(Unrn^ll &m i'rlynnl SJibtary KF 801.H29 '"""""'"*"* """"^ Elements of the law of contracts. 3 1924 018 882 724 Cornell University Library The original of tliis 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/cu31924018882724 ELEMENTS OP THE LAW OF CONTRACTS. BY EDWARD AVERY HARRIMAN PBOFESSOB OF LAW IN THE NOETHWESTEEN UNrVERSITT LAW SCHOOL. BOSTON: LITTLE, BROWN, AND COMPANY. 1896. Copyright, 1896, Bt Edwabd A7EBT Harbimah. UmVEKSITT FSESS: JoHM Wilson ahd Sou, Cambbidge, U.S.A. TO MELVILLE M. BIGELOW, Ph.D., WHOSE FBIENDSHIP HAS BEEN ITS CAUSE, AND WHOSE EXAMPLE HAS BEEN ITS INSPIBATION, THIS BOOK IS DEDICATED WITH GRATEFUL AFFECTION BY HIS FRIEND AND PUPIL THE AUTHOR. PREFACE. The science of English law has been the victim of two opposing forces, each tending to. retard its development. On the one hand, the practical lawyer of average intelligence has for centuries sought for nothing but precedents without regard to the prin- ciples which the precedents represent. On the other hand, the scholar at Oxford or Cambridge has for as many centuries been influenced by the idea that the science of law is essentially Roman in its character. The lawyer has not endeavored to construct a science of English law because it has not seemed to him worth while ; and the attempts of the scholar have been largely confined to recasting English ideas and institutions in a Roman mould. The recent develop- ment of the historical spirit in the study of the law is changing all this. " If English-speaking lawyers, " says Sir Frederick Pollock, " are really to believe in their own science, they must seek a genuine phi- losophy of the common law, and not be put off with a surface-dressing of Romanized generalities. " ^ In 1 Address before the Harvard Law School, IV. Harvard Graduates' Magazine, 8. VI PEEFACB. short, we are just awakening to the fact that there is a science of English law, and that the principles of this science are to be discovered by the careful study of our own legal history, and not by the analysis of the theories of Continental jurists. The justification of this book is, as the justifica- tion of every book which purports to be anything more than a mere compilation must be, that it is an attempt to explain the rules of positive contract law which are to-day enforced by the courts of England and the United States, in accordance with the actual historical development of those rules, and to classify and arrange those rules as far as possible in a scien- tific manner. If this attempt has been in any degree successful, the author's labor has not been lost. The difficulties in the preparation of a treatise on Contracts are by no means small. The absence of any theory of contracts in our early law, the slow development of the different legal ideas which govern contracts at the present day, the conflict between law and equity, and the various artificial theories advanced to account for perfectly natural legal rules, have brought about confusion that at times seems almost hopeless. If the task of an English writer on Contracts is no easy one, what shall be said of the position of his fellow-laborer in America ? In England there is at least positive law; in this country our positive law is purely local ; and though we all claim the same heritage of the common law, PREFACE. vii ■we treat our inheritance very differently, and some- times very indifferently, in different jurisdictions. The decisions of the House of Lords and of the United States Supreme Court alike are swept aside by some State court with this cogent argument : " We cannot accept this doctrine. " The constant progress and development of the law, especially with reference to commerce and industry, call for strenuous exer- tions on the part of the jurist who would keep abreast of the times ; but when the law progresses in so many different directions in different jurisdic- tions, one who loves harmony and consistency feels as if he were being drawn and quartered by the con- flicting decisions. The writer can only record and interpret these decisions to the best of his ability, emphasizing on the one hand the great