not this case. Here the pro- hibition is directed, not against par- ticular persons, but against a particular tiling, namely, the employment of minors in manufacturing establish- ments. The language of the statute is 'no minor, etc., shall be employed,' which means not only that no manu- facturer shall employ any minor, but also — what it says — that no minor shall be employed, the employment itself being interdicted. The plaintiff is therefore suing for compensation for having violated the statute, for having done a forbidden thing, which is very different from suing for money or prop- erty paid or delivered on a contract, the execution of which does not involve the plaintiff in the violation of any statute,but only the defendant. Thomas V. City of Richmond, 12 Wall. 349, 356." Sei; as sustaining tlie text White V. Bank, 22 Pick. 181 ; see also Tracy ,. Talmage, 14 N. Y. 162 ; Ford u. Har- rington, 16 N. Y. 285 ; Long v. Long, 9 Md. 348 ; and oases cited Smith's L. C. 7th Am. ed. 699. 526 1 Knight Bruce, L. J., opinion in Reynell v. Sprye, 1 D. M. G. 660 ; Os- borne c. Williams, 18 Ves. 379. See Ford V. Harrington, 16 N. Y. 285, and cases cited Wald's Pollock, 333 ; Brown- ing (•. Morris, 2 Cowp. 792 ; Hatch o. Hatch, 9 Ves. 298 ; Lowell v. R. R., 23 Pick. 22 ; Pinckston v. Brown, 3 Jones's Eq. 494. 2 Story's Eq. Jur. 12th ed. § 300, citing Woodhouse v. Meredith, 1 .Jac. & W. 224 ; Morris v. MacCuUock, 2 Eden, 190. In Smart < . White, 73 Me. (26 Alb. L. J. 12), we have the following from Peters, J. : " The principle that where the offence is merely malum prohibitum and not in itself immoral, a person may recover back money paid under an illegal contract to the party who is wholly or principally the wrong-doer, runs through a long line of decisions which bear more or less analogy to the present case. The case at bar is a stronger case for the application of the principle than most of them. In Smith's Cont. 204, it is said there is an excep- tion to the rule or maxim, inpari delicto, potior est conditio defendentis, ' where the illegality is created by some statute, CHAP. XV.] ILLEGALITY. [§ 354. § 354. Where money has been paid on an illegal considera- tion, it may be recovered back at any time while the con- the object of which is to protect one class of men against another, or where the illegal contract has been extorted from one party by the oppression of the other.' And it is there further said : ' In cases of this sort, although the con- tract is illegal, and although a person belonging to the class against whom it is intended to protect others cannot re- cover money he has paid in pursuance of it, yet a person belonging to the class to be protected may, since the allowing him to do so renders the act more effi- cacious.' The English cases quoted by the author to illustrate the principle are many and various. In Smith v. Cuff, 6 M. & Selw. 160, Lord Ellen- borough says : ' This is not a case of par delictum, but of oppression on one side and submission on the other ; it can never be predicated as par delictum when one holds the rod and the other bows to it ; there was an inequality of situation between the parties.' " In Curtiss v. Leavitt, 15 N. Y. 9, it was held that ' where a contract other- wise unobjectionable is prohibited by a statute which imposes a penalty upon one of the parties only, the other party is not in pari delicto, and upon disaffirm- ing the contract may recover as upon an implied assumpsit, against the party upon whom the penalty is imposed, for any money or property which has been advanced upon such contract.' Other New York cases are to the same effect. Schermerhorn v. Talmanj 4 Kern. 93, and Tracy v. Talmage, id. 162, are to the same point, and contain copious citations of analogous cases. Benj. on Sales, 3d Am. ed. § 509, note c, and cases cited. "In White v. Franklin Bank, 22 Pick. 181, where a plaintiff had depos- ited money in a bank repayable at a future day, in violation of a statute of Massachusetts, he was allowed to re- cover back the deposit upon tlie ground that although both parties were culpa- ble the defendants were the principal offenders. The court there said that to deny the action would be to secure to the defendants the fruits of an ille- gal transaction, and would operate as a temptation to all banks to take an ad- vantage of the unwary and those who had no knowledge of the law or the illegality of such transaction. In Low- ell V. Boston and Lowell R. Co., 23 Pick. 24, the same doctrine is restated and reaffirmed as applicable to another class of facts. In Atlas Bank v. Nahant Bank, 3 Mete. 581, 585, the same court, speaking of the decision in White u. Franklin Bank, says : ' To have decided otherwise would have given effect to an illegal contract in favor of the principal offender, and would have operated as a reward for an offence which the statute was intended to prevent.' In Walan V. Kerby, 99 Mass. 1, in construing an act relating to the sale of intoxicating liquors, the court say : ' The seller and buyer of intoxicating liquors sold in violation of law are not in pari delicto, because the latter is guilty of no offence. When the purchaser seeks to recover back the price he has paid, the illegal- ity of the transaction of which he offers evidence is wholly on the part of the defendant, and he himself is not par- ticeps criminis. ' " Other illustrations of the principle are found in many other cases. The doctrine is commented upon in Concord V. Delaney, 58 Me. 316 ; is considered in Connecticut in the case of Cameron V. Peck, 37 Conn. 555 ; and elaborately discussed in New Hampshire in the cases of Prescott v. Norris, 32 N. H. 527 § 354.] CONTRACTS. [chap. XV. Money paid oil executory illegal agreement may be re- covered back. tract is still unexecuted, by repudiating the agreement, sup- posing that the plaintiiF is not using the process of the court as a criminal venture.^ This has been held to be the case with money paid as consideration of void wagering contracts,^ and with money deposited with a stakeholder to be paid over according to the event of an illegal or void wager.' In all cases of this class, however, the plaintiif must act promptly and fairly, and give previous notice that he repudiated the agreement.'* The reason is that in such cases the plaintift''s claim is not to enforce, but to repudiate, an illegal contract. The object of the suit is not to get paid for something illegally done, but to prevent the defendant from using an illegal pretext to retain money unlawfully detained. In conformity with this view it was held by the Supreme Court of the United States, in 1881, that where a New York corporation increased its capital stock in contravention of the statutes of that state, a subscriber who paid an assessment on the shares allotted to him could recover back from the corporation the amount so paid.' One party, 101, and Butler i\ Northumberland, id. 33, 39." See infra, § 730, as to prin- ciple ruled in this case. 1 Leake, ii ed. 773 et seq.; 2 Addis. Con. § 1412 ; Hasfelow v. Jackson, 8 B. & C. 221 ; Bone v. Eckless, 5 H. & N. 925 ; Palyart v. Leckie, B M. & S. 290 ; Aubert v. Walsh, 3 Taunt. 277 ; Tap- pendeu v. Randall, 2 B. & P. 4(17 ; Busk o. AValsh, 4 Taunt. 290 ; Smith ,■. Bick- more, 4 Taunt. 474 ; Gatty u. Field, 9 Q. B. 431 ; Taylor u. Bowers, L. R. 1 Q. B. D. 291 ; Thomas v. Richmond, 12 Wall. 3.55 ; White c. Bank, 22 Pick. 184 ; Lowell V. R. R., 23 Pick. 24 ; Utica Ins. Co. I . Kip, 8 Cow. 20 ; Adams Ex. Co. V. Reno, 48 Mo. 264. See, however, Kingsbury v. Flemming, 66 N. C. 524; Alston />. Durant, 2 Strobh. 257. In Kieweit r. Rindskopf, 46 Wis. 481, it was lield that money extortionately received by attorney to obtain mitija tion of sentence of a person under in dictmeut could be recovered back, 528 2 Tappenden v. Randall, 2 B. & P. 467 ; Busk ,.•. Walsh, 4 Taunt. 290 ; Colton <■. Thurland, 5 T. R. 405 ; infra, §§ 449 et seq. » Ibid.; Hodson v. Terrill, 1 C. & M. 797 ; Batson v. Newman, L. R. 1 C. P. D. 573; Hampden ...Walsh, L. R. 1 Q. B. D. 189 ; see infra, §§ 726, 729. * Palyart «. Leckie, 6 M. & S. 290 ; Foote V. Emerson, 10 Vt. 338 ; Dixon v. Ormstead, 9 Vt. 310 ; see Utica Ins. Co. ['. Scott, 19 Johns. 1 ; Utica Ins. Co. c. Bloodgood, 4 Wend. 652. 5 Spring Co o. Knowlton, 103 U. S. 49. In the. opinion of the court. Woods, J., said : " The views of the text- wri- ters are sustained by a vast array oi authorities, both English and Ameri- can. A few will be cited. The case of Taylor v. Bowers, L. R. 1 Q. B. Div. 291, was an action to recover the value of property assigned for the purpose of defrauding creditors. A verdict was CHAP. XV.] ILLEGALITY. [§ 354. also, cannot hold back proceeds from another of whom he was representative, on the ground that there was illegality in the way of getting the money.' But where the plaintift" and the defendant agreed to conduct an unlicensed theatre, the enter- prise being illegal, and the plaintiff in pursuance of the agree- ment paid out certain money, with the expectation of large gains if the enterprise was forced through, it was held that rendered for plaintiff with leave to move to enter a verdict for the defendant. A rule was obtained on the ground that the plaintiff could not hy the allega- tion of his own fraud get back the goods from the defendant. The Queen's Bench sustained the verdict, the chief justice, Cockburn, delivering the opin- ion. The defendant then appealed to the Court of Appeals, where the judg- ment was affirmed. Both courts agreed that an illegal contract partially per- formed might be repudiated and the money paid upon it recovered. "Lord Justice Mellish, in the Court of Appeals, said : ' If the illegal trans- action had been carried out, the plain- tiff could not, in my judgment, have recovered the money. But the illegal transaction was not carried out, it came wholly to an end. To hold that the plaintiff is entitled to recover does not carry out the illegal transaction, but the effect is to put everybody in the same situation as they ^ere before the illegal transaction was determined on and before the parties took any steps to carry it out. That, I apprehend, is the true distinction in point of law. If money is paid or goods delivered-for an illegal purpose, the person who had so paid the money or delivered the goods may recover them back before the illegal purpose is carried out, but if he waits till the illegal purpose is carried out, or if he seeks to enforce the illegal transaction, in neither can he maintain an action ; the law will not allow that to be done.' VOL. I. — 34 " In Thomas v. The City of Richmond, 12 Wall. 355, this court cites with ap- proval the note of Mr. Frere to the case of Smith r. Bromley, 2 Doug. 696, to the effect that a recovery can be had as for money had and received, when the illegality consists in the contract itself, and that contract is not exe- cuted ; in such case there is a locus penitentice; the delictum is incomplete, the contract may be rescinded by either party. " The rule is applied in the great ma- jority of the cases, even when the par- ties to the illegal contract are in pcn-i delicto, the question which of the two parties is the more blamable being often difficult of solution and quite im- material. We think, therefore, that the facts of this case present no obsta- cle to a recovery by Knowlton's admin- istrators of the sum paid by him on the stock which had been subscribed for by Sheehan." Aff. Knowlton v. C. & E. Springs, 14 Blatch. 364; see, contra, S. C, 57 N. Y. 518 ; cf. White ;;. Bank, 22 Pick. 181 ; Lowell V. R. R., 23 Pick. 32; Utica Ins. Co. (,■. Scott, 19 John. 1 ; Utica Ins. Co. u. Bloodgood, 4 Wend. 652 ; Curtis V. Leavitt, 15 N. Y. 9 ; Skinner ;;. Hen- derson, 10 Mo. 205. 1 Infra, § 357 ; Armstrong v. Toler, 11 Wheat. 258 ; Planters' Bk. v. Union Bk., 16 Wall. 483 ; Baehr v. Wolf, 59 111. 470 ; Douville v. Meenik, 25 Wis. 688 ; Heckman v. Swartz, 50 Wis. 264 ; and other oases cited, infra, § 357. 629 § 355.] CONTRACTS. [CHAP. XV. he could not call upon the defendant to contribute.' And, as a general rule, a party who goes into an illegal enterprise risks all he puts in it, and cannot, in case of his confederate proving uutrue, or the adventure miscarrying, recover back his ad- vances.^ It should be added that if there be an agreement to rescind an illegal contract, and to return the money advanced on one side, the contract not having become operative, a suit lies to recover such money back.' § 355. Goods deposited with a party for illegal purposes, the deposit not amouutins; to a substantive ofience. Goods ^ ° ' deposited may be reclaimed and recovered back by the owner inchoate upon repudiating the bailment.^ This has been held pose may '^' to be the case where goods are transferred under a be recov- fictitious Sale to an agent for the purpose of eluding the owner's creditors, in which case the owner, by repudiating the transaction, may recover them from the agent, or his assignee with notice.' " The vendor who had sold goods so as to pass the general property, but without delivery, or the lessor who had executed a demise to take eii'ect at a future day, might rescind the contract and stand remitted to his original possession on learning the unlawful use of the property designed by the purchaser or lessee.'"'' And even supposing the illegal purpose was known, yet if there was to be no complicity in carrying it out,' or if the agreement was rescinded before any action was taken on it, then there may be a recovery back. ' De Begnis o. Armistead, 10 Bing. Bowers, L. R. 1 Q. B. D. 291 ; 107. Symes <■. Hughes, L. R. 9 Eq. 475. 2 Auberti'.Maze, 2B. &P.371;Booth In Taylor c. Bowers, A. transferred I. Hodgson, 6 T. R. 405 ; Cannan u. goods to B. under a fictitious assign- Bryoe, 3 B. & Aid. 181 ; supra, §§ 335 ment to defraud A.'s creditors. B. et seij. See, contra, the earlier cases of sold the goods to C, with notice of the Burnell ». Minst, 4 Moore, 340; Faik- fraud, hut without A.'s consent. It ney v. Reynous, 4 Burr. 2069 ; Petrie was held that A. might repudiate the V. Hannay, 3 T. R. 418. transaction and recover the goods from ' Lea V. Cassen, 61 Ala. 312 ; infra, C. § 355. « Pollock, 3d ed. 341. 4 See infra, § 725. 7 gee supra, § 343. 6 Leake, 2d ed. 774 ; Taylor u. 530 CHAP. XV.] ILLEGALITY. [§ 357. § 356. When, however, the mere fact of supplying either money or goods to an unlawful enterprise is crimi- nal — e. ^., when money is contributed to a treason- themcie able conspiracy — and when the fact of the supply ^^^6,"''' goes to encourage others in forming an unlawful |arty can- confederacy, then the agreement has been so far not recover executed that the party supplying the goods or money cannot, by repudiating the conti-act, recover either back. He cannot play fast and loose. He cannot take his chance in a criminal venture, and then, after it is advanced in part by his aid, back out and recover what he contributes. The cases where this right of repudiation exists are those of merely unexecuted agreements in which the contribution was not a substantive crime.^ § 357. li the contract between the principal and the agent was not of itself illegal, the agent cannot retain, as . , . . . , , ■, „ . . Agent can- against his principal, the proceeds of a transaction not hold conducted by him for his principal on the ground principal™ that the transaction was illegal.^ And if A. pays °^a,f t'J,e°^ money to B. for the use of C, B. cannot sustain a transaction refusal to pay to C. by setting up the illegality of the agreement between A. and C.^ A trustee, also, cannot refuse to account on ground that a particular in the trust involved a breach of the law.^ Where, also. A., with E.'s consent, effects a policy for his own benefit in B.'s name for B.'s life, A. having no insurable interest therein, B. or his ' Tappenden v. Randall, 2 B. & P. 421 ; Aubery v. Fisk, 36 N. Y. 47 467. On the distinction between at- Woodworth v. Bennett, 43 N. Y. 273 tempts which are merely inchoate con- Murray v. Vanderbilt, 39 Barb. 140 ceptions, and are therefore not crimi- Lestapies (,. Ingraham, 5 Barr, 71 nal, and attempts which are substan- Baehr i,. Wolf, 59 111. 470 ; Daniels tive crimes, see Wh. Cr. L. 8th ed. v. Barney, 22 Ind. 207 ; Douville u. §§ 180 et seq. Merrick, 25 Wis. 688 ; ■ Heckman u. 2 Infra, § 725 ; Wh. on Agency, Swartz, 50 Wis. 267 ; De Leon v. §§ 242, 250, 573, 761 ; Farmer v. Rus- Trevino, 49 Tex. 88 ; see West. Un. sell, 1 B. & P. 296 ; Tenant v. Elliott, Tel. Co. v. Blanchard, 66 Ga. 1 B. & P. 3 ; Bousfield v. Wilson, 16 ' Tenant u. Elliott, 1 B. & P. 3 ; M. & W. 185 ; Johnson v. Lansley, 12 Kinsman v. Parklmrst, 18 How. 2SSI. C. B. 468; Planters' Bk. u. Union Bk., ^ Infra, § 726; Sheppard v. Oxen- 16 Wal.'483; Caldwell u. Harding, 1 ford, 1 K. & J. 491 ; Beeston <,. Bees- Lowell, 326 ; Phalen v. Clark, 19 Conn, ton, L. R. 1 Ex. D. 13. 531 § 360.] CONTRACTS. [CHAP. XV. representatives cannot set up this fact against A.' Au agent, also, on a settlement of accounts, cannot set up against a principal an illegal taint attaching to a special item.^ Even though the purpose for which money is given to an agent may be illegal, the principal may revoke the advance at any time before actual appropriation takes place, or may recover the money from the agent in case the money be paid oyer by the latter after notice not to pay over.^ But where the prin- cipal's title is based on tort, an agent may set up as against the principal the title of a third person from whom the goods were unlawfully taken, and who has given notice of suit for the goods. ^ And when the contract of agency is itself tainted with illegality, its enforcement will be refused ;' and this is eminently the case when the act constituting the agency is in itself an indictable offence.^ ISTor can such a suit be main- tained when the object is to obtain a share in an illegal speculation.' II. VIOLATION OF STATUTE. § 360. A contract whose object is to violate a statute will not be enforced by the courts of the state by which the statute is enacted.^ "Whether a contract coniiicts with a statute is ' Worthington v. Curtis, L. R. 1 Ch. B. N. S. 79 ; Grraeme v. Wroughton, 11 D. 419. Exch. 146 ; Neumau v. Neumfin, 4 M. 2 Infra, § 725. & S. 66 ; Pellecat v. Angell, 2 C. U. k » Hastelow v. Jackson, 8 B. & C. R. 311 ; Cope v. Rowlands, 2 M. & W. 221 ; Bone nally not inconsistent with the statute, virtually invalidate. " t j contravenes its provisions.^ This has been frequently held with regard to stipulations evading usury statutes,^ and with regard to assignments evading bankrupt laws.' — If aeon- tract conflicts with the general policy and spirit of a statute governing it, it will not be enforced, although there may be no literal conflict.' 1 Wh. Con. of L. §§482-497; Story's t. Baker, 52 111. 241. And so nnder Con. of L. §§ 243 c( segr. ; Schlesinger !■. the federal constitution, before the Stratton, 9 R. I. 578 ; Scott v. Duffy, 14 abolition of slavery consequent on the Penn. St. 18. As to usury see infra, late civil war. Com. d'. Aves, 18 Pick. § 463. 193. 2 Richardson v. Rowland, 40 Conn. 5 De Begnis u. Armistead, 10 Bing. 565 ; see Grell v. Levy, 16 C. B. N. S. 107 ; Booth v. Bank, 7 CI. & F. 509 ; 79 ; B.^i-rien v. McLane, 1 Hoff. Ch. 421 ; Bank U. S. v. Owens, 2 Pet. 27 ; Eber- infra, §§ 421 et seq. man v. Reitzel, 1 W. & S. 181. 3 Wh. Con. of L. § 493 ; Pollock, 334 ; e Evans v. Nagley, 13 S. & R. 218 ; Santos V. lUidge, 8 C. B. N. S. 874. Marsh v. Robeno, 5 Phila. 190 ; Man- « Green v. Collins, 3 Cliff. 494; Hill derson v. Bk., 28 Penn. St. 379 ; see V. Spear, 50 N. H. 253 ; Webber v. infra, §§ 461 et seq. Donnelly, 33 Mich. 469. In Osborn v. ^ Mackay ex parte, L. R. 8 Ch. 643 ; Nicholson, 13 Wall. 656, it was argued Williams ex parte, L. R. 7 Ch. D. 138 ; by Swayne, J., that a note given for a Pierce v. Evans, 61 Penn. St. 415 ; see slave in a state where slavery existed, i-nfra, § 379. could be sued out in a state where » Steaines v. Wainwright, 8 Scott, slavery did not exist. See Roundtree 280; Craig d. Missouri, 4 Pet 410- 534 CHAP. XV.] ILLEGALITY. [§ 364. § 36.3. If a statute prohibits an act, it is not necessary, in order to invalidate a contract to do the act, that Notneces- the statute should provide a penalty.' The fact that eary that ^ i .; penalty a thing is prohibited, if it be in the nature of a should be , , . , • , • • /Y- 1 prescribed. public wrong, makes its commission an onence ; and in any view vitiates a contract for its performance.^ § 364. It does not follow, on the other hand, because a statute imposes a penalty on a particular act, that such act is illegal. A penalty may be a mere police tax ; aity'im"' it may be equivalent to saying, " You are at liberty ^°t malfe^^ to do this, but if you do, you must pay a certain an act amount to the state." When a penalty is thus in the nature of a tax, a contract to do the act on which the penalty is imposed is not in itself unlawful.^ When statutory conditions, also, are imposed on the conduct of a business or profession, agreements made without observing these condi- tions, if no stigma of wrong is attached to the specific transac- tion, and if it appears that the condition was imposed for merely administrative purposes, e. g., the convenient collec- tion of the revenue, will not be held invalid.^ Hence, a con- tract of sale is not void, because the thing sold may be open Bartle v. Coleman, 4 Pet. 184 ; Fuller State v. Fletcher, 5 N. H. 257 ; Com. v. V. Dame, 18 Pick. 472 ; White i'. Bass, Shattuck, 4 Cush. 141 ; Seidenbender v. 3 Cush. 449 ; and other cases cited, 2 Charles, 4 S. & R. 159 ; Keller u. State, Ch. on Cont. 11th Am. ed. 1003. 11 Md. 525. 1 Leake, 2d ed. 723 ; Forster v. Tay- » Leake, 2d ed. 724 ; Johnson v. Hud- lor, 5 B. & Ad. 896 ; Cope v. Rowlands, son, 11 East, 180 ; Gremare v. Valon, 2 2 M. & W. 157 ; Cork & Youghel R. Camp. 144 ; Smith v. Mawwood, 14 M. R. in re, L. R. 4 Ch. 748 ; Cowan u. & W. 463 ; Brown v. Duncan, 10 B. & Milburn, L. R. 2 Ex. 230; Combs v. C. 93; Bailey u. Harris, 12 Q. B. 905; Emery, 14 Me. 404; Pattee v. Greely, Harris v. Runnels, 12 How. U. S. 79 ; 13 Mete. 284; White v. Bass, 3 Cush. Larned v Andrews, 106 Mass. 435. 449; Mitchell «. Smith, 1 Binn. 118 ; * Pollock, 262; Benj. on Sales, 3d and see Sussex Peerage Case, 11 CI. & Am. ed. § 538. That it is otherwise F. 148-9, cited Pollock (Wald's ed.) when the object of the statiTte is to 261. make the contract illegal, see Larned * 2 Hawk. 0. 25, s. 4; R. «. Davis, v. Andrews, 106 Mass. 435; Favor u. Say. 163 ; R. v. Gregory, 2 N. & M. Philbrick, 7 N. H. 340 ; Schermerhorn 478 ; 5 B. & Ad. 555 ; Mayor of Nor- v. Tolman, 4 Kern. 93 ; and cases cited wich V. Norfolk R. R., 4 E. & B. 397 ; infra, § 365. Harris v. Runnels, 12 How. U. S. 80 ; 535 § 365.] CONTRACTS. [chap. XV. to seizure under a license or excise law ;' nor because the broker or peddler making the sale was not duly licensed, thereby exposing himself to a penalty f nor because the agent was prohibited from acting as such f nor because certain formalities presented by law have not been complied with.'^ § 365. But when a statute imposes a penalty, not as a tax, but as a punishment, then a contract to do the thing otherwise u • i j.i. li ■ • i ■ t ■^ when act is on which the penalty is imposed is orainarily un- uniawfui lawful f and so when an act is absolutely pro- hibited.^ And when conditions on the exercise of a business are imposed in a statute for the maintenance of public order, or for the protection of parties, or on grounds of public policy, then contracts by such persons, in violation of the statute, are void.^ Thus it has been held that where a pawn-broker lends money without complying with the statu- tory requisites, he cannot recover the loan f nor can a foreign » Bailey v. Harris, 12 Q. B. 905; Wetherell v. Jones, 3 B. & Ad. 221. 2 Smith V. Linds, 4 C. B. N. S. 395 ; Jolinson u. Hudson, 11 East, 180 ; Jones V. Barry, 33 N. H. 209; see Lewis V. Welch, 14 N. H. 294. 3 Ward V. Smith, 7 Wall. 447 ; Conn V. Penn, Pet. C. C. 523 ; Griswold v. Waddington, 16 Johns. R. 438 ; Chas- tain V. Bowman, 1 Hill, S. C. 270 ; Lyon V. Kent, 45 Ala. 656. « Smith V. Mawwood, 14 M. & W. 452; see Aiken u. Blaisdell, 41 Vt. 655. That a statute which does not absolutely prohibit a thing not in itself immoral, should not be strained be- yond its reasonable meaning so as to interfere with liberty, see Barton v. Muir, L. R. 6 P. C. 134. " Drury v. Defontaine, 1 Taunt. 136 ; Bensley v. Bignold, 5 B. & Al. 335 ; Fennell v. Ridler, 5 B. & C. 406 ; see Elkins V. Parkhurst, 17 Vt. 105 ; Com. V. Shattuck, 4 Gush. 141 ; Smith v. Arnold, 106 Mass. 269 ; Lamed „. Andrews, 106 Mass. 435 ; People v. Albany, 11 Wend. 539 ; Bell .;. Quin, 536 2 Sandf. 146 ; Seidenbender v. Charles. 4 S. & R. 151 ; Morris Run Coal Co. v. Barclay Coal Co., 68 Penn. St. 173; Woods V. Armstrong, 54 Ala. 150 ; see Prescott V. Battersley, 119 Mass. 285. and cases cited supra, § 364. 6 Cope V. Rowlands, 2 M. & W. 149 : see Bensley v. Bignold, 5 B. & Aid. 335 ; Griffith v. Wells, 3 Denio, 22« ; Schermerhorn v. Tolman, 4 Kern. 93 ; Burkholder u. Beetem, 65 Penn. St. 496. "A contract is void if prohibited by a statute, though the statute inflicts a penalty only, because such a penalty implies a prohibition." Cope (.Row- lands, 2 M. & W. 149 ; adopted in Pol- lock, 3d ed. 271. It would be better to say ''when such a penalty implies a prohibition." See De Begnis v. Arm- istead, 10 Bing. 110; S. P. Roby !>. West, 4 N. H. 289 ; Mitchell v. Smith, 1 Binn. 110 ; Stanly j;. Nelson, 28 Ala. 514. ' Taylor t/. Gas Co., 10 Ex. 293; Ritchie v. Smith, 6 C. B. 462. 8 Fergussou v. Norman, 5 Bing. N. C. 76. CHAP. XV.] ILLEGALITY. [§ 367. insurance company without complying with the statutory conditions.' When a statute, also, makes a license from two justices a condition precedent to certain kinds of contracts by surveyors of highways, contracts without such license are invalid.^ Under the act of congress, also, mortgages given to national banks to secure future loans are void f though it is otherwise with loans by national banks to a particular cus- tomer in excess of one-tenth of the capital.* Where, also, a penalty is imposed on selling by the cord wood not measured by a wood measurer, the object being to prohibit all such sales, a sale of this kind is void, and the seller cannot recover the price ;' and so of a sale of shingles not of a size permitted by local statute.' § 366. It may happen that by special legislation a particu- lar class may be subjected to only a limited liability on its contracts. Such legislation has taken place tected'by' with regard to contracts for labor, and to contracts ^ajTsue by sailors; and under the same general head may be considered contracts by infants. The fact, however, that the liability of such parties is limited does not interfere with their right to sue on contracts which are for their own benefit.' § 367. Statutes prohibiting the performance of contracts, if impairing the obligation of such contracts, are inoper- ative under the constitution of the United States. ti^^XhT It may happen, however, that such statutes are in ^^^J^ ^'^- . t lawful by execution ot a power reserved by the state, as where subsequent 1 Thorne v. Ins. Co., 80 Penn. St. 15. lor, 5 B. & Ad. 896 ; Coombs v. Emery, 2 Barton c. Piggott, L. R. 10 Q. B. 14 Me. 404 ; Harris <,-. Runnels, 12 86. How. U. S. 80 ; Bancroft o. Dumas, 21 - Fowler v. Scully, 72 Penn. St. 456. Vt. 456 ; Miller v. Post, 1 Allen, 434 ; * O'Hare v. Bank, 77 Penn. St. 96 ; White v. Bass, 3 Cush. 449 ; Prescott Mapes V. Bank, 80 Penn. St. 163. v. Battersly, 119 Mass. 285 ; Griffith 5 Pray v. Burbank, 10 N. H. 377. v. Wells, 3 Denio, 226 ; Seidenbender 6 Wheeler v. Russell, 17 Mass. 258. v. Charles, 4 S. & R. 159 ; Fowler u. That the imposition of a penalty on Scully, 72 Penn. St. 456 ; Thorne v. the act stamps the act, so far as cOn- Ins. Co., 80 Penn. St. 15 ; and cases oerns parties intelligently concocting cited 2 Ch. on Cont. 11th Am. ed. it, with illegality, see Fergusson v. 1004. Norman, 6 Scott, 794; Houston v. ' 5«pra, §§ 2, 353. But see Hackett Mills, 1 M. & R. 325 ; Forster v. Tay- v. Chellerton, supra, § 353. 537 367.] CONTRACTS. [chap. XV. Ugisiation in chartering a corporation, the right to amend its ofjudkfai charter is reserved ; or it may be that they are in opinion. exercisc of the right of eminent domain or of other prerogatives to which the constitutional restriction does not apply. Such a statute, if constitutional, is as much a bar to the performance of a contract as it would have been had it been enacted prior to the inception of the contract ; and this is also the case with lawful executive action, by which the per- formance of the contract is made impossible.^ But where a contract was originally legal, a subsequent statute making it illegal does not discharge an agent appointed under the con- tract from accounting to his principal.^ And as a general rule, a contract valid under the laws of a state as expounded at the time it was made is not affected by a subsequent change of judicial opinion as to the validity of such a contract.' The courts, also, following the maxim Communis error facH jus, will sustain a prevalent construction which may be based on erroneous principles, rather than disturb titles settled under such construction.^ But, to enablethe maxim to operate, the ' Supra, § 305 ; Pollock, 340 ; Atkin- son V. Ritchie, 10 East, 530 ; Brown c. Delano, 12 Mass. 370 ; Barker v. Hodg- son, 3 M. & S. 267 ; Esposito o. Bow- den, 7 E. & B. 763. 2 Newbold v. Sims, 2 S. & R. 317. ^ 1 Dill. JIunic. Corp. 146 ; Gelpke c. Dubuque, 1 Wall. 175 ; Olcott c Supervisors, 16 Wall. 67S ; Elmwood L-. Marcy, 92 U. S. 291 ; Venice v. Mur- doch, 92 U. S. 494; Walker v. State, 12 S. C. 200. ■ - Broom's Maxims, 5th ed. 139 ; Wh. on Et. § 12-12 ; Kostenbader u. Spotts, 80 Penn. St. 430. "This" {communis error facit jus), " tliough an admitted legal maxim, is seldom applied in the administration of justice, and never without the ut- most caution. The reason is obvious, it permits u misconception to become law in destr action of the real law of the case. In my judgment, no error should be allowed to possess that de- 538 gree of dignity and force until it has been sanctioned by a tribunal of supe- rior jurisdiction, and subsequently treated as law in the actual business affairs of men. The true rule, I be- lieve, to be this : That no error is enti- tled to be accepted as law by the courts until it has been declared to be law by a competent judicial decision and after- wards so far adopted in practice that a return to the true law would seriously impair existing interests. "In O'Connell v. Queen, 11 CI. & F. 373, Lord Denman said : ' When in pursuit of truth we are obliged to in- vestigate the grounds of the law, it is plain, and has often been proved by recent experience, that the mere state- ment and restatement of a doctrine — the mere repetition of the cantilena of lawyers — cannot make it law if it be irreconcilable with some clear legal principle.' "And Lord Brougham, in De Vaynes CHAP. XV.J ILLEGALITY. [§ 370. error must not be " floating," but " must have been made the groundwork and substratum of practice."' § 368. A contract void at the time of its inception cannot be validated by subsequent legislation. And if it But void violates, when made, a statute, the repeal of that contract ' . cannot be statute does not make it operative.^ validated. III. IMMORALITY. § 370. " Contracts to commit an immoral offence, or to give money or reward to another to commit an immoral ^gree- oft'ence, or to induce another to do somethinsr ag-ainst raents to • 1 induce im- the general rules of morality, though far more inde- morality finite than the previous class (contracts to commit a crime), have always been held to be void."' " Generaliter novimus, turpes stipulationes nullius esse momenti."* — "Cum omnia, quae contra bonos mores vel in pactum vel in stipu- r. Noble, 2 Russ. & Myl. 506, said: ' Common or universal error may he said to make the law, especially if the opinion of lawyers and the decisions of judges have been ruled by it.' " Justice Blackburn says, in Jones v. Tapling, 12 C. B. (N. S.) 846 : ' There are cases in which a decision originally erroneous has been so long acquiesced in and acted on, that a return to the proper principle would greatly aifect existing interests. This is peculiarly the case in questions of conveyancing law. In such cases the maxim, commu- nis error facit jus, may be applied.' ' ' The error approved in Morecock v. Dickins, Amb. 678, was one that had been sanctioned by a prior adjudica- tion. So, too, in D'Arcy v. Blake, 2 Sch. & Lef. 387, the error approved by Lord Redesdale was one which prior decisions had made law. He said,: ' The decisions to the full extent are so old, so strong, and so numerous, so adopted in every book on the subject, and so considered as settled law, that it would be very wrong to attempt at this time to alter them.' In my opinion, there is no evidence whatever, in this case, that the error which the com- plainants insist shall have the force of law, has ever been recognized or ap- plied by any authority competent to give it the force of law." Runyan, C, Ocean Beach Ass. v. Brinley, 34 N. J. Eq. 448. • Isherwood v. Oldnow, 3 M. & S. 382; R. V. Sussex, 2 B. & S. 680; Phipps V. Ackers, 9 CI. & F. 598. 2 Milne „. Huber, 3 McL. 212 ; Rob- inson V. Barrows, 48 Me. 186 ; Ludlow V. Hardy, 38 Mich. 690; Anding v. Levy, 57 Miss. 51 ; Decell t. Lowen- thal, 57 Miss. 331 ; see Mays v. Wil- liams, 27 Ala. 267. ' Jessel, M. R., Printing Registering Co. V. Sampson, L. R. 19 Eq. 465 ; S. P. Howson V. Hancock, 18 T. R. 577 ; Lowell V. R. R., 23 Pick. 32 ; Bredine's App., 92 Penn. St. 241 ; see White v. Bank, 22 Pick. 184 ; Belding v. Pitkin, 2 Gaines, 149 ; Forsythe v. State, 6 Ohio, 19. * L. 26, de V. 0. (45,1). 539 § 371.J CONTRACTS. [CHAP. XV. lationem deducuntur, nullius momenti sunt."' A printer, in conformity with this rule, cannot recover the price of ■vvork done on a libellous book f nor is a promise to indemnify the publisher of such a book binding.' In such cases the court, on the immorality of the transaction appearing from the plaintiff's opening, will refuse to hear the suit. — " The court will not listen to claims founded upon services rendered in violation of common decency, public morality, or the law. History furnishes instances of robbery, arson, and other crimes committed for hire. If after receiving a pardon or suffering the punishment imposed upon him, the culprit should sue the instigator of the crime for the promised reward — if we may suppose that audacity could go so far — the court would not hesitate a moment in dismissing his case and sending him from its presence, whatever might be the character of the defence. It would not be restrained by defects of pleading, nor indeed could it be by the defendant's waiver, if we may suppose that in such a matter it would be offered. What is so obvious in a case of such aggravated criminality as the one supposed, is equally true in all cases where the services for which compensation is claimed are forbidden by law or con- demned by public decency or morality.''^ It has consequently been held that an action cannot be maintained for a breach of a contract in renting rooms which the owner refused to allow the lessee to use when it appeared that they were to be opened for irreligious lectures.'^ So of im- § 371. Wherever an agreement amounts to an iu- agreements dictable Conspiracy, it is void when sued on in a civil- t"in«cta^ court. Under this head may be enumerated con- bieconspi- spiracies to seduce or to cause to elope, or to de- racies. ^ -^ ' 1 L. 6, I. 30, C. de pact. (2, 3). See it seems highly probable, that agree- Colburn v. Patmore, 1 C. M. & R. 73 ; ments are void which directly tend to Worcester v. Eaton, 11 Mass. 368. discourage the perforniance of social 2 Poplett V. Stockdale, Ey. & M. 337. and moral duties. Such would be a ' Shackell o. Hosier, 2 Bing. N. C. covenant by a landowner to let all his 634. cultivable land lie waste, or a clause " Field, J., Oscany a. Arms Co., 103 in a charter party prohibiting deviation U. S. 261 ; cited in/ra, §§ 402, 403. even to save life." Pollock, 3d ed. 5 Cowan V. Milbourne, L. R. 2 Exch. 323, citing Cockburn, C. J., L. R. 5 G. 230. " It has never been decided, but P. D. 305. 540 CHAP. XV.] ILLEGALITY. [§ 372. bauch;' to procure a fraudulent marriage or divorce f to pro- cure an abortion f and to interfere with the rights of sepul- ture.^ § 372. "Wherever a libel would be indictable, then the courts refuse to enforce a contract of which its pre- soasto paration or publication is the consideration.^ Under ^^'^^'^• this head fall indecent and seditious publications, as well as libels on individuals.* — Mr. Pollock' maintains " that for all practical purposes the civil law is determined by and co- extensive with the criminal law in these matters ; the question in a given case is not simply whether the publication be immoral, but whether the criminal law would punish it as immoral." In view of the constitutional guarantees in this countrj' of the freedom of the press, this position will be generally accepted in the United States. At the same time it does not follow that because by a local statute publications of a certain class, otherwise libellous, are pi'ivileged, the law will enforce an agreement for the issue of such publications. It may be easy, for instance, to conceive of indecent publications in respect to candidates for office, which would be privileged by some of our statutes, but which, as a matter between individuals, would be so steeped in turpitude that no court would give its aid to sustain an agreement for their publication. And we may safely say that no agreement will be sustained for pub- lishing a document that is a libel at common law. — As we have seen, the concurrence of other motives is in such cases no defence.* 1 Wh. Cr. L. 8tli ed. § 1361 ; E. ^. 43 ; Resp. o. Hevioe, 2 Yeates, 114 ; Wakefield, 2 Town. St. Tr. 112; R. u. Cole u. People, 84 111. 216; State v. Delaval, 3 Burr. 1435 ; R. u. Gray, 1 Murphy, 6 Ala. 765. East, P. C. 460 ; Mifflin v. Com., 5 W. " Com. v. Demain, Brightly's R. 441. & S. 461 ; Anderson v. Com., 5 Rand. " Wh. Cr. L. 8th ed. § 1365. (Va.) 627 ; State v. Savoye, 48 Iowa, = Stockdale v. Onwhyn, 5 B. & C. 562. 173; Poplett o. Stockdale, Ry. & M. * Wh. Cr. L. 8th ed. § 1362 ; R. v. 337 ; Gale v. Leckie, 2 Stark. 96. Wakefield, 2 Town. St. Tr. 112 ; R. ■/. ^ wh. Cr. L. 8th ed. §§ 1594 et seg. Means, 2 Den. C. C. 79 ; 4 Cox C. C. ' 3d ed. 286. 423 ; Com. v. Waterman, 122 Mass. ^ Supra, § 339. 541 373.] CONTRACTS. [chap. XV. So as to agreement for illicit cohabita- tion. 373. An agreement is void when the consideration is future illicit cohabitation,' no matter what other considerations may unite, or how skilfully the illegal object might be cloaked f nor is the agreement made valid by a seal.' A promise of marriage on considera- tion of sexual intercourse also is void.* A promise, also, made in compensation for past illicit cohabitation is void for want of consideration f though if made under seal it would bind ;" and this even though the cohabitation continues after execu- tion of the deed.' — And an actual transfer of property in con- sideration of seduction and of sufferings undergone by the woman, cannot afterwards be impeached by either the party making the settlement or his representatives or assignees.' — 1 Leake, 2d ed. 761 ; Walker v. Per- kins, 1 W. Bl. 517 ; 3 Burr. 1568 ; Gray v. Matbias, 5 Ves. 286 ; Benyon V. Nettlefold, 2 Mac. & G. 94 ; Coolidge c. Blake, 15 Mass. 429 ; Trovinger ,.. McBurney, 5 Cow. 253 ; Denman c. Douglass, 102 III. 341; Walker v. Gregory, 36 Ala. 180. 2 Hall V. Palmer, 3 Hare, 536. ' Walter v. Perkins, ut supra; Friend c. Harrison, 2 C. & P. 584. « Beaumont v. Reeve, 8 Q. B. 483 ; Steinfel v. Levy, 16 Abb. Pr. N. S. 26 ; Hanks v. Naglee, 54 Cal. 51. s Beaumont u. Reeve, 8 Q. B. 483 ; Fisher v. Bridges, 3 E. & B. 642 ; Wal- ker V. Gregory, 36 Ala. 180. See Shenk u. Mingle, 13 S. & R. 29. See amtra, Smith V. Richards, 29 Conn. 232. And in such case the law of the place of per- formance binds. Ligeois v. McCrackan, Blatchford, .T., 13 Rep. 298. 6 Gray v. Matthias, 5 Ves. 287 ; Knye V. Moore, 2 Sim. & St. 260 ; Brown < . Kinsey, 81 N. C. 245. ' Brown v. Kinsey, 81 N. C. 245. 8 Ayerst v. Jenkins, L. R. IB Eq. 275 ; White v. Hunter, 3 Fost. 128 ; Gisaf .-. Neval, 81 Penn. St. 354 ; and other cases cited Wald's Pollock, 270. The prevailing distinctions are thus 542 stated by Lord Selborne, Ayerst r. Jen- kins, L. R. 16 Eq. 282 (adopted by Pollock, 3d ed. 280), as follows : "Most of the older authorities on the subject of contracts founded on immoral con- siderations are collected iu the notes to Benyon ; . Nettlefold, 3 Mac. & G. 94, 100. Their results may be thus stated : 1. Bonds or covenants founded on past consideration , whether adulterous (Kay e V. Moore, 1 Sim. & S. 61), incestuous, or simply immoral, are valid in law, and not liable (unless there be other elements in the case) to be set aside in equity. 2. Such bonds or covenants, if given in consideration of future co- habitation, are void in law (Walker t . Perkins, 3 Burr. 1568), and therefore of course also void in equity. 3. Relief cannot be given against any such bonds or covenants in equity if the illegal consideration appears on the face of the instrument. 4. It an illegal con- sideration does not appear on the face of the instrument, the objection of ;:inr- ticeps criiitinis will not prevail against a bill of discovery in equity in aid of the defence to an action at law. Benyon c. Nettlefold, ut supra. 5. Under some (but not under all) circumstances, when the consideration is illegal, and does CHAP. XV.J ILLEGALITY. [§ 374. "When a contract for the benefit of the woman is on its face executed, bearing reference exclusively to past cohabitation, and the illicit cohabitation between the parties is resumed, this will not itself vitiate a bond or other sealed instrument of which the past cohabitation is the consideration, unless it should be proved that the averment in the contract that co- habitation was abandoned was put in as a fraud, and that the consideration was really in part future.' — A promise by the father of illegitimate children to their mother in consideration of her taking care of them is good.^ — Promises to support illegitimate children are hereafter distinctively discussed.^ § 374. ISTor can a party recover the price of goods supplied for an immoral purpose.* Thus, the price of goods sold for the purpose of carrying on a house of ill- fame cannot be recovered,' nor can the rent of a house for the same purpose.^ In such cases, how- 1™™°™! . purposes. ever, the scienter must be established, and it must be shown that the intention of the vendor or the lessor was to further the commission of the wrong, and that this was the object of the bargain.' If these conditions exist, an assignor So as to goods or houses fur- nished for not appear on the face of the instru- ment, relief may be given to a particeps criminis in equity." It should be added that, as in this country illicit cohabitation is an in- dictable offence, agreements to encour- age it are invalid, exclusive of other grounds, on the ground of this indicta- bility. 1 Gray v. Matthias, 5 Ves. 286 ; Hall V. Palmer, 3 Hare, 532 ; Shenk v. Min- gle, 13 S. & E. 29 ; Cusack v. White, 2 Const. St. Rep. 285 ; Brown ;;. Kinsey, 81 N. C. 245. A covenant, by parties who have been living in illicit cohabita- tion, but who have separated, for an annuity to the woman with a proviso that it cease upon the parties living together again, is valid ; though the proviso is void. Naden . McKisson, 8 S. & R. 122 Mass. 231. 420 ; State v. Buchanan, 5 Har. & J. 2 See Wh. Cr. L. 8th ed. §§ 1347 et 317 ; Bloomer v. State, 48 Md. 521 ; seq. ; Steinburg r. Bowman, 103 Mass. Byrd v. Hughes, 84 111. 174 ; People v. 32,'); Moore v. Wood, 100 111. 451; Richards, 1 Mich. 216; Powell a. In- Martin v. Bolton, 75 Ind. 295 ; Har- man, 8 Jones, N. C. 436 ; Heineman v. wood V. Knepper, 50 Mo. 456. Newman, 55 Ga. 262; Fentou u. H.im, 3 R. u. Lewis, II Cox, C. C. 404. 35 Mo. 409. That fraudulent coopera- * R. o. De Berenger, 3 M. & S. 67. tion on part ot vendee is essential, see 5 R. V. Hevey, 2 East, P. C. 858; Beurmann r. Van Buren, 44 Midi. Twitchell v. Com., 9 Penn. St. 211 ; 496. Wh. Cr. L. 8th ed. § 1357. ' State v. Younger, 1 Dev. 357. t McKewan v. Sanderson, L. R. 15 s r. „_ Robinson, 1 Leach, 44. Eq. 229 ; R. v. Aspinall, L. R. 1 Q. B. » Com. u. Judd, 2 Mass. 329. D. 735 ; R. ,.. Heymann, L. R. 8 Q. B. w gt.-ite v. Shooter, 8 Rich. 72. 102; Harringtons. Dock Co., L. R. 8 n Lockhart ». Van Alstyne, 14 Am. a. B. D. 549 ; R. v. Kenrick, 5 Q. B. Law Reg. 180 ; Culver v. Reno Real 49 ; Jackson v. Ludeling, 21 Wall. Est., 91 Penn. St. 367. 616; State u. Bartlett, 30 Me. 132; 12 Jackson r. Duchaire, 3 T. R. 551; Com. u. Warren, 6 Mass. 72 ; Fuller v. Willis v. Baldwin, 2 Doug. 450 ; Eegbie Dame, IS Pick. 472; Rice v. Wood, v. Phosp. Co., L. R. 1 Q B D 679° 544 CHAP. XV.] ILLEGALITY. [§ 376. creditors of their just rights.^ And no resulting trust will be permitted to arise from a settlement in fraud of creditors.^ ' See cases cited to §§ 379 et seq. ; and further, to the effect that all con- veyances in fraud of creditors are void, Huse V. Preston, 51 Vt. 245 ; Blant v. Gabler, 77 N. Y. 461; Southard u. Benner, 72 N. Y. 424 ; Miller v. Sauer- bier, 30 N. J. Eq. 71 ; Budd v. Atkin- son, 30 N. J. Eq. 530 ; Bunn u. Ahl, 29 Penn. St. 387 ; Blystone r. Bly- stone, 51 Penn. St. 373 ; Brocken- brough u. Brockenbrough, 31 Grrat. 580 ; McQuade «.Rosecrans, 36 Oh. St. 442 ; Appleton Bk. v. Bertschey, 52 Wis; 438; Crapster c. Williams, 21 Kan. 109 ; Annis v. Bonar, 86 111. 128 ; Tobey v. Robinson, 99 111. 222 ; Harri- son V. Bailey, 14 S. C. 334 ; Marshall V. Croom, 60 Ala. 121 ; Horn v. Wiatt, 60 Ala. 297 ; Sattler v. Marino, 30 La. An. Pt. I. 355 ; Fisher v. Lewis, 69 Mo. 629. lu Blennerhasset v. Sherman, Sup. Ct. U. S. 1882, it is said by Woods, J. ; " It is not to be disputed that, except as forbidden by the bank- rupt law, a debtor has the right to prefer one creditor over another, and that the vigilant creditor is entitled to the advantage secured by. his watch- fulness and'attention to his own inter- ests. Neither can it bo denied that the mere failure to record a mortgage is not a ground for setting it aside for the benefit of subsequent creditors who have acquired no specific lien on the property described in the mortgage. " But where a mortgagee, knowing that his mortgagor is insolvent, for the purpose of giving him a fictitious credit, actively conceals the mortgage which covers the mortgagor's entire estate and withholds it from the record, and while so concealing it represents the mortgagor as having a large estate and unlimited credit, and by these VOL. I. — 35 means others are induced to give credit to the mortgagor, who fails and is unable to pay the debts thus con- tracted, the mortgage will be declared fraudulent and void at common law, whether the motive of the mortgagee be gain to himself or advantage to his mortgagor. " It is not enough in order to support a settlement against creditors that it be made for a valuable consideration. It must be also bona fide. If it be made with intent to hinder, delay, or de- fraud creditors, it is void as against them, although there may be in the strictest sense a valuable or even an adequate consideration. (Twyne's case, 3 Co. Rep. 81 ; Holmes v. Penney, 3 Kay & J. 99 ; Gragg v. Martin, 12 Al- len, 498; Brady u. Briscoe, 2 J. J. Marsh. 212 ; Bozman v. Draughn, 3 Stew. 243 ; Farmers' Bank i'. Douglass, 11 Sme. & Mar. 469 ; Bunn v. Ahl, 29 Penn. St. 387; Root v. Reynolds, 32 Vt. 139; Kempner v. Churchill, 8 Wall. 362 ; Kerr on Fraud and Mis- take, 200. " As long ago as the case of Hunger- ford V. Earle, 2 Vern. 261, it was held that ' a deed not at first fraudulent may afterwards become so by being concealed or not pursued, by which means creditors are drawn in to lend their money.' This doctrine has been repeatedly reaffirmed. (Chancellor Kent in Hildreth u. Sands, 2 Johns. Ch. 35 ; Scrivener t. Scriveuor, 7 B. Mon. 374 ; Bank of the United States u. Housman, 6 Paige, 526)." 2G Alb. L.J. 116. 2 Perry on Trusts, 131 ; 1 Lead. Cas, in Eq. 320; Murphy v. Hubert, 16 Penn. St. 56 ; infra, § 377 ; see Lynch's App., 97 Penn. St. 349. 545 § 377.] CONTKACTS. [CHAP. XV. § 377. The subject of voidability of fraudulent conveyances is one which can only be treated in outline in such of voidabii- a work as the present. The following points, how- ' ^' ever, may be specifically noticed : — 1. Intent to defraud is the test of voidability. If the object of a sale be to defraud creditors, no matter what consideration was paid by the purchaser, the sale must be set aside.^ 2. Fraud is to be inferred from, all the ciixumstances of the case?' For this purpose other acts of fraud, forming part of the same system, are admissible.^ Want of consideration is an import- ant ingredient of proof in such an issue. Supposing a party knows himself to be insolvent, the fact of his parting with valuable property without consideration is naturally to be imputed to a desire to withdraw such property from his cred- itors' grasp. Hence, as a rule, all voluntary conveyances with intent to hinder creditors are void ; and this is the rule pre- scribed by the statute of Elizabeth, with the proviso that bona fide transfers for a good consideration are not thereby to be avoided. But to bring a transfer under the proviso, it must not merely be for a good consideration ; it must also be in good faith.^ Whenever an intention to defraud can be shown, > Twyne's case, 1 Sm. Lead. Cas. 7th ' Wh. on Ev. §§ 38 el seq. Am. ed. 33 et seq., where there is a full " Bispliam's Eq. § 243 ; and see exijosition of state legislation down to generally as to inference of fraud, 1872; Chandler o. Van Eoader, 24 Hiintiiigford < . Massey, 1 F. & F. 690 ; How. U. S. 224 ; Kempner v. Churchill, Lincoln r. Claflin, 7 Wal. 132 ; Cragin 8Wall.3B2; Blennerhasset I'. Sherman, ,. Tarr, 32 Me. 55; Knight o. Heath, Sup. Ct. U. S. 1882, 26 Alb. L. .1. 116, 23 N. H. 410; Pierce o. Hoffman, 24 cited supra, § 377 ; Robinson t . Holt, Vt. 525 ; Cook r. Moore, 11 Cush. 216 ; 39 N. H. 557 ; Bridge v. Eggleston, 14 Stof kwell v. SiUoway, 113 Mass. 3S4 ; Mass. 245 ; Harrison v. Phillips Acad., Horton r. Weiner, 124 Mass. 92 ; Gary 12 Mass. 456 ; Gragg v. Martin, 12 v. Hotailing, 1 Hill, 311 ; Booth u. Allen, 498; Wadsworth v. Williams, Powers, 56 N. Y. 22; Brown v. Shock, 100Ma3s.l26;Levicky. Brotherline,74 77 Penn. St. 471 ; Brinks c. Heise, 84 Penn. St. 149 ; Harrison v. Jaquess, 29 Penn. St. 246 ; Battles v. Laudenslager, Ind. 208 ; Henry v. H^inman, 25 Minn. 84 Penn. St. 446 ; McAleer r. Horsey, 199 ; Thorpe v. Thorpe, 12 S. C. 154. 35 Md. 439 ; Brink v. Black, 77 N. C. 2 Svpra, § 239 ; see Wh. on Ev. § 33', 59 ; Spivey v. Wilson, 31 La. An. 653 ; and cases there cited ; Towne v. Fiske, King u. Moon, 42 Mo. 551; Williams 127 Mass. 125 ; Blaut c. Gabler, 77 N. u. Barnett, 52 Tex. 130. Y. 461 ; Sandlin v. Robbins, 62 Ala. In Lehman v. Kelly, Sup. Ct. Ala. .477 ; Barman v. Hoskins, 56 Miss. 142. 1881, we have the following from 546 CHAP. XV.] ILLEGALITY. [§ 377. then an agreement to efl'ect such intention will be held void.' So far as concerns frauds on creditors, the principle which is adopted in the Roman law, and which was part of the old English common law, was affirmed by the statutes of 50 Edward III. ch. 6, of 3 Henry VII. ch. 4, of 13 Elizabeth, ch. 5, and of 27 Elizabeth, ch. 4, by which gifts and conveyances for the purpose of defrauding creditors were pronounced void. These stone, J. ; " In Crawford v. Kirksey, 55 Ala. 282, 293, speaking of sales upon a new consideration, and not in payment of a debt, we, after mature consideration, announced the following proposition : ' If the seller he insolvent, or in failing circumstances, and the purchaser knows, or is in possession of information reasonably calculated to stimulate inquiry, and which, if fol- lowed up, would lead to the discovery that the purpose of the seller is to put his property beyond reach, or other- wise to delay, hinder, or defraud his creditors, then a purchase under these circumstances, though full considera- tion is paid, is invalid as against cred- itors. But, if the purchase be made without such knowledge and without such information as reasonably to put him on inquiry, he acquh'es a good title, no matter how fraudulent the intent of the seller.' In Covanhovan c. Hart, 21 Penn. St. 495, Chief Justice Black declared the principle in the following language : ' If a debtor, with the purpose to cheat his creditors, converts his land into money, because money is more easily shuffled out of sight than land, he, of course, commits a gross fraud. If his object in making the sale is known to the purchaser, and he, nevertheless, aids and assists in executing it, his title is worthless as against creditors, though Jie may have paid a full price.' Hopkins v. Langton, 30 Wis. 379. It will be seen that under those authorities a sale, such as we are considering, is fraudu- lent and inoperative, if intended by an insolvent seller to delay, hinder, or defraud his creditors, and that intent be known to the purchaser, or if he be in possession of information reasonably calculated to stimulate inquiry, and which, if followed up, would lead to a discovery of the seller's fraudulent purpose. The underlying morals on which this sound principle rests are, that it is the legal duty of every debtor to keep his property open to the claims of his creditors and to make no effort to secrete it, or to sell it otherwise than for the honest purpose of paying his debts. If he secrete his property, or if he sell it witli the intent or purpose of delaying, hindering, or defrauding his creditors — eitlier one of the three purposes stamps his conduct as fraudu- lent, even if he sells for the full value, and the purchaser, although paying full value, acquires no valid title against the vendor's creditors if he aid him in consummating the fraud. He renders sufficient aid to invalidate his purchase when he knows the seller's fraudulent intention in making the sale, or has knowledge of facts and circumstances naturally and justly calculated to awaken suspicion in the mind of a man of ordinary care and prudence of the fraudulent intent of ■the seller. The cases of Brown u. Foree, 7 B. Mon. 357, and Brown v. Smith, ib. 361, cannot be followed." 1 Story's Eq. Jur. 12th ed. §§ 350 et seq. 547 § 377.] CONTRACTS. [CHAP. XV. statutes, recapitulating as thej' do sound ethical pi-inciples as well as rules of the Roman and old English law, have been liberally construed by the English courts. In this country, when not expressly re-enacted, they have been held in force as part of the common law.^ 3. Consideration must be valuable. This excludes mere moral obligations,^ though it is otherwise as to obligations founded on antecedent legal indebtedness ; and hence a party may waive the beneiit of a statute relieving him from legal liability.^ A marriage is a valuable consideration, so that a settlement made by a man on his intended wife, in consideration of marriage, is good, although he was insolvent at the time, unless the object was to defraud his creditors.^ But this does not preclude suitable settlements made by a solvent party on his family when he is engaged in a business not involving large hazards, such settlements not being made to prevent any probable contingent liability.' It is otherwise when the jiarty making the settlement either knows or ought to know himself to be insolvent.^ But " mere indebtedness," says Judge Stor}-, after noticing the divergency of views in the earlier cases, " would not per se establish that a voluntary conveyance was void, even as to existing creditors, unless the > Hamilton a. Russell, 1 Cranch, v. "Waite, 4 Vt. 389 ; 6 Vt. 411 ; Sal- 309 ; Clements v. Mome, 6 Wall. 299 Clark <-■. Douglass, d'l Penn. St. 408 see notes to Twyne's case, 1 Sm. Lead Cas. 7th Am. ed. ; 2 Kent's Com. 440 notes to Sexton t . Wheaton, 1 Am mon r. Bennett, 1 Conn. 525 ; Jackson 1 . Town, 4 Cow. 599 ; Mellon v. Mul- vey, 8 C. E. firi'pn, 198; Benedict r. Montgomery, 7 W. & S. 238 ; Ammon's App., U:5 Penn. St. 284; Williams r. Lead. Cas. 58. Davis, 69 Penn. St. 21 ; Morris r. 2 Infra, §§ 497, 512. Ziegler, 71 Penn. St. 450 ; Monroe ( . 3 /»/>«, § 613; Bump on Fraud. Smith, 79 Penn. St. 459; Frank r. Conv. 249. Welch, 89 111. 38 ; Huston r. Cantril, ■> Fraser v. Thompson, 1 Giflf. 49 ; 11 Leigh, 13t! ; Duhme u. Young, 3 Reade r. Livingston, 3 Johns. Ch. 489 ; Bush, 343; Laird v. Scott, 5 Heisk. Tomlinson a. Matthews, 98 HI. 17S ; 314; Harrell r. Mitchell, 61 Ala. 270. see infra, § 537, where this topic is ^ Townshend r. Windham, 2 Ves. discussed. 10; Hnlloway v. Millard, 1 Mad. 414; 5 See Ware v. Gardner, L. R. 7 Eq. Wick(>3 c-. Clarke, 8 Paige, 161 ; Kane 317; Townsend i. Westacott, 2 Beav. i. Roberts, 40 Md. 590; Patten u. 340 ; Sexton v. Wheaton, 8 Wheat. Casey, 57 Mo. 118 ; Power v. Alston, 229, and notes 1 Am. Lead. Cas. 57; 93 HI. 587; Wake u. Griffin, 9 Neb. Mattingly?;.Nye, 8 Wall. 370 ; Brackett 47. 548 CHAP. XV.J ILLEGALITY. [§ 377. other circumstances of the case justly created a presumption (or more properly, to use Lord Mansfield's term, 'argument' or ' inference') of fraud, actual or constructive, from the con- dition, state, and rank of the parties, and the direct tendency of the conveyance to impair the rights of creditors.'" An important additional element of fraud in such cases is the reservation of any secret benefit to the grantor.^ 4. Insolvency essential ; or intention to take great risks. As a condition of fraudulent intention, insolvency, known to the grantor, must be shown. A party who believes himself to have the pecuniary ability to make a gift, can make such gift without the risk of its being subsequently impeached, sup- posing his belief is not negligently adopted.' The intention to enter into a hazardous business, also, may cast the suspicion of fraud on any settlements made with a view of protecting the grantor's property from the contingency of loss in such business, if such settlements were unsuitable to the circum- stances of the party making them, and if they were concealed from parties trusting him on the faith of his supposed posses- sion of the assigned estate.* But indebtedness alone does not prejudice such a settlement, supposing the settlement to be reasonable, as there is no one who does not owe some debts. If, however, such debts are so great as to constitute probable insolvency, and if the grantor is or ought to be conscious of this fact; and if concealment or other modes of unfairness be shown ; then an intent to defraud may be inferred. The ques- tion is one of inductive reasoning.' " A fair voluntary con- veyance," justly says Lord Mansfield, " may be good against creditors, notwithstanding its being voluntary. The circum- stance of a man being indebted, at the time of his making a voluntary conveyance, is an argument of fraud. The question in every case, therefore, is, whether the act done is a bona 1 To this is cited Gale t). Williamson, Freeman v. Pope, L. R. 5 Ch. 538; 8 M. & W. 405. Smith v. CherriU, L. R. 4 Eq. 390. 2 Egery u. Johnson, 70 Me. 258 ; * Mackay v. Douglass, L. R. 14 Eq. Donovan v. Dunning, 69 Mo. 436 ; 106 ; Tanqueray u. Bowles, L. R. 14 see Franklin v. Claflin, 49 Md. 24. Eq. 151 ; Kent v. Riley, L. R. 14 Eq. 3 Bispham's Eq. § 245 ; Bump, Fraud. 190. Con. 291 ; Jenkyn u. Vaughan, 3 Dr. 5 Wh. on Ev. § 33. 425 ; Kent v. Riley, L. R. 14 Eq. 190 ; 549 § 377] CONTKACTS. [CHAP. XV. fide transaction, or whether a trick or contrivance to defeat creditors."' According to Chancellor Kent, as followed by Judge Story ,2 " if the party is indebted at the time of the voluntary settlement, it is presumed to be fraudulent in re- spect to such debts (that is, those antecedently due), and no circumstances will permit those debts to be affected by the settlement, or repel the legal presvuiption of fraud. The pre- sumpiion of law in this case does not depend upon the amount of the debts, or the extent of the property in settlement, or tlie circumstances of the party. There is no such line of dis- tinction set up or traced in any of the cases. The attempt would be embarrassing, if not dangerous, to the rights of creditors, and might form an inlet to fraud. The law has, therefore, wisely disabled the debtor from making any volun- tary settlement of his estate to stand in the way of existing debts." Adding to this, " debts about to be incurred in view of the assignment," and inserting in the jilace of the words italicized " inference" (the conclusions being inductive, from a survey of all the facts in the case, and not a presumption of law),^ the view thus expressed not only accords with that of Lord Mansfield, but is sustained b}^ right reason and recent adjudications.^ 5. Glioses in action are subject to same rule. In England choses in action were held not within the statute of Eliza- beth.'* This, however, is now corrected by statute f and in this country this distinction between choses in action and other species of property cannot be said ever to have existed.^ 6. Conveyances good against fniudnlent grantor. Only credit- ors, or subsequent purchasers, can, as a general rule, set aside such conveyances.^ The grantor, as a party to the fraud, can- ' Lord Mansfield, C. J., Cadogaii < . 106 ; McLaughlan ,: Bank, 7 How. U. Kennett, Cowp. 434. S. 220 ; Sparkman v. Place, 5 Ben. 184 ; 2 Reed u. Livingston, 3 Johns. Ch. Cornwall in re, Blatch. 116 ; Summers 600 ; Story's Eq. Jur. 12th ed. § 359. c. Hoovey, 42 Ind. 153. ' See Wh. on Ev. §§ 1226 et seq. » Story's Eq. Jur. 12th ed. § 246. 1248. 6 Stokel v. Cowan, 29 Beav. 637. * Jenkyn v. Vaughan, 3 Drew, 419 ; ? Bispham's Eq. § 246. Crosaley o. EUworthy, L. R. 12 Eq. s Bispham's Eq. §§ 248-251 ; Story's 158 ; Freeman v. Pope, L. R. 5 Ch. Ap. Eq. Jur. 12th ed. § 371 ; as to bona, fide 538 ; Mackay v. Douglass, L. R. 14 Eq. purchasers see §§ 211, 291, 347, 376. 550 CHAP. XV.] ILLBflALITT. [§ 379. Contract of an aijent to his private profit void against the] principal. not obtain the aid of the courts to get rid of the obligation of such a conveyance, though it could not be enforced against him.i Nor can third parties, unless they are parties defrauded, impeach such conveyances.^ § 378. An agent is not allowed to make profit out of his agency, beyond his fixed salary or commissions, to his principal's detriment; and hence any contracts by an agent for purchase of principal's property or for investment of principal's assets enure to the princi- pal's benefit, or may be repudiated so far as con- cerns the agent and parties with notice, at the principal's elec- tion, unless it should appear that the purchase or investment was made with the principal's full approval, on a full knowl- edge of the facts.^ A contract which creates an interest ad- verse to the interest of the cestui que trust is void as against public policy.* And, as a general rule, it is against public policy to allow persons occupying fiduciary relations to be placed in positions in which their interests and that of the trust would come in collision." § 379. The object of the bankrupt statutes being the equal distribution of the bankrupt's estate among all his creditors, 1 Supra, § 340 ; Petre v. Espinasse, 2 My. & K. 496 ; Chapin v. Pease, 10 Conn. 69; Hubbell u. Currier, 10 Allen, 333 ; Bonslough u. Bonslough, 68 Penn. St. 495. 2 Curtiss V. Price, 12 Ves. 103 ; Drink- water u. Drlnkwater, 4 Mass. 354 ; Jackson v. Garnsey, 16 Johns. 189 ; Reichart v. Castator,'5 Binu. 109 ; Har- mon v. Harmon, 63 111. 512 ; Clemens u. Clemens, 28 Wis. 637. s Wh. on Agency, §§ 231, 573, 760; Lees V. Nuttall, 2 Myl. & K. 819 ; Low- ther u. Lowther, 13 Ves. 95 ; Dunne V. English, L. R. 18 Eq. 524 ; Mollett ... Robinson, L. R. 5 C. P. 653 ; Pro- vost V. G-ratz, 6 Wheat. 481 ; Marsh v. WVtmore, 21 Wall. 178; Ringo o. Biuus, 10 Pet. 269 ; Baker v. Hum- phrey, 101 U. S. 494 ; Mott v. Harring- ton, 12 Vt. 199 ; Smith v. Townsend, 109 Mass. 500 ; Taussig v. Hart, 58 N. Y. 428 ; Fulton v. Whitney, 66 N. Y. 548 ; Lorillard v. Clyde, 86 N. Y. 384 ; Condit V. Blackwell, 22 N. J. Eq. 486 ; Myers' Ap., 2 Barr, 463; Everhart V. Searle, 71 Penn. St. 256; Piatt ;;. Longworth, 27 Oh. St. 159 ; Kruse ... Stefiens, 47 111. 112 ; Eldridge v. Wal- ker, 60 111. 230 ; Mason v. Bauman, 62 111. 76 ; Ackenburgh v. McCool, 36 Ind. 473 ; Firestone v. Firestone, 49 Ala. 128 ; Gaines v. Allen, 58 Mo. 541. See supra, § 161, where the subject is examined in its relation to undue in- fluence. * Bowers v. Bowers, 26 Penn. St. 74 ; Foil's Ap., 91 Penn. St. 434. 5 Aberdeen R. K. v. Blaikie, 1 Macq. H. L. 461 ; Risley M. R. R., 62 N. Y. 240 ; Barnes v. Brower, 80 N. Y. 527 ; Gard- ner V. Butler, 30 N. J. Eq. 703. As to sales or other provisions of trusts, see infra, § 408. 551 379.] CONTEACTS. [chap. XV. any agreement with any particular creditor, by which, in con- Agree- sideration of acts done by him, he is to obtain a mentsin covert preference over other creditors, is void.^ fraud of + . . ' bankrupt liencc a security taken by a creditor, in view of the debtor's bankruptcy, to be valid only iu case of bank- ruptcy, will not be sustained f and so where the device used was the attornment of the debtor to his mortgagee at an exces- sive rent,' and so of other contrivances to give any particular creditor an unfair preference in distribution.^ Contracts to remove goods from the bankrupt's creditors are also void.^ It has been held in England, also, that the assent of a majority of creditors to a composition, must, in order to bind the mi- nority, be bona fide.^ And in this country a state court will not enforce an executory contract in violation of the federal bankrupt law.' ' Leake, 2d ed. 730 ; Mare v. Sand- ford, 1 Giff. 288 ; McKewan v. Sander- son, L. R. 20 Eq. 65 ; Elliott c. Rich- ardson, L. R. 5 C. P. 744 ; Wilson v. Prewett, 3 Woods, 631 ; Wilson B.Jor- dan, 3 Woods, 642 ; Sawyer in re, 14 N. Bank. Reg. 24 ; Whitney in re, 14 N. Bank. Reg. 3. That evasions of bankrupt law invalidate, see supra, § 362. " A mortgage executed by an insol- vent debtor, with intent to give a pre- ference to his creditor, who has rea- sonable cause to believe him to be insolvent, and knows it to be made in fraud of the provisions of the bankrupt act, and who, for the pur- pose of evading the provisions of that act, actively conceals and withholds it from record for two months, is void un- der the bankrupt act, notwithstand- ing the fact that it was executed more than two months before the filing of a petition in bankruptcy by or against the mortgagor. "If the mortgage had been executed within the period of two months next before the filing of the petition in bank- ruptcy, it would have been void under 552 the letter of the bankrupt act. Where all the other circumstances necessary to render the mortgage void concur, the device of concealing it until the two months have elapsed cannot save it. It is, notwithstanding the lapse of time, a fraud on the policy and objects of the bankrupt law, and void as against its spirit." Woods, J., Blen- nerhasset v. Sherman, Sup. Ct. U. S. 1882. This was so under the United States Bankrupt Act of 1867, Rev. Stat. § 5132. 2 Mackay ex parte, L. R. 8 Ch. 643. ' Jackson ex parte, L. R. 14 Ch. D. 725. * Gomersall in re, L. R. 1 Ch. D. 137. '■ Heymann v. R., L. R. 8 Q. B. 102 ; 12 Cox, C. C. 383 ; U. S. v. Bayer, 4 Dill. 407. 6 Cowen ex parte, L. R. 2 Ch. 563 ; Cobb ex parte, L. R. 8 Ch. 727 ; Lins- ley ex parte, L. R. 9 Ch. 290 ; Page ex parte, L. R. 2 Ch. D. 323. ' Blaisdel v. Fowle, 120 Mass. 447 ; Austin V. Markham, 44 Ga. 161 ; Claf- lin V. Torlina, 56 Mo. 369 ; Lowtham v. Stillwell, Sup. Ct. Mo. 1882. CHAP. XV.] ILLEGALITY. [§ 380. § 380. The essence of insolvent releases being equality, the law avoids a secret agreement with any particular . creditor by which, in consideration of a release by ments in him, he is to obtain peculiar advantages.' Hence, for"prefer^ securities ffiven without the assent of the other encMto o particluar creditors to induce a creditor to assent to a release, creiiitors are void.'* "When such a fraudulent preference is obtained, the creditor cannot recover even the amount of his composition, the whole transaction being vitiated by the fraud.^ The debtor, also, is precluded from maintaining any claim against the creditor on the composition thus fraudulently con- cocted.^ Any reservation of indebtedness, by a creditor, on executing a composition deed, will be fraudulent, as to other creditors, so far as concerns any claim by the creditor to re- cover on ground of the indebtedness reserved ;' though one creditor may, with consent of the other creditors, exclude a portion of his claim from the composition.* Other creditors are not bound by releases they are thus induced to execute f 1 Cookshott u. Bennett, 2 T. R. 763 ; Britton v. Hughes, 5 Bing. 466 ; Malla- lieu V. Hodgson, 16 Q. B. 711 ; Clark V. White, 12 Pet. 178 ; Huntington v. Clark, 39 Conn. 540 ; Bliss v. Matteson, 45 N. Y. 22 ; Bixby v. Carskaddon, 55 Iowa, 533. 2 Leake, 2d ed. 767 ; Jackman o. Mitchell, 13 Ves. 581 ; Leicester v. Rose, 4 East, 372; Wells u. Girling, 1 B. & B. 447 ; Wood v. Barker, L. R. 1 Eq. 139 ; McKewan v, Sanderson, L. R. 20 Eq. 65 ; Bissell u. Jones, L. R. 4 a. B. 49 ; Crossley v. Moore, 40 N. J. L. 27 ; Baker v. Matlack, 1 Ashm. 68 ; Way V. Laugley, 15 Oh. St. 392. 3 Howden v, Haigh, 11 A. & E. 1033 ; see Sternburg Supra, §§ 352, 377 ; Johnson <;. Willis, 7 Gray, 164. That there may be a recovery on a quantum meruit for services rendered under a contrai-t made on a Sunday, see Thomas (■. Hatch, 53 Wis. 296. 5 In Smith v. Bean, 15 N. H. 577, re- ferring to a contract of sale made on Sunday, it is said: "The transaction being illegal, the law leaves the par- ties to suffer the consequences of their illegal acts. The contract is void so far as it is attempted to be made the foun- dation of legal proceedings. The law will not interfere to assist the vendor to recover the price. The contract is void for any such purpose. It will not sustain an action by the vendee upon any warranty or fraud in the sale. It is void in that respect. The principle CHAP. XV.] ILLEGALITY. [§ 384. Alabama and Arkansas that a vendee retaining goods after a Sunday purchase is liable in trover, after demand and refusal.' — The prevalent opinion is that the fact that goods sold and delivered, but not paid for, on Sunday are retained by the purchaser on Monday does not, without a fresh promise based on the detention, sustain an action by the vendor for the price of goods sold and delivered.^ But a fresh promise, or even recognition of indebtedness, coupled with detention of goods, will support an assumpsit.' Hence, while the mere retention on Monday of goods obtained on Sunday involves no promise to pay for them, and while the vendor, without exposing him- self to an action of replevin, cannot reclaim the property,^ yet, if after demand the purchaser admits the vendor's ownership, but refuses to return, he may be made liable in trover; or an admission of the vendor's ownership, with a request to retain the goods, may be the basis of a fresh assumpsit. But no mere I'atification of the Sunday sale as such will give it effect.^ shows that the law will not aid the vendor to recover possession of the pro- perty if he has parted with it. The vendee has the possession as of his own property by the assent of the vendor, and the law leaves the parties where it finds them. If the vendor should at- tempt to retake the property without process, the law, finding that the ven- dee had a possession which could not be controverted, would give a remedy for the violation of that possession." S. P. Kinney u. MoDermott, 55 Iowa, 674. To the same effect is 2 Parsons, 764 ; Header v. White, 66 Me. 90. As to distinctive rule in New York and Ohio see supra, § 382. ' Dodson V. Harris, 10 Ala. 566 ; Tucker v. West, 29 Ark. 386. It has been held in Vermont that when goods are sold and are delivered on Sunday, the vendor may on the next day de- mand them, and in case their return is refused, this is regarded as a purchase on the prior terms. Adams v. Gay, 19 Vt. 358. 2 Simpson v. Nichols, 3 M. & W. 240 ; 5 M. & W. 702, overruling Williams v. Paul, 6 Bing. 653 ; Myers n. Meinrath, 101 Mass. 366 ; Cranson r. Goss, 107 Mass. 441 ; Ellis v. Hammond, 57 Ga. 179 ; but see contra, Allen c. Deming, 14 N. H. 133 ; Boutelle v. Melandy, 19 N. H. 196 ; Tucker v. West, 29 Ark. 386. ' Adams v. Gay, 19 Vt. 358 ; Sar- geant v. Butts, 21 Vt. 99 ; Sumner u. Jones, 24 Vt. 317. See Harrison u. Colton, 31 Iowa, 16 ; and see fully Benj. on Sales, 3d Am. ed. § 558, where these authorities are discussed. ' See supra, § 352. ' Infra, § 389, and see in addition to cases above cited. Day v. McAllister, 15 Gray, 433, ; Bradley v. Rea, 14 Allen, 20 ; 103 Mass. 188 ; Finn v. Donahue, 35 Conn. 216 ; Reeves v. Butcher, 2 Vroom, 224. In Moseley v. Vanhoozer, 6 Lea (Tenn.), 286, A. agreed to buy a yoke of oxen of B. The tei-ms of the sale were agreed upon on Sunday, but A. was to see the condition of the oxen before he was absolutely bound. He 559 385.J CONTRACTS. [chap. XV. § 385. The English statute, as has been seen, prohibits labor in the " ordinary calling" of the parties pro- hibited. Under this and cognate statutes isolated pri- >^ate contracts made by parties outside of their ordi- nary calling are not invalidated.^ It was held in 1808 that a private sale of a horse on Sunday, when not in the seller's ordinary calling, he not being a trades- man of that class, is not void by the statute f but this has now been virtually overruled.' And it has been fur- ther held that a contract of hiring made on a Sunday between a farmer and a laborer is not in conflict with the statute.* Proprietors of stage coaches, so far as concerns their contracts with passengers, are not within the terms of the act." When stat- ute relates to " ordi- nary" call- ing, it does not invali- date col- lateral con- tracts. saw them the next day, and heing sat- isfied with them, removed them. It was held that the contract was not complete on Sunday, and if a contract made on Sunday is to be held void, it must he technically complete in that day. 1 George v. George, 47 N. H. 27; Hazard c. Day, 14 Allen, 487 ; Bloom V. Richards, 2 Oh. St. 388. 2 Drury c. Deibntaine, 1 Taunt. 131. See Bloxsome v. Williams, 3 B. & C. 232, 3 Smith V. Sparrow, 4 Bing. 86 ; Fen- nell t. Ridler, 5 B. & C. 40(3. ^ R. 1.. Whitnash, 7 B. & C. 596. 6 Sandimau r. Breach, 7 B. & C. 96. Under the South Carolina statute, a mortgage which has been executed on a Sunday has been held to be valid. Hellams r. Abercrombie, 15 S. C. 110. lu this case Simpson, C. J., said : "In Shaw r. JPCombs, 2 Bay, 232, this ex- pression is used : ' Sunday is not a day in law — dies ilondnicvs et non dies juridi- cus — consequently all temporal busi- ness transaction on that day is null and void.' But this was only an in- ference of the reporter not sustained by the facts. Under these cases it ap- pears that there is nothing in the com- 560 mon law which renders this contract void. 2 Parsons on Gontr. 757. " Is the contract void by virtue of any statute of the state ? The act of 1712 is the only act on the subject. That act forbids tradesmen, workmen, laborers, etc., from exercising any worldly labor, business, or work in their ordinary calling upon the Lord's day under a certain penalty. "The execution of the mortgage now under consideration does not fall with- in the penalty of this act, and there- fore void. It was not an act done with- in the ordinary calling of the parties. It was a casual and exceptional act, and in no way violated the act of 1712. "The first section of 29 Car. II. was very similar in its terms to the act of 1712. This section was construed in the cases of Drury c. Deibntaine, 1 Taunt. 131, and in Bloxsome o. Wil- liams, 3 B. & C. 232, not to embrace contracts made outside of the ordinary calling of the party. True, in one case decided a difli'ereut doctrine was held, the construction above being regarded as too narrow, and contrary to the spirit of the act ; but in the subse- quent decisions, especially in the case CHAP. XV.] ILLEGALITT. [§ 388. S 386. As against a bona fide endorsee the maker Endorsee •. ,. ■ 1 J without cannot set up as a defence that the note was made notice not ST , bound, unday.^ § 387. Where the statute only prohibits business in a party's ordinary calling, a party cannot set up the statute against strangers dealing with him bona fide in igno- dealing ranee that he was at the time exercising his ordi- ^^^'^^^^^^ nary calling. The mistake made by parties so deal- ing with him is a mistake not of law but of fact, and, if not negligent, it should not preclude such other parties from re- covery. It is otherwise, however, with the party himself. He is barred from recovery, notwithstanding the fact that the other party was ignorant of his disability.^ § 388. Several of the statutes except cases of "necessity" and " charity," or " mercy." — The term " necessity" is not restricted to cases in which the party is physi- to^e^iibei- cally required to do the act in question. " Necessity," ally coa- in the sense of the statute, means such an extremity as requires labor in order to avoid serious peril.* Hence, it has been held that a contract with a debtor is a necessity, when otherwise the debt would be lost ;* and that repairing a road is a necessity when otherwise serious damage might ensue." On the other hand, it is not a necessity to visit a house to be moved into the next day for the purpose of de- termining whether it is in good order f nor is loading a steamboat with flour to avoid sudden closing of navigation f of Rex I . Inhab. of Whltnash, 7 B. & 45 Iowa, 241 ; Clinton i/. Graves, 4S C. 596, the decision in the case of Blox- Iowa, 228. See, to same eflfect, Blox- some V. Williams, supra, was reaffirmed, some v. Williams, 3 B. & C. 232 ; Beg- and a contract of hiring between a far- bie c. Levi, 1 Cr. & J. 180 ; Saltmarsh mer and a laborer for a year, made on v. Tuthill, 13 Ala. 390. Sunday, was held valid. Such, in our 2 Supra, § 385-6 ; Bloxsome v. Wil- opinion, is the proper construction of liams, 3 B. & C. 232 ; 5 S. & R. 82 ; the act of 1712, incorporated in the Fennelly. Ridler, 5 B. &X;. 406 ; Smith General Statutes, p. 390. v. Wilcox, 19 Barb. 581. 1 Supra, § 382; Bank of Cumberland » See Stewart v. Davis, 31 Ark. 518. V. Mayberry, 48 Me. 198 ; Allen v. Dem- * Hooper v. Edwards, 18 Ala. 280. ing, 14 N. H. 133 ; State Bank v. ^ Flagg v. Millbury, 4 Cush. 243. Thompson, 42 N. H. 369 ; Cranson c. « Smith v. R. R., 120 Mass. 490. Goss, 107 Mass. 439 ; Johns v. Bailey, ^ Pate v. Wright, 30 Ind. 476., VOL. I.— 36 561 § 389.] COKTRACTS. [chap. XT. nor is shaving by a barber.^ For a son to visit a father is an act of mercy f and so is visiting a sick friend or relative;^ but not volunteering to assist a neighbor in cleaning out his wheel-pit.^ A marriage may be validly solemnized on Sun- day.° In Massachusetts and Pennsylvania, attendance at public worship is within the exception,* though in Maine, it seems to be otherwise.^ — It has been ruled in Vermont, that honest belief in necessity is not enough to place a party within the exception. There must be actual necessity.* — A contract on the Lord's day by overseers of the ^Joor for relief of a pauper, is not void ;' nor is a subscription to a church.'" § 389. It has been held in several jurisdictions, that a con- tract invalid from having been executed on Sunday cannot, after its completion, be ratified on a subse- quent secular day, without some new consideration or modification giving it a fresh start. '^ But though there may be no ratification, a new contract on a secular day may be implied, as we have seen, from the recognition of Sunday contracts caonot be ratified. • Phillips V. Innes, 4 CI. & F. 234. 2 Logan V. Matliews, 6 Barr, 417 see McClary v. Lowell, 44 Vt. 116. 3 Gorman v. Lowell, 117 Mass. 65 Doyle V. R. R., 118 Mass. 195. ' McGrath v. Merwin, 112 Mass. 167 citing Hall v. Corcoran, 107 Mass. 251 5 Gangwere's Est., 14 Peun. St, 417. 6 Feital c. R. R., 109 Mass. 398 Com. u. Nesbit, 34 Penn. St. 398. 7 Tillock V. Webb, 56 Me. 100. 8 Johnson v. Irasbnrgh, 47 Vt. 28 ; see as to "honest belief," Wh. Cr. L. 8th ed. § 88. 9 Aldrich v. Blackstone, 128 Mass. 14S. i« Flagg V. -Millburg, 4 Gush. 243 ; Bennett v. Brooks, 9 Allen, 118 ; Doyle d. R. R., 118 Mass. 195; Allen v. Dnffie, 43 Mich. 1 ; Dale v. Knapp, 11 Weekly Notes, 12; see contra, Catlett C-. Trustees, 62 Ind. 365. 11 Supra, § 384 ; Williams v. Paul, 6 :662 Bing. 653 ; Pope v. Linn, 50 Me. 83 ; Meader r. White, 66 Me. 90 ; Sumner V. Jones, 24 Vt. 317 ; Day r. McAlister, 15 Gray, 433 ; Tuckerman i . Hinkley, 9 Allen, 452; Cranson u. Goss, 107 Mass. 439 ; contra, Simpson v. Nicholls, 3 M. & W. 240 ; Finn v. Donahue, 35 Conn. 216 ; Reeves v. Butcher, 2 Vroom, 224; Ryno v. Darby, 20 N. J. Eq. 231 ; Tucker r. West, 29 Ark. 386 ; see Story on Cont. (Bigelow'snote), § 756 ; Adams v. Gay, 19 Vt. 358 ; Shippey v. Eastwood, 9 Ala. 198. In Van Hoven -'. Irish, U. S. Cir. Ct. Min. 1882, it was held that a sale invalid from being made on Sunday could be ratified on a week day, following, in this respect, Adams v. Gay, 19 Vt. 358 ; Harrison u. Colton, 31 Iowa, 16 ; in order, quot- ing from Redfield, J., '-to secure par- ties from fraud and overreaching prac- tised on Sunday by those who know their contracts are void and cannot be enforced." CHAP. XV.] ILLEGALITY. [§ 394. indebtedness on that day.' And it is difficult to reconcile the position that such contracts are absolutely null with the posi- tion that they bind innocent endorsees without notice.^ § 390. A court will take judicial notice that a particular date was Sunday.' But when the statute prescribes 11-111 ■! • 1 ,1 Date may that Sunday closes with sun-setting, there must be becor- proof that the contract was in that part of the day paro^i*^ ^^ in which it would have been illegal.'' The date may be contradicted by parol, and it may be shown that though a writing is dated on a secular day, the real date is Sunday .° § 391. In several states the duration of Sunday, so far as concerns the limitation now before us, is sunday'de- deiined by statute. In such states the statutory termined _ •' by statute. prescriptions are to control.* VI. INTBREERENCE WITH FAMILY RELATIONS. § 394. Marriage being an institution which is superior to local law, all contracts to modify its character are void.—" Contracts are subordinated to the state, but ^Idif^ng'^ the state is subordinated to marriage." Hence no marriage ° ... are void, contracts by the parties to a marriage modifying its and so are essential characteristics are valid.^ This rule has for divorce. been applied to agreements by which one party to divorce proceedings is bound to the other not to resist the process.* All agreements in consideration of divorce proceed- 1 Supra, §§ 382 et seq. 2 Supra, § 386 ; and see observations, supra, § 28. 3 VPh. on Ev. § 335 ; Tutton v. Darke, 5 H. & N. 649 ; Hoyle u. Corn- wallis, 1 Str. 387 ; Hanson v. Shackle- ton, 4 Dowl. 48 ; Sasscer v. Bank, 4 Md. 409 ; Clough. v. Goggina, 40 Iowa, 325 ; Allman u. Owen, 31 Ala. 167 ; Sprowl V. Lawrence, 33 Ala. 674 ; Kodgers v. State, 50 Ala. 102. ■i Nason v. Dinsmore, 34 Me. 391 ; see Hiller v. English, 4 Strobh. 486. = K. u. Treharne, 1 Mood. C. C. 298 ; Com. o. Harrison, 11 Gray, 308 ; and other oases cited Wh. Cr. Ev. § 106 ; Heller v. Crawford, 37 Ind. 279. 6 Nason u. Dinsmore, 34 Me. 391 ; Hilton V. Houghton, 35 Me. 143 ; Tracy V. Jenks, 15 Pick. 465 ; Hill ^. Dun- ham, 7 Gray, 543 ; Cranson v. Goss, 107 Mass. 443 ; Fox v. Abel, 2 Conn. 541. ' Wh. Con. of L. § 126. 8 Hope V. Hope, 8 D. M. G. 731 ; Sayles o. Sayles, 1 Fost. 312 ; Weeks c. Hill, 38 N. H. 199 ; Kilborn v. Field, 78 Penn. St. 194 ; Stoutenburg t'. Ly- brand, 13 Oh. St. 228; Hamilton u. Hamilton, 89 111. 349 ; Everhardt o. Puckett, 73 Ind. 409; Comstock v. Adams, 23 Kan. 513. 563 § 395.] CONTRACTS. [CHAP. XV. iiigs are void for the same reason. Thus in a Missouri case in 1880, it appeared that during the pending of a divorce suit the parties agreed in writing that if a divorce was granted without alimony, certain securities were to be delivered to the wife's trustee, it was held that a suit could not be maintained on the contract.^ Where, during pendency of divorce procedure by the wife, she entered into an agreement with her husband by which she was to join in conveying certain real estate of his to a third party, she releasing her dower, and he was to settle certain property on her absolutely, it was held that as the consideration of divorce was one of the ingredients of the agreement it could not be enforced.^ When a divorce, also, is wrongfully obtained, an agreement by the parties not to disturb it will not be sustained.' § 395. ITot only are agreements providing for future separa- ^ tion of husband and wife void,^ but limitations of Agreements . ' pioviding- property on either husband or wife in the event of Won are™' Separation are held, in ^England, against the policy '*'°"^- of the law.' But when tliere has been an actual separation between husband and wife, deeds of settlement be- tween them and third persons, as trustees, will be sustained, such deeds providing for the wife's separate support, and for the husband's protection from the wife's indebtedness.^ And in this country, as well as in England, deeds of settlement in such cases, where their object is immediate, and they are based on a separation which has actually taken place, are held valid where they contain no provisions contravening public policy.' ' Speck V. Dansman, 7 Mo. Ap. 165. 538 ; 5 H. L. Ca. 40 ; Gibbs v. Harding 2 Hamilton v. Hamilton, 89 111. 349. L. K. 5 Ch. 336 ; Charlesworth v. Holt, 3 Comstock r. Adams, 23 Kan. 513. L. R. 9 Ex. 38. That the covenants ■> Bispham's Eq. § 115 ; Hill on Trus- in such deeds will be enforced see San- tees, 668 ; Perry on Trusts, § 672 ; ders u. Rodway, 16 Beav. 207 ; Wil- Hindley v. "Westmeath, 6 B. & C. 200 ; liaras v. Bailey, L. R. 2 Eq. 731 ; note St. John V. St. John, 11 Ves. 526 ; and to Stapilton u. Stapilton, 2 Lead. Cas. cases cited supra, § 90. Eq. 853. In Hunt < . Hunt, 4 D. F. 6 Cartwright v. Cartwright, 3 D. M. J. 221 et seg., 10 W. R. 215, the sub- G. 982; H. v. W., 3 K. & J. 382; ject is examined with great fulness by cited Leake, 2d ed. 758. Lord Westbury. 6 See cases cited, supra, § 90 ; Jones ' Walker v. Walker, 9 Wall. 743 ; V. Waite, 5 Bing. N. C. 341 ; 4 M. & G. Barron „. Barron, 24 Vt. 375 ; Fox v. 1104; Wilson v. Wilson, 1 H. L. Ca. Davis, 113 Mass. 255 ; Beach v. Beach, 564 CHAP. XV.] ILLEGALITY. [§ 396. Nor is the intervention of a trustee necessary,' though where a trustee is agreed upon by the parties, but refuses to act, and the trust never is carried into effect, the covenants will not be enforced.^ A covenant not to sue for the restoration of con- jugal rights will be sustained if inserted in such a deed, and will be enforced if the articles of separation have been other- wise executed.' But a deed for an immediate separation is void unless the separation actually take place.* And the reason is that while a separation which has taken place, or which is immediate, is regarded as a fact which justifies a proper settlement between the parties, to be guarded by pro- per covenants, marriage is an institution which is so far supe- rior to local law as not to be susceptible of being modified in its conditions by contract.* § 396. The policy of the law being to encourage marriage, contracts imposins; j^eneral restraints on marriasce „ .-,.,,„ Contracts are void." A covenant, therefore, to marry no one in general but the covenantee, without engaging to marry her, marda^e° has been held inoperative f and so of a covenant not ^°"^' to marry within a particular time;' and so of a bond by a 2 Hill, 260; Griffin v. Banks, 37 N. Y. 623 ; Hutton v. Button, 3 Barr, 100 ; Dillinger's App., 35 Penn. St. 357 Hitner's App., 54 Penn. St. 110 Thomas v. Brown, 10 Ohio St. 250 Bettle V. Wilson, 14 Oh. 257 ; Button v. Button, 30 Ind. 455 ; though see, as to refusing to execute deeds of separation, Eogers v. Rogers, 4 Paige, 518 ; Cham- plin V. Champlin, 1 Hoif. Ch. 55 ; Simp- son V. Simpson, 4 Bana, 140 ; McCrooli- liu V. McCroolilin, 2 B. Mon. 370; Collins V. Collins, Phill. (N. C.) Eq. 153; Bisp. Eq. § 115. ' Barron v. Barron, 24 Vt. 375 ; Smith V. Knowles, 2 Gr. 413 ; Hutton v. Hutton, 3 Barr, 100 ; Garver v. Miller, 16 Oh. St. 527 ; and see, to same efl'ect, Frampton o. Frarapton, 4 Beav. 294; though see, contra, Carson u. Mur- ray, 3 Paige, 483 ; Bettle v. Wilson, 14 Ohio, 257 ; Simpson v. Simpson, 4 Bana, 140 ; Watkins v. Watkins, 7 Yerg. 283 ; Carter u. Carter, 14 S. & M. 59 ; and cases cited Wald's Pollock, 270. 2 Smith D. Knowles, 2 Grant, 413. ' Sanders v. Rodway, 16 Beav. 207 ; Flower v. Flower, 20 W. R. 231 ; Wil- son V. Wilson, 1 H. L. Cas. 538. * Westmeath u. Salisbury, 5 Bli. N. S. 339. * See the cases given in Wh. Con. of L. § 126 ; and see also H. u. W., 3 K. & J. 382 ; People v. Mercein, 8 Paige, 47 ; Bindley v. Mulloney, 7 Eq. 343. « Leake, 2d ed. 757 ; Morley v. Ren- noldsou, 2 Hare, 570 ; Scott v. Tyler, 2 Bro. C. C. 431 ; 2 Lead. Cas. Eq. 215 ; Hartley v. Rice, 10 East, 22 ; Bellairs V. Bellairs, L. R. 18 Eq. 510 ; Jones i: Jones, L. R. 1 Q. B. B. 279 ; Williams V. Cowden, 13 Mo. 211. ' Lowe V. Peers, 4 Burr. 2225 ; Wil- mot,* 371. " Hartley v. Rice, 10 East, 22 ; see Sterling v. Sinnickson, 2 South. 756. 565 § 397.] CONTRACTS. [CHAP. XV. widow conditioned on her not marrying again. ^ But a settle- ment of real estate while the party remains single may be sns- tained when the intention is not to discourage marriage, but to give a proper support until marriage.^ § 397. A limitation of property, however, to a man or a woman, in restraint of a second marriage, is not in Partial ' ■ . . . ° . limitatioDB itself void.' And restrictions against marrying par- may^b"''^*' ticular persons have been sustained as not amounting valid. ^Q ^ general restraint on marriage.^ So far as concerns deeds of realty, conditions in general restraint of marriage will be held valid, although there is no gift over, when the object is to make a provision until marriage. But as to personalty such a condition, if there is no gift over, will be held not to defeat the estate.'' And in England such is now the case as to per- sonalty, even when there is a gift over.^ But a gift durante vi'Iuitnte, with a limitation over, is valid, the object being to give support during widowhood.' Such limitations may be applied to widowers as well as to widows.^ But a limitation during widowhood and life, without any bequest over, has been held to give an interest which a second marriage does not defeat.' — To ado[)t Judge Story's summary : " Conditions annexed to gifts, legacies, and devises, in restraint of marriage, ' Baker r. White, 2 Vern. 215. St. 422 ; Fox's Est., 1 Leg. Gaz, (Phil.) 2 .lones r. Jones, L. R. 1 Q. B. D. .03 ; Waters ,-. Tazewell, 9 Md. 291 ; 27:> ; see Pollock, 3d ed. 32.5. Holmes r. Field, 12 111. 424 ; Collier v. " Newton j;. Marsden, 2 J. & H. 3.56; Slaughter, 20 Ala. 2G3 ; though see Allen c. Jackson, L. R. 1 C. D. 399 ; Gough v. Manning, 20 Md. 347. Jones V. Jone.s, L. R. 1 Q. B. D. 279, s Bellairs c. Bellairs, L. R. 18 Eq. cited supra, § 39(j ; Arthur v. Cole, 56 510. Md. 100. 7 Bisph. Eq. § 227 ; Allen r. Jackson, * Leake, 2d ed. 7.5S, citing Thurlow, L. R. 1 Ch. D. 399 ; Newton u. Mars- C, Scott V. Tyler, 2 Bro. C. C. 431. den, 2 Johns. & H. 367 ; Mollvaine v. 5 Bisph. Eq. § 227 ; Hill on Trustees, C4ithen, 3 Whart. 575 ; Bennett r. Rob- 496; Story, Eq. Jur. §§ 274 ctseq.; inson, ID Watts, 348; McCuUough's Harvey c'. Asten, 1 Atk. 370 ; Jones r. App., 12 Penn. St. 197; Vance v. Jones, L. R. 1 Q. B. D. 279 ; Pliillips Campbell, 1 Dana, 229 ; Pringle i'. V. Medhury, 7 Conn. 568 ; Mcllvaine r. Dunkley, 14 Sm. & M. 16 ; Hughes «. Gethen, 3 Whart. 575 ; Hoopes v. Dun- Boyd, 2 Sneed, 612. das, 10 Penn. St. 75 ; Com. v. Stauffer, » Allen v. Jackson, L. R. 1 C. D. 399. 10 I'enn. St. 350 ; Bennett v. Robinson, 9 Parsons f. VVinslow, 6 Mass. 169. 10 Watts, 348; Hotz's Est., 3S Penu. 566 CHAP. XV.] ILLEGALITY. [§ 397. are not void, if they are reasonable in themselves, and do not directly or virtually operate as an undue i-estraint upon the freedom of marriage. If the condition is in restraint of mar- riage generally, then, indeed, as a condition against public policy, and the due economy and morality of domestic life, it will be held utterly void. And so if the condition is not in restraint of marriage generally, but still the prohibition is of so rigid a nature or so tied up to peculiar circumstances, that the party upon whom it is to operate is unreasonably restrained in the choice of marriage, it will fall under the like consideration. , . . Eut the same principles of public policy which annul such conditions, when they tend to a gen- eral restraint of marriage, will confirm and support them when they merely preserve such reasonable and prudent regulations and sureties as tend to protect the individual from those mel- ancholy consequences to which an over-hasty, rash, or pre- cipitate match would probably lead. If parents, who must naturally feel the deepest solicitude for the welfare of their children and other near relatives and friends, who may well be presumed to take a lively interest in the happiness of those with whom they are associated by ties of kindred or friend- ship, could not, by imposing some restraints upon their bounty, guard the inexperience and ardor of youth against the wiles and delusions of the crafty and the corrupt, who should seek to betray them from motives of the grossest selfishness, the law would be lamentably defective, and would, under the pre- tence of upholding the institution of marriage, subvert its highest purposes. . . . Such a reproach does not belong to the common law in our day ; and, least of all, can it be justly attributed to courts of equity. "^ A distinction, how- ever, has been taken, as to limitations in special as well as to those in general restraint, between limitations of real and limi- tations of personal estate. When the limitation is as to real estate, it must be strictly complied with, supposing the con- dition to be good. But limitations of personal estate are not binding unless there is limitation over in case of default.^ 1 1 Story, Eq. Jur. 12th ed. § 281. Hoopes v. Dundas, 10 Penn. St. 75 ; but 2 1 Story, Eq. Jur. 12th ed. § 289 ; see Otis v. Prince, 10 Gray, 581. 567 § 399.] CONTRACTS. [chap. XV. § 398. It has also been held that all agreements to bring Marriage about marriages for a money consideration are void- con^rattr '^^® reason given is, that parties in a matter so im- voia. portant and so essential to the state as marriage should not be exposed to the machinations of speculators.' Even a bond given by a partj' after marriage in consideration of assistance rendered by the obligee in eftecting the obligor's marriage, has been held void.^ § 399. ISTot only is a fraudulent settlement by awoman,on eve of marriage, of property of which he is cognizant, and settlements which he might therefore be supposed to marry on maritaf °*^ the faith of, void as against the husband,' but he is rights will j^jgo held entitled to avoid settlements made by her besetaside. . ... in fraud of his marital rights of property of which he has no knowledge.* ITor will an ante-nuptial contract by the woman, without a fair disclosure of her husband's circum- stances, be enforced against her.'^ A fraudulent conveyance, also, by a man in prospect of marriage, in such a way as to deprive the wife, if successful, of dower, will be void against her.*" 1 1 story Eq. Jur. § 263 ; 1 Fonbl. Eq. B. 1 ; Keat <•. Allen, 2 Vern. 5^6 ; Hyltou <. Hylton, 2 Ves. 548 ; Law r. Law, 3 P. Wms. 394 ; Boynton v. Hub- bard, 7 Mass. 118. 2 Williamson o. Gilion, 2 Sch. & L. 357. 3 Supra, § 266 ; Bispham's Eq. § 253 ; England v. Downs, 2 Beav. 522 ; Ciod- dard i. Snow, 1 Rnss. Ch. 485; Wil- liams V. Carle, 2 Stockt. Ch. 543 ; Wal- ler t. Armistead, 2 Leigh, 11 ; Manes V. Durant, 2 Rich. Eq. 404 ; McAfee v. Ferguson, 9 B. Mon. 475. ' Goildard r. Snow, 1 Russ. Ch. 485 ; Chambers u. Craljbe, 34 Beav. 457 ; Taylor . . Pugh, 1 Hare, 608 ; Linker ('. Smith, 4 Wash. C. C. 224 ; Tucker 0. Andrews, 13 Me. 124 ; Terry v. Hop- kins, 1 Hill Ch. 1 ; Williams i . Carle, 2 Stockt. 543 ; Duncan's App., 43 Penn. St. 67 ; Robinson v. Buck, 71 Penn. St. 386 ; S. C, 8 Phil. 87 ; Belt , . Fer- guson, 3 Grant, 289 ; Greeuawalt ex 568 parte, 2 Clark, 1 ; Logan v. Simmons, 3 H-ed. Eq. 487 ; Baker u. Jordan, 73 N. C. 145 ; Jordan v. Black, Meigs, Tenu. 142 ; Freeman v. Hartman, 45 HI. 57. s Kline v. Kline, 57 Penn. St. 120 ; Kline's Est., 64 Penn. St. 122; cited supra, § 161. 6 2 Bishop, Married Wom. § 343 ; Wald's Pollock, 289, where the cases are cited ; Sohouler on Dom. Rel. 271 ; Bisp. Eq. § 499 ; Gibson v. Hutchinson, 120 Mass. 27 ; Swaine v. Perriue, 5 Johns. Ch. 482 ; Pierce v. Pierce, 71 N. Y. 154; Petty r. Petty, 4 B. Mon. 215; Leach v. Duvall, 8 Bush, 201 ; Gainor u. Gainor, 26 Iowa, 337 ; Crawsonr.Crawsoi-i,4Mich. 230; Brown t. Bronson, 35 Mich. 415 ; Littleton v. Littleton, 1 Dev. & B. 327; Tate .. Tate, 1 Dev. & B. Eq. 22 ; Davis i . Davis, 5 Mo. 183 ; Butler v. Butler, 21 Kan. 521 ; Hamilton v. Smith, S. C. Iowa, 1881. See Killinger v. Reiden- hauer, 6 S. & R. 532. CHAP. XV.] ILLEGALITY. [§ 400. The question of fraud is to be determined from all the circum- stances of the case;^ secrecy not necessarily implying fraud.^ — The wife, after her husband's death, may elect, if the con- veyance be fraudulent, to set it aside; and a court of equity can be invoked for this purpose.' Whether such conveyance was made with intention to defraud the intended wife is to be determined from all the circumstances of the case.^ The burden is on the party setting up the fraud.^ A strong infer- ence of fraud is to be drawn from the fact that there is a secret reservation for the husband's benefit.^ § 400. The right of a father, also, to the custody of his children, is inalienable, and he is not bound by an „ ,, ' ' •' Father can- agreement surrendering such custody, unless, from not divest ,"" . . „ , . . himself of their extreme inrancy, or his incompetency, the custody of agreement is one the courts feel called upon to en- '='^'''^''^"- foree.^ " He cannot, therefore, by any contract, relieve him- self from the responsibility of discharging this duty ; and hence it must be considered as settled (at all events in Eng- land), that contracts by a father to give up to his wife the custody and education of their children, are contrary to public policy, and will not be enforced in equity against the husband ; and this although the husband may have been guilty of adul- 1 Strathmore v. Bowes, 1 Ves; Jr. 28. 2 Taylor „. Pugh, 1 Hare, 613. In 2 Kent's Com. 175, it is said : " If the settlement be upon the children of a former husband, the settlement would be valid without notice," citing King v. Colton, 2 P. Wms. 674 ; Jones v. Cole, 2 Bailey, 330. And see supra, § 266. ' See Jiggitts v. Jiggitts, 40 Miss. 718 ; Davis v. Davis, 5 Mo. 183. The right is secured in some states by stat- ute. Littleton v. Littleton, 1 Dev. & B. 327 ; M'Intosh v. Ladd, 1 Humph. 459 ; Jiggitts v. Jiggitts, 40 Miss. 718. 4 Supra, I 239. " Gibson v. Hutchinson, 120 Mass. 27; Baker v. Chase, 6 Hill (N. Y.) 482 ; Crawson v. Crawson, 4 Mich. 230 ; Tate V. Tate, 1 Dev. & B. Eq. 27 ; Davis u. Davis, 5 Mo. 183. See on this topic an article by Judge Thompson in 14 Cent. L. J. 399. 6 Littleton u. Littleton, 1 Dev. & B. 327 ; Tucker v. Tucker, 29 Mo. 350 ; 32 Mo. 464. ' Bispham's Eq. § 547 ; 2 Lead. Cas, Eq. 671 ; Andrews in re, L. R. 8 Q. B, 153 ; Besant in re, L. E. 11 Ch. D. 508 Vansittart v. Vansittart, 2 De G. & J, 249 ; Farnsworth v. Richardson, 35 Me, 267 ; Richardson v. Richardson, 35 Me 560 ; Johnson u. Terry, 34 Conn. 259 Torrington v. Norwich, 21 Conn. 543 Mercein v. People, 25 Wend. 64 ; People V. Mercein, 3 Hill, 399 ; State v. Baird, 6 C. E. Green, 384 ; Com. r. Smith, 1 Brewst. 547 ; Gates u. Renfroe, 7 La. An. 569 ; Byrne v. Love, 14 Tex. 81. 569 402.] CONTRACTS. [chap. XV. tery and of cruelty to his wife."' But the father may, by waiver, strengthened by lapse of time, preclude himself from asserting his right against the child's interests.^ And a father, after consenting to a sou taking employment, cannot, after the wages have been earned, retract such consent.' But, as a gen- eral rule, "the husband can in no circumstances bind himself not to set up his paternal rights,"* nor will such an agreement be operative unless in cases in which the father would on other grounds be deprived of his children's custody.' VII. INJURY TO PUBLIC SERVICE. § 402. An agreement to solicit legislative action by the use of private personal influence on members indi- Agreement yiduallv is void as against the policy of the law.^ privately to •' _ ^ t j influence A foHiori, a promisc made to a member of a legis- legislature , . . , . pi- • . . i is invalid, laturc in Consideration .ot his voting in a particular way is void.^ But an agreement between a land- owner and the promoter of a railroad that the land-owner, whose land is affected by a proposed railroad, will withdraw his opposition on the payment of a sum of money, has been 1 Bisp. Eq. 3d ed. § 547. See Wh. & Tu. Lead. (Jas. in Eq. 4th Am. ed. 1435, 150S-10 ; citing Hope v. Hope, 8 D. M. & a. 731 ; Vansittart v. Vansit- tart, 4 K. & J. «2 ; 2 De G. & J. 249. ' Curtis c. Curtis, 5 Gray, 535 ; Van Artsdalen o. Van Artsdalen, 14 Penn. St. 384; Com. v. Gilkeson, 1 Pliila. 194 ; 5 Clark, 30 ; Com. u. Dougherty, 1 Leg. Gaz. (Phil.) 63 ; Mercein ;'. Peo- ple, 25 Weud. 04; State i-. Smith, 6 Greenl. 4li2 (a case going to the ex- treme limit). » Torrens c Campbell, 74 Penn. St. 470. " Wald's Pollock, 304, citing Swift ; Denison v. Crawford Co., 48 Iowa, 211. 2 Wildey v. Collier, 7 Md. 273 ; Win- penny V. French, 18 Oh. St. 469. The distinction is thus stated by Field, J., in Oscanyan v. Arms Co., 103 U. S. 2(;l: "In Trist v. Child, re- porti'd in 21st of Wallace, the distinc- tion is drawn between the use of per- sonal influence to secure legislation and legitimate professional services in making the legislature acquainted with the merits of the measures desired. Whilst the former is condemned, the latter are, within certain limits, re- garded as appropriate subj ects for com- pensation. There the defendant had employed the plaintiff to get a bill passed by congress for an appropria- tion to pay a claim against the United States. It was considered by the court to have been a contract for lobby ser- vices, and adjudged void as against public policy. Other similar cases were mentioned by the court, and, after observing that in all of them the contract was held to be against public policy and void, it added, speaking through Mr. Justice Swayne : ' We entertain no doubt that in such cases, as under all other circumstances, an agreement, express or implied, for purely professional services is valid. Within this category are included 572 drafting the petition to set forth the claim, attending to the taking of testi- mony, collecting facts, preparing argu- ments, and submitting them orally or in writing to a committee or other proper authority, and other services of like character. All these things are intended to reach only the reason of those sought to be influenced. Tliey rest on the same principle of ethics as professional services rendered in a court of justice, and are no more ex- ceptionable. But such services are separated by a broad line of demarca- tion from personal solicitation, and the other means and appliances which the correspondence shows were resorted to in this case.' " See supra, § 370. In Meguire v. Corwine, 101 U. S. Ill, Trist r. Child was reafEirmed. See to same general effect. Powers v. Skin- ner, 34 Vt. 274 ; Mills u. Mills, 40 N. Y. 543 ; Bryan v. Reynolds, 5 Wis. 200; Gil V. Williams, 12 La. An. 219. In Marshall u. R. R., 16 How. 336, "log rolling" was held indictable. See, also, as to corrupt legislative combinations, opinion of Judge Curtis, Wh. Cr. L. 8th ed. § 1375. It must be remembered, however, that compromise is the basis of all legislation in parliamentary govern- ment, and that to declare that all com- binations in which there are mutual concessions are illegal is to aiEx the stamp of illegality on many beneficent legislative acts. This was strikingly illustrated in the proceedings which gave the English crown to William of CHAP. XV.] ILLEGALITY. [§ 403. is to affect legislation by any other means than open argu- ment, then a contract to promote such object will not be sustained. Even an agreement by which signatures to a petition are obtained by promise of money has been held invalid ;^ and so of an agreement to grant to individuals the right of passing a gate free from toll on condition of their withdrawing their opposition to a bill before the legislature.^ § 403. An agreement by which a party, for a contingent fee, agrees to influence government to grant a con- tract for purchase of supplies, will not be enforced agreement by the courts.' "Considerations," it was said, "as iyin°iuenee to the most efficient and economical mode of meet- ^^'^^''v'*- ing the public wants should alone control in this respect the action of every department of government. No other consid- eration can lawfully enter into the transaction, so far as the government is concerned. Such is the rule of public policy, and whatever tends to introduce any other element into the transaction is against public policy. That agreements like the one under consideration have this tendency is manifest. They tend to introduce personal solicitation and personal influence as elements in the procurement of contracts, and thus directly lead to inefficiency in the public service and to unnecessary expenditures of the public funds. . . . All agreements for Orange, and which, as Maoaulay vivid- votes to carry the funding hill. Mr. ly shows, were a compromise between Clay's compromise and "omnibus" two parties, disagreeing in their gene- bills were made up in the same way. ral conceptions of government, and Members from one section agreed to agreeing only in the conclusion that vote for what was distasteful to them James II. had abdicated the throne, in consideration of aid from another — In our early congressional history section in carrying a measure in which we have an analogous compromise they were particularly interested. See recorded. In Jefferson's Ana (Jeff, as to barter of offices, infra, § 407. Works, ix. 93, see Irving's Life of ' Maguire w. Smock, 42 Ind. 1. Washington, v. 70), we have detailed " Pingry v. Washburn, 1 Aik. 264. the compromise by which, after the That a contract fraudulently concocted funding bill was defeated by southern between an engineer employed by a votes, its reconsideration was carried local board and a contractor is void, and its passage insured by » bargain see Wakefield Banking Co. v. Norman- by which the northern members agreed ton Local Board, 44 L.T.N. S. 697, to place the seat of government on the cited supra, § 279. Potomac in consideration of enough ' Tool Co. v. Norris, 2 Wall. 45. 573 § 403.] CONTRACTS. [CHAP. XV. jDecuniary considerations to control the business operations of the government, or the regular administration of justice, or the appointment to public offices, or the ordinary course of legis- lation, are void as against public policy, without reference to the question whether improper means are contemplated or used in their execution. The law looks to the general tend- ency of such agreemen'ts^and it closes the door to temptation by refusing them recognition in any of the courts of the country."' And this rule applies to contracts to corruptly influence offi- cers of foreign governments.^ A contract, also, to procure an appointment to a public office by private influence is invalid f and so of a contract to obtain, for a contingent fee, the discharge of a drafted soldier ;* and of a contract to obtain from the executive the appointment of C, the promisor, as special counsel, in consideration of the piromisor dividing his fee with the promisee.^ But it is otherwise as to pro- fessional services in procuring a pension or similar executive action.^ The distinction in these cases is the same as that already taken in reference to app)lications to the legislature. If the object of a contract is to lay a matter properly before an executive, there is not only no reason why it should be invali- dated, but many reasons why it should be sustained. So far from corruption being stimulated by agents of eminence ap- ' See Hatzfield i\ Gulden, 7 Watts, would receive a commission upon the 152 ; Ashburner v. Parrish, 81 Penn. St. purchase. It was held that the con- 52 ; O'Harau. Carpenter, 23 Mich. 410 ; tract was illegal and would not be Pickett o. School Dist., 25 Wis. 551 ; enforced in the United States, even Mills V. Mills, 40 N. Y. 543 ; Kelly v. though it would have been legal in Devlin, 58 How. N.Y. Pr. 487 ; Hutohen Turkey. See opinion, supra, § 402, and fc. Gibson, 1 Bush, 270. see Cook v. Shipman, 51 111. 316. 2 Hope v. Hope, 8 D. G. M. & G. 731 ; » Davison u. Seymour, 1 Bosw. SB ; Watson V. Murray, 8 C. E. Green, 257. Hager v. Catlin, 18 Hun, 448 ; Filson v. In Oscanyan v. Arms Co., 15 Blatch. C. Himes, 6 Barr, 452 ; infra, § 407. See C. 70, aff. S. C. U. S. 1881, 103 U. Weld v. Lancaster, 56 Me. 453, where S. 261, an agreement was made by a a sale of a government contract was manufacturer of rifles with the Turkish held invalid. Consul General at New York that in « Bowman v. Coffroth, 59 Penn. St. case such consul should influence an 19. agent of the Turkish government em- " Maguire v. Corwine, 101 U. S. 101. ployed to purchase arms to purchase « Painterv. Drum, 40 Penn. St. 467 ; rifles of such manufacturer, the consul Formby v. Pryor, 15 Ga. 258. 574 CHAP. XV.] ILLEGALITY. [§ 405. pearing to represent private interests before the executive, such agencies, publicly acknowledged, and acting openly, are important instruments in preventing corruption. Hence con- tracts for services in applications for contracts, when honest and fair, will be sustained.'— Under this head may be noticed a celebrated English ruling to the effect that a limitation in the will of the seventh Earl of Bridgewater that if his devisee should not acquire the title of Marquis or Duke of Bridge- water, or should accept any inferior title, the estates should go over. The judges, eight against two, sustained the limita- tion, but this was reversed in the house of lords by four to one. Lords Lyndhurst, Brougham, Truro, and St. Leonards holding that such a limitation was against the polic}' of the law as putting an undue pressure on government, from which the appointments to peerages proceed. Lord Cranworth dis- sented, holding the limitation good.^ § 404. "When there is a board of pardons before whom counsel appear, or when there is a hearing before an executive, there is no reason whv counsel should not Frofession- ' . . •' al services present a case for consideration, and be properly paid as to par- for their services.^ On the other hand, a contract m^siWe' whose consideration is the obtaining a pardon from a governor cannot be enforced.^ It is otherwise with a con- tract for professional services in presenting and arguing a case before the executive.^ § 405. While an agreement with a sheriff or other public officer of the same class to indemnify him in a ser- . . •' Agreements Vice of writs for the purpose of determining ques- to influence tions of title will be sustained,* it is otherwise when cers void. 1 See Lyon v. Mitchell, 36 N. Y. 235. Pollock, 286. That a contract by the 2 See criticism in Pollock, 3d ed. mayor of a city to lease a public park, 289, 291 ef sey. ; Egerton v. Earl Brown- and for an annual sum to keep it in low, 4 H. L. C. 1-250. repair, is void, see Macon v. Huff, 60 » See Bird v. Meadows, 25 Ga. 251. Ga. 221. * Hatzfield v. Gulden, 7 Watts, 152 ; « gee Grett v. Close, 16 East, 293 ; Filson V. Himes, 5 Barr, 492 ; Bowman Clark v. Foxcroft, 6 Greenl. 296 ; Con- V. Coffrath, 59 Penn. St. 23 ; Haines v. nelly v. Walker, 45 Peun. St. 449 ; Lewis, 54 Iowa, 301. March v. Gold, 2 Pick. 285; Foster v. 5 Chadwick v. Knox, 11 Foster, N. Clark, 19 Pick. 329 ; Com. v. Vandyke, H. 226, and other cases cited Wald's 57 Penn. St. 34. 575 § 406.] CONTRACTS. [chap. XV. the object is to induce him to do an illegal act, or to neglect his duty. Such agreements constitute indictable offences, and are in themselves void ;^ and so of bonds which an officer takes of a prisoner in consideration of an illegal indulgence amounting to an escape -^ and of agreements to pay officers commissioned to take testimony for prematurely divulging the testimony f and of agreements to pay public officers for doing their duty.^ A note, however, accepted by an officer from a person charged with a revenue otfence to save his pro- perty from attachment is not based on an invalid considera- tion.^ And, as has already been incidentally seen, bonds given to a public officer to indemnify him for an illegal act may be enforced when the bonds did not operate as inducements to violate the law, and were not illegal in their inception, but were bona fide meant to remunerate him for expenses incurred by him in a mistaken view of duty. The seal in such cases makes it unnecessary to prove consideration. '^ An indemnity to a private person may, under the same circumstances, be sus- tained.'' § 406. Independent of local statutes an agreement And BO of corruptly to influence votes at a popular election agreement ..,.,__ . to bribe IS invalia. Hence it has been held that a promise vo ers. t\^^i a voter should be remunerated for time lost by 1 Hodsdon r. Wilkins, 7 Greenl. 113; Denny v. Lincoln, 5 Mass. 385; Churchill v. Perkins, 5 Mass. 541 ; Doty ( . Wilson, 14 Johns. 381 ; VFebber c. Blunt, 19 Wend. 188 ; Devlin v. Brady, 36 N. Y. 531 ; Richardson v. Crandall, 48 N. Y. 328 ; Satterlee v. Jones, 3 Duer, 102 ; Fanshot v. Stout, 1 South. 319 ; Newsom v. Thighen, 30 Miss. 44. In Ray v. Mackin, 100 111. 246, an agreement between contractors to make collusive bids and pool profits was held void, see infra, § 443. 2 Wh. Cr. L. 8th ed. § 1667 ; Colby v. Sampson, 5 Mass. 310; Churchill ,j. Perkins, 5 Mass. 541 ; Fanshot v. Stout, 1 South. 319 ; Green r. Hern, 2 Pen. & W. 167 ; Hopkinson v. Leeds, 78 Penn. 576 St. 396 ; Kenworthy r. Stringer, 27 Ind. 498. 3 Cooth V. Jackson, 6 Ves. 12. * Infra, § 602 ; Gallagher v. Hallett, 1 Caines, 104 ; Gilmore v. Lewis, 12 Ohio, 281 ; Odineal v. Barry, 24 Miss. 9. 5 Pilkington v. Green, 2 B. & P. 151. See Stonington o. Powers, 37 Conn. 439. 6 Story Cont. (Bigelow's ed.),§ 707; Drake on Attach. § 1S9 ; Hall v. Hun- toon, 17 Vt. 244 ; Marsh v. Gold, 2 Pick. 285 ; Avery v. Halsey, 14 Pick. 174 ; Coventry v. Barton, 17 Johns. 142 ; McCartney v. Shepard, 21 Mo. 573 ; ' Stone V. Hooker, 9 Cow. 154. CHAP. XV.] ILLEGALITY. [§ 407. him in attending the polls cannot be enforced ;' and so of a promise to pay him for money spent by him in travelling.^ An agreement to pay money in consideration of abandoning an election petition has also been held invalid.^ And it has been held that a promise to aid in the election of another can- not be made the subject of a suit.^ Nor can a promise to pay for treating a candidate's supporters.' § 407. Agreements to pay money to secure public honors,^ or public office, have been held void at common law -J „ ^ '^ ' _ _ ' So for sale and so of a sale by a person of his influence to ob- of public tain an office for another;' and a contract to resign for a certain payment.' As we have already seen, a contract for obtaining by private means the appointment to a public office, is invalid.'" It has been held, also, that a corrupt agree- ment by two justices, in whom were vested certain county nominations, that A. will vote for B. if C. will vote for D., is a conspiracy at common law." And so, it is argued by Judge Curtis, is a similar combination between members of the legislature.'^ Without accepting the position that such ' Simpson v. Yeend, L. R. 4 Q. B. 626. 2 Cooper V. Slade, 6 E. & B. 447. ' Coppock V. Bower, 4 M. & W. 361. 4 Nichols V. Mudgett, 32 Vt. 546. See Martin o. Wade, 37 Cal. 168; O'Rear v. Kiger, 10 Leigh, 622. 5 Duke V. Asbee, 11 Ired. 112. " Kingston v. Pierrepont, 1 Vern. 5. 7 Blachford v. Preston, 8 T. R. 89 ; Card V. Hope, 2 B. & C. 661 ; .Richard- son V. Mellish, 2 Bing. 236; Thomson V. Thomson, 7 Ves. 470; Waldo v. Martin, 4 B. & C. 319 ; Hanington v. Du Chatel, 1 Bro. C. C. 124; Carle- ton y. Whitcher, 5 N. H. 196 ; Cardi- gan V. Page, 6 N. H. 183; Ferris v. Adams, 23 Vt. 136 ; Gray v. Hook, 4 N. Y. 449 ; Filsou v. Himes, 5 Barr, 452 ; Hunter v. Nolf, 71 Penn. St. 282 ; Duke V. Asbee, 11 Ired. 112 ; Grant «. McLester, 8 Ga. 553 ; Lewis v. Knox, 2 Bibb, 453 ; Outon v. Rodes, 3 Marsh, 483. VOL. I.— 37 s Garforth v. Fearon, 1 H. Bl. 327 ; Waldo i;. Martin, 4 B. & C. 319 ; R. v. Charretie, 13 Q. B. 447; Carleton v. Whitcher, 5 N. H. 196; Cardigan u. Page, 6 N. H. 183 ; Meguire v. Corwine, 101 U. S. 108 ; Boynton v. Hubbard, 7 Mass. 119 ; Bowers v. Bowers, 26 Penn. St. 74 ; Stroud v. Smith, 4 Houst. 448 ; Martin v. Wade, 37 Cal. 168 ; Gaston u. Drake, 14 Nev. 175. See criticism of cases in Benj. on Sales, 3d Am. ed, §§ 516 et seq. ' Graeme u. Wroughton, 11 Ex. 146 ; Waldo V. Martin, 4 B. & C, 319 ; Mea- cham V. Dow, 32 Vt. 721, See Swayze V. Hull, 3 Halst. 54 ; Ham v. Smith, 87 Penn. St. 63, cited infra, § 410. 1° Supra, § 403 ; Meguire v. Corwine, 101 U. S. 108 i Pilson v. Himes, 5 Barr, 452 ; Anon., Lewis Cr. L. 126. " Com. V. Callaghan, 2 Va. Ca. 460. '« Wh. Ct, L. 8th ed. § 1375. 677 § 408.] CONTRACTS. [CHAP. XV. combinations, when limited to mere legislative compromises, form a criminal offence, it may be argued for several reasons that no suit for their enforcement would stand. (1) Bargains for votes are in themselves invalid. (2) The judiciary cannot, without transcending its functions, undertake to examine the motives of votes of legislators, or to impose damages in case such votes are not given in a particular way.' — A contract between two candidates for a public office by which one^ for a specific con- sideration, shall withdraw in favor of another, is void.^ And so of a contract by the marshal of a territory to give a subor- dinate office as consideration for receiving some private per- sonal services from the appointee.^ § 408. An agreement by which a trustee or director of a corpo- So of sales rate body givcs his influence for a particular Candidate of trusts, jj-^ exchange for a benefit received by himself, is void.* And of offices in which the public is interested, the appointing power cannot make a valid sale. " Public policy requires that there shall be no money consideration for the appointment to an office in which the public are interested ; the public will be better served by having persons best qualified to fill oflices appointed to them ; but if money be given to those who ap- point, it may be a temptation to them to appoint improper persons."^— An agreement by a trustee of a mining corporation to resign his trust for money is void.^ "Trustees of corpora- tions owe duties to others besides themselves ; they have been placed in a position of trust by the stockholders, and to those stockholders they must be faithful. It is a violation of the trust for them to be bought out of oflice."' — Specific perform- 1 See as to legislative compromises, Martin v. Wade, 37 Cal. 168. See snpru, § 402. lu Bolton o. Madden, L. Gray v. Hook, 4 N. Y. 449. R. 9 Q. B. 55, an agreement by sub- 3 Waldron v. Evans, 1 Dak. Ter. 11. scribers to a charity to vote for the * Wardell v. R. R., 103 U. S. 656. same candidate for aid was sustained. 6 Blachford u. Preston, 8 T. R. 89. In Gaston ,-. Drake, 14 Nev. 175, an See, however, Bolton i . Madden, L. R. agreement between A. and B. by which 9 Q. B. 55 ; supra, § 407. A., in consideration of B.'s services in " Forbes v. McDonald, 54 Cal. 99. obtaining A. 's election as district attor- ? Ibid., Myrick, J. See to same gene- ney, was to divide the salary and emol- ral effect; Miller's Appeal, 30 Penn. uments with him, was held invalid. St. 478 ; Bowers u. Bowers, 20 Penn. 2 Hunter o. Nolf, 71 Penn. St. 282 ; St. 74. Benedict v. Ehler, Lewis Cr. L. 126 ; 678 CHAP. XV.] ILLEGALITY. [§ 410. ance will not be granted of a contract for the purpose of obtain- ing control of a national bank.' — "A director of a corporation cannot make for himself, or for his own benefit, a contract that will bind the company. The contract may be repudiated by the company at the instance of a stockholder."^ — An agree- ment to grant diplomas on any ground except merit is void.^ — "All arrangements by directors of a railroad company," also, "to secure an undue advantage to themselves at its expense, . . . are so many unlawful devices to enrich themselves to the detriment of the stockholders and creditors of the original company, and will be condemned whenever properly brought before the courts for consideration."^ An agreement, there- fore, by an officer of a railroad corporation to use his influence to locate the road in a particular line, is invalid.' § 409. An administrator being a public officer, an agree- ment by which he is to give any undue preferences is void. This has been held to be the case with a contract by an administrator to sell the real estate of his intestate on certain terms, and then to make title through the orphans' court f and with an agree- ment to assume a debt on condition of the plaintiff relinquish- ing his right to letters of administration in favor of the de- fendant.' § 410. On the same reasoning it has been held that when an election is contested, an agreement by one of the . , Agreement candidates to abandon the contest on the payment towith- n c • - J « » 1 o draw from 01 a sum or money, is void." And so or an agree- contesting ment between candidates for the legislature, that ^J^^'^"'^ one should withdraw in favor of the other." So of agree- ments by adminis- trators to give undue preferences 1 Foil's App., 91 Penn. St. 434. 2 Reed, J., Guild v. Parker, 43 N. J. L. 435 ; citing Field on Corp. § 175 ; Green's Brice's Ultra Vires, 2d Am. ed. 477, note a, 479, note a. 3 Olin V. Bate, 98 111. 53. * Field, J., Wardell u. Railroad Co., 103 U. S. 658; citing Great Luxem- bourg R. R. i>. Magney, 25 Beav. 586 ; Benson o. Hathaway, 1 Y. & C. 326 ; Flint, etc. R. R. v. Dewey, 14 Mich. 477; European R. R. v. Poor, 59 Me. 277 ; Drury v. Cross, 7 Wall. 299. = Berrymau v. R. R., 14 Bush, 755. See infra, § 414. As to perversions of trusts by trustees, see supra, § 378. 5 Myers v. Hodges, 2 Watts, 381. ' Bowers v. Bowers, 26 Penn. St. 74. See Miller's App., 30 Penn. St. 478. 8 Coppock V. Bower, 4 M. & W. 361. 8 Ham ;;. Smith, 87 Penn. St. 63; see supra, § 407. 579 § 413.] CONTRACTS. [chap. XV. § 411. When a salary is given for the support of a public officer, a contract by which it is assigned to other sigDments parties, is void as against the policy of the law.^ In of salary. j],]g]and, it is true, it has been held that a partnership in the emoluments of permanent patent offices may be valid. ^ And a mortgage by an officer of the customs of his interest in the " Customs Benevolent Fund," erected by special act of par- liament, has been in England held good.^ But such appoint- ments are in the nature of bounties and not of compensations for specific work. § 412. In England, a pension granted exclusively in conside- ration of piast services is assignable. "But where the astopen- pension is granted not exclusively for past services, sions. ^^^ ^g ^ consideration or retainer for some con- tinuing duty or future service, although the amount of the pension may be influenced by the length of the service which the party has already performed, it is against the policy of the law that it should be assignable."^ In this countr}', assign- ments of federal pensions are prohibited by statute, though an agreement to professionally secure a pension for a contingent fee has been sustained.* § 413. A public officer is not entitled to receive payment Ana ree- ^^'om individuals for the performance of his public ment by a dutics, unless in the shape of fees prescribed by law ; public , , rr- officer to ana when such payments are made to an officer 1 Eyall V. Eowles, 2 Wli. & T. Lead. Cas., with notes; Pollock, 289 ; Leake, 2d ed 727 ; citing Palmer u. Bute, 2 B. & B. 673 (case of a clerk of tlie peace) ; Barwicke v. Eeede (that of a military officer) ; Cooper u. Eeilly, 2 Sim. 560 ; Davis ;;. Marlborough, 1 Swanst. 74. In Oshorne c. Williams, 18 Ves. 379, an agreement to pay over the profits of a contract was held void. In State Bank v. Hastings, 15 Wis. 83, it was held that an unqualified order by a judge, on the treasurer of the state to pay a forthcoming quarter's salary to a bank, bound the maker to a honajide endorsee for value, though 680 the order was simply for collection, and was given without value. Paine, J., diss. The question of assignability of judicial salaries was not argued, the sole question being held to be whether the order was negotiable. 2 Sterry r. Clifton, 9 C. B. 110. ' Maclean's Trusts, L. R. 19 Eq. 274. ■> Parke, B., Wells v. Foster, 8 M. & W. 152 ; Leake, 2d ed. 728, referring to Priddy v. Rose, 3 Mer. 86 ; Tunstall V. Boothby, 10 Sim. 542 ; Spooner v. Payne, 4 Ex. 138. 5 Painter v. Drum, 40 Penn. St. 4G7. CHAP. XV.J ILLEGALITY. [§ 414. vested with discretionary power, they may subject receive , . 1 ■ /> 1 -1 1 private the parties concerned to prosecutions tor bribery.^ payment In any view agreements by individuals to pay pub- ggrvSb lie officers specially for their services are generally 'iTaiid. void as against the policy of the law.^ Hence, a promise to a constable of a reward for executing a warrant of arrest which it was his official duty to execute, is void f and so of promises of extra payments to officers in executing criminal process.* It is otherwise, however, as to extra services, not prohibited by law.' § 414. Railroad corporations may be regarded as public in- stitutions, bound, in exercising their franchises, not Railroad to be governed by private considerations. In ac- bargains as to &t3,tioiis cordance with this view an agreement between may bo individuals and a railroad corporation by which the latter is to build a depot in a particular place in a large city, and to permit no other to be built within a specified distance, has been held void as against public policy ;' and in some states the extreme position is taken that an agreement between a railroad company and individuals, to place, in con- sideration of payments to it, a depot at a particular spot, is void.^ The same rule has been applied to an agreement not to establish a station within a certain distance of a particular point. ^ But notes given to a railway corporation in conside- 1 Wh. Cr. L. Stk ed. § 1857. 2 Infra, § 502; Pool v. Boston, 5 Cush. 269 ; Callaghau u. Hallett, 1 Caines, 104 ; Tilden v. Mayor, 56 Barb. 340; Walsh v. People, 65 111. 58; Huffman u. Greenwood, 25 Kan. 64 ; Macon o. Huff, 60 Ga. 221 ; and cases cited infra, §§ 500-2. 3 Smith V. Whildin, 10 Barr, 39 ; see Commercial Bank u. Pleasants, 6 Whart. 375. • See Pool (/. Boston, 5 Cush. 219 ; Gilmore v. Lewis, 12 Ohio, 281 ; Com. V. Chapman, 1 Va. Cas. 138. » Converse v. U. S., 21 How. U. S. 463; Evans v. Trenton, 4 Zab. 764; and cases cited infra, § 502. " Williamson v. R. R., 53 Iowa, 137 ; see Cedar Rapids Bk. v. Hendrie, 49 Iowa, 402. ' Fuller ... Dame, 18 Pick. 472 ; Pa- cific R. R. o. Seely, 45 Mo. 212 ; Bestor V. Wathen, 60 111. 138 ; Marsh v. R. E., 64 111. 414; Holladay v. Patterson, 5 Oregon, 177. In Southard v. R. R., 2 Dutch. 13; Cumberland, etc., R. R. u. Bab b, 9 Watts, 458; and Jewett w. R. R., 10 Ind. 539, where actions on such contracts were sustained, the question of illegality was not raised. ' St. Louis, etc. R. R. v. Mathers, 71 111. 592 ; St. Joseph, etc. R. R. v. Ryan, 11 Kan. 602. 581 § 415.J CONTRACTS. [chap. XV. ration of a promise to construct its road to a given point are not void as against public policy.' — As we have already seen,^ contracts by railroad directors by which the patronage of their road is to be used for their private advantage, are void. § 415. Since any agreement to obstruct the course of justice , , is an indictable conspiracy at common law, such Agreement ^ ^ ' to oiibtruct agreements are to be regarded as void, and incapa- ble of sustaining a suit;' and this is the case with agreements for the suppression or perversion of testimony to be used in a judicial proceeding;^ with agreements giving contingent fees to witnesses;' with secret agreements by par- ticular parties to delay proceedings in a suit to the injury of other parties f with agreements to pervert insolvent and bankrupt proceedings as means of fraud ;^ with agreements to covertly secure undue indulgences to the debtor;* and with agreements to suppress a criminal prosecution.' — That agree- ments to compound ofiences are void will be hereafter seen.'" — It may be here noticed that an agreement for the collusive conduct of a divorce suit is void ;" and so is an agreement not to expose immoral c nduct.'^ 1 Cedar Rapids Bk. v. Hendrie, 49 Iowa, 402 ; disapproving Holladay t . Patterson, 5 Oregon, 177. 2 Supra, § 408. '' See R. o. Hamp, 6 Cox C. C. 167 ; Dixon V. Olmstead, 9 Vt. 310 ; State i'. Noyes, 25 Vt. 415 ; Com. <•. Mcl.pan, 2 Parsons, 367 ; State u. Norton, 3 Zab. 33 ; Stoutenburg <,•. Lybrand, 13 Oli. St. 228; State u. MoKistry, nil Ind. 465 ; Porter v. Jones, 52 Mo. 399 ; Baker v. Farris, 61 Mo. 389. " Tliere is another remarkable instance of con- tracts falling under this class, namely, of illegality created by the rules of common law. It consists of contracts void because of having a tendency to obstruct the administration of justice. " Smith on Cent. 141, citing Collins v. Elaiitern, 2 MV\\s. 341 ; Unwin v. Leaper, 1 M. & Gr. 747 ; E. C. L. R. 582 vol. 39 ; Keir v. Leeman, 6 Q. B. 308 ; 9 Q. B. 371. « Wli. Cr. L. 8th ed. §§ 1334 et seq., § 1380; Shaw ,-. Reed, 30 Me. 105; Southern Ex. Co. u. Duffey, 48 Ga. 35S ; Patterson v. Donner, 4S Cal. 369. 5 Dawkins ... Gill, 10 Ala. 20lJ ; Willis e. Peckham, 1 Br. & B. 515 ; and see infra, §§ 500 et seq.; Collins v. Godefroy, 1 B. & Ad. 950 ; though see Grove r. HcCalla, 21 Penn. St. 44. 6 Elliott i: Richardson, L. R. 5 C. P. 744. ' See Sifjora, § 379 ; Ca\decott ex parte, L. R. 4 Ch. D. 150. 8 Bracewell v. Williams, L. R. 2 C. P. 196., s Barron v. Tucker, 53 Vt. 338. 1" Infra, §§ 483 et seq. II Hope u. Hope, 8 D. M. G. 731 sitpra, § 394. '2 Brown c. Brine, L. R. 1 Ex. D. 5. CHAP. XV.] ILLEGALITY, [§ 417. § 416. The right of free access to courts of justice is inalien- able. Hence a condition that a title should be taken without investigation is void, and does not preclude not to have investigation and litigation ;' and so of an agree- [^^"^5^ *° ment that an insured party, if sued in a state court, will not remove the suit into a federal court.^ No binding eti'ect, also, will be awarded to resolutions of corporations by which their members are to renounce the right to appeal from their action to courts of law.' § 417. So strongly is the right of free access to courts of justice maintained in England and in the United States that a party, by agreeing to arbitrate a claim agreement (unless in pursuance of statutory authority), does ^rMtrate not preclude himself from afterwards litigating the question in a court of justice.'* Nor can the right to ai'bitrate be the subject of arbitration. It would be a petitio principii to say that an arbitration can determine whether the right of determining is incident to an arbitration.' And an award, under statute, to bind must comply with the statutory con- ditions.^ 1 Jones V. CliflFord, L. R. 3 C. D. 779. 2 Insurance Co. u, Morse, 20 Wal. 445. 3 Player v. Arclier, 2 Sid. 121 ; Lon- don V. Bernadiston, 1 Lev. 16 ; Ballai'd V. Bennett, 2 Burr. 778 ; Middleton's case, Dyer, 333 (a) ; Austin u. Sear- ing, 16 N. Y. 123 ; White v. Brownell, 3 Ab. Pr. (N. S.) 318 ; 4 Ab. Pr. 162. In Heath, v. Gold Exchange, 7 Ab. Pr.(N. S.) 251, it was held that a rule of the Gold Exchange, an unincorporated society, that its members should be bound by the action of the board as to matters in dispute, did not preclude a member (who in the particular case resigned his membership) from obtain- ing an injunction to preclude the board from adjudicating the question in dis- pute. See to the same effect, Saffery ex parte, L. R. 4 Ch. D. 561 ; Leech u. Harris, 2 Brewst. 571 ; Dos Passos on Stock Brokers, 81. But when the par- ties to a transaction agree to arbitrate, leaving the question to the decision of a board to which they mutually be- long, and attend the proceedings of the arbitrating tribunal, they are bound by the result. Sonneborn o. Lavarello, 2 Hun, 201 ; Lafond a. Deems, 81 N. Y. 507. * Street v. Rigby, 6 Ves. 815 ; Cooke V. Cooke, L. R. 4 Eq. 77 ; Hill v. More, 40 Me. 515 ; Pearl v. Harris, 121 Mass. 390 ; Hurst x. Litchfield, 39 N. Y. 377 ; and other cases cited Wald's Pollock 293. See, however, Davis v. Havard, 15 S. & R. 165 ; Bowen u. Cooper, 7 Watts, 311 ; and see 2 Pars, on Cont. 707-8. ' James, L. J., Llanelly R. R. ;;. N. W. R. R., L. R. 8 Ch. 948. •* Steele v. Lineberger, 59 Penu. St. 308. 583 § 421.] CO-NTRACTS. [CHAP. XV. VIII. — CHAMPERTY AND MAINTENANCE. § 421. Champerty (campi partitio), which is an oflence by the English common law, is an asrreement for the Champerty => . „ . , . ^ is illegal division between the parties ot a particular piece ot proflte^of ^ property to be sued for by one of them.^ The offence, litigation. ^^^ other words, consists in a speculation in lawsuits, it being agreed between the parties to divide the proceeds of a suit to be brought by one of them. Should a number of par- ties combine in such a way, public justice, it is argued, would be imperilled by the pressure which would be thus brought to bear on behalf of the suit so supported ; and the danger would in most cases be aggravated by the fact that those who had this contingent interest in the success of the suit would work out of sight, or, if seen, would not be known to be parties in interest.^ Several old English statutes make champerty and maintenance (to be presently defined) indictalde; but these statutes are regarded merely as afErniations of the com- mon law, and virtually absorbed in that law, so that with the modification of the common law the statutes have become modified.^ In Missouri the statutes are not in force, though the principle will be appilied in all cases where there is a vexatious stirring up of litigation.^ The statutes are not in force in Ver- mont,' in Iowa,* in Delaware,' in Tennessee,' and in 'Sew Jer- sey.^ In ISTew York there is a special statute limiting the rule,'" while Massachusetts and Rhode Island adopt the prin- ciple of the statutes as common law." — -An agreement by a third 1 Steph. Dig. C. L. art. 141 ; Wh. i Durke l,. Harper, 2 Mo. Ap. 1 ; 66 Cr. L. 8th ed. § 1853 ; see Broughton Mo. 51. 0. Mitchell, 64 Ala. 210. « Danforth u. Sweeter, 28 Vt. 490. 2 SeeDe Houghton v. Money, L. R. 2 " Wright t;. Meek, 3 Greene (Iowa), Ch. 164. 472. 3 Pechell V. Watson, 8 M. & W. 691. ' Bayard v. McLane, 3 Har. 139. Whether these statutes are in force in ^ Sherley v. Riggs, 11 Humph. 53. Pennsylvania is reserved in Chester ^ gchomp u. Sohenck, 40 N. J. L. Co. i: Barker, 97 Penn. St. 455. It 195. has, however, been generally held that i" Hassenfrats v. Kelly, 13 .John. 466 ; Stat. 33 Ed. I. ch. 3 is not in force in Etheridge v. Cromwell, 8 Wend. 629. that state. Roberts' Dig. 96 ; Foster 'i Thurston v. Percival, 1 Pick. 415 ; V. Jack, 4 Watts, 334 ; (iray v. Packer, Lathrop i . Bank, 9 Met. 489 ; Martin 4 W. & S. 17; 6 Penn. L. J. 309 ; u. Clark, 8 R. I. 389. Sharswood Leg. Ethics, 102. 584 CHAP. XV.] ILLEGALITY. [§ 421. ■party, in consideration of a share in the proceeds of the suit, to furnish information and evidence to support it, is against the policy of the law, and will not be enforced. " Besides the objection that a stranger has acquired an interest to carry on the litigation, the bargain to procure evidence for the con- sideration of a money payment has a direct and manifest ten- dency to pervert the course of justice."^ This is eminently the case with regard to speculations in real estate.^ It is otherwise, however, when a party interested makes such an agreement.' But generally contracts for the fomenting of litigation,- enabling a party unwilling himself to bear the expense of a suit to undertake it under the auspices of others, are invalid as against the policy of the law. If he be so poor that if he be not aided justice may be defeated, then it is not improper to aftbrd him aid to vindicate his rights ;^ but where he is not in such straits, and where the object of the aid is to stimulate him to a litigation which he would not otherwise encounter, then the contract is one which the courts should not enforce.' Whether a- con- tract is champertous is determined by the law of the place of performance.^ ' Per cur. in Stanley v. Jones, 7 Fall, 9 Hump. 505. Under local stat- Bing. 369 ; cited Leake, 2d ed. 732 ; utes the purchase of land in suit, Sprye v. Porter, 7 E. cSc B. 58 ; Reynell knowing it to be in suit, for specula- II. Sprye, 1 D. M. G. 660 ; De Hough- tive purposes, and not in pursuance of ton V. Money, L. R. 2 Ch. 164 ; Wei- a prior business bargain, may be Toid ; lington V. Kelly, 84 N. Y. 543 ; Hollo- see Jackson v. Ketchum, 8 Johns. 482 ; way r. Lowe, 7 Port. 488. Jackson v. Andrews, 7 Wend. 152. ' Whitaker v. Cone, 2 John. Ca. 58 ; It is otherwise, as we will see, as to McGfoou V. Ankeny, II 111. 558 ; Dexter sales of p'ersonal property. Infra, § u. Nelson, 6 Ala. 68. 424 et seq. ' Wellington v. Kelly, 84 N. Y. 543 ; « Supra, § 361. It is also settled in see Findon c. Parker, 11 M. & W. 675 ; England that the participation of infra, §§ 422 et seq. others, under a contract for division ■• Ferine v. Dunn, 3 John. Ch. 508; of the proceeds, in the furtherance of State V. Chitty, 1 Bailey, 379, and a suit, is no defence to the suit, nor cases cited Wald's Pollock, 303. ground for injunction. Leake, 2d ed. 6 See Leake, 2d ed. 295 ; Reynell v. 731 ; Hilton v. Woods, L. R. 4 Eq. 432 ; Sprye, 1 D. M. G. 680-6 ; Edwards v. Elborough v. Ayres, L. R. 10 Eq. 367. Parkhurst, 21 Vt. 47? ; Brinley v. In' Courtright v. Burns (U. S. Cir. Ct. Whiting, 5 Pick. 855; Whitaker u. Mo. 1881), 14 Cent. L. J. 89, it was Cone, 2 John. Ca. 58 ; Dunbar v. Mc- held that the fact of the existence of a 585 § 422.] CONTRACTS, [COAP. XT. § 422. Maintenance does not necessarily involve a contin- gent division of the profits, and consists in an agreement, by a cliampertous agreement between the plaintiff and liis attorney, is no ground for the dismissal of the suit. "The answer," said McCrary, J., "alleges that this suit being prosecuted by one of the attorneys for plaintiif, upon a cliampertous contract, by which he is to pay the expenses of the litigation and receive as his compensation forty per cent, of the sum realized, the de- fendant moves to dismiss the suit for that reason. The proof sustains the allegation of champerty ; the testimony of the defendant himself being quite conclusive upon that point. This makes it necessary for the court to de- cide the important question whether the plaintiff can be defeated in his action upon the note, by the proof that he has made a champertous contract with his attorney. In other words, can the defendant, the maker of a promissory note, avoid payment thereof or prevent a recovery thereon, upon the ground that the holder of the note has made a void and unlawful agree- ment with .in attorney for the prosecu- tion of a suit upon it ? The authori- ties upon this question are in conflict. Some courts have ruled that if the fact that a suit is being prosecuted upon a champertous contract comes to the knowledge of the court in any proper manm-r, it should refuse longer to en- tertain the proceeding. Barker v. Bar- ber, 14 Wis. 142 ; Webb v. Armstrong, 5 Humph. 379 ; Morrison u. Deadrick, 10 Humph. 142 ; Greenman u. Coliee, 61 Ind. 201. "OthiT courts have held that the fact that there is an illegal and cham- pertous contract for the prosecution of a cause of action is no ground of de- fence thereto, and can only be set up by the client against the attorney when 586 the champertous agreement itself is sought to be enforced. Hilton v. Woods, L. R. 4 Eq. Cas. 432; Elborough u. Ayres, L. R. 10 Eq. Cas. 367 ; "Wliitney t. Kirtland, 27 N. J. Eq. 333 ; Robison u. Beall, 26 Ga. 17 ; Allison v. R. R., 42 Iowa,, 274 ; Small ;;. R. Co., 55 Iowa, 582. This latter view is in my judg- ment supported by the better reason. It is not necessary for the full protec- tion of the client to go so far as to dis- miss the suit, for he is in no manner bound by the champertous agreement ; nor are there any reasons founded on public policy that should require such dismissal. If all champertous agree- ments shall be held void and courts firmly refuse to enforce them, they will thereby be discouraged and discounte- nanced to the same extent and in the same manner as are all other unlawful, fraudulent, or void contracts. If, on the other hand, the defendant in an ac- tion upon a valid and binding contract may avoid liability or prevent a recov- ery by proving a champertous agree- ment for the prosecution of the suit between the plaintiff and his attorney, an effect would thus be given to the champerty, reaching very far beyond that which attaches to any other illegal contract. The defendant in such case is no party to the champerty ; he is not interested in it nor in any wise injured by it. If the contract upon which he is sued is a bona fide contract upon which a sum of money is due from him to the plaintiff, and if he has no defence upon that contract, I can see no good reason for holding that he may be re- leased by showing that the plaintiff has made a void and unlawful agree- ment with his attorney concerning the fee and expenses of the suit. " The tendency of the courts in this CHAP. XV.] ILLEGALITY. [§ 422. party having no pecuniary interest in a suit, to aid in promot- ing its litigation.* That maintenance, in this sense, Mainte- is no longer an indictable offence in England, is °'^°'=.'' '^ o . . stirring up illustrated by the fact that, in the Tichborne litiga- uufounded ,. , . . ■ . , • 1 litiffation. tion, parties having no pecuniary interest in the result not only were permitted without prosecution to canvass the country for support for the claimant, but were adjudged in so doing, notwithstanding the publicity and excitement that attended their proceedings, not to be guilty of a con- tempt of court.^ It should be noticed, also, that the English courts have sustained purchases of shares in a company for the purpose of instituting suits to restrain the directors from acts alleged to be illegal.' In this country, though there are jurisdictions in which maintenance is held an offence at com- mon law,^ the prevalent opinion is that it is with us no longer indictable, and hence that agreements by persons to promote country is stronger in the direction of relaxing the common-law doctrine con- cerning champerty and maintenance so as to permit greater liberty of contract- ing between attorney and client than was formerly allowed, and this for the reason that the peculiar condition of society which gave rise to the doctrine has, in a great measure, passed away. In some of the states the common-law rule is altogether repudiated, and it is held that no such contract is now in- valid unless it contravenes some exist- ing statute of the state. Sedgwick v. Stanton, 14 N. Y. 289 ; Voorhees v. Dorr, 51 Barb. 580 ; Richardson u. Rowland, 40 Conn. 572 ; Matthewson V. Fitch, 22 Cal. 86 ; Hoffman v. Vallejo, 45 Cal. 564 ; Lyttle a. State, 17 Ark. 609. "The common-law doctrine, how- ever, prevails in Missouri, according to the doctrine of the supreme court of the state, in Duke v. Harper, 66 Mo. 55. While following that ruling, I am disposed, in view of the general ten- dency of American courts, to relax somewhat the rigor of the English rule, to apply it only to the champertous contract itself, and not to allow debtors to make use of it to avoid the payment of their honest obligations. " It follows that the defence of cham- perty in this case cannot be maintained, and that the motion to dismiss must be overruled." ' Wh. Cr. L. 8th ed. § 1854. 2 R. V. Skipworth, 12 Cox C. C. 371 ; Wh. Cr. PI. and Pr. § 957. See Com. V. Dupuy, Bright. 44 ; S. C, 4 Clark, 1. » Bloxam u. R. R., L. R. 3 Ch. 353. That the maintenance statutes are now regarded as obsolete in England, see editorial notice of Bradlaugh c. New- degate, in London Law Times, Sept. 24, 1881, 345. * Thurston ■;. Percival, 1 Pick. 415 ; Lathrop u. Amherst Bk., 9 Met. 489 ; Martin v. Clark, 8 R. I. 389 ; Elliott v. McClelland, 17 Ala. 206 ; Duke v. Har- per, 66 Mo. 51 ; Hayney «. CojTie, 10 Heisk. 339. See Newkirk !>. Cone, 18 111. 449 ; Thompson v. Reynolds, 73 111. 11 ; Backus v. Byron, 4 Mich. 535. 587 § 423.] CONTRACTS. [chap. XV. suits in which they have no pecuniary interest are not, in themselves, void.^ It has been held, also, in England, that the common law is not in this respect in force in Iiidia.^ And a transaction is not void on this ground unless it be " some- thing against good policy and justice, something tending to promote unnecessary litigation, something that in a legal sense is immoral, and to the constitution of which a bad motive is in the same sense necessary."^ Mr. Pollock, in citing this passage, says that " it fairly represents the principles on which English judges have acted in the modern cases."* § 423. An agreement, also, by which a party seeking to establish his title to property, divides it with parties who are to aid him in collecting information by which his title may be secured, ia not in itself in- valid ;' and were a contrary view to be held^ not only few agreements for the vindication of patent and other rights could stand, but contracts for the sale of goods would be vitiated in all cases in which it became subsequently neces- sary to resort to litigation to establish the title to such goods.^ It should be added that there are few business adventures that do not involve sales on shares.^ Agreement to sell claims on shares not invalid. 1 Roberts v. Cooper, 20 How. 467; Danforth v. Streeter, 28 Vt. 490 ; Eich- ardson u. Rowland, 40 Conn. 565 ; Voorhees c. Dorr, 51 Barb. 580 ; Peck V. Briggs, 3 Denio, 107 ; Sedgwick u. Stanton, 14 N. Y. 289 ; Schomp v. Schenck, 40 N. .T. L. 195 ; Bayard v. McLane, 3 Harring. 139 ; Sherley c. Riggs, 11 Humph. 53 ; Wright v. Meek, 3 Grei-ne (Iowa), 472. 2 Ram Coomar u. Chunder Canto, L. E. 2 Ap. Ca. 186. ' Fischer v. Kamala Naicker, 8 Moo. Ind. Ap. 170. ■1 Pollock,3ded.319. InFindonv. Par- ker, 11 M. & W. 675, Lord Abinger con- fined maintenance "to cases where a man improperly, and for the purpose of stirring up litigation and strife, encour- ages others either to bring actions, or to make defences they have no right to 588 make." See Baker v. Whiting, 3 Sum- ner, 475 ; Call v. Calef, 13 Mete. 3ii2 ; Thallhimer v. Brinokerhofif, 3 Cow. 647, to same eifect. 5 Sprye ;-. Porter, 7 E. & B. 58. 