principles enunciated by master-minds, and pointing out on the other the extraordinary results which so frequently flow from judicial vagaries. As regards legal theory, the most distinctive features of this book may be briefly stated. First comes the recognition of the fact that contractual obligation in English law may be due to the act of one party or of two ; or to use my own terminology, may be unifactoral or bifactoral. Second, I have carefully separated the facts which are essential to the formation of contract from those which merely affect the validity of contracts when formed. Third, I have treated all voidable contracts under the one head of Eescission. In my treatment of Rescission Vlll PKErACE. I have derived great assistance from Mr, Bigelow's treatment of that subject in his work on Fraud. Fourth, I have endeavored to reduce all rules of Offer and Acceptance to rules of Consideration, in accordance with the suggestion made by Mr. Justice Holmes in his work on the Common Law. Fifth, I have treated under the head of the Construction of Contracts certain subjects like Impossibility which are ordinarily treated elsewhere. Sixth, I have tried to shed some additional light on the difficult subject of Conditions. Seventh, I have sought to give an adequate account of the nature and results of the judicial legislation by which, in many States, a stranger to a contract is permitted to sue upon it — a doctrine which is one of the least intelligible and least understood of any in our law of Contracts. My indebtedness to those who have preceded me in the same field has, 1 trust, been duly acknowl- edged in the proper place. I must here, however, make especial acknowledgment of the constant encouragement and advice which I have received from my friend Mr. Bigelow ; and of many valuable suggestions with reference to the theory of con- tractual obligation which have been imparted to me from time to time by my colleague, Professor John H. Wigmore. As this treatise is intended especially for the use of students, I have sought to make it as useful as possible by adding constant references to Langdell and Williston's Cases on Contracts, and to Huffcut PEEFACE. IX and Woodruff's American Cases on Contract. That a study of cases is absolutely essential to a thorough understanding of the law is now universally recog- nized ; and the references in the notes to the excel- lent collections just mentioned will enable the student who reads this book to refer readily to many of the leading authorities. References have also been added in some cases to certain other collections. The citations of American cases are not only of the official reports, but also of the National Reporter System. E. A. H. NOETHWESTERN UNIVERSITY LaW ScHOOI,, February, 1896. CONTENTS. Page Abbreviations xxi Cases Cited xxiii INTEODUCTIOK. Part I. The Nature of Contractual Obligation ... 1 Part II. The History of Contractual Actions .... 15 CHAPTER I. the foematiosr of conteact. § 1. Introductory 27 § 2. Necessity of an Act 27 § 3. The Act must be Voluntary 29 § 4. The Act must determine the Extent of the Obligation 30 § 5. The Law must impose Obligation as the Re- sult OF the Act 32 (a) Contractual Capacity 33 (b) Reasonableness of Promisee's Conduct ... 34 (1) Jests and Social Engagements 34 (2) Inherent Impossibility 34 (3) Execution of Written Instruments .... 35 § 6. Formal and Simple Contracts 38 (a) Formal Contracts 38 (1) Contracts of Record 39 (2) Specialties 39 (a) Signing 40 (6) Sealing 40 (c) Delivery 41 (d) Acceptance 41 Xll CONTENTS. Page § 6. Format, and Simple Contracts — continued. (6) Simple Contracts 43 (1) Necessarily Bifactoral 43 (2) The Primary Act, or Promise .... 43 (a) Acceptance of Benefits .... 43 (J) Business Circulars and Proposals 45 (c) Auctions 46 (rf) Time Tables 47 (e) Acceptance of Documents ... 47 (/) Written Contracts 50 {g) Agreement for Future Contract . 52 (3) The Secondary Act, or Consideration . 63 (a) Origin of the Doctrine of Consid- eration 53 (b) Definitions and Instances of Con- sideration 56 (c) Mutual Promises .58 (rf) Distinction between Consideration and Condition Precedent . . 