6 See Wilson c. Short, 6 Hare, 366 ; Dickinson v. Burrell, L. R. 1 Eq. 3:!7. ' Mr. Pollock (3d ed. 319) states the law as follows : " It is not unlawful to purchase an interest in property though adverse claims exist which make litigation necessary for realizing that interest ; but it is unlawful to purchase merely for the purpose of liti- gation." Hence, it has been held that the creditor of an insolvent company may sell his claim, but that he cannot sell the right to proceed on a winding- up petition. Paris Skating Rink Co. in re, L. R. 5 Ch. D. 959. CHAP. XV.] ILLEGALITY. [§ 424. § 424. It has just been observed that, while an agreement to share a property or right not yet in possession Purchase with one aiding in establishing it is not in itself in- t/on oTsutt valid, such an agreement becomes invalid when its ■^"''J- consideration is the supplying of evidence to sustain a pending litigation. It is hard to see why the mere fact of bringing a suit should make invalid what would otherwise be valid ; nor is it likely that in a case in which there is an honest and fair agreement by a party to sustain by money and personal ser- vice the vindication of a contested claim, the validity of such an agreement would be made to depend upon whether a suit on the claims had already been brought. But there is a wide diiference between the sale of property on which a question of title subsequently arises, and the sale of a merely specula- tive claim. It is against the policy of the law that claims of this kind should be hawked about in the market, for the same reason that it is against the policy of the law that gambling ventures should be put up for sale. Hence, it has been held that the assignment of an alleged claim against trustees for breach of trust is void.^ And this has been decided to be the case with regard to claims to salvage,^ and with regard to suits for the redress of personal wrong, which, it has been said, are not marketable commodities, and have no settled business value.^ With this is to be considered the settled rule that, pending litigation, neither party can be permitted to alienate the contested property so as to prejudice the rights of the other.^ But there is nothing (saving the rights of third parties) in the mere fact that a claim is in litigation to pre- vent the sale to third parties, provided the object of the sale be not to foment litigation, but to dispose of a right.^ Were 1 Hill V. Boyle, L. R. 4 Eq. 260. See 582 ; Sawyer v. Phaley, 33 Vt. 69 ; Prosser v. Edmonds, 1 Y. & C. 481; Corey's App., 97 Penn. St. 153. As to Bell V. Smith, 5 B. & C. 188 ; Hilton v. set-off, see infra, §§ 1025 et seq. Woods, L. R. 4 Eq. 432. » 2 Story Eq. Jur. § 1050 ; Stanley v. 2 The Rosario, L. R. 2 Adm. D. 41. Jones, 7 Bing. 377 ; Harrington v. 3 Ibid. ; Wald's Pollock, citing Nor- Long, 2 M. & K. 590 ; Williams v. ton V. Tuttle, 60 111. 130 ; Marshall Proctor V. Sargent, 2 M. & G. 20. J., in Chappel v. Brockway, 21 Wend. ' Wetherill v. Zinc. Co., 6 Fish. Pat. 157; and see Jones v. Heavens, L. E. 4 Ca. 50. Ch. B. 636. 5 Catt V. Tourle, L. E. 4 Ch. 659 ; 599 § 433.] CONTRACTS. [chap. XV. miles.^ It would not, however, be reasonable for a medical man, whose practice is ordinarily limited to a circuit of ten miles in diameter, to be bound by an agreement not to prac- tise within one hundred miles of a particular place ;^ though an agreement not to practise within what is under the circum- stances the ordinary bounds of practice will be sustained.^ The area over which a solicitor practises is larger, and an agreement by a solicitor, selling his good-will, not to practise in London or within one hundred and fifty miles, has been held good.^ A similar limitation was held good on the sale of the business of a publishing house." The vendor of a business limited in its operation to a small neighborhood, such as may be personally visited for sale and delivery of perishable pro- visions, may bind himself, on selling his good-will, not to resume the business within that neighborhood, bounding it, for instance, by five miles of his old stand. ^ On the other 1 Harms v. Parsons, 32 Bc-aT. 328 ; see Jones v. Lees, 1 H. &N. ISO ; Clark- son (.. Edge, 33 Beav. 227 ; Oregon St. Nav. Co. u. Winsor, 20 Wall. 64 ; Morse Drill Co. v. Morse, 103 Mass. 73. ' Horner v. Graves, 7 Bing. 735. See Long V. Towl, 42 Mo. 545 ; Betts's App., 10 Weekly Notes, 431, where the su- preme court of Pennsylvania enjoined on a radius of five miles. " Davis >•. Mason, 5 T. R. 118 ; Sainter V. Ferguson, 7 C. B. 716 ; Mallan «. May, 11 M. & W. 653; Atkyns v. Kin- nier, 4 Ex. 776 ; Gravely v. Barnard, L. R. 18 Eq. 518 ; Perkins u. Clay, 54 N. H. 518; Butler c. Burleson, 16 Vt. 176 ; Pierce r. Woodward, 6 Pick. 206 ; Dean u. Emerson, 102 Mass. 480; Dwight V. Hamilton, 113 Mass. 175 ; Treat v. Melodeon Co., 35 Conn. 543 ; Sander v. Hoffman, 64 N. Y. 248 ; Mott ,.. Mott, 11 Barb. 127; Van Marter v. Babcock, 23 Barb. 633 ; Erie R. R. v. Ex- press Co.,6 Vroom, 240; McClurg's App., 58 Penu. St. 51; McNutt r. MuEwen, 1 Weekly Notes, 552; Palmer u. Graham, 1 Pars. 476; Betts's App., ut supra; Guerand v. Dandelet, 32 Md. 561 ; War- 600 field V. Booth, 33 Md. 63; Bowser u. Bliss, 7 Blackf. 344 ; Heichew v. Ham- ilton, 4 Greene (Iowa), 317 ; Hubbard V. Miller, 27 Mich. 15 ; Jenkins v. Tem- ple, 39 Ga. 655 ; Thompson u. Means, 11 Sm. & M. 604; More v. Bonnet, 40 Cal. 251. < Bunn V. Guy, 4 East, 190. See Den- dy (. Henderson, 11 Ex. 194, where a limitation of twenty -one miles was held not excessive. In Smalley u. Greene, 52 Iowa, 241, an agreement by a law- yer not to practise in a particular town was held valid. In Whittaker v. Howe, 3 Beav. 383, an agreement not to prac- tise for twenty years in any part of Great Britain was upheld. « Tallis V. Tallis, 1 E. & B. 391. " Elves V. Crofts, 10 C. B. 241 ; Proc- tor D. Sargent, 2 M. & G. 20 ; Benwell V. Inns, 24 Beav. 307 ; Pierce v. Wood- ward, 6 Pick. 206 ; Nobles «. Bates, 7 Cow. 307. See Gompers c'. Rochester, 66 Penn. St. 194; Grasselli !>. Lowdeu, 11 Oh. St. 349 ; Holmes u. JIartin, 10 Ga., 503 ; Laubenheimer v. Mann, 17 Wis. 542. CHAP. XV.] ILLEGALITY. [§ 434. hand, a person conducting a business which may be extended over the whole United States, may bind himself not to exer- cise this business within a particular state or considerable section of such state ;' and in cases in which there would be breach of trust if a defendant were allowed to violate an agreement not to do business anywhere, he may be generally restrained.^ — Distances, also, in such cases, are to be measured by a radius on the map, and not according to lines of travel.^ But when such an agreement goes to deprive an entire state of competition in transportation, it will be held invalid ; and this was held to be the case with an agreement not to run steamboats in the state of California for ten years ;^ though an agreement not to compete for seven years with the north- west trade has been sustained, ° and so of an agreement not to run an opposition stage between Boston and Providence f and of an agreement not to run an opposition on the Connecticut river.' An agreement of this class may be divisible; if so — as where the restriction is as to London, which was valid, or as to any place within six hundred miles of the same, which is invalid — the invalid condition may be stricken out as sur- plusage.* — A contract by a dealer in New Jersey not to ship poultry to ]S"ew York or "Washington has been held not to contain an unreasonable restriction.' § 4-34. Such an agreement must have a valuable considera- tion; though the courts, if the consideration be the Must be sale of a business, or instruction in a business, will consiOera not undertake to determine whether the considera- tio^^- 1 Oregon N. Co. v. Winsor, 20 Wall. " Pierce v. Fuller, 8 Mass. 223. See 64; Whitney v. Slayton, 40 Me. 224; Pyle v. Thomas, 4 Bibb, 486. Warren u. Jones, 51 Me. 146. Agree- ' Palmer v. Stebbins, 3 Pick. 188. ments not to exercise a trade in a par- 8 Pi-ice v. Green, 16 M. & W. 346. ticular state were held void in Taylor See Mallan v. May, 11 M. & W. 653; V. Blanchard, 13 Allen, 370 ; Laurence Oregon N. Co. v. Winsor, 20 Wall. V. Kidder, 10 Barb. 641 ; Dunlop u. 64 ; West. Uu. Tel. Co. v. Burlington Gregory, 6 Seld. 241. See Catt v. R. R., 11 Fed. Rep. 1 ; Dean v. Emer- Tourle, L. R. 4 Ch. 654; AUsopp u. son, 102 Mass. 480; Lange c;. Werk, 2 Wheatcroft, L. R. 15 Eq. 59. Oh. St. 520. As to divisibility, see 2 Rousillon V. Rousillon, supra, § 430. supra, § 338. ' Mouflat V. Cole, L. R. 8 Ex. 32. ' s Richardson v. Peacock, 33 N. J. Eq. ■> Wright V. Ryder, 36 Cal. 342. 597. ' Perkins v. Lyman, 9 Mass. 522. 601 § 435.] CONTRACTS. [chap. XV. tion be adequate.' A consideration is requisite, even when the contract is under seal.^ In parol contracts, the burden of proving the consideration is on the party setting up the con- tract.' But the consideration need not be specifically stated in the deed. It may be proved by parol. ^ § 435. A sale of good-will does not of itself imply a contract not to resume the same business in the same place,' beenjoTned ^"^ ^ P^^'ty SO Selling out will be restrained from for breach advertising that he has removed his former place of of trust. " , , . . , . . . business to another location, in the same vicinity.^ The vendor of the good-will of a business, while he is entitled to carry on the business under the limitation of the contract of sale, and to solicit the continuance of custom by advertise- ment in the public papers, is not permitted to apply to such customers privately, or by letter, or through travellers, asking for a continuance of the patronage to him personally, even though he is not precluded from so doing by the articles of sale.' But it was held in England in 1882 that the purchaser 1 Hitchcock V. Coker, 6 A. & E. 438 ; Pilkington v. Scott, 15 M. & W. 660 ; Tallis r. Tallis, 1 E. & B. 397, n ; Pierce . Organ Co., 92 U. S. 604 724 ; Wetherill v. Zinc Co., 6 Fish. Pat. Cas. 50 ; Peabody v. Norfolk, 98 JIass. 452; Gillis v. Hall, 2 Brewst. 342; see Rousillon u. Rousillon, L. R. 14 Ch. D. 351, cited supra, § 430 ; Leather Cloth Co. V. Lorsont, L. R. 9 Eq. 343, ^ Leather Cloth Co. v. Lorsont, L. R. 9 Eq. 345 ; Bryson v. Whitehead, 1 Sim. & St. 74 ; Jones v. Lees, 1 H. & N. 189 ; Vickery ,. Welch, 19 Pick. 525; see Story Eq. Jur. 12th ed. § 292. » Cooper ;>. Twibill, 3 Camp. 28Hn; Gale r. Read, 8 East, 80 ; Catt c. Tourle, L. R.4Ch. G54 ; seeSchwalmu. Holmes, 49 Cal. 665. ' Morris v. Colman, 18 Ves. 437. CHAP. XV.] ILLEGALITY. [§ 437. its business to a ferry company, is not void as against public policy when it binds the ferry company to give all the facili- ties the public requires.* To validate covenants of this class, however, the commodity or services rendered should be fairly up to the market value f and such covenants will not be ex- tended so far as to cover agreements by employers to induce their employees to deal exclusively in a particular store.^ — A contract whereby a railroad corporation grants to a telegraph company the exclusive right to put up on the railroad track a telegraph line is invalid as against public policy. A contract giving an exclusive right to a system of poles has been sustained in Illinois ;^ but the use of the entire roadbed cannot be thus limited. " In our opinion," said McCrary, J., in 1882,° " it is not competent for a railroad company to grant to a single telegraph company the exclusive right of establishing lines of telegraphic communication along its right of way. The pur- pose of such contracts is very plainly to cripple and prevent competition, and they are therefore void, as being in restraint of trade, and contrary to public policy. They are also in contravention of the act of congress of July 24, 1866, which authorizes telegraph companies to maintain and operate lines of telegraph ' over and along any of the military or post roads of the United States which have been, or may hereafter be de- clared such by act of congress.' " The last point might be open to criticism, were it not that it is sustained by the supreme court of the United States.^ The first point may be now regarded as settled. Telegraph communication is now as much a business necessity as is railway transportation ; and a contract which would operate to give a monopoly to a particular telegraph company must be regarded as conflicting with public policy .7 1 Wiggins Ferry Co. v. R. E., 73 Mo. 96 D. S. 1 ; West. Un. Tel. Co. v. Am. 39. Union Co., 19 Am. Law Reg. 173. 2 Cooper V. Twibill, 3 Camp. 286 n; ' Atlanta Tel. Co. <.. R. R.,1 McCrary, Thornton v. Sherratt, 8 Taunt. 529. 541 ; West. Un. Tel. Co. c. Bait. & Oh. 3 Crawford v. Wick, 18 Oh. St. 190. R. R., McKennan, J., 1882 ; West. Un. " West. Un. Tel. Co. v. Chicago R. Tel. Co. v. R. R., 1 McCrary, 565, 585, R., 86 111. 246. 597; West. Un. Tel. Co. o. Am. Tel. 5 West. Un. Tel. Co. v. Burlington Co., Sup. Ct. Gta. 1880 ; and see supra, R. R., 11 Fed. Rep. 1. § 412. ^ Pensacola Tel. Co. u. West. Un. Co., 605 § 437.] CONTRACTS. [CHAP. XV. The question, then, should be, does a contract by which the ex- clusive use of a railroad is given to a particular company give that company such an advantage as to practically exclude all others from competition ? If it does, the contract is invalid. — It has also been much discussed whether a telephone com- pany can contract to deal exclusively with a particular tele- graph- company. The validity of such a contract has been affirmed in Connecticut.' On the other hand, it has been de- nied in Ohio, on the ground that under a statute prescribing the impartial transmission of dispatches (a similar statute ex- isting also in Connecticut) no preference could be given by the telephone company to any particular telegraph company.' — It is implied in all contracts of service that the employee should undertake no business that makes him a competitor for the business of his emiDloyer.' In some contracts of service a pledge of this kind is expressly included, and when so included will be sustained, although it is extended to the life of the employee, provided it be limited as to space.^ And when un- limited as to space, it is good if limited to the term of service of the employee,^ or to a period extending so far as ten j-ears ' American Rapid Telegraph Co. v. quires it. It appears to us a proposi- Telephone Co., 13 Rep. 329. tion too plain to admit of argument 2 State 0. Telephone Co., 36 Oh. St. thatwhere the beneficial use of patented 296. In this case the court said : The property, or anj species of property American Bell Telephone Company requires public patron age and govern- " cannot be permitted to operate asys- mental aid, as, for instance, the use of tem or line of telephones in this state, public ways and the exercise of the and in the face of the statute, either right of eminent domain, the state may directly or through the agency os impose such conditions and regulations licenses, without impartiality ; or, in as in the judgment of the law-making other words, with discrimination power are necessary to promote the against any member of the general public good." public who is willing and ready to ' Windscheid, § 401 ; Rousillon v. comply with the conditions imposed Rousillon, supra, § 430. upon all other patrons or customers who ^ Leake, 2d ed. 737; Pilkington u are in like circumstances. . . . The Scott, l.'j M. & W. 657 ; Hartley i' property of an inventor in a patented Cummlngs, 5 C. B. 247 ; Ward v. Byrne machine, like all other property, re- 5M. &W. 562; AUsopp i'. Wheatcroft, mains subject to the paramount claims L. R. 15 Eq. 59. See Keeler v. Taylor, of society, and the manner of its use cited supra, § 430. may be controlled and regulated by " Wallis v. 'Day, 2 M. & W. 273. state laws when the public welfare re- 606 CHAP. XV.j ILLEGALITY. [§ 438. after the employee leaves such service.^ And the fact of employment is a sufficient consideration for such an engage- ment.^ § 438. It is against the policy of the law that common car- riers should be relieved from all liability for negli- ^ _ gence; and agreements so relieving them are void,3 mentsre- though certain special duties may be transferred from liabii- from the carrier to the other contracting party, and lilen^ce^afe the carrier may be by such agreements relieved from '^°^^- his liability as insurer.* When a valid agreement to this eftect is made, the carrier, while he loses the character of an insurer, continues to be charged with liability for negligence.* Proof of such exceptions and limitations, however, to be oper- ative, must be brought home to the party to whom they are imputed,* and this must be shown by the other party.' Eor 1 Rousillon V. Rousilloii, L. R. 14 Ch. 351 ; 42 L. T. N. S. 679 ; cited at large supra, § 430. In this case Fry, J., dissented from the rule laid down in Allsopp V. Wheatoroft, L. R. 15 Eq. 59, that agreements unlimited as to space would not be sustained. Rou- sillon V. Rousillon, however, as has been observed, was the case of a confi- dential agent, binding himself not to compete, not that of a sale of good-will. ' Gravely v. Barnard, L. R. 18 Eq. 518 ; Benwell v. Inns, 24 Beav. 307. ' Whart. on Neg. § 589, and cases there cited ; Lawson, Cont. of Car. 20, 22; Gill V. R. R., L. R. 8 Q. B. 186. The conflicting opinions in the Ameri- can courts, with the authorities, are given in Wh. on Neg. §§ 590-1-3. The subject can only be treated in outline in the text, its discussion belonging more properly to treatises on negligence. < Wh. on Neg. § 586. 5 Ibid. § 594. * Vfh. on Neg.' § 587 ; see supra, § 22, where this topic is incidentally dis- cussed. That notice of condition is question of fact, see infra, § 572. As to presumption of reading contract, see §§ 185, 196, 205. ' Brown u. R. R., 11 Cush. 97 ; Buokland v. Express Co., 97 Mass. 124 ; Gott V. Dinsmore, 111 Mass. 45 ; Gaines V. Trans. Co., 28 Oh. St. 418; Pitts- burgh R. R. u. Barrett, 36 Oh. St. 449. The following summary of the law is given by Bradley, J., R. R. i. Lock- wood, 17 Wall. 357. " Contracts of com- mon carriers, like those of persons occupying a fiduciary character, giving them a position in which they can take undue advantage of the persons with whom they contract, must rest upon their fairness and reasonableness. It was for the reason that the limitations of liability first introduced by common carriers into their notices and bills of lading were just and reasonable, that the courts sustained them. It was just and reasonable that they should not be responsible for losses happening by sheer accident, or dangers of naviga- tion that no human skill or vigilance could guard against ; it was just and reasonable that they should not be chargeable for money or other valuable 607 § 438.] CONTRACTS. [chap. XV. the same reason contracts have been held void when operating to relieve a combination of common carriers from the duty of using certain new improvements and facilities of travel.' — It was held in 1881 by Judge Gresham, in the United States District Court of Indiana,^ that a contract between an em- ployer and employee, by which the employee agrees to release the employer from liability for negligence of employer or fel- low employees, is void.^ — A similar limitation is applicable to telegraph companies. " The rule in this state is well settled, that one exercising a public employment is liable for failing to bring to the service he undertakes that degree of skill and care which a careful and prudent man would, under the circum- stances, employ ; and that any stipulation or regulation by which he undertakes to relieve himself from the duty to exer- cise such skill and care in performance of the service, is con- trary to public policy, and consequently illegal and void. In our articles liable to be stolen or damaged, unless apprised of their character or value ; it was just and reasonable that they should not be responsible for arti- cles liable to rapid decay, or for live animals liable to get unruly from fright, and to injure themselves in that state, when such articles or live ani- mals became injured without their fault or negligence. And when any of these just and reasonable excuses were incorporated into notices or special contracts assented to by their custom- ers, the law might well give effect to them without the violation of any im- portant principle, although modifying the strict rules of responsibility im- posed by the common law. The im- proved state of society, and the better administration of the laws, had dimin- isheil the opportunities of collusion and bad faith on the part of the carrier, and rendered less imperative the applica- tion of the iron rule that he must be responsible at all events. Hence the exceptions referred to were deemed reasonable and proper to be allowed. 608 But the proposition to allow a public carrier to abandon altogether his obli- gations to the public, and stipulate for exemptions that are unreasonable and improper, amounting to an abdication of the essential duties of his employ- ment, would never have been enter- tained by the sages of the law." A release of a railroad company from all claims for any damage "from what- soever cause arising," made in consid- eration of reduction of rates, does not exempt the company from liability for negligence. Mynard v. R. R., 71 N. Y. 180. That unreasonable restrictions will not be upheld, see further Penn. Co. V. Wentz, 37 Oh. St. 333 ; Capehart r. R. R., 81 N. C. 438; Louisville R. R. V. Brownlee, 14 Bush, 590 ; Chicago etc. R. R. u. Hale, 2 HI. App. 150. 1 Wiggins Ferry Co. v. R. R., 5 Mo. Ap. 347. 2 Roesner t-. Hermann, 8 Fed. Rep. 782. ^ Western etc. R. R. Co. v. Bishop, 50 Ga. 465. CHAP. XV .J ILLEGALITY. [§ 439. opiiiioB, telegraph companies fall within the operation of this rule ; and in failing to exercise such care and skill in the transmission of messages, they become liable for the resulting consequences, notwithstanding their stipulation to the con- trary. The right to make rules and regulations to govern the management of their business, is expressly conferred by statute. But such rules must be reasonable ; and if they fail to accord with the demands of a sound public policy, they are void."i § 439. l^Tot only has every man a right to a market for his 1 Boynton, C. J., West. Un. TeL Co. u. Griswold, Sup. Ct. Ohio, 1882, 25 Alb. L. J. 190 ; White u. West. Un. Tel. Co., U. S. Cir. Ct. Kan. 1882, 14 Cent. L. J. 481. In West. Un. Tel. Co. V. Neill, Su-p. Ct. Tex. 1881, we have the following : — ' ' In accordance with these princi- ples, and which have been often recog- nized by the legislative departments also, it may now be considered as settled law, that telegraph companies can, by express contract or by proper rules and regulations contained in printed notices, or otherwise, and brought to the knowledge of those with whom they deal, under such circum- stances as to create an implied con- tract, limit their liability for delays and errors in transmitting and deliver- ing messages, except when caused by the misconduct, fraud, or want of due care on the part of the company, its servants or agents. ' ' In cases of this character, that exemption from liability cannot be claimed for such misconduct, fraud, or want of due care, is a cardinal doctrine of the common law which has become deeply rooted into our own jurispru- dence, and the wisdom of which has received the sanction of ages. 2 Sedg. on Dam. (7th ed.) 130 ; 2 Redf. on Eailw. (4th ed.) 290; 2 Thomp. on VOL. I. — 39 Neg. 839, § 4; West. Un. Tel. Co. v. Carew, 15 Mich. 525 ; Ellis v. Tel. Co., 13 Allen, 226 ; Birney v. Tel. Co., 18 Md. 358; U. S. Tel. Co. u. Gilder- sleeve, 29 id. 232; Breese v. Tel. Co., 45 Barb. 274; reaffirmed, 48 N. Y. 132 ; Camp c. Tel. Co., 1 Mete. (Ky.) 164; Passmore v. Tel. Co., 78 Penn. St. 238; Aiken v. Tel. Co., 5 S. C. 358." S. P., West. Un. Tel. Co. c Blanchard, 66 Ga. A limitation of liability on half-rate night messages to ten times the amount paid for the message was held in this case reasona- ble ; and the court went on to say : — "Another regulation of telegraph companies held to be reasonable by the great weight of authority is the right to demand, in a proper case, as a condition of liability, that the message be repeated at a reasonable cost. 2 Sedg. on Dam. (7th ed.) 130 ; 2 Redf. Railw. 290, § 17, note 15 ; 2 Thomp. on Neg. 841, § 6 ; West. Un. Tel. Co. V. Carew, 15 Mich. 525 ; Ellis u. Tel. Co., 13 Allen, 226; Redpath v. Tel. Co., 112 Mass. 71; Grinnell v. TeL Co., 113 id. 299 ; Wann v. Tel. Co., 37 Mo. 472; Breese v. Tel. Co., 45 Barb. 274 ; reaffirmed, 48 N. Y. 132 ; Camp V. Tel. Co., 1 Meto. (Ky.) 164; Pass- more V. Tel. Co., 78 Penn. St. 238; MacAndrew v. Tel. Co., 17 C. B., 3; S. C, 33Eng. L. & Eq. 180." 609 § 439.] CONTRACTS. [CHAP. XV. labor of which he cannot absolutely divest himself, but the j^g,,gj,_ community has a right to obtain labor, as it would ments lim- obtain any other commodity, at the price at which price of it would be fixed under the ordinary laws of supply and demand. Hence, combinations to monopolize the labor of a community by refusal of the parties combining to do work except at a fixed price, have been held, when undue influence is used to prevent others from laboring at a lower price, or a labor-famine is thereby induced, indictable as con- spiracies at common law. But to constitute such illegality, the use of undue influence, amounting to either force or fraud, must be part of the agreement, or the agreement must amount to an entire absorption of the particular kind of labor, so as to establish virtual duress. " I cannot bring myself to be- lieve," said Lord Campbell,^ " without authority much more cogent, that if two workmen who sincerely believe their wages to be inadequate should meet and agree that they would not work unless their wages were raised, without de- signing or contemplating violence, or any illegal means for gaining their object, they would be guilty of a misdemeanor, and liable to be punished by fine and imprisonment. The object is not illegal, and therefore, if no illegal means are to be used, there is no indictable conspiracy." If the object is not illegal, then an agreement otherwise valid does not become invalid because this ingredient enters into its composition. But the pi-esence of either of the above qualifications makes the agreement invalid. (1) We must, therefore, predicate this invalidity of an agreement to keep other operatives out of employment by threats or fraud.^ (2) And we must further hold, that when the object is to monopolize all the labor of a particular community, then, like all other attempts to mo- nopolize for extortionate purposes a necessary staple, the agree- ment is to obtain an advantage by duress, and will not, there- fore, be enforced.^ The duress is analogous to that already ' Hilton V. Eckersley, 6 E. & B. 62. 196 ; Wh. Cr. L. Sth ed. § 1366 ; 1 Bl. 2 R. V. Hewitt, 5 Cox, C. C. 162 ; R. Com. 158 ; R. c. Webb, 14 East, 406 ; < . Rowlands, 5 Cox, C. C. 436 ; 17 Q. R. u. Waddington, 1 East, 143 ; People B. 671. V. Fisher, 14 Wend. 9. 3 1 Hawk. P. C. c. 80, s. 3 ; 3 Inst. 610 CHAP. XV.] ILLEGALITY. [§ 442. noticed in cases where money paid by a party to one refusing otherwise to deliver goods, has been recovered back.' It is as much against the policy of the law to absorb all the labor in the community, so as to compel employers to pay extor- tionate prices, as to buy up the necessaries of life, so as to obtain extortionate prices, or to hold back goods from their owner until an extortionate bonus is paid for them. § 440. For the reason that the right to labor is inalienable, a party who agrees (unless for a specific considera- Agree- tion in reference to a particular place) not to labor to labor ex- except for a specific price, is not bound by his agree- certain* ment.^ Agreements, also, not to work for a particu- p"<=^ <"■ ... . for a par- lar obnoxious individual, so as to preclude him from ticuiar per- 11 . 1 • 1 » son are procuring labor, are invalid.' invalid. § 441. On the same ground, an agreement of all employers of labor in a particular line limiting themselves in And so of the hiring of labor for a particular time, is void, the ygn'^Jf ^ right to employ as well as the right to be employed employers. being inalienable.* And, aside fi-om this ground, such an agreement amounts to duress which invalidates contracts based upon it. A laborer is entitled to a market for his labor. For all employers to unite to exclude him, except on extor- tionate concessions, from employment necessary to sustain life, is to apply to him a duress which invalidates the concessions thus extorted. The question is whether such a duress is actually applied. It certainly is not when a group of em- ployers agree to reduce wages to a figure proportioned to their temporary receipts. It certainly is when all the employers of a community agree to reduce wages unreasonably, leaving to the , operative the choice only between submission and starvation. § 442. Whenever a particular staple is essential to the health and comfort of the community, a combination to Agree- absorb it for the purposes of extortion is invalid. Xorbl° This is the case in respect to a combination to staple orfix . . ■ prices in- absorb all of a particular kind of necessary food ;' valid. 1 See supra, § 149; infra, § 738. » Collins v. Locke, L. R. 4 Ap. Ca. 2 Leake, 2d ed. 741, citing Farrer v. 674. Close, L. R. 4 Q. B. 612 ; Springhead « Hilton v. Eokersley, 6 E. & B. 66. Spinning Co. v. Riley, L. R. 6 Eq. 551. = 1 Hawk. P. C. c. 80, s. 3 ; 1 Bl. 611 § 442.J CONTBACTS. [chap. XV. and a combination to absorb all coal procurable in the market.' But a combination between a coal company and a carrying company by which the latter grants to the former half of its capacity, is not of itself invalid.^ On the other hand, an Com. 150 ; E. a. Waddington, 1 East, 143 (a combination to force up price of hops) ; Craft r. McConougby, 79 111. 346 ; Raymond v. Leavitt, Sup. Ct. Michigan, 1881 (a combination to force up price of wheat). 1 Morris Run Coal Co. <;. Barclay Coal Co., 68 Penn. St. 173; Arnot v. Coal Co., 68 N. Y. 558. Crawford u. Wick, 18 Oh. St. 190, held invalid an agreement between the lessor and the lessee of a coal mine, by which the latter was to use his influence over his employees in favor of the former's store, and by which the lessee was neither to give nor accept an order on any other store. 2 Com. V. Del. & Hudson Canal Co., 43 Penn. St. 295. See Del. & Hudson Canal Co. t>. Penn. Coal Co., 21 Penn. St. 131. In Collins v. Locke, L. R. 4 Ap. Ca. 674 ; 38 W. R. 189, an agreement was set up between the stevedores of the port of Melbourne distributing the business of the port among themselves, and providing that if any merchant refused to give his business to the ste- vedore designated in the agreement, the party doing the work should give an equivalent, to be fixed by arbitra- tors, to the party superseded. The agreement was held not invalid. In Raymond (. Leavitt, ut supra, Campbell, J., said : " The object of the arrangement between these parties was to force a fictitious and unnatural rise in the wheat market for the express purpose of getting the advantage of dealers and purchasers, whose neces- sities compelled them to buy, and ne- cessarily to create a similar difficulty as to all persons who had to obtain or 612 use that commodity, which is an article indispensable to every family in the country. That such transactions are hazardous to the comfort of the com- munity is universally recognized. This alone may not be enough to make them illegal. But it is enough to make them so questionable that very little further is required to bring them within dis- tinct prohibition. The cases of Morris Run Coal Co. v. Barclay Coal Co., 68 Penn. St. 173, and Arnot v. Coal Co., 68 N. Y. 558, held contracts involving similar dealings with coal, to be against public policy. And we think the rea- soning of those cases is based on famil- iar common law principles, which apply more strongly to provisions than to any other articles. "There is no doubt that modern ideas of trade have practically abro- gated some common law doctrines which are supposed to unduly hamper com- merce. At the common law there is no doubt such transactions as were here contemplated, although confined to a single person, were indictable misde- meanors under the law applicable to forestalling and engrossing. Some of our states have abolished the old stat- utes which were adopted on this sub- ject, and which were sometimes re- garded as embodying the whole law of such cases. Where this has been done, as in New York, the statutes have re- placed them by restraints on combina- tions for that purpose, leaving indi- vidual action free. In England there have been several statutes narrowing or repealing all of the ancient statutes, and more recently covering the whole ground. But so long as the early stat- utes only were repealed, it was con- CHAP. XV.] ILLEGALITY. [§ 442. agreement to create a corner in stock, so as to control a market, and then, when the fact of this absorption is un- known, to make purchases for future delivery, is void.' It is held, also, that an agreement by an association of salt manufacturers that no member should sell salt for a specific term below prices to be fixed by a committee is invalid, as in restraint of trade -j^ and so of an agreement by several busi- ness houses not to sell cotton bagging for three months, except with the consent of a majority of their number.^ — "All re- straints upon trade are bad, as being in violation of public policy, unless they are natural and not unreasonable for the protection of parties in dealing legally with some subject- matter of contract."* " We must wilfully shut our eyes, before we can fail to see that a combination between a man who furnishes money, and dealers who manipulate the market sidered that enough remained of the common law to punish combinations to enhancethe value of commodities. . . . ' ' We do not feel called upon to re- gard so much of the common law to be obsolete as treats these combinations as unlawful, whether they should now be held punishable as crimes or not. The statute of New York, which is universally conceded to be a limitation of common law offences, is referred to in the case in 68 N. Y. as rendering such conspiracies unlawful, and this had been previously held in People o. Fisher, 14 Wend. 9, whece the subject is discussed at length. There may be difficulties in determining conduct as in violation of public policy, where it has not before been covered by statutes as precedents. But in the case before us the conduct of the parties comes within the undisputed censure of the law of the land, and we cannot sustain the transaction without doing so on the ground that such dealings are so mani- festly sanctioned by usage and public approval that it' would be absurd to suppose the legislature, if attention were called to them, would not legalize them. We do not think public opinion has become so thoroughly demoralized ; and until the law is changed we shall decline enforcing such contracts. If parties see fit to invest money in such ventures, they must get it back by other than legal measures." "When such contracts are made as a cover for gambling, without intention to deliver and receive the grain, but merely to pay and receive the differ- ence between the price agreed on and the market price at some future day, they come within the statute of gam- bling, and are void in law." Per cur. Barnard v. Baokhaus, 52' Wis. 597. 1 Sampson v. Shaw, 101 Mass. 145, and oases cited infra, § 453. As to Illinois statute against "options" and "corners," see Tenney v. Foote, 4 111. Ap. 594; Williams v. Tiedemann, 6 Mo. Ap. 269. As to "corners," see § 453 6. 2 Central Ohio Salt Co. v. Guthrie, 85 Ohio St. 666. ' India Bagging Ass. u. Knox, 14 La. An. 168; see Gulick U.Ward, 5 Halst. 87. * Bramwell, B., Jones u. Lees, 1 H. & N. 189. 613 § 442 a.] CONTRACTS. [CHAP. XV. where the money invested is but a trifling percentage of the property to be handled, and where the only intent is to pro- duce unnatural fluctuations in prices, is entirely outside the limits of buying and selling for honest trade purposes. It is the plainest and worse kind of produce gambling, and it is impossible for any but dangerous results to come from it."' § 442 a. An agreement between all carriers and transporta- tion companies of a particular section for the pur- So of agree- „,,. n- n i-j.- j mentto pose of absorbing or crushmg all competition, and trans-'' fixing on the community arbitrary and unreasonable portation. prices of transportation, will be held void as against the policy of the law.^ In determining questions of policy of this class two opposite dangers are to be avoided. On the one side to declare all combinations and absorptions by carriers illegal would be to inflict a serious bio w, not only on the carrying interests, but on the interests of those desiring car- riage. If it were illegal for railroad companies to agree to fix upon remunerative rates, then, each company caring for ' Campbell, J., Raymond v. Leavitt, ut supra. See Story Eq. Jur. §§ 292 et seq. 2 Oregon St. Nav. Co. v. Winsor, 20 Wall. IJ4 ; Hooker o. Vandewater, 4 Denio, 349 ; Stanton v. Allen, 5 Deuio, 434 ; Magulre Jones u. North, L. R. 19 Eq. 426 ; Kearney v. Taylor, 15 How. 494 ; Hun- tingdon V. Bardwell, 46 N. H. 492 ; SmuU V. Jones, 1 Watts & S. 128 ; 6 W. & S. 122 ; Breslin v Brown, 24 Oh. St. 565 ; see Bradley u. Coolbaugh, 91 111. 148, and other cases cited in last section and in Wald's Pollock, 310. That an agreement to pay off other proposers for contracts is void, see Wald u. Lancaster, 56 Me. 453 ; Stevens v. Perrier, 12 Kan. 297. 2 Wh. Con. of L. § 484. ' Cotem. Rev. Sept. 1881. Swift, in a letter to Motte, the Loudon printer, speaking of the English statutes re- stricting the woollen trade, said: "I am so incensi'd against the oppressions from England, and have so little re- gard to the laws they make, that I do, as a clergyman, encourage the mer- chants (of Ireland) both to export wool and woollen manufactures to any country in Europe, or anywhere else, 618 as I would hide my purse from a high- wayman if he came to rob me on the road, although England has made a law to the contrary." * Briggs I . Lawrence, 3 T. R. 454 ; Clugas V. Penaluna, 4 T. R. 466; Planche !■. Fletcher, Doug. 251 ; Light- foot V. Tenant, 1 B. & P. 551 ; Sortwell V. Hughes, 1 Curtis, 244 ; Harris c. Runnells, 12 How. U. S. 79 ; Smith v. Godfrey, 28 N. H. 379 ; Ludlow v. Van Rensselaer, 1 Johns. 94; Merchants' Bank v. Spalding, 5 Selden, 53 ; Kohn V. Schooner Renaisance, 5 La. An. 25 ; Ivey V. Lalland, 42 Miss. 444 ; Armen- draz V. Serna, 40 Tex. 291 ; see Hill v. Spear, 50 N. H. 273. ' See citations in Wh. on Con. of L. § 484; Pollock, 3d ed. 299; Story, Conf. of Laws, § 257 ; Story, Cont. § 720. 6 In Sharp v. Taylor, 2 Phill. 801, there were intimations that English courts would not regard foreign regis- CHAP. XV.] ILLEGALITY. [§ 446. § 446. An action for the price of goods to be smuggled into England cannot be maintained in the English courts ; even though the plaintiff", a domiciled Englishman, was, at the time of the contract, living in a foreign land in which the contract was made ;' nor can a foreign vendor recover if he combined to defeat the English revenue laws by intentionally packing the goods in a way fitting them to be smuggled.^ But the mere fact that a foreign vendor knew that the purchaser was arranging to evade the English tariff" does not preclude the vendor from recovering in an English court.^ When, on the other hand, the object is to violate the home revenue law, this vitiates a contract for the purpose of effecting such object.^ Intended evasion of home reve- nue laws does not vitiate con- tract when this is not the consid- eration. tration laws as affecting contracts to be acted on in England ; but the question was not actually determined. But in our own courts a contract founded on a consideration in violation of our own navigation laws will not he enforced. Mayhin u. Coulson, 4 Ball. 298; 4 Yeates, 24. 1 Clugas V. Panaluna, 4 T. R. 466. 2 Waymell v. Reed, 5 T. R. 599 ; Leake, 2d ed. 782. That there can be no action generally for the price of smuggled goods, see Condon v. Walker, 1 Yeates, 483. ' Supra, § 393 ; Holman v. Johnson, Cowp. 341 ; Pelleoat v. Angell, 2 C. M. & R. 311. * Drexler u. Tyrrell, 15 Nev. 115. In Patrick v. Littell, 36 Oh. St. 79, a loan of money was to he secured by a conveyance of real estate in fee to the lender, with a lease back for a specified number of years, with a privilege of redemption to the lessees at the ex- piration of the term, the lessees to pay a ground rent equal to eight per cent, per annum on the money loaned. It was held that such security is in equity a mortgage and subject to taxation under the statute, and that a promise to a third party to pay for services to be ren- dered in obtaining a loan to be thus secured, is not void as contrary to public policy, although the object of the len- der of the money in adopting such ■form of security was to evade taxation upon the investment. Boynton, J., said: "As respects this objection, whatever might be the effect of the transaction, if the person from whom the money had been procured were seeking to enforce the provisions of the agreement, — with which point we are not now concerned, — the relation of the defendants in error to the transac- tion, or to the form of the security to be given for the money borrowed, was not such, in our judgment, as to defeat their right to compensation for the services rendered, or the money ad- vanced. They were constituted agents to procure a loan, upon terms pre- scribed by the plaintiff and her hus- band. The written request to procure the same explicitly defined the form of the security the defendants were di- rected to adopt. It was in pursuance of these directions that the services were rendered and the money paid for the examination of the title to the 619 § 449.] CONTRACTS. [chap. XV. X. WASERS AND GAMBLING. § 449. At common law a contract on a wager, by which A. agrees to pay money to B. conditioned on a cer- Wagerson ^y^j^ f^Q^ transpiring, in consideration of B. paying which money to A. conditioned on the same fact not trans- tobeiiwes- piring, is valid, provided the fact which is the sub- iifegaf '^'^'^ ject of the wager be not one which it is against the policy of the law either to have investigated or to have made dependent upon such influences as a wager would be likely to put in motion.^ The courts have, therefore, refused to sustain wagers whether an unmarried woman had a child f whether a person is of a particular sex f whether a certain person has committed adultery ;* and whether certain property, which was to be pledged as security for tlie debt. The agreement by the defendants was fully executed, and the services rendered were per- formed in good faith. To refuse them redress, under the circumstances, for tlie reason stated, would, it seems to us, be applying the doctrine which denies a remedy for the enforcement of contracts contrary to public policy, to a state of facts not justly falling within the operation of the rule. The ser- vices they performed were distinctive in their character and perfectly lawful ; and, had the transaction been executed throughout in the mode contemplated by the parties as respects the form of the security to be taken, it would, in fact and legal effect, have been but a loan secured by what in equity would have been regarded as a mortgage only, and the investment, without doubt, have been as much the subject of taxation, under the statute relating to that subject, as it a mortgage pure and simple had been taken. Where the transaction, within the under- standing of the parties, is a loan of money ;ipon security, no form which the transaction may assume can so 620 disguise it as to change its legal char- acter or effect." 1 In Hampden v. Walsh, L. R. 1 Q. B. D. 192, a wager is defined to be " a contract by A. to pay money to B. on the happening of a given event, in con- sideration of B. paying money to him on the event not happening." This is defective as excluding cases where the wager is based on an existing fact not yet ascertained. That a wager is not at common law unlawful, see Leake, 2d ed. 748 ; Benj. on Sales, 3d Am. ed. § 542; Good i'. Elliott, 2 T. R. 693; Hussey v. Crickett, 3 Camp. IBS; Cousins o. Nantes, 3 Taunt. 515 ; Hampden v. Walsh, ut supra ; Grant v. Hamilton, 3 McL. 100 ; Bunn c. Riker, 4 Johns. 426 ;■ Haskett v. Wooten, 1 Nott & McC. 180 ; Dunman v. Strother, 1 Tex. 89. That an agreement is none the less a wager because the wagering element is put in the shape of a con- ditional sale of goods or contract for wages, see Higginson v. Simpson, L. R. 2 C. P. D. 76. 2 Ditcliburn u. Goldsmith, 4 Camp. 152. 3 Da Costa v, Jones, Cowp. 729. ^ See Atherfold u. Beard, 2 T. R. 610 ; Hartley v. Rioe, 10 East, 22. CHAP. XV.] ILLEaALITT. [§ 451. domestic relations existed which could not be explored with- out giving great personal pain or public scandal.^ § 450. A wager, also, will not be sustained when the thing to which the wager relates is one which it is against the policy of the law to have thus acted on. This ^"gers as*^ has been held to be the case with a wager between ^° matters ." . which it is two voters as to the result of an election, which it against the is against the policy of the law to have made de- the'iaw to pendent upon pecuniary gain f with a wager, that acte^*upon a person indicted would be convicted on a coming trial f with a wager by a party that he would not marry within six months, this being in restraint of marriage ;^ with wagers as to the result of illegal games.' § 451. By the act of 8 and 9 Vict. c. 109, s. 18, it is enacted " that all contracts or agreements, whether in parol ■*• u i^ ■ J • u 11 Bystatute or in writing, by way oi gaming and wagering shall wagers are be null and void ; and that no suit shall be brought ' ''^^ ' or maintained in any court of law or equity for recoverin. In Rourke v. Short, 5 _E. & B. 904, under the English statute, there was a difference of opinion between the plain- tiif and the defendant, when settling a bargain for the sale of rags, as to the price fixed in a prior transaction be- tween the parties. They finally agreed that the rags were to be paid for at three shillings a cwt. if the defendant's report of the former transaction was correct, and six shillings a cwt. if the plaintiff's report was correct ; three shillings being less and six shillings more than the value of the goods per cwt. The goods were in any view to VOL. I. — 40 be delivered at the price paid. It was held that the contract was void as in- volving a wager. As to agreements to create a ' ' corner' ' in stock, see ivfra, § 4.536. It is a significant fact that in the ex- amination on Apr. 16, 1882, before the New York Senate Committee on corners in grain, Mr. Franlclin Edsen, formerly president of the Produce Exchange, testified that the dealing in futures in grain was often necessary In order to handle grain economically. In Chandler in re, 13 Am. L. Reg. N. S. 310 (an attempt to get up a "cor- ner" in oats), the court held that none of the parties to the transaction who went into it without any intention of delivering or taking the oats could sue on the contract. The transaction "was as manifestly a bet upon the future price of the grain in question as any that could be made upon the speed of ahorse or the turn of a card." The court did not hold that all "option" contracts were void, even though the party agreeing to deliver did not have the article on hand. The contract only became gambling when the object was to corner or otherwise to speculate. "Op- tions stand on the same footing as any other species of contract. Where it appears that the intention of the par- ties is to contract for the payment of ' differences' merely, and not to deliver or accept stock, the law pronounces it a wager, irrespective of the form used to cover the transaction ; but, on the other hand, where there is a bona fide intention to deliver or receive proi^erty, the agreement will be sustained." Dos Passes on Stock Brokers, 454. The rulings of the courts on this issue must be considered in connection with the legislation to which they are 625 453.] CONTRACTS. [chap. XV. principal 18 liable to the broker for the amount so paid.* And to vacate an agreement as a gambling venture, whether at common law, or under the English or analogous American statutes, it is necessary to show that it was understood by both parties that the transaction was a mere wager, and that there was to be no delivery of the goods or stock.^ But where subject. Of such legislation the fol- lowing illustrations may be given : — The Revised Statutes of New York (1 Rev. Stat. 710, § 6) contained a pro- vision to the effect that all contracts for the sale of stock not at the time in hand were void. In 1858 (ch. 134) this was repealed, and it was provided that no contract for the sale of stock " shall be void, or voidable, for any want of consideration, or because of the non- payment of any consideration, or be- cause the vendor at the time of making such contract is not the owner or pos- sessor of the certificate or certificates, or other evidence of such debt, share, or interest." In Massachusetts, sales of securities are void unless the party contracting to sell or transfer the same is, at the time of making the contract, the owner or assignee thereof, or is authorized by the owner or assignee, or his agent, to make the sale or transfer. See as con- struing this statute, Barrett v. Hyde, 7 Gray, 160; Wyman c. Fiske, 3 Allen, 238 ; Price v. Minot, 107 Mass. 49. In Pennsylvania, a statute to the same effect was adopted, but subse- quently repealed. Kranse r. Setley, 2 Phila. 32. An act of congress limiting the power thus to speculate was repealed in 18(i4. See 13 U. S. Stat. 303 ; Dos Passes on Stock Brokers, 405. The English stock -jobbing act was re- pealed by 23 and 24 Vict. u. 28 (1860). See history of this legislation in Dos Passos on Stock Brokers, 382 et serj. Mr. Dos Passos concludes his summary as 626 follows : ' ' The history of these stock- jobbingacts seems to prove conclusively that they have never been effective in preventing speculations in stocks. In almost every instance in which they have been adopted, after lingering for years on the books, scorned and violated by ' the unbridled and defiant spirit of speculation' (Hoffman, J., in Cussard V. Hinman, 14 How. (N. Y.) Pr. 84, 90), despite the earnest efforts of the courts to enforce them, they have finally been repealed." ' Rosewarne v. Billing, 15 C. B. N. S. 316. In Rogers ex parte, L. R. 15 Ch. D. 207, it appeared that S., a stock broker, having been authorized by C. to buy and sell specified stocks for C, and to receive or pay for him the " dif- ferences " representing profit or loss, bought and sold large amounts of stock as a principal, and appropriated tliem among certain clients including S. It was held that S. could recover from C. the balance of losses due S. on the whole transaction. "This," said James, L. J., "is the ordinary case of -a broker employed by a person who is speculating on the stock exchange, and authorized by his client to pay his losses, and actually paying tliem." See Fareira v. Gabell, 89 Penn. St. 89 ; Williams ;•. Carr, 80 N. C. 294. 2 Grozewood v. Blane, 11 C. B. 536 ; Thacker ?.. Hardy, L. R. 4 Q. B. D. 685 ; Green in re, 7 Biss. 338 ; Lehman V. Strassburger, 2 Woods, 554 ; Rnm- sey c. Berry, 65 Me. 570 ; Yerkes v. Salomon, 11 Hun, 471 ; Parsons v. Tay- lor, 12 Hun, 252 ; Bigelow v. Benedict, CHAP. XV.] ILLEGALITY. [§ 453. stock-jobbing is illegal, money lent for the purpose of carrying it on cannot be recovered, supposing it appear that the money was lent knowingly and with the purpose of furthering the illegal act. " If it be unlawful in one man to pay, how can it be lawful for another to furnish him with the means of payment?"' — It is not necessary to constitute a valid contract, 70 N. Y. 202 ; Story r. Salomon, 71 N. Y. 420 ; Morris v. Tumbridge, 83 N. Y. 95; Kirkpatrick u. Bonsall, 72 Perm. St. 155 ; Pixley v. Boynton, 79 111. 351 ; Cole V. Melmine, 88 111. 349 ; Logan v. Brown, 81 111. 415 ; Grregory v. Wen- dell, 39 Mich. 337 ; Barnard v. Bark- haus, 52 Wis. 593 ; Williams v. Carr, 80 N. C. 294; Sawyer u. Taggart, 14 Busli, 727 ; Williams u. Tiedemann, 6 Mo. Ap. 269, and other oases cited Wald's Pollock, 278; Benj. on Sales, 3d Am. ed. § 542. 1 Per cur. Cannan u. Bryce, 3 B. & Aid. 179. In Third National Bank r. Harrison, 10 Fed. Report. 248, we have the following from Treat, J. : — "The principle may be considered well established that when a statute pronounces a gaming or usurious con- tract absolutely void no recovery can be had thereon. The gaming statute of Missouri destroys the negotiable character of a note, or other obligation, given for a gaming consideration within the terms of that statute. The doc- trine that void transactions cannot ac- quire validity by transfer of paper obligations based thereon finds full sanction not only in authorities, supra, but in the many bond cases before the United States supreme court. Thomp- son V. Bowie, 4 Wall. 463 ; Wells v. Supervisors, 102 U. S. 626 ; Buchanan u. Litchfield, 102 U. S. 278; Jarrolt v. Moberly, 103 U. S. 580 ; McClure v. Ox- ford, 94 U. S. 429. The broad distinc- tion remains between contracts void ab origine, by force of statutes whereby assignees and indorsees are unpro- tected, and contracts contra homos mores, which cannot be enforced between the original parties thereto, but are held enforceable when, being negotiable in form, they have passed to innocent holders for value. " The notes in question were, it must be held for the purposes of this motion, given for balances on an ' op- tion deal,' an illegal contract ; being, as alleged, a mere betting transaction on future prices, with no purpose of delivering or receiving the articles con- cerning which the bet was made. If the allegations of the answer are true, Alexander could not recover on the notes in suit ; and the court was in doubt whether the position the bank occupies should not be considered as exceptional, and thus open the equities between the original parties. It is evident that the bank could at divers times have collected Alexander's de- mand note and turned over to him the collaterals ; and it seemed that defen- dant's position had great force, viz., that the transfer of Harrison's notes as collateral to the bank under the cir- cumstances was merely for the purpose of excluding the equities between the original parties. Still the stubborn fact remained that the bank is a bona fide holder for value within the rules laid down by the United States su- preme court in Swift v. Tyson, 16 Pet. 1, and Goodman v. Simonds, 20 How. 343, no evidence being given that the bank had notice of the infirmity of the paper. "The court holds that the transac- 627 § 453.] CONTRACTS. [chap. XV. that the vendor should have the thing in his yiossession. There may be actual sale, even without tactual possession on either tion in question is not within the terms of tlie gaming laws of Missouri, but if it was an option deal, as charged, would be unenforceable between the original parties, and even in the hands of an innocent indorsee for value. " The distinction is so clearly drawn, and the doctrines so exhaustively con- sidered by Judge Thayer, of the St. Louis circuit court (with whose manu- scrijit opinion in the Tinsley case I have been favored), that it would be a mere repetition of what has been thus so ably done, to attempt to travel over the same ground, and hence I quote lai'gely from his opinion as follows : — " ' The law is now well settled, in all of the states where the question has arisen, that there can be no recovery had upon a contract or sale of person- alty where the parties to such contract do not intend an actual delivery of the articles bargained for, but merely in- tend to settle differences at some future day between the price agreed to be paid for the commodity and the then market price. Such contracts are universally held to be invalid as against public policy, and in some instances they have been held to be in violation of statutes relative to gaming and wagers. Lyon u. Culbertson, S3 111. 33 ; Sampson r. Shaw, 101 llass. lAf> ; Kirkpatrick a. Bonsall, 72 I'a. St. 155 ; Gregory v. Wendell, 39 Mich. 337 ; Rumsey v. Berry, 65 Me. 570 ; Williams v. Tiedemann, 6 Mo. App. 260. But there is an apparent conflict of opinion touching the question whe- ther a broker, factor, or commission merchant, who has been employed by his principal to make contracts of this character with some third party, and has done so in his own name, but for his principal's benefit, may maintain 628 an action against his principal to re- cover money expended for his principal at his principal's request in the settle- ment of losses accruing under such contrjicts. This precise question was considered in the case of Green, 15 N. B. R. 201 (U. S. Dist. Court, W. D. Wis.), and it was there held that the broker could not recover from his princi- pal for moneys thus expended in the settlement of losses on such illegal ventures. But it is to be observed that the court, in the case last cited, based its decision mainly on a statute of Wisconsin, which declared all ' notes and agreements void that had been given for repaying any money knowingly advanced for any betting and gaming at the time of such betting or gaming.' And the evidence in the case cited showed that the broker not only made the illegal contracts in question, but that he advanced the money for the venture. The court accordingly held that the case fell within the statute, and that the broker could not recover money thus know- ingly advanced in furtherance of a gambling transaction. " ' There are other cases, arising be- tween factors and brokers and their principals, which the courts have ap- parently treated as though the action was between the principals to the ille- gal transaction. Birt the different re- lation existing between the agent and his principal, in actions by the former to recover moneys expeuded for his principal in the settlement of losses on wager contracts, was apparently not called to the attention of the court. Vide Gregory u. Wendell, supra; Wil- liams V. Tiedemann, supra. " ' On the other hand, the law is well settled in England that if a broker be CHAP. XV.] ILLEOALITY. [§ 453. side, if there be the intention bona fide to sell. It may often happen that a party desires, and this in pursuance of a line of employed to make wager contracts, such as are voidable under 8 & 9 Vict. c. 109, § 18, and at the request of his principal the broker pays the amount due under such contract, he can recover the amount so paid from his principal, and the illegal nature of the contract with reference to which the money is paid is no defence to an action founded on such claim. Eosewarne v. Billing, 33 Law Jour. (1864) 55, N. S. Common Pleas, Michaelmas term, 1863 ; Pidgeon V. Burslem, 3 Exch. 465 ; Jessopp v. Lutwyche, 10 Exch. 614. " ' In this country the same doctrine has been held substantially in the fol- lowing cases : Lehman v. Strassberger, 2 Woods, 554; Warren c. Hewitt, 45 Ga. 501 ; Clark v. Foss, 10 Chicago Leg. N. 213. " ' In the case of Marshall v. Thurston the court says : ' We understand the charge of the lower court to be, in substance, that if the broker know- ingly assisted the defendant by an ad- vance of money and active agency, though not as principal, to gamble iu the rise and fall of bonds, no recovery can be had ; but if the broker merely acted as his agent iu effecting contracts between him and third parties for the purchase or sale of bonds on time, the defendant and third parties intending to speculate in the rise and fall of prices, and defendant suffered losses which were paid by the broker at de- fendant's request, or were paid and the payments subsequently ratified by the defendant by executing notes there- for, a recovery can be had. In this view the charge is supported by the authorities.' " 'The rule which has the support of the great weight of authority (what- ever may be thought of the policy and morality of the rule) seems to be as follows : If a factor, broker, or com- mission merchant be employed by his principal to buy or sell commodities for the purpose of speculating on the rise and fall of prices merely, and the agent buys or sells in his own name, but on his principal's account, and subsequently, after losses have occur- red in such transactions, the agent advances money at his principal's re- quest to pay such losses, or if the agent pay such losses and the principal afterwards executes notes in the agent's favor to cover the amounts so advanced, the agent may recover against his prin- cipal the advances so made at liis re- quest, or upon the notes so executed, notwithstanding the illegal character of the original venture. The promise implied in the one instance and ex- pressed in the other is neither void for want of consideration nor tainted with illegality. It was even held in tlie case of the Planters' Bank u. Union Bank, 16 Wall. 433, that where the defendant, in violation of law, had sold bonds for the plaintiff and re- ceived the proceeds, the plaintiff might recover the amount from the defend- ant, and that the illegal character of the transaction out of which the fund arose was no defence. " ' But, on the other hand, if a broker or factor supply his principal with funds for the express purpose of en- abling him to engage in illegal trans- actions, and if he (the agent) conducts the illegal venture in liis own name, it seems clear that he becomes a particrps criminis, and the law will not aid him to recover moneys advanced for such purpose, nor will it enforce securities taken therefor.' " In Melchert v. Ins. Co., Cir. Ct. 629 § 453.] CONTRACTS. [chap. XV. business perfectly fair, to sell soniethiiis:, which, though not actually in his hands, could yet be obtained by him either in specie or in equivalent at any time he may desire. Endorse- ment of negotiable paper rests on this principle. I do not have the money which my endorsement calls for in my pocket ; I may not have it in bank ; but nevertheless my endorsement is a perfectly legitimate transaction. There is no reason why a debt payable in wheat or in any other common commodity should not be resarded in the same light. The custom of merchants, it is agreed, sustains transfers of money which is not in hand ; there is no reason why the custom of merchants should not be permitted to establish similar transfers of arti- cles into which monej' can be readily converted. This has been held to be the case with regard to assignments of goods in transit by transfers of bills of lading ; and goods, of which Iowa, 1882,11 Feb. Eep. 193, it was held that an action could not be maintained against a telegraph company for negli- gence in non-delivery of a message, which the court held to be to direct a gambling investment. " If these con- tracts," said Judge Love, "were ille- gal gambling contracts, within the statute laws of Illinois, it was the plaintiff's plain duty not to fulfil them, and he cannot complain of the defend- ant's telegraph company that they were not sufficiently diligent in aiding him to perform his unlawful agree- ments. The contracts in question were for the delivery of rye in the month of September, at the seller's option. A contract for d(divery at the seller's option maybe valid or invalid. It depends upon the nature of the option as shown in the intention and purpose of the parties. The option may refer to the fact of delivery, or merely to the time of delivery. If it be the intention of the parties that the property shall be in fact delivered, giving the seller's option as to the time of delivery within a certain 630 period, I see no valid objection to such a contract. It is but a contract for sale of property to be delivered in the future, within a given time. But if it be not the bona fide intention of the parties that the property shall be in fact delivered in fulfilment of the con- tract of sale, but that the seller may, at his election, deliver or not deliver, and pay 'differences,' then the con- tract is void. Such a dealing amounts to a mere speculation upon the rise and fall of prices. It required no cap- ital, except the small sums demanded to jjut up margins and pay differences. It promotes no legitimate trade. Any impecunious gambler can engage in it, with infinite detriment to the bona fide dealer. It enables mere adventurers, at small risk, to agitate the markets, stimulate and depress prices, and bring down financial ruin upon the heads of the unwary. It enables the unscrupu- lous speculator, with little or no cap- ital, to oppress and ruin the honest and legitimate trader. Corners and black Fridays and sudden fluctuations in values are its illegitimate progeny." CHAP. XV.] ILLESALITT. [§ 453. there are at any time lai't;e amounts in the market, may be obtained at least as readily as goods in transit. Supposing my specialty is trading in wheat, there is no more reason why an agreement by me to deliver a certain amount of wheat next week should be invalid, than would be my agreement, suppos- ing me to be a professional man, to render next week certain professional services. Such is unquestionably the English rule;^ and in this country there are high authorities to the same effect.^ In Pennsylvania, it is true, it has been held that where, as a matter of fact, it appears that the vendor has not any reasonable expectation of procuring the article he sells, and no intention of procuring it, the sale is to be regarded as a mere gambling venture, and the contract will not be en- forced.^ The decisions reached in these cases can be sustained on the hypothesis that, as a matter of fact, it appeared that there was no intention to deal with the things sold in specie, but merely with difference in price. If so, the proposal would substantially be, "if I deposit $1000 with you will you give me $10,000 in case of a future uncertain event occurring in a particular way ;" and this would be a gambling wager. On the other hand, if there be either an actual delivery of the thing purchased to the purchaser or his agent, or if there be a right to call for such thing so deposited, such thing being obtainable for the purpose, then the transaction cannot be regarded as a gambling adventure. "Whether the last-named condition of things exists is a question, not of law, but of fact.* ' Ashton V. Dakin, 4 H. & N. 867. Fareira v. Gabell, 89 Penn. St. 89 ; " If the law were held to be otherwise, North v. Phillips, 89 Penu. St. 250; nearly every contract for the sale of Gheen v. Johnson, 90 Penn. St. 38 ; stock on the London Stock Exchange Ruchizky v. De Haven, 97 Penn. St. would be gambling ; for in almost every 202; Dickson v. Thomas, 97 Penn. St. instance the jobber buys intending to 278. resell before a delivery is made to him, < See, for a criticism of the Pennsyl- and giving up the name of a third party vania cases above cited, Dos Passes on as the purchaser." Biddle on Stock Stock Brokers, 431 et seq. Brokers, 305. In Hatch v. Douglass, 48 Conn. 116, '^ Cameron u. Durkheim, 55 N. Y. the defendant wrote to the plaintiffs, 425 ; Pixley v, Boynton, 79 111. 351 ; who were stock brokers in New York Sawyer B. Taggart, 14 Bush, 727 ; Pick- city, "I want to buy one hundred ering v. Cease, 79 111. 727. shares Union Pacific stock on margin. » Brua's App., 55 Penn. St. 294; Will you take $1000 first mortgage New 631 453 a. j CONTRACTS. [chap. XV. § 458 a. Sales on option are sometimes spoken of as gambling transactions ; but this is not necessarily the case. The fact is, the meaning of the terra " option" varies with local usage. York and Oswego Railroad, and do it ?" The plaintiffs answered that they would, and at once bought the stock, and soon after sold it by defendant's order at a profit. Other stocks were afterwards bought and sold under the same arrangement, resulting in a loss on the entire accoirnt. The suit was brought to recover this loss. It was held that the suit could be maintained. Carpenter, J., in delivering the opinion of the coiirt, said: "The authorities are clear that a contract relating to stocks or other commodities, to be per- formed at a future day, by which the parties contemplate only the payment of the difference in the market value by one or the other as the case may be, is a mere gaming contract and void. So if parties in form contract to sell goods to be delivered in tlie future, the seller in fact having no goods, and the parties not intending an actual deliv- ery, but contemplating merely a, pay- ment of the difference between the market value on that day and the agreed price, it is a gaming contract and cannot be enforced. Contracts of this nature, however, are distinguish- able from speculating contracts. A man may legitimately buy goods or stocks intending to sell in a short time and take advantage of an advance in the price if there is one. In such a case he takes the risk of a decline, but that does not make it a gambling con- tract. And he may purchase goods at a fixed price to be delivered at a future day, if the parties intend an actual de- livery and acceptance. The actual in- tention may be difficult to prove or dis- prove ; but when once the fact is estab- 632 lished, one way or the other, there is no difficulty in applying the law. "Now there are in the transactions between these parties some of the ele- ments which are usually found in a, gambling contract. For instance, it is pretty evident that the parties did not contemplate that the stock should be actually transferred to the defendant ; but lie would have been satisfied with the receipt of the difference between the price paid and the price receivi-il, less interest and commissions, if the price advanced, and expected to pay the difference if the price declined. To that extent it was a contract for the payment of differences. But it was more than that. The defendant through his agents, the plaintiffs, actually pur- chased the stock, and there was an ac- tual delivery — yot to the principal, but to the agents for the principal. The plaintiffs advanced the money and held the stock in their hands as security. The plaintiffs were ready at any time to transfer the stock to the defendant on payment of the purchase-money. The import of the finding is, and we must so regard it, that it was an actual and bona fide employment of the plain- tiffs to purchase stocks, and not a mere formal employment designed to cover a betting operation. It does not appear that the plaintiffs assumed any risk. They were entitled to their commissions and interests on their advancements, whether the stocks went irp or down. The most that can be said of them is, that they knew that the defendant was speculating, and that they advanced him money for that purpose. But that was neither illegal nor immoral." CHAP. XV.] ILLEGALITY. [§453a. In a recent excellent work on stockbrokers' is the following : " Option signifies in America a right or privilege to receive or deliver a certain number of shares of a not^neces- specified stock on a certain day at a certain price^ ?^">y with or without interest. In England it signi- fies the right to buy or sell at a future day at a certain price, or to do neither." Now if this were all, there is nothing in such contracts necessarily illegal. Contracts to sell or purchase at a future date at the election of the promisor, subject to cer- tain contingencies, are no more illegal than are other contracts conditioned on a future contingency.^ 'Nor is there anything necessarily illegal in a conditional agreement to buy or sell in the future at the election of one of the parties. I may own, for instance, a house in a particular block, and I may say to my neighbor who owns the next house, " now there may come a contingency in which it may be important for me to own both houses,' or to own neither, give me the 'option' to do this, and I will pay you so much at once for this privilege." This, as we will presently see, is what, were the bargain made in the stock-market, would be called a " straddle ;" nor, how- ever disreputable may be some of the brokerage transactions to which the name is applied, is there anything in such a bar- gain which is in itself immoral or inequitable, or which should prevent it from being enforced. If this be the case, we must a fortiori hold that an agreement by one party to give another an " option" has in it nothing necessarily immoral or inequita- ble. There may be a contingency, for instance, which may ' Biddle on Stock Brokers, 72. Ac- ' spread eagles.' A ' call' gives A. the cording to Mr. Dos Passes, an "option" option of selling or buying from B. or is a contract by which. A., in considera- not certain securities. A 'put' gives tion of the payment of a certain sum A. the option of selling or delivering to to B., acquires the right or privilege of B. or not, certain shares of said secu- huying from or selling to B. specified rities. A ' straddle' or ' spread eagle' securities at a fixed price within a cer- is a combination of a ' put' and a ' call,' tain time. (To this are cited Story v. and secures the right to buy or sell to Salomon, 71 N. Y. 420, and opinion of B. or not a certain number of shares of Van Hoesen, J., in court below, 6 Daly, specified securities." Dos Passes on 531 ; Yerkes v. Salomon, 11 Hun, 471.) Stock Brokers (1882), 444. " These options are of three kinds, viz., ' See infra, §§ 579 et seq. 'calls,' 'puts,' and 'straddles' or 633 § 453 a.] CONTRACTS. [chap. XV. make it necessary for me to go to Liverpool next week, and I desire to obtain a particular room in a particular steamer, and I pay something for this right, or I pay something for the re- fusal, a month hence, of a yacht, or of a horse, or of a bale of cotton. Xow there can be no question that when there is a fixed price, so that the contract is sufficiently definite, agree- ments of this class are binding.' At the same time we must remember that it is not in this sense alone that the term " option" is used. Thus in the Revised Statutes of Illinois we have the following : — " Whoever contracts to have or give to himself or another the option to sell or buy at a future time any grain or other commodity, stock of any railroad or other company, or gold, or forestalls the market by spreading false rumors to influence the prices of commodities tlierein, or corners the market, or attempts to do so, in relation to any of such commodities, shall be fined not less than $10, nor more than $1000, or con- fined in the county jail not exceeding one year, or both, and all contracts made in violation of this section shall be consid- ered as gambling contracts, and shall be void."