69 (e) Adequacy of Consideration . . 60 (/) Contingent Consideration ... 61 (g) Performance of Legal Obligation . 64 (1) Effect of Uncertainty as to One's Rights .... 66 (2) Performance of Broken Con- tract 70 (3) Performance of Contract with Third Person . . 74 (h) Composition with Creditors . . 77 (i) Subscription Papers 78 (j) Consideration must be furnished in Reliance on the Promise 80 (1) Mutual Promises ... 80 (2) Pre-existing Obligation . 81 (3) Flight v. Reed .... 82 (4) Past Consideration ... 82 (5) Moral Obligation ... 84 (k) OfFer and Acceptance .... 85 (1) Relation of Offer and Ac- ceptance to Considera- tion 85 (2) Communication of Acceptance 86 CONTENTS. xiii , Paob § 6. FORMAt AND Simple Contracts — continued. (b) Simple Contracts — continued. (J) The Consideration is determined by the Promise 89 (m) Revocation of Promise .... 95 (n) Consideration in Deeds .... d9 (o) Consideration in Negotiable Instru- ments 99 CHAPTER II. illegal contracts. § 1. Introductory 101 § 2. Classes of Illegal Contracts 101 (a) Prohibited Contracts ........ 101 (6) Contracts to do a Prohibited Act 102 (c) Contracts contemplating' an Injury to the Legal Rights of a Third Party 102 (d) Contracts against Public Policy 106 (1) Contracts tending to injure the State in its External Relations .... 106 (2) Contracts tending to Interfere with the Internal Administration of the Government 106 (a) Contracts tending to Interfere with the Election or Ap- pointment of Public Officers 106 (6) Contracts tending to prevent Public Officers from perform- ing their Duties . . . . 107 (c) Contracts tending to Obstruct the Administration of Justice 109 1. Maintenance and Cham- perty 109 2. Contracts tending to stifle Prosecution . . . . 112 3. Miscellaneous . . . . 112 4. Contracts to Submit to Arbitration . . . 113 XIV CONTENTS. Page § 2. Classes op Illegal Contkacts — continued. (b) Contracts against Public Policy — continued. (3) Contracts tending to Injure the Citizens of the State as Individuals . . . . 114 (a) Contracts Injurious to Public Morals 114 1. Sexual Immorality . . . 114 2. Contracts tending to In- terfere with the Mar- riage Relation . . . 114 3. Wagering Contracts . . 115 (b) Contracts tending to Limit Nec- essary Individual Freedom . 118 1. Contracts affecting Pree- dom of Marriage . . 119 2. Contracts affecting Free- dom of Testamentary Disposition .... 119 3. Contracts in Restraint of Trade 120 4. Contracts to Surrender Certain Rights . . . 123 § 3. General Rules as to Illegality 124 (a) Object Unlawful 124 (J) Consideration Illegal 124 (c) Contract Legal, Intention Innocently Illegal . 124 (d) Tendency Illegal 124 (e) Intention of One Party Illegal 125 (/) Vendee's Intention Illegal 125 (_g) Borrower's Intention Illegal 1 26 (h) Illegal and Void Contracts 126 (i) Securities for Illegal Contracts 128 (/) Effect of Illegality 128 (k) Receipt of Proceeds of Illegal Transaction . . 131 (I) Partial Illegality 132 CONTENTS. XV CHAPTEE III. Page Joint and Several Contracts 137 CHAPTEE IV. conditions. § 1. Nature of Conditiohs 141 § 2. Classification of Conditions 142 § 3. Conditions distinguished from Representa- tions AND Warranties 149 § 4. Suspension and Discharge op Obligation by Conditions 149 § 5. Conditions Subsequent in Form, Precedent in Fact 150 § 6. Conditions affecting Right of Action . . . 150 § 7. Concurrent Conditions 151 § 8. Express and Implied Conditions 151 § 9. Dependent and Independent Promises . . . 152 § 10. Inconsistent Descriptions 160 § 11. Performance of Conditions 162 § 12. Waiver op Conditions 163 § 13. Equitable View of Conditions 167 CHAPTEE V. the constrtrction of contracts. § 1. General Rules op Construction 169 § 2. Impossibility 174 (a) Legal Impossibility 176 (6) Existence of Subject Matter 177 (c) Bailment Contracts 180 . (d) Personal Contracts 181 § 3. Reasonableness 182 § 4. The Essence of the Contract 184 § 5. Penalties and Liquidated Damages .... 189 § 6. Notice 190 XVI CONTENTS. CHAPTER VI. THE STATUTE OF FRAUDS. Paob § 1. Introductory 192 § 2. contkacts within the statute 194 (a) Fourth Section 194 (1) Executors and Administrators . . . 194 (2) Guaranties 194 (3) Marriage Contracts 200 (4) Concerning Lands . 200 (5) Performance within One Year . . . 201 (J) Seventeenth Section 204 (1) " Contract for the Sale of " . . . . 204 (2) " Goods, Wares, and Merchandises " . 205 (3) " For the Price of £10 Sterling and up- wards" 206 § 3. Eequikements op the Statute 206 (a) Memorandum 206 (6) Acceptance and Receipt 210 (c) Earnest and Part Payment 211 § 4. Effect of the Statute 211 CHAPTEE VII. THE OPERATION OF CONTRACT. § 1. As TO Obligations 215 § 2. As to Eights 216 (o) At Common Law and in Equity 216 (b) Exceptions 216 (c) Right of the " Beneficiary " to Sue .... 217 (1) Cases in which such Eight is Recog- nized 217 (2) Nature of such Eight 223 (d) Doctrine of the Federal Courts ..... 226 CONTENTS. XVU CHAPTER VIII. RESCISSION OF CONTEACT. Faob § 1. Introductory 229 § 2. Causes for Rescission 230 (a) Facts Prejudicially AfEecting Motives in Legal Contemplation 231 (1) Infancy 231 (2) Mental Incapacity 233 (6) Facts Prejudicially Affecting Motives to the Knowledge of the Other Party .... 234 (1) Mental Incapacity 234 (2) Misunderstanding 237 (a) Common to Both Parties . 237. (1) As to the Terms of the Contract .... 238 (2) As to the Subject- Matter .... 243 (6) Of one Party Only .... 245 (1) Not Known to the Other .... 245 (2) Known to the Other 246 (a) Not Caused by the Other Party — Mistake . 246 (6) Caused by the Other Party — Misrepre- sentation and Fraud . . 247 (3) Duress 255 (4) Unfair Dealing . . 259 § 3. How Rescission is Effected 260 (a) Modes of Rescission 260 (6) Requisites of Rescission 262 § 4. How the Right of Rescission is Lost . . . 265 (a) Ratification 265 (6) Laches 269 (c) Statutes of Limitations 270 b XVIU CONTENTS. CHAPTEK IX. THE ASSIGNMENT OF CONTKACT. Page § 1. At Common Law 271 § 2. In Equity 271 § 3. Negotiability 275 § 4. Assignment by Opekation op Law . . . 276 (a) By Death 276 (b) By Marriage 277 (c) By Bankruptcy and Insolvency 277 (d) By the Transfer of Land 277 CHAPTER X. THE DISCHAEGE OF CONTRACT. § 1. Performance 278 §2. Tender 279 § 3. Infernal Conditions Sijbsequent 280i § 4. External Conditions Subsequent 281| (a) Waiver 281 (6) Gift 281 (c) Release 282 (d) New Contract 283 (e) Breach of Contract 285 (/) Repudiation 287 (g) Failure of Consideration 289 (K) Alteration or Loss of a Written Instrument . 292 (i) Merger and Estoppel 294 § 5. Discharge of Right op Action for Breach op Contract 295; (a) Internal Conditions Subsequent 295 (6) External Conditions Subsequent 295 (1) Accord and Satisfaction 296 (2) Arbitration and Award 297 (3) Statutory Discharges 298 CONTENTS. XIX CHAPTEE XI. THE ENFORCEMENT OF CONTRACT. Page § 1. Sanctions 299 § 2. Eemedies 300 INDEX 309 ABBREVIATIONS. The following abbreviations, in addition to those in common use, have been used in this book : — A Atlantic Keporter. CCA Circuit Court of Appeals Reports. Swell's li. C Ewell's Leading Cases on lufancy, Cover- ture, etc. F Federal Reporter. H. & W Huff cut and Woodruff's American Cases on Contract. L Langdell's Cases on Contracts. N. E Northeastern Reporter. M". "W Northwestern Reporter. P Pacific Reporter. S Southern Reporter. S. E. Southeastern Reporter. S. W . Southwestern Reporter. W Williston's Cases on Contracts. "W. C. S Williston's Cases on I TABLE OF CASES. Page Abbott v. Doane 74, 76 u. Inskip 212 Abbot Walter v. Baillol 17 Aokert u. Barker 111, 128 Adam v. Newbigging 264 Adams v. Coulliard 126 V. Jones 87 V. Kiiehn 216 V. Lindsell 98 V. Nichols 179 u. Schiffer 256 Adams Radiator Works a. Schrader 184 Ahem v. Ayres 45 Ahl V. Johnson 213 Aiken v. Blaisdell 102, 126 Alabaster v. Harness 109, 110 Alden v. Hart 147 Aldrich v. Ames 196 Alexander v. Haskins 235 Alger V. Thacher 120 Allard v. Lamirande 111 Allen V. Chouteau 52 V. Duffle 79 V. Hammond 187 V. Harris 296 V. Hartfield 251 V. Rescous 102 Aller V. Aller 283 AUore v. Jewell 259 Alpaugh V. Wood 140 Alsop V. Riker 270 Alvord V. Smith 117 American Cotton Oil Co. u. Kirk 62 American Express Co. v. Pinckney 174 American Mtg. Co. v. Wright 267 Ames V. Belden 181 Amsinck K. American Tns. Co. 212 Anderson v. Haytnan 