^ In a recent charge to the grand jury of Cook County, Illi- ' The argument in the text is ap- money thus received would be, as it plied as follows in Melsheimer's Stock were, a reduction of one per cent, in Exchange (London, 1879), as adopted the purchase price if the security is in Dos Passos on Stock Brokers, 445. put upon him, and would equally, as " Let us suppose a person who is pos- it were, go to increase the selling price sessi'il of certain securities to be desir- if it is called from him. There is, of ons of Selling if he could get a bid, course, this difference, that if the say one per cent, higher than the pre- security is at precisely the same price sent price, and to be at the same time on the option day as ou the day the desirous of doubling his holding if he bargain was made, it may happen that could buy at a price one per cent, the security is neither put nor called, lower. If he gives his instructions in and in that case the owner will have this form to his broker, it may well secured his one per cent, without fur- happen tliat the price does not fluctu- ther liability, and be in a position to ate sufficiently to make it possible to repeat the process. Under such cir- carry out either transaction. But the cumstances, the option could not be same practical result may be attained said to be void as a wager." with certainty by the owner of the ^ Rgy. gtat. 111., ch. 38, § 180 ; see securities taking a one per cent, price as to statutes of other states, supra, § for the put and call of them, for the 453. 634 CHAP. XV.] ILLEGALITY. [§ 453 a. noia, by Judge Jameson,' we have the following exposition of this statute: — "By this section [that above given] are denounced three separate misdemeanors — the sale of options, forestalling the market, and cornering the market. All these have either, in name or in spirit, been always interdicted by the common law, and that of 'forestalling' was, at a very early day, made punishable in England by statutes. Over a century ago a movement arose in England for abolishing the restrictions upon the freedom of trade, and these statutes were, as a part of them, repealed ; but the common law has remained, both there and in this countr}^ unchanged, though fallen into disuse. The exigencies of the times induced our legislature a few years since to re-enact the statute against forestalling, and to add to it those touching options and corners, which I have .read — offences in which the criminal ingenuity of our ances- tors seems not to have been equal. " The first offence is the illegal sale of options for future delivery of grain and other commodities. The fact that pro- perty is sold to be delivered at a future day does not make the contract illegal ; or that it is not at the time possessed or owned by the seller ; or that the time of its delivery is left, within fixed limits, optional with the buyer or seller; though in one sense any such sale is a sale of an option apparently within the statute. What makes it a gambling contract is the intent of the parties that there shall not be a delivery of the commodity sold, but a payment of differences by the party losing upon the rise or fall of the market. Of this intent the jury are to be the judges, and it may be inferred directly from the terms of the contract, or indirectly from the course of dealing of the parties.^ "By this legislation the general assembly had no purpose to interdict bona fide sales of commodities, but only such as are colorable or fraudulent, contrived by both parties as a cover merely for gambling transactions." "The statute," said Craig, J.,^ "does not prohibit a party > Chicago Legal News, Oct. 15th, Wolcott v. Heath, 78 111. 433 ; Pixley 1881, p. 37. V. Boynton, 79 111. 351. 2 Pickering ^. Cease, 79 111. 328 ; » Logan v. Brown, 81 111. 415. 635 §453«.] CONTRACTS. [CHAP. XV. from selling or buying grain for future delivery ; such was not the purpose of the statute ; nor can it make any difference, as to the legality of the contract, whether the person who sells for future delivery, at the time the sale was made, has on hand the grain ; a party may sell to-day a certain quantity of grain for de- livery in a week or a month hence, and then go upon the market and buy the grain to till the contract."^ "Option," therefore, as a statutory term in Illinois, means a contingent bargain for differences of jjrice, as distinguished from a bargain for the thing itself, and as such is illegal.^ But in ISTew York, there is nothing in itself illegal in an "optional contract for the sale of any marketable commodity, when, for a consideration paid, one of the parties binds himself to sell or receive the property at a future time, at a specified price, at the election of the other. Mercantile contracts of this' character are not infre- quent, and with a bona fide intention on the p)art of both par- ties to perform them. The vendor of goods may expect to produce or acquire them in time for a future delivery, and, while wishing to make a market for them, is unwilling to enter into an absolute obligation to deliver, and, therefore, bargains for an option which, while it relieves him from liability, assures him of a sale, in case he is able to deliver ; and 1 A contrant of this class was held difference, without either performing valid, the court relying on Pixley v. or offering to perform his part of the Boynton, 79 III. 3f)l ; Pickering i. agreement," "was only gambling in Cc-a.su, 71) 111.328; Sawyer k. Taggart, tlie price of wheat. . . . If the one 14 Bush, 727. And see Cole v. Milmine, party is not to deliver, or the other to ■SS III. 349. receive the grain, it is in all but name 2 Under this statute a, sale "where a gambling on tlie price of the com- the seller had only an option as to the modify, and the change of name never time of delivery" is valid. Blodgett, .1., changes the quality or nature of Jackson v. Foote, 12 Fed. R. 41 ; citing things. It has never been the policy Pixley V. Boynton, 79 111. 3.51 ; Cole v. of the law to encourage, or even sanc- Milmine, 88 111. 349. It was after- tion, gaming transactions, or sucli as wards lield in the same state, tliat a are injurious to trade or are immoral contract for the sale of wlieat by which in their tendency ; and the old maxim " neither party expected the delivery that courts will always suppress new of any wheat, but in case of default in and subtile inventions in derogation of keeping margins good, or even at the the common law would be applicable time of delivery, they only expected to to such contracts." Lyon u. Culbert- settle this contract on tlie basis of son, 83 111. 33. 636 CHAP. XV.] ILLEGALITY. [§ 453 a. the purchaser may in the same way guard himself against loss beyond the consideration paid for the option, in case of his inability to take the gdods."^ The mere fact, also, that wheat is to be delivered at a future day, does not infect the transac- tion with the element of gambling.^ ' Andrews, J., Bigelow v. Benedict, 70 N. Y. 202; see Chicago R. E. t\ Dane, 43 N. Y. 240 ; Cooke v. Davis, 53 N. Y. 318 ; Story v. Salomon, 71 N. Y. 420; Kirkpatrick v. Bonsall, 72 Penn. St. 155 ; discussed in Biddle on Stockbrokers, 311 et seq. 2 Cole u. Milraiue, 88 111. 349 ; see supra, § 453. In a case in the New York court of appeals in 1880, Harris v. Tumbridge, 83 N. Y. 92, the plaintiff, Mrs. H., bought through the defendant, a New York stock broker, a stock option or privilege known as a " straddle," which secured to her the right to de- mand of the seller, at a price stated, a. certain number of shares of a specified stock, or to require him to take said stock at the same price within sixty days. It was in evidence that the plaintiff was induced to make the pur- chase by printed circulars issued by defendant, explaining the nature of a "straddle," offering to purchase one of his selection upon payment of a specified sum, and guaranteeing that fluctuation in the stock during the pendency of the contract would amount to eight per cent., and in cage it did not, agreeing to refund the amount paid less commissions. The plaintiff sent $400 to the defendants to invest in a sixty day "straddle." Under this supposed guaranty, on the next day after the purchase, the defendant sold the stock "short," which resulted in a loss. In an action to recover dam- ages, it was ruled that defendant had no autho]-ity to make the sale, that in the absence of any directions from plaintiff, it was the defendant's duty to have closed the contract by exercis- ing the option at the most favorable time, and to have acted for her in that respect with reasonable care. It was further held the question of negligence and want of skill and care in the per- formance of his duty as agent, was properly submitted to the jury, and authorized a recovery. The defendant claimed on appeal that this was a gambling transaction, and as such prohibited by statute. It was held that the contract was not of necessity a wager contract and void under the statute. "The plaintiff," said Finch, J., "bought, through the agency of the defendant, a stock option, or privilege, known in the language of brokers as a ' straddle.' The word, if not elegant, is at least expressive. It means the double privilege of a ' put ' and ' call ;' and secures to the holder the right to demand of the seller at a certain price within a certain time a certain number of shares of specified stock, or to re- quire him to take, at the same price within the same time, the same shares of stock. The continuance of the op- tion is fixed by the agreement, and in this case was for sixty days. The value of a 'straddle,' it is proven, de- pends upon the fluctuation of the stock selected. The wider the range of these fluctuations, whether up or down, the greater the amount which may be realized ; and of course the longer the option continues, the greater the chance of such fluctuations during the period." . . . "It is next argued that this 637 § 453 6.] CONTRACTS. [chap. XV. § 4536. It has been held in Massachusetts,^ that a contract to get up a corner in stock, connected with a plan bj' the in^^Mnvai- " comerers" to make large purchases to bedelivered to iciates con- them after the "corner" had been completed by them, is invalid at common law. This may be sustained on the ground that such a " corner"' involves a cheat by false pre- tence. When the " cornerers" go to A., and say to him, " we want to buy 10,000 bales of cotton, to be delivered next month," this is equivalent to a representation on their part that as far as they know the cotton is obtainable ; and if they have taken measures making it impossible that it should be obtained, tlieir conduct amounts to a false pretence. For another reason such a contract may be regarded as inoperative. A contract whose performance is made impossible by any action of the promisee does not bind the promisor.^ 'Sovv this is the case when a " cornerer " makes a contract for the purchase of arti- cles which he has prevented the party purchasing from deliver- ing to him except at a ruinous sacrifice. The Illinois statute, as has been just seen, invalidates sales based on corners ; and of this we have the following expositif)n by Judge Jameson, in the charge just quoted: "The offence of cornering the market is not, so far as I am aware, mentioned in the books, but it is one of the numerous family of frauds of which the various members in their fight with society assume an infini- tude of shapes and colors. To detect and punish these, not- withstanding the novelty and apparent innocence of their disguises, is the first business of courts and justices. The thing which we know as a ' corner ' in the market, might be briefly described as a process of driving unsuspecting dealers in grain, stocks, and the like, into a ' corral,' and relieving them of their purses. The essence of the offence consists in was a gambling transaction, and as money to be employed by the latter in such prohibited by statute. It may stoclc wagering cannot recover, Thacker have been, but there is no proof that it v. Hardy, 27 W. R. 158 ; Lehman u. was, and no such defence was pleaded. Strassberger, 2 Wood C. C. 554 ; Wood- The contract was not of necessity a worth r. Bennett, 43 N. Y. 273. wager contract." See, to the effect that ' Sampson r. Shaw, 101 Mass. 145. a broker who advances to his principal ^ Supra, § 312. 638 CHAP. XV.] ILLEGALITY. [§ 453 b. the party securing a contract for the future delivery of some commodity at his option, and then, by engrossing the stock of such commodity in the market, making it impossible for the other parly to complete his contract, but by purchasing of his adversary at his own price, or paying in cash the difler- ence fixed by such adversary. As was said of another great wrong, if this is not wrong then nothing is wrong."' ' The parties to a corner are di- vided as " bulls " and " bears." The ' ' bears "are looking forward to a de- cline, and agree to sell certain securi- ties, which they do not hold, for delivery at a fixed price at a future date ; and their object is to beat down the stocks as much as they can prior to the time of sale. The "bulls" are speculators who hear of this, and who try to get into their hands as much of the securities as they can, so as to compel the "bears " to buy from thetu at an exorbitant price. In itself there is nothing illegal in a contract to sell a security at a future day, nor is there anything illegal in purchasing secu- rities under the impression that they are going to rise in value. The illegal- ity comes in (1) when there is a com- bination by several parties by false pretences or false rumors to raise or depress value, or (2) when the object is to absorb a staple in such a way as to produce public distress. By the New York statute of 1858, ch. 134, heretofore specified, "short" sales of securities (i. e. sales of securi- ties by a party by whom they are not at the time held) are sanctioned. How far they are prohibited by the Illinois statute has been already discussed. The question in the text is thus dis- cussed by me in the Criminal Law Magazine for January, 1882: — "It does not follow, as we will see, that because a transaction is invalid it is indictable ; and on principle we must hold that the indictability of a ' cor- ner' depends not upon the object itself, but on the means employed. For one man to ' corner' another by buying sometliing that that other wants, is not an indictable oifence ; since the whole basis of trade is the purchase of goods by one person in order to sell to another person at an advance. If this is allowable for one person, it is allowable for a number of persons acting in combination. In fact, it has been by companies of men combining to buy certain commodities and to refuse to sell except on highly remunerative terms, that some of our most beneficial business enterprises have been conducted. Had it been held to be indictable for two or more capi- talists to combine to hold any property until it reaches a specific figure, there is scarcely a railroad that could have been built, scarcely a mine that could have been dug. Nor are such combi- nations when directed to the pyc^^erva- tion of property, likely to be less bene- ficial. Some months ago, when the credit of the Reading railroad received a great shock, some of its leading friends agreed not to let the stock fall below 40 ; to buy up all offered below that figure, and not to sell until that figure was reached. They argued that if the threatened panic should not be checked, not only would their property, but the property of multitudes of meri- torious small holders, be exposed to disastrous fluctuations. Similar ope- rations took place in England more than once, during the Napoleonic wars, 639 § 454.J CONTRACTS. [chap. XV. § 454. The statute of 9 Anne, c. 14, s. 1, avoids all securities of which the whole or part of the consideration is money won large purcliases of the public funds being made from time to time by great capitalists, in the interest of the ad- ministration, for the purpose of keep- ing up the funds to a specific mark. Such movements are often not only salutary but in a high degree public spirited. Nor, even when these attri- butes cannot be claimed, can it be said that the criminal law ought to take hold of all cases in which ' corners' are got up for the purpose of compel- ling purchasers to buy at an inordinate advance. To determine what advance is and what is not inordinate is a func- tion that (fraud not being charged) no court of justice is competent to exer- cise. Nor can it be said that because a contract is void in law, the parties to it, or any one of them, is obnoxious to indictment. Unlawfulness and indict- ability, we must remember, are far from being convertible. So far from all contracts which are void in law being indictable, it is a settled principle that indictments do not lie to punish parti- ciijation in void contracts which are not tainted by fraud or coercion. Sun- day contracts are void ; usurious con- tracts are in many states void ; but to make participation in Sunday contracts and usurious contracts indictable, . would be to abolish the distinction be- tween civil and criminal jurisdiction, so far as concerns the object of trial, and to impose upon the community an intolerable burden of espionage and of misrule. The conditions of indicta- bility in such cases should be coercion or fraud. "As to fraud, little need be said. If there be false pretences or false per- sonation employed, there can be no question that to get up a ' corner' is indictable, even though the offence is unconsummated. It is as to coercion that the difficulty arises. A conspiracy to obtain money by coercion is un- questionably indictable at common law. And of coercion there are two kinds. Tlie first is physical, and when this is applied for the purpose of obtaining money, there is no doubt that an in- dictable offence is made out. The second is moral, and here the vexed question before us emerges. Is it ' moral' coercion, so as to make the use of it for tlie purpose of obtaining money indictable, to buy up any par- ticular necessary commodity for the purpose of getting inordinate prices ? We have some analogies in this respect to guide us. It has been held that lie who drives another before him till the victim plunges into a river in terror and is drowned, is guilty of homicide. ' It has been held, also, that the maxim, volenti nonjit injuria, does not apply to a person succumbing under the par- alysis of extreme need or fear." It is possible to conceive of the buying up of the corn, or the meat, or the coal of a community so exhaustively as to compel purchasers in agony to pay any price that the speculators demand. But to make out a case of coercion of " R. V. Pitts, Carr. & M. 284. 2 See cases enumerated in Whart. Cr. L. (8th ed.) §§ 164, 167, 521. To this, however, it is to be added that when to the absorbing of all of a par- ticular commodity that is in the mar- 640 ket, is added a purchase for future delivery of large blocks of such com- modity from a party ignorant of the "cornering," tliis, as has been said, is an attempt to cheat by false pretences, and the contract is void. CHAP. XV.] ILLEGALITY. [§ 454. by gambling or betting, or the repaying of money lent for gambling or betting. By the statute 5 & 6 Wm. Securities IV. c. 41, s. 1, such securities, instead of being abso- |a^Xg"'' lutely void, are deemed to have been made for an debts void, *J ' ^ D\ii money illegal consideration; and under this statute notes paidcamiot for gambling debts may be good in the hands of eredback. bona fide holders for value, such parties, however, hav- ~^^^il^g ing the onus on them of proving consideration.' But materials, at common law a gaming contract, not tainted by fraud, is not void.^ And when money, fairly lost, has been paid, it cannot at common law be recovered back ;' though it may be otherwise by statute.^ There is, it is true, high authority for holding that a court of equity will compel the surrender of securities given for gambling debts.® And equity, under cir- this class the following conditions are necessary : First, the thing slioald be a necessity of life. We cannot speak of coercion in buying articles of luxury or taste. Secondly, the market must be so engrossed as to produce an actual famine. Anything short of this would make it an indictable offence for holders of grain, or meat, or coal, to agree to sell only for remunerative prices ; and not only, therefore, would one of the great safeguards against panics be re- moved, but the regulation of prices would be given to courts. This might be consistent with high toryism. It might be consistent with communism. But it is not consistent with constitu- tional republicanism. Nor can such a jurisdiction affect beneficially even the classes it is designed to aid. Mono- polies, unless protected by the state, are soon headed off, when their gains become exorbitant, by the intrusion of other capitalists offering reduced prices. But when a price is fixed by law it cannot be changed. It may prove to he ruinous to purchaser, or itmay prove to be ruinous to vendor ; but whatever it may prove to be it must remain. Nor would business men of character go VOL. I. — 41 into speculations which would expose them to indictment ; and as there is no large enterprise that would not be open to this charge, those entering into such enterprises would be men without character. ' ' 1 Leake, 2d ed. 752 ; Hay v. Ayling, 16 Q. B..423; Edmunds .,. Groves, 2 M. & W. 642 ; Bingham r. Stanley, 2 a. B. 117. 2 Wilkinson v. L'Eaugier, 2 Y. & Col. 364 ; Babcock v. Thompson, 3 Pick. 446 ; but see Wilkinson v. Tous- ley, 16 Minn. 299. ' Cotton V. Thurland, 5 T. R. 405. ^ Spalding w. Preston, 21 Vt. 9 ; Got- walt u. Neal, 25 Md. 434 ; Thomas v. Cronise, 16 Ohio, 54 ; Cleveland v. Wolff, 7 Kans. 184 ; Thorpe v. Coleman, 1 C. B. 990. See Story on Cont. § 695. ' ' If one, having lost money by gam- bling, or on a wager, pays it, the law will not aid him to recover it back." Blodgett, J., Jackson u. Foote, 12 Fed. Rep. 41. 5 1 Story Eqi. Jur. 12th ed. § 303, citing Rawden v. Shadwell, Ambl. 268 ; Woodroffe v. Farnham, 2 Vern. 291 ; Portarlington v. Soulby, 3 My. & K. 104; Osbaldiston v, Simpson, 13 Sim.. 641 § 454.] CONTRACTS. [CHAP. XV. cumstances of oppression or fraud, will enjoin a plaintiif from enforcing a judgment obtained on a gambling contract;^ and will set aside a deed the consideration of which is an illegal wager.^ But a losing party, not distinctively a victim or a dupe, will not be assisted in recovering back money paid by him on his losses.' Judge Story, indeed, goes so far as to maintain that money lost by gambling should be recovered back "in furtherance of a great public policy, independently of any statutable provision." But Mr. Perry, the latest edi- tor of Judge Story's work on Equity Jurisprudence, adds, "the opposite rule has finally prevailed, with few exceptions. And we are not able to comprehend how, or why, a court of equity should be able to grant relief upon principles different from those recognized in courts of law. There may be excep- tions, based upon great oppression, and unconscionable advan- tage taken of one's weakness or want of caution, through the form of an illegal contract, where the courts of equity will treat the fraud as being the chief ingredient, and grant relief to the injured party upon that ground. But where the piarties stand upon equal footing, and the contract is illegal, they can- not expect aid either from the courts of law or equity."^ — In most states, by statute, provision is made for the recovery back of money lost in gambling.^ — That a deposit on an illegal wager may be recovered back will be hereafter seen.^ — A broker cannot recover for the value of services in conductinsr gambling contracts.' — When articles which are exclusively used for gambling are sold, their price cannot be recovered. But it is otherwise when they may or may not be so used. Thus, it is no defence to an action for the price of a billiard table that it may be used for gambling purposes, even though 513; thougli see contra, Cowles u. Ra- 55; Thomas v. Cronise, 16 Ohio, 54; guet, 140hio, 55; Bispham'a Eq. §223. Adams o. Barrett, 5 Ga. 404. See as 1 Skipwith u. Strother, 3Rand. (Va.) to recovery back from stakeholder, 214. supra, § 450. 2 Thomas v. Cronise, 16 Ohio, 54. < Story's Eq. 12th ed. § 304. 3 Supra, § 353 ; Bispham's Eq. § 223 ; = Ibid. Adams v. Gay, 19 Vt. 358 ; Spalding v. s infra, § 729. Preston, 21 Vt. 9 ; Gotwalt v. Neal, 25 ' Barnard v. Backhaug, 52 Wis. 593. Md. 434; Cowles v, Raguet, 14 Ohio, See supra, § 453, for opinion. 642 CHAP. XV.] ILLEGALITY. [§ 457. the vendor may have reason to suspect that such use is in- tended.' § 455. By the statute 19 Geo. II. c. 37, s. 1, marine insur- ances, without interest in the thing insured, are void as far as concerns British ships.* Hence to By statute ^ marine in- entitle a party on such an insurance to recover, he smances . 1. • • i i. J 1 I i without in- must prove his interest, and can recover only what tereetvoid. is his real loss.' The parties, however, may hind themselves to value the insured interest at a specific figure ;* and in case of total loss, the insured can recover the full extent of this valuation, though no more." Where the loss is partial, the insured recovers pro tanto on the agreed value." § 456. By the statute 4 Geo. III. c. 48, life insurances with- out interest are void; thousrh under this statute it „ ,. P So of iu- is sufficient if there was an insurable interest at the surances time of effecting the insurance.^ As insurable in- terests are regarded the interest a person has in his own life, or in that of his wife, or, in the case of a wife, in that of a hus- band ;' the interest a creditor has in his debtor's life ;' the interest an employee has in the life of an employer ;'" though not the interest a parent has in a child's life, unless the parent be in some way dependent on the child." § 457. A fire insurance, without an insurable interest, is void in England, both as a wagering contract and as prohibited by 14 Geo. III. c. 48. But as having fireinsur- insurable interests have been regarded carriers or ^'"^'^^' 1 Brunswick v. Valleau, 50 Iowa, 303 ; Lidgett v. Seoretan, L. R. 6 C. P. 120 ; supra, § 343. 616. * See, as to this limitation, Allkins = Ibid. ; Bousfield v. Barnes, 4 Camp. V. Jupe, L. R. 2 C. P. D. 375. 228 ; Bruce v. Jones, 1 H. & C. 769. ' Leake, 2d ed. 753 : Seagrave w. Ins. s Lewis v. Rucker, 2 Burr. 1167; Co., L. R. 1 C. P. 305; Ebsworth v. Denoou v. Ins. Co., L. R. 7 C. P. 341. Ins. Co., L. R. 8 C. P. 596. That the ' Dalby t>. Ins. Co., 15 C. B. 365. principle of this statute is part of the * Leake, 2d ed. 755. common law in Pennsylvania, see ' Downes v. Green, 12 M. & W. 481. Pritchett v. Ins. Co., 3 Yeates, 458. i» Hebdou v. West, 3 B. & S. 579. •■ Ibid. ; Irving v. Manning, 6 C. B. " Halford v. Kymer, 10 B. & C. 724 ; 391 ; Barker v. Janson, L. R. 3 C. P. Worthington u. Curtis, L. R. 1 C. D. 419. 643 § 461.J CONTRACTS. [CHAP. XV. Other bailees, if responsible for losses by fire;' and trustees, assignees, and caretalcers, responsible to the real owner.^ § 458. With gambling contracts may be associated contracts to violate lottery laws. When a statute makes lot- based on^ teries illegal, all contracts to carry on lotteries, or of lotteries which lotteries form part of the consideration, are illegal, ^ void.' A lottery, however, to be within the purview of the statutes, must be a distribution of prizes by chance among parties invited to buy shares, and does not include con- tracts between two or more individuals to settle a disputed issue by lot. But a distribution of prizes by chance among all invited to buy shares, this not being in pursuance of a prior arrangement between them, is a lottery, no matter how art- fully the scheme may be disguised. Thus, in an action in ISTew York, in 1876, the defendant to a suit for goods sold, consisting of candies and silverware, claimed that they were to be used in a lottery. The candies were put up by the plaintiff in packages, known as prize candy packages, in some of which there were tickets, each with the name of a piece of silverware on it. The defendants intended to sell the pack- ages for more than their value, the purchaser taking the chance of getting a package containing a ticket. It was ruled that this was a lottery under the statute, and that the plaintiff could not recover.' JSTor does it affect the question that in the scheme there are no blanks. ' XI. USURY. § 461. According to modern political economy, the trade in Usury laws money should be as unrestricted as the trade in loea^, an goods, and laws limiting the one should be as construed strictly construed as laws limiting the other. In ' Waters v. Ins. Co., 5 E. & B. 870; bocker, 5 John. 327 ; and other cases London, etc. R. R. v. Glyn, 1 E. & E. 652. cited Wh. Cr. L. 8th ed. § 1491. 2 Marks v. Hamilton, 7 Ex. 323; " Hull u. Ruggles, 56N. Y. 424. See, CoUingridge v. Ins. Co., L. R. 3 Q. to same effect, Morris u. Blackman, 2 B. D. 173. Hurl. & C. 912; U. S. v. Olney, 1 3 U. S. V. Olney, 1 Abb. U. S. 275 ; Deady, 461 ; People v. Art Union, 7 N. State V. Clarke, 33 N. H. 329 ; Com. Y. 240 ; Thomas v. People, 59 111. 160 ; u. Thacher, 97 Mass. 583 ; Hull v. Rug- Eubanks v. State, 3 Heisk. 488. gles, 56 N. Y. 424 ; Hunt v. Knicker- 6 Wooden v. Shotwell, 3 Zab. 465. 644 CHAP. XV.] ILLEGALITY. [§ 461. practice, however, there is this wide difference, that usury laws are passed to regulate the traffic of subjects intra-ter- ritorially, while tariff laws are laid to regulate their traffic extra-territorially. We hear of no tariff on the exportation of money, and no usury limitations on the home sale of goods. But both as to tariff and usury laws the same tests are appli- cable. They both are in restraint of liberty, and are, there- fore, to be strictly construed. And this view is strengthened by the gradually diminishing area of territory in which usury laws prevail.' The presumption of sympathy with accepted economical views is now as much against the authority of usury laws as it once was in favor of them. When they exist, also, they no longer rest on a common international basis. They assume as many distinct forms as there are juris- dictions. In some states it is prescribed that all usurious contracts shall be null and void. In other states the only penalty is a forfeiture of the unlawful interest. In other states intermediate positions are taken. In this complexity of legislation it is impossible to find any common basis of agreement on which uniform international rules can rest.^ 1 See, however, supra, § 362. giving this form to the contract will 2 See Bispham's Eq. § 232 ; Prov. afford a cover which conceals it from Bk. t'. Frost, 14 Blatch. 233; Dayton judicial investigation, the statute u. Moore, 30 N. .1. Eq. 543 ; Duquesne would hecome a dead letter Bank's App., 74 Penn. St. 426 ; Cooper And as in such cases the original in- V. Braswell, 59 Ga. 616. tention of the parties can seldom be In Montague u. Sewell, 57 Md. 407, arrived at except by resort to matters a case in which the facts, which were dehors the particular instruments of numerous and complicated, indicated writing executed by them, extrinsic a loan of $30,000, at usurious interest, evidence must be received to show under the form of a ground-rent, the real nature and intent of the Alvey, J., delivering the opinion of transaction. Tyson o. Rickard, 3 H. the court, said: "The form taken is & J. 109, 114; Andrews v. Poe, 30 Md. in all respects legal, and the instru- 486 See, also, Wetter f. ments used fail to disclose any taint of Hardesty, 16 Md. 11 ; and Rouskulp v. usury. But, as said by the supreme Kershner, 49 Md. 524 court in Scott v. Lloyd, 9 Pet. 446, "It is insisted, however, that not- while the purchase of an annuity, or a withstanding the transaction may be ground-rent, if a hona fide sale, has found to be a loan of money, and in- never been considered as usurious, fected with usury, yet, as the defend- though more than six per cent, profit ant was entirely innocent of any par- be secured, yet it is manifest that, if ticipation in the original transaction, 645 § 463.] CONTRACTS. [chap. XV, Between conflicting laws, that least onerous is to be applied. § 462. When there are conflicting laws which may be claimed to be applicable to a particular contract, that most favorable to the validity of the contract will, all other things being equal, be preferred. Parties will not be supposed to have meant to in- corporate into a contract a law by which it would be made void if not fraudulent; and they will be supposed, in case of conflict, to have incorporated that law by which it would be made effective.' It is true that this opinion has been zealously disputed by Judge Story ,^ and in New York, where it was at one time adopted,^ it has been recently questioned.^ But supposing there is nothing in the document with which this construction conflicts, its acceptance is in harmony with the rule that " where a contract is capable of two constructions, the one making it valid and the other void, it is clear law the first ought to be adopted."* § 463. Ordinarily it is the law of the place of performance that determines whether or no a contract is usurious f and and was without knowledge of any illogality therein at the time she ac- cepted the transfer of this ground-rent to her by Denison as surviving trustee, the complainants have no equity for relief as against her, and that she can- not be affected by the usury that may be found to exist. But this position cannot for a moment be sustained. No principle is better settled than that usurious securities are not only affected as between the original parties to the transaction, but the illegality or taint of their inception follows and afi'ects them in the hands of third persons, even though they be ignorant and in- nocent holders thereof. Lloyd v. Scott, 4 Pet. 228, and the authorities there quoted ; Andrews u. Poe, 30 Md. 485, 488." But see 2 Pars, on Cont. 145. 1 Pars, on Cont. ii. p. 584 ; Wh. Con. of L. § 507 ; Cromwell <.. Sac, 96 U. S. 51 ; Leavenworth Bk. v. Smoot, 2 MacAr. 371 ; Kellogg v. Miller, 2 McCrary, 395 ; Townscnd o. Riley, 46 646 N. H. 312 ; Peck v. Mayo, 14 Vt. 33 ; Fisher «. Otis, 3 Chand. 83 ; Bolton v. Street, 3 Cold. 31 ; Depau r. Hum- phrey, 8 Mart. N. S. 1 ; Bullard ^. Thompson, 55 Tex. 313 ; and see cases cited infra, § 654 ; supra, § 337. ' Conf. of L. § 298. ' Walworth, J., Chapman r. Robert- son, 6 Paige, 629. ' Folger, J., Dickinson !'. Edwards, 77 N. Y. 578. 5 Erie, J., Norwich v. R. R., 4 E. & B. 397 ; and other cases cited Wh. on Ev. § 1249 ; infra, § 654. 6 Burge, III. 774 ; Phillimore, IV. 515 ; Guthrie's Savigny, 208 ; Henry on Foreign Law, 43, note ; 2 Parsons on Contracts, 5th ed. 584 ; Westlake (1880), § 211; Story, § 291 ; 2 Kent, Com. Lect. 39, p. 460 ; Jones on Mort- gages, §§ 656 et seq. ; Cash v. Kenni- son, 11 Vesey, 314 ; Robinson v. Bland, 2 Bur. R. 1077 ; Fergusson c Fyffe, 8 CI. & Fin. 121 ; Andrews v. Pond, 13 Pet. 65 ; Junction R. R. u. Bank, 12 CHAP. XV.] ILLEGALITY. [§ 463. the place of performance, according to the better view, is the place where the money is invested. Suppose, j^^^ ^^ for instance, it is to be used for the purchase of place of ,, n ■ -/".IT perfoitn- lands or the working or mines in Colorado, where auce con- interest may be fifteen per cent. The money may ™ ^' be lent in NewYork ; the contract executed in 'Hew York ; and the payment designated to be made in a 'New York bank. But, for all this, the place of performance is Colorado, where the money is emploj'ed. The interest is great, but so is the risk ; and the lender should have full remuneration for this risk. Similar reasoning applies to the bonds executed by western railroads payable in Boston and 'Hew York. To de- clare such obligations usurious, because conflicting with the local law of the place of payment, would not only be a gross Wal. 226 ; Miller v. Tiffany, 1 Wal. 298 ; Scudder v. Bank, 91 U. S. 406 ; Dodge in re, 17 Bk. Reg. 604 ; Hough- ton u. Page, 2 N. H. 42; Little v. Riley, 43 N. H. 109 ; French v. French, 126 Mass. 360 ; Phelps v. Kent, 4 Day, 96 ; Fanning v. Consequa, 17 Johns. R. 511 ; 3 Johns. Ca. 610 ; Hosford v. Nichols, 1 Paige, R. 220 ; Stewart v. EUice, 2 Paige, 604; Potter v. Tall- man, 35 Barb. 182 ; Balme u. Wom- baugh, 38 Barb. 352 ; Jewell v. Wright, 30 N. Y. 259 ; Dickinson v. Edwards, 77 N. Y'. 578 ; Cartwright <^. Greene, 47 Barb. 9 ; Healy v. Gorman, 3 Green (N. J.), 328 ; Archer v. Dunn, 2 W. & S. 327 ; Wood v. Kelso, 27 Penn. St. 241 ; Mullen u. Morris, 2 Barr, 85 ; Irvine v. Barrett, 2 Grant's Cas. 73 ; Bowman v. Miller, 25 Grat. 331; Roberts v. McNeeley, 7 Jones' Law (N. C), 506 ; Findlay v. Hall, 12 Ohio St. 610 ; Collins' Ins. Co. v. Burkam, 10 Mich. 287 ; Savary v. Savary, 3 Iowa, 272 ; Boyd v. ^ Ellis, 11 Iowa, 97 ; Arnold v. Potter, 22 Iowa, 194 ; New- man 0. Kershaw, 10 Wis. 333 ; Lapice V. Smith, 13 La. R. 91; Howard u. Brauner, 23 La. An. 369 ; Kennedy v. Knight, 21 Wis. 340 ; Hunt v. Hall, 37 Ala. 702 ; Cubbedge v. Napier, 62 Ala. 518 ; Granger's Ins. Co. o. Brown, 57 Miss. 308 ; Bolton v. Street, 3 Cold. (Tenn.) 31 ; Greenwade r. Greenwade, 3 Dana, 497 ; Young u. Harris, 14 B. Mon. 556 ; Butler v. Edgerton, 15 Ind. 15; Butler c. Myer, 17 Ind. 77. In Scudder v. Bank, 91 U. S. 106, Hunt, J., said: "So if a note, payable in New York, be given in the state of Illinois for money there lent, reserving ten per cent, interest, which is legal in that state, the note is valid, although but seven per cent, interest is allowed by the laws of the former state. Miller V. Tiffany, 1 Wal. 310 ; Depau v. Humphrey, 8 Mart. N. S. 1 ; Chapman u. Robertson, 6 Paige, 634 ; Andrews V. Pond, 13 Pet. 65." That the lex fori determines what interest is payable on a note when no place of payment is designated, see Stickney v. Jordan, 58 Me. 106. In Consequa v. Fanning, 3 John. Ch. 587, it was ruled by Chan- cellor Kent, that the Chinese law, re- lating to interest, would be applied in New York to a contract distinctively subject to that law. And see supra, § 351. 647 464.J CONTRACTS. [chap. XV. wrong to innocent and meritorious creditors, but a serious shock to national enterprise. Improvements in new countries would be slow, if capital should be exposed to such risks of forfeiture. It would be otherwise, however, if the rule be maintained that the place of performance {i. e., the place that supplies the applicatory local law) is that where the money lent is to be used. This view, it should be added, is main- tained by Bar,' and by a high French tribunal.^ It has also the sanction of an eminent Scotch court.' Nor is this view unfamiliar to the Roman law. "Usurae vicem fructuum ob- tinent ;"* where the tree is, there properly is the fruit. It is true that this is regular!}' at the debtor's domicil. But if he goes to a foreign land, and uses the money there, applying it by his labor and skill to the realization of foreign staples, then the law of the place where the money is used is that which determines the interest.' And this view derives sup- port from parallel cases which the most eminent civilians have regarded as definitely settled.^ But where a note is made in the state of A. and discounted and delivered in the state of B., as between the two, in case of conflict, the law of B. prevails.' § 464. Ignorance of fact, leading to a mistake in calculation, will not avoid a contract on account of take in law. usurious interest nominally charged.^ Mistake in fact will not avoid contract ; otherwise as to mis- 1 Int. Priv. Recht, pp. 237, 238, 256. 2 Jour, riti droit int. prive, 1874, p. 128 : see Fiore, § 265. 3 Parker u. Royal Exchange Co., 8 D. 372 ; cited Guthrie's Savigny, p. 204, note. See to same effect, Harvey ,:. Archihold, 1 Ry. & Moo. 104; S. C, 3 B. & C. 626 ; Young c. Godbe, 15 Wal. 562 ; Fitch c. Reiner, 1 Biss. 337 ; Phelps 0. Kent, 4 Day, 96 ; Potter (•. Tallman, 35 Barb. 182; Bank of Georgia /■. Lewin, 45 Barb. 340 ; Bowen v. Bradley, 9 Abb. N. Y. Pr. 395 ; Findlay u. Hall, 12 Oh. St. 610 ; Arnold v. Potter, 22 Iowa, 194 ; Senter V. Bowman, 5 Heisk. 14; Duncan v. Helm, 22 La. An. 418. The tendency 648 of the French authorities is to hold that the rate of interest is to be deter- mined by the law of the place where the money is to be employed. Jour, du droit int. priv6, 1875, p. 354; Brocher, p. 363. > L. 34, D. de usur. 22, 1. 6 Hert. IV. 53 ; Seuffert, Comment. I. p. 234. 6 Wh. Conf. of L. §§ 508, 672 ; Bar, p. 256. ' Andrews v. Pond, 13 Pet. 65 ; Tildeu r. Blair, 21 Wall. 241 ; Upham V. Brimhall, 11 Mete. 526 ; Hiatt v. Griswold, 5 Fed. Rep. 573. 8 Story on Cont. § 730, citing Glass- furd 0. Laing, 1 Camp. 149 ; Gibson v. CHAP. XV.] ILLEGALITY. [§ 467. § 465. The rights given by the statutes are strictly Stranger personal. A stranger cannot be heard to avoid a contract on the ground that it is usurious.' § 466. When a contract is in itself valid, it is not affected by the fact that the lender receives, by a subsequent special arrangement, without remodel- ling the contract, an excess of interest.'' § 467. Supposing that a statute exists prohibiting the reception of interest beyond a fixed amount, and makino; void all contracts of loan in which the in- cannot avail him- self of stat- ute. Contract not affected by subse- quent usu- rious recep- tion of in- terest. ■ Statute cannot be evaded by . 11.. disguising terest IS beyond this amount, the statute cannot be loahassaie evaded by disguising loans as sales. If the transac- construet- tion is put in the shape of a sale with a right of re- "^ '°*°- demption at a rate equivalent to a usurious penalty, then it will be regarded as a loan.' Interest beyond the legal standard, also, when paid for forbearance to call in money due, amounts to usury. ^ Nor, by technical subtleties, such as by antedating,' or by forcing depreciated currency or goods upon the borrower,' or by retaining a bonus,' or by masking the transaction in the form of discounts,* can the penalties of the statute be escaped.' N"or is an agreement not to reclaim usurious interest valid.'" I^or can the usurious taint of a loan be got rid of by reconstructing or remoulding of the loan, l^o matter how numerous may be the reconstructions and re- Stearns, 3 N. H. 185 ; Bank of Utloa v. Wager, 2 Cow. 720 ; and oases cited supra, §§ 197-8. ' Williams u. Tilt, 36 N. Y. 319 ; Stoney v. Ins. Co., 11 Paige, 635. 2 Gray v. Fowler, 1 H. Bl. 462 ; Bank U. a. u. Waggoner, 9 Pet. 399 ; Rams- dell V. Soule, 12 Pick. 126 ; Bremen v. Hess, 13 Johns. 52 ; see Kilgore v. Em- mlt, 33 Oh. St. 410. ' Barker v. Vansommer, 1 Bro. C. C. 151 ; Waller v. Dalt, 1 Ch. Ca. 276 ; 1 Dick. 8; Scott v. Lloyd, 9 Pet. 418; Train v. Collins, 2 Pick. 145 ; Agricul- tural Bk. V. Bissell, 12 Pick. 586 ; Day- ton u. Moore, 30 N. J. Eq. 543 ; Philip V. Kirkpatrick, Add. (Penn.) 124 ; Musgrove v. Gibbs, 1 Dall. 216 ; Evans V. Negley, 13 S. & R. 218; Citizens' Land Co. u. Uliler, 48 Md. 455 ; Doug- las V. MoCheney, 2 Rand. Va. 109. * Scott V. Lloyd, 9 Pet. 440 ; Man- derson v. Bank, 28 Penn. St. 379. 5 Witham v. Williams, 3 Green, N. J. 255. 6 Tate V. Wellings, 3 T. R. 531 ; Bank of the Valley ;;. Stribling, 7 Leigh, 36. ' Whitney v. Tyler, 12 Met. 193 ; East River Bank v. Hoyt, 32 N. Y. 119. 8 Powell V. Waters, 8 Cow. 669. 9 See Auriol u. Thomas, 2 T. R. 52 ; Fitzsimmons v. Baum, 44 Penn. St. 32 ; Bachdell's App., 56 Penn. St. 386. 1° Bosta V. Rheem, 72 Penn. St. 54. 649 § 469.] CONTKACTS. [chap. XV. modifications of a security, if the original consideration is tainted with usury, this taints all subsequent renewals of the indebtedness resting on such consideration.' But if the trans- action be meant bona fide as a loan at interest, and the interest stipulated is legal, the contract is not avoided by the reserva- tion to the lender of compensation for trouble he may have been put to, or may be put to in suing out the debt f provided such compensation is not excessive.' ITor is compounding interest, at certain risks, in mercantile accounts, usury, when such is the arrangement between the parties ;' nor does the advantage derived from dift'erences of exchange amount to usury.* But all securities substituted for the original contract partake of its taint.* § 468. But while the statutes are to be applied to all loans, they are not to be stretched to extend to any trans- actions but loans.' They do not cover, therefore, annuities;* nor guarantees;* nor bottomry bonds;" nor partnership adventures ;'' nor bona fide sales of securities, no matter at what discount.'^ A court of equity will enjoin the collection of any- thing beyond the amount of the loan with legal interest." But a borrower on a usurious contract cannot, in equity, have the transaction set aside un- less he offer to repay to the lender whatever is actu- ally due on the loan with legal interest." But he statutes do not apply to any transac- tions but loans. §469. Borrower in usurious contract cannot de- fend with- out doing equity. 1 Archer ... McCray, 59 Ga. 546 ; Wilkinson u. Wooten, 59 Ga. 584; King V. Ins. Co., 57 Ala. 118. ' Lee V. Cass, 1 Taunt. 511 ; Scott v. Lloyd, 9 Pet. 440 ; Huling u. Drexel, 7 Watts, 126 ; Gray o. Brackenridge, 2 Pen. & W. 75 ; Beadle v. Munson, 30 Conn. 175. ' Large u. Passmore, 5 S. & R. 51 ; Grubb V. Brooks, 47 Peun. St. 485. * Bevan ex parte, 9 Ves. 223 ; Eaton V. Bell, 5 B. & Al. 34 ; Wilcox v. How- land, 23 Pick. 167. 5 Eagle Bank u. Rigney, 33 N. Y. 613; Eaton v. Bell, 5 B. & Al. 34; Wilcox V. Howland, 23 Pick. 167. 650 » Campbell r. Sloan, 62 Penn. St. 481. ' See Easterlin u. Eylander, 59 Ga. 292. 8 Lawley v. Hooper, 8 Atk. 273. ^ Larnego v. Gould, 2 Burr. 715. '" Long V. Wharton, 3 Keb. 304 ; see Jennings v. Ins. Co., 4 Binn. 244. " Huston V. Moorhead, 7 Barr, 45. '2 Wycoff V. Longhead, 2 Ball. 92 ; Gaul V. Willis, 26 Penn. St. 259 ; Ful- wiler V, .Jackson, 1 Phila. 145. " Duquesne Bank's App., 74 Penn. St. 426. " 1 Story Eq. Jur. 12th ed. § 301 ; Mason „. Gardiner, 4 Bro. C. C. 436 ; CHAP. XV.] ILLEGALITY. [§ 469. may reclaim the excess paid over principal and legal interest." — A lender on a usurious contract is precluded from suing as much in equity as in law, when barred by statute.^ " If the lender," says Judge Story, "comes into a court of equity seeking to enforce the contract, the court will refuse any assistance and repudiate the contract.^ But, on the other hand, if the borrower come into a court of equity, seeking relief against the usurious contract, the only terms upon which the court will interfere are, that the plaintiff will pay the defendant what is really and bona fide due to him, deduct- ing the usurious interest •/ and if the plaintiff" do not make such an offer in his bill, the defendant may demur to it, and the bill be dismissed." The ground of this distinction is, that a court of equity is not positively bound to interfere in such cases by an active exertion of its powers ; but it has a discre- tion on the subject, and may prescribe the terms of its inter- ference ; and he who seeks equity at its hands may well be required to do equity. . . . But, in the other case, if equity should relieve the lender, who is plaintiff, it would be aiding a wrong-doer, who is seeking to make the court the means of carrying into effect a transaction manifestly wrong and illegal in itself."* "And, upon the like principles, if the borrower has paid the money upon a usurious contract, courts of equity (and, indeed, courts of law also) will assist him to recover back the excess paid beyond principal and lawful Hindle v. O'Brien, 1 Taunt. 413; Ben- " Fanning v. Dunliam, 5 Jolin. Ch. field V. Solomons, 9 Ves. 84; Rogers u. 142. Eathbun, 1 John. Ch. 367 ; Fanning v. 3 Fanning v. Dunham, 5 John. Ch. Dunham, 5 John. Ch. 142 ; Williams v. 142. Fitzhugh, 37 N. Y. 444 ; Whitehead v. - Williams v. Fitzhugh, 37 N. Y. Peck, 1 Kelly, 140 ; Ballinger v. Ed- 444 ; Whitehead o. Peck, 1 Kelly, 140 ; wards, 4 Ired. Eq. 449 ; Sporrer v. Ballinger v. Edwards, 4 Ired. Eq. 449. Eifler, 1 Heisk. 633. See Ahern v. ^ Mason v. Gardiner, 4 Bro. Ch. 436 Goodspeed, 72 N. Y. 108 ; Powers v. Rogers .;. Rathbun, 1 John. Ch. 367 Chaplain, 30 N. J. Eq. 17 ; Lee v. Fanning v. Dunham, 5 John. Ch. 142 Stiger, 30 N. J. Eq. 610. Ware v. Thompson, 2 Beasl. N. J. 66 > Browning v. Morris, 2 Cowp. 792 ; Ruddell v. Ambler, 18 Ark. 369 ; Noble Bond V. Hays, 12 Mass. 36 ; Thomas v. v. Walker, 32 Ala. 456. Shoemaker, 6 W. & S. 179 ; Heath v. s Story Eq. Jur. 12th ed. § 301. Page, 48 Penn. St. 130; Hopkins v. West, 83 Penn. St. 109. 651 § 470.] CONTRACTS. [CHAP. XV. interest; but not further. So, the borrower may maintain a bill to compel the giving up of securities left as collateral security for a usurious debt, although he might have a defence in an action at law."' — Under the Pennsylvania statute, the reservation of an illegal rate of interest does not prevent the recovery of the amount actually loaned with legal interest.^ But under the act of congress, a national bank, by reserving usurious interest on a loan, forfeits the entire interest, but not the principal.' § 470. Under statutes avoiding usurious contracts, the ques- tion is not whether the usury was really received, one of°ex- It IS enough, under the statutes, if the promise was of''a,°ment ^^^'^^ed as a condition of the loan, though the pay- ment was not actually raade.^ The penalty, however, imposed on illegal reception of usury cannot be imposed unless the reception be proved.^ But when the illegal interest is re- ceived, the creditor cannot relieve himself by subsequently releasing the excess.'' — The burden is on the party setting up usury to prove it.' — The taint must be brought home to the lender himself in order to infect the transaction. Thus, usury was held not to attach to a loan of $17,000 on real estate security', from the fact that the agent negotiating the loan charged the borrower five per cent, for his services, and $100 for the expenses of a journey from Chicago to Peoria in the specific business.^ But exactions by an agent may implicate the principal wherever the principal ought to be cognizant of the facts." 1 Ibid., citing Peters ( . Mortimer, 4 * JIaddock v. Hammett, ^ T. R. 184 ; Edw. Ch. 279. That a borrower is not Com. v. Frost, 5 Mass. 53 ; Oyster u. precluded from recovery by. his com- Lougnecker, 16 Penn. St. 269. plicity in an illegal transaction, see ^ Kirkpatriok v. Houston, 4 W. & S. supra, § 353 ; Vandyck u. Hewitt, 1 11. East, 98; Astley U.Reynolds, 2 Str. 916. ^ Hotel Co. <;. Wade, 97 U. S. 50; 2 Philadelphia, etc. R. R. o. Lewis, Wilson r. Kirby, 88 111. 566. 33 Penn. St. 33. b Ballinger v. Bourland, 87 111. 513 ; ' Farm, and Mech. Bank i>. Bearing, see Van Wyck u. Walters, 16 Hun, N. 91 U. S. 29 ; Brown .-. Bank, 72 Penn. Y. 209 ; Marshalltown Bk. v. Bona- St. 209; Lucas v. Bank, 78 Penn. St. witz, 47 Iowa, 322. 228; OverholttJ.Bank, 82P™n. St. 490. 9 Cheney „. Eberhardt, 8 Neb. 423. * Clark V. Badgley, 3 Halst. 233 ; See New England Co. v. Hendrickson, Hammond v. Hopping, 13 Wend. 505. 15 Cent. L. J. 132. 652 CHAP. XV.] ILLEGALITY. [§ 473. XII. TRADING WITH ENEMY AND BREACH OF NEUTRALITY. § 473. At common law, contracts of trade with a public enemy are void.' Even a charter-party undertaking ■j.j.^^j to load a cargo in a foreign country is avoided by withpuwie 1- 111-11 ft enemy void war being declared by the country or the contract at common with the country of the port of loading.^ And the ^'^' courts of one belligerent state will refuse to enforce any busi- ness contracts between the citizens of such state and the citi- zens of the other belligerent state, no matter through what agencies such contracts may have been negotiated. The rule is that there must be absolute suspension of business between the citizens of one belligerent state and the citizens of another belligerent state.' A partnership, also, is dissolved by war intervening between two countries, of one of which one part- ner is subject and of the other of which another partner is subject.^ And a bill drawn by an alien enemy on a subject of the state in whose courts the suit is brought, and endorsed by the payee, such payee being a subject residing in the enemy's country, will be held void as an act of trade between subjects of belligerent states.' A British subject, domiciled in a for- ' AMy's Kent, 294; Wh. Con. of L. Albrecht u. Sussman, 2 V. & B. 323 ; § 497 ; Potts V. Bell, 8 T. R. 561 ; Es- Montgomery u. U. S., 15 Wall. 395 ; posito V. Bowden, 7 E. & B. 763 ; Bar- Crawford v. The William Penn, 3 Wash, rick V. Buba, 2 C. B. N. S. 563 ; Sohole- C. C. 484 ; Philips ■;. Hatch, 1 Dill, field V. Eichelberger, 7 Pet. 586 ; U. S. 571. A contract by a citizen to observe V. Grossmayer, 9 Wall. 72 ; Kershaw v. neutrality with an enemy may be valid Kelsey, 100 Mass. 561 ; Stevenson u, when it ia out of the power of his own Payne, 109 Mass. 378 ; Griswold o. government to protect him. Miller v. Waddington, 15 Johns. 57 ; S. C, 16 The Resolution, 2 Dall. 10. Johns. 438 ; Hyatt v. James, 2 Bush, . '' Pollock, Wald's ed. 282 ; Matthews 463 ; Graham v. Merrill, 5 Cold. 622 ; v. McStea, 91 U. S. 7 ; Hubbard v. Perkins ?;. Rogers, 35 Ind. 124; Shack- Matthews, 54 N. Y. 43; Griswold v. lett V. Polk, 51 Miss. 878; Rice v. Waddington, 15 Johns. 57; S. C, 16 Shook, 27 Ark. 137 ; Hennan v. Gilman, Johns. 438 ; McStea v. Matthews, 50 20 La. An. 241 ; and see supra, §§ 94- N. Y. 166 ; supra, §§ 305, 319. 319. 5 Willison v. Patteson, 7 Taunt. 439. 2 Esposito V. Bowden, 7 E. & B. 763 ; See Williams v. Bank, 2 Woods, 501 ; supra, §§ 305, 319. Woods v. Wilder, 43 N. Y. 164. See 1 3 Supra, §§ 305, 319 ; Wheat. Int. Oh. on Con. 11th Am. ed. 259 ; supra. Law, 556 ; Anthon v. Fisher, 2 Doug. §§ 305-19. 649 ; Brandon v. Nesbitt, 6 T. R. 23 ; 653 § 474.] CONTRACTS, [CHAP. XV. eign country at war with Great Britain, cannot, it is held in England, sue in English courts.^ It is otherwise as to a British subject who is a prisoner of war in an enemy's country.^ — It has been held by the supreme court of the United States that an assignment of shares iu a company originally formed to supply aid to a belligerent is not of itself necessarily void.' But bonds issued by the late Confederate government, general or state, as war bonds, do not constitute a lawful consideration for a promissory note, though those bonds were used as cur- rency.'' — A contract, however, which has been executed, will not be overhauled because its consideration, in whole or in part, was aid to a public enemy.^ This distinction holds as to partnerships as well as to other business conditions. " After a partnership contract confessedly against public policy has been carried out, and money contributed by one of the parties has passed into other forms, the results of the contemplated operation completed, a partner in whose hands the profits are cannot refuse to account for and divide them, on the ground of the illegal character of the original contract."^ § 474. The general rule that no contracts with public ene- mies can be enforced, is applicable to all cases of cabietobei- belligerency ; and hence, belligerent insurgents, when infurgeiits. their belligerency is recognized by the parent state, are put in this respect in the category of public enemies.' A fortiori is this the case with contracts to furnish goods to support a rebellion. Aside from the reason that such contracts are void as made with a public enemy, they are void as contributing to an indictable oftence.' A note, therefore, 1 McConnell v. Hector, 3 B. & P. 113 ; ' Dean v. Nelson, 10 Wall. 158 ; Koberta u. Hardy, 3 M. & S. 533 ; and Hanauer v. Doane, 12 Wal. 342 ; Por- other cases cited supra, §§ 94, 305, 319. tis v. Green, 25 Ark. 376. 2 Willison V. Patteson, 7 Taunt. 449. 8 Texas v. White, 7 Wall. 700 ; Hau- ' McBlair v. Gibbes, 17 How. 232. auer v. Doane, 12 Wall. 342 ; Waitz- < Hanauer v. WoodrufiF, 15 Wall. 439. felder u. Kaliuweiler, 56 Barb. 300 ; 6 Supra, § 352 ; Robinson v. Ins. Co., see White v. Hart, 13 Wall. 646 ; Mc- 42 N. Y. 54; Clements v. Yturria, 81 Kesson v. Jones, 66 N. C. 258 ; Cronly N. Y. 285 ; Pfeuffer y. Maltby, 54 Tex. v. Hall, 67 N. C. 9 ; see Wh. Cr. L. 454. 8th ed. § 1901, where this topic is dis- '• Brooks V. Martin, 2 Wall. 70 ; cussed in detail. Planters' Bank v. Union Bk., 16 Wall. 483 ; Lewis u. Alexander, 51 Tex. 690, 654 CHAP. XV.J ILLEGALITY, [§ 476. given in consideration of the payee acting as the payor's sub- stitute in the Confederate army is void.' — Contracts which in- volve the reception of Confederate money are void as giving credit to the Confederate treasury.^ § 475. In England it is within the power of the crown to grant a valid license to trade with a public enemy. " The crown may exempt any persons and any validates branch of commerce, in its discretion, from the dis- en^gmy"* abilities and forfeitures arising out of a state of war, and its license for such purpose ought to receive the most lib- eral construction."^ But a license to trade as subjects will not be construed as containing authority to trade as agents of a public enemy.* The license is limited to its specific objects," nor can it be transferred to other parties.^ § 476. A contract between the citizens of two friendly states is suspended by a declaration of war between -, , , . ... I Contract the two states, so that there can be no 'suit in either suepended state unless by license of the state in which the suit t^imf^"^' is brought.' But an order from the proper domestic authorities may reserve for specific periods and under certain conditions the right of suit.' And when the contract is of a character that its suspension during war destroys its efliciency permanently, then it is vacated and dissolved by the war.' 1 Chancely v. Baily, 37 Ga. 532. Esposito v. Bowden, 7 E. & B. 763 ; 2 Martin ti. Wallace, 40 Ga. 52. Johnson v. Falconer, 2 Paine, 639 ; " Per cur. in Usparicha v. Noble, 13 Crawford . Johnson, 39 Ga. 85 ; Baker V. Farris, 61 Mo. 389 ; Snyder r. Wil- ley, 33 Mich. 483. 1 Brook u. Hook, L. R. 6 Ex. 89. It has been held, however, not com- pounding felony for a person whose name has been forged to adopt the signature and give money to the forger to enable him to pay the note forged. Caldecott ex parte, L. R. 4 Ch. D. 150. 2 Edgcombe v. Rodd, 5 East, 294. 8 Williams v. Bayley, L. R. 1 H. L. 200. 4 Keir u. Leeman, 9 Q. B. 371 ; see Williams v. Bayley, L. R. 1 H. L. 200. 6 Supra, § 151 a ; Com. v. Pease, 16 Mass. 91 ; Chandler v. Johnson, 39 Ga. 89 ; and see generally Whitmore 658 u. Farley, 43 L. T. N. S. 192 ; Shaw v. Reed, 30 Me. 105 ; Taylor v. Jaques, 106 Mass. 291. 6 Fivaz r. Nichols, 2 C. B. 501 ; Critchley ex parte, 3 D. & L. 527 ; Shaw V. Reed, 30 Me. 105. And so as to embezzlement by bailee, constituting statutory larceny. Whitmore v. Far- ley, infra, § 484. ' Dixon V. Olmstead, 9 Vt. 310. * Rawlings v. Coal Consumers' Co., 43 L. J. M. Ill ; Hinds .'. Chamber- lain, 6 N. H. 225. s Clubb (.. Hutson, 18 C. B. N. S. 414; Shaw «. Spooner, 9 N. H. 197; see Shaw r. Reed, 30 Me. 105. '" McMahon v. Smith, 47 Conn. 221. And see generally as sustaining the text, Shaw v. Reed, 30 Me. 105 ; Shaw u. Spooner, 9 N. H. 197; Bowen ... Buck, 28 Vt. 308 ; Pierce v. Kibbee, 51 Vt. 659 ; Com. v. Johnson, 3 Cush. 454 ; Sharon v. Gager, 46 Conn. 189 ; Von Windisch v. Klaus, 46 Conn. 433 ; National Bank of Oxford v. Kirk, 90 CHAP. XV.] ILLEGALITY. [§ 483. To sustain a charge of compounding crime, it must appear that there was an agreement not to prosecute, and by a preponder- ance of evidence that a crime was committed.^ — It is import- ant here to observe the difference in this relation between the defence of duress and that of compounding crime. To sustain the defence of duress it is not necessary to show that the party making the promise was guilty of any wrong.^ To sustain the defence that the consideration was the compounding of a crime, it is necessary to show by a preponderance of proof that a crime was committed. But, without such proof, an agreement by parties to settle a criminal prosecution is in- valid.5 — A mortgage-note given in consideration of com- pounding a prosecution for forgery is bad in the hands of an assignee for value, but with notice ;* though it is otherwise as to party without notice.' — An agreement, also, not to expose immoral conduct has been held void.^ — Money paid inadvertently, and not with criminal intent, to compound a prosecution, cannot be recovered back.' — A forged endorse- ment cannot be ratified, this being against public policy f though a party may estop himself from setting up forgery. Penn. St. 49 ; Shisler c/. Vandike, 92 that if the note was given it would Penn. St. 447 ; Roll v. Raguet, 4 Ohio, probably be paid by the son, and ' no 400 ; 7 Ohio, 76 ; Buck v. Bank, 27 one would then know anything about' Mich. 293 ; Pay v. Oatley, 6 VPis. 42 ; the forgery. This tended to show an Kimbrough v. Lane, 11 Bush, 556 ; agreement on the part of the bank not Gardner v. Maxey, 9 B. Mon. 90 ; Cor- to prosecute, and the question was ao- ley V. Williams, 1 Bailey, 588 ; Bell v. cordingly submitted to the jury." Wood, 1 Bay, 249 ; Robinson v. Cran- Sterrett, J., 93 Penn. St. 254. Shaw, 2 St. & P. 276 ; Averbeck t. 2 Supra, §§ 148 et seq. Hall, 14 Bush, 505 ; Ozanne v. Haber, » Supra, § 151 ; infra, § 484. 30 La. An. Part II. 1384. And see * Pierce p.Kibbee, 51 Vt. 559 ; Smith supra, § 151a, for cases of contracts u. Bank, 9 Neb. 31. void from the duress so applied. 5 Ibid. ; supra, § 146. ' Swope V. Ins. Co., 93 Penn. St. « Brown v. Brine, L. R. 1 Ex. D. 5 251 ; Catlin v. Henton, 9 Wis. 476. see supra, § 415. In Nat. Bk. 0. Kirk, 90 Penn. St. 49, ' Mapleback in re, L. R. 4 C. D. 150 "the defendant ofl'ered testimony tend- Butt ex parte, 46 L. J. B. 14; 13 Cox ing to show that he was induced to C. C. 374, cited Leake, 2d ed. 928 give the note in consequence of the infra, § 741. threatened prosecution of his son for 8 Shisler v. Vandike, 92 Penn. St.. forgery, coupled with the representa- 447. tion of one of the officers of the bank 659< 484.] CONTRACTS. [chap. XV. Distinction between felonies and misde- meanors obsolete. § 484. It used to be said that there was a distinction in this respect between felonies and misdemeanors. But this can be no longer regarded as the law. (1) In many jurisdictions the distinction between felonies and misdemeanors is abolished, and in all jurisdic- tions it is regarded as artificial, and even where re- tained, its abandonment is a mere question of time. (2) There are many misdemeanors whose compounding militates far more against public policy than does the compounding of some felonies. It is more important, for instance, that con- spiracies to murder, conspiracies to rob, and treasonable conspiracies, should be prosecuted by the state unswayed by private interest, and that private hands should be kept off such prosecutions, than that there should be this rigor manifested in all prosecutions for larceny. If no agreement whose consideration is the holding back a prosecution for larceny should be held valid, there is no oflence, touching the public as such, whose prosecution we can consistently allow to be a matter of private arrangement. To adopt the language of Baggallay, L. J., in 1881,' " it is immaterial whether the charge which was attempted to be compromised was a felony or only a misdemeanor."^ The proper view is that it is a criminal ' Whitmore v. Farley, 45 L, T. N. S. 101. See supra, § 345. 2 In the same case Lush, L. J., said : "Although the oiTeiioe here was a felony, it would not matter if it were a misdemeanor. Thi^re are, no doubt, certain cases, as that of an assault, where the parties may compromise the offence without being guilty of an illegal act. But this does not apply to misdemeanors of a serious kind. Embezzlement is only a misdemeanor, yet it is a criminal offence to compro- mise a prosecution for embezzlement. The principle lias been stated by Lord Abinger, C. B., in the case of Davis a. Holding (1 M. & W. 159). The court there held that an agreement which was illegal and void, as being against th« general policy of the law, should 660 not be enforced, and applied the doc- trine to an agreement to abandon a fiat in bankruptcy. The doctrine has also been applied in cases where a debtor has entered into a bargain with certain creditors not to oppose him in obtain- ing a composition with the general body of his creditors. It is a well- established doctrine that an agreement to forego public rights is an illegal agreement. Whether the felony could have been proved here or not, there is no doubt that a criminal charge was made, and the prosecutrix could not legally withdraw it." See to same general effect Wh. Cr. L. 8th ed. §§ 21, 22, 1559; Ball ex parte, Shepherd in re, L. R. 10 Ch. D. 667 ; Keir v. Lee- man, 9 Q. B. 371; Hinesburgh i. Sumner, 9 Vt. 23 ; Com. u. Pease, 16 CHAP. XV.] ILLEGALITY. [§ 485. offence to compound, for a personal benefit, a misdemeanor involving an offence against public order ; for this would be a corrupt usurpation and prostitution by an individual of a high prerogative of the state. And, whatever we may think on this point, it is settled that no contract will be sustained the con- sideration of which is the refusal by an individual to aid in prosecuting an off'ence whose prosecution is a matter of interest to the state. To induce a witness to suppress his testimony is indictable;' a fortiori is this the case with an agreement to suppress a prosecution as a whole, or to use it as means of private gain ; and a contract will not be sustained whose con- sideration is the commission of an indictable offence. As illustrating this distinction may be cited a case, already no- ticed, in which it was held that while a merely private and secret assault may be settled by the parties, it is otherwise with an assault connected with a breach of the public peace, and with resistance to an officer in discharge of his duties.^ § 485. The approval of the magistrate before whom the case was heard cannot lesralize such an agreement, how- . . . , ° ,. , " Approval ever much it might relieve tne parties to the' com- ofmagis- j • /. , . , . fT,, , trate does pounding rrom a criminal prosecution, ihus, in a not legalize case tried in London in 1881, D., having been ar- <=o°''''"='- rested at the instance of P., on the charge of having committed the off'fence of larceny as a bailee, was brought up before a magistrate and remanded. D.'s wife then induced P. to with- draw from the prosecution on D.'s wife agreeing to charge her separate real estate with the amount taken. The title deeds of the property were deposited at a bank in the joint names Mass. 91 ; McMahon v. Smith, 47 Conn, cases of misdemeanor, be or be not real, 221 ; People v. Buckland, 13 Wend, and if I merely look at tbis case as one .592. See for effect of duress in vacat- of an offence, without specifying to ing contract under such circumstances, what category it belongs, I will ask supra, § 151 a. myself is it an offence of a strictly pri- ' Wh. Cr. L. 8th ed. § 1333. vate character, or is it one in which 2 Keir v. Leeman, 9 Q,. B. 371; see the public have an interest." That the Davies v. Ins. Co., L. R. 8 Ch. D. 469. proper prosecuting officer may compel In Whitmore v. Farley, 43 L. T. (N. S.) a prosecutor to elect between a civil and 192, Fry, J., said: "Whether, then, a criminal suit, see Wh. Cr. PL & Pr. the distinction which appears to me to § 384; 2 Burr. 270. See generally prevail between cases of felony and supra, § 345. 661 § 486.J CONTRACTS. [CHAP. XV. of the solicitors of the parties. D. being again brought before the magistrate, the latter, having been informed of the terms, allowed the prosecution to be withdrawn. D.'s wife having refused to perform her agreement, P. brought an action to enforce the charge, and D.'s wife counter-claimed for a decla- ration that she was entitled to have the deeds delivered up to her. It was held by James, Baggallay,and Lush,L. JJ.(affirm- ing the decision of Fry, .J.), that the agreement to charge the separate property was illegal and could not be enforced, and that the defendant was entitled to-the declaration for delivery of the deeds.' — "The agreement," said James, L. J., "would not have been legal if the lord chief justice, the lord high chancellor, and all the judges of the court of appeal had con- sented to it." § 486. There are many unlawful acts which may be pro- ceeded agai'nst both criminally and civilly. Thus, of private an assault and battery may be sued for as a trespass preciuaed 0^ the person, entitling to damages, or as an offence by the fact against the public peace ; a cheat may be sued on as thatacrim- ^^ r i ' ^ inai prose- deceit, entitling the party injured to damages, or as for the either a cheat at common law, or an offence under sameac . ^j^^ false pretence statutes, exposing the offender to conviction in a criminal court. If we were to say that no case could be compromised which involves a criminal offence, we would not only say that litigation to the bitter end is impera- tive in multitudes of cases in which compromises are on general grounds eminently proper, but we would almost indefinitely extend litigation by holding parties who do not in such cases prosecute liable to criminal prosecutions themselves. It is essential, therefore, to keep criminal and civil prosecutions strictly separate, in all cases in which both may be instituted for the same act. In England this is in part effected, so far as concerns felonies, by the rule that a party who fails to prosecute for the felony in a criminal court, when such prose- cution is within his power, is precluded from suing in a civil 1 Whitmore i'. Farley, 45 L. T. N. S. 99 ; aff. S. C, 43 L. T. N. S. 192 ; supra, § 151a. 662 CHAP. XV.] ILLECtALITY. [§ 486. court the offender for damages incurred through the felony.^ In this country, however, the English rule is not properly ap- plicable in those jurisdictions in which the power of prose- cution is vested exclusively in public officers;^ and neither in this country nor in England has the rule been supposed to apply to misdemeanors.' Assuming, therefore, that there is now no case in which the fact that a criminal prosecution can be brought for an act sued upon in a civil court is ground for abating the suit, it follows that there is no reason why such a suit, if begun, should not be settled by compromise, suppos- ing the settlement does not imply the illegal stifling of the prosecution. "In all offences which involve damages to an injured partj^ for which he may maintain an action, it is com- petent for him, notwithstanding they are also of a public nature, to compromise or settle the private damage in any way he may think fit."* This is clearly the case after convic- tions for assault, in which cases the court trying the criminal offence will be influenced, in imposing sentence, by considering how much the offender had to pay, and how much the prose- cutor received.^ And a bond conditioned for the abatement of a public nuisance, in consideration of the abandonment of a prosecution for the nuisance, has been held valid ;^ and the same view has been applied to prosecutions for infringing trade-marks ;' to bastardy prosecutions f to prosecutions for ' Ball ex parte, L. R. 10 Ch. D. 667; This, however, is questioned in Keir v. Wh. Cr. PI. and Pr. 8th ed. § 453 ; Leeman, 9 Q. B. 394. Wellock V. Constantine, 2 H. & C. 146 ; ' Fisher v. Apollonaris Co., L. R. 10 London Law Times, Apr. 12, 1879. Ch. 297. 2 See Wh. Cr. PI. and Pr. 8th ed. s wh. Cr. L. 8th ed. § 1741 ; Hol- § 453. comb V. Stimpson, 8 Vt. 144 ; Howe i>. ' Bail ex parte, ut supra; Fissingtonv. Litchfield, 3 Allen, 443; Maurer u. Hutchinson,15L. T.N. S. 390;Boodyi;. Mitchell, 9 W. & S. 69, overruling Keating, 4 Me. 167 ; Nowlan v. Griffin, Shenk v. Mingle, 13 S. & R. 29 ; Maxwell 68 Me. 235 ; Boston, etc. R. R. u. Dana, v. Campbell, 8 Oh. St. 265 ; Burgen v. 1 Gray, 83. Straughen, 7 J. J. Marsh. 583 ; Ste- • Per cur. Keir v. Leeman, 9 Q. B. phens u. Spiers, 25 Mo. 386. "No 395. reason is perceived why a person may ' Baker u. Townsend, 7 Taunt. 422 ; not receive from one guilty of a private Beeley v. Wingfield, 11 East, 46; El- injury satisfaction for such injury, and worthy v. Bird, 2 Sim. & S. 372. the fact that this is received while the 6 Fallowes v, Taylor, 7 T. R. 475. person may be in confinement does not 663 § 487.] CONTRACTS. [CHAP. XV. assault and battery -^ though when such prosecutions are used to extort money, all securities thereby obtained are void.^ And where merely private injury has been eftected, the party injured may recover on securities given to him to indemnify him for his losses, though a part consideration may have been his for- bearance to prosecute criminally for these injuries, on which a criminal prosecution might have been sustained.^ — In a case in 1882 in Georgia, D.'s widow having instituted a suit against K., under the Georgia statute, for damages sustained by her through her husband's killing by K., K. gave her his notes in consideration of the settlement of the suit. It was held that the notes were valid and the consideration good, whether K. was actually concerned in the killing of T>. or not.'' — But wherever the consideration is the illegal abandonment of a criminal prosecution, the contract fails. Thus, where a party charged with cheating at cards gave a promissory note to the party detecting him in consideration of the offence not being prosecuted, a decree was entered requiring the note to be sur- rendered as improperly obtained.' Such abandonment may, under local law, be with the assent of the prosecuting attor- ney, and if so, it does not invalidate a contract of which it is the consideration.