200 V. May 179 V. Soward 267 V. Spence 196 Andrews v. Franklin 141 Angell V. Duke 52 Angle V. Chicago, &c. Ry. Co. 215 Anglo-Egyptian Nav. Co. v. Rennie 180 Anheuser-Busch Br'g Ass'n V. Mason 126 Ankeny u. Clark 187 Appleby v. Myers 180 Archer v. California Lumber Co. 37 Arkansas Valley Smelting Co. v. Belden Mining Co. 273 Armstrong v. American Ex- change Bank 126 Arnold v. Nichols 219 V. Richmond Iron Works 268 Arnot V. Coal Co. 122 Ashmead v. Reynolds 234 Asiatic Banking Ass'n, Ex parte 275 Atkins V. Barnstable 163 Atkinson v. Denby 129 V. Smith 159 Atwood V. Cobb 208 Austin V. Hall 138 Averill v. Hedge 93 Avery v. Bowden 288, 289 Ayerst v. Jenkins 114, 128 Babcock v. Hawkins 296 V. Terry 125 Badische Anilin Fabrik v. Schott 121 Bagster v. Earl of Portsmouth 235 XXIV TABLE OF CASES. Bailey v. Austrian 61, 62 V. Cromwell 160 V. R. R. Co. . 171 Baily v. De Crespigny 176 Bainbridge v. Firmstone 65 Baird v. U. S. 66 Baits V. Peters 294 Baker v. Bryau 223 V. Holt 92 ». Maxwell 268 Baldey v. Parker 206 Baldwin v. Williams 206 V. Van Deusen 59 Baldy v. Stratton 114 Bank v. Kennedy 173 Bank of Australasia v. Breil- lat 134 Bank of China v. American Trading Co. 158 Bank of Columbia v. Patter- son 294 Bank of Hindostan v. Smith 293 Banorgee v. Hovey 294 Barker u. Barker 111 V. Hodgson 177 Barlow v. Ocean Ins. Co. 68 Barnard v. Kellogg 170, 171 Barnes v. Barnes 41 V. Hekla Ins. Co. 219 V. Smith 117 V. Strong 110 Barnett v. Juday 140 v. Speir 269 Barrett v. Buxton 236 Barrie v. Earle 265 Barry v. Capen 108 Bartholomew v. Jackson 44 Bartle v. Nutt 131 Bartlett v. Blaine 103 Barton v. Benson 104 Bascom v. Smith 88 Bassett v. Brown 265 V. Hughes 219, 225, 226 Bateraan v. Phillips 207 Bates V. Ball 237 Batterbury u. Vyse 164 Batty V. Marriott 118 Bay V. Williams 223, 225 Bayley v. Bailey 123 Beach v. First M. E. Church 99 Beadles v. Bless 115 Bean v. Burhank 97, 98 Beckwith v. Talbot 61, 207 Page Beecher v. Conradt 155 Behn v. Burness 142, 145, 161, 175, 186 Belger v. Dinsmore 49 Bell V. Campbell 129 V. Leggett 103 V. Stocker 277 Bellows V. Sowles 194 Benge v. Hiatt 68, 218 Bennett v. Collins 267 Bent V. Cobb 210 Beresford v. Goodrouse 190 Bergen v. Ebey 239 Berkshire Life Ins. Co. v. Hutchings 226 ; Bernard v. Taylor 116, 129, 130 Berry o. Brown 222 Bestor v. Wathen 109 Beveridge v. N. Y. El. R. Co. 221 Bibb V. Allen 117, 207 Bierbauer v. Wirth 112 Bignall v. Gould 189 Bill V. Bament 210 Bingham v. Bingham 187 Birch V. Earl of Liverpool 202 Bird V. Munroe 210, 211 Bisbee v. McAllen 102 Bishop V. Allen 36 V. Busse 70 V. Eaton 88, 94 V. Palmer 121, 128, 133 Bixby V. Mow 133 Black V. Wabash 36 Blackstock v. N. T. & E. E. R. Co. 183 Blagden v. Bradbear 209 Blaisbell v. Ahem 110 Blake v. Voight 202 Blakely Ordnance Co., In re 275 Blake's Case 297 Blewitt V. Boorura 41 Bliss V. N. Y. &c. R. R. Co. 37 Bliven v. New England Screw Co. 170, 171 Blood V. Wilson 163 Bloomer v. Nolan 266 Blossom V. Dodd 49 Boardman v. Reed 172 Boast t;. Firth 181 Bock V. Perkins 172 Bohanan v. Pope 224 Boigneres v. Boulon 114 Boit V. Maybin 86 TABLE OF CASES. XXV Page Bona's Appeal 116 Booth V. Wiley 65 Borchsenius v. Caniitson 197 Borden v. Boardman 216 ■V. Riulimond, &c. R. K. Co. 245 Boston & Lowell R. R. v. Nashua, &c. R. R. Co. 298 Boston & Maine R. R. Co. 96, 97 Boston Ice Co. v. Potter 44 Bostwick V. Bostwick 45 Bowditch V. New England Mut. Life Ins. Co. 102 Bowen v. Hall 215 Bowery Nat. Bank v. Wilson 107 Bowes V. Shand 186 Bowman v. Hiller 258 V. Phillips 112 V. Stewart 166 Boyce v. Smith 2.36 Boyd V. Hitchcock 66 V. Paul 200 Boy dell v. Drummond 207 Boyden v. Boyden 266 Boylan v. Hot Springs. E. R. Co. 48 Boyson v. Thorn 215 Bradford v. Roulston 83 Bradley v. King 287, 288 Bradner v. Roffsell 166 Brady v. Finn 253 Bragg v. Danielson 284 t;. Wetzell .137 Braman v. Bingham 41 Brassell v. Williams 66 Brewer v. Maurer 221, 226 Brewster v. Brewster 260 Briggs V. Sizer 92 Bristol Aerated Bread Co. v. Maggs 51- British Waggon Co. v. Lea 272 Brock V. O'Oell 242 Brogdon v. Metropolitan Ry. Co. 86 Brooks V. Ball 57 V. Martin 132 V. White 66 Brophy v. Lawler 268 Brown v. Bign^ 110 V. Bryne 170 V. Duncan 102 