^ But, unless the settlement is authorized by law, it vitiates any contract of which it is the consideration. § 487. The question of the legality of settlements of this class is largely dependent upon the local law in refer- d"peud'e°ut ^^^^ *" ^^^ discontinuance of prosecutions. In some upon local jurisdictions, the right to enter a nolle prosequi be- noiieprose- longs to the duly authorized prosecuting attorney; *"*■ in some to this officer with the approval of the render the transaction illegal." Craig, ^ See Corley v. Williams, 1 Bailey, J., Heaps V. Dunham, 95 111. 588, citing 588 ; supra, § 151. Schommer v. Farwell, 56 111. 542. ' Plumer v. Smith, 5 N. H. 553 ; Stone 1 Price t;. Summers, 2 South. 578 ; v. Hooker, 9 Cow. 154. Rusliworth V. Dwyer, 1 Phila. 26 ; see " Dodson v. McCauley, 62 Ga. 130. Gray v. Seigler, 2 Strobh. 117. That 5 Osbaldiston v. Simpson, 13 Sim. notes given to compromise » prosecu- 513. tion of assault and battery, when a f' Price v. Summers, 2 South. 578 ; public offence, are void, see Jones v. Maurer o. Mitchell, 9 W. & S. 69; Rice, 18 Pick. 440 ; "Vincent i-. Groom, Robinson «. Cranshaw, 2 St. & Port. 276. 1 Yerg. 430. 664 CHAP. XV.] ILLEGALITY. [§ 488. court.^ Where the right of discontinuing prosecutions is thus defined by law, it cannot but be held that a settlement of a prosecution by a private individual is not only inoperative, but is not a consideration on which a contract can be sus- tained. On the other hand, it is equally clear that the proper public officer may impose as a condition of a nolle prosequi that the defendant should reimburse, as far as is practicable, the prosecutor. In prosecutions for larceny this is eminently proper, since in those prosecutions it is part of the sentence of the court that the defendant should restore the propertj'^ stolen " if not already restored," recognizing the duty of final if not intermediate restitution. And there is no reason why the same distinction should not be applicable to prosecutions for cheats.'' § 488. It should further be observed, that in states where imprisonment for debt is abolished, it is not proper crimiQai to permit indirectly, by means of a criminal prosecu- y^^g''''" tion, compulsory collection of debts by imprison- should not ment which is forbidden in civil process. Hence, collection any securities given as a consideration for the with- °^ '^'^^^^' drawal of a prosecution should be held void when it appears that the prosecution was undertaken for the purpose of enforc- ing the collection of a debt, unless such securities be allowed by the proper authorities as part of the terms on which the prosecution is to be abandoned.^ 1 See Wli. Cr. PI. and Pr. 8tli ed. 1 Leg. Gaz. Rep. 76 ; Lindsay v. Smith, § 383. 78 N. C. 328 ; and see fully supra, 2 See Jones v. Rice, 18 Pick. 440. §§ 148 et seg. ' See, however, Steinhaker v. Wilson, 665 CONTEACTS. [chap. XVI. CHAPTER XVI. CONSIDERATION. Consideration is what is done in return for a promise, § 493. Promise without consideration not bind- ing, § 494. Exception as to sealed documents, §495. Executed gift cannot be recalled, § 496. Distinction between "good" and "valu- able" considerations, § 497. Cumulative promise a nullity, § 498. But agreement for extension or modifi- cation not cumulative, § 499. Promise to do what a party is bound to do is not valid, § 500. Question as to promise to reward duty to others, § 501. Agreement to pay public officer invalid, § 502. So of promises to give extra pay to sea- men, § 503. Part payment no consideration for prom- ise, § 504. Detriment or loss of rights to other side a consideration, § 505. Party suing must show consideration flowing from himself, § 506. Cannot recover unless on duty assumed to himself, § 507. Promise against policy of law not valid consideration, § 508. Illegal consideration vitiates, § 509. And so of impossible consideration, § 510. When considerations are divisible, ille- gal or inoperative may be rejected, § 511. Moral obligation not sufficient con- sideration, § 512. 666 Party may waive benefit of statute, § 513. Executed act not a valid consideration, § 514. Otherwise as to continuing considera- tion, § 515. Amount of consideration not material, § 516. Courts will not determine sufficiency, § 517. Gross inadequacy may be ground to set aside, § 518. Consideration utterly valueless invalid, § 519. Money paid without consideration may be recovered back, § 520. Release of unliquidated debt a suffi- cient consideration for promise to pay a specific sum, § 521. One consideration can support several promises, § 522. Promise may sustain promise, § 523. Promise may be contingent, § 524. Promise to support illegitimate children good when on good consideration, § 525. Assignment of a debt a good considera- tion, § 526. Releases by other creditors sufficient consideration, § 527. So of mutual subscriptions to charities, etc., § 528. Fraud vitiates such subscriptions, § 529. So of interchange of patronage, § 530. Merely equitable rights a valid con- sideration, § 531. CHAP. XVI.] CONSIDERATION. [§ 493. Forbearance of legal proceedings suffi- cient consideration, § 532. So of compromise of doubtful claim, § 533. So of giving up litigated document, § 534. Forbearance of void claims no con- sideration, § 535. Assuming indebtedness of another a valid consideration, § 536. So of marriage, § 537. Equity will not set aside executed gift, § 538. In negotiable paper burden is on party disputing consideration, § 539. Consideration may be proved or varied by parol, § 540. § 493. Consideration, by our common law, is that which one party to a contract gives or does or promises in con^idera- exchange for what is given or done or promised by tioniswhat , » ■ 1 ' • IP .is done in the other party. A consideration, theretore, is an return for a essential incident of a contract; nor is the English P'°™'^'*- common law peculiar in so holding. According to the Roman standards, a contract from the necessity of things is bilateral, one party agreeing to a particular thing in exchange for some- thing to be done by the other party. A. mere unilateral en- gagement is not a contract.* But in a contract — e. (/., a bi- lateral engagement — each stipulation is at once a promise and a consideration. A. agrees to work for B. for wages. What A. says is a promise so far as concerns himself and a con- sideration so far as concerns B. ; what B. says is a promise so far as concerns himself and a consideration so far as concerns A.'' Other systems differ from ours in recognizing as valid unilateral promises, which, in our law, are not binding unless under seal ; but all systems of jurisprudence are alike in main- taining that to a contract reciprocal engagements are necessary, whatever may be the names by which these engagements are distinguished. To a contract it is essential that there should be an exchange of legal rights ; and what each party does or gives is, according to our terminology, the consideration for what the other party does or gives. A consideration, in this sense, has been said to "consist either in some right, interest, profit, or benefit accruing to the one party, or some forbear- ' It is true that in our own books we the Roman sense^e. g., the purchaser have the term "unilateral" sometimes promises to pay and the vendor war- applied to contracts executed on one rants title. Promise is set up against side — e. g., sales on credit. But even promise, this class of contracts are bilateral in * See infra, § 523. 667 § 493.] CONTRACTS. [CHAP. XVI. ance, detriment, loss, or responsibility, given, suft'ered, or undertaken by the other ;"' but as a mere advantage to the promisor without detriment to the promisee would not avail,^ the proper test is detriment to the promisee. At the same time we must remember, that " consideration" in our law is not convertible with " causa" or " reason" in the Roman law. All our " considerations" would be " reasons" in the Roman sense ; but it does not follow that all " reasons," — e. g., desire to aid a meritorious object, or to benefit one of my own family, — are considerations in our sense. And though all " consider- ations" are reasons, yet many of them are so slight that as mere reasons they would be entitled to little weight.^ An additional endorser, for instance, whom I know to be insol- vent, adds very slightly to the security of a debt due me ; yet the acquisition of this additional endorser is a sufiicient con- sideration for the extension of the debt. — A consideration, therefore, must be a quid pro quo ; though its value is to be determined by the parties themselves, and this determination will not be overhauled unless there be fraud. It is a price : it may be very inadequate, for the courts do not sit to tix values, but it must be something actually given or done, or promised. — One reason for this condition is fairness. A man should not be compelled to give unless on terms of reciprocity ; and charity, as such, when ceasing to be voluntary, ceases to exist. — Another reason is implied in the very terra considera- tion. Men ought not to be bound by their loose talk. If so, all expressions of gratitude and obligation would have to be suppressed. To make a promise binding it must be made either in a distinctively solemn way, which will be presently considered, or in the shape of a contract in which the parties independently give or take.* — Mr. Pollock^ speaks of the doc- trine of consideration, at least in the generality of form and application in which we now have it, " as peculiar to Eng- land." It is true, that in France, if Pothier is still authority, ' Per cur. Currie v. Misa, L. R. 10 < See to this efifect, observations of Ex. li;2. Patterson, J., in Thomas v. Thomas, 2 2 Infra, § 505. Q. B. 859. 3 Bee infra, § 516. 6 Cont. 3d ed. 179. 668 CHAP. XVr.] CONSIDERATION. [§ 493. a gratuitous promise may be the subject of suit. It is other- wise in Germany ; and by the most authoritative German com- mentators, a unilateral declaration of will, though made with the purpose of subjecting the maker to an obligation, creates, when there is no quid pro quo, no obligation which can be the subject of a suit, and can at any time be revoked by the maker.' But while other systems hold, as does ours, to the position that a mere unilateral promise does not by itself bind, the doctrine of consideration, as we hold it, is peculiar to ourselves. With us, there must be a material quid pro quo; there must be something given or surrendered in return, no matter how slight, to make the promise binding. In the modern Roman law, as held in Germany, there must be a causa or reason to sustain the promise, and this reason must be rational. In other words, we require a material quid ■pro quo, but the Germans do not; they require that if the reason be irrational the promise is not to bind, while we sus- tain irrational bargains on considerations often slight when there is no fraud.^ ' Windsoheid, Pand. § 304 ; Koch, mean contracts without consideration, but § 69. contracts divested of the prescribed legal " In the old Roman law, a pollici- form. — From Koch, II. § 69, the following tation, in its wide sense, included all is condensed : In the old Roman law promises not made under the form contracts were classified as (1) real, prescribed \>y the law ; hut in its tech- (2) oral, (3) written, and (4; con- nical sense it was a promise to the sensual. A contract not falling under public authorities to do certain things one of these heads did not bind. Ao- for the public benefit. When a poUi- cording to the modern view all con- citation was with justa causa, — e. g., tracts bind unless prohibited ; accord- when the object was to avert some iug to the view prevalent not only in the threatened public calamity, — it was jurisprudence of early Rome, but gene- held binding. Koch, § 142. A votum rally in the jurisprudence of all other was a promise to do something for a primitive communities, a, contract does religious use. L. 2, D. h. t. The not bind unless authorized by the modern Roman law rejects both these state. Under the old Roman system a exceptions, holding, however, that specific form of stipulation was pre- when 3, pollicitation or a votum is par- scribed, and no contracts not solem- tially fulfilled, this, as leading the nized in this form bound unless (1) public body or institution partially they were executed on one side, or (2) endowed to take action on the faith of they fell under certain specified heads a continuance of the promised aid, to be hereafter mentioned. The reason binds the promisor. why the validity of contracts was thus Nuda pacta in the Roman law do not restricted, was stated to be the diffi- 669 § 494.J CONTRACTS. [chap. XVI. § 494. The distinctive rule of our law, therefore, is that unless with respect to nearotiable paper, which is Promise , , , . , ■ , • ■ , , n ^ ■without good though without consideration in the hands oi culty of deti-rmining, unless a set form vras used, whetlier one party actually meant to bind himself to another. The use of forms, also, it is argued, adds precision and deliberation to business ; people who have to resort to a form to express their views are more likely to act intelligently and accurately than is the case when business is conducted without settled form by word of mouth. This reasoning is to be distinguished from that which rests forms on evi- dential grounds. It is true that it may be argued that unless contracts are solemnized according to a fixed form much fraud will ensue ; and it is on this ground that the English Statute of Frauds, re-enacted with greater or less modifications in all our states, rests. But that this was not the ground taken by the early Roman jurists is shown by the fact that stipu- lation, prescribed by them as the pri- mary form of binding contract, was not to be in writing, and could be solem- . nized without witnesses. The prescribed form fell into two classes, oral and literal ; I'erborum, literarum obligatio. Of oral contracts, there were two kinds: nexus and stipulation. In addition to these formal contracts, suit could be brought on contracts executed on one side (re contracta obligatio, Real- Contract), and on certain specified business engagements which under the title of consensual contracts (con- sensu contracta obligatio) were specifi- cally recognized by the Roman law, viz., emtio venditio, locatio conduotio, societas, mandatum, or, to popularize these terms, sale, hiring, partnership, and agency. In partnership and agency, it is true, this reason does not apply, but these partake of the nature 670 of real-contracts which are executed on one side, and either may be revoked at will. (See further, supra, note to §1.) Contracts which do not fall under the preceding heads were called nuda ■pacta, niidae pactiones ; on these no suit could be brought, although they might be the basis of an exception. It will be seen, therefore, that the term nuda pacta has a very different mean- ing in the Roman law from what it has in our own law. In the Roman law it means a contract not clothed in the terms the law prescribes ; in our own law it is used (leaving specialties and negotiable paper out of account) as meaning a contract .without consid- eration. The strictness of the old Roman law, however, in respect to nuda pacta was relaxed ; and it was held that suit could be brought on (1) ^' pacta in continenti adjecta hei bonae Jidei Kontrakten ;" (2) ;joc Goss c. Nugent, 5 B. & Ad. 58 ; Black, 20 Ala. 309. Carrier r. Dilworth, 59 Penn. St. 406. ' Infra, §§ 852 et seq. 5 Bates V. Starr, 2 Vt. 536 ; Russell v. » Infra, §§ 856 et seq. 678 CHAP. XVI.] CONSIDERATION. [§ 500. § 500. A promise by A. to do what he is already bound to do to B. is not a sufficient consideration to support a ... . . Promise to promise by Ji. to do somethmg in return to A.; in do what a other words, a promise cannot be conditioned on a fegaUy^ promise to do a thing to which a party is already ^o™'^g^^ legally bound.' Hence, a promise to pay a witness cient con- extra tees tor attendance on court is invalid ;'' though this would not hold in reference to promises to pay experts for special professional assistance f and so, generally, as we have seen of a promise to pay a debt already existing.* "Whether a promise to finish a work already undertaken is a good con- sideration depends upon whether the party making the pro- mise has encountered any fresh difficulties which might give him an excuse for surrendering the work, or whether any additional burden has been cast on him. In either of these cases, the promise to finish the work is a good consideration to support a promise to give some additional advantage to the employee ;° though otherwise not.^ In other words, if there is a novation, the new promise binds; but it does not unless, in consequence of some change of relations, there is a nova- tion.' — It should be added, that when a legal duty is question- able, then, as a matter of compromise, an agreement to per- form it, and to waive any defence that may heretofore have been made to its performance, will beheld a good considera- tion.' And when the debtor is able to delay fulfilling his contract, the consideration of his waiving such opportunities of procrastination and proceeding to prompt performance 1 Infra, § 720 ; 1 Ch. on Con. 11th Patterson c. Donner, 48 Cal. 369 ; Am. ed. 60 ; Leake, 2d ed. 621 ; citing Dawkins v. Gill, 10 Ala. 206 ; Sweany Jackson u. Cobbin, 8 M. & W. 790 ; ■/. Hunter, 1 Miirph. 181. Bayley v. Homan, 3 Bing. N. C. 915 ; ' Wh. on Ev. § 456. Dixon V. Adams, Cro. Eliz. 538 ; Cal- ■• Supra, § 498 ; infra, § 514. laghan v. Hallett, 1 Caines, 104 L'Amoreux u. Gould, 3 Seld. 349 Cleveland u. Lenze, 27 Oh. St. 383 5 Munroe v. Perkins, 9 Pick. 305 ; Cooke V. Murphy, 70 111. 96. s Cole JI. Shurtlefif, 41 Vt. 311 ; Runnamaker v. Cordray, 54 111. 303. Reynolds v. Nugent, 25 Ind. 328 ; That agreements to influence public Ayers v. R. R., 52 Iowa, 478 ; Anson, oflScers are void, see supra, § 405. That 76. when there is a fixed salary, extra pay ' See infra, §§ 852 et seq. cannot be recovered, see infra, § 720. * Infra, §§ 533, 852. 2 Dodge V. Stiles, 26 Comi. 463; 679 § 501.] CONTRACTS. [CHAP. XVI. may sustain a promise to give him additional compensation.^ Here, again, there is a reconstruction of the contract amount- ing to a novation which, as such, binds the parties.^ § 501. A distinction has been tal-cen by a learned English r, 4- iudffe in this relation between a promise to reward Question ae ^ ^ ^ ^- to promise A. for doiu2: his duty to a third party, and a promise to reward , ? p i • , • i , ^ 1, • dutyto to reward A. for doing his duty to the promisor. — others. „jf ^ man," said Wilde, B.,3''has already con- tracted with another to do a certain thing, he cannot make the performance of it a consideration for a new promise to the same individual ; but it is possible to make a valid promise to another to do the same thing." And in a much-discussed English case, where an uncle wrote to a nephew, who was about to be married, " I am glad to hear of your intended marriage to E. N"., and as I promised to help you at starting, I am happy to tell you I will pay you one hundred and fifty pounds yearly, during my life;'' — this was held a binding promise.^ But apart from the fact that the letter in this case seems to indicate a continuous promise conditioning the nephew's engagement, the ruling was weakened by the dis- sent of Byle, J., as against Erie, 0. J., and Keating, J. It is supported, indeed, by Mr. Pollock,^ but as is pointed out by Mr. Wald, the learned American editor of Mr. Pollock's work,^ by reasoning which assumes that the party thus prom- ising to pay another to do his duty to a third party has a right in the very matter concerning which his right is ques- tioned.'' To this it may be added, that giving to a third party the right to interfere with other parties' contracts {e. g., by enabling A., when there is a relation of debtor and creditor established between B. and C, to become B.'s creditor as to the very matter in which B. is debtor to C), is to create a ' Munroe v. Perkins, 9 Pick. 298 ; * Shadwell u. Shadwell, 9 C. B. N. Lattimore v. Harsen, 14 John. 330 ; S. 159. Stewart u. Keteltas, 36 N. Y. 388 ; ^ Cjont. 3d ed. 195. Cooke r. Murphy, 70 111. 96 ; cited, " Wald's ed. 185. Wald's Pollock, 164. 7 To this effect are cited Gordan v. 2 /«//-«, § 858 et seq. Gordon, 56 N. H. 170 ; Davenport .. 3 Scotsou V. Pegg, 6 H. & N. 295. First Cong. Soc, 33 Wis. 387 ; John- 680 son I. Seller, 33 Ala. 265. CHAP. XVI.] CONSIDERATION. [§ 502. double duty, against the policy of the law. There cannot be equal loyalty to two duties which would be likely to conflict.* § 502. "We have already seen that au agreement by a pri- vate person to pay a public officer for doing his duty is invalid as contrary to the policy of the law.^ kfpay'pu'b- Such an a2;reement, also, is invalid as without con- !''= ojfl^ers " _ ' ' _ invalid. sideration.^ It is otherwise, however, as to matters not in the scope of the oflacer's public duties. Unless it be one of the conditions of his office that his whole time should be given up to the state, he is entitled to sell to third parties such of his services as the state does not require.* Hence a constable, or other peace officer, may be remunerated for special attentions not in the line of his employment.'' But agreement to pay for such services must be special in order to bind.^ On the same reasoning, special services rendered by 1 See infra, §§ 506, 810. 2 Supra, § 403. ' Leake, 2d ed. 620, citing Bridge v. Cage, Cro. Jao. 103. To same effect, see Callaghan v. Hallett, 1 Cainea, 104 ; Evans u. Trenton, 4 Zab. 764 ; Smith L-. Whildin, 10 Barr, 39 ; Gil- more V. Lewis, 12 Ohio, 281 ; Burk v. Webb, 32 Mich. 173 ; Mitchell v. Vance, 6 Monroe, 529 ; Odineal c. Barry, 24 Miss. 9. ' England v. Davidson, 11 A. & E. 856. 6 Davis V. Munson, 43 Vt. 676. ^ In a case before the supreme court of Ohio in 1882 (Cincinnati R. R. v. Lee, 13 Rep. 280), the plaintiff was prosecuting attorney of Erie county, Ohio, at the time the services were rendered, which consisted in appear- ing before a magistrate, at the request of the company, and prosecuting cer- tain felonies. The plaintiff had judg- ment, and defendant assigned error. This was reversed in the supreme court, Okey, J., saying: "Lee having performed services as an attorney, in pursuance of the request of the railroad company, the agreement of the com- pany to compensate liim would be ap- plied, in the absence of any other fact. But the law does not imply such prom- ise in all cases where one performs ser- vice at the request of another. Take the familiar example of a son who con- tinues, after arriving at age, to live with his father, and performs service at his request. The sou may have expected to be paid wages, but, from the mere fact that he acted under direction of his father in the same way as during his minority, a contract to pay wages will not be implied. To constitute an agreement to pay wages in such a case it is not essential that any price should be fixed, but words must be employed showing that both parties understand that wages are to be paid. It is the duty of the prose- cuting attorney to conduct the prose- cution of offenders in the court of com- mon pleas ; but in Smith u. Portage County, 9 Ohio, 25, it is said that he is not bound to appear before a justice of the peace or mayor in a criminal case. The law remains the same to the pres- ent day. But in fact that officer, in many cases, appears voluntarily in 681 § 504.] CONTRACTS. [chap. XVI. Promises to seamen of increased pay not ordinarily binding. an officer of a corporation, though in the line of his duty, form no consideration for a subsequent promise by the corpo- ration to pay for them.' § 503. When a seaman is bound by his contract of service to serve for a particular voyage, a promise to in- crease his wages, unless there is increased duty or hazard, does not bind the promisor.^ It is other- wise, however, if the promise is made in considera- tion of increased peril and labor under circumstances which would have justified the seaman in throwing up the contract.^ § 504. On the same reasoning, part payment of a liquidated debt is no consideration for a promise from the Part payment of Creditor to the debtor in all cases Avhere the debt is consi'dera- ^t tbe time due and payable.* Hence, as between tion for a dobtor and creditor alone (the element of reciprocal promise by _ ^ ... creditor to release by other creditors, the one in consideration of the other, not coming in), the payment of one tlie examining court, and conducts the prosecution tliere. He does the same thing sometimes at the request of a citizen, without any expectation on his part to receive, or on tlie part of the citizen to pay, compensation for the services. We cannot say, looking to the facts stated In this answer, that there was an implied contract on the part of the company to pay Lee com- pensation for his services. The further proposition is urged by the counsel for the company that even an express agreement to pay would have been void as contrary to public policy. But upon that question we express no opinion." 1 Loan Ass. u. Stouemetz, 29 Penn. St. 534. See as to extra pay, infra, § 720. That agreement to pay public officer private remuneration is invalid, see supra, § 413. 2 Supra, § 499 ; and see, also, Leake, 2d ed. 621 ; Stilk v. Myrick, 2 Camp. 317 ; Frazer u. Hatton, 2 C. B. N. S. 682 512 ; Harris c. Carter, 3 E. & B. 559 ; Bartlett o. "Wyman, 14 Johns. 260; The Brookline, S Bost. L. Rep. 70. » Hartley v. Ponsonby, 7 E. & B. 872 ; see Clutterbuck v. Coffin, 4 Scott N. R. 509 ; Newman c. Walters, 3 B. & P. 612 ; see 2 Ch. on Con. 11th Am. ed. 61. " Met. on Con. 191 ; Leake, 2d ed. 619 ; Cumber v. Wane, 1 Str. 426 ; S. C. in 1 Smith's Lead. Cas. 7th Am. ed. 595 ; Jones v. Waite, 5 Bing. N. C. 341 ; Orme v. GoUoway, 9 Ex. 544 ; Baillie ... Moore, 8 Q. B. 489 ; Bailey V. Day, 26 Me. 88 ; White v. Jordan, 27 Me. 370 ; Smith c. Bartholomew, 1 Met. 278 ; Warren v. Hodge, 121 Mass. 106 ; Warren c. Skinner, 20 Conn. 559 ; Pabodie r. King, 12 .Johns. 426 ; Watts u. French, 19 N. J. Eq. 407; Daniels v. Hatch, 1 Zab. 391; McKenzie V. Culbreth, 66 N. C. 534 ; Pearson v. Thomason, 15 Ala. 700 ; Carraway i'. Odeneal, 56 Miss. 223 ; and see cases cited infra, §§ 935, 996, 1000 et seq. CHAP. XVI.l CONSIDERATION. [§ 504. part of a debt is no consideration for a promise not to sue on the other part.* And hence, also, paj^ment of the principal of a note is not in itself a sufficient consideration for a promise to pay the interest.^ At the same time, as has been noticed and will hereafter be seen more fully, the surrender by one party of any vantage ground is a sufficient consideration for a counter promise from the other party f and this is the case, also, with the giving of any security which the creditor did not before possess. Hence an accepted draft for a part of the debt will be a consideration for the release of the rest ;* and 80 will the note of a third person ;' and so of a guaranty of a third person f and so of a specific article or bonus received in satisfaction.'' It has also been held that payment before ma- >turity may be a good consideration for a reduction of the debt.' And a payment of a smaller sum in cash may be a sufficient consideration to support a promise to satisfy an unliquidated claim for a larger amount.' — In what cases a payment amounts to accord and satisfaction is hereafter independently discussed.*" 1 Infra, §§ 935, 996 et seq. ; Fitch v. Sullen, 5 East, 230 ; Down r. Hatcher, 10 A. & E. 121 ; Smith o. Page, 15 M. & W. 683 ; Goodwin v. Follett, 25 Vt. 386 ; Harriman w Harriman, 12 Gray, 341; Bunge <-. Koop, 48 N. Y. 225; Line v. Nelson, 9 Vroom, 358 ; Rising V. Patterson, 5 Whart. 319 ; see Jeu- ness V. Lane, 26 Me. 475. 2 Willis V. Gammill, 67 Mo. 730. ' Infra, §§ 534 et seq., 852 et seq,; Brooks V. White, 2 Met. Mass. 283; Kellogg <.. Richards, 14 Wend. 116; Harper v. Graham, 20 Ohio, 105. ■" Infra, §§ 953 et seq., 1003; Sibree V. Tripp, 15 M. & W. 23; Frisbie v. Larned, 21 Wend. 450 ; Douglass v. White, 3 Barb. Ch. 621 ; Milliken v. Brown, 1 Rawle, 391 ; Reid v. Hibbard, 6 Wis. 175. * 6 Hinckley o. Avey, 27 Me. 362 ; Brooks V. White, 2 Met. Mass. 283; Kellogg u. Richards, 14 Wend. 116 ; Sanders o. Bank, 13 Ala. 353 ; infra, § 954. « Lewis . . Jones, 4 B. & C. 506 ; Little V. Hobbs, 34 Me. 357 ; Kellogg V. Richards, 14 Wend. 116; Bliss v. Swartz, 7 Lans. 186 ; Maddux v. Bevan, 39 Md. 485. ' Infra, § 1006 ; Co. Lit. 212 b ; Pin- nel's case, 5 Coke, 117 ; Met. on Con. 191 ; Blinu v. Chester, 5 Day, 359 ; Boyd u. Hitchcock, 20 Johns. 76 ; Kel- logg u. Richards, 14 Wend. 116 ; Mc- Kenzie v. Cnlbreth, 66 N. C. 534 ; San- ders (/. Bank, 13 Ala. 353 ; and cases cited infra, § 1000 et seq. Whether a seal makes a difference has been already considered. Supra, § 495. 8 Irfra, §§ 1001-3 ; Pinnel's case, 5 Coke, 117 ; Brooks o. White, 2 Met. 283 ; Bowker v. Childs, 3 Allen, 434 ; Arnold v. Park, 8 Bush, 3 ; Rose ». Hall, 26 Conn. 392 ; Smith a. Brown, 3 Hawkes, 580 ; and see cases cited infra, § 1002. 9 Infra, §§ 521a, 935, 1000. »» Infra, §§ 996 et seq. 683 § 505.J CONTRACTS. [CHAP. XVI. § 505. It is frequently stated that detriment to tiie pro- Detriment misee is as good a consideration as is benefit to tiie or loss of promisor, and that either benefit to the promisor or rights by 1^ ' _ _ r- _ promisee is detriment to the promisee will be a sufBcient con- considera- sideration.^— But this is not strlctlj accurate. "While *'°°' a detriment to the promisee is a sufficient considera- tion without benefit to the promisor, benefit to the promisor is not a sufficient consideration without detriment to the pro- misee. If I receive a benefit, for instance, this does not sub- ject me to suit from a party who has done nothing to procure me the benefit, no matter how solemnly he may have bound himself to aid me in obtaining this benefit. Detriment to the promisee of some kind there must be to sustain the promise; though this detriment may consist of rights surrendered as well as of work done or money or goods parted with. The promise, in fact, is conditioned on this detriment, and unless the detriment is sufi'ered, the promise is not operative. This condition may be contingent, when not until the contingency occurs {e.g., the work done, or the goods transferred, or the service performed) does the promise bind.^ — The condition may be a contingent surrender of a right by the promisee.^ Hence it has been held that a promise by the heir-at-law of a dying relative, to pay a designated person a certain sum out of the estate, supposing there is no will, binds the party mak- ing the promise ;* and a resignation, also, by a pastor of his oflice is a consideration for a promise to give him certain aid on his resignation.'' Hence, also, a note given to a literary institution in consideration of its assuming additional liabili- ties is a sufficient consideration.^ The loss or inconvenience » Nerot V. Wallace, 3 T. R. 24 ; Bai- McLaughlin, 39 Mich. 480 ; Watkins v. ley V. Croft, 4 Taunt. 611 ; Bunn u. Turner, 34 Ark. 663 ; infra, § 1002. Gay, 4 East, 190; Thomas i^. Thomas, 2 Supra, § 24; infra, §§ 545 et seq.; 2 Q. B. 851 ; Towsley i>. Sumrall, 2 Pet. Hilton v. Sonthwick, 17 Me. 305 ; Ethe- 182; Chick v. Trevett, 20 Me. 462; ridge u. Thompson, 7 Ired. 127. Foster w. Phaley, 35 Vt. 303 ; Forster v. » Infra, § 579 ; Richardson r. Gosser, Fuller, 6 Mass. 58 ; Powell v. Brown, 26 Penn. St. 355. • 3 .Johns. 100 ; Miller v. Drake, 1 Caines, > Parker r. Urie, 21 Penn. St. 305. 45 ; Seaman v. Seaman, 12 Wend. 381 ; 6 -vVorren u. Presb. Ch., 8 C. E. Green, White u. Baxter, 71 N. Y. 254 ; Lewis 96. V. Seabury, 74 N. Y. 409 ; Conover v. ^ Simpson College v. Bryan, 50 Iowa, Stillwell, 34 N. J. L. 54 ; Bradshaw v. 293 ; infra, § 528. 684 CHAP. XVI.] CONSIDERATION. [§ 505. to the promisee, however, must be incurred at the request of the promisor; a promise by way of indemnity for a past loss is without consideration.' — As illustrations of the principle before us may be noticed guarantees. In contracts of this glass it is enough to establish the binding character of the contract of guarantee if the person to whom the guarantee is given suffers inconvenience, as an inducement to the surety to be- come guarantee for the principal debtor.^ — The abandon- ment of any right by the promisee, no matter how slight or how disputable, is a sufficient consideration for a promise by the promisor.^ — "When a bona fide abandonment of a right is shown, the courts will not undertake to determine the value of the right abandoned. It will form, no matter how slight, a consideration for a promise unless the transaction was so preposterous as to indicate fraud.* The sale of ancient lights and of rights of way, at high prices, though of little value to the owner, illustrates the position above given that a surren- der of a right, or a detriment, as it is called, is a good con- sideration. In conformity with this view it was held in Michigan, in 1880, that when D. a debtor, and M. a party holding a mortgage on D.'s property, agreed with S., a subse- quent mort_gagee, that the property should be put up at auc- tion to satisfy the latter's claims, there was a sufficient con- sideration to support the agreement in the waiver of mortgage security it involved. ° — An unconscionable agreement, however, by which a preposterous sum is required for the surrender of a right, will not be sustained.^ — Under the same head may fall ' Infra, § 514. Brine, L. R. 1 Ex. D. 5 ; Edgeware 2 Percnr.,Morleyf.Booth'by, SBing. Highway v. Gas Co., L. R. 10 Q. B. 92; 113, cited Leake, 2d ed. 611 ; Brooks v. Laurence v. McCalmont, 2 How. 426 ; Ball, 18 .Johns. 307. Warren v. Whitney, 24 Me. 561 ; Wliit- 3 Mather v. Maidstone, 18 C. B. 273 ; tie v. Skinner, 23 Vt. 532 ; Clark v. Forster w. Fuller^6 Mass. 58 ; Stebbins Sigourney, 17 Conn. 511; Coleman v. V. Smith, 4 Pick. 97 ; Smith v. Weed, Eyre, 45 N. Y. 38 ; Neal v. Gilmore, 79 20 Wend. 184 ; Haines ;;. Haines, 6 Md. Penn. St. 421 ; Buchanan v. Bank, 78 435 ; Williams v. Alexander, 4 Ired. Eq. 111. 500 ; Tompkins v. Philips, 12 Ga. 207 ; Pitt V. Gentle, 49 Mo. 74. As to 52. forbearance to sue, see infra, § 532 ; as ^ Bradshaw v. McLaughlin, 39 Mich, to compromises, see infra, § 533 ; as to 480. equitable rights, see infra, § 531. ^ Supra, § 169 ; infra, § 618. " See infra, §§ 517, 1001 ; Brown v. 685 § 506.] CONTRACTS. [CHAP. XVI, the reconstruction of an agreement by which new terms are imposed. The promisee's abandonment of the old terms are the consideration for the adoption of the new.' It is other- wise when the old agreement has been absolutely done away with, and when after an entire vacating of the old agreement a new as;reement is established on a new consideration. To make such new agreement binding the new consideration must be proved. Hence, renewing a broken contract of mar- riage requires as strong proof as did the original contract.^ — Of surrender of rights, the most extreme illustration that can be taken is that given in an early English case in which it was held that parting with the possession of goods and placing them in the hands of another is a sufficient consideration for a promise by the latter to deliver them safely.^ To sustain such a consideration, however, it must be something apprecia- ble on which the minds of the party are fixed. It must be, " if you will carry the goods I will surrender possession of them to you." This would be a surrender of a right.^ The sur- render, also, of a right incident to the depositing of a sum of money by the plaintiff in the defendant's hands is a sufficient consideration for a promise to keep it safely and return it.^ § 506. In all cases where a consideration is required, a party suing on a contract, as we will hereafter see more musTshow^ fully," must show that the consideration flowed from considera- him. Consideration means something which is of tiou flowing . ° (rom him- some value in the eye of the law, moving from the plaiutifi"; it may be some benefit to the defendant, but it must be some detriment to the plaintiff, and it must move from the plaintiff,^ and this is tantamount to saying ' Brown v. Everhard, 52 Wis. '20ft ; ^ See observations in Holmes' Com- infra, § 858; Cutter t.. Cocliran, 116 mon Law, 291. Mass. 408 ; Rollins v. March, 128 Mass. s Whitehead v. Greetham, McC. & Y. 116. 205 ; Wilkinson o. Oliveira, 1 Bing. 2 Dean v. Skiff, 128 Mass. 174. N. C. 490 ; Hart v. Miles, 4 C. B. N. S. s Wheatley i-. Low, Cro. Jac. 668; 371. see Riches i\ Briggs, Yel. 4. In Coggs ^ Infra, §§ 784 et seq., and see supra, , . Bernard, 2 Ld. Ray. 909, 920, Lord § 184. Raymond is reported to have said that ' See Patterson, J., Thomas v. Thom- delivery of casks to a party to he car- as, 2 Q. B. 869 ; adopted in Leake, 2d ried is a sufficient consideration for the ed. 612. contract of carriage. 686 CHAP. XVI.] CONSIDERATION. [§ 506. that there must be in all cases some detriment to the promisee. The promisee, in other words, must have done something or suffered something at the promisor's request as a reason for the promise. — The promise, so far as he is concerned, must not have been gratuitous.' — Hence a promise to me by B. to pay C.'s debt to me does not bind B. to me, unless in exchange for this promise I give C. indulgence, or in some way benefit B. ; nor can I support the suit by showing that some one else agreed to give C. indulgence or to confer some benefit on B.^ A promise by me, also, to pay a reward for the discovery of a lost article can only be enforced against me by a person who has done something, no matter how slight, in bringing the lost article to light, and who was aware of the reward.^ The real party in interest is to bring suit; if a principal acts through an agent, it is the principal who is to sue, and against whom set-offs may be introduced.^ In some of the earlier cases liability was further extended." " If A. promised to pay B. £1000 if C. would go to Rome, and C. took the journey, he and not B. was regarded as entitled to the reward, and to compel the payment of it by suit. For as the action of as- sumpsit was, as stated, brought not to enforce the contract specifically, but to recover compensation for the injury occa- sioned by the breach of faith, the person who parted with his property, or rendered the stipulated service, was obviously the one who should be compensated in damages." — In a Pennsyl- vania case, adopting substantially the same rule, the evidence was that the defendant, a member of a congregation of which M. was the minister, promised the plaintifi" to pay him twenty- five dollars for the services to be rendered by M. as minister for a particular year. The money was for M.'s use, and it was held 1 Infra, § 784, supra, § 505 ; Bourne 2 Denio, 403 ; see infra, §§ 723 et seq. V. Mason, 1 Vent. 6 ; Crow v. Rogers, 784 et seq. 1 Str. 592 ; Company of Felt Makers v. « See Price v. Easton, 4 B. & Ad. 433 ; Davis, 1 B. & P. 102; Mandeville v. S. C, 1 N.&M. 303 ; overruling Martyn Welch, 5 Wheat. 277 ; Fugrove t. v. Hind, 2 Cowp. 443 ; 1 Dougl. 146. Mutual Soc, 46 Vt. 362; Segars v. » See supra, § 24. Segars, 71 Me. 530 ; Stoddard v. Ham, '' Supra, § 96 ; infra, § 802. 129 Mass. 383 ; Bury v. Ziegler, 93 ^ See .Judge Hare's Lectures on Con- Penn. St. 367 ; Gibson v. Cooke, 20 tracts, 20. Pick. 18 ; Stewart v. Hamilton College, 687 § 506.] CONTRACTS. [chap. XVI. that M. should have sued for it. " A parol promise to one for the benefit of another," so it was held by Gibson, 0. J., " can support an action on it only by him from whom the consider- ation moved, or who was the meritorious cause of it. And the rule is founded in good sense, not only because it avoids circuity, but because there is no necessity that one who has been the mere recipient of a promise should sue on it as a trus- tee, when there is no trust, and when the party beneficially entitled is able to sue for himself. Neither in equity nor in law is a hare recipient a -party to the contract."'^ The words italicized show that what Chief Justice Gibson had in view were con- tracts of agency in which the principal can unquestionably sue on a parol contract made by his agent.^ But the prevalent English view^ is that where a promise is made to A. for B.'s benefit, the suit to enforce the promise must be brought by A.* It is true that the party from whom the consideration flows must sue either in his own name when a party, or in the name of his trustee when not a partj'. But, nevertheless, according to the English doctrine, as will be seen in the next section, none but a party to the contract can sustain on it a suit. There is no hardship in this. The party beneficially interested may use his trustee's name, or compel the trustee to sue. On the other hand, a mere stranger, who is not a trustee, and who has not done anything or surrendered anything in considera- tion of the defendant's promise, cannot sue on the promise. 1 Edmunson v. Penny, 1 Barr, 334. been held that no stranger can take 2 Wh. on Agency, §§ 4, 5, 147, 398, advantage of a contract made with an- 722. Inanearly case, where a conversa- other person." Tweddle u. Atkinson, tion took place between two fathers, in 1 B. & S. 393 ; and see as to cliildren which one promised that if the other under marriage settlement suing, infra, would give his daughter in marriage to § 790. In Dashwood v. Jermyn, L. R. his son he would settle certain lands on 12 Ch. D. 776, P. a stranger to the the married couple, and the marriage family promised certain benefits to M. took place in part reliance on this state- to enable Jl. to marry one of F.'s ment, but the settlement was not made, daughters, on faith of which M. was it was held that the husband might married to F.'s daughter. It was held maintain an action for the default. But that this was a promise on P. 's part of this Mr. Leake, 2d ed. 4S3, says : " no without consideration. modern case can be found to support ^ See Leake, 2d ed. 443. such an exception to the general rule ; ^ See also infra, § 799. and, on the contrary, it has always 688 CHAP. XVI.] CONSIDERATION. [§ 507. § 507. We have just seen that the party from whom the consideration proceeds must be the party to sue for the equivalent of such consideration, though when not recover the contract is made by an agent, he may sue either 2°[^^^J^g° in his own or in his principal's name. We have eumed to . , himself. next to observe that a party cannot recover unless on a duty assumed to himself. " "When two persons for valu- able consideration between themselves covenant to do some act for the benefit of a mere stranger, that stranger has not a right to enforce the covenant against the two, although each one might as against the other."' " No one can be made a debtor for money paid, unless it was paid at his request."^ " A debtor cannot discharge his liability to his creditor by seeking some person whom his creditor happens to owe and paying his debt to him."^ That to entitle a person to sue on a contract, not only must he be, as was just seen, beneficially interested in the contract, but he must be a party to the con- tract, is, as we will hereafter see more fully, a settled princi- ple of the English common law.^ Much conflict of opinion, however, exists in this country on the question whether a party for whose benefit a contract is made, but who is not a party to it, can sue on such contract. — If a credit is obtained by my agent or trustee, there is no question of my right to sue on it, although I knew nothing of the transaction at the time, and was not even known to the party who thus became my debtor.' But suppose that a deposit was made to my credit by a stranger, without notice to me. In such case I am not, by the English common law, entitled to bring suit on the deposit which is thus made in my name until I am notified by the depositary, and adopt the deposit as for my use, > Langdale, M. R., Colyear v. Mul- » Van Fleet, V. C, Receiver, etc. u. grave, 2 Keen, 98; see Piercy ex parte, First Nat. Bk., 34 N. J. Eq. 457. That L. R. 9 Ch. 33 ; Tweddle u. Atkinson, A. by paying C.'s debt cannot make 1B-&S. 393; see Segars u. Segars, 71 himself C.'s creditor, see Patillo v. Me. 530 ; Stoddard v. Ham, 129 Mass. Smith, 61 Ga. 265. 383 ; Biery v. Ziegler, 93 Penn. St. * See infra, §§ 784 et seq^ 367. 6 Wh. on Agency, §§ 4, 5, 147, 398 i 2 Curtis V. Parks, 55 Cal. 106 ; S. P., infra, §§ 723 et seq., 784 et seg.. Anderson v. Hamilton, 25 Penn. St. 75. VOL. I.— 44 689 § 507.] CONTRACTS. [CEAP. XTI. he agreeing with me, on sufficient consideration, to hold the deposit for nie.^ There must be, to entitle an alleged creditor to sue, a prior recognition by the creditor of the in- debtedness as part of an agreement either express or implied by him with the debtor, that the debtor is to hold for the benefit of the creditor.^ On the other hand, as will be here- after seen more fully, the rule in most states in this country is, that a person for whose benefit a contract was made is not precluded from suing on it by the fact that he is not a party to it.' — It is worth considering, however, whether our relaxa- tion in this respect of the strictness of the common-law princi- ple is wise. The increasing complexity of our civilization makes it each day the more important to maintain the prin- ciple that without privity of contract there can be no con- tractual relation. It is not likely, in fact, that money will be deposited by a volunteer to my credit, or work done for me, unless for some sinister purpose. I may be a capitalist or a politician, and it may be an object of importance to the party so volunteering to rank me as co-operating in his schemes, or to subject me to him by the ties of gratitude. The true principle is that to establish a contractual relation there must be the consent, express or implied, of the contracting parties. Even supposing that work is done for me or goods supplied to me from motives of disinterested kindness, there are strong ' Williams ". Everest, 14 East, 582; Arnold t;. Lyman, 17 Mass. 400. Thead- Tweddle u. Atkinson, 1 B. & S. 393; Tance in this direction was sulDsequent- Thomas u. Thomas, 2 Q. B. 857 ; ly checked ; and it has been held that Mandeville v. Wf Ich, 5 Wheat. 277 ; on a promise made to the seller by the Hinkley v. Fowler, 15 Me. 285 ; Gib- buyer of an equity of redemption, to son u. Cooke, 20 Pick. 18; Brewer v. secure and cancel the mortgage with the Dyer, 7 Cush. 337; Exchange Bankw. note for which it was given, no action Rice, 107 Mass. 37 ; Hindi). Holdship, lies by the mortgagee. Mellen c. Whip- 2 Watts, 104 ; Beers o. Robinson, 9 pie, 1 Gray, 317. Barr, 229 ; Page v. Becker, 31 Mo. 2 Infra, § 784 ; Cobb o. Becke, 6 Q. 466 ; Fithian v. Monks, 43 Mo. 503 ; B. 930 ; Barlow v. Browne, 16 M. & and oases cited infra, § 784 et seq. In W. 126 ; Tweddle i^. Atkinson, 1 B. & an early Massachusetts case, Peltou v. S. 393 ; Bigelow 1;. Davis, 16 Barb. Dickinson, 10 Mass. 287, it was held that 561. As to novation, see 2«/ra, § 852; a son can maintain an action on a con- whether members of an association can tractmadeforhisbenefitwithhisfather. sue as a committee, see infra, § b08. See, also. Fetch v. Taylor, 13 Pick. 136 ; ^ /nf^a, § 785. 690 CHAP. XVI.] CONSIDERATION. [§ 507. reasons why this should not be permitted to sustain a suit. (1) Disinterested kindness would cease to exist if it gave a legal claim against the party to whom it is shown. (2) Every man must be left to determine what service he needs in his household, what comfort he requires, what investments he will make. It may be a matter of true charity to supply service or goods to another ; but to assert that A. has a right to supply his neighbors with what they need and then exact payment makes A. the master of every family with which he may meddle. In conformity with this view, it has been held that voluntary aid given in securing lost property does not support an action against the party aided ;' nor does aid in saving property from fire.^ — On this topic the Roman law takes a different position, it being held in that law, that when aid is given in extremity in relief of an absent person, the party relieving can recover compensation afterwards from the party relieved.' ITo such system of agency, however, is recognized in our jurisprudence. The only exception is that of salvage ; it being part of the maritime law that compensation may be obtained for ser- vices rendered in saving property from marine loss or from piracy.^ — Another question to be considered in this connection is, whether a consideration is suflScient of which the party Betting it up was not aware at the time he did the act for which he sues. A reward, for instance, is oflered for certain services ; and a party does this service unconscious of the reward. Can he afterwards recover in a suit on the reward ? It has been held in New York that he cannot, there being no contract between the parties." On the other hand, a party who undertakes to do a particular thing without the knowl- ' Nicholson v. Chapman, 2 H. Bl. necessary expenses of preserving the 254 ; Binsteed v. Buck, 2 W. Bl. 1117. hoat. 2 Bartholomew v. Jackson, 20 Johns. = Fitch o. Snedaker, 38 N. Y. 248. 28. In Williams v. Carwardine, 4 B. & Ad. ' Wh. on Agency, § 358. 621, apparently contra, it does not * Abb. on Ship, part 4, ch. 12 ; appear that the party doing the service Chase u. Corcoran, 106 Mass. 286, was ignorant of the reward, though where it was held, that a party claim- influenced by other motives in doing ing and obtaining a boat lost in the the service ; see Pollock, 3d ed. 12, water was entitled to recover from the 19 ; Leake, 2d ed. 24 ; and see cases party who brought it to shore the cited supra, § 24. 691 510.] CONTRACTS. [chap. XVI. A promise against the policy of the law not a valid con- sideration. edge that any other persons will act upon his undertaking, and without inviting other persons so to act, is not liable on his undertaking.! § 508. "We have already considered numerous cases in which agreements have been held inoperative as illegal or against the policy of the law.^ Wherever a promise is of this type, it is not a valid consideration for another promise.' A promise, for instance, to suppress matters defamatory of another, is not a valid consideration, because (1) such matters should be dis- closed to the proper public officer, or not disclosed at all, and (2) to permit such agreements would be to sanction black- mailing.'' § 509. For the same reason an illegal consideration vitiates a contract.' The engagement of one side being void. Illegal con- * ° ■ -, , i - sideration the engagement of the other side based on it falls.^ VI la es. _^tid where the contract is indivisible, and a part of the consideration is illegal, this vitiates the whole transaction.' It is otherwise, as we will presently see, with divisible con- siderations.' § 510. When a consideration, after an agreement has been made bona fide, becomes impossible of performance, Bible con- without the fault of the party agreeing to supply it, sideration. ^]^qj.q being no guaranty against such impossibility 1 Ellis V. Clark, 110 Mass. 389. 2 Supra, §§ 325 et seq. ' Bee also Ham „. Smith, 87 Penn. St. 63. * Brown v. Brine, L. R. 1 Ex. D. 5. ^ Supra, §§ 335 etseq. 6 Supra, §§ 338-9 ; Benj. on Sale,s, 3d Am. ed. § 505 ; Ladd v. Dillingham, 34 Me. 316. ' Supra, § 339 ; Chater v. Beckett, 7 T. R. 201 ; VPaite v. Jones, 1 Bing. N. C. 656; Hopkins v. Prescott, 4 C. B. 578 ; Howden v. Simpson, 10 Ad. & El. 793 ; Taylor v. Chester, L. R. 4 Q. B. 309; Armstrong v. Toler, 11 Wheat. 258 ; Ladd v. Dillingham, 34 Me. 316 ; Roby V. West, 4 N. H. 285 ; Carleton v. 692 Witcher, 5 N. H. 196 ; Prescott v. Nor- ris, 32 N. H. 101 ; Woodruff v. Hinman, 11 Vt. 592; Crawford v. Morell, 8 Johns. 253 ; Thayer v. Rook, 13 Wend. 53; Barton u. Plank Road, 17 Barb. 397 ; Baldwin v. Palmer, 6 Selden, 232 ; Filson V. Himes, 5 Barr, 452 ; Bly v. Bank, 79 Penn. St. 453 ; Ives «. Bos- ley, 35 Md. 262; Stouteuburg v. Ly- brand, 13 Oh. St. 228 ; Collins ... Mer- rell, 2 Met. (Ky.) 163; Chandler u. Johnson, 39 Ga. 85 ; Pettit v. Pettit, 32 Ala. 288 ; Porter v. Jones, 52 Mo. 399 ; Tucker v. West, 29 Ark. 286 ; Curamings u. Saux, 30 La. An. Part I. 207. 8 Infra, § 511. CHAP. XVI.] CONSIDERATIOK. [§ 512. When con- siderations are divis- ible, illegal or inopera- tive may be rejected. on his part, the contract, as we have already seen, t'alls.^ How far impossibility at the time of the asjreement atFects the con- tract has been distinctively considered.^ § 511. The fact that one of several considerations is invalid or nugatory or impossible does not vitiate an agree- ment if there remains any one valuable considei-a- tion to support the promise. In such case all the invalid and ineffective considerations may be re- jected as surplusage.^ Thus, where a promissory note and a bill of exchange had been given at the same time in payment of a sailor's bill to his landlord, part of which bill included an illegal charge for spirituous liquors, and it appeared that the whole charge for liquors was not equal to one of these securities, it was held by Lord Tenterden that the plaintiff was entitled to recover on the other security.* When, also, part of a divisible consideration falls as contra- vening the statute of frauds, the rest will support a promise." And, as a general rule, where one consideration is nugatory or inoperative, it does not impair liability if a valid considera- tion remains f and so where there is a divisible agreement to do two things, one legal and the other illegal.'' It is otherwise, however, when the consideration is entire, and wholly illegal or inoperative.' § 512. Gratitude for past benefits will not support a prom- ise to repay the benefactor, unless the benefit was in some way 1 Supra, §§ 296 et seq, 2 Supra, §§ 298 et seq. ' Leake, 2d ed. 630 ; supra, §§ 338-9 ; Mete. Con. 193 ; Ch. on Con. 11th Am. ed. 69 ; Shackell v. Rosier, 2 Bing. N. C. 646 ; King v. Sears, 2 C. M. & R. 48 ; Goodwin v. Clark, 65 Me. 280 ; Bliss v. Ne^us, 8 Mass. 51 ; Loomis v. Newliall, 15 Pick. 159 ; Andrews v. Ives, 3 Conn. 368 ; Hook v. Gray, 6 Barb. 398 ; Tracy V. Talmage, 14 N. Y. 162 ; Wiggins v. Reiser, 6 Ind. 252 ; infra, § 338. 4 Crookshank v. Rose, 5 C. & P. 19 ; see to same effect Carleton v. Woods, 28 N. H. 290; Robinson ... Green, 3 Met. (Mass.) 159. 5 Mayfleld v. Wadsley, 3 B. & C. 361 ; infra, § 338. 6 Supra, §§ 66, 338 ; Best v. Jolly, 11 Sid. 38 ; Jones o. Waite, 1 Bing. N. C. 341; Parish u. Stone, 14 Pick. 198; Earle v. Reed, 10 Mete. 387 ; Hynds v. Hays, 25 Ind. 31 ; Treadwell v. Davis, 34 Cal. 601. ' Lewis V. Davidson, 4 M. & W. 654 ; supra, § 338. 8 Supra, § 509 ; Hall v. Dyson, 17 Q. B. 785; Loomis v. Newhall, 15 Pick. 167 ; Mead v. Combs, 19 N. J. Eq. 112 ; Floyd V. Goodwin, 8 Yerg. 484 ; Hall u. Heydon, 41 Ala. 242 ; Burke v. Mur- phey, 27 Miss. 167. 693 § 512.] CONTRACTS. [CHAP. XVI. conditioned on the promise. We have, it is true, the high J, authority of Lord Mansfield to the effect that, "where ligation a man is under a moral obligation, which no court support a of law or equity can enforce, and promises, the promise. honcsty and rectitude of the thing is a considera- tion ;"^ and for a time this position was accepted by the courts.^ Where, for instance, a married woman borrowed money on her bond, which was void on account of her cover- ture, and after her husband's death gave a written promise to pay the debt, it was held that the "moral obligation" incum- bent on her to pay the'debt, though not one that bound her at the time it was incurred, was a sufficient consideration for the written promise made on her discoverture.^ But it was soon felt that if a moral obligation in one case would sustain a promise, moral obligations in all other cases would have the same effect ; and that as in complex conditions of society there are few persons who are not under some sort of moral obligation to those with whom they deal, to treat moral obligations as always a sufficient consideration, would be to do away with the rule by which consideration is required. Hence, Lord Mansfield's opinion that a moral obligation is a consideration to support a contract was soon afterwards abandoned even in his own court ;^ and it is now settled, both in England and the United States, that no merely moral obli- gation, no matter how strong, can support a promise unless the benefit from which the obligation arises was conditioned on the promise.' A promise by a son, for instance, to take an 1 Hawkes v. Saunders, Cowp. 290. Watkius u. Halstead, 2 Sandf. 311 ; 2 See Atkins v. Banwell, 2 East, 506 ; Gear r. Archer, 2 Barb. 424. Dodge V. Adams, 19 Pick. 429 ; Updike = 1 Ch. Con. lltli Am. ed. 52 ; Beau- V. Titus, 2 Beasley, 151 ; Lang. Cent, mont v. Reeve, 8 Q. B. 483; Warren v. ii. 1025 ; 1 Smith's Lead. Cas. 7th Am. Whitney, 24 Me. 561 ; Mills v. Wyman, ed. 284, and see supra, § 373. 3 Pick. 207 ; Loomis v. Newhall, 15 ' Lee 0. Muggeridge, 5 Taunt. 36. Pick. 159 ; Dearborn ^■. Bowman, 3 Tliis case is overruled in Eastwood v. Met. 155 ; Andrews u. Ives, 3 Conn. Kenyon, 11 A. &. E. 438. 36S ; Cook v. Bradley, 7 Coun. 57 ; ■* See note to Wennall v. Adney, 3 B. Stone v. Stone, 32 Conn. 142 ; Smith v. & P. 249 ; Kaye v. Dutton, 7 M. & G. Ware, 13 Johns. 257 ; Ehle v. Judson, 807 ; Jennings u. Brown, 9 M. & W. 25 Wend. 97 ; Whitaker o. Whitaker, 501; Smith v. Ware, 13 Johns. 259; 52N. Y. 368 ; Snevily r. Reed, 9 Watts, 390 ; Parker v. Carter, 4 Muuf. 273. 694 CHAP. XVI.] CONSIDERATION. [§ 512. extreme case, to pay for support given an aged and destitute parent, is void as without consideration ;''■ nor is a father bound by a promise to pay for aid rendered to an adult sou during sickness.^ Even negotiable paper, as between the par- ties, will not be sustained by a consideration consisting of mere gratitude for a benefit previously conferred.^ No mat- ter how sacred the duty may be, it will not sustain a promise, unless the one were conditioned on the other, for the courts can no more discriminate between duties more or less sacred, and thus constitute themselves the arbiters of ethics, than they can discriminate between prices more or less adequate, and thus constitute themselves the arbiters of the market.* Even an agreement by a man to pay a yearly sum to a woman whom he had seduced to support her in her destitution has on this ground been held inoperative.^ And a promise made by a ' Cook V. Bradley, 7 Conn. 57 ; Stone V. Stone, 32 Conn. 142; Parker v. Car- ter, 4 Munf. 473. « Mills u. Wyman, 3 Pick 207 ; El- licott V. Peterson, 4 Md. 476. That an undertaking for the payment of a son's debts is, by itself, without considera- tion, see Mortimore u. Wright, 6 M. & W. 482 ; Seaborne v. Maddy, 9 C. & P. 497 ; Raymond v. Loyl, 10 Barb. 483 ; 1 Smith's Lead. Cas. 7th Am. ed. 285. ' Holliday u. Atkinson, 5 B. & C. 501. < See Eastwood v. Kenyon, 11 A. & E. 438 ; Chamberlin w. Whitford, 102 Mass. 448 ; Greeves t^. McAllister, 2 Binn. 591 ; Kennedy v. Ware, 1 Barr, 445 ; Snevily v. Eeed, 9 Watts, 396 ; Pennington v. Gittings, 2 Gill & J. 208 ; Parker v. Carter, 4 Munf. 273 ; John- ston V. Johnston, 31 Penn. St. 450; Shealey v. Toole, 56 Ga. 2l0 ; though see Hemphill u. MoClimans, 24 Penn. St. 367. In Conmey u, Maofarlane, Sup. Ct. Penn. 1882, 12 Pitts. Leg. Jour. 411, we have the following ; "If one person has been guilty of a wrong- ful act which would render him liable in damages to another, and he promise to pay the injured person a sum of money as a compensation, this is a mere gratuitous promise, unless made in consideration of the injured person releasing his right of action for such damages," citing Smart v. Chell, 7 Dowl. 781. See, however. Directors of House of Employment v. Murry, 32 Penn. St. 178, where it was held that payment for medical services rendered, in a case of necessity, to paupers could, on a, quantum meruit, be exacted from directors of the poor, under the special legislation of the state imposing on them the duty of supplying medical aid to such paupers ; and this though, in this particular case, there was no prior request to the physician to attend the paupers. s Beaumont v. Reeve, 8 Q. B. 483 ; Hulse V. Hulse, 17 C. B. 711 ; and see Mills V. Wyman, 3 Pick. 207 ; Valen- tine u. Foster, 1 Mete. 521 ; Dearborn u. Bowman, 3 Mete. 155 ; Ehle v. Jud- son, 24 Wend. 97 ; Stafford v. Bacon, 25 Wend. 384; 1 Hill, 533; 2 Hill, 453 ; Van Derveer v. Wright, 6 Barb. 547 ; Snevily u. Reed, 9 Watts, 396 ; Kennedy v. Ware, 1 Barr, 445 ; Car- 695 § 512.] CONTRACTS. [chap. xvr. woman, after divorce or her husband's death, to pay a debt incurred by her during her marriage is also at common law invalid as without consideration.^ The same rule has been applied to a promise by a bankrupt, after filing his petition in bankruptcy, and before his discharge f though, as will be seen in the next section, the promise if made after discharge would be valid.' — On the same reasoning there is no consider- man v. Noble, 9 Barr, 367, and cases cited 1 Smith's Lead. Cas. 7th Am. ed. 284 ; though see Carson ;;. Ely, 23 Mo. 267. That the rule in Connecticut differs from the text, see supra, § 373. That agreements for illicit cohabitation are invalid, see supra, § 373. That agreements to support illegitimate chil- dren are invalid, see infra, § 525. ' Howe V. Wildes, 34 Me. 566 ; Hay- ward V. Barker, 52 Vt. 42'J ; Watkins f. Halstead, 2 Sandf. 311 ; Felton c. Keid, 7 Jones N. C. 269 ; Waters v. Bean, 15 Ga. 358 ; see Meyer u. Ha- worth, 8 A. & E. 467. ' Stebbins v. Sherman, 1 Sandf. 510 ; jroves I . McGnire, Ky. Ct. Ap. 1881 ; 1 Ky. L. .1. 249 ; Nelson c. Stewart, 54 Ala. 115 ; though see, contra, Brix c. Braham, 1 Biug. 281 ; Otis v. Gazelin, 31 Me. 567. ' In Groves v. McGuire, ut supra, it is said by the court : " It is nothing more than a promise to pay a debt already owing and collectible by law, and a re- newed assurance to the creditor, with- out any additional consideration, that the debt will be paid. The original contract remained in full force, and had never been discharged, and as long as the creditors can maintain an action on the original promise, a new promise, without some additional con- sideration, will not affect an action. That is the rule laid down in Ogden v. Redd, 13 Bush, 581, as well as by all the elementary authorities. Suppose the appellees had sued the appellant on the original undertaking, and the eye latter, instead of relying on his dis- charge in bankruptcy, had pleaded, by way of accord and satisfaction, that he had, subsequently to the original promise, say on the day of March, 1878, made an additional promise to pay the debt, and it was accepted by the defendants, and therefore the last promise, and not the original under- taking, created the liability, can it be successfully maintained that such a plea would be good ? We think not. There must be some distinct agreement based upon a, consideration in which the original contract is merged or dis- charged before such a promise can be made available, except for the purpose of defeating a plea of limitation. Where the debt is barred by time or by the bankrupt's discharge, and is no longer collectible by law, a new promise based on the moral obligation to pay, creates a liability ; hut so long as the original contract can be enforced, a mere prom- ise or recognition of the liability will not support the action. It will not do to say that the mere forbearance to pre- sent the claim before the assignee in bankruptcy, gives vitality to the prom- isp and creates an obligation upon which the action can be maintained. The mere conclusion in the mind of the creditor, that he will accept or for- bear to act with reference to his claim, will not amount to a contract with his debtor. He must forbear to present his claim by reason of some contract, made by both parties, based upon a consideration, or have been so defraud- CHAP. XVI.] CONSIDERATION. [§ 513. ation for a promise to pay a demand that the plaintiff has voluntarily released in order to make the defendant a wit- ness.^ § 513. An apparent exception to the rule that a moral obliga- tion is not a sufficient consideration to support a _ 1 • -ii -J Party, how- promise 18 to be found an the rule still recognized ever, may that the fact that a debt once binding has been dis- ^t^ofstatute charged by law without satisfaction to the debtor is relieving '^ J him from a sufficient consideration to pay such debt. This has paying been held where a bankrupt promises to pay a debt discharged in bankruptcy ;' and d fortiori of promises barred by insolvent discharges, such discharges being only locally effective.' The same view has been taken in regard to promises ed by the debtor as to estop the latter from relying on his defence in bank- ruptcy. A mere promise to pay is not sufficient. A mere promise to pay a debt already existing cannot be made the foundation of an action. Gilmore V. Green, 14 Bush, 772." ' Valentine v. Foster, 1 Met. 520, and cases cited at close of § 513. 2 See Stebbins v. Sherman, 1 Sandf. 510 ; Scouten v. Eislord, 7 Johns. 36 ; Stafford v. Bacon, 25 Wend. 384 ; 2 Hill, 353 ; Willing ... Peters, 12 S. & E. 177 ; Johns u. Lantz, 63 Penn. St. 324 ; Chambers t. Rubey, 47 Mo. 99. It would be otherwise if the promise was made before discharge ; supra, § 512. " The very decided weight of authority holds that a promise made after the debtor has been adj udioated a bankrupt, but before he has ob- tained his certificate of discharge, is binding. This doctrine is sustained by the following authorities : Brix v. Bra- ham, 1 Bing. 281 ; Stilwell v. Coope, 4 Den. 225; Corliss v. Shepherd, 28 Me. 550 ; Otis v. Gazeliu, 31 Me. 567; Donnell v. Swaim, 2 Penn. L. J. 393 ; Fraley v. Kelly, 67 N. C. 78. The con- trary doctrine is held by the following authorities, so far as we have been able to discover : IngersoU v. Rhoades, Hill & Den. Sup. 371 ; Ogden v. Redd, 13 Bush. 581." Day, J., Knapp v. Hoyt, S. Ct. Iowa, 1881, 13 Rep. 497. In Shaw v. Burney, Sup. Ct. N. C. 1882 (14 Law Rep. 182), Smith, C. J., said : " The authorities are clear that to remove the bar of a discharge in bankruptcy and revive the debt, the proof should show a distinct and une- qitivocal promise to pay, notwithstand- ing the discharge, and this is the rule announced by this court in Fraley v, Kelly, 67 N. C. 78, and approved in Riggs V. Roberts, 85 ib. 151. In Stew- art u. Reckless, 4 Zabr. (N. J.) 427, the words relied on were, that he (the defendant) had always told Stewart (the plaintiff) he intended to pay him, and the court say ' the expression of an intention to do a thing is not a promise to do it. An intention is but the purpose a. man forms in his own mind ; a promise is an express under- taking or agreement to carry the pur- pose into eflfect.' But a case in its es- sential features the same as that now before the court was decided in 1851 by the supreme court of Massachusetts. Pratt V. Russell, 7 Cush. 462." ' Badger v. Gilmore, 33 N. H. 361 ; Maxim v. Morse, 8 Mass. 127 ; Way v. Sperry, 6 Cush. 238 ; Erwin o. Saun- 697 § 513.] CONTKACTS. [chap. XVI. to pay a debt barred by the statute of limitations. But the validity of promises of this class is no longer placed on the consideration of moral obligation. The liability is now based exclusively on the right of a party to waive the protection of a statute relieving him from indebtedness. " Where the consideration was originally beneiicial to the party promising, 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 promises to pay the debt, which is only what an honest man ought to do, he is then bound by the law to perform it."' And it has been held in this country that a promise to pay a debt which has been voluntarily released is void as without consideration.^ ders, 1 Cow. 249 ; Earnest o. Parke, 4 Rawle, 452 ; Thomas v. Hodgson, 4 Whart. 492; Turner v. Crisman, 20 Ohio, 332; Mo Willie u. Kirkpatrick, 28 Miss. 802. ' Per cur. Earle u. Oliver, 2 Ex. 90 ; adopted in Leake, 2d ed. 617. To the same effect see Eastwood v. Keuyon, 11 A. & E. 447 ; Beaumont v. Reeve, 8 Q. B. 487 ; Flight «. Reed, 1 H. & C. 766 ; and see Walbridge o. Harroon, 18 Vt. 448 ; Way v. Sperry, 6 Gush. 338 ; Shepard v. Rhodes, 7 R. I. 470 ; Scou- ton r. Eislord, 7 Johns. 36 ; Shippey y. Henderson, 14 Johns. 178 ; Geer v. Archer, 2 Barb. 424 ; Ehle v. Judson, 24 Wend. 97 ; Harper v. Fairley, .')3 N. Y. 442 ; Turner v. Crisman, 20 Ohio, 332 ; Runnamaker v. Cordray, .54 HI. 303 ; Simonton v. Clark, 65 N. C. 525. In (ieer u. Archer, 2 Barb. 424, it was rightly said: "The test is, could it have been enforced before it was barred by the legal maxim or statute provi- sion." In Lee v. Muggeridge, 5 Taunt. 36, however, it was held, as we have seen, that the fact that a woman gave a bond during coverture for money then loaned her will not sustain a, promise after her husband's death to pay the money. This case, however, is virtu- 698 ally overruled in Eastwood v. Kenyon, 11 Ad. & El. 438. In England prom- ises to pay debts discharged in bank- ruptcy are now by statute void. That such is also the case with promises to pay debts which were incurred in in- facy, see supra, § 43. See discussion in Lang. Cont., ii. 1028; Leake, 2d ed. 668 ; supra, § 43. ' Warren l: Whitney, 24 Me. 561 ; Valentine v. Foster, 1 Met. (Mass.) 520 ; Hale v. Rice, 124 Mass. 292 ; Shepard v. Rhodes, 7 R. I. 470 ; Snevily V. Reed, 9 Watts, 396 ; though see, contra, Hemphill c. McClimans, 24 Penn. St. 367; Willing v. Peters, 12 S. & R. 177. In Ingersoll o. Martin, Ct. of Ap. Md. 1882, 13 Rep. 782, it is held that a promise to pay a released debt is void for want of consideration, following Warren r. Whitney, 24 Me. 561 ; Shepard u. Rhodes, 7 R. I. 470 ; Montgomery v. Lampton, 3 Met. Ky. 519 ; and dissenting from Willing v. Peters, 12 S. & R. 177. In Mete, on Cont. 179, after citing Valentine o. Foster, 1 Met. (Mass.) 520, it is said: "The distinction taken in this case between the validity of a promise to pay a claim that is discharged by ope- ration of positive law, and a claim that CHAP. XVI.] CONSIDERATION. [§ 514. — In connection with the position before us may be cited the rulings of tlie courts that parties to negotiable paper, dis- charged for want of notice of dishonor, become liable, if, after notice of such discharge, they promise payment.' "Whether the party promising had notice is to be inferred from all the facts in the case.^ — Under the same head are sometimes classed promises by infants, which, it is alleged, are subject to ratifi- cation when they reach majority, and promises of married women renewed after divorce or their husband's death. But the analogy with the case of an infant fails from the fact that the promise on his part, according to the better view, always bound, though not capable of enforcement during his minority, and was subject to repudiation upon his majority.^ A mar- ried woman's promise, on the other hand, is at common law a nullity, which no subsequent promise can resuscitate.^ § 514. An executed act {i. e., an act already performed) can- not constitute a valid consideration unless a request . ^ An exe- to perform such act be proved. That a benefit has cuted act been conferred on me, for instance, without my re- eonsidera- quest, is not a valid consideration for a promise on *'°°' my part to confer a benefit on the person from whom the benefit to me proceeded. E^o matter how morally obligatory on me may be the duty of repaying the kindness done me, not onlj' am I not obliged in law to repay it, but a promise is released or otherwise discharged by absolutely discharges a debt, see infra, the voluntary act of the claimant, has § 1034. been recognized and applied by other ' Lundie v. Robertson, 7 East, 231 ; courts. See ex parte Hall, 1 Deacon, Gibbon v, Coggon, 2 Campb. 188 ; 171 ; Stafford v. Bacon, 1 Hill, N. Y. Pickin v. Graham, 1 C. & M. 725 ; By- 532 ; Warren v. Whitney, 24 Me. 562 ; ram v. Hunter, 36 Me. 217 ; Andrews v. Lewis u. Simons, 1 Handy, 82 ; Mont- Boyd, 3 Met. 434 ; Breed v. Hillhouse, goraery u. Lampton, 3 Met. (Ky.) 519 ; 7 Conn. 523; Dorsey v. Watson, 14 Shepard v. Knowles, 7 R. I. 474; con- Miss. 59. tra, Willing K. Peters, 12 S. & R. 177." ' 3 Kent, 113; 1 Ch. on Cont. 55, As generally sustaining the text, see 1 citing, among other cases, Sigerson v. Ch. on Con. 11th Am. ed. 69 ; East- Matthews, 20 How. U. S. 496 ; Thorn- wood c. Kenyon, 11 A. & E. 438 ; ton v. Wynn, 12 Wheat. 183 ; Farring- Streeter v. Horlock, 1 Bing. 34; Oakes ton v. Brown, 7 N. H.271 ; Andrews v. V. Gushing, 24 Me. 313 ; Manter v. Boyd, 3 Met. 434 ; Tebbetts c. Dowd, Churchill, 127 Mass. 31 ; Bulkley o. 23 Wend. 379. Landon, 2 Conn. 404 ; Chaffee v. ' See supra, §§ 29 et seq. Thomes, 7 Cow. 358. That a release * Supra, § 512. 699 § 514.J CONTRACTS. [CHAP. XVI. on my part to repay it, if I did not request it, is void for want of consideration.^ The reasons may be thus stated : (1) To banish expressions of gratitude from conversation would be to impose on conversation an insufterable burden, yet expressions of gratitude would have to be suppressed if they were the subjects of suits in courts of justice. (2) In the long run, the welfare of society is more promoted by a system in which it is understood that acts of kindness are gratuitous, than it would be were it understood that when a benefit is conferred and acknowledged then a suit could be maintained on the acknowledgment. (3) To make an executed act a con- sideration would be to virtually declare that considerations are not necessary in cases of prior dealings between the par- ties, and hence to do away with the entire sanction of con- sideration. After a benefit, no matter how great, has been received, and the transaction is terminated, the plaintiff suf- fers the same detriment, and the defendant retains the same advantage, whether the promise is made or not. The past is irrevocably closed, and the promise to repay or to recompense stands by itself as gratuitous. Supposing that he has nothing to gain by promising, and nothing to lose by refusing to promise, his promise is a mere voluntary act. (4) If a past consideration will support a promise at all, it will support a promise at any future period ; if it will not support a promise at any future period, which is conceded, it ought not to sup- port a promise at all.