V. Eastern R. R. Co. 49 V. Farmers', &c. Bank 195 Page Brown v. First Nat. Bank 113. V. Foster 184 V. Guarantee Trust Co. 185 V. Hartford Fire Ins. Co. 260 V. Langley 51 ii. Muller 288 ... Nealley 103 ... Stillman 220, 221 V. Whipple 207 Brumby v. Smith 180 Bryant v. Isburgh 162, 281 v. Peck & Whipple Co. 258 Bryant's Pond Co. v. Felt 80 Buchanan i-. Hubbard 265 Buckstaff V. Russell 280 Bunn V. Winthrop 114 Bunting v. Darbyshire 198 Burchell i-. Marsh 298 Burdett v. Williams 233 Burke v. Allen 234 V. Gould 257 Burnes v. Scott 111 Burr V. Beers 219 Burtis V. Thompson 165, 288 Burton v. Larkin 221 Bush V. Breinig 236 Buswell i: Fuller 282 Bute V. Thompson 178 Butler and Baker's Case 42 Butler V. Wigge 172 Butterfield v. Byron 179 u. Hartshorn 223 Byrne v. Van Tienhoven 96 Cabot v. Christie 255 Cage V. Acton 150 Cahen v. Piatt 163, 286 Caines v. Smith 164, 288, 303 Caledonian Ins. Co. v. 611- mour 114, 151 Callanan v. Cliapin 207 Callisher v. Bischoffsheim 68 Cambefort v. Chapman 139 Camden & Amboy R. R. Co. a. Baldauf 49 Campbell v. Jones 156 V. Smith 219 Canal Co. v. Ray 285 Cann v. Cann 45 Cannan v. Bryce 126 Carleton v. Whitcher 133 i: Woods 133 XXVI TABLE OF CASES. Carlill V. Carbolic Smoke Co. Page 68 Carlson v. Segog 264 Carpenter v. Carpenter 233 V. Cress well 156 V. Rodgers 268 Carrell v. Potter 267 Carrier v. Sears 234 Carter v. Holahan 220, 221 1 V. Mayor of Albany 225 0. Silber 263 V. United Ins. Co. 274 Cartwriglit v. Cartwrlght 115 Castlegate Stp. Co. v. Demp- sey 183 Catlin V. Haddex 267 Cecil V. Spurger 248 Central Siiade Roller Co . V. Cusliman 122 ,123 C. F. Jewett Publishing Co. V. Butler 125 Clialfant v. Payton 119 Chamber of Commerce V. Sollitt 288 Chamberlain v. Grimes 111 V. Williamson 277 Chambers v. Baldwin 215 Champion v. Plummer 207 V. Ulmer 36 Chase v. Pitz 200 V. Lowell 210 Chatham Furnace Co. V. Moffatt 255 Cheney v. Cook 97 V. Libby 185 Cherry v. Heming 40 Chesebrough v. Conover 108 Chesman ;•. Nainbry 1.35 Chicago V. Sheldon 172 Chieago, &c. Ry. Co. V. Dane 62, 64 1 V. Lewis 237 Chicago Attachment Co. V. Davis S. M. Co. 212 Chicago B. & Q. S. Co. V. Bell 124 Chicago M. & St. P. Ry V. Hoyt 175 176 Chicago & S. F. E. R. Co V. Price 166 167 Chism V. Shipper 167 Chrysler v. Canaday 252 Church V. Fowle 293 V. Proctor 104 125 Cincinnati v. Cincinnati Gas- light Co. 172, 173 City Nat. Bank v. Kusworm 258 Claflin V. Olstrom 222 Clapp V. Hoffmann 187 Clark V. Busse 179 V. Franklin 179 V. Marsiglia 304 V. Pendleton 200 V. Van Court 267 Clarke v. Watson 166 V. White 297 Clason V. Bailey 209, 210 Clay V. Yates 102 Clayton v. Andrews 204 Cleary v. Sohier 179 Clements v. London & N. W. Ry. Co. 232 Cleveland Rolling Mill v. Rhodes 157, 186 Clifford V. Luhring 199 ».. Watts 35, 175, 178 Clough V. Giles 223 V. Seay 293 Clymer v. De Young 197 Cole V. Cassidy 255 V. Gibson 119 Coleman v. Applegarth 96 V. U. S. 45 11. Whitney 219 Collins V. Locke 123 CoUyer v. Moulton 283 Comer v. Grannis 245 Comley v. Dazian 226 Commings v. Heard 298 Commonwealth v. Hunt 123 Compton V. Bunker Hill Bank 258 Condict V. Flower 298 Cone V. Russel 105 Conley v. Nailor 237 Coiily V. Coffin • 252 Conn V. Thirnton 141 Connerat v. Goldsmith 195 Connihan v. Thompson 269 Connor v. Black 116 V. Stanley 236 Conrad v. Lane 233 Conrow v. Little 269 Consumers' Oil Co. v. Nun- nemaker 121, 134 Cook V. Bradley 84 t>. McCabe 180 TABLE OF CASES. XXVll Page Cook V. Wright 68 Cooke V. Millard 206 u. Murpliy 70,71 V. Oxley 97 Coombe v. Greene 158 Cooper V. Coates 305 V. Cooper 45 V. Lansing Wheel Co. 63, 64 u. Phibbs 187 Cope V. Rowlands 102 Cordes v. Miller 177 Cort c. Ambergate Ry. Co. 165 V. Lassard 307 Coster V. Mayor of Albany 218 Cottage St. Church v. Kendall 80 Cotten V. McKenzie 133 Cotterill v. Stevens 211 Couturier v. Hastie 144, 145, 160, 175, 187, 244 Cowan V. Milbourn 125 Coyner v. Lynde 71 Craft V. McConoughy 131 Craighead ;■. Wells 262 Crandall v. Gosnell 228 Craus V. Hunter 68 Crears v. Hunter 69 Creswell Ranch Co. v. Mar- tindale 157, 186 Cristie «. Borelly 157 Crisup V. Grosslight 112 Cromwell v. Tate 41 Cross V. Cross 115 Crossley v. Maycock 52, 92 Crouch V. Credit Foncier 170, 