^ — In some of the old English cases it is ' Supra, § 494 ; Leake, 2d ed. 19 ; Eliz. 741 ; Riggs i,. Bullingham, Cro. Rann v. Hughes, 7 T. R. 350 ; Rosoorla Eliz. 716 ; Townsend v. Hunt, Cro. V. Thomas, 3 Q. B. 234 ; Hopkins v. Car. 408 ; Lampleigh v. Brathwaite, Logan, 5 M. & W. 241 ; Eastwood u. Hob. 106 — are shown by Mr. Langdell Kenyon, 11 A. & E. 438 ; Lonsdale v. to have been on this point clearly Brown, 4 Wash. C. C. 148 ; Comstock overruled. V. Smith, 7 Johns. 87 ; Parker v. As an illustration of the rule above Crane, 6 Wend. 649 ; Johnston v. stated may be mentioned an Iowa case Johnston, 31 Penn. St. 450 ; Chambers in 1880, where C. contracted with a V. Davis, 3 Whart. 40 ; Hopkins r. railroad company to build by a par- Richardson, 9 Grat. 485 ; McMaban v. ticular time an extension of the track. Geiger, 73 Mo. 145. The contract turned out badly, and C. ' See Lang. Cont. ii. 1035 et seq, incurred great losses. The company The older cases — Pearle v. Edwards, 1 then agreed to pay any debts that G. Leou. 102 ; Barker u, Halifax, Cro. had incurred in the prosecution of the 700 '^J -U^^. /^ h "" ' CHAP. XVI.] CONSIDERATION. [§ 514. held that an executed benefit, if requested, is a sufficient con- sideration to sustain a promise. If I receive, for instance, goods or service which I previously requested, then a promise on my part to pay for such goods or service will be held to be on a sufficient consideration. But this position cannot be sustained. Either my request implied a promise to pay or it did not. If it did, then the suit must be brought on the request, thus implj-ing the promise. If it did not, then my promise, after the benefit has been received, is without con- sideration. If, to illustrate this distinction, I order goods from a grocer whom I am dealing with on the basis of paying for what I take, then my order implies a promise to pay ; and when he sues me, he sues on this implied promise.^ On the other hand, if I ask a member of my family to do me a ser- vice, such a request does not imply a promise to pay f and not only can no suit be brought for such service, but a sub- sequent promise to pay for it, after the service has been re- ceived, is without consideration.^ — The question whether there was a promise to pay concurrent with the acceptance of the goods or services is to be determined from all the circum- stances of the case; and where a party accepts a benefit knowing it is one for which payment is expected to be made, then a promise to pay may be inferred.* — Where the facts in the pleading sustain the implication, there need be no express averment of request.* — An express promise made sub- sequent to an executed consideration will not be sustained if it is essentially diflfierent from the promise which the law implies from the same consideration.* Thus a promise to pay work. It was held that this agree- ^ Supra, § 7; infra, §§ 709 et seq.; ment was without consideration. Ayreg 1 Saund. 264, note ; Mete, on Cont. u. R. R., 52 Iowa, 478. Had the agree- 200 ; Wilson v. Edmonds, 4 Foster, ment heen in consideration of the con- 546 ; Oatfield v. Waring, 14 Johns, tractor resuming work, the law would 192. have been otherwise. See infra, §§ ' Infra, §§ 709 et seq.; Comstock v, 852 et seq. ■ Smith, 7 Johns. 88 ; Hicks v. Burhaus, 1 Supra, § 7. 10 Johns. 243 ; Doty u. Wilson, 14 ' Infra, § 719. Johns. 382. a See Mete, on Cont. 194 ; Lampleigh « 2 Ch. on Cont. 11th Am. ed. 71 ; V. Brathwaite, Hob. 105 ; S. C, 1 Kaye v. Button, 7 M. & G. 807 ; Eos- Smith's Lead. Cas. 7th Am. ed. 280 ; corla v. Thomas, 3 Q. B. 234 ; Jackson infra, §§ 709 et seq. v. Cohhin, 8 M. & W. 790. 701 § 515.] CONTRACTS. [CHAP. XVI. on a future day cannot ordinarily be sustained on an account stated, though a general request to pay may be inferred;^ nor is a promise of warranty, after a perfected sale, sustain- able when from the mere fact of sale no such promise can be inferred.^ § 515. It may be, however, that a consideration is only part Continuing performed, as where one party agrees to do another considera- g^ continuous servicc, and while this service has been tioa will support begun but has not yet been completed, the party promise. benefited promises to pay for it.' Under this rule, a promise for the support of an illegitimate child is retrospective as well as prospective ;'' and so of marriage.' The same view has been taken in regard to the consideration of a lessee per- manently occupying and paying rent." Promises made in respect to existing debts, also, when the obligation of such debts continues, though they may not be technically suable, are to be regarded as made on a continuous consideration.^ The same rule was held where the plaintiff declared that, in con- sideration he had bought three parcels of land in a particu- lar day, the defendant afterwards promised to make him a sufficient assurance ; the assurance being the substance of the sale.' But a mere tenancy from year to year is not sufficient to sustain a promise to put on any repairs which are not the ordinary duty of a landlord.' — A continuous guaranty is, from the nature of the case, a continuing consideration ; and a con- tinuous guaranty is one which is meant to remain in force until terminated by its own limitations, or by notice.'" 1 Hopkins o. Logan, 5 M. & W. 241. C, 1 Leon. 102 ; 1 Ch. on Cont. lltli 2 Eosoorla v. Thomas, 3 Q. B. 234. Am. ed. 73. 3 Mete, on Cont. 202 ; Gotten v. Wes- ' Supra, § 513 ; 1 Ch. on Cont. lltli cott, 3 Bulst. 187 ; Pearle u. Unger, Am. ed. 74 ; 2 Steph. Com. 114 ; Hodge Cro. Eliz. 94 ; 1 Leon. 102 ; Carroll v. c. Vavisor, 1 Roll. R. 413. Nixon, 4 W. & S. 517; Carman v. Noble, « Warcop v. Morse, Cro. Eliz. 138. 9 Barr, 366. As to continuous prom- s 1 Ch. on Con. 11th Am. ed. 74; ises, see supra, §§ 9-14. Brown v. Crump, 1 Marsh. 567 ; Horse- •• Shenk o. Mingle, 13 S. & R. 29 ; fall ,:. Mather, Holt, N. P. 7. Maurer v. Mitchell, 9 W. & S. 69 ; m Brandt on Suretyship, §§ 130 et Wiggins V. Keizer, 6 Ind. 252. seq.; Heffield v. Meadows, L. R.4 C. P. ■^ Bac. Ab. Ass. D., Marsh u. Rains- 595 ; Nottingham Hide Co. v. Bothrill, ford, 2 Leon. Ill ; infra, § 537. L. R. 8 C. P. 694 ; Mussey v. Rayner, '' Pearle v. Unger, Cro. Eliz. 94 ; S. 22 Pick. 223 ; Boston, etc. Glass Co. v. 702 CHAP. XVI.] CONSIDERATION. [§ 516. § 516. That a consideration should be required to sustain a promise, and yet that the amount of this considera- Amount of tion should be a matter as to which, unless fraud or t°JJf'no[^' undue influence be set up, the courts will not adju- material. dicate, seems unreasonable ; yet it must be remembered that if the courts were required to determine in each case whether the consideration was adequate, prices would have to be fixed not by parties, but by courts. A consideration, it is said by Tindal, C. J., is sufficient if it consists of "any act of the plain- tifi" from which the defendant or a stranger derives a benefit or advantage, or any labor, detriment, or inconvenience sus- tained by the plaintift", however small the detriment or in- convenience may be, if such act is performed or inconvenience sufi'ered by the plaintiff with the consent, express or implied, of the defendant."' And as sufficient considerations have been held the dating an account,^ the showing of a deed,' and the making an affidavit in exposition of a case,^ the parting with a letter which belonged to the promisee," the trust mani- fested in a bailee by depositing with him goods for delivery.* Moore, 119 Mass. 435 ; Meleridy v. Capen, 120 Mass. 222; Hotchkiss u. Barnes, 34 Conn. 29 ; Carrol v. Nixon, 4 W. & S. 617; Carman v. Noble, 9 Barr, 366 ; and see as instances Wood V. Priestner, L. R. 2 Ex. 282 ; Hitchcock V. Humfrey, 5 M. & Gr. 559 ; Burgess v. Eve, L. R. 13 Eq. 450. 1 Tindal, C. .1., Laythoarp v. Bryant, 3 Scott, 250 ; citing Selwyn's N. P., tit. "Assumpsit;" adopted in Leake, 2d ed. 611 ; 1 Ch. on Con. llth Am. ed. 29. That detriment is essential see supra, § 605. — That its amount is immaterial, see Westlake v. Adams, 5 C. B. N. S. 248 ; Harrison v. Guest, 8 H. L. Ca. 481; Erwin v. Parhana, 12 How. 197; Slater v. Maxwell, 6 Wall. 273 ; Nash v. Lull, 102 Mass. 60 ; Lee v. Kirby, 104 Mass. 420 ; Rut- gers I'. Lucet, 2 John. Ca. 92 ; Worth u. Case, 42 N. Y. 362 ; Earl v. Peck, 64 N. y. 596 ; Wintermute v. Snyder, 2 Green. Ch. 489 ; Weber ^. Weitling, 3 C. E. Green, 441 ; Harlan v. Harlan, 20 Penu. St. 303; Curamings's App., 67 Penn. St. 404 ; Duncan r. Sanders, 50 111. 475 ; Stevenson v. Robertson, 55 Iowa, 689 ; Butler v. Haskell, 4 Desaus. 651 ; Woodruff v. McDonald, 33 Ark. 97. In Brooks v. Haigh, 10 Ad. & El. 323, it was held that a piece of paper on which a void contract is drawn is a sufficient consideration for a guaranty of 10,000/. 2 Haws V. Smith, 2 Lev. 122. 3 Sturlyn v. Albany, Cro. Eliz. 67. " Brooks V. BaU, 18 John. 337. s Wilkinson v. Oliveira, 1 Bing. N. C. 490 ; Lang. Cont. 1016. ^ Supra, § 505. And see generally to same effect Coles v. Trecothick, 9 Ves. Jun. 246 ; Murray v. Palmer, 2 Sch. & Le. 488 ; Eyre v. Potter, 15 How. 42 ; Bedel v. Loomis, 11 N. H. 9 ; Howard V. Edgell, 17 Vt. 9 ; Park v. Johnson, 4 Allen, 266. That "the smallest spark" of consideration will suffice, 703 § 517.] CONTRACTS. [CHAP. XVI. " If a contract is deliberately made without fraud and with full consideration of all the circumstances, the least considera- tion will be sufficient."^ § 517. Whether a party has made a good or bad bargain, Courts will supposing he was capax negotii, and there was no mine 6uffi- fi'^ud, is not a question for the adjudicating tribunal ciency. to determine. Every person competent to do busi- ness must decide for himself whether the price he receives for a particular object is sufficient to induce hira to part with it. What may be very inadequate to the mind of a stranger may be adequate to me. There may be particular reasons why I want to buy particular property or to obtain the services of a particular agent ; and these reasons I alone can weigh. If I choose, on the other hand, to sell a property at less than its supposed market value, it must be remembered that I know best what it really is ; and beside this, there may be reasons, also peculiar to myself, for selling to the particular vendee. Aside from this, for a court to determine the adequacy of prices would be in conflict with the established economical rule that by parties in business alone can prices be justly fixed. Hence, it is a settled principle that " the adequacy of the consideration is for the parties to consider at the time of making the agreement, not for the court when it is sought to be enforced.''^ The rule is applied in equity as well as in see Austyn v. McLure, 4 Dall. 226 ; 20 Penn. St. 303 ; Davidson v. Little, Greaves v. McAllister, 2 Binn. 591 ; 22 Penn. St. 245. As to setting aside Harlan v. Harlan, 20 Penn. St. 303. contract for inadequacy of considera- ' Wilde, J., Train v. Gould, 5 Pick, tion, see supra, §§ 165, 239 ; infra, § 384, cited Read v. Hitchings, 71 Me. 518. As illustrations, Mr. Pollock cites 596. To same effect see Nash. v. Lull, Bainbridge v. Firmstone, 8 A. & E. 743, 102 Mass. 60; Howe v. Richards, 102 in which it was held that if a man who Mass. 64 n; Hardisty v. Smith, 3 Ind. owns two boilers allows another to weigh 41. them, this is a good consideration for 2 Per cur. in Bolton v. Madden, L. R. that other's promise to give them up 9 Q. B. 57 ; adopted in Leake, 2d ed. after such weighing in as good condi- 613; Bainbridge w. Firmstone, 8 A. & tion as before. " The defendant," said E. 743. See to same effect Skeate v. Lord Denman, "had some reason for Beale, 11 A. & E. 983 ; Lawrence v. wishing to weigh the boilers, and he McCalmont, 2 How. 426; Newhall'u. could do so only by obtaining permis- Paige, 10 Gray, 366 ; Leonard v. Vre- sion from the plaintiff, which he did denburgh, 8 Johns. 29 ; Cowel o. Cor- obtain by promising to return them in nell, 76 N. Y. 91; Harlan u. Harlan, good condition." We need not inquire 704 CHAP. XVI.] CONSIDERATION. [§ 518. law.' — That the giving up of goods to a bailee is a sufficient cou- sideration for a promise on his part to keep them safely, has been already shown.^ — "When there are conflicting construc- tions assignable to a disputed consideration, that will be ac- cepted which is most consistent with good faith.^ § 518. Although the courts will not determine the question of the adequacy of a consideration, if the i-ssue be presented singly, yet, if the issue of fraud be raised, eqiiacynmy the adequacy of consideration is of decisive import- Je ground ^ •' _ _ '^ to set aside. ance. Where the consideration is grossly inadequate and where the party reaping the advantage had in any way authority or influence over the other party, then, as we have seen, the bargain is one which a court of equity will not only refuse to execute, but will rescind."* G-ross inadequacy of con- sideration, by itself, therefore, is not ground for setting aside a conveyance, but it may be of controlling moment in deter- mining whether a conveyance was fraudulent.^ A court of equity, also, will not give its aid to the enforcement of a bar- what benefit he expected to derive. In Sykes u. Chadwick, 18 Wall. 141, also, a release of a supposed right of dower, though actually unfounded, was held a good consideration. In Gravely u. Barnard, L. R. 18 Eq. 518, it was held that an agreement to con- tinue an existing service terminable at will is a good consideration. 1 Pollock, 169 ; 1 Ch. on Cent. 11th Am. ed. 30 ; 1 Sug. V. & P. 8th Am. ed. 273 ; Cheale v. Kenward, 3 De G. & J. 27 ; Taylor v. Manners, L. R. 1 Ch. 48 ; Lee ... Kirby, 104 Mass. 420 ; Os- good V. Franklin, 2 John. Ch. 23 ; Haines v. Haines, 6 Md. 435 ; Comstook V. Purple, 49 111. 158 ; Harrison Supra, §§ 165, 239 et seq. ; Bis- « Kelley !■. Caplice, 23 Kan. 474 ; see pbam's Eq. § 374 ; 2 Cli. on Con. 11th also Botlciu v. Livingston, 21 Kan. 232, Am. ed. 31 ; 1 Sug. V. & P. 8th Am. as anotlier case of an nnconscionable ed. 275 ; Tennent v. Teunent, L. E. 2 bargain. Sc. Ap. 6; Faloke v. Gray, 4 Drew. ^ Ch. on Con. 11th Am. ed. 29 ; Sykes 651 ; Willard v. Tayloe, 8 Wal. 557 ; u. Dixon, 9 Ad. & E. 693 ; Cabot z;. Has- Howard v. Edgell, 17 Vt. 9 ; Kidder v. kins, 3 Pick. 83 ; Pfeiffer v. Adler, 37 Chamberlin, 41 Vt. 62; Osgood v. N. Y. 1G4 ; Maull «. Vaughan, 45 Ala. Franklin, 2 Johns. Ch. 23 ; 14 Johns. 134. 527 ; Seymour v. Delancy, 3 Cow. 445 ; " Kosher v. Williams, L. E. 20 Eq. Hough i;. Hurst, 2 Ohio, 495 ; Williams 210. a. Powell, 1 Ired. Eq. 460 ; Butler v. Has- 6 gnpra, § 500. kell, 4 Dessaus. 651 ; Gasque v. Small, 6 Supra, §§ 165, 239. 2 Strobh. 72. 706 CHAP. XVI.] CONSIDERATION. [§ 520. essential cbaraeter of the consideration is destroyed ;^ eration . " may be re- supposing that this is not attributable in any way covered to the misconduct of the promisor;^ or that the risk is not one against which he guarantees.^ The accept- ance, by the receiver, of money on any kind of trust, exposes him to a suit for its recovery, the trust being a sufficient con- sideration.* Hence, when the consideration totally fails, and there is a warranty either express or implied, the purchaser is entitled to rescind, and recover back the price." This is a fortiori the case where there is a breach of warranty of title.' And a promise made under a mistake as to legal liability, when such mistake is the consideration of the promise, is in- operative from failure of consideration.^ — Even where there is no express warranty of title, the prevalent opinion is, that a party selling goods as his own gives an implied warranty of title ;' and that total failure of title is a defence to a suit for purchase money.' — It has also been held, that the price of goods sold whicb the seller fails to deliver may be recovered back j^" and so of money paid as a deposit on application for shares iu a projected company which is subsequently abandoned ;" and 80 of money paid to a corporation on an undertaking which ' Supra, § 300. 8 Supra, § 230 ; infra, §§ 742 et seq. 2 Supra, § 309. 9 Meto. on Cont. 219 ; Tillotsoii v. 3 Supra, § 361. Grapes, 4 N. H. 448 ; Rice v. Goddard, ' Whitehead v. Greetham, 2 Bing. 14 Pick. 293 ; Bierce v. Stocking, 11 464 ; Shillibeer u. Glyn, 2 M. & W. Gray, 174 ; Trask v. Vinson, 20 Pick. 143. 110 ; Cook v. Mix, 11 Conn. 432 ; Fris- 5 Infra, §§ 521, 742 et seq.; Benj. bee t. Hofifnagle, 11 Jolms. 50; Tyler on Sales, 3d Am. ed. § 423 ; Giles u. v. Young, 2 Scam. 447 ; Logan v. Edwards, 7 T. R. 181 ; Howe Machine Matthews, 6 Barr, 417 ; Geiger u. Co. V. Willie, 85 111. 333. That this Cook, 3 W. & S. 266 ; Davis u. Mc- is the case with money paid on an Vickers, 11 111. 327 ; People v. Sisson, abandoned adventure, see tn/ra, § 742 ; 98 111. 335; Sturgis Bk. v. Peck, 8 and with money paid for worthless Kan. 660 ; see to the question of re- securities, see infra, § 744. covery on failure of title, supra, § 214 ; « Infra, § 746 ; supra, § 214 ; Eichholz infra, §§ 746, 919. V. Banister, 17 C. B. N. S. 708 ; Chap- '» Devaux v. Conolly,8 C. B. 640 ; see mant). Speller, 14 Q. B. 621. supra, §§ 190 et seq., 300. ' Supra, §§ 177 et seq.; infra, § 747; " Walstab d. Spottiswoode, 15 M. & Warder v. Tucker, 7 Mass. 449 ; Cabot W. 501 ; Johnson v. Goslett, 3 C. B. N. v. Haskins, 3 Pick. 83. As to error in S. 569 ; Watson v. Charlemont, 12 Q. law, see supra, §§ 198 et seq. B. 856 ; infra, § 742. 707 § 523.] CONTRACTS. [chap. XVI. was ultra vires ;' and so of money paid on void bills, or on bills or securities turning out to have been forged f and so of money paid for articles turning out to be valueless.^ But a party who buys on a speculation which fails cannot, in cases where there was no fraud or imposition, either refuse to pay for the thing purchased, or recover back its price if paid, because it turns out not to be what he expected.^ — Whether on a partial failure of consideration there can be a recovery back will be hereafter considered.' § 521. But where an unliquidated debt is liquidated, and a new promise is made to pay the sum thus assessed, a release of the unliquidated claim is a sufBcient con- sideration to sustain the new promise.^ And a pay- ment of a smaller sum in hand may be a suiEcient consideration for the discharge of a larger unliqui- dated sum.'' — As a general rule a reconstruction of an old agreement is a sufficient consideration for the new agreement which the reconstruction contains.' § 522. One and the same consideration may sup- port several successive promises, or several promises to distinct persons.' 523. As has been already incidentally observed, and as will be hereafter noticed in detail, a promise is a Eelease of uuliqui- dated debt a sullirifnt considera- tion for promise to pay speciiic 6um. One con- sideration may sup- port seve- ral prom- isee. Promise may sup- sufficient Consideration for a promise. And when promises are thus mutually dependent, either can port prom- ise. " Alison's case, L. R. 9 Cli. 24; supra, §§ 135 et seq. 2 Infra, § Taunt. 488 ; E. &B. 133 C. B. 345. 3 Supra, § Tillotson V 744 ; Jones v. Hyde, 5 Gurney a. Womevsley, 4 Westropp V, Solomon, 8 282 et seq. ; infra, § 746 ; Grapes, 4 N. H. 44s ; Vauglian v. Porter, 16 Vt. 266 ; Dick- inson u. Hall, 14 Pick. 217; Hotch- kiss L'. Judd, 12 Allen, 447 ; Chapman V. Brooklyn, 40 N. Y. 372 ; Davis v. McVickers, 11 111. 327; Wharton ,;. O'Hara, 2 Nott & McC. 65. " Infra, § 749 ; supra, §§ 282, 519 ; Erwin v. Parkham, 12 How. 97 ; Forbes 708 c'. Appleton, 5 Cusli. 117 ; Lamert u. Heath, 15 M. & W. 4S7. ^ Infra, § 748. 6 Infra, §§ 937, 1000 ; Wilkinson t . Byers, 1 A. & E. 106. ' Longridge v. Dorville, 5 B. & Aid. 117 ; Palmerton v. Hnxford, 4 Denio, 166 ; Howard v. Norton, 65 Barb. 161. For other cases, see infra, §§ 937, 1000. 8 Infra, §§ 858 et seq.; supra, §§ 505, 533 ; Cutter v. Cochrane, 116 Mass. 408 ; Rollins v. Marsh, 128 Mass. 116 ; Brown v. Everhard, 62 Wis. 205. ' Leake, 614 ; citiiig Harris v. Ven- ahles, L. R. 7 Ex. 235. CHAP. XVI.] CONSIDERATION. [§ 523. be sued on by the party to whom the promise is made, supposing him to be in no default.' Each party, in such case, must be bound, as otherwise there is no mutuality, and no contract;* though, as we will presently see, an obligation may be contingent.' As illustrations of promises thus made in consideration of each other may be mentioned marriage prom- ises;* promises of exchange of work;' promises of sale and purchase;' promises to transfer and to accept unpaid shares in a railroad company ;' promises to receive a partner on consideration of becoming a partner.^ — Promises thus to sus- tain each other must be simultaneous. If one has been exe- cuted by reception of the thing promised, it takes the shape of a benefit received, and is not, therefore, a good consideration. The promises, to sustain each other, must be interdependent. It does not follow from this, however, that the promises must take their origin at the same time. One may have been made a long time ago, the other may have been made only a few moments since. All that is necessary is that they should be renewed and reaffirmed at the time of the inception of the contract. " I will promise to do a particular thing if you will promise to do a certain other thing." If this be agreed to by the party addressed, there is a contract. There would be no contract, however, if one party should say, " because some 1 Wilkinson v. Byers, 1 A. & E.106 ; Ired. 257 ; Martin v. Black, 20 Ala. Steinman u. Magnus, 11 East, 390 ; 309 ; Hartzell ;;. Saunders, 49 Mo. 433 ; Bolton o. Madden, L. R. 9 Q. B. 55 ; see Holmes's Common Law, 305. Phillips V. Preston, 5 How. U. S. 278 ; 2 Hopkins v. Logan, 5 M. & W. 241 ; Appleton V. Chase, 19 Me. 74 ; Doekray Dorsey v. Packwood, 12 How. 120 ; V. Dunn, 37 Me. 442 ; Robinson v. Ewins v. Gordon, 49 N. H. 444 ; supra, Batchelder, 4 N. H. 40 ; Ouarles u. § 2. George, 23 Pick. 401 ; Burr v. Wilcox, ' Infra, §§ 524, 549. 13 Allen, 269 ; Cottage St. Ch. c. Ken- » Wightman u. Coates, 15 Mass. 1 ; dall, 121 Mass. 628 ; Tucker v. Woods, Willard i<. Stone, 7 Cow. 22 ; infra, 12 John. 120 ; Briggs v. Sizer, 30 N. Y. § 537. 647 ; Coleman v. Eyre, 45 N. Y. 38 ; 5 Davis v. Petit, 27 Vt. 216. Giles V. Ackles, 9 Barr, 147 ; Kiester v. « Appleton u. Chase, 19 Me. 74 ; in- Miller, 25 Penn. St. 481 ; Carrier u. fra, § 549. Dilworth, 59 Penn. St. 406 ; Watkius ' Cheale u. Kenward, 3 De G. & J. V. Hodges, 6 Har. & J. 38 ; Funk v. 27. Hough, 29 111. 145 ; Colgin v. Henley, s McNeill v. Reid, 9 Bing. 68. 6 Leigh, 85 ; Whitehead o. Potter, 4 709 § 524.J CONTRACTS. [CHAP. XVI. time ago j'ou promised to do a particular thing, I now promise to do the other thing.''^ — Promises, therefore, to thus lend support to each other, must be reciprocally dependent. When forming an oral contract, they must be simultaneous. If one promise is not made until the other is complete, one is not the consideration for tlie other, even though they were madi3 on the same day.^ If made in a written correspondence, the acceptance must be conditioned on the proposal.^ They must therefore be, in the eye of the law, made at the same moment oftime, as otherwise both will be without consideration. If one is a nullity, the other falls. — The promise, also, relied on as a consideration must be legally effective.^ " A promise may be a good consideration for a promise ; as a promissory note or acceptance for another promissory note or acceptance. But the promise which shall form a valid consideration must be such a one as the promisee may have in hand to enforce by law."' It may be said, in answer to this, that an infant is not bound on his contract, yet such contract may bind those con- tracting with him. But an infant's contracts are not void, since he may ratify them when of full age, or waive the defence of infancy.^ Such promises, also, must be to do a possible thing, since an impossible promise is a nullity,' and so is an illegal promise.' Absolute capacity to perform is not necessary, since, if it were, few promises would be good. What is requisite is such a chance of performance as the other contracting party may find it worth while to purchase.' As has alread}' been seen, the concessions which form part of the reconstruction of an old agreement may form the consideration of a new con- tract.i" § 524. A promise for which no consideration has been given ' See Lang. Sum. § 89. 6 Supra, §§ 31-2 ; and see to the ef- 2 Supra, § 514 ; Livingston >;. Rogers, feet that mutuality is essential, supra, 1 Gaines, 585; Keep c Goodrich, 12 §2. .Johns. 397. As to conditional prom- ' Supra, § 510. ises, sec infra, §§ 545 et seq. s Supra, § 509. 3 Supra, §§ 8 et seq. s Nerot v. Wallace, 3 T. R. 17 ; Has- •• Supra, § 509. lam c. Sherwood, 10 Bing. 540, are to *■ Knapp, J., Crowell v. Osborne, 43 be understood in the sense of the text. N. J. L. 335. 10 Supra, § 505 ; infra, § 858. 710 CHAP. XVI.] CONSIDERATION. [§ 625. may be revoked before acceptance ;* but this coiitin- Promise , . ,, ■ though gency does not prevent a promise to sell certain contingent goods, if ordered, from being a good consideration ^^Jg^ ^g^_ for a contract between the party so promising and eideration. the party ordering the goods.^ " The consideration for a promise may well be contingent, that is, it may consist in the doing something by the promisee which he need not do unless he chooses, but which being done by him the contract is complete and the promise binding."' Whether a continu- ing offer to supply to a particular party goods indefinitely for a particular period binds him unless the promisee agrees to depend on him exclusively, or there be an acceptance for spe- cific goods, may be doubted.^ A guaranty, however, dependent on the employment of a particular person, would be good." — ■ Contingent promises of this class may be retracted at any time until some act based on them is done by the other contracting party.' — Any surrender of a right on the other side, no matter how slight, even though amounting only to an understanding that there shall be a suspension of inquiries elsewhere, will be a consideration for a promise to keep open an ofter.' § 525. A promise to support an . illegitimate child in con- sideration of its surrender by its mother, and other forbearance on her part, will be sustained as made on sufficient consideration.^ Hence it has been held that a bond for an annuity by the father to the mother of illegitimate children conditioned on her Promise to support of illegitimate child good when on good con- sideration. ' Supra, § 10. 2 See supra, § 16 ; infra, §§ 575 et seq. 3 Pollock (Wald's ed.), 160, citing Great N. R. E. v. Witham, L. R. 9 C. P. 16. To the point in tke text Mr. Wald, in a learned Bote to Pollock, cites Cottage St. Ch. v. Kendall, 121 Mass. 528 ; and see oases cited supra, § 16 ; Turnpike Co. v. Coy, 13 Oh. St. 84 ; and see Babcook v. Wilson, 17 Me. 372 ; Appleton v. Chase, 19 Me. 74. * See Great N. R. R. v. Witham, ut supra; Thayer v. Burohard, 99 Mass. 608 ; Bailey v. Austrian, 19 Minn. 535, denying such liability in toto, and ob- servations in Wald's Pollock, 160. As to continuous offer see supra, §§ 9, 14 ; as to continuous considerations see supra, § 515. ' Newbury i'. Armstrong, 6 Bing. 201 ; Kennaway u. Treleavan, 5 M. & W. 501. s Routledge v. Grant, 4 Bing. 660. ' See supra, § 13. 8 Jennings v. Brown, 9 M. & W. 496 Ridley v. Ridley, 11 Jurist, N. S. 475 Hammersley v. De Biel, 12 CI. & F. 45 Alderson n. Maddison, L. R. 5 Ex. D 293 ; Holcome v. Stimpson, 8 Vt. 141 Howe V. Litchfield, 3 Allen, 443 ; Hook V. Pratt, 78 N. Y. 376 ; Sharp u.Teese, 4 Halst. 352; Wright v. Tinsley, 30 Mo. 396. 711 526.] CONTRACTS. [chap. XVI. not claiming their custody is good ;' and so where a distinct provision is made on consideration of the mother not proceed- ing against the father for affiliation.^ It is otherwise, however, when the consideration is past illicit intercourse.^ § 526. At common law, while the assignment of a deht Assig-n- *i°®^ '^°^ authorize the assignee to sue in his own ment of name,"* it conveys to him the control over the debt, debt a 2;ood . considera- and entitles hira to use the assignee s name to sue it out.' By statute or by local usage suit may be now brought in most jurisdictions by the party beneficially interested.* This is the case with negotiable paper, and with negotiable securities such as railway bonds and other similar obligations.' It is sufficient, on this topic, to say that wher- 1 Plaskett's Est. in re, 30 L. J. C. 606 ; cited Leake, 2d ed. (120. 2 Supra, § 486 ; infra, § 532 ; Linne- gar ).. Hodd, 5 C. B. 437; FoUit v. Koetzow, 2 E. & E. 730; Smith v. Roche, 6 C. B. N. S. 223. 3 Supra, §§ 373, 512. In Wallace r. Rappelye, Sup. Ct. 111. 1881, it ap- peared that W., the father of an ille- gitimate child, agreed with the mother, that in consideration of Ler abandon- ment to him of all claim for damages, and releasing custody of the child, he would adopt the child as his own, and give her a portion of his estate. This agreement was carried out by both parties, except that no legal form of adoption was ever had, but the child was taken into the family of her father, and ever after treated as his daughter. It was held that the agreement was sufficient in equity to sustain the claim of such child to a portion of her father's estate. " What was really intended and ob- viously understood by the parties," said Mulkey, J., "was that Wallace was to adopt such legal measures as would secure to the child the same in- terest in his estate as she would, on his dying intestate, succeed to, if a legiti- mate child. If, as is claimed, there 712 was no law at that time by which Wal- lace could confer upon her the capacity of inheriting his estate upon his intes- tacy, to give the contract any force at all, it must be construed as an under- taking on his part to secure to her by deed, will, or some other appropriate means, so much of his estate subject to distribution at the time of his death, as she would have been entitled to, if a legitimate child, upon his dying in- testate ; for it is manifest, to give it the construction contended for, would render it inoperative altogether. This we are not prejiared to do." That an agreement to pay a seduced woman support is without considera- tion, see supra, § 512. " Jiifru, §§ 836 et sei)., 952 ; Mete, on Cont. 187 ; Bac. Ab. Assign. D.; Welch r. Mandeville, 1 Wheat. 233 ; 5 Wheat. 277 ; Riley v. Taber, 9 Gray, 373. ^ Infra, §§ 836 ei seq.; Legh v. Legh, 1 B. & P. 447; Dunn «. Snell, 15 Mass. 481. « Infra, § 841 ; Mete, on Cont. 188 ; Innes v. Dunlop, 8 T. R. 595 ; Thomp- son V. Farden, 1 M. & G. 535. ' Vertue u. R. R., 5 Exch. 280; Thomson v. Lee Co., 3 Wall. 327 ; see infra, § 838. CHAP. XVI.] CONSIDEKATION. [§ 528. ever a debt is assignable, its assignment is a good considera- tion. § 527. Where there are several creditors who agree to re- lease the common debtor on part payment, the re- Releases by lease by one creditor is a sufficient consideration for tors^suffi-^"' the release by another. "If you will release him, I cientcon- . . • 1 1 1 • sideratiou Will. Such a bargain is equitable; and supposing to support the transaction to be fair, and there be no conceal- ^■''^''^®- ment or reservation, each creditor signing the release, upon his reception of his share of the assets assigned, loses his right to fall back on the debtor except in accordance with the terras of the release.' But a promise by a particular creditor to ac- cept a part of his debt in satisfaction, although on condition that no other creditor shall receive a larger percentage, is void for want of consideration.^ § 528. A voluntary subscription to a charity, or other ob- ject of general interest, when the consideration is ji^tu^i the faithful discharge of duty by the party to whom subscrip- the subscription is made, binds the party giving it, cimnties though without other consideration.' It is a suffi- ™ cient consideration that the labor and responsibility of the trust is undertaken by the party to whom the subscription is made, though this condition is inferred from the whole trans- action, and is not expressly made,* or by other subscribing ' Infra, § 1005 ; and see supra, §§ 379 et seq. ; Leake, 2d ed. 619 ; Stein- man V. Magnus, 11 East, 390 ; Norman V. Thompson, 4 Ex. 755. 2 Van Rensselaer v. Aiken, 44 N. Y. 126 ; see infra, §§ 997 et seq. ' Trustees u. Haskell, 73 Me. 140 ; State Treasurer u. Goss, 9 Vt. 289; Bridgewater Academy v. Gilbert, 2 Pick. 579 ; Bryant v. Goodenow, 5 Pick. 229 ; Watkius v. Eames, 9 Cush. 537 ; Mirick v. French, 2 Gray, 420 ; Barnes v. Ferine, 9 Barb. 202 ; Knox- boro Church v. Beach, 74 N. Y. 72; Phipps V. Jones, 20 Penn. St. 260; Gittings V. Mayhew, 6 Md. 113 ; Edin- boro Acad. v. Robinson, 37 Penn. St. 210 ; Caley v. R. R., 80 Penn. St. 363 ; Petty V. Board, 70 Ind. 290 ; Under- wood V. Waldron, 12 Mich. 73 ; Com- stock V. Howd, 15 Mich. 237 ; Lathrop V. Knapp, 27 Wis. 214; Gait v. Swain, 9 Grat. 633 ; see Collier v. Baptist Soc, 8 B. Mon. 68 ; Robertson v. March, 3 Scam. 198 ; see supra, § 24, as to un- certain promisee. That such subscrip- tions must he accepted to bind, see supra, § 16 a. ■* University of Vermont r. Buell, 2 Vt. 48 ; Troy Academy u. Nelson, 24 Vt. 189 ; Homes v. Dana, 12 Mass. 190 ; Warren v. Stearns, 19 Pick. 73 ; Mirick v. French, 2 Gray, 420 ; Ladies' Collegiate Institute v. French, 16 Gray, 713 § 528.] CONTRACTS, [chap. XVI. parties.' A fortiori is this the case when there is any outlay by trustee or fellow-subscriber on the faith of the subscription sued on.^ " Where something has been done, or some liabil- ity or duty assumed, in reliance upon the subscription, in order to carry out the object, the promises are binding and may be enforced, although no pecuniary advantage i6 to result to the promisors. "2 But the endowment, actual and prospec- tive, of a literary institution by others is not a sufficient con- sideration for a promise to give to such an institution unless payments or subscriptions by others are made on the faith of the promise ;* or unless the promise is the consideration for certain exertions to be made by parties acting for the in- stitution.^ — Whether the fact that B. is induced to subscribe 196 ; Berkeley Divinity School v. Jar- vis, 32 Conn. 412; Barnes v. Ferine, 9 Barb. 202 ; Caul v. Gibson, 3 Barr, 416 Grafif V. Pitts. R. R., 31 Penn. St. 489 Gait V. Swain, 9 Grat. 633 ; Commis. v Perry, 5 Ohio, 56 ; MoClure v. Wilson 43 111. 356 ; Method. Ep. Church u. Garvey, 53 111. 401 ; Hall v. Virginia 91 111. 535; Mouton u. Noble, 1 ha. An. 192 ; Collier u. B. E. Society, 8 B, Mon. 68 ; Lathrop u. Knapp, 27 VPis 214 ; Philomath College c. Hartless, 6 Oreg. 158 ; see Petty v. Board, 70 Ind. 290. ' Miller v. Ballard, 46 111. 377. 2 Knoxboro Church v. Beech, 74 N. Y. 72 ; Robertson v. March, 3 Scam. 198. ' Underwood v. Waldron, 12 Mich. 89, adopted as text in Mete, on Cont. 185 ; Commissioners o. Perry, 5 Ohio, 59 ; Peirce v. Ruley, 5 Ind. 69. In I-Ielfenstein's Est., 77 Penn. St. 331, Sharswood, J., said: "Had the decedent united with others as a sub- scriber to the fund for the increase of the library to the theological seminary, the note upon which the appellant made his claim might have been sus- tained under the case of Caul u. Gib- son, 3 Barr, 416. Or if the note had been accepted by the trustees before 714 the death of the promisor, it would have stood on the footing of the prin- ciple applied in Chambers v. Calhoun, 6 Harris (18 Penn. St.), 13; for in such case, if the trustees assumed the duty imposed upon them by the terms or conditions of the note, it would have been a sufficient consideration to sus- tain the promise. But, when the de- cedent died, the trustees had not ac- cepted the note, and his death was a countermand in law of the offer, for such it must be considered until ac- cepted. In Piiipps V. Jones, 8 Harris (20 Penn. St.), 260, where there was a subscription with others for the benefit of a proposed association to build a cliurch, the court held that it was a mere proposal, revocable until the as- sociation was formed and the promise accepted, and that the death of the subscriber was such a revocation." ' Hamilton College v. Stewart, 2 Denio, 403; S. C, 1 Comst. 581. 5 Ibid., and oases cited supra. See Pitt i: Gentle, 49 Mo. 74. In the London Law Times of May 21, 1881, is the following: "We see it stated that Earl Cowper, acting under the advice of the attorney-general, has submitted to pay the subscription of CHAP. XVI.] CONSIDERATION. [§ 528. by C. subscribing is a good consideration for B.'s subscription depends upon whether 0. loses any right or suffers any detri- £500, which he had promised towards the restoration of St. Albans Cathedral. It appears the Earl had promised this sum to the faculty committee in 1877. He had paid no portion of it until the committee had not only done the work, to which he did not object, but had also restored the original high roof, in regard to which a. controversy had oc- curred, when he had taken an active part against the faculty committee. Lord Cowper then refused to pay any of his subscription on that ground, and so pleaded in his defence to the action. On the eve of trial this defence has been abandoned. It has always been a moot point whether, and under what conditions, subscriptions prom- ised to a charitable work can be recov- ered. It seems that in some of the common law courts of the United States attempts to recover subscriptions have met with success. But in Cottage Street Church v. Kendall (121 Mass. 528), cited by Pollock on Contracts, 2d ed. 598, note, the earlier dicta, that ' it is a sufficient consideration that others were led to subscribe by the very subscription of the defendant,' were overruled. Earl Cowper's case seems, however, to show that, in the opinion of the attorney-general, where the work has actually been done, the promised subscription can be legally demanded. This certainly appears to be just." In University v. Livingston, Sup. Ct. of Iowa, 1881 (13 Rep. 584), the suit was to recover the amount of a sub- scription to the University of Des Moines in the following terms : " ' For and in consideration of securing to the Baptist denomination of Iowa the prop- erty situate in Des Moines, and known as the University of Des Moines, we, the undersigned, hereby bind our- selves, individually, . to pay the sums set opposite our names,. when, in the aggregate, $10,000 is so secured : pro- vided the said amount is pledged by August 1, 1870. Grinnell, March 20, 1869.' The defendant had judgment, and plaintiff appealed. The judgment was affirmed in the supreme court. 'The question,' said Day, J., ' involved in this case is whether the proof shows without conflict that the subscription sued upon was without consideration. In Meth. E. Church v. Kendall, 121 Mass. 528, which is comparatively a recent case, and which contains the latest utterance of the supreme court of Massachusetts upon the question of subscriptions, the following language is employed : ' The performance of gratuitous promises depends wholly upon the good-will which prompted them, and will not be enforced by the law. The general rule is that, in order to support an action, the promise must have been made upon a legal consideration moving from the promisee to the promisor. Exchange Bank u. Rice, 107 Mass. 37. To constitute such consideration there must be either a benefit to the maker of the promise, or a loss, trouble, or inconvenience to, or a charge or obligation resting upon, the party to whom the promise is made.' In this case, most of the Massachusetts cases cited by appel- lant's counsel are referred to, and it is declared that ' in every case in which this court has sustained an action upon a promise of this description the promisee's acceptance of the defend- ant's promise was shown either by express vote or contract, assuming a liability or obligation, legal or equi- table, or else by some unequivocal act, 715 § 528.] CONTRACTS. [chap. XVI. ment by his subscription. If he does — if his promise, by the law to which he is subject, binds him ;'■ — if he pays up, either in whole or in part, or gives a sealed instrument or negotiable paper on which his liability is fixed, then in such case B. is bound.^ Supposing, however, that the subscription is merely tentative — supposing that from the whole state of facts in- volved it is to be gathered that until certain independent conditions are complete the money shall not be due — -then there is no consideration until these conditions are complete.^ such as advancing or expending money, or erecting a building, in accordance Tvith the terms of tlie contract, and upon tlie faitli of tlie defendant's prom- ise.' In this case tlie plaintiff did not enter into any undertaking on account of the subscription in suit. The col- lege building had been purchased, and the debt in question had been con- tracted, before that time. The plaintiff did not even obligate itself to raise the sum of $10,000. The case is, in prin- ciple, very like Stewart r. Trustees, 2 Den. 403 ; S. C, 1 N. Y. 581, in which it was held tliere.could be no recovery. See Limerick Academy r. Davis, 11 Mass. 113. In most of the authorities cited by appellant it will be found that the promisee luitered into some under- taking, assumed some liability, or made some promise upon the faith of the subscriptioa sought to be enforced. Nothing of the kind was done in this case. In our opinion, the court did not err in directing a verdict for the defendant upon the proof admitted.' " 1 See supra, § 023 ; infra, § 595. 2 Infra, § 595 ; Grilman v. Veazie, 24 Me. 202 ; George v. Harris, 4 N. H. 533 ; Cong. Soo. in Troy v. Perry, 6 N. H. 104 ; Fisher v. Ellis, 3 Pick. 323 ; Trustees v. Stetson, 5 Pick. 506 ; Am- herst Acad. u. Cowles, 6 Pick. 427 ; Watkins v. Eames, 9 Cush. 537 ; Mirick V. French, 2 Gray, 420 ; Brigham v. Mead, 10 Allen, 245 ; Mann <.. Cook, 716 20 Conn. 178; Garrett r. E. R., 78 Penn. St. 4i;5 ; Miller , . Ballard, 46 111. 377 ; Peirce v. Ruley, 5 Ind. 69 ; Comstock r. Howd, 15 Mich. 237 ; Smith <•. Plank-Road Co., 30 Ala. 650. As to effect of seal, see Ball r. Duuster- ville, 4 T. R. 313 ; Coocft v. Goodman, 2Q. B. 580. ' Infra, §§ 545 etseq.; Ives v. Ster- ling, 6 Met. 310 ; M'Auley v. Billenger, 20 Johns. 89 ; Ayers's App., 28 Penn. St. 179 ; Commissioners v. Perry, 5 Ohio, 58 ; Stuart v. R. R., 32 Grat. 146 ; supra, § 16 a. In Ladies' Coll. Inst. v. French, 16 Gray, 196, where the implied promise of the promisee to disburse in con- formity with the terms of the subscrip- tion was held a sufficient considera- tion, Chapman, C. J., said: "Sub- scriptions of this character have been made the subject of litigation in many instances ; and the earlier cases in our reports contain dicta, some of which have not been sustained by later de- cisions. But in the cases of Amherst Acad. r. Cowls, 6 Pick. 427 ; Williams College V. Dauforth, 12 Pick. 541 ; and Thompson r. Page, 1 Met. 565, their validity is established, and the ground of it is definitely stated. It is held that by accepting such a subscription, the promisee agrees on his part with the subscribers, that he will hold and ap- propriate the funds subscribed in con- formity with the terms and objects of CHAP. XVI.] CONSIDERATION. [§ 528. In those states, also, in which it is held that a third party cannot sue B. and 0. on a contract made between them for the subscription, and tlius mutual and independent promises are made, wliioli constitute a legal and sufficient con- sideration for each, other. They are thus held to rest upon a well settled principle in respect to concurrent promises." In Carr v. Bartlett, 12, Me. 121, it was said hy Peters, J.: "The de- fendant, with others, signed an agree- ment of association containing the following clauses : ' We, the under- signed, residents of the town of Mont- ville and vicinity, hereby agree to enter into association for tlie purpose of erecting and operating a cheese factory, . . . and we severally and individually bind ourselves, by these presents, on or before the first day of May, 1874, to pay our regularly ap- pointed building committee the several sums set opposite our names for the purpose of building and furnishing said factory. . . . The above not to be binding unless the sum of $2000 is subscribed.' This undertaking, while it remained inchoate and incomplete, was not binding upon the defendant. It was without consideration. It was not a sufficient consideration that others joined in the same promise, relying upon her promise. Foxcroft Academy v. Favor, 4 Me. 382 ; Cottage St. M. E. Church v. Kendall, 121 Mass. 528. The latter case is the subject of an instructive note, citing and dis- cussing a mass of authorities, in Am. Law Eeg. Sept. No. 1877. At this stage of the undertaking the defend- ant could have withdrawn from it, or she could continue a party until the same became a completed agreement and binding upon her. She took the latter course. The subscription be- came completed. Her associates paid in their subscriptions, made purcliases, and entered into contracts necessary for the consummation of the common enterprise. She is presumed to have assented to all that was done. Those facts furnished a sufficient considera- tion for the liability which by her subscription she assumed. The au- thorities are agreed upon this point, as the cases cited and those to be cited clearly show. " It is denied that the plaintiffs are competent parties to sue for the sub- scription. They are the regularly appointed building committee of the subscribers. They are tliemselves subscribers. In their name, for the benefit of the associates, they con- tracted for the erection of the factory. Under the agreement tliey are the payees or promisees by description, in whose names the subscriptions are col- lectible for the benefit of all concerned. They are the association by repre- sentation. Therefore, the objection is avoided that sometimes is presented in this class of contracts, that the mutual promises of the subscribers do not afford a consideration for a contract with a third person, for a want of privity between the subscribers and such person. Thompson v. Page, 1 Met. 565 ; Ives u. Sterling, 6 ib. 310 ; Fisher u. Ellis, 3 Pick. 323 ; Watkins V. Fames, 9 Gush. 537 ; Athol Music Hall V. Carey, 116 Mass. 471 ; Curry ^. Rogers, 21 N. H. 247. There can be no valid objection to a suit in the name of the plaintiffs for the benefit of them- selves and associates. See infra, § 808. " It is further objected that the pro- perty and business became absorbed into a corporation subsequently formed. But this was after the defendant's lia- 717 § 528.] CONTRACTS. [CHAP. XVI. his benefit, the mere fact of the contract being binding be- tween B. and C. (subscribers to the charitable corporation), does not enable the corporation subscribed to, to sue.^ And a mere agreement by A., B.,C., and D. to subscribe a sum opposite to their names to some public object, there being no promisee named in the paper, and no privity of contract between the subscribing parties, does not sustain a suit brought against any one of them on his subscription. It would be otherwise, as we have seen, if a promisee be named who is to make and does make certain efforts in consideration of the subscription. As between the subscribers, also, there would be mutual liability if they agree together to make up a specific sum, so that the withdrawal of one increased the amount to be paid by the others. But if neither of these conditions exists, and if there is no privity of contract between the parties sub- scribing, the subscriptions must be regarded as inchoate or tentative.^ Nor can a subscription to an incorporated church be enforced by the corporation. unless it appear that the sub- scription was for its specific uses, though the treasurer to whom the subscription is made may sue if it was made per- bility became fixed. It seems that all "The corporation voted to release the subscribers were incorporated into the defendant from the payment of the a company with a corporate name, subscription. The vote was without without any change in the purposes of any consideration, and before the vote the association or adding any liabili- was acted upon, it was reconsidered ties to those before assumed. It gave and annulled. That affords no defence them little more than ' a local habita- to the action." tion and a name.' Whether the de- ' Cottage St. Church v. Kendall, 121 fendant became thereby legally a, Mass. 52S ; see infra, §§ TS4 ctseg.; member of the incorporated body or supra, §§ 506-7. That something to not, it is not a reason why her sub- be done by the institution subscribed scription cannot be enforced by the to is a consideration for the subscrip- oommittee to whom the payment by tion, see Simpson College v. Bryan, the agreement was to be made. No 50 Iowa, 293 ; supra, § 505. right can be taken from her. For any 2 See George r. Harris, 4 N. H. 533 ; loss or injury caused by others she Curry v. Rogers, 1 Fost. 255 ; Farm- can commence an action or resort to a ington Acad. t. Allen, 14 Mass. 172 ; remedy in equity. Thompson v. Page, Rensselaer Glass Factory v. Reid, 5 Fishery. Ellis, supra; Mirick v. Cow. 603 ; Methodist Asso. v. Sharp, 6 French, 2 Gray, 420 ; Machias Hotel Mo. Ap. 150. Co. u. Coyle, 35 Me. 405. 718 CHAP. XVI.] CONSIDERATION. [§ 530. sonally to him in consideration of his services.' — Until some action is taken on the basis of a subscription to a benevolent or other enterprise, it may be revoked.^ " The promise, in such case, stands as a mere offer, and may, by necessary im- plication, be revoked at any time before it is acted on. It is the expending of money, etc., or incurring of legal liability on the faith of a promise, which gives the right of action, and without which there is no right of action. Until action upon it, there is no mutuality, and, being only an oifer, and suscepti- ble of revocation at any time before being acted upon, it follows that the death (or insanity) of the promisor, before the offer is acted upon, is' a revocation of the offer. "^ It would be otherwise, as has been already stated, if other parties had made themselves legally liable on the faith of the subscription claimed to be revoked. § 529. As we have already seen, subscribers to business corpo- rations will be relieved from liabilitv on subscriptions „ ... Fraud vitl- obtained from them by fraud.^ The same principle atcs sub- applies to subscriptions to charitable and religious ^'^"^ '°°' enterprises.' Should it appear, for instance, that, when the subscription is conditioned on raising a specific sum, some of the subscriptions were to be regarded as merely honorary, or were fictitious, this relieves the parties making the other sub- scriptions.' Ifor can the subscription be enforced if the object be materially changed.' § 530. Provided there be nothing in the agreement which is against the policy of the law, an interchange of patronage is a valid consideration. Thus where A., chan^geof a subscriber to a charity, agreed with B., another patronage subscriber, that A. would vote at one meeting for a particular candidate for relief, if B, would at a subsequent meeting vote for another candidate, this agreement was held ' Knoxboro Church v. Beech, 74 N. ^ Middlebury College v. Loomis, 1 Y. 72. Vt. 189. 2 See supra, § 10. s Middlebury College u. Loomis, 1 » Pratt u. Trustees, 93 111. 475 ; aff. Vt. 189 ; New York Exchange Co. v. De in Beach v. Church, 96 111. 179. Wolf, 31 N. Y. 273. < Supra, § 276. ' Worcester Med. Inst. v. Bigelow, 6 Gray, 498. 719 § 532.] CONTRACTS. [chap. XVI. valid. 1 But such an agreement by electors to a public office would be void as against the policy of the law.^ § 531. It is not necessary in order to make the transfer of a Merely right a Valid consideration, that it should be a legal equitable right. It is Sufficient if it be an equitable right.^ rii>'hts valid ^'^ , „ . * coDBidera- Hence a release by a mortgagor or an equity or re- demption is a valid consideration;* and so, in Eng- land, forbearance by the assignee of a debt, whose title is there merely equitable.' § 532. Forbearing to press either a legal or equitable claim is a sufficient consideration for a promise.^ Guar- antees of debts are constantly rested on considera- tions of this kind ; and when no time of forbear- ance is specified, the contract will be construed to mean a forbearance for a reasonable time.' And forbearance to sell goods under a bill of sale, or to execute a writ offi.fa. has been held a sufficient consideration for a promise by a third party to pay the debt ; * and so of for- bearance to press an action for a tort, though it may be that the plaintiff in such action sustained no actual loss f and so of forbearance in issuing execution ;" and of withdrawing ob- Forbear- ance of legal pro- ceedings is a sufflcii'ut eoDsidera- tiou. 1 Bolton V. Madden, L. R. 9 Q. B. 55. 2 Supra, §§ 407 et seq. 3 Leake, 2d ed. 624; Wells r. Wells, 1 Vimt. 40 ; Gully r. Bishop of Exeter, 10 B. & C. 606 : Carpenter r. Dodge, 20 Vt. 595 ; Pearson v. Pearson, 7 Jolms. 26 ; Wliitbeck v. Whitbeck, 9 Cow. 2(i6 ; Ewing v. Ewing, 2 Leigli, 337. ■< Thorpe v. Thorpe, 1 L. Raym. 663. s Morton v. Burn, 7 A. & E. 19. See infra, § 532. « Leake, 2d ed. 622 ; Thornton v. Fairlie, 2 Moore, 397 ; Willatts v. Ken- nedy, 8 Bing. 6 ; Union Bk. u. Geary, 5 Pet. 99 ; Lonsdale v. Brown, 4 Wash. C. C. 148 ; King v. Upton, 4 Me. 387 ; Chapin v. Lapliam, 20 Pick. 467 ; Bar- low V. Ins. Co., 4 Met. 270; Abbott o. Eisher, 124 Mass. 414 ; Stewart v. McGuin, 1 Cow. 99 ; Ward v. Fryer, 19 Wend. 494 ; Russell v. Cook, 3 Hill, 504; 720 Perkins v. Gray, 3 S. & R. 327 ; Giles V. Ackles, 9 Barr, 147 ; Cook v. Duvall 9 Gill, 460; Durham r. Wadlington 2 Strob. Eq. 258 ; Hartford Ins. Co. u Olcott, 97 HI. 439 ; see Mechanics' Bk V. Wixson, 42 N. Y. 438. ^ Oldershaw v. King, 2 H. & N. 517 Coles V. Pack, L. R. 5 C. P. 65 ; Robin- son V. Gould, 11 Cush. 55 ; Sage v. Wilcox, 6 Conn. 81 ; Watson c. Ran- dall, 20 Wend. 201 ; Hamaker <•. Eb- erley, 2 Binn. 506 ; Muirhead v. Kirk- patrick, 21 Penn. St. 237 ; Colgin , . Henley, 6 Leigli, 85 ; see Gary v. White, 52 N. Y. 13S. 8 Barren .'. Trussell, 4 Taunt. 117 ; Pullin V. Stokes, 2 H. Bl. 312; see Hockenbury v. Meyers, 5 Vroom, 346. 9 Davis V. Morgan, 4 B. & C. 8. 1" Lent V. PadeUord, 10 Mass. 230. CHAP. XVI.] CONSIDERATION. [§ 532. jections to the probate of a will,' and of adjourning a suit in a justice's court.^ The accepting by a creditor of a promissory note for an existing debt is evidence of a forbearance to sue until the maturity of the note ; and this forbearance is a suffi- cient consideration for the note.' Nor does the fact that the party promising to pay is an executor, and that the considera- tion is the debt of his testator, relieve the executor from per- sonal liability when he personally promises to pay in consider- ation of forbearance to the estate.'' An agreement, also, by a petitioner to withdraw his application for winding up a com- pany, is a sufficient consideration for a promise to pay the debt of the party so withdrawing, although there is nothing in the agreement to preclude him from presenting another petition to the same effect.' And an agreement by a tax collector to forbear distraining will be a consideration for a promise by the owner to pay the tax.^ — Agreements to forbear criminal prosecutions, as we have seen, when amounting to compound- ing indictable offences, are, on independent grounds, illegal.' But there is no reason why such agreements to forbear should not be valid, and hence should form a sufficient consideration for a promise, in cases where the prosecution is only quasi criminal, and is virtually for the collection of a debt.* Hence forbearance in an affiliation procedure is a valid consideration for a promise by the alleged father to support the child.' — A forbearance, however, to be a consideration must be for a rea- sonable time ; as otherwise, if the forbearance be not appre- ciable, there is no consideration.'" — But an agreement to forbear 1 Hill V. Buckminster, 5 Pick. 393. 5 Harris v. Venatles, L. R. 7 Ex. 235. 2 Stewart v. McGnin, 1 Cow. 99 ; 6 Burrs v. V^^ilcox, 13 Allen, 269 ; Eiehardson v. Brown, 1 Cow. 255. see Baileyville v. Lowell, 20 Me. 178. 3 Baker v. Walker, 14 M. & W. 465 ; ' See supra, § 483. Jennison v. Stafford, 1 Cush. 168 ; see * Supra, § 486. Calkins v. Chandler, 36 Mich. 320 ; s Linnegar v. Hodd, 5 C. B. 437 ; Martin u. Black, 20 Ala. 309. As to Follit v. Koetzow, 2 E. & E. 730 ; see the conflict of opinion whether receiv- supra, § 525, for other cases, ing negotiable paper is a satisfaction, '" Mecorney v. Stanley, 8 Cush. 85 ; see §§ 953 et seq. Boyd v. Freize, 5 Gray, 553 ; Shupe v. '^ Leake, 2d ed. 623 ; citing Fisher Galbreath, 32 Penn. St. 10 ; and cases u. Richardson, Cro. Jao. 47 ; Rann v. cited Wald's Pollock, 166 ; see as sus- Hughes, 7 T. R. 350 n. taining the position that a vague state- VOL. I.— 46 721 § 532.] CONTRACTS. [chap. XVI. immediate pressure will, under the circumstances of the case be construed to mean forbearance for a reasonable time ;' and so when the length of time is left open.^ And there must be some definite party to have been sued.^ "When the promise is to forbear to sue generally, this will be construed, if the con- text require no other inference, to mean a promise to forbear permanently.* — Mere forbearance, however, without an agree- ment, being an executed act, is not a sufficient consideration.' — The fact that the suit is not well founded makes no diflterence, if it has a show of title f though it is otherwise in cases of fraud,' and in cases where the claim to be forborne is utterly destitute of support.* ment of indulgence is a consideration, Alliance Bk. u. Broom, 2 Dr. & Sm. 289 ; contra, see Nelson v. Serle, 4 M. & W. 795 ; Bixler v. Ream, 3 Barr, 282. ' Pollock, 166 ; Oldershaw c King, 2 H. & N. 517 ; Hakes v. Hotclikiss, 23 Vt. 235 ; Lonsdale c. Brown, 4 Wash. C. C. 148 ; see Hamaker v. Eberley, 2 Binn. 506; Clark v. Russell, 3 Watts, 213. That the time must he definite see, further. Crofts v. Beale, 11 C. B. 172. 2 Elting V. Vanderlyn, 4. Johns. 237 ; Hamaker v. Eberley, 2 Binn. 506 ; Clark I,. Russell, 3 Watts, 213 ; ' Nelson v. Serle, 4 M. & W. 795 ; see Jones V. Ashburnham, 4 East, 455. « Herring!). Dorell, 8 Dow. P. C. 604 ; Elting V. Vanderlyn, 4 Johns. 437 ; Clark u. Russell, 3 Watts, 213. As to covenant not to sue, see infra, § 1036. 6 Manter v. ChurchiU, 127 Mass. 31 ; supra, § 514. 5 Callisher v. BischofTsheim, L. R. 5 Q. B. 449 ; infra, § 533. ^ Supra, § 232. 8 Smith V. Algar, 1 B. & Ad. 604; Nelson ,>. Serle, 4 M. & W. 795 ; Kid- der V. Blake, 45 N. H. 630; Pitkin .-. Noyes, 48 N. H. 304 ; Freeman u. Boynton, 7 Mass. 483 ; Martin v. Black, 20 Ala. 309. The ruling in Callisher 722 ■0. Bischoffsheim, supra, is stated by Mr. Langdell to be that forbearance "is a sufficient consideration if the promisee ' bona fide believed lie had a fair chance of success,' so that he might have sued without bad faith ; and that, as there is a legal presumption in favor of hon- esty and good faith, the plaintiff need only allege in his declaration that he made the claim and threatened to sue, and that the defendant, if he wished to show that the forbearance constituted no consideration, must plead and prove that the plaintiff knew that he had no cause of action ;" and this Mr. Langdell holds to be " alike repugnant to autho- rity and principle," and he maintains it is inconsistent with Cook v. Wright, 1 B. &S. 559, on which it is professedly based. Lang. Cent. ii. 1018. It may be that Callisher v. Bischoffsheim went too fai' in throwing on the defendant the burden of proving that the plaintiff knew that he had no cause of action. But it does not go too far in holding that probable cause is suflicient to support a compro- mise. There is no litigated suit in which success is absolutely certain ; and if there is a show of a case hona fide brought, its abandonment is a good consideration for a promise. Of course, these remarks do not apply CHAP. XVI.] CONSIDERATION. [§ 533. § 533. As has been incidentally noticed, a promise to com- promise a claim utterly unfounded will not be so of com- regarded as a valid consideration, (1) because such a ^ou"Jfu°^ claim is obviously and transparently valueless ; (2) claim. because to sanction such promises would be to sanction black- mailing; and (3) because the selling of unfounded claims, which such a transaction would virtually amount to, would be illegal as a species of champerty.' It is otherwise when a suit is brought bona fide on probable cause ; and a promise to com- promise such suit is a valid consideration, even though the suit should be held to be unfounded. Were it otherwise there could be no compromise of litigation, since there is no litigation in which one or the other party, if the case be pressed to judg- ment, does not fail to make out his case.^ Not only will such agreements, when there is no fraud, be sustained by the courts, but they are highly favored, as productive of peace and good-will in the community, and reducing the expense and persistency of litigation.^ The rule is peculiarly applicable in family settlements, where right and wrong on both sides are so where an unreasonable bargain has been extorted, supra, § 165, or where there has been a distortion or suppres- sion of facts, supra, §§ 232-252. ' See supra, §§ 411 et seq.; infra, §§ 836 et seq. 2 Supra, § 198 ; infra, § 1000 ; Leake, 2d ed. 627 ; Longridge v. Dorville, 5 B. & Aid. 117 ; Atlee v. Backhouse, 3 M. & W. 633 ; Lucy ex parte, 4 De G. M. & G. 356 ; Thomas u. Brown, L. R. 1 Q. B. D. 714 ; Home Ins. Co. v. Balti- more, 93 U. S. 527 ; Blake i;. Peck, 11 Vt. 483 ; Hodges v. Saunders, 17 Pick. 470 ; Clark v. Gamwell, 125 Mass. 428 ; Crans v. Hunter, 28 N. Y. 389 ; Weh- rum u. Kuhn, 61 N. Y. 623 ; Wrege v. VPestoott, 30 N. J. L. 212; Hoge o. Hoge, 1 Watts, 216 ; Tryon v. Miller, 1 Whart. 11 ; Fleming u. Eamsey, 46 Penn. St. 252 ; Zane v. Zane, 6 Munf. 406 ; Grasselli c/. Lowden, 11 Oh. St. 349 ; Hindert v. Schneider, 4 111. Ap. 203; Paulin v. Howser, 63 111. 312; Stearns ii. Johnson, 17 Minn. 142 ; Van Dyke v. Davis, 2 Mich. 145 ; Truett ■u, Chaplin, 4 Hawks, 178 ; Taylor v. Patrick, 1 Bibb, 168 ; McKinley v. Wat- kins, 13 111. 140 ; Livingston v. Dugan, 20 Mo. 102 ; Riley v. Kershaw, 52 Mo. 224; Snow v. Grace, 29 Ark. 131. 3 2 Ch. on Con. 11th Am. ed. 46 Cook c/. Wright, 1 B. & S. 559 ; Long- ridge V. Dorville, 5 B. & Aid. 117 Edwards v. Baugh, ' 11 M. & W. 641 Stewart v. Stewart, 6 CI. & F. 911 Read v. Hitchings, 71 Me. 590 ; Pitkin V. Noyes, 48 N. H. 304 ; Blake v. Peck, 11 Vt. 483 ; Leach ^. Fobes, 11 Gray, 509 ; Powers v. Freeman, 2 Lans. 127; Brown v. Sloane, 6 Watts, 421 ; Barton V. Wells, 5 Whart. 225 ; Logan v. Mat- thews, 6 Barr, 417 ; Fisher u. May, 2 Bibb, 448 ; Truett v. Chaplin, 4 Hawks, 178 ; Williams v. Alexander, 4 Ired. Eq. 207; Field ;.. Weir, 28 Miss. 56; Warren v. Williamson, 8 Baxt. 427. See supra, § 198 ; infra, § 1000. 723 § 533.] CONTRACTS. [chap. XVI. often dependent on feeling ;^ in which cases the courts, unless there be imposition, will not undertake to weigh actual gain or loss.^ On the same principle, the courts will sustain a set- tlement of a large unliquidated claim on a cash payment much smaller in amount.' — It is not necessary, as we have seen, that there should be a specific new consideration to alter an old contract.* — Whether or no suit has been instituted makes no difference;^ but there must be some probable cause, so as to make out a case of doubt, to make such an agreement binding.* If an executor, for instance, should say to a lega- tee, whose claim is unquestionable, " I dispute your claim," and thus get from the legatee a promise to take a less amount than that designated by the will, the legatee would not be bound by the promise.' — But the fact that a suit must have failed from want of technical proof does not make such a com- promise void for want of consideration f nor is it necessary that the question in dispute should be one as to which, look- ing back on it from our present stand-point, we should say, "this was really a question of much doubt." It is enough if it was one as to which doubt at the time could honestly be felt.' ' Groves v. Perking, 6 Sim. 576 ; LangstafFe v. Fenwick, 10 Vea. 405 ; Bierers's App., 92 Penn. St. 265 ; Smitli V. Smith, 36 Ga. 184. As to limitations on this position, see supra, §§ 3'J4 et seq. 2 Stewart v. Stewart, 6 CI. & F. 969 ; Shotwell V. Murray, 1 John. Ch. 516. 3 Infra, §§ 937, 1000 ; supra, § 521 Atlee V. Backhouse, 3 M. & W. 651 Wilkinson v. Byers, 1 Ad. & El. 106 Tuttle V. Tuttle, 12 Met. 551 ; Howard V. Norton, tiS Barb. 161 ; Palmerton v. Huxford, 4 Denio, 166 ; Cutter v. Coch- rane, 116 Mass. 408 ; Rollins v. Marsh, 128 Mass. 116. * Brown a. Everhard, 52 Wis. 205 ; supra, §§ 505, 521 ; infra, § 858. ^ Callisher o. Bisohoffsheim, L. R. 5 a. B. 451 ; Wilby v. Elgee, L. R. 10 C. P. 497 ; Cook v. Wright, 1 B.& S. 659 ; 724 Longridge v. Dorville, 5 B. & Aid. 117 ; Hamaker v. Eberley, 2 Binn. 506 ; Ben- net u. Paine, 5 Watts, 259 ; Muirhead u. Kirkpatrick, 21 Penu. St. 237. ^ Supra, § 532 ; Edwards c. Baugh, 11 M. & W. 641. ' Irfra, § 535 ; Thomson v. Eastwood, L. R. 2 App. Ca. 215. See Moore v. Fitzwater, 2 Rand. (Va.) 442 ; Foster L'. Metts, 55 Miss. 77. * Thomas v. Brown, L. R. 1 Q. B. D. 714. 9 Cook V. Wright, 1 B. & S. 559 ; Kerr v. Lucas, 1 Allen, 279 ; Russell u. Cook, 3 Hill, 504; Hoge u. Hoge, 1 Watts, 216 ; Durham v. Wadlington, 2 Str. Eq. 258 ; Allen ;;. Prater, 35 Ala. 169. In Little i>. Allen, Sup. Ct. Tex. 1882 (13 Rep. 413), we have the follow- ing from Stayton, J. : "A mutual agreement for compromise is, in itself. CHAP. XVI.] CONSIDERATION. [§ 535. § 534. It may be that a document which A. surrenders to B. may be worthless; but if there be no fraud, the So of giving mere fact that it would sustain prima facie a suit by gated aocu- which A. could be benefited makes the surrender a ™<=nt. sufficient consideration to support a promise from B. to A. This has been, held to apply to the surrender of an invalid will ;^ and to the surrender of an invalid guaranty.^ § 585. While forbearance of a claim that has a prima facie case is a valid consideration, even though the claim „ ... . Forbear- prove to be without sound foundation, it is otherwise anceof void with an utterly void claim.^ This has been held to considera- be the case with regard to a release by a party of all *'°°' interest in an estate in which he has not even a show of an interest f with regard to a promise to conduct bankrupt pro- ceedings so as to inconvenience the promisee as little as pos- sible f with regard to the surrender of a tenancy at will, because a tenancy at will is not an estate of appreciable value f and with regard to surrendering claims in which there is obviously a valuable consideration. In Cavode v. M'Kelvey, Addison, 56, it was held that where one claimant purchased the title of another claimant, the contract was upon valuable consideration, though the title bought was bad. In O'Keson V. Barclay, 2 P. & W. 531, which was an action for libel, it was held that a compromise of the action was a valu- able consideration sufficient to sustain an agreement, although the words alleged to be libellous were not action- able. — No investigation into the char- acter or value of respective claims will be made, it being sufficient that the parties thought there was a question between them. 1 Parsons on Contr. 439. In Hoge v. Hoge, 1 Watts, 216, it was held that the compromise of a doubtful title was a valuable considera- tion, and sufficient, although a party thereto may have been ignorant of his rights, unless the compromise be viti- ated by fraud sufficient to set aside any other contract." In Flannagan v. Kil- come, 58 N. H., it was held that it did not affect the principle stated in the text that it was shown that the abandoned suit ought to have pre- vailed ; citing Pitliin u. Noyes, 48 N. H. 294, 304; Peiroe v. Building Co., 9 La. 397, and other cases. 1 Smith V. Smith, 13 C. B. N. S. 429. 2 Haigh V. Brooks, 10 A. & E. 309. 3 Leake, 2d ed. 625 ; Cowper v. Green, 7 M. & W. 633 ; N. H. Bank v. Colcord, 15 N. H. 119 ; Palfrey u. R. R., 4 Allen, 55 ; Knotts v. Preble, 50 111. 226 ; Hennessey v. Hill, 52 111. 281 ; Mulholland u. Bartlett, 74 111. 58; Lowe V. Weatherley, 4 Dev. & B. 212 ; Prater v. Miller, 25 Ala. 320 ; Barkley V. Hanlan, 55 Miss. 606. < Kaye v. Button, 7 M. & G. 807. « Braoewell u. Williams, L. R. 2 C. P. 196. ^ Leake, ut supra, citing Richardson V. Mellish, 2 Bing. 244. 725 § 536.] CONTRACTS. [chap. XVI. no cause of action.^ Hence it has been held in England that promise of forbearance by the assignee of a bond upon which, by reason of equities subsisting between the obligor and the assignor, the assignor had no right to sue, is not a sufficient consideration to support a promise by the obligor, in igno- rance of his rights, to pay the bond.^ And, a fortiori, an agree- ment to take money for abandoning a claim which the party holding knows is unfounded is void as fraudulent and extor- tionate.' But the mere fact that a claim has not a strong case to rest on does not preclude it from being the basis of a bind- ing settlement ; and this is peculiarly the case with compro- mises of family disputes.^ § 536. The assumption by A. of an indebtedness on con- dition of B. doing a particular thing, is a conside- ration to support B.'s promise to do that thing.° Hence a promise by A. to buy certain property in consideration of B. undertaking to supply the money binds A., such promise by B. being a sufficient consideration.^ And a promise by the residents of a town that they will pay a tax levied on the town in consideration of allowance of discount is binding.' And a party may make himself liable as guarantor without any consideration Assuming collateral indebted- nes6 a valid considera- tion. 1 Jones V. Ashbnrnham, 4 East, 455 ; Barber v. Fox, 2 Wms. Saund. 136 ; New Hampshire Bk. o. Colcord, 15 N. H. 119. In Cline v. Templeton, 78 Ky. 550, Hines, J., said: "That there is no cause of action either at common law or under the statutes, in behalf of a woman for seduction, is clearly estab- lished. (Woodward v. Anderson, 9 Bush, 624.) It is laid down, both in Parsons on Contracts and in Chitty on Contracts, that an agreement to for- bear to prosecute a claim which is wholly and certainly unsustainable at law or in equity is no consideration for a promise. (Parsons, vol. i. p. 440 ; Chitty, vol. i. pp. 35 to 46. ) This propo- sition appears to be so well established that further citation of authorities seems to us unnecessary. We need 726 not discuss the question as to whether past cohabitation is a good considera- tion for a promise, since it is admitted that the sole consideration was the agreement to forbear suit." "■ Graham v. Johnson, L. R. 8 Eq. 36. ^ Callisher u. Bischoffsheim, L. R. 5 a. B. 489 ; see Pitkin v. Noyes, 48 N. H. 294; Knotts ^. Preble, 50 111. 226. For criticisms on Callisher v. Bischoff- sheim, see supra, § 532. * Supra, § 533. 6 Stadt u. Lill, 9 East, 348 ; Homes V. Dana, 12 Mass. 190 ; Leonard v. Vredenburgh, 8 Johns. 29 ; Cook v. Bradley, 7 Conn. 57 ; supra, §§ 506-7. ' Skidmore v. Bradford, L. E. 8 Eq. 134; see Bryant v, Goodnow, 5 Pick. 228. ' Baileyville v. Lowell, 20 Me. 178. CHAP. XVI.] CONSIDERATION. [§ 537. passing between principal and guarantor. " It is enough, if the person for whom the guarantor becomes surety has bene- fit, or the person to whom the guaranty is given suffer incon- venience, as an inducement to the surety to become guarantee to the principal debtor."' But unless a guarantee is contem- poraneous with and an incident of a debt, it requires an inde- pendent consideration in the way of an indulgence from the creditor, to make it valid.^ § 537. Marriage is a valuable consideration as between the parties ;' and hence a settlement by a man on his • o 11 • f 111- ■ 1 Marriage is Wife, or by the wite on her husband, in considera- a valuable tion of marriage is as valid and binding, even against t^"^.^'^'^''^' subsequent bona fide purchasers for value, as would be a sale of the same property for a full price.'' — A promise by a third party to either the intended husband or the intended wife, it has been held, will be sustained by the consideration of the projected marriage." — Marriage, however, ceases to be 1 Best, C. J., Morley v. Boothty, 3 Biiig. 113. ' D'Wolf V. Rabaud, 1 Pet. 476 ; Packard v. Richardson, 17 Mass. 129 ; Mecorney v. Stanley, 8 Cusb. 85 ; Leon- ard o. Vredenburgh, 8 Jobus. 29. As to guarantee, see supra, § 515 ; infra, § 570. » Whelan u. Whelan, 3 Cow. 537 Wright V. Wright, 54 N. Y. 437 Whitehill v. Lonsey, 2 Yeates, 109 Frank's App., 59 Peun. St. 190 ; Derry V. Derry, 74 Ind. 560 ; Huston v. Can- trel, 11 Leigh, 136. ■> Supra, § 377 ; Richardson v. Hor- ton, 7 Beav. 112 ; Clarke v. Wright, 6 H. & N. 849 ; Price v. Jenkins, L. R. 5 C. D. 619 ; Kevan v. Crawford, L. R. 6 C. D. 29 ; Gale v. Gale, L. R. 6 C. D. 144; Tomlinson v. Matthews, 98 111. 178; Latimer c. Glenn, 2 Bush, 535; Miller v. Edwards, 17 Bush, 397 ; Wall V. Scales, 1 Dev. Eq. 476 ; Ploss v. Thomas, 6 Mo. Ap. 157 ; Magniac v. Thompson, 7 Pet. 348. In Magniac v. Thompson, it was said hy the court : "Nothing can he clearer, hoth upon principle and authority, than the doc- trine that to make an ante-nuptial settlement void as a fraud upon credi- tors, it is necessary that both parties should concur in, or have cognizance of, the intended fraud. If the settlor alone intended a fraud, and the other party have no notice of it, but is inno- cent of it, she is not and cannot be affected by it." » Shadwell v. Shadwell, 9 C. B. N. S. 159 ; see supra, § 497. In Stratton v. Stratton, 58 N. H. 473, there was an ante-nuptial agreement that if the wife would take a farm, on which she held a mortgage, and the husband would carry it on, she would contribute the products to the support of the family and herself after marriage. Marriage took place, and the husband made valuable improvements at his own ex- pense. After two years the wife con- veyed the farm to another in violation of his rights. The court said : " The disabilities and extensive suspension 727 § 539.] CONTRACTS. [chap. XVI. a good consideration in cases where the husband is largely in- solvent at the marriage, and the wife knows that the conveyance to her is to defraud his creditors.^ But such a settlement will not be set aside on ground of fraud unless on clear proof of the wife's complicity.^ — A marriage settlement in fraud of marital rights will be set aside.^ § 538. When a gift though gratuitous has been fairly made, Equity Tviii after fuU deliberation, a court of equity will not in- notset terfere to revoke it, unless it was intended by the aside an i i , • r> executed donor to be revocable ;^ and a declaration of trust, ^' ' although without consideration, will, when made fairly and deliberately, and when vesting a specific interest in the cestui que trust, be sustained.' § 539. Promissory notes and bills of exchange are presumed In negoti- to have been made for value, and, as we have seen, burde^n?s"^' this presumption is irrebuttable so far as concerns dispuHn''g ^'"*'^' fi'-^^ endorsees for value without notice. As considera- between the parties, however, and against endorsees tion. f 1 ) & of legal personality, imposed upon married women by the ancient com- mion law, are so far removeii by statute, and by change of customs and condi- tions of society from which common law is largely derived, as to present no obstacle to the -maintenance of this action by the plaintiff against his wife. Clough V. Russell, 55 N. H, 279. Her agreement was valid as a contract for a marriage settlement in his favor ; and her conveyance to Ladd was a fraud upon that settlement. Under the former law, the husband, acijuiring by marriage great and Immediate rights in his wife's property, was entitled to relief against her fraudulent ante- nuptial conveyance of property which she had represented herself to him to be possessed of. 1 Story Eq. § 273. And for the purpose of this case, the legal capacities of the plaintiff and his wife being equal, her ante-nuptial pro- mise, in consideration of marriage, is as binding as his, and equally enforce- 728 able by process of law. Specific per- formance of her agreement for the use of her land may be enforced to prevent a fraud being practised upon him by his wife's inducing him to expend his money in valuable improvements on the faith of her agreement, and tlien depriving him of the benefit of them, and securing them or the proceeds of them for herself." ' Supra, §§ 377 et seq. ; Wilson u. Prewett, 3 Wood's C. C. 631 ; Wilson I'. Jordan, 3 Wood's C. C. 647. As to family settlements, see supra, § 377. 2 Prewit V. Wilson, 103 U. S. 22. ^ Supra, § 399. ^ Toker r. Toker, 31 Beav. 629 ; Coutts ('. Acworth, L. R. 8 Eq. 558 ; that an executed gift cannot be recalled, see supra, § 496. 6 Leake, 2d ed. 610 ; Kekewich v. Manning, 1 D. M. & G. 176 ; Richard- son V. Richardson, L. R. 3 Eq. 686 ; supra, § 496, CHAP. XVI.] CONSIDERATION. [§ 540. with notice or after maturity, the want of consideration may be shown, though the burden is on the party attempting to show such want of consideration.^ But if the paper is shown to have been stolen or lost or fraudulently obtained, then the burden of proving consideration is on the holder seeking to avail himself of the bill.^ § 540. It is not necessary that a consideration, if there be one, should appear on the face of a document. A considera- deed, for instance, may purport to convey land for tionmaybe the price of a dollar an acre ; but this will not pre- varied by vent the parties, or either of them, from showing ^*'° ' that the price paid was one thousand dollars.' Nor is the averment of a consideration of natural love and affection binding on the parties. It may be disputed by showing on the one side an additional valuable consideration, or on the other side that the whole transaction was a fraud.^ A party is not estopped from proving such variation.' But, even in equity, a party claiming under a sealed document is bound by the general character of the consideration stated, unless mis- take on both sides be shown, or the omission be satisfactorily explained. He cannot, for instance, as part of his case (unless with the above qualification), if money be averred, prove 1 Supra, §§493 et seq.; HoUiday v. iiett, 26 Me. 397; Arms v. Ashley, 4 Atkinson, 5 B. & C. 501 ; Mills v. Pick. 73 ; Hannan v. Hannan, 123 Barber, 1 M. & W. 425 ; Aldrich u. Mass. 441 ; Farnsworth v. Boardman, Warren, 16 Me. 465 ; Thurston v. Mo- 131 Mass. 115 ; Tingley v. Cutler, 7 Kown, 6 Mass. 428 ; Wheeler v. Guild, Conn. 291 ; Hehbard u. Hanghian, 70 20 Pick. 545 ; Case u. Banking Ass., 4 N. Y. 57 ; Cunningham v. Dwyer, 23 Comst. 166 ; Barnet v, Offermau, 7 Md. 219 ; Jones v. Sasser, 1 Dev. & B. Watts. 130; Swain v. Ettling, 32 466. Penn. St. 486. * Filmer v.' Gott, 4 Br. P. C. 230; 2 Leake, 2d ed. 608 ; Mills v. Barber, Gale Windscheid, Pandekt. § 86. ^ Wilkinson v. Clements, L. R. 8 Oh. * See infra, § 607; Lang. Cont. ii. 96. 1007 ; Neale v. Ratoliflf, 15 Q. B. 916. « Neale v. Ratcliff, 15 Q. B. 916. 739 § 553.] CONTRACTS, [CHAP. XVII. On the other hand, he may bind himself to do a particular thing on the occurrence of one out of several events.^ It should be remembered that entirety depends upon the inten- tion of the parties, and not upon the divisibility of the price or the thing to be delivered. Price or thing to be delivered may be divisible ; and yet, if intended by the parties, the con- tract may be entire.^ But the fact that purchase money is pay- able at distinct intervals, leads to the inference of divisibility f and so does the fact that each article in a sale has a distinct price.^ II. CONSTRUCTION. § 553. If there appear on the whole contract an intention that either party is to have redress in damages for pressionsof the default of the other, irrespective of the question notto'over- of his own default, then mere formal ■ expressions rule real denoting interdependence will be made to yield to Intention. or j ^ the substantial purpose of the contract. This has been held to be the case with contracts providing that a prom- ise is conditioned on the other party " well and truly perform- ing all and singular his covenants and agreements," or " on the performance of the terms and conditions" imposed on the other party. All this, when from the whole document it appears that a promise made by one party was to have inde. pendent redress irrespective of the default of the other party, will be regarded as purely formal and inoperative.^ — In order to ascertain the intention of the parties, the whole context of the contract is to be taken into consideration, in view of all ' Infra, § 619. 281 ; Knight v. Worsted Co., 2 Cusli. » Shinn v. Bodine, 60 Penn. St. 182 ; 286 ; Dodge v. Gardiner, 31 N. Y. 239 ; see infra, § 899. Todd ■;. Summers, 2 Grat. 167. That ' Morgan v. MoKee, 77 Penn. St. 228. a general covenant of title is restrained ^ Lncesco Oil Co.i). Brewer, 66 Penn. by special covenants among which it St. 351. occurs, see Browning v. Wright, 2 B. & " Leake, 2d ed. 652 ; Boone i. Eyre, P. 13, 26 ; Hesse v. Stevenson, 3 B. & 2 W. Bl. 1312 ; Stavers v. Curling, 3 P. 565 ; Sumner v. Williams, 8 Mass. Bing. N. C. 355; Fishmongers' Co. o. 162; Whallon r. Kauffman, 19 Johns. Robertson, 5 Man. & G. 131 ; Keenan 99 ; Miller v. Heller, 7 S. & R. 32 ; and V. Brown, 21 Vt. 86 ; Tufts c . Kidder, see infra, § 664. 8 Pick. 537; Kane u. Hood, 13 Pick. 740 CHAP. XVII.] CONDITIONS. [§ 554. the extrinsic facts.* Contracts of this class, as is the case with all contracts, are to be construed consistently with the true intent of the parties,^ so as best to sustain good faith.^ § 554. " Whether covenants are to be held dependent or in- dependent of each other is to be determined by the whether a intention of the parties as it appears on the instru- ig'^"o''^^°" ment, and by the application of common sense to Mon ^e- • 1 , • 1 • ■ pends on each particular case ; to which intention, when once intention discovered, all technical forms of expression must ° ^" ^^^' give way."* — Lord Mansfield lays down as a rule, which Mr. Benjamin' declares to be unchanged, " that the dependence or independence of covenants is to be collected from the evident sense and meaning of the parties, and that however transposed they might be in the deed, their precedency must depend on the order of time in which the intent of the transaction requires their performance." — Hence, where the condition of a bond for £1000 was to render a fair and just account in writing of all sums received, it was held that the word " account" meant payment, since it was not to be supposed that the parties would impose so heavy and solemn a penalty on mere account- ing without paying.' The intention of the parties, as evi- denced in the contract, is to determine whether the allegation in question is a condition precedent, whose performance is necessary to make the contract binding on the other party, or a representation, which does not interfere with the contract taking effect, though if false it exposes the party making it to a cross suit.' Whether the promise is on its face conditional, 1 1 Wnas. Saund. 320 a ; Graves v. ' Sales, 3d Am. ed. § 561, citing Legg, 9 Exch. 709 ; Dicker v. Jackson, Jones v. Barkley, 2 Doug. 684. 6 C. B. 103 ; Jowett v. Spencer, 1 Exch. 6 Baohe v. Proctor, 1 Doug. 382. 647; Kingdom o. Cox, 5 C. B. 522; ' Infra, § 650; Benj. on Sales, 3d Couch V. Ingersoll, 2 Pick. 292 ; Kane Am. ed. 561 ; Howland v. Leach, 11 u. Hood, 13 Pick. 282 ; Knight ^.Worsted Pick. 151 ; Mill Dam Foundry v. Hovey, Co., 2 Cush. 286. 21 Pick. 439 ; Knight v. Worsted Co., 2 Infra, §§ 657-9. 2 Cush. 287; Booth v. Mills Co., 74 3 Infra, § 654. N. Y. 15 ; Phillip v. Allegheny Car Co., * Per our., Stavers v. Curling, 3 82 Penn. St. 368 ; Brockenbrough v. Bing. N. C. 368 ; adopted in Leake, Ward, 4 Rand. 352 ; Moore v. Waldo, 2d ed. 649 ; see also notes to Cutter v. 69 Mo. 277. Powell, 2 Smith, L. C. 1 ; see irfra, §§ 650 et seg. 741 § 554.J CONTRACTS. [chap. XVII. or whether words used in connection with it subject it to a condition, is a matter of law for the court, supposing those words to be proved.' • Leake, 2d ed. 219, citing Furness V. Meek, 27 L. J. Ex. 34. In Hale r. Finch, Sup. Ct. U. S. 1881, the suit was based on a contract between tlie California Steam Navigation Com- pany and the Oregon Steam Navigation Company, by which the latter company, engaged in the navigation of the Columbia river and its tributaries, purchased a steamboat, called the New World, from the California Steam Navi- gation Company, then engaged in like business upon the rivers, bays, and waters of the state of California. The terms of the sale are embodied in a written agreement, from ^hich it appears that the consideration was J75,OUO, and the covenant and agree- ment of the vendees, not only that they would not "run or employ, or suffer to be run or employed, the said steamboat New World upon any of the routes of travel upon the rivers, bays, and waters of the state of California for the period of ten years from the first day of May, 1864," but that its machinery should not be "run or employed in running any steamboat, vessel, or craft upon any of the routes of travel, or on the rivers, bays, or waters of" that state for that period. The Oregon Steam Navigation Company, in that agree- ment, further stipulated, that in case of any breach of their covenant and agreement, they would pay the Cali- fornia Steam Navigation Company the sum of $75,000 in gold coin of the United States "as actual liquidated damages," such stipulation, however, not to "have the effect to prevent the latter from taking such other remedy, by injunction or otherwise, as they might be advised. "The written memorandum," said 742 Harlan, J., "between that company (the Oregon) and the California Steam Navigation Company, in words aptly chosen, shows, as we have seen, an express covenant and agreement, upon the part of the former, that neither the New World nor its machinery shall be used on the waters of California within ten years from May 1, 1864, and, also, to pay a certain sum as actual liqui- dated damages for any breach of such covenant and agreement. The bill of sale from the Oregon Steam Navigation Company to Winsor and his associates did not contain any words of covenant or agreement. But the company, in view of its express covenants to the California Steam Navigation Company, took care to exact from its vendees a separate written obligation, in which the latter, in express terms, covenanted and agreed with that company, in like manner as the latter had covenanted and agreed with the California Steam Navigation Company. The next writ- ing executed was the bill of sale from Winsor to Hale. That instrument shows nothing more than a covenant to warrant the title to the steamboat. It makes no reference, in any form, to any waters from which the steamboat should be excluded. Then comes the bill of sale executed by Hale to Finch. Its material portions are the same in substance, and in language almost identical with the bill of sale given by the Oregon Steam Navigation Company to Winsor. Each contains a covenant and agreement, upon the part of the vendor, simply to warrant and defend the title to the steamboat, its machin- ery, etc., against all persons whomso- ever. But each recites, let it be ob- served, only an agreement that the CHAP. XVII.] CONDITIONS. [§ 555. § 555. The whole context, also, of the document is to be considered.' The effect of the condition cannot be determined sale is upon the express condition that it shall not he used or employed upon those waters. Upon the sale by the Oregon Steam Navigation Company to Winsor and his associates, the former, as we have seen, was careful to take the separate obligation of the latter, with surety, containing covenants and agreements, described in such terms as to show that the draughtsman, as well as all parties, knew the difference between a covenant and a condition. The same criticism may be made in reference to the separate writing signed by Finch and Hale, at the time of the execution by the latter of the bill of sale to the former. The latter writing shows, it is true, several covenants and agreements upon the part of Finch, but no covenant or agreement in re- ference to the use of the boat, such as found in the writings which passed between the California Steam Naviga- tion and the Oregon Steam Navigation, or such as are contained in the sepa- rate agreement between the latter and Winsor and his associates. " If, therefore, we suppose (which we could not do without discrediting some of the testimony) that Finch, at the time of his purchase, had knowledge of all the papers executed upon prior sales of the New World, the absence, as well from the hill of sale accepted by him, as from the written agreement of the same date, signed by him and Hale, of any covenant or agreement that he would not use that vessel, or permit it to be used, on the prohibited waters within the period prescribed, quite conclusively shows that he never in- tended to assume the personal responsi- bility which would result from such a covenant. ' ' It thus appears that the circum- stances separately considered, militate against the construction for which plaintiff contends. " But, if we omit all consideration of the circumstances under which the bill of sale from Hale to Finch was executed, and look solely at the language em- ployed in that instrument, there seems to be no ground upon which the claim of plaintiff can stand. The words are precise and unambiguous. No room is left for construction. It is undoubtedly true, as argued by counsel, that neither express words of covenant, nor any particular technical words, nor any special form of words, are necessary in order to charge a party with covenant. I Roll. Abridg. 518; I Burr. 290; I Vesey, 516 ; Sheppard's Touchstone, 161, 162 ; Courtney v. Taylor, 7 Scott, N. R. 765 ; 2 Parsons' Contracts, 510. 'The law,' says Bacon, 'does not seem to have appropriated any set form of words which are absolutely neces- sary to be made use of in creating a covenant.' Bacon's Abridgment, Cove- nant, A. So, in Sheppard's Touch- stone, 161-2, it is said : ' There need not be any formal words, as ' covenant, ' 'promise,' and the like, to make a covenant on which to ground an action of covenant, for a covenant may be had by any other words ; and upon any part of an agreement in writing, in whatsoever words it be set down, for ' Pearsall o. Summersett, 4 Taunt, 593 ; Hassell ^. Long, 2 M. & S. 363 U. S. V. Kirkpatrick, 9 Wheat. 720 Bell ,.. Bruen, 1 How. (U. S.) 169 Worcester Bk. u. Reed, 9 Mass. 267 ; Russell V. NicoU, 3 Wend. 42 ; Bene- dict V. Field, 16 N. Y. 595 ; Ramsey v. E. R., 3 Tenn. Ch. 170 ; infra, § 662. 743 555.J CONTRACTS. [chap. XVII. without taking into consideration the stipulations that it Whole con . Lyons, 2 Whart. 441 ; Lykens Scott, 502 ; AUard o. Belfast, 40 Me. v. Tower, 27 Penu. St. 462 ; Schilling 369 ; Putnam v. Mellen, 34 N. H. 71 ; v. Durst, 42 Penn. St. 126; Knight V. VPorsted Co., 2 Cush. 271; * Supra, § 190; infra, §§ 601 et seq., Beecher v. Conradt, 3 Kern. 108. § 898 ; Fletcher „. Cole, 23 Vt. 114 ; 2 Dey V. Dox, 9 Wend. 133. Goodrich v. Lafflin, 1 Pick. 57 ; Dubois ' See supra, §§ 545 et seq.; infra, §§ c. Canal Co., 4 Wend. 285. 601 et seq., 869 el seq.; Johnassohn u. ^ Infra, §§ 602, 904 et seq. n. R., 10 Exch. 434; Mawmau a. Gil- « Brown i^ Slee, 103 U. S. 828. lett, 2 Taunt. 327 ; Chapin v. Norton, ' Supra, §§ 212, 216 ; infra, § 560. 6 McLean, 500 ; Dodge u. Greeley, 31 748 CHAP. XVII.] CONDITIONS. [§ 559. seen that a condition is distinguishable from a representation in this, that where there is a condition there is no absolute concurrence to an immediately operative agreement ; while a false representation, provided it goes not to identity but to quality, assumes a concurrence at least as to the thing which may be at once done or delivered, and a warranty expressly assumes a concurrence as to a thing which may be imme- diately delivered, and binds the vendor to give damages in case it fails in certain requisites.^ A condition precedent, also, is an integral part of the contract which it qualifies ; the contract cannot be severed from the condition. Representa- tions and warranties, on the other hand, are severable from the contract to which they are attached, and may form the basis of cross-suits. The non-performance of the condition prevents the contract from taking effect ; the falsity of a rep- resentation or warranty does not prevent (if the parties had the same thing in mind) the contract from taking effect, but exposes the vendor to a suit for damages by the purchaser.^ To relieve a party, however, from a contract on the ground that the other party refuses to perform a condition precedent, the refusal must be specific and absolute, and must be so regarded on both sides.' If, for instance, I continue to urge the performance of the condition on the party whose duty it is to perform it, this treats the contract as still in force.* ' Supra, § 218. chia v. Hickie, 1 H. & N. 183 ; Dimach 2 Benj. on Sales, 3d Am. ed. § 561 ; v. Corlett, 12 Moore P. C. 199 ; MoAn- Wilson Sewing Maoh. Co. v. Sloan, 50 drew Supra, § 254 ; Leake, 2d ed. 646 ; 9 Mo. 673 ; and cases cited supra, and Sicklemore v. Thistleton, 6 M. & S. 9 ; citations in Brandt on Suretyship, § Lilley i'. Hewitt, 11 Price, 494 ; Price 157. V. Kirkham, 3 H. & C. 437 ; Walton v. 1 Dates V. Weller, 13 Vt. 106 ; Kay Mascall, 13 M. & W. 452 ; Cooper u. V. Allen, 9 Barr, 320 ; Kellogg v. Page, 27 Jle. 73 ; Gibbs v. Cannon, 9 Stockton, 29 Penn. St. 460 ; Kincheloe S. & R. 198 ; Leech v. Hill, 4 Watts, I . Holmes, 7 B. Mon. 5 ; McCollum v. 448 ; Voltz u. Harris, 40 111. 155 ; Cushing, 22 Ark. 540. Kline v. Raymond, 70 Ind. 271 ; Bow- 2 Douglass V. Reynolds, 7 Pet. 113 ; man v. Curd, 2 Bush, 565 ; Forest c Wildes u. Savage, 1 Story, 22 ; Howe Stewart, 14 Oh. St. 246 ; see Brant on c. Nickels, 22 Me. 175 ; Clark v. Rem- Suretyship, §§ 168 et seq. ington, 11 Met. 361 ; Babeock v. Bryant, '■ Lawrence v. Walmsley, 12 C. B. N. 12 Pick. 133 ; Thomas u. Davis, 14 S. 799 ; Duncan u. Heller, 13 S. C. 94. Pick. 353 ; Montgomery v. Kellogg, 43 6 Duffield v. Scott, 3 T. R. 374. Miss. 486. 760 CHAP, xvir.] CONDITIONS. [§ 570 a. was not properly made or properly defended.' — A continuing guaranty, with fluctuating liabilities, stands on a different position with regard to notice, from a guaranty for a fixed sum. In the latter case notice of default need not be given, for the liabilities of all the parties are fixed ; but it is other- wise with continuing liabilities which are subjected from the nature of things to uncertainty.^ — And when a guarantor 1 Leake, 2d ed. 646 ; Duffield v. Scott, 3 T. R. 374 ; Jones u. Williams, 7 M. & W. 493 ; Parker u. Lewis, L. R. 8 Ch. 1058. * Thus in a case in 1881 in Iowa the action was on a bond executed by L. as principal and the other defendants as sureties, conditioned that L. should pay a corporation all his indebtedness to it, existing or afterwards to exist, whether upon notes, accounts, or in any manner, either party having the right to terminate the contract at plea- sure. The bond was executed upon L. becoming agent of th e corporation for the sale of sewing-machines. Beck, J., in giving the opinion of the court, said : ' ' The controlling question in the case, and the only one argued by counsel, involves the correctness of the court's ruling in holding that defendants are not liable for the reason that notice was not given them of the extent of L's. liability within a reasonable time after his agency was terminated, and his indebtedness fixed by his settle- ment with plaintiff. The ruling of the court, we think, is correct, and in ac- cord with Machine Co. o. Mills, 55 Iowa, 543 ; S. C, 8 N. W. Rep. 356. We held in that case, ' where the guaranty is a continuing one, and the parties must have understood their liability there- under would be increased and dimin- ished from time to time, and the guar- anty is uncertain as to when it will cease to be binding upon the guarantor, and when the party indemnified has the power at pleasure to annul and put an end to the contract guarantied, without the knowledge of the guaran- tor, he is entitled to notice, within a reasonable time after the transactions guarantied are closed, of the amount of his liability thereunder.' It will be observed) upon considering the state- merit of the terms of the contract guar- antied, that they are within this rule, and that under it the defendants in this case are not liable, in the absence of the notice contemplated therein. But counsel for plaintiff, in an ingen- ious argument, attempt to distinguish this case from Machine Co. v. Mills. They insist that while the contract in that case was a guaranty, in this case defendants are not guarantors, but are sureties for L., and are jointly liable with him upon an original contract. The error of this position is apparent. L. was or was about to become indebted to plaintiff upon the contract under which he was appointed agent. De- fendants were not bound upon that contract. Neither were they bound upon the notes, accounts, acceptances, or upon any contract upon which L. became indebted to plaintiff. They be- came first and only bound upon the bond, whereby they guarantied that L. would pay his indebtedness to plain- tiff in whatever form it assumed. A guarantor becomes bound for the per- formance of a prior or collateral con- tract upon which the principal is alone indebted. A surety is bound with the principal upon the contract under which the principal's indebtedness 761 § 570 a.] CONTRACTS. [chap. XVII. would be prejadiced by want of notice of his principal's de- fault, and the guarantee was advised of this default in time to give notice, then notice should be given of the fact, and of the intention to hold the guarantor responsible in all cases in which the liability of the guarantor is not direct, but is de- pendent on the default.* In case of a continuing guaranty of a servant, if the servant is guilty of dishonesty, and the mas- ter does not notify the fact to the guarantor, but retains the arises. This is a familiar doctrine of the law. Upon applying it to the facts of the case, it will be seen that defen- dants are guarantors, and not sureties, for the performance of the contract upon which L.'s indebtedness to plain- tiff arose. They were therefore entitled to notice, under the rule of Machine Co. u. Mills. It may be observed that guarantors are often called sureties. We use the term 'sureties,' in the foregoing discussion, to describe one who is bound by a contract with his principal — who joins with his principal in the execution of the contract, and becomes pecuniarily liable thereon. But, as we have seen, a guarantor — the surety in a contract of guaranty — is not primarily liable upon the prin- cipal's contracts, and only becomes liable upon his default. A guarantor, under this rule, is entitled to notice of the amount of his liability within a reasonable time after that liability is determined by the transaction between the original debtor and creditor." Singer Mfg. Co. v. Littler, 12 Rep. 777. Watprtown Ins. Co. u. Simmons, 131 Mass. 85, was an action upon the surety bond of an agent of an insur- ance company. The evidence showed that the agent rendered his accounts regularly until December, 1S77, when he failed to pay the balance due the company, and that thereafter his in- debtedness increased monthly until March, 1879, when he died, owing a balance larger than the bond. The 762 company did not give notice to the surety of the default until after this time, and the surety did not know of it. It was held that it was not the company's duty to notify the surety of the default within a reasonable time, and the failure to do so was not laches discharging the surety. There is no rule of law, so it was argued by Morton, J., giving the opinion, which makes it a duty which the creditor, un- der the circumstances of this case, owes to the surety either to dismiss its agent or to notify the surety of his de- fault. It is the business of the surety to see that his principal performs the duty which he has guaranteed, and not that of the creditor. Wright v. Simpson, 6 Ves. 734 ; Adams Bank v. Anthony, 18 Pick. 238 ; Taft v. Gifford, 13 Weto. 187. The surety, it was held, is bound to inquire for himself, and cannot complain that the creditor does not notify him of the state of the ac- counts between him and his agent for whom the surety is liable. Mere inac- tion of the creditor will not discharge the surety, unless it amounts to fraud or concealment. ' Louisville Co. v. Welsh, 10 How. U. S. 461 ; Wildes v. Savage, 1 Story, 22 ; Globe Bank v. Small, 25 Me. 366 ; Talbot u. Gay, 18 Pick. 534 ; Allen v. Rightmore, 20 Johns. 366 ; Douglass v. Ilowland, 24 Wend. 35 ; Farm. & Mech. Bk. c: Kerchavel, 2 Mich. 504 ; Cox v. Brown, 6 Jones, L. 100. CHAP. XVXI.] CONDITIONS. [§570a. servant, the guarantor is relieved.' But there must be negli- gence imputable to the guarantee, and consequent loss to the guarantor, in order to enable the latter to make want of notice a defence to a suit by the former.^ — " A surety is not dis- charged from liability by the mere fact that the principal is continued in the master's employment after he has failed to make his payments promptly, of which fact the surety has not been advised."' ' Phillips !.., Foxall, L. R. 7 Q. B. 660. 2 Douglass V. Reyuolds, 7 Pet. 114; Clark V. Remington, 11 Met. 361 ; Craft V. Isham, 13 Conn. 2S. ' Day, J., Home Ins. Co, v. Holway, 55 Iowa, 578 ; Jones v. U. S., 18 Wall. 662 ; Albany Dutch Ch. u. Vedder, 14 Wend. 166; McKeckniev. Ward, 58 N. Y. 541 ; Atlantic Tel. Co. v. Barnes, 64 N. Y. 385; Pittsburgh R. R. u. Schaffer, 59 Penn. St. 350. In Home Ins. Co. v. Holway, 55 Iowa, 675, we have the following summary of the cases : — "The case of Roper v. Trustees of Sangamon Lodge, 91 111. 518, is also directly in point, and much stronger in its facts, in favor of the sureties, than the case at bar. The point determined is correctly stated in the syllabus as follows : ' Where a party becomes surety upon the bond of a treasurer of a secret society, for the faithful application of moneys in his hands, payable to the society, the fact that the officers and members of the society knew of his pre- vious misappropriation of the funds intrusted to him during the previous year, and with such knowledge re- elected him and failed to communicate such fact to his sureties, and they doing no act to put the sureties off their guard or prevent them from ascertaining the facts, no fraud can be imputed to the society which can be set up in avoid- ance of the sureties' liability on the bond.' See also Ham v. Grove, 34 Ind. 18 ; Atlantic and Pacific Telegraph Co. V. Barnes, 64 N. Y. 385 ; Cowley v. The People, Illinois Supreme Court, in the Reporter of Nov. 10, 1880 [95 111. 249], page 592 ; The Remington Sewing Ma- chine Company u. Kezertee, 5 N. W. Hep. 809 (Wis.) [49 Wis. 409] ; Atlas Bank v. Brownell, 11 Am. Rep. 231 ; 9 R. I. 168. "The cases relied upon by the ap- pellee are nearly all distinguishable in principle from the case at bar. In Sooy V. State, 39 N. J. L. 135, it was held that ' A person taking a bond for the future good conduct of an agent already in his employment, must com- municate to a surety his knowledge of the past criminal misconduct of such agent in the course of such employ- ment, in order to make such bond bind- ing.' No fact appears in the present case from which criminal misconduct on the part of Holway can be inferred. He made correct statements of the con- dition of his accounts to the plaintiff. It does not appear that he attempted to defraud them in any way. Upon the contrary, when he found himself run- ning behind in his accounts, he made arrangements for the settlement of his delinquencies, and soon caused the plaintiff to be paid in full. He may have acted improperly and carelessly in the management of his principal's money, but his conduct is not shown by the evidence to be criminal. In Phil- lips V. Fonall, L. R. 7 Q. B. 666, it was held that ' on a continuing guaranty 763 § 571.] CONTBACTS. [CHAP. XVII, § 571. As between a debtor and a creditor, it may happen for the honesty of a servant, if the master discovers that the servant lias been guilty of dishonesty in the course of the service, and, instead of dismissing the servant, he chooses to continue him in his employ without the knowledge and consent of the surety, express or implied, he cannot afterwards have re- course to the surety to make good any loss which may arise from the dishon- esty of the servant during the subse- quent service.' In this case the surety guaranteed the honesty of a servant. The master detected the servant in acts of dishonesty, and took an agreement from the servant to pay a certain amount monthly on account of a defalcation which existed, which facts were un- known to the surety. It was for a de- falcation subsequently occurring that it was sought to hold the surety liable. In Franklin Bank r. Cooper, 36 lie. 179, the bond was procured at the request of the bank, as surety for its cashier, who was then known to be a defaulter, and was made to cover past as well as future delinquencies, the bank having an opportunity to disclose the facts to the surety. " Dinsmore v. Tidball, 34 Ohio St. 411, was an action upon a bond to in- demnify the Adams Express Co. against loss from the dishonesty or unfaithful- ness of an agent. The agent was at the time in the employment of the company, and had been guilty of acts of embezzlement, which fact was not communicated to the surety. The court say : 'Admitting that a principal, in accepting a guaranty for the faithful and honest conduct of his agent, is not bound, under all circumstances, to communicate to the guarantor every fact within his knowledge which in- creases the risk, yet we think there can be no doubt, either upon principle 764 or authority, that when an agent has acted dishonestly in his employment, the principal, with a knowledge of the fact, cannot accept a guaranty for his future honesty from one who is igno- rant of the agent's dishonesty, and to whom the agent is held out by the principal as a person worthy of confi- dence. The failure to communicate such knowledge under such circum- stances would be a fraud upon the guarantor. ' " In Graves ('. Lebanon National Bank, 10 Bush, 23, when a cashier who had given no bond was guilty of em- bezzlement which might easily have been discovered, and the bank fur- nished a statement of its good condi- tion, after which parties became sure- ties for the cashier, it was determined that they could not be held. In Char- lotte, Columbia, and Augusta Railroad o. Gaw, 59 Ga. 685, it was held that ' the agent of a corporation, being under bond to account and pay over daily, cannot be trusted with more money at the sureties' risk after dishonesty of the agent has been discovered by the corporation, but he may be so trusted so long as the circumstances, fairly in- terpreted, point not to moral turpitude, but to a want of diligence or punctual- ity rather than to a want of integrity.' "In all of these cases the agents were guilty of criminal misconduct or of positive dishonesty. In the last case it was expressly held that the agent may be trusted so long as the circumstances indicate a want of dili- gence or punctuality, and not a want of integrity. Under the facts disclosed in this case, the court, in our opinion, erred, both in giving the instructions complained of and in refusing those asked." CHAP. XVII.] CONDITIONS. [§ 571. that the fact of the occurrence of an event on which When debt the debt becomes payable, is one -which would natu- tioued on rally come first to the knowledge of the creditor, witwu In such case a stipulation that notice of the happen- peculiar ° ins: of the event should be given by the creditor to knowledge, notice the debtor before the maturing of the debt is a should be matter of substance, and will be enforced as a condi- leMor" tion precedent.' Even without such a stipulation, when a debt is made payable on an event whose occurrence is from the nature of things to be within the peculiar knowledge of the creditor, then notice of the event to the debtor is a con- dition precedent to the maturing of the debt. " The reason of the rule is that when a thing is in the knowledge of the plaintiff, but cannot be in the knowledge of the defendant, but the defendant can only guess or speculate about the matter, then notice is necessary."^ — It is otherwise when the occur- rence of the event is not more distinctively in the knowledge of one party than of the other.^ The true test is declared by ' VPatson V. Walker, 23 N. H. 471 ; Lent V. Padelford, 10 Mass. 230 ; Tas- ker V. Bartlett, 5 Cusli. 359 ; Clough v. Hoffman, 5 Wend. 500; see Benj. on Sales, 3d Am. ed. § 577 ; Webber v. Dunn, 71 Me. 331. ° Bramwell, B.,Makinj). Watkinson, L. R. 6 Ex. 25. To same effect see Vyse V. Wakefield, 6 M. & W. 453 ; tut see Hayden v. Bradley, 6 Gray, 425. 3 Leake, 2d ed. 644 ; citing 1 Wms. Saund. 117 a; Watson v. Walker, 23 N. H. 471. The following cases are given by Mr. Leake as illustrations of the rule in the text : — " A buyer promised to pay for barley as much as the seller sold it for to any other man ; the seller was held bound to give notice before he could call upon the buyer to pay, because the person to whom the barley would be sold was altogether at the option of the seller, who might sell it to whom he pleased. Haule V. Homyng, Cro. Jac. 432 ; cited 6 M. & W. 454. The defendant cove- nanted not to do anything whereby an insurance, to be effected on his life by the plaintiff at any office which the latter should choose, should be avoided or prejudiced ; it was held that the defendant was not bound by this cove- nant until the plaintiff had given him notice that he had chosen an office, and had effected a policy, because the option of the plaintiff as to the office was too indefinite to enable the defendant to inform himself of the conditions of the policy he was to observe. Vyse v. Wake- field, 6 M. & W.442 ; see also Rippinghall V. Lloyd, 5 B. & Ad. 742. ' ' ' Upon a cove- nant in a lease by the lessor to keep the demised premises in repair, it was held that notice of want of repair was a con- dition precedent without which he could not be sued for non-repair. Makin v. Watkinson, L. R. 6 Ex. 35 ; though see Hayden v. Bradley, 6 Gray, 425. In Tasker o. Bartlett, 5 Cush. 359, Wilde, J., said it was a, settled 765 § 572.] CONTRACTS. [OHAP. XVII. Mr. Benjamin to be this: "that if the obligee has reserved any option to himself, by which he can control the event on which the duty of the obligor depends, then he must give notice of his own act before he can call upon the obligor to comply with his engagement."' § 572. It may be a question whether a condition is properly notified to the party whom it is sought to charge condition a ^ith it. This (as where conditions are set up by question of common carriers, and by vendors of ffoods at auc- lact. ) J & _ tion) depends on the facts of each particular case. If there be notice, and the condition is not illegal, the party affected is bound by it.^ But the notice, if printed on a ticket, receipt, or bill of lading, must be put in such a shape as to impose the duty of reading it on the party taking the docu- ment.^ Whether the party should have taken notice of such conditions is a question for the jury.^ But when the con- ditions on a ticket or bill of lading are put in a shape which a business man ought to notice, then they will bind a party holding such ticket or bill of lading.' — As to notice the fol- lowing positions may be advanced : Ignorance of the contents of a contract will not ordinarily relieve a party who has signed it when charged with notice of a condition that the contract recites.* And a condition inserted in a contract in such a way as would attract the attention of a person using due care binds, if not otherwise illegal, the party to the contract.' It is otherwise, however, as to conditions inserted on tickets or other papers in such a way as not to attract attention. And rule that " where one party has knowl- ligence are against the policy of the edge of a material fact not known to the law, see sxipra, § 438. other party, he is bound to give notice." ' Elmore «. Sands, 54 N. Y. 512, and ' Sales, 2d ed. § 577, citing Vyse v. cases cited, supra, § 22. Wakefield, 6 M. & W. 442, supra. « Parker v. R. R., 1 C. P. D. 618. 2 Bywater v. Richardson, 3 N. & M. s Harris v. R. R., L. R. 1 Q. B. D. 515. 748 ; 1 Ad. & El. 508 ; Head ... Tatter- « Supra, § 196. sail, L. R. 7 Ex. 7; Hinchcliffe v. i Supra, § 22; Wh. on Neg. § 587; Barwick, L. R. 5 Ex. D. 177. That Wh. on Ev. § 1243; Austin v. R. R., assent must be definite to bind, see su- 16 Q. B. 600 ; Behrens v. R. R., 6 H. & pra, § 22. That agreements to release N. 366 ; Bk. of Kentucky v. Adams Ex., carriers from the consequences of neg- 93 U. S. 174 ; Squire v. R. R., 98 Mass. 766 239 ; McMilleu v. R. R., 16 Mich. 80. CHAP. XVII.] CONDITIONS. [§ 573. Drawer and indor- ser entitled to notice of dislionor. this has been held to be the case with regard to conditions printed in small type in such a way that an ordinai-y ob- server would not notice them." — An ordinary printed heading to a telegraph blank is a notice to a party sending a message on such blank, although the heading was never read by him.^ § 573. By the law merchant, the drawer and indoreers of a bill of exchange, and the indorsers of a promissory note, are entitled to notice of dishonor of the paper by the party by whom it is primarily due.^ Whether the paper is properly presented for pay- ment, and whether the notice of dishonor is ade- quate, depends upon the law of the place of payment.'' If otice, however, is not required in cases where the drawer or indorser, as the case may be, whom the object is to fix with the debt, is the party primarily liable, as where the acceptance was made for the drawer's accommodation.^ Nor is it necessary that notice should be given to a surety, who, without becoming a party to the paper, by a collateral agreement, guarantees the payment of a bill, the guarantee binding him absolutely in default of payment.* Nor need notice be given to a party who is out of reach, so as to make uotilication impracticable.' ' Supra, § 22; Malone v. R. R., 12 Gray, 388; Verner v, Sweitzer, 32 Penn. St. 208 ; and cases cited Wh. on Neg. § 587. 2 Redpath v. Tel. Co., 112 Mass. 71 ; Grinnell v. Tel. Co., 113 Mass. 279 ; Breeze 6-. Tel. Co., 48 N. Y. 132. See, contra, Sweatland v. Tel. Co., 27 Iowa, 433 ; and see supra, § 22. ' Leake, Am. ed. 645 ; Byles on Bills, 9th ed. 195. And this applies even to overdue notes. Dwight v. Emerson, 2 N. H. 159 ; Adams c. Torbert, 6 Ala. 865. < Wh. Con. of L. § 454; Rouquette V. Overmann, L. R. 10 Q. B. 542. 5 Bickerdike v. Bollmann, 1 T. R. 405 ; Turner v. Samson, L. R. 2 Q. B. D. 23. 6 Warrington v. Furbor, 8 East, 242 ; Walton V. Masoall, 13 M. & W. 452. ' Bowes V. Howe, 5 Taunt. 30. That notice may be waived, either directly or constructively, see Amoskeag Bk. v. Moore, 37 N. H. 539 ; Gove v. Vining, 7 Met. 212 ; Ridgway v. Day, 13 Penn. St. 208. That while a waiver of demand is a waiver of notice, a waiver of notice does not operate as a waiver of de- mand, see 1 Pars, on Gout. 278, citing Lane v. Steward, 20 Me. 98 ; Buchanan V. Marshall, 22 Vt. 561 ; Berkshire Bk. V. Jones, 6 Mass. 324. In Susquehanna Valley Bank v. Loomis, 85 N. Y. 213 (1881), it was held that notice to an accommodation indorser {the defendant), who was such to the knowledge of the plaintiff, was not excused by the fact that the note was forged, which fact the defend- ant was not shown to know, and could 767 § 573.] CONTRACTS. [chap. XVII. — The diligence to be used in giving notice is not perfect dili- gence, i. e., the party is not chargeable with culpa levissima in not be presumed to know. " It re- mains," said Danforth, J., "to con- sider the case of Turnbull v. Bowyer (40 N. Y. 45 li), cited by the appellant. There the names of persons to whom a check was payable were forged, and afterward it was innocently indorsed by the defendant. By his negligence it went into circulation, and reached the hands of one who, in good faith and without notice of the true relation of the indorser to the check, paid value for it, and was permitted to recover it back from him upon the ground that the indorsement was a warranty to every subserjuent holder in good faith, that the instrument itself and all the signatures antecedent to such indorse- ment were genuine. It was decisive of that case that the payee's name was forged, and the remark that the im- plied warranty applied to the instru- ment itself was uncalled for by any fact in the case. In support of the proposi- tion reference is also made to Story on Promissory Notes, §§ 135, 379, 380, 387, and cases there referred to, and such is the citation by the appellant. But these meri'ly assert a right of action against the indorser on the ground that he cannot complain if called upon to repay money received by him upon an indorsement of a void title, for the author says, ' There is a failure of the consideration on which the transfer was made.' In Daniels on Neg. Inst, language similar to that of Story is made use of (§ 669), but the cases cited in its support do not meet the facts of this case. They are like those before referred to, and only upheld the recovery of money from the person to whom it was paid. (Jones v. Hyde, 5 Taunt. 486.) There are, no doubt, 768 cases in which an indorser is liable without notice of non-payment. Bick- erdike v. Bellman (1 Term Rep. 405) is said by Parke, B., in Carter v. Flower (16 M. & W. 743) to have made the first exception to the general law which requires such notice. There the in- dorser knew the draft was not to be paid ; and another is illustrated in The Mechanics' Bank ofN. Y. w. Griswold (7 Wend. 165), where the indorser had all the maker's property. But that any exception should be allowed has been many times regretted, because thereby nice distinctions were intro- duced into the law, and a plain and intelligible rule departed from. It has, liowever, been uniformly held that, whoever will avail himself of an excep- tion to the general rule, must bring his case within it, either by some recog- nized authority, or the application of some legal principle. Such exceptions should not be multiplied. Turnbull V. Bowyer (supra) goes no farther than to make an indorser liable upon an im- plied warranty, that a prior indorse- ment, purporting to be that of the payee, was genuine ; and upon the same principle it has been held that a bank certifying a check in the usual form simply certifies to the genuineness of the signature of the drawer, and that he has funds sufiicient to meet it. It does not warrant the genuineness of the body of the check as to payee or amount. This was decided in The Ma- rine National Bank u. The National City Bank (59 N. Y. 67), where the plaintiff certified a check which had been altered, by changing the date, name of payee, and raising the amount, and subsequently paid it to the defend- ant. It was decided by this court that CHAP. XVII.] CONDITIONS. [§ 575. respect to it ;' but is the diligence that good business men of the particular class are accustomed to use under similar cir- cumstances.* § 574. A lessor's covenant to repair is ordinarily conditioned on notice being given to him of the defects requir- ing repairing. It may be that certain repairs, from covenant to the nature of the building, have to be done at stated repair is ■, , , . conditioned intervals, and as to these he will not require notice, on notmca- But as the premises are not open to his continuous inspection, any damages by casualty, or even by ordinary wear and tear, so it has been held in England, must be notified to him in case it is desired to fix him with the duty of repairing;^ though in this country this has been doubted as to matters concerning which the landlord ought himself to take notice.* 3. Bequest or demand. § 575. Unless there is a specific stipulation that a debt shall not be due until a demand is made, a demand is not necessary to make the debt suable. " A request for p^or^d"^^ the payment of a debt is qute immaterial, unless the mandisnot , "^ ^ . . necessaryto parties to the contract have stipulated that it shall indebted- be made ; if they have not, the law requires no notice or request; but the debtor is bound to find out the the money so paid could be recovered back from the defendant who had re- ceived it. " So the defendant in the case before us might be held responsible for the truth of facts presumed to be within his own knowledge, and for an implied affirmation that so far as he was con- nected with it the draft was not defec- tive. It is not denied, however, that the signature of the drawer wa^ genu- ine, nor that the person presenting the draft, and for whose consideration Pickering indorsed it, was the payee appearing upon its face at that time. The trial court does not find that the payee's name as indoraer was forged ; it finds no undertaking on the testator's VOL. I. — 49 part, save that of an indorser ; and we concur with the general term in the opinion that his liability was not established. There is no evidence of any intention to create any liability except as indorser. He had all the rights and privileges of one, was there- fore subject only to the obligations which that relation imposed, and as he was not charged according to the law merchant, he cannot be held." ■ Wh. on Neg. §§ 59 c« seq. 2 Clarkw. Bigelow, 16Me. 246; Man- chester Bk. V. Fellows, 8 Foster, 312 ; Bank of Utica v. Bender, 21 Wend. 543. » Makin v. Watkinson, L. R. 6 Ex. 25. * Haydou v. Bradley, 6 Grray, 425. 769 § 575.] CONTRACTS. [chap. XVII. creditor, and pay him the debt when due."' — Even the inser- tion of the words " payable on demand" in a promissory note, does not make prior demand necessary to the institution of a suit,^ though when a note is made payable at a particular place, it must be presented for payment at that place,^ and where the note is payable in specific articles, the specific arti- cles should be demanded.^ And "when a party accepts a negotiable bill, he binds himself to pay the amount without notice to whomsoever may happen to be the holder, and on the precise day on which it becomes due."^ Even when a de- mand is required, it need not be in writing unless required by the contract,* nor need it be exact in amount unless this be needed to individuate the debt.'^A party who puts it out of his power to perform a contract may be sued without demand, even though the time specified for performance has not arrived.^ This is eminently the case with regard to promises of marriage.' A party who shows by his conduct that he does not consider himself bound, cannot complain that marriage was not de- manded by the other side.'" ' Parke, B., in Walton v. Mascall, 13 M. & W. 458 ; adopted in Leake, 2d ed. 647. See Wolf v. Marsh, 64 Cal. 228 ; and see infra, § 881. 2 Norton v. Ellam, 2 M. & W. 461 ; Maltby u. Murrels, 5 H. & N. 813; Little II. Blunt, 9 Pick. 488 ; Wenman V. Mohawk Ins. Co., 13 Wend. 267 ; Wheeler v. Warner, 47 N. Y. 519 ; Fleming v. Potter, 7 Watts, 380. ' Leake, 2d ed. 642 ; Byles on Bills, &th ed. 205 ; infra, § 871. ■■ Lohdell c. Hopkins, 5 Cow. 518 ; Vance v. Bloomer, 20 Wend. 196 ; Rice u. Churchill, 2 Denio, 145. 6 Parke, B., Poole f. Tunhridge, 2M. & W. 225 ; see Cotton v. Godwin, 7 M. & W. 147 ; City Bank v. Cutter, 3 Pick. 414. « Colby V. Reed, 99 U. S. 560. ' Ibid. 8 Infra, §§ 885 a ; and see also infra, § 603. s Supra, § 324 ; infra, § 606. 770 1° Wagenseller v. Simmers, 97 Penn. St. 465. In this case Mercur, J., said: " It was not necessary that he should say to her in express words, ' I will not marry you,' nor that she should run after him and say, ' I entreat you to marry me.' Marriage is a civil contract. A refusal to fulfil it may be as unmis- takably manifested by conduct as by words. The true question was, whether the acts and conduct of the plaintiff in error evinced an intention to be no longer bound. This has been held a correct rule in case of an agreement of sale of personal property. Preeth c. Burr, L. R. 9 C. P. 208. We think this rule applies with greater reason to a marriage contract which should rest on mutual affection. His denial that he had ever promised to marry was very strong evidence of a refusal. Coupled with his acts it fully justified the jury in finding a refusal." See infra, §§ 606, 885 a, 995. CHAP. XVII.] CONDITIONS. " [§ 576. § 576. It may be that there are transactions between a bailor and bailee which, from the nature of things, „ ' ° ' Demand must remain open until a demand is made by the necessary bailor on the bailee. In such case the demand is a pued i™ prerequisite to the inception of liquidated indebted- ^aSmeutor ness. Thus, when goods are left with a bailee for other con- T,., IT., IT ,. tract. sate custody, he is not chargeable with the duty oi returning them until a demand is made on him ; though it is otherwise when they have been converted by him wrongfully, in which case the bailment is determined, and he is at once chargeable as a wrong-doer.' Between a factor and his principal, also, the factor's duty is to account on demand ; and until the demand is made, or there be instructions to remit, he is not liable to a suit for non-accounting.^ And whenever demand is requisite, it must be given in reasonable time.^ A demand, however, may be made at any place where the party holding the goods may be found.* — A pledgee of stock or other assets, where the debt in question is payable on demand, cannot sell without demand, even where it is agreed that he may sell without notice to the debtor.' And unless a clause is contained in the contract dispensing with notice, the pledgee must, before sale, give reasonable notice to the pledgor.^ — That a demand, when requisite, under a contract of sale, should be made within a reasonable time, will be hereafter seen.' — A note payable in " legal services on demand" will not sustain an action until a demand, specifying the nature of the services required, has been made.' — When a demand is neces- ' Wilkinson u. Verity, L. R. 6 C. P. See 2 Kent's Com. 568 ; Mason v. Briggs, 206. See Wren v. Kirton, 11 Ves. 377 ; 16 Mass. 453. Foster o. Bank, 17 Mass. 479. Penn. < Dunlap v. Hunting, 2 Denio, 643 ; Coal Co. V. Blake, 85 N. Y. 227. infra, §§ 871 at seq. 2 Wh. on Agency, § 787; Topham v. = Campbell u. Parker, 9 Bosw. 322; Braddiok, 1 Taunt. 572 ; Burns v. Pills- Wilson v. Little, 1 Sandf. 351 ; S. C, 2 bury, 17 N. H. 66 ; Cooley v. Betts, 24 Comst. 443. Wend. 203. In Massachusetts, it has ^ Tucker v. Wilson, 1 P. Wms. 261 ; been said that in a claim against a for- Hart u. Ten Eyck, 2 Johns. Ch. 100 ; eign factor demand is not necessary. Stearns v. Marsh, 4 Denio, 227. Dodge u. Perkins, 9 Pick. 368. See, ? Infra, § 882 a. contra, Cooley v. Betts, 24 Wend. 203. » Haskell v. Mathews, 37 Me. 541. 3 Higgins V. Emmons, 5 Conn. 76. 771 § 577.] CONTRACTS. [chap. XVII. Bary, it is not excused by showing that the defendant would not probably have complied with it if made ;^ though it is otherwise where liability is generally denied.^ — A demand is necessary in all cases where the creditor has an option which must be determined before suit is brought.' § 577. Where a bond binds the obligor to a specific duty in case he does not pay a designated amount on de- mand, that demand is necessary to constitute liabil- ity on the bond ; though it is otherwise when the bond is merely conditioned for the payment of a specific sum without demand being required.^ And when a warrant of attorney is given for the payment of money on demand, demand is necessary to enable the warrant of attor- ney to become operative.' And interest on a money bond, not specifying any day for payment, runs from the date of the bond.' Bonds con- ditioned for pay- ment on demand re- quire de- mand. 1 Southwiok V. Bank, 84 N. Y. 421. « Hammett u. Brown, 60 Ala. 498 ; supra, § 575 ; infra., § 885 a. ' Thus, in a Wisconsin case, in 1882 (Wheeler Man. Co. v. Teetzlaff, 53 Wis. 211), the plaintiffs were shown to have delivered to the defendant a, sewing machine under a contract for the sale thereof, by which title was not to pass to the defendant until full payment was made in specific instalments, and on default of any payment the plaintiff was to be at liberty to take the machine away at his option. It was held that the plaintiff, on default in a payment, could not replevy the machine from the defendant's possession without demand or notice of his option, and refusal to surrender it, especially when it had been suffered to remain in defendant's possession for several months after the default, plaintiff claiming meanwhile that the payment was due. It was also held that in the absence of any 772 proof that the defendant was keeping out of the way to avoid notice and de- mand, a demand upon his wife, and her refusal to surrender the machine, and claim that it belonged to the defendant, were not a demand upon and refusal and claim by the defendant, unless she was especially authorized to act for him in that behalf, and the mere fact that she had made all the previous payments was not suiiicient to establish such agency. In support of these views were cited Smith v. Newland, 9 Hun, 553 ; Johnston v. Whittemore, 27 Mich. 463 ; Giddey v. Altman, id. 209 ; Deyoe v. Jamison, 33 id. 94 ; Cushman V. Jewell, 7 Hun, 525-530 ; Hutohings V. Hunger, 41 N. Y. 155-158. " Leake, 2d ed. 642; Carter v. Ring, 3 Camp. 459 ; Uibbs u. Southam, 5 B. & Ad. 911. " NichoU V. Bromley, 2 B. & B. 464 ; Capper v. Dando, 2 A. & E. 458. 6 Infra, § 881. CHAP. XVII.] CONDITIONS. ' [§ 579. 4. Delivery or other action hy promisee, § 579. It may be, that by conditions of sale, express or im- plied, the delivery of the goods is to precede the when pay- payment of the price. If so, delivery is a condition "^"Ji*'* precedent to the purchaser's liability on the contract, ^'^onei on 1 • 1 ■ • 1 !• 1 -in delivery or and no action can be maintained for the price before completion delivery.' Thus, where by the terms of sale fifty condfti? tion tons of iron were to be delivered " forthwith," while precedent. the price was to be paid within fourteen days, it was held that the delivery of the iron was a condition precedent to the pay- ing of the price.* And where, by the terms of the contract, a condition must be complied with by one party before there can be performance by the other party, this condition is a con- dition precedent.' — The practice in case of rescission is here- after considered.^ — When delivery is divisible, performance may be partial, and there may be a pro tanto recovery." It is otherwise when a delivery as an aggregate is contracted for.* Whether completion is a condition precedent depends on the construction of the contract.' In a case before the supreme court of the United States in 1880, it appeared that C. had contracted with the government for the removal of a rock in a particular harbor, the work to be finished at a specified time; and if he should be unable or unwilling to complete the work after beginning, the officer in charge was to terminate the en- gagement, and employ others to finish the work, deducting expenses from any money due C, who was to be responsible, for damages caused to others by his delay or laches. As the several sections of the work were in turn completed, he was to be paid pro tanto, reserving ten per cent, until the comple- tion and acceptance of the whole work. The work was not completed within the specified limit, owing to the failure of a 1 Ripley v. Maclure, 4 Ex. 345. See Cush. 286. See Cooper v. Altimus, 62 Smoot's case, 15 Wall. 37 ; Bean v. At- Penn. St. 486. water, 4 Conn. 9 ; Morris v. Sliter, 1 « Infra, § 919. Denio, 59. See infra, §§ 898 et seq. ' Infra, § 899. 2 Staunton v. Wood, 16 Q,. B. 638. 6 /,y^r. Crippin was in conflict with Hoare delivery. In an elaborate note by c. Rennie, and that between the two Mr. L. S. Landreth, it is argued that he preferred Simpson v. Crippin." the ruling of the court cannot be sua- 776 CHAP. XVII.] CONDITIONS. [§ 580. upon the construction of the contract. It is no doubt com- petent for me to say : " For the title to the property in ques- tion I will give you at once the price agreed on, though deliv- ery need not be at once made." This is all that is ruled in principle in Pordage v. Cole' and the error in that famous and much-discussed case- is, not in recognizing this principle, but in placing under the principle the facts then before the court.^ It is also competent for the parties to say : " The tained, and that in such, case there can he no rescission. Honck v. Miller, L. R. 7 Q. B. D. 92, is admitted to rule to the contrary, hut is held to be un- reasonable, and against the tenor of authority. To the effect that, when deliveries are not interdependent, the contract is not rescinded by failure in an initial delivery, see further Haines V. Tucker, 50 N. H. 309 ; Tyson v. Doe, 15 Vt. 571 ; Winchester v. Newton, 2 Allen, 492 ; Thompson v. Conover, 3 Vroom, 466 ; Morgan v. McKee, 77 Penn. St. 228 ; Luoesco Oil Co. v. Brewer, 66 Penn. St. 351 ; Kirkland v. Gates, 25 Ala. 465 ; Dunlap v. Petrie, 35 Miss. 590; McDaniels v. Whitney, 38 Iowa, 60; Sawyer v. R. R., 22 Wis. 403. The question in such oases is. Was the value to the purchaser of the later instalments dependent upon the due delivery to him of the prior instal- ments ? If so, he ought not to be com- pelled to receive the later instalments, and is justified in refusing to accept them. See Catlin v. Tobias, 26 N. Y. 217 ; Bradley v. King, 44 111. 339 ; Smith V. Lewis, 40 Ind. 98. It is otherwise when the contract provides for a series of deliveries not mutually dependent. In such cases we have virtually separate contracts, on each of which there can be a separate suit. See Dugan v. Anderson, 36 Md. 567; Loomis V. Bank, 10 Oh. St. 327 ; More V. Bonnet, 40 Cal. 251 ; and other cases cited 21 Am. Law Reg. 406. I 1 Saund.319, decided in 1669, 20 & 21 Charles I. ^ The plaintiff in that case agreed to sell land, and the defendant was to pay the plaintiff £775 for the land at an appointed time. The plaintiff, to adopt Judge Potter's summary in King Philip Mills V. Slater, 12 R. I. 82, "did not allege that he had ever con- veyed or offered to convey the land, but sued the defendant for the money. To persons of ordinary intelligence it would seem that although the money was to be paid at a particular time, yet as it was stated and admitted that it was for the land, the purchaser should not be required to pay until he got the land ; unless, which does not appear, the parties, when making the contract, knew it could not be con- veyed by that time. Then the defend- ant would have contracted with his eyes open. But the learned court held that the plaintiff should have his judg- ment for the money, and the defendant should be left to sue for his damages for not conveying the land. In some cases of this sort, justice might be done under the law and practice of set-off, by letting both parties sue and retain- ing the cases until both could be de- cided. But this would be a very roundabout way of doing justice. The court seems in this case to have been influenced by the fact that the agree- ment was under seal. But justice re- quires that the intentions of the parties 777 § 580.] CONTRACTS. [CHAP. XVII. goods are to be delivered by instalments, but the whole amount is to be paid at once." But the ordinary meaning of a contract to deliver in instalments is not this. It is : "I want these goods in instalments ; if they do not arrive each instalment in due time, it will defeat the object of the con- tract ; if the supply does not come in at the proper moment, I must immediately look elsewhere, and consider your con- tract with me as abandoned." This is the meaning we would ordinarily attach, for instance, to a contract by which sup- plies are to be given to a manufacturer, at stated periods, to enable him to carry on his works, as, for instance, where coal is needed for a furnace, and without which the fires would be extinguished and irreparable loss incurred. That, if there be an agreement to this effect, it is to be carried out, and rescis- sion permitted whenever there is a failure to pay an essential instalment, is plain ; and it is also plain that whether such is the purport of a contract is to be determined from its terms, as explained by the circumstances under which they were made. And to this conclusion the cases in this country tend.^ — In any view, where a default in payment of a should control as much in that case as Gross, J., criticizes the tendency of the in any other case of contract. When old cases to construe the covenants to in Goodisson u. Nunn, 4 Term Rep. be independent as ' contrary to the 761, A. D. 1792, in an action on a con- real sense of the parties and the true tract similar to the foregoing, except justice of the case.' See also the re- that a time was expressed for making marks of Lawrence, J." the deed, Pordage v. Cole, with 1 Rol. ' Phillips, etc.. Const. Co. v. Sey- Abr. 415, pi. 8, and Blaokwell v. Nash, mour, 91 U. S. 646 ; Dwinell v. How- 1 Str. 535, were cited for the plaintiff, ard, 30 Me. 258 ; King Philip Mills v. Lord Kenyon, C. J., in giving his deci- Slater, 12 R. I. 82 ; Reybold v. Voor- sion, said that the determinations in hees, 30 Penn. St. 116 ; Hartje v. Col- those cases outraged common sense, lins, 46 Penn. St. 268 ; Robson v. Bohn, He considered the old oases overruled 27 Minn. 333. In Van Buren v. Digges, by the decision of Lord Mansfield in 11 How. U. S. 461, it was held that Kingston u. Preston, as given in Jones when payment is to be made by instal- V. Barkley, Douglas, 689. And Buller, ments, at fixed periods, the contractor, J., said if there had been no case in on payment not being made, may quit opposition to those old ones, he should the work and sue for what has been not hesitate to make a precedent. And done ; and this though the contract Gross, J., considered the later decisions provides that the work shall be prose- as the most sensible. So in Glazebrook cuted until completion. 0. Woodrow, 8 Term Rep. 366, 371, In the 11th American edition of 778 CHAP. XVII.] CONDITIONS. [§ 580. first instalment is made with the evident intention of re- pudiating the contract, or indicates incapacity to perform it Cliitty on Contracts, II. 923, we liave the following note: "There may be rescission for the unperformed por- tions. And if I mistake not the eifeot of Grant v. Johnson, 1 Seld. 252 ; Dox ... Dey, 3 Wend. 361 ; Bradley v. King, 44 111. 339 ; they establish the sensi- ble rule that where the subject is divided in quantities and times for delivery, and price,- as each portion is performed or partially performed, and the partial performance is accepted, the doctrine of Boone u. Ayre applies as to so much as has been done, leaving the right of rescission as a remedy for the future performances, if they are capable of being severed, because of the defaults as to those parts as to which Boone v. Ayre applies. Smith V. Lewis, 40 Ind. 98, is distinct on the same point, unless it be that the per- mission to make deliveries at different times makes the difference." An in- structive article on this topic by Mr. McMurtrie will be found in 15th Am. Law Rev. (Oct. 1881) 580 ; see, also. Solicitors' Journal, London, July 13, 1881, as given in 15th Am. Law Rev. 687. In King Philip Mills t. Slater, 12 R. I. 82, which came before the supreme court of Rhode Island in 1877, the plaintiff, the King Philip Mills, on January 28, 1873, being about to go into operation, agreed with S. to sell to him the production of 400 looms up to July 1. The goods were to be made of specified weight, width, and quality, and to be delivered in lots of 1000 pieces ; and payment was to be made thirty days after the delivery of each lot. The mill was expected to be in full operation by April 1, but deliveries were to be made earlier if possible, and the maximum production was to be reached as soon as practicable, and to be maintained. About April 17, two lots, 1000 pieces each, were de- livered, and were deficient in width and weight. The evidence showed that the plaintiff to fulfil the contract must procure new machinery. Upon learning this S. rescinded the contract. The plaintiff brought assumpsit against S. for goods subsequently and before July 1 manufactured, tendered, and refused. — It was ruled that the con- tract was for successive deliveries of goods as manixfactured, and that the plaintiff having failed in the first de- liveries could not compel S. to take goods subsequently manufactured and offered. " It seems strange," said Potter, J., "that of the almost infinite variety and number of cases of contract coming before the courts, there should have been so few where the agreement was for successive deliveries at more or less definite periods ; and that when they have occurred, the decisions should have been so conflicting. This conflict has arisen, partly, we think, from applying to this class of contracts, distinguished from all others by this marked peculiarity, principles of de- cision which properly belonged only to other classes of contracts. " In cases of contracts for successive deliveries the doctrine of condition pre- cedent becomes more difficult of appli- cation. So, also, when in such cases the articles already delivered have been used, it becomes impossible for the party rescinding to return them and put the other party in statu quo. " In the progress of improvement in mechanics and the arts old systems of labor and of trade are changing, each branch of business becomes more and 779 § 581.] CONTRACTS. [chap. XVII. and to pay for the goods to be delivered in future, the seller will be relieved from further delivery.^ The insolvency of the purchaser, coupled with failure to pay for the first instal- ment, will relieve from the duty to deliver the remaining instalments.^ But a mere temporary default in payment of the first instalment will not, when explained and corrected, relieve the vendor from his obligations as to other instal- ments, for which the purchaser is willing and ready to pay f nor does an imperfection in performance which may be com- pensated for by a set-ofi", or by an action for damages.^ — What has been said applies a fortiori to sales of perishable articles, deliverable day after day, and to be paid for at the end of each week. Upon a single failure to pay, the vendor has a right to rescind.' § 581. In executory agreements for the sale of goods, the vendor's obligation to deliver and purchaser's obli- gation to pay, are ordinarily concurrent,^ and each constitutes a condition precedent, which cannot be enforced by either party without showing on his part performance, or ofier to perform, or prevention by the other side coupled with readiness and will- ingness on his part to perform.' Thus in an English case In execu- tory agree- ments de- livery and payment ordinarily concurrent. more subdivided, and, in consequence, every subdivision becomes more de- pendent upon others, and upon the strict and honest performance of the portion of the work they contribute towards the final product. And thus it is becoming more and more import- ant, as this interdependence of differ- ent branches of trade increases, that contracts of this sort should be carried out according to their spirit and object, without regard to the mere technicali- ties, and we might well say quibbles, of the older decisions." To the same general effect are Rey- bold u. Voorhees, 30 Penn. St. 116, and Shinn v. Bodine, 60 Penn. St. 182 ; though see remarks of Williams, J., Lucesco Oil Co. v. Brewer, 66 Penn. St. 351 ; Morgan v. McKee, 77 Penn. St. 229. 780 ' Bloomer v. Bernstein, L. R. 9 C. P. 5S8 ; see Withers v. Reynolds, 2 B. & Ad. 882. 2 Infra, §§ 603, 885 a, 901 ; Chalmers ex parte, L. R. 8 Ch. 289. 3 Freeth v. Burr, L. R. 9 C. P. 208. 4 Scott r. Coal Co., 89 Penn. St. 231 ; seeinfia, §§ 899, 1009; and see as to remedy, supra, §§ 282 et seq. 5 Reybold o. Voorhees, 30 Penn. St. 116. '> See infra, § 584. ' Supra, § 558 ; Benj. on Sales, 3d Am. ed. § 592 ; Waterhouse v. Skinner, 2 B. & P. 447 ; Rawson v. Johnson, 1 East, 203 ; Jackson v. Allaway, 6 JI. & G. 942; Warren u. Wheeler, 21 Me. 484 ; Jones v. Marsh, 22 Vt. 144 ; Lord r. Belknap, 1 Cush. 279 ; Smith c. Lewis, 26 Conn. 118 ; Gazley v. Price, 16 Johns. 267 ; Williams v. Healey, 3 CHAP. XVII.] CONDITIONS. [§ 581, taken by Mr. Benjamin to illustrate this principle,' there was a mutual agreement for cross-sales, as follows : " Bought of A. & Co. about thirty packs of Cheviot fleeces, and agreed to take the undermentioned noils (coarse woollen cloths so-called) ; also agreed to draw for 250?. on account, at three months, 16 packs No. 5 noils, at lOfc?. ; 8 packs No. 4 noils, at 12d." The defendant had bargained with the plaintiff for the purchase of the fleeces, and had agreed to sell him the noils. The noils having risen in price, the defendant refused to deliver them. The plaintiff, in his action, averred independent agreements, but he was nonsuited, all the judges holding that he should have alleged an offer to deliver the fleeces, which was a con- dition precedent to his right to claim the noils. — When land is sold, the conveyance of the title, and payment for it, are usually concurrent acts, one dependent on the other. There can therefore be no suit for the purchase money in such case, without a conveyance of title ; there can be no suit for the land without a payment or tender of purchase money.^ The vendor, it is true, on tendering conveyance, may sustain a bill for specific performance ; or the purchaser may sustain a bill for specific performance on tendering the purchase money.* But at law, while either party may claim damages for the other's default, neither party can sue the other on his direct promise without proving that he has done his part ; and hence if the purchaser refuses to take title, while liable to a suit for damages, or to a bill for specific performance, he is not liable at law on his promise to pay the purchase money .^ It is other- wise, however, as we have seen, when the conveyance and the payment are not to be concurrent.^ — It may be, for instance, that the payment is fixed on a particular day ; while it is not Denio, 363 ; Campbell v. Gittings, 19 v. Pirn, 7 M. & W. 474 ; Manby v. Ohio, 347 ; Hough v. Eawson, 172 111. Cremouini, 6 Ex. 808 ; Marsden v. 588 ; Cole U.Hester, 9 Ired. 23; Grandy Moore, 4 H. & N. 500; Bankart v. V. McCleese, 2 Jones, N. C. 142. As to Bowers, L. R. 1 C. P. 484 ; Smith v. R. mode of performance, see infra, § 869 R., 6 Allen, 262 ; Phillips v. Soule, 9 et seq.; as to tender, see infra, §§ 970 et Gray, 233 ; Williams v. Healey, 3 Denio, seg. 363 ; Campbell v. Gittings, 19 Ohio, 347. 1 Atkinson v. Smith, 14 M. &W. 695. ' Bispham's Eq. §§ 370 et seq. 2 Supra, § 558 ; Leake, 2d ed. 612; ' Laird v. Pim, 7 M. & W. 474. Heard v. Wadham, 1 East, 619 ; Laird ^ Supra, §§ 545 et seq. 781 § 584.] CONTRACTS. [chap. XVII. practicable, in consequence of the absence or temporary dis- ability of one or more of the parties, to have the conveyance ready on that day. In such case the conveyance is not a con- dition precedent to the payment ; and to enable the vendor to recover, all that is necessary is for him to show that he took all the steps obligatory on him towards tendering the convey- ance.' And the rule, also, does not apply in those cases in which from the nature of the transaction delivery and pay- ment are not concurrent duties.^ g^j. ^ § 582. Where the time fixed for payment is to ment may happen or may happen before the time fixed for delivery. performance, an action may be brought for the money (or other consideration) before the performance.' § 583. Although a sale of goods is not to be perfected until delivery, and the risk of loss may not attach may^takr *° ^^^ purchaser until delivery, yet if the parties risk of de- stipulate that the srooda are at the purchaser's risk livery. '- ° _ ^ from the time of the contract, this throws the bur- den of loss on the purchaser in case the goods are destroyed before the period of delivery has arrived.