272 V. Gutman 167, 168 Cummings v. Arnold 278, 284 Cunningham v. Fourth Bap- tist Church 177 Curtis V. Brown 197 V. Innerarity 305 V. Sage 204 Cutter V. Powell 162 Dale v. Hamiltrn 201 V. Lincoln 42 Dalzell V. Dueber Mfg. Co. 205 Daniels v. Newton 165, 303 Dartmouth College v. Wood- ward 4 Dater v. Earl 126 Daub V. Englebach 219 Dauglish v. Tennent 103 Davenport v. First Congrega- tional Society 74 Davey e. Shannon 203 Davidson v. Cooper 293 Davies v. Davies 32, 120, 121 V. Stowell 109 Davis V. Davis 98 V. Patrick 198 V. Rice 257 V, Seeley 105 V. Sheilds 209 V. Snider 35 V. Wells 86, 87, 174 Davis Sewing Machine Co. v. Richards 87 Davison v. Von Lingen 142, 145 160, 161, 175, 187 Dawe V. Morris 250 Dawkins u. Sappington 80 Day V. Caton 44 V. Leal 294 V. McLea 296 Dean v. Emerson 135 V. Newhall 283 V. Walker 221 Dearborn v. Bowman 83 Dearie v. Hall 275 Debenham v. Ox 120 Decker v. Livingston 138 Deering v. Chapman 133 De Francesco v. Barnum 232 De Groot v. United States 297 Delamater v. Miller 164, 288, 303 Delano v. Blake 266 Delavina v. Hill 126 Delaware County v. Diebold Safe Co. 273 Delier v. Agricultural So- ciety 117 Dennett v. Dennett 236 Derby v. Johnson 304 Dermott v. Jones 179 Derry v. Peek 254, 255 Derry Bank v. Webster 42 Devecmon v. Shaw 57 Dewey v. Alpena School Dis- trict 182 Dexter v. Blanchard 195 V. Hall 235 V. Norton 178 Diamond Match Co. v. Roe- ber 120, 121 xxvm TABLE OF CASES. Dicker v. Johnson 154 Dickinson v. Burrell 111 V. Calahan 276 V. Dodds 96, 97 V. Lee 253 Dickson v. Frisbee 204 Dieckliofif u. Fox 125 Diggle V. Higgs 118 Dill V. White 140 Dingley v. Oler 288 Dinwiddle v. Self 241 District of Columbia v. Gal- lagher 172 Dixon V. Clarke 280 Doane v. Chicago City Ry. Co. 109 V. Lockwood 264 Dobson u. CoUis 202 Dodge V. Moss 226 Doll V. Noble 184 Donaldson v. Farwell 250 Donellan v. Read 204 Donohue v. Woodbury 66 Doty V. Wilson 84 Dougherty v. Catlett 200 Douglass V. Reynolds 87, 89 Doyle V. Dixon 203 V. Trinity Church 256 Drake v. Mitchell 139 Draughan v. Bunting 195 Drew V. Nunn 99 Driver v. Broad 201 Dublin & Wicklow Ry. v. Black 263 Duncan v. Charles 156, 158, 160, 292 V. Willis 139 Dunham v. Griswold 257 Dunton v. Dunton 32 Duplex Safety Boiler Co. v. Garden 184 Durnherr v. Rau 220 Dusenbury v. Hoyt 81 Dutchman y. Tooth 61 Duval V. Wellman 129, 131 Dyer v. Sutherland 138 Eaglesfield V, London- derry 251 Eames v. Preston 41 Earle v. Angell 58 Eastwood V. Kenyon 84 Page Eberstein v. Willets 256 Ecker v. McAllister 68 Eddy V. Capron 107 V. Davis 155 Eden v. Chaffee 196 Edgerton v. Weaver 69 Edmonston v. Drake 87 Edwards v. Carter 263 V. Pyle 292 Egerton v. Earl Brownlow 124 209 139 V. Mathers Eliason v. Henshaw EUer V. Lacy Ellerman v. Chicago Junc- tion Ry. Co. 121 Elliott V. Bell 139 V. Caldwell 162 Ellis I'. Johnson 219 Elting V. Vanderlyu 69 Embrey v. Jemison 116, 127 Emerson v. Heelis 206 V. Slater 198 Emery v. Ohio Candle Co. 121 V. Smith 212 Emmitt v. Bropliy 219 Empress Engineering Co., In re 216 Endriss v. Belle Isle Ice Co. 71 England i'. Davidson 64 Eposito V. Eowden 177 Equitable Co-op. Foundry v. Hersee 268 Erie Ry. Co. v. Union Loco- motive Co. 135 Ernest M. Munn 264 Essex V. Day 240 Evans v. Huey 258 V. McCormick 87 V. Powis 296 V. Rothschild 269 V. Trenton 131 V. Ware 232 Everson v. Carpenter 268 V. International Granite Co. 246 Ewing V. Burnett 174 Exchange Bank v. Rice 216 Faieplat School Tp. «. O'Neal 31 Fallowless v. Taylor 112 Farni v. Tesson 137, 139 TABLE OF CASES. XXIX Page Page Farrow v. Wilson 181 Fowler v. Black 242 Farwell v. Hanchett 251 u. Brooks 65 V. Lowther 209 V. Fowler 238 Fawcett v. Freshwatei 65 Fox V. Davis 115 Featherstone v. Hutchinson 124. Frank v. Eltringham 208 133 Franklin v. Miller 157 Fehlberg v. Cosine 240 Franks v. Jones 237 Fellows V. Wood 232 Freeman v. Bernard 298 Felthouse v. Bindley 28 V. Freeman 45 Felton V. Wiseman 267 V. Taylor 186 Ferguson v. Coleman 118 Freeth v. Burr 157 Fewell V. Deane 265 French v. Ryan 250 Field i;. Brackett 180 Freyman v. Knecht 161 ,281 V. Mayor 273 ,274 Friend v. Miller 112 Filson V. Himes 183 Fritzler v. Robinson 187 Finch V. Finch 213 Frost V. Clarkson 116 