^ § 584. In an ordinary Cash sale of goods, delivery of the goods by the vendor to the purchaser, and payment by the In cash purchaser to the vendor, are supposed to be concur- goods de- rent, the one conditioned on the other.' No formal payment tender from the one side to the other is necessary ; rent!""*^""^ it is enough for the vendor to be ready and willing to deliver, and the purchaser to be ready and will- ing to pay. If the sale is made on this basis, the contract is complete.^ It may happen, however, that the goods are deliv- ' Leake, 2d ed. 682 ; Pordage v. Cole, Robb v. Montgomery, 20 Johns. 15 ; 1 Wms. Saund. 319 ; Dicker v. Jack- Lowry v. Mehafify, 10 Watts, 387. son, 6 C. B. 103. As to time of per- ■< Leake, 2d ed. 658; Castle v. Playford, formanoe see fully infra, §§ 881 et seg. L. E. 7 Ex. 98 ; Martineau v. Kitching, 2 Supra, §§ 545 et seq., infra, §§ 881 et L. R. 7 Q. B. 436. See supra, § 317. seq. 6 Supra, § 558 ; Morton v. Lamb, 7 " Supra, §§ 659 et seq. ; Peeters r. T. E. 128. Opie, 2 Saund. 350 ; Irving v. King, 4 ^ Leake, 2d ed. 654 ; Rawson v. John- C. & P. 309 ; Pistor v. Cater, 9 M. & son, 1 East, 203 ; "Waterhouse v. Skin- W. 315 ; Lord v. Belknap, 1 Cugh. 279 ; ner, 2 B. & p. 447 ; Boyd v. Lett, 1 C. B. 262. 782 CHAP. XVII.] CONDITIONS. [§ 586. ered without payment, with the express understanding that the title remains with the vendor until the price be paid. If so, the payment is a condition precedent to the vesting of the title in the purchaser.' § 585. A delivery of goods, also, by a person promising to furnish them in a state fit for the market, may be conditioned on receiving from the promisee the ofgoods^ proper raw material. In this case the receiving the ™itk,ned'on material is a condition precedent to the delivery of supply of ^ •' material. the goods.^ — "What has been said with regard to the delivery of goods applies, mutatis mutandis, to agreements for the finishing of a particular piece of work, the materials to be furnished by the other contracting party .^ § 586. A lessee may bind himself to repair, providing cer- tain things are first done by the lessor, in which case the condition must be satisfied before the lessee's lia- by lessee to bility attaches. This is the case when the lessee's be'^mad^"^ enga,gement is made dependent upon the supervision dependent by a surveyor to be appointed by the lessor ;* or upon acts of les- the lessor finding the timber, in which case, how- ever, readiness and willingness to furnish the timber are sufli- cient without actual cutting until required ;= or upon certain preliminary repairs being done by the lessor.^ But a covenant by a tenant to repair, he being privileged to take from the 1 Smith u. Foster, 18 Vt. 182 ; Root V. Lord, 23 Vt. 568 ; Ayer v. Bartlett, 9 Pick. 156; Brewster u. Baker, 20 Barb. 364 ; Parris v. Roberts, 12 Ired. L. 268. 2 Savage Man. Co. u. Armstrong, 19 Me. 147 ; Mill Dam Foundry v. Hovey, 21 Pick. 417 ; see Clement v. Clement, 8 N. H. 210 ; Downer v. Frizzle, 10 Vt. 541; See v. Partridge, 2 Duer, 463. Where a note was payable in goeds, to be delivered to the creditor on a spe- cific day, with the right reserved to the creditor to make a reasonable selec- tion, and the creditor made no selec- tion, but, before the time of payment, requested the debtor not to send any goods until ordered, it was held that the debtor was not by this discharged from the contract, and that the creditor did not, by this request alone, lose his right of selection. Gilbert v. Danforth, 2 Selden, 585. In Robertson v. Amazon Tug Co., 45 L. T. N. S. 317, cited supra, § 212, it was held that where one party undertakes to perform certain services for the other party with the means to be provided by such other party, there is an implied warranty that such means are reasonably fit for the purpose for which they have been provided. 5 Hall V. Rupley, 10 Barr, 231, cited infra, § 605. ■* Coombe v. Greene, 11 M. & W. 480. ^ Thomas v. Cadwallader, Willes, 496 ; Martyn v. Clue, 18 Q. B. 681. " Neale v. Ratcliffe, 15 Q. B. 916. 783 § 588.] CONTRACTS. [chap. XVII. estate whatever timber he required for the purpose, is held to be absolute, not dependent upon there being sufficient timber on the premises.! § 587. A promise, also, may be conditioned on the exercise of prudence and diligence on the part of the prom- isee. Illustrations of this are to be found in con- tracts of service which are conditioned on the good conduct of the employee, and in contracts of com- mon carriage which are conditioned on the owner doing nothing to interfere with the due performance of the carrier's duties.^ Promise may be condition- ed on pru- dence and diligence of promisee. 5. Discretion of promisor. § 588. A promise which is determinable at the will of the promisor is inoperative.^ This has been held to be the case with a contract to take into service at wages to be fixed by the promisor, which is virtually a promise to make a promise.^ It has been Promise determina- ble at pro- misor's choice is invalid. 1 Dean of Bristol v. Jones, 1 E. & E. 484. • 2 Wh. on Neg. §§ 334 et seq. 3 Leake, 2d ed. 13, 637 ; Faulkner v. Lowe, 2 Ex. 595 ; Barnard v. Gushing, 4 Met. (Mass.) 230; see Demuth v. Institute, 75 N. Y. 502 ; cited supra, § 16. 1 Leake, 2d ed. 636 ; Story on Cont. § 41 ; Roberts v. Smith, 4 H. & N. 315. Mr. Leake says (citing Taylor v. Brewer, 1 M. & S. 290 ; Roberts v. Smith, 4 H. & N. 315 ; Parker v. Ibbetson, 4 C. B. N. S. 346) : " Where an employer engages a servant or agent upon the terms of making him such remuneration as he, the employer, shall think right, there is no legal liability to pay anything." On the other hand, in Bryant «. Flight, 5 M. & W. 114, the case on a quantum meruit was left to the jury ; Parke, B., diss. In Butler u. Winona, Sup. Ct. Minn. 1881, it was held that in such case the agreement could he perfected hy the 784 fixing of wages in good faith by the employer, and that this hound the employee. "It appears," said Clark, J., " from the findings of fact that the plaintiff performed services for the de- fendant corporation under a contract whereby ' it was agreed that plaintiff was to enter the service of the defend- ant in superintending the mason work of a mill, about to he erected by it, and the amount of the plaintiif 's compen- sation, therefore, was to be left entirely to the defendant to determine and fix after the services were performed, at such price and amount as, under all the circumstances, it (defendant) should consider right and proper.' It further appears from the findings ' that after such services were completed, and before the action was brought, the de- fendant determined and fixed upon the sum of $2.50 per day as the amount of plaintiff's compensation, and as the amount and price thereof, which, under the circumstances, it (defendant) con- CHAP. XVII. J CONDITIONS. [§ 588. held that no legal liability is imposed by a stipulation to take whatever the promisor feels able to pay ;' and by an agreement to build a house if the promisor chooses.^ At the same time if there be a consideration for such a pro- mise, and if it imposes any specific duty on the promisor, it may be enforced by a court of equity, and if broken, ex- poses the party making it to an action for damages.* — Under this head may be noticed the line of cases already discussed in which it is held that an inchoate negotiation which is not to take effect until reduced to form does not bind.* Hence, a court of equity will not enforce specific performance of an agreement " subject to a contract to be settled," or " subject to a proper contract and the payment of a deposit to be agreed on."° — The Roman standards are emphatic to the effect that a promise by a person to do a thing in the future at his own sidered right and proper. ' The further fact is found that the services were reasonably worth four dollars per day. The court below gave judgment for the amount of the compensation at the rate of two and a half dollars per day. The plaintiff claims that he was entitled to a judgment at the rate of four dollars per day. We think the judgment, as rendered, is correct. The contract was clear and unambiguous. The stipula- tion that the amount of the compensa- tion should depend upon the judgment and decision of the employer may have been an undesirable one for the plain- tiff to consent to ; but he, neverthe- less, chose to accept the employment on those terms. The contract was an entirety and of obligation iu all its parts, and the law cannot, after it has been executed, relieve the plaintiff from the consequences of one of its stipulations which proves to be disad- vantageous to him. That would, in effect, be making a new contract for the parties. It was the duty of the defendant to determine and fix the amount of the compensation honestly VOL. I. — 50 and in good faith, and if it did so fix it, the obligation of the contract was fulfilled so far as that matter is con- cerned. It is not alleged in the plead- ings nor found in the decision that the defendant acted fraudulently or in bad faith, and fraud or bad faith is not to be presumed. The mere fact that the defendant fixed the compensation at an amount considerably less than the learned judge of the trial court found, upon the evidence before him, the services was reasonably worth, is not of itself sufficient to justify an inference of fraud or bad faith. ' ' ' Nelson v. Bonnhorst, 29 Penn. St. 352. 2 Rosher v. Williams, L. R. 20 Eq. 210 ; see Harrison v. Guest, 6 D. M. Gt. 424 ; 111. Deaf and Dumb Inst. (/. Piatt, 5 111. Ap. 567. ' See Graham v, Graham, 34 Penn. St. 475 ; Tell City Co. v. Nees, 63 Ind. 245. * Supra, § 5. * Harvey v, Barnard's-inn, 45 L. T. N. S. 280. 785 § 590.] CONTRACTS. [CHAP. XVII. election is inoperative.^ "Illam autem stipulationam, si vol- ueris dari, inutilem esse constat."^ " Nulla promissio potest consistere, quse ex voluntate promittentis statum capit."^ " ITeque enim debet in arbitrium rei conferri, an sit adstric- tus." Ab Windscheid* remarks, such a promise involves a contradiction : it is to be bound and not to be bound ; to assume a duty and not to assume a duty. But a distinction is to betaken between cases where the condition is the prom- isor's future intention to do the particular thing, and cases in which the condition is his intention to do some other thing. For a man to say, " I will to do this thing when I will to do it,'" is a mere play on words ; for him to say, " I will to do this thing when at some future time I will to do some other thing," makes a promise which can at least be understood. § 589. It may be that on the last distinction may be ex- plained the rulings sustaining conditions in con- as to™ o-^ tracts for sale that the vendee shall "on trial" or misor's ap- a qjj approval " be satisfied with the thing delivered.' goods or — A retention of the goods beyond the time allowed for trial, however, makes the sale absolute.^ — The buyer has the entire time allotted for trial in which to change his mind and return the goods.' If the buyer unnecessarily consumes such a portion of the goods as materially impairs their value, this makes the sale absolute.^ § 59t). Contracts " of sale or return " differ from contracts of sale on trial in this, that the sale on trial calls for some sort of trial of the goods, and becomes absolute on expression ' L. 8, D. de Q. et A. (44, 7) ; L. too far in leaving the matter too much 108, § 1, D. de V. 0. (45. 1) ; L. pr. D. to the purchaser's caprice ; see supra, de cont. emt. (18, 1) ; L. 13, C. eod. § 16. (4. 38) ; L. 46, § 3, cit. 6 n,;^. . Humphries v. Carvalho, 16 2 L. ]08, § 1, cit. East, 45 ; Waters Heater Co. u. Mans- 3 L. 7, pr. cit. field, 48 Vt. 378 ; Dewey v. Erie, 14 « § 93. Penn. St. 211 ; Spickler v. Marsh, 36 6 Benj. on Sales, §§ 565, 595 ; Dela- Md. 222 ; Prairie Farmer Co. v. Taylor, mater v. Chappell, 48 Md. 244; Mc 69 111.440. Cormick v. Basal, 50 Iowa, 523 ; Hunt ' Ellis u. Mortimer, 1 B. & P. N. R. V. VPyman, 100 Mass. 198 ; Reed v. Up- 257 ; Aiken v. Hyde, 99 Mass. 183. ton, 10 Pick. 522 ; see McCarren t'.Mo- s Elliott v. Thomas, 8 M. & W. 170 ; Nulty, 7 Gray, 139 ; Atkins v. Barn- Lucy u. Mouflet, 5 H. & N. 229 ; see stable, 97 Mass. 428 ; oases which go Smith v. Love, 64 N. C. 439. 786 CHAP. XVII.] CONDITIONS. [§ 591. of approval as well as on retention beyond the time fixed for trial ; while contracts " of sale or return" do not , , , , . . . 1 , . . , . And 80 as make subjection to trial a condition, and consist to con- of a mere proposal of sale, the retention of the goods sale or beyond a reasonable time being an acceptance.' But •'<''"™" a contract which provides for the delivery of the goods to the purchaser to be paid for in the future or returned if he cannot pay, constitutes a present sale.^ — To agree to purchase if satis- fied creates a condition precedent ; to agree to return if not satisfied constitutes a condition subsequent. "An agreement to purchase if he liked is essentially different from an option to return a purchase if he should not like. In one case the title will not pass until the option is determined ; in the other the property passes at once, subject to the right to rescind and return."' And a return before the time limited is not made inoperative by the fact that the article returned has been in- termediately injured by causes with which the purchaser has had nothing to do.^ But in any case the return must be within the period limited, or the sale is absolute, and even a suit on the warranty is excluded." § 591. Further illustrations of the rule that a promise may be conditioned on the promisor's approval of certain „ extraneous acts or things are to be found in cases in of approval , . , a.- j^ ^ • J i J- I must not be which an oner oi a reward is made to parties who capricious- come up to certain conditions determined by the 'y^'^'''^'^^'* promisor;' and in cases of offers to architects to make plans for a proposed building, such plans to be paid for if satisfactory.' In such case the duty of examination must not be exercised capriciously, but there must be a reasonable trial of the plans ;^ though it is competent for the parties to leave the question 1 Moss V. Sweet, 16 Q. B. 493 ; El- " Head v. Tattersall, L. R. 7 Ex. 7. phick V. Barnes, L. R. 5 C. P. D. 321 ; 5 Hinchcliffe v. Barwick, L. R. 5 Ex. Perkins v. Douglass, 20 Me. 317 ; Ray D. 177. V. Thompson, 12 Cush. 281 ; Schlesin- « Supra, § 24. ger V. Stratton, 9 R. I. 578 ; Chamber- ' Moffatt v. Dickson, 13 C. B. 543 ; lain V. Smith, 44 Penn. St. 431. 15 C. B. 583. As to plans to be sub- 2 Martin v. Adams, 104 Mass. 262 ; mitted to architects, see infra, § 594. McKinney v. Bradlee, 117 Mass. 321. « Dallman v. King, 4 Bing. N. C. 3 Wells, J., Hunt v. Wyman, 100 105 ; Parsons v. Sexton, 4 C. B. 899. Mass. 198. 787 § 593.] CONTRACTS. [CHAP. XVII. absolutely to the determination of the employer, in which case it will be sufficient if he exercises his option in good faith.' — Another illustration is to be found in the conditions, common in leases, prohibiting assignments unless with the lessor's assent. The lessor's right of rejection in such cases cannot be arbitrarily exercised. Hence, it has been held that a mere arbitrary and unreasonable refuSal to assent to an assignment does not preclude such an assignment, though each limitation of this kind is to be determined by its special terms.^ — Still more strongly is the fairness of such discretion insisted on when its exercise has in it anything of the judicial element. Thus, where, in an assignment for creditors, it is provided that debts shall be verified by such proof as the assignee shall require, it has been held obligatory on the assignee to subject the claims only to reasonable tests.' And a similar duty is imposed upon insurers by the clause in poli- cies requiring that, before payment of an alleged loss, the in- sured must furnish to the insurers such proofs as they shall deem necessary to establish his claim.^ 6. Action of third party. § 593. A third party may be made the arbiter of the corn- Third party pliance with a condition.^ Thus, an agreement to Sade'arbi- ^°^^ money on mortgage, provided the property to ter of com- be mortgaged receives a certain valuation, is condi- pliance i=> c^ ? with con- tioned on the furnishing of such a valuation ;* an dition. agreement for the price of transportation to be fixed by the quartermaster is conditioned on the decision of the quartermaster ;' an agreement to pay a price to be determined on measurement by a particular person is conditioned on 1 Andrews u. Belfield, 2 C. B. N. S. V7orsley u. Wood, 6 T. R. 720; Ames 779 ; Stadhard ... Lee, 3 B. & S. 364; ^.Vose, 71 Me. 17; Read v. Decker, 67 2 Pars, on Cent. 59. N. Y. 182 ; Nofsinger ,.. Ring, 71 Mo. 2 Treloar v. Bigge, L. R. 9 Ex. 151 ; 149. As to approval of architect, see Lehmann v. McArthur, L. R. 3 Ch. infra, § 594 ; of engineer, Beau v. Miller, 496. 69 Mo. 384. 3 Coles V. Turner, L. R. 1 C. P. 373. « Leake, 2d ed. 639 ; Thurnell v. Bal- 1 Braunstein u. Ins. Co., 1 B. & S. liirnie, 2 M. & W. 786. 782. 7 Kihiberg v. U. S., 97 U. S. 398. 6 Benj. on Sales, 3d Am. ed. § 574; 788 CHAP. XVII.2 CONDITIONS. [§ 593. measurement by such person ;* and an agreement to pay in- surance may be conditioned on a certificate being obtained as to the loss from a neighboring magistrate.^ An agreement, also, for the sale of shares in a corporation may be made conditional on the approval of the sale by the directors, though this is dependent upon the charter of the company ; and unless this power is given to the directors, their consent to a bona fide transfer of the stock will be compelled.^ — When the agreement is to pay a price to be fixed by A., the price, when fixed, is as much part of the contract as it would have been if fixed by the parties themselves.^ When, also, P., on leasing V.'s rail- road, agrees to pay V.'s debts when duly adjusted and au- dited, there can be no suit on this agreement when V. refuses to make such an adjustment, even though the creditors of V. have obtained a judgment for their particular debts.' — If an agreement is made for a sale at a specific price, provided that if a third party decide in a particular way the price shall be higher, and the third party, without fault of the buyer, refuses to interfere, the property must be delivered at the price fixed in the agreement.' When the agreement, also, is ' Mills «. Bayley, 2 H. & C. 36. Where a condition in a sale of a horse was that "horses warranted . . . not answering the warranty, must be returned by 5 o'clock of the day after the sale ; shall then be tried by a per- son to be appointed by the auctioneer, and the decision of such person shall be final ;" it was held that a plaintiff who had neglected to return within the period limited, so that the arbitrament could be made, could not subsequently bring suit on the warranty. Hincliffe 0. Barwick, L. R. 5 Ex. D. 177. 2 See Worsley v. Wood, 6 T. R. 710 Columbia Ins. Co. v. Lawrence, 10 Pet, 513; Leadbetter v. Ins. Co., 13 Me, 265 ; Turley v. Ins. Co., 25 Wend. 374. » Weston's case, L. R. 4 Ch. 20. ■• Benj. on Sales, 3d Am. ed. § 87 Fuller V. Bean, 34 N. H. 301 ; Nutting V. Dickinson, 8 Allen, 540 ; MoCandlish V. Neuman, 22 Penn. St. 460 ; Cunning- ham V. Ashbrook, 20 Mo. 553. " Bills V. R. R. Assoc, 7 Baxt.(Tenn.) 595. s In Bogden a. Marriott, 2 Bing. N. C. 473, the doctrine in the text was pushed to its extremest limit. An agreement between A. and B. provided that A. should sell a horse to B. for one shilling, provided that if, to the satis- faction of C, the horse should trot eighteen miles in an hour, B. should pay the price of £200. C. refused to attend without any fault of the buyer. It was held that A. was obliged to deliver the horse to B. for one shilling; and Tindal, C. J., said that this ' ' was a condition which the defendant should have shown to have been performed, or that the performance was prevented by the fault of the oppo- site side." 789 § 594.] CONTRACTS. [CHAP. XVII. to sell at a price to be fixed by A., and A. refuses to fix the price, without any fault of either party, then, as the fixing the price is a condition precedent of the sale, there is no sale.* If, in the case of a sale of real estate, the appraiser is ready to enter and make the appraisement, the court will order the vendor to allow him to enter and appraise, so that specific per- formance can be decreed.^ "When an appraiser refuses to act on a sale of goods whose price is to be fixed on his appraise- ment, this also is a condition precedent to a sale; though if the buyer obtain possession of and retain the goods after such non-appraisement, he may become liable on an implied con- tract for their value.' — If the contract is to be performed to the satisfaction of another, the decision of such person, if honest, is final, no matter how unreasonable.^ If, however, there is collusion, this entitles party defrauded to rescind.' Thus, in a recent English case,^ the evidence was that the defendants agreed with the plaiutifl:s to lay a cable, the payment to be in part on the beginning of the work, and in part in twelve in- stalments, payable on certificates by the plaintiffs' engineer. The engineer, who was employed to lay other cables for the defendants, agreed with them to lay this cable also for a price to be paid him by them. It was held that this agreement was a fraud, entitling the plaintiffs to have their contract rescinded, and to have the mone^' they had paid under it returned. § 594. Building contracts often contain the provision that the owner shall not be liable to the builder until contracts the work has been approved by the architect em- madede- ploycd ; and this provision, when the builder takes pendent on ^-j^g work subject to it, and when the architect acts architect, as an independent arbiter between the parties, will ■ Leake, 2d ed. 640 ; Emery v. Wase, Bean, 34 N. H. 304 ; Borden v. Borden, 8 Ves. 505 ; Milnes ^. Gery, 14 Ves. 5 Mass. 67. 400 ; Thurnell v. Balbirnie, 2 M. & W. » Brown u. Foster, 113 Mass. 136 ; 786 ; Firth v. R. R., L. R. 20 Eq. 100. Zaleski ^. Clark, 44 Conn. 218 ; Gray See Anderson v. Wallace, 3 CI. & F. 26. o. R. R., 11 Hun, 70 ; Gibson u. Cran- io Smith V. Peters, L. R. 20 Eq. 511. ege, 39 Mich. 49 ; and oases cited infra, ' Leake, 2d ed. 640 ; Thurnell v. § 594. Balbirnie, 2 M. & W. 786 ; Clarke v. = Infra, § 594. Westrope, 18 C. B. 765. See Fuller v. « Panama Tel. Co. i-. India Rubber Co., L. R. 10 Ch. 515. 790 CHAP. XVII.] CONDITIONS. [§ 594. be strictly enforced. The owner has no right to complain, since the architect was selected by him, and charged by him with this very power ; the builder has no right to complain, since he took the work on this very condition. No matter bow arbitrary may be the action of the architect in refusing to give the certificate required by the contract, yet, if he per- sists in his refusal, the builder cannot recover on the contract price.' It is otherwise when the architect in collusion with the owner refuses to give the certificate, in which case the owner and the architect may together be liable in an action for conspiracy, or the owner may be made liable on the con- tract being estopped by his own fraud from setting up the refusal of the architect to certify.^ The converse is also true: a settlement made by the architect collusively with the builder will not bind the owner.* — When performance of the archi- ' Leake, 2d ed. 640 ; Benj. on Sales, 3d Am. ed. § 575 ; Morgan v. Birnie, 9 Bing. 672 ; Grafton v. R. R., 8 Ex. 699 ; Clarke o. Watson, 18 C. B. N. S. 278 ; Goodyear v. Weymouth, 1 H. & R. 67 ; 35 L. J. C. P. 12 ; Ferguson v. Gait, 23 Up. Can. C. P. 66 ; Schenke v. Rowell, 7 Daly, 286 ; Smith v. Brlggs, 3 Denlo, 73 ; Whlteman v. Mayor, 21 Hun, 117 ; North Lebanon R. R. u. McGrann, 33 Penn. St. 530 ; Reynolds v. Caldwell, 51 Penn. St. 298 ; O'Reilly v. Kerns, 52 Penn. St. 214 ; Condon v. R. R., 14 Grat. 302 ; Lull v. Korf, 84 111. 225 ; Bean v. Miller, 69 Mo. 384. 2 Batterbury v. Vyse, 2 H. & C. 42 ; Ludbrook v. Barrett, 46 L. J. C. P. 798, cited Leake, 2d ed. Add. xcv. ; Hud- sou V. McCartney, 33 Wis. 331 ; Sulli- van V. Byrne, 10 S. C. 122. As to col- lusion, see Panama Tel. Co. v. India Rubber Co., L. R. 10 Ch. 515, cited supra, § 593 ; and see supra, § 279. In Hudson v. McCartney, 33 Wis. 331, Dixon, C. J., said: "If fraud in the arbiter can ever be established by proof that he refused to certify the execution of the work when the same had been duly and properly performed. it can only be in those cases where the refusal is shown to have been grossly and palpably perverse, oppressive, and unjust, so much so that the inference of bad faith and dishonesty would at once arise when the facts are known." ' Supra, § 279. In Tetz v. Butter- field, S. C. Wise. 1882, 4 Wise. Leg. News, 197, Taylor, J., giving the opin- ion of the court, said : " The evidence olTered by the defendant in this case, if given, would have tended to prove such a state of facts as would at least have justified an inference of bad faith on the part of the architect in accept- ing the work. Knowingly accepting unsound and rotten materials where the contract called for sound materials would certainly tend to prove bad faith, and if the evidence had shown that he had permitted large quantities of such material to be used, when the contract called for sound and perfect materials, it would be almost conclusive evidence of that fact. Proof that a few pieces of imperfect material had been used, or that in some slight mat- ters the workmanship had not been in strict accordance with the terms of the 791 § 594.] CONTKACTS. [CHAP. XVII. tect's duties is made impossible by the vendee, this avoids the contract.' — The general rule above stated obtains in equity as well as in law.^ A builder, also, who undertakes to finish certain work ordered by an architect by a specific time, can- not, after undertaking the work, dispute the feasibility of performance within the time, and is liable for the delay.^ When, also, it is provided by the contract that the owner's liability should cease upon a default by the builder deter- mined by the architect, the architect's decision on the ques- tion of default binds the builder.^ Even a forfeiture of what is due on prior work may be thus determined, so that the architect's decision imposing such forfeiture is final. * — The certificate must be exact and conform to the condition.* — The principal is not bound by the architect's decision in a matter not within the architect's range of authority. Thus, in a case in Connecticut in 1880,' B. made a written contract to furnish materials and build a house for C, according to definite plans and specifications, for a fixed sum of money. All materials and work were to be accepted by a certain architect, who was to superintend the construction. B., under directions of the architect, did extra work. It was held that the direction and approval of such work was beyond the scope of the architect's agency, and that, therefore, C. was not liable thereupon.* contract and specifications, would not " Faunce v. Burke, 16 Penn. St. 469. be sufficient to avoid the acceptance of That an architect's certificate can be the work by the architect, nor estab- by parol, see Roberts u. Watkins, 14 lish bad faith on his part ; but it C. B. N. S. 592 ; though it is otherwise seems to us, if the defendant had when the contract requires the certifi- proTed all the matters set out in his cate to be in writing. Lamprell (■- answer to their full extent, it would Billericay Union, 3 Ex. 283 ; Russell have shown such a want of faithful- v. Bandeira. 13 C. B. N. S. 149. When ness on the part of the architect as the written order by the engineer is should render his acts ineffectual to made an essential to a recovery for bind the defendant." extra work, the mere approval by the 1 Clarke u. Westrope, 18 C. B. 765 ; engineer without such order will not see supra, § 312 ; infra, § 603. sustain a recovery. Tharsis Co. u. 2 Scott 0. Liverpool, 3 D. & J. 334; McElroy, L. R. 3 Ap. Ca. 1040. De Worms v. Mellier, L. E. 16 Eq. 654 ; « Smith v. Briggs, 3 Denio, 73. M'Intosh V. R. R., 2 Mac. & G.74. ' Starkweather v. Goodman, 48 Conn. ' Jones V. St. John's Coll., L. R. 6 101. Q. B. 115. 8 gge to same effect, Downey v. * Roberts v. Bury, L. R. 5 C. P. 310 ; O'Donnell, 86 111. 49. Wadsworth v. Smith, L. R. 6 Q. B. 332. 792 CHAP. XVII.] CONDITIONS. [§ 597. And where a third party is made arbiter, his decision must be conformed to. Thus, on a contract to guarantee the payment of a certain sum in consideration of the building of a county bridge at a place to be determined by viewers, there can be no recovery if the location determined by the viewers is changed.* — As has been already seen, if the arbiter, in collu- sion with one party, decides improperly in favor ef the other, this does not bind the.former.^ § 595. A subscription to a charity or other public under- taking may be conditioned on a certain amount be- subscrip- ing elsewhere subscribed ; and if the condition be ^'g °o^^7 not complied with, the subscription is void.^ On the tioned on ... T . , action of other hand, when such subscriptions are made with- third out such condition, each one on the faith of the other, ^^"^ ^^^' each subscriber is estopped so far as concerns other bona fide subscribers who have paid in from denying the binding effect of his subscription.* But unless the condition on which the subscription is dependent is fulfilled, it is not due.' § 596. We have already seen that the refusal of a third party to do an act the defendant guaranteed he should do Refusal of is no defence to an action against the defendant on 'Wrd party 1 B mi IT no defence the guaranty." i he same rule applies to a contract toguar- that a third person shall do or abstain from doing ""^ ^' a particular thing. The promisor, it is settled, becomes abso- lutely bound on such a promise on the happening of the con- dition.' 7. Contingent future event. § 597. Although, unless so limited by the contract, the per- formance of a promise will not be regarded as conditioned by ' Mercer Co. v. Coovert, 6 W. & S. 70. 10 Allen, 245 ; Mann v. Cook, 20 Conn. 2 Tetz V. Butterfield, S. C. Wise. 178 ; Garrett v. R. R., 78 Penn. St. 1881, 4 Wise. Leg. News, 197, cited 465 ; Smith v. Tallahassee, 30 Ala. 650 ; supra, and other cases above cited. see for other distinctions, supra, § 528. ' Supra, §§ 16 a, 528 ; New YorkExc. ^ Supra, § 528. Co. V. De Wolf, 31 N. Y. 273. « Supra, § 321. « Wh. on Ev. § 1068 ; Gilmore v. ^ Supra, §§ 311, 545 et seq. Veazie, 24 Me. 202 ; Brigham v. Mead, 793 § 599.] CONTRACTS. [CHAP. XVII. an act to be done by tbe promisee when not necessary to such performance, yet it is competent for the parties to matter make a collateral matter a condition precedent. made a If they 80 declare, their intention will be carried out prec^eden" ^^ ^^^ court, unlcss the objcct be to cover an illegal wager.' "Parties may think some matter, appa- rently of very little importance, essential, and if they suffi- ciently express an intention to make the literal fulfilment of such a thing a condition precedent, it will be one; or they may think that the performance of some matter, appa- rently of essential importance and prima facie a condition pre- cedent, is not really vital and may be compensated for in damages, and if they sufficiently express such an intention it will not be a condition precedent."^ — Whether the creditor having peculiar knowledge of the occurrence of the contin- gency is bound to notify the debtor has been already dis- cussed.^ § 598. When there is a promise to pay out of a particular Promise to fund, the promisec is restricted to the fund thus speci- a ftind're-^ fied, and has no remedy if such fund did not come Btricts the into the promisor's power, supposing its non-recep- promisee . . . ... , . to such tion IS not imputable to the promisor s negligence.^ A promise, also, by a corporation to pay out of funds to be contributed to it from specific parties, is conditioned on the reception of such funds by the corporation.' Whether a promise is to be so restricted depends upon the terms.^ § 599. It is not inconsistent with the requisites of a bill of exchange that its acceptance should be conditioned change may on a futurc Contingency ; and a holder who takes it 1 Supra, § 449. Shields v. Pattee, 2 Sandf. 262 ; 4 2 Per cur. in Beltini v. Gye, L. R. Comst. 122. 1 Q. B. D. 183 ; and see StaTsrs i-. ' Supra, § 571. Curling, 3 Bing. N. C. 369 ; Lambert ■* Chambers u. Jaynes, 4 Barr, 39 ; u. Fuller, 88 111. 260 ; Green u. Birch, Snell v. Cheney, 88 111. 258. 2 111. Ap. 528. For promises condi- ^ Sunderland Ins. Co. v. Kearney, tioned on arrival of ships at a certain 16 Q. B. 925 ; Williams v. Hathaway, time, or a cargo being in a certain con- L. R. 6 C. D. 544 ; see Furnwall n. dition, see Boyd u. Seffkin, 2 Camp. Coombes, 5 M. & Gr. 736. 327 ; Ellis d. Mortimer, 1 B. & P. 257 ; ^ goott v. Ebury, L. E. 2 C. P. 255. liovatt V. Hamilton, 5 M. & W. 639; 794 CHAP. XVII.] CONDITIONS. [§ 600. subject to such a condition is bound by the con- be accepted dition.i Thus an acceptance may be made payable condition- " when a navy bill is paid,"^ or when a cargo arrives.^ ''"^' The same may be predicated of negotiable paper payable in specific goods. When, however, the engagement is to pay a certain sum in specific articles at a given price, it has been held this gives an election to pay either the money or the arti- cles ;* though it is otherwise if the meaning to be collected from the entire writing is that goods are to be specifically delivered." An indorsement, also, may be conditional.^ But a bill of exchange must, to be negotiable as such, be payable absolutely at a specified date. If it be conditioned on a future contingent event, it is not negotiable, and the holder must sue upon it as on an ordinary contract, proving consideration.^ And a note payable in a particular kind of money is not nego- tiable.' This is the case, also, with an order drawn by a con- signor to his consignee to pay a fixed sum when in funds from a consignment.* § 600. A carrier or other bailee may excuse himself from special liability on the occurrence of any event which would otherwise not aflfect his liability. He may yacate™?^ sav, for instance, " I am bound to deliver these goods institute ■' . . ° obligation, unless destroyed by fire." This is the reverse of an insurer's duties who agrees to pay the price of the goods in case they are destroyed by fire. The casus of accidental fire is then the condition, in the one case of the vacating, in the other of the institution, of the obligation. i" It is also settled > Leake, 2d ed. 634; Byles on Bills, 9th ed. 148 ; Chitty on Bills, 10th ed. 9th ed. 186 ; hut see, contra, Syracuse 166. Bank v. Armstrong, 25 Minn. 530. ' Leake, 2d ed. 636 ; Carlos u. Fan- 2 Pierson v. Dunlop, Cowp. 571. court, 5 T. R. 482 ; Hill v. Halford, 2 3 Miln V. Prest, 4 Camp. 393. B. & P. 413 ; Robins v. May, 11 A. & 4 Perry v. Smith, 22 Vt. 301 ; Brooks E. 213 ; Dodge v. Emerson, 34 Me. 96 ; V. Hubbard, 2 Conn. 58 ; Pinney v. Cook o. Satterlee, 6 Cow. 108 ; Ree- Gleason, 5Wend. 393; 5Cow. 152. As side t. Knox, 2 Whart. 233 ; Dyer t;. to notes in the alternative, see infra, Covington, 19 Penn. St. 200. § 619. 8 MoCormick u. Trotter, 10 S. & R. 6 Edgar y. Boies, 11 S. & R. 445 ; 94; Wright v. Hart, 44 Penn. St. 454. Cole V. Ross, 9 B. Mon. 393 ; Harris ' Munger v. Shannon, 61 N. Y. 251 ; Man. Co. o. Marsh, 49 Iowa, 11. Gillespie v. Mather, 10 Barr, 28. 6 Leake, 2d ed. 636 ; Byles on Bills, 'o Supra, § 308. 795 § 601.] CONTRACTS. [CHAP. XVII. that an agreement may be made inoperative on the hap- pening of a contingency ; e.g., when a contractor reserves the right to abandon boring for coal in case he should find " what is known as conglomerate or iron stone before he reaches 300 feet."i IV. — PERFORMANCE . § 601. An affirmative condition is regarded as performed when the thing contemplated by the party imposing perform- it as such occurs in the way that party prescribes, pends on -^ negative condition is to be regarded as performed terms. when the thing contemplated by the party imposing it as such is either shown not to have existed or occurred within the limits designated, or to be incapable of occurring or exist- ing. In the Roman law, when the condition was that a particu- lar person should not do a particular thing, and this thing was one he could do at any time during life, the non-fulfilment of the condition could not be shown until death. ^ In our own law we have illustrations of conditions of this class in cases in which estates are limited on the death of parties of whose whereabouts nothing is known.^ Of conditions based upon the non-happening of events requiring certain bodily aptitudes to insure them we have illustrations in estates limited on capacity for child-bearing, which, with women, is supposed to cease at fifty-five years.* In what way the condition is to be specifically fulfilled is to be determined from the terms of the contract." "When, however, a party claims to recover on the ground of having performed a condition precedent, the burden of proving such performance is on him f and the performance must be satisfactorily established.' The performance of the 1 Lambert v. Fuller, 88 111. 260. structlon, see supra, §§ 553 etseq.; infra, 2 § 4. I. de V. 0. (3, 15) ; I. 73 D. de §§ (J24 et seq. cond. (35, 1). 6 Johnson v. Reed, 9 Mass. 78 ; Dana s Wh. on Ev. §§ 1274 et seq. ; see v. King, 2 Pick. 155 ; Albany Chnrch Finlay v. King, 3 Pet. 376 ; Deoorab v. Bradford, 8 Cow. 457 ; Decorah Bank Bank v. Haug, 52 Iowa, 538. o, Haug, 52 Iowa, 538 ; see Wh. on Ev. • Wh. on Ev. § 1300. As to divisi- § 363. bility of performance, see infra, § 899. ' Jones o. U. S., 96 U. S. 24 ; Dana " Windscheid, § 92 ; Stockton Soc. v. King, 2 Pick. 155 ; Albany Dutch V. Hildreth, 53 Cal. 721. As to con- Church v. Bradford, 8 Cow. 457 ; Levy u. Burgess, 64 N. Y. 390. 796 CHAP. XVII.] CONDITIONS. [§ 603. condition must be in the mode stipulated, unless the mode be modified by agreement.' An impossible condition precedent precludes a contract from becoming operative.^ § 602. In the Roman law an unfulfilled condition is consid- ered as fulfilled whenever the party to be benefited pj^yoj^ ^f by the condition releases its performance : " quotiens fulfilment per eum, cujus interest conditionem impleri, fit quo tionwhen impleatur."^ The same view was taken in England flted^j.^™^' in 1787, by Ashurst, J., who in an opinion of the i^"^''^- court of king's bench said, that when the promisee dispenses with the performance of the condition, this " is equal to per- formance."* § 603. The same rule obtains when the party to be bene- fited by the non-performance of a contract pre- j^^^go vents the happening of the condition. In the when such Eoman law the rule is thus stated : " Jure civile re- vents ceptum est, quotiens per eum, cujus interest condi- ^"'fl'°"^°*' tionem non impleri, fiat, quo minus impleatur, perinde haberi ac si impleta conditio fuisset."" A party cannot in this way take advantage of his own wrong.* " The conduct of one 1 Supra, § 558 ; Savage Man. Co. v. Armstrong, 19 Me. 147 ; Willington V. Boylston, 4 Pick. 101 ; Hunt v. Liv- ermore, 5 Pick. 395 ; Mill Dam Foun- der/ V. Hovey, 21 Pick. 417 ; Albany Dutch Church v. Bradford, 8 Cow. 457 ; Cole V. Hester, 9 Ired. 28.; Stockton Soc. V. Hildreth, 63 Cal. 721. See, as to performance of contracts, infra, § 898. 2 Supra, § 547. ' Savigny, op. oit. 138, citing I. 5, § 5, quando dies (36, 2). * Hotham v. E. I. Co., 1 T. R. 645 ; adopted in Benj. on Sales, 3d Am. ed. § 667, citing also Pontifex v. Wilkinson, 1 C. B. 75 ; Armitage v. Insole, 14 Q. B. 728 ; Laird u. Pirn, 7 M. & W. 474 ; Cort V. R. R., 17 Q. B. 127 ; Smith v. Lewis, 26 Conn. 110 ; Grove v. Donaldson, 15 Penn. St. 128 ; Kugler v. Wiseman, 20 Ohio, 361 ; Follansbee v. Adams, 86 111. 13. As to releases, seeinfra, § 1031 et seq. 5 L. 161 de R. J. (50, 17) and other citations in Savigny, op. oit. 140. ^ See supra, §§ 312, 579 ; infra, §§ 716, 747, 901, and citations in Wind- scheid, § 92; Benj. on Sales, § 566; Hotham v. E. I. Co., 1 T. R. 645; Holme V. Guppy, 3 M. & W. 387 ; Ar- mitage V. Insole, 14 Q. B. 728 ; Frost v. Knight, L. R. 7 Ex. Ill ; Mackay a. Dick, L. R. 6 Ap. Ca. 251 ; Williams v. Bank, 2 Pet. 102 ; Webb v. Stone, 24 N. H. 288 ; Webster v. Coffin, 14 Mass. 196; Miller v. Ward, 2 Conn. 494; Burtis V. Thompson, 42 N. Y. 246 ; Howard v. Daly, 61 N. Y. 370 ; Risley u. Smith, 64 N. Y. 576 ; Homer v. Ins. Co., 67 N. Y. 478 ; Marie v. Garrison, 83 N. Y. 14 ; Lawrence v. Miller, 86 N. Y. 131 ; Winch w. Ice Co., 86 N. Y. 618 ; Kline v. Cutter, 34 N. J. Eq. 329 ; John- son V. Somerville, 33 N. J. L. 152 ; Grove v. Donaldson, 15 Penn. St. 128 ; 797 § 604.] CONTRACTS. [CHAP. XVII. party to a contract which prevents the other from performing his part is an excuse for non-performance."' Hence, where a covenantee prevents the performance of a covenant, this is a de- fence for the covenantor on a suit for the performance of the covenant.^ But, as has already been seen, one party cannot rescind a contract on account of the failure of the other party to perform a condition precedent without on his part doing equity ;' nor can a party sue on a quantum 7netniit, on part per- formance, treating the contract as rescinded in consequence of prevention of full performance on the other side, and sue also for damages under the contract.^ But that in case of preven- tion by one party of an entire fulfilment by the other, the latter may sue on a quantum meruit for the price of the part performance is well settled.' — The practice in case of rescis- sion is considered in a subsequent section.^ § 604. A promisee cannot insist on the non-performance of a condition precedent when that non-performance is And so ... when imputable to himself.' Thus, in the familiar case waive . ^^^ ^^1^ of goods to be paid for on delivery, if the purchaser notifies the vendor that he refuses to accept the goods, this relieves the vendor from the condition precedent of delivering the goods f and such, also, is the case where the vendor is asked by the purchaser not to deliver, or to postpone the delivery (though a default in delivery is not cured by a Kugler u. Wiseman, 20 Ohio, 361 ; « Supra, § 579 ; infra, §§ 712, 719. Lowry u. Barelli, 21 Oh. St. 324; " yn/ra, § 919 ; and see supra, §§ 282 Swift V. Dewy, 37 Oh. St. ; Jones ei seq. V. R. R., 14 W. Va. 514; Reynolds v. ' Supra, §§ 312, 325 ; infra, §§ 891, R. R., 11 Neb. 186 ; Crump v. Mead, 3 901, 945 ; Leake, 2d ed. 666 ; Benj. on Mo. 233 ; Aller y. Pennell, 51 Iowa, Sales, 2d Am. ed. § 566 ; Cooper o. 537 ; Smith v. Wheeler, 7 Oregon, 49 ; Mowry, 16 Mass. 7 ; Betts v. Perrine, and cases cited infra, § 712 ; supra, § 14 Wend. 219 ; Whitney v. Spencer, 4 312. That a party by disabling him- Cow. 39 ; Haden o. Coleman, 73 N. Y. self may make himself at once liable, 567 ; Swift v. Dewy, 37 Oh. St. ; see infra, § 885 a. Crump v. Meas, 3 Mo. 233 ; see Brown ' Bradley, J., Peck v. U. S., 102 U. „. Slee, 103 U. S. 828 ; and see cases S. 65. cited supra, § 559 ; as to release, see 2 Borden o. Borden, 5 Mass. 67; m/ra, §§ 1031 eisey. Marshall y. Craig, 1 Bibb, 379 ; Shaw * Ripley v. McClure, 4 Ex. 345 ; Fitt t.. Kurd, 3 Bibb, 372. u. Cassanet, 4 M. & G. 898. See .Tack- ^ Supra, § 285. son v. Crysler, 1 John. Cas. 125 ; see < Hill V. Green, 4 Pick. 114. infra, §§ 994-5. 798 CHAP. XVII.J CONDITIONS. [§ 605. subsequent request not to deliver) ;' and where performance on a later day is accepted as a substitute for performance on a prior day ;^ and where on a contract to manufacture and de- liver goods, the vendor is notified by the purchaser that he has changed his mind and will not accept the goods when ready.^ A waiver, however, is not to be implied from silence, unless the silence be of a party whose duty was at the time to speak.^ But performance of a particular thing is waived by the acceptance of a substitute for such particular thing f and this is the case with the waiver of conditions precedent in insurance.^ It should be added, that a party cannot enforce a performance upon the refusal of the other party to perform, and then rely on such non-performance as a ground for re- scinding the contract.' — The intention to waive must be established by language and conduct, and not by speculation as to intention.' § 605. On a contract for labor, although the work, when a specific job, is to be completed as a condition pre- cedent before payment,' yet if the employer prevents [^acts of the completion of the iob, he becomes liable to the '^bor em- " ployee pre- employee for damages for breach of contract.'" And, vented by where the plaintiff agreed to build a barn for a from°vork- fixed price, the defendant to supply the materials, 5.°fo"^^ it was held that where the barn was not completed in consequence of the defendant's failure to supply the mate- rials, the plaintiff was entitled to recover for part perform- ance." But as a general rule, " where the plaintiff himself is ' Plevins v. Downing, L. E. 1 C. P. Hartford Ins. Co. v. Davenport, 37 D. 220. Mich. 609. 2 "Warren v. Mains, 7 Johns. 476. ' Selway u. Fogg, 5 M. & S. 83 ; ' Cort V. R. R., 17 a. B. 127 ; Frost Allen v. Webb, 24 N. H. 278. u. Knight, L. R. 7 Ex. 111. » West v. Piatt, 127 Mass. 367. * Gray v. Blanchard, 8 Pick. 292. » Infra, §§ 716 ei seg. ; Leake, 2d ed. 5 Porter v. Stewart, 2 Aiken, 427 ; 667 ; Peeters v. Opie, 2 Wras. Saun. Warren v. Mains, 7 Johns. 476 ; see 346 ; Morton v. Lamb, 7 T. R. 130. Flannery v. Rohrmayer, 46 Conn. 558 ; '" Pontifex v. Williamson, 1 C. B. see supra, § 559 ; infra, §§ 994-5. 75 ; PlanchS o. Colburn, 8 Bing. 14 ; « Hadley v. Ins. Co., 55 N. H. 110 ; Moultou v. Trask, 9 Met. 577 ; Hall u. Bennett v. Ins. Co., 81 N. Y. 273 ; Rupley, 10 Barr, 231. n Hall V. Rupley, 10 Barr, 231. 799 § 606.] CONTRACTS. [chap. XVII. to do an act to entitle himself to the action, he rauat either show the act done, or if it be not done, at least that he has performed everything that was in his power to do."^ And as will be hereafter seen,^ when a terra of service is broken into by the employer, the employee may recover on a quantum meruit. It will be also seen, that the duration of a term of service, when not limited in writing, is determined by the facts of the particular case, as modified by local usage.^ § 606. A party who disables himself from performing a con- tract cannot set up in defence to a suit on it a tech- nical default by the other party subsequent to the occurrence of the disability.* Thus when, after a contract for the sale of goods to be delivered when requested by the purchaser, the vendor sold the goods to a third party, it was held that to subject the vendor to liability to the purchaser it was not necessarj' that the purchaser should have requested delivery ;° nor when one party has disabled himself absolutely from performing his part of the contract need the other party even tender to per- form his part in order to bring suit.^ A man, who, when en- gaged to be married to one woman, marries another, cannot, to a suit for breach of promise brought against him by the first, set up the want of a request to him to marry ;'' and generally after an agreement to sell real estate to A. upon certain conditions precedent, an absolute sale to B. relieves A. Party dis- abling him- self cannot set up tech- nical de- fault by other party. 1 Note to Peeters v. Opie, ut supra. 2 Infra, § 716. ' Infra, §§ 612, 717 et seq. * Infra, §§ 712-16 ; supra, §§ 312, 325 ; Kerrison v. Cole, 8 East, 231 ; Avery v. Boden, 5 E. & B. 714 ; Cort I,. R. R., 17 Q. B. 127 ; Caines v. Smith, 15 M. & W. 189 ; Mill Dam B'oundry V. Hovey, 21 Pick. 417 ; Heard ti. Lodge, 20 Pick. 53 ; Smith v. Lewis, 24 Conn. 624; 26 Conn. 110; Stewart «>. Ketal- tas, 36 N. Y. 388 ; Fleming a. Potter, 7 Watts, 380 ; Law v. Henry, 39 Ins. 414 ; see Denby v. GraflF, 10 111. Ap. 195, and see infra, §§ 885 a, 995, for other cases. 800 6 Bowdell ... Parson, 10 East, 359 ; Amory v. Brodrick, 5 B. & Aid. 712 ; infra, §§ 994-5. « Clark V. Crandalls, 3 Barb. 600 ; supra, §§ 575 et seq. ' Supra, § 575 ; Short v. Stone, 8 Q. B. 358 ; Freath v. Burr, L. R. 9 C. P. 208 ; Caines v. Smith, 15 M. & W. 189 ; Wagonseller v. Simmers, 97 Penn. St. 465, and cases supra, §§ 324, 575 ; see Harrison v. Cage, 1 Ld. Ray. 387. That his incapacity is no defence to a suit for damages, see supra, § 324. That a contract to marry must be to marry in a reasonable time, see infra, § 882. CHAP. XVII.] CONDITIONS. [§ 606. from proving that the conditions precedent had not been per- formed by him, provided there was no default on his part prior to the sale to B.' A promisor, also, prevented by the interference of the promisee from completing his contract may recover for part performance, though the contract was entire.^ — An employer who refuses to. give notes, as required by the contract of employment, is suable at once on quantum meruit.^ — Whenever, in other words, there are concurrent conditions, neither party can sue without showing that he was ready and willing to perform, or that performance on his part was pre- vented or waived by the other party.^ " The plaintiff," as was said by Storrs, C. J., in a well-considered case in Con- necticut," " in order to sustain this action, need only to show that he did what the law required of him ; and all that it required was that he should be ready and willing to per- form on his part if the defendant was also ready to perform on his." " Some misapprehension or confusion appears to have arisen from the mode of expression used in the books in treating of the necessity of a tender or offer by the parties as applicable to the case of mutual and concurrent promises. The word 'tender,' as used in such a connection, does not mean the same kind of offer as when it is used in reference to the payment or offer to pay an ordinary debt due in money, where the money is offered to a creditor who is entitled to re- ceive it, and nothing further remains to be done, but the trans- action is completed and ended ; but it only means a readiness and willingness accompanied with an ability on part of one of the parties, to do the acts which the agreement requires him 1 Leake, 2d ed. 668 ; Main's case, 5 » Brown v. Foster, 51 Penn. St. 165. Co. 20 i; Lovelock v. Franklyn, 8 Q. ■• Supra, § 558; Giles u. Giles, 9 Q. B. 371. B. 164 ; Atkinson v. Smith, 14 M. & 2 Hill V. Hovey, 26 Vt. 109 ; Wil- W. 695 ; Bankart v. Bowers, L. R. 1 C. helm V. Caul, 2 Watts & S. 26 ; infra, P. 484 ; Howe v. Huntington, 15 Me. §§ 714 et seq. That an employer can- 350 ; and cases cited in prior notes to not set up a failure in service induced this section and to § 558. For other by himself as a defence to a suit by the oases see infra, §§ 994-5. employee, see infra, §§ 716 e( seq. That » Smith v. Lewis, 26 Conn. 110 ; see a quantum meruit lies in cases of failure 2 Oh. on Cont. 11th Am. ed. 1085^ on defendant's part to perform condi- where this opinion is given at lengthy tion precedent, see infra, §§ 707 et seq. VOL. I.— 51 801 § 607.] CONTRACTS. [chap. XVII. to perform, provided the other will concurrently do the things which he is required by it to do, and a notice by the former to the latter of such readiness. Such readiness, ability, and notice are sufficient evidence of, and indeed constitute and imply, an oft'er or tender in the sense in which those terms are used in reference to the kind of agreement we are now considering. It is not an absolute unconditional offer to do or transfer any- thing at all events, but it is in its nature conditional only, and dependent on, and to be performed only in case of, the readi- ness of the other party to perform his part of the agreement." — The distinctive rules with regard to divisibility of perform- ance are considered in other sections.' § 607. When there is a substantial performance of a condi- Substantiai tion precedent, the agreement, if the condition is perform- divisible, will be enforced pro tanto} Thus, where a dition pre- ship-owner contracted to load a full cargo and de- be suiH- liver it on payment of freight, but sailed with only tMe must ^ partial cargo, it was held that, supposing the load- be proved, j j^g ^q "[^g ^ condition precedent, yet, as the condition was divisible, a suit might be maintained for freight jjvo rata on the goods carried.^ Where it was a condition precedent in a contract for the sale of a business that the profits should appear by the books to amount to a certain sum per week, the purchase money to be paid by instalments, it was held, after the purchaser had taken possession of the business and carried it on until all the instalments were due, that he could not set up as a bar to a suit for the purchase money that the profits fell below the figure designated in the agreement.* And where, even though the contract is entire, entire per- ' See supra, §§ 190, 601; infra, §§ Herndon, 4 T. B. Men. 480. As to per- 898 et seq. formaiices generally, see infra, §§ 867 2 Leake, 2d ed. 664; Benj. on Sales, et seq. 3d Am. ed. § .564; Ellen w.Topp, 6 Ex. » Ritolile v. Atkinson, 10 East, 295 ; 441 ; Havelock v. Geddes, 10 East, 563 ; Roberts v. Havelook, 3 B. & Ad. 404 ; Bradford v. Williams, L. R. 7 Ex. 260 ; see Heilbutt v. Hickson, L. R. 7 C. P. Stanton v. Rioliardson, L. R. 7 C. P. 450. As to divisibility of conditions, 421 ; Divinal v. Howard, 30 Me. 258 ; see supra, § 552. As to other cases of Holden Steam Mill Co. <.. Westervelt, divisibility, see §§ 338, 511, 899. 67 Me. 446 ; Maryland Fertilizing Co. ■• Pust v. Dowie, 5 B. & S. 20. u. Lorentz, 44 Md. 418 ; MoGratli v. 802 CHAP. XVII.] CONDITIONS. [§ 608. formance by one party is prevented by the interference of the other, the value of what has been done can be recovered on a quantum meruit} " It is remarkable that, according to this rule, the construction of the instrument may be varied by matter ex post facto ; and that which is a condition precedent when the deed is executed may cease to be so by the subse- quent conduct of the covenantee in accepting less. This is no objection to the soundness of the rule, which has been much acted on. But there is often a difficulty in its application to particular cases, and it cannot be intended to apply to every case in which a covenant by the plaintiff forms only part of the consideration, and the residue of the consideration has been had by the defendant. That residue must be the sub- stantial part of the contract."^ — But while substantial per- formance of a condition is essential, such performance must be proved by the party setting it up.' — A condition whose performance is of no possible value whatever to the promisee need not be performed.* v. CONDITIONS SUBSEQUENT. § 608. A condition subsequent is a limitation of title so that it will be divested on the happening of a future con- tingent event. The term title is used in a general subsequent sense, and includes title to labor, and title to personal tuTuoUu ' property, as well as title to land." By a condition ^^^°^ °^ r r J 7 J straugers. precedent, it should be remembered, a duty is created ; 1 Supra, §§ 603 et seq. ; infra, § 714 ; « Emerson v. Graflf, 29 Penn. St. 358. Blood u. Enos, 12 Vt. 625 ; Chaufplin " See supra, §§ 545 et seq. ; infra, § V. Rowley, 18 Wend. 187 ; Willielni v. 1039 ; and see Elliott v. Blake, 1 Lev. MoCall, 2 Watts & S. 26. 88 ; Poussard u. Spiers, L. R. 1 Q. B. 2 Per cur. in Ellen v. Topp, 6 Ex. 441. D. 410 ; Cowell u. Springs Co. , 100 U. In Raymond v. Minton, L. R. 1 Ex. 244, S. 55 ; Rowell v. Jewett, 69 Me. 293 ; it was held that a master would not he Randall v. Marble, 69 Me. 310 ; Wells liahle for not teaching an apprentice i . Calnan, 107 Mass. 514 ; Brigham u. when the apprentice would not he Shattuck, 10 Pick. 309 ; Dre^sser Man. taught. See infra, § 613. Co. c. Waterston, 3 Met. 9 ; Osborn v. ' Wh. on Ev. §§ 353 et seq.; Penn. Jernegan, 126 Mass. 362; Keening v. Life Ins. Co. v. Dovey, 64 Penn. St. Ayling, 126 Mass. 404 ; Goodell u. Fair- 260; Newman v. Perrill, 73 Ind. 153; brother, 12 R. I. 233; Knight v. R. R., Cheraw, etc. R. R. o. White, 14 S. C. 70 Mo. 231 ; McClelland v. Nichols, 24 51 ; and see oases supra, §§ 558, 606. Minn. 176. 803 § 608.] CONTRACTS. [chap. XVII. by a condition subsequent, a duty is extinguished. A condi- tion precedent is put in evidence by the plaintiff in order to establish his right to sue; a condition subsequent is put in evidence by the defendant for the purpose of showing why he should not be sued. But while this is the general rule, '' it is possible for an obligation to be extinguished by a condition subsequent before the time for performing the obligation arrives, and hence before any right of action accrues. Yet, if an action be brought after the time for performance arrives, the plaintiff will be able to state and prove facts which will entitle him to recover, unless the defendant sets up and proves his defence arising from the condition subsequent."' — It is also to be observed, as is elsewhere more fully shown,^ that so far as concerns the reason of the thing, the distinction between conditions precedent and conditions subsequent is purely arti- ticial. Tiiere is no condition that is not in one aspect prece- dent and in another aspect subsequent. — That a stranger can- not take advantage of a breach of a condition subsequent, springs from the very nature of contracts f and as a stranger, so far as concerns the right to insist on a broken covenant on land, is to be considered an heir of the grantor when such heir has no interest which would be served by the exaction of the forfeiture. Thus, in a case in Michigan in 1881, the plaintiff sought to take advantage of a condition in a deed that no intoxicating liquors should be sold on the premises. " May an owner of lands," said Marston, C. J., "when conveying the same, insert such conditions subsequent as his fancy may dic- tate, and upon a breach thereof insist upon a forfeiture of the estate, although such breach in no way tends to his prejudice? May he insert a condition that even an objectionable business shall not be carried on upon the premises ; or that a particular use of the premises, and none other, shall be made ; or if any violation of the laws of the land occur thereon, as an assault and battery, that the estate shall be forfeited and that he may thereupon re-enter and become owner thereof? Upon what principle could such conditions be enforced, other than ' Langdell, Cases on Cont. ii. 1002. 3 See infra, § 784. 2 Supra, § 551. 804 CHAP. XVII.] CONDITIONS. [§ 609. that as mere owner he had a right to insert any conditions which the grantee would accept ? If this right exists, then conditions in restraint of trade, and that would tend to pre- vent alienation of the property, may be inserted at pleasure, and the courts be called upon to enforce the same. The right to insert conditions, like the one in this case, we do not ques- tion, •^yhere it appears that the grantor has a special interest in the enforcement thereof. An owner of real estate, when conveying a part thereof, may undoubtedly impose conditions, which, if reasonable, courts would, by an appropriate remedy, restrain and prevent the violation thereof, for the protection of the grantor and his privies in estate, certainly so long as the reasons which gave rise to the condition still existed. Nothing, however, of this kind exists in the present case. It does not appear that the plaintiffs, at the time of the convey- ance or since then, owned any other lands in the village or vicinity of Otsego, or that they resided in the village or vicin- ity, or had in any way a special interest in the enforcement of this condition. "1 § 609. "When property is vested in A. subject to a condition subsequent that on the happening of a certain con- g^^^g^j tingency it is to revert to B., the burden is on B. to on party show that the property has thus reverted. " Prima devolution facie, every contract is permanent and irrevocable, by comu-'^ and it lies upon a person who says it is revocable or *'°" subee- determinable to show either some expression in the contract itself, from which it is reasonably to be implied that it was not intended to be permanent and perpetual, but was to be in some way or other subject to determination."^ — Yet the question is complicated by the circumstances just mentioned, that a condition is in one aspect a condition precedent ; in another aspect a condition subsequent. In such case we must hold that the burden is on the actor ; i. e., on the party seeking to establish a point.' 1 Barrie v. Smith, Sup. Ct. Mich. ' Wh. on Ev. § 353 ; Cage v. Acton, 1881. 1 Ld. Ray. 515 ; Gray v. Gardner, 17 2 James, L. J., Llanelly R. R. v. Mass. 188. London R. R., L. R. 8 Ch. 949 ; Dun- can V. Findley, 6 S. & R. 235. 51* 805 § 613.] CONTKACTS. [chap. XVII. Contract may give right to rescind on breach of warranty. 610. Ordinarily, as we have seen, a breach of warranty does not give a right to rescind except in case of fraud or of honest misapprehension.' The parties, however, may agree that on breach of warranty the goods may be returned, and the contract rescinded, though the right is usually limited to a specific time, after which the right to claim rescission ceases to exist even as to latent defects not detected until after that period.^ § 611. As we have already seen, when there is a contract of " sale or return," the intention being that the pur- chaser shall take the property with a right to return within a certain limit, the title vests in the pur- chaser, the condition being a condition subsequent.* § 612. The right to determine contracts of service depends upon the terms of the particular contract interpreted by usage.^ That a contract may be made to terminate and a forfeiture imposed on the decision of an architect or other referee has been already shown. ^ In an indenture of apprenticeship, the master's cove- nant to teach the apprentice is conditioned on the apprentice's willingness to learn, while the appren- tice's covenant to serve is conditioned on the mas- ter's willingness to direct and teach. If the appren- tice deserts or refuses to learn, defying or escaping the master, this relieves the master from his covenant f though mere misconduct on the part of the apprentice, not amounting to On con- tracts of " sale or return" title vests. Eight to determine contracts of service de- pendent upon concrete case. §613. Indentures of appren- ticeship mutually dependent. ' See stipra, §§ 214, 282 ; Gompertz V. Denton, 1 C. & M. 207 ; Head v. Tattersall, L. R. 7 Ex. 7 ; Thornton V. Wynn, 12 Wheat. 192 ; Scranton v. Trading Co., 37 Conn. 130; Voorhees ». Earl, 2 Hill, 288. 2 Smart v. Hyde, 8 M. & "W. 723; Chapman v. Gwyther, L. R. 1 Q. B. 463 ; see Bryant u. Isburgh, 13 Gray, 607. 3 Supra, § 589. 4 Infra, § 718; Leake, 2d ed. 673; Baxter r. Nurse, 6 M. & G. 938 ; 1 C. & 806 K. 10 ; Fairman v. Oakford, 5 H. & N. 635. The conditions on •which such contracts may be terminated, and the effect of sucli termination are hereafter distinctively discussed. Infra, §§ 716- 718. * Supra, § 594 ; Faunce v. Burke, 16 Penn. St. 469. 6 Leake, 2d ed. 663 ; Hughes v. Humphreys, 6 B. & C. CSO ; Rayment v. Minton, L. R. 1 Ex. 244 ; supra, § 323. See Blunt v. Welcher, 2 Mass. 228 ; Holbrook v. Billiard, 10 Pick. 68. CHAP. XVII.] CONDITIONS. [§ 615. refusal to be taught, does not relieve the master from the duty of teaching, though it may subject the apprentice to a cross-action, or, under our practice, to a set-off for damages, should he sue the master for failure in the latter's covenants.' The apprentice's covenant to serve is conditioned on the mas- ter's readiness to direct and teach.^ And in either case per- formance is excused by absolute incapacity produced by sick- ness or other necessity.^ § 614. Deeds of separation between husband and wife re- main in force only while the parties live apart, and Deeds of cease to be operative when they resume cohabita- ^et^^n""^ tion ;'■ though, when the deed by its own terms is husband to remam m lorce until there be a written consent are revoked to resume cohabitation, it is not avoided by cohabi- newed^co- tation without written consent.' And a deed pro- habitation. jected to meet an intended separation which never took place is void ab initio.^ — As has been already seen, agreements modi- fying the marriage relations are void as against the policy of the law.^ § 615. It is customary to insert in leases stipulations that, in case of non-discharge by the lessee of certain duties (e. g., paying of rent, repairing), the lease is may be to be forfeited. These stipulations are for the ben- ^^'^'"^• efit of the lessor, and cannot, therefore, be set up by the lessee as ground for avoidance of the lease.^ — The lessor waives a forfeiture by acceptance of rent or other ratification of the tenancy after the forfeiture has occurred ;' and hence, in 1 Leake, 2d ed. 664 ; Winstone v. 6 Randle v. Gould, 8 E. & B. 457. Linn, I B. & C. 460 ; Phillips v. Clift, « Bindley v. MuUoney, L. R. 7 Eq. 4 H. & N. 168. It is otherwise when 343. the indenture provides that misbe- ' Supra, § 394. havior on part of the apprentice shall ' Leake, 2d ed. 671 ; Rede v. Farr, avoid the contract. Westwick v. The- 6 M. & S. 121 ; Arnsby u. Woodward, odor, L. R. 10 Q. B. 224. 6 B. & C. 519 ; Jones v. Carter, 15 M. 2 Ellen V. Topp, 6 Ex. 424. & W. 718. See Garnhart u. Finney, Boast u. Firth, L. R. 4 C. P. 1, 40 Mo. 449. cited supra, §§ 300, 321, 323. ^ Dendy v. Nicholl, 4 C. B. N. S. < Pollock, 273; Hindley v. West- 376 ; Toleman «. Portbury, L. R. 6 Q. meath, 6 B. & C. 200 ; Webster v. B. 245. Webster, 4 D. M. & G. 437 ; Ruffles v. Alston, L. R. 19 Eq. 539. 807 ^ 616.] CONTRACTS. [chap. XVII. order to avoid the lease on ground of forfeiture, he must notify the tenant, or do some other act showing that he holds the lease to he terminated. The same rule obtains with re- gard to other defeasible conveyances. Thus in a case, already cited, in Michigan in 1881, the evidence was that the plaintiiFa conveyed certain lots in the village of Otsego Lake by war- ranty deed, subject to the condition that if the grantees, their heirs or assigns, should sell, or knowingly permit another to sell or keep for sale, intoxicating liquors, on the premises, the estate thereby conveyed should cease and revert to the grantors. It was shown that defendant, a subsequent grantee, had sold intoxicating liquors on the premises. The defendant intro- duced evidence tending to show that intoxicating liquors had been sold on the premises with the knowledge and consent of the plaintiffs, and it was held that this, if proved, was a waiver.* And, independently of the question of waiver, conditions limit- ing the alienability of land cannot, as we have seen, be en- forced unless by parties retaining an interest in the adjacent lands.^ § 616. The happening of a condition subsequent (auflosende Bedingung) causes the title at once to revert to the party to whom it is limited. The reversioner has a right, on the condition occurring, to resume posses- sion ; and according to the Roman law, he has an immediate title to the thing, not merely a claim On happen- ing of con- dition sub- sequent title at once reverts. ■ " It is well settled," said Marston, C. J., "that a condition subsequent may be waived, where broken, by the party who has the right to avail him- self of it, and this may be proven, as well by acts and conduct as hy an express agreement, and where once waived it is gone forever. If, there- fore, it appeared that the grantor of the defendant had used these premises or the buildings thereon for the pur- pose of selling intoxicating liquors therein, to the knowledge of the plain- tiffs, or either of them, and the de- fendant subsequently purchased the premises, and made valuable improve- ments thereon without objection, or 808 any steps being taken by the plaintiffs to insist upon a forfeiture, this would constitute a waiver of the condition and forfeiture. Gray v. Blanchard, 8 Pick. 284. That the plaintiffs could waive the condition there can be no question, and, if they permitted the premises to be used in violation thereof, they could not stand by, see the prop- erty change hands, and, after valuable improvements had been made thereon, then step in, insist upon a forfeiture, and thus acquire the improvements made upon the strength of their seem- ing acquiescence." Barrie v. Smith, Sup. Ct. Mich. 1881. « Ibid. ; sapra, § 608. CHAP. XVII.] CONDITIONS. [§ 616. against a person.' According to our own law, on breach of a condition subsequent the property reverts to the grantor.^ Hence, a settlement by a father of four thousand dollars on a married daughter, with a provision, that the money should revert to him should she die in an approaching confinement? has been held to give a vested right to her father to the re- version upon her death taking place at such confinement.' — Whether the condition reverts is a matter of law when there are no disputed facts. Thus, in a case decided in Wisconsin, in 1881,* a " reaper and self-binder" was delivered to a con- ditional purchaser in July, and used in the harvest of that season, and found defective. In January or February follow- ing, the vendor's agent called on the purchaser in relation to payment for the machine, and the purchaser said he would give nothing for it ; but he still kept it and did not ofier to return it until the following April. It was held that as a mat- ter of law, the machine was not returned in reasonable time, and judgment should be entered for the value. In such cases it was said, the question may be treated as one of law, and passed upon by the court without any encroachment upon the province of the jury.' — The title that reverts, however, may be merely a title not to be sued. Thus, an insurance policy may ' Windscheid, § 90. "by the grantor until lie had made ' Cowell u. Spring Co., 100 U. S. 55. entry upon the land after condition In this case there was a condition in a broken, or made claim, if entry was deed of land, avoiding it in case in- impossible. Hammond v. R. E., 16 S. toxicating liquors should be sold in C. 10. any place of public resort on it. It •'" Herrington v. Robertson, 71 N. Y. was held that on breach of the condi- 280 ; and see Westenberger v. Reist, tion, the grantor had a, right to treat 13 Penn. St. 594. the estate as reverted. — ^Where a deed •• Gammon u. Abrams, 53 Wis. 323 ; conveyed a strip of land to a railroad as cited in 25 Alb. L. J. 137. company, to them, their successors, ' The court cited 1 Greeul. Ev. § 49, and assigns, forever, "provided al- and notes; Williams v. Porter, 41 ways, and this deed is upon the ex- Wis. 423 ; Hutchinson v. Chicago, etc. press condition," that a certain system R. Co., 41 id. 542; Berg u. Chicago, of drainage was to be kept up by the etc., R. Co., 50 id. 419. See, also, railroad company, it was ruled that Lemke v, Chicago, etc., R. Co., 39 this created a condition subsequent. Wis. 450 ; Boothby v. Scales, 27 id. voidable by the grantor upon condi- 626 ; 2 Sedg. Damages, 173 ; Vaughn tion broken ; but that no action for u. Howe, 20 Wis. 497. recovery of the land could be brought 809 § 617.] CONTRACTS. [CHAP. XVII. provide, that unless a suit be brought within a year after death the insured's policy is to be forfeited ; and in such case, when the year expires, the title of the insurer to immunity is established.' § 617. Under a conditional sale, a title passes which, though DefeasiWe defeasible, is attachable by the vendee's creditors, title passes Thus in an action for trover in Massachusetts, in 1881, for the conversion of a mowing machine, the evidence was, that the plaiutitfs sold the machine to C. in June, 1879, upon the condition that he should pay one half of the price on August 15, and the other half on September 20, of the same year, and that the machine should be the property of the plaintiffs until paid for. The defendant, a deputy sheriff, attached the machine as the property of C. on July 9, and sold it on execution August 22, 1879. The plain- tiff's' writ was dated July 28, 1879. At the trial in the superior court, a verdict was directed for the defendant, and, by agreement of the parties, the case was reported to the supreme judicial court. This was affirmed by the supreme court. — " The agreement between the plaintiffs and C," said Morton, J., " amounted to a conditional sale, liable to be de- feated upon the non-performance of the conditions. C, after the delivery to him, had a rightful possession which the plaintiffs could not interfere with until a failure by him to perform the condition. He had an interest in the property which he could convey, and which was attachable by his creditors, and which could be ripened into an absolute title by the performance of the conditions.- Even if the sale by the defendant without performing the condition made him a trespasser ab initio, so that the plaintiffs could at any time after the breach of the condition maintain trover against him; yet the difficulty is, that, at the time the plaintiffs commenced this suit, there had been no breach of the condition, and they had no right of possession. In order to maintain trover, a plaintiff must show that at the time he commences his suit he 1 Semmes v. Ins. Co., 13 "Wall. 158. Day v. Bassett, 102 Mass. 445 ; Currier 2 Vincent v. Cornell, 13 Pioli. 294 ; u. Knapp, 117 ib. 324. 810 CHAP. XVII,] CONBITIONS. [§ 617. has possession or a right to the immediate possession.' It follows that this action was prematurely brought, and that the ruling of the superior court was correct."^ ' Winship v. Neale, 10. Gray, 382 ; ' Newliall v. Kingsbury, 131 Mass. Ring V. Neale, 114 Mass. Ill ; Hardy 445. V. Munroe, 127 ib. 64. 811 END OF VOL. I. '),■. KF 801 W55 Author Vol. Wharton, Efrancis Title Copy A Commentary on the law \j v^uiiuj. at-vo Date Borrower's Name J