V. Mansfield 86 V. Gage loa ,128 Fink V. Smith 68 V. Knight 165, 288, 289 ,303 Fire Ins. Assoc'n v. Wick- Ft. Payne Coal & Iron Co. ham 66,69 V. Webster 160 ,292 First Nat. Bank v. Bennett 195 Fugate V. Hansford 208 V. Chalmers 196 Fuller V. Dame 109 V. Watkins 89 V. Kemp 296 Fish V. Cleland 251 i^. Glover 228 Fisher v. Bridges 128 Gable v. Morse 191 V. Chadwick 183 Gage V. Lewis 251 Fitch V. Snedecker 80 Gaines v. Poor 115 Fitzgerald v. Barker 219 Gamewell Fire Alarm Tel. Flagg V. Baldwin 116 ,117 Co. 0. Crane 122 V. Manhattan Ry. Co. 221 Garberino v. Roberts 288 Fleet ". Perrins 277 Garbracht v. Commonwealth 86 Flegal V. Hoover 296 Garbutt v. Watson 204 Flight V. Eeed 82 Gardner v. Gardner 40 Flint V. Cadenasse 219 Garden v. Manchester 47 Flower v. Sadler 112 Garrard v. Frankel 240, 246 Foakes ». Beer 66 Garrett v. Trabue 95,98 Fogg u. Portsmouth Athen- Garrison v. U. S. 172 aeum 44 Garvin v, Mobley 225 Foley V. Piatt 107 Gaskell v. King 173 V. Speir 133 Gaylord v. Soragen 126 Fonseca v. Cunard S. S. Co. 49 Geipel v. Smith 150 Ford V. Beech 172 283 Geismer v. Lake Shore &M. V. Phillips 265 267 S. R. Co. 183 «. Tiley 288 Gelpe V. Dubuque 134 Forsyth v. Hastings 266 George v. Tate 261 Foster v. Cockerel! 275 Gerli v. Poidebard Mfg. Co. 157, V. Dawber 281 166 186 V. Mackinnon 36 Gibbons v. Gouverneur 118 V. Metts 68 V. Proctor 80 V. Thurston 126 V. Vouillon 282 Fowle v. Haggar 191 Gibbs V. Baltimore Gas Co. 121 II. Park 121 V. Smith 104 XXX TABLE OP CASES. Page Gibson v. Pelkie 244 V. Soper 263 Gifford V. Corrigan 219, 225, 226 Gillett V. Logan County 112 Gilman v. Eives 137 Gilmore v. Courtney 166 Glaholm v. Hays 186 Glaspie v. Keator 255 Glass V. Hulbert 213 V. Murphy 105 Glaze V. Dusou 133 Glazebrook v. Woodrow 158 Gleason v. Dyke 84 Glenn v. Marbury 271 Gobble V. Linder 190 Goddard v. Biniiey 205 Goebel v. Lynn 70 Goetter v. Pickett 36 Gold V. Pliillips 196 Goldman u. Oppenbeira 104 Goldsborough v. Orr 156 Good V. Cheesman 77, 296 Good Fellows v. Campbell 66 Goodrich «. Tenney 112 Goodsell V. Myers 267 Gordon v. Butler- 252 V. Parraelee 262 V. Third Nat. Bank 293 Gore i: Gibson 236 Gorringe v. Irwell Works 274 Goss V. Lord Nugent 284 Gould V. Cayuga Bank 260 Goulding v. Davidson 85 Govren v. Klous 207 Grace v. Lynch 204 Graces v. Johnson 125 Grandin v. Grandin 68 Grant v. Johnson 154, 155 Gray v. Gardner 150 V. Hook 106 V. Smith 201 Great Berlin Steamboat Co., In re 130 Great Northern Ey. Co. v. Witham 63, 64 Green v. Collins 126 V. Langdon 282 Greenup v. Stoker 165 Greenwood v. Bishop of Lon- don 135 V. Law 205 Gregory v. Lee 232 Grice v. Noble 28 Page Griel v. Loraax 252 Griffin v. O'Neil 245 Grigsby v. Stapleton 248 Griswold v. Hayward 242 Guernsey v. Cook 105 Guild V. Butler 66 V. Conrad 195 Guthing V. Lynn 32 Haas v. Kansas City, &c. B. Co. 183 Hackley v. Headley 256 Hadley v. Baxendale 304 V. Clarke 150 Haigh V. Brooks 57, 60 Hale V. Gerrish 265, 267 V. Trout 164 Hall V. Perkins 160 V. Solomon 201 Hall Lumber Co. v. Gastin 257 Hallenbeck v. Dewitt 36 Halstead v. Grinnan 270 Halsted v. Francis 216 Hamblin v. Bishop 187 Hamer v. Sidway 58 Hamilton v. Gray 111 V. Liverpool Ins. Co. 114, 151 Hampden v. Walsh 180 Hanauer v. Doane 125 V. Gray 173 Handforth v. Jackson 265 Hanger v. Abbott 177 Hanks v. Brown 105 Hanover Nat. Bank v. Blake 103 Hansard v. Robinson 293 Hanson v. Marsh 209 Harbor Bros. Co. «. Moffat Cycle Co. 163, 287, 288 Harding v. Harding 273 Harmer v. Killing 267 Harnis v, McCormick 225 Harriman v. Harrinian 66 Harrington v. Higgins 155 V. Kloprogge 173 Harris v. Great Western Ey. Co. 48 V. Nickerson 46 I'. Scott 92 . Wendall 206 Joest V. Williams 263 Johnson v. Bamberger 220 V. Dodgson 209 V. Hudson 102 V. Hunt 119 V. Otterbein University 78 V. Sellers 74 Johnson-Brinkman Co. w. Missouri Pac. Ry. Co. 269 Jolinstone v. Milling 165, 287, 288 Jones V. Bacon 190 V. Barkley 163, 165 V. Daniel 92 0. Houghton 257 V. Perkins 66 V. Rice 112 V. Stanley 215 V. Swayze 42 Jordan v. Kavanaugh 223 Joslin V. New Jersey Car Spring Co. 225 Page Jourdain v. Fox 213 Joy V. St. Louis 171, 174 Judd V. Harrington 122 Judson V. Bowden 156 I'. Corcoran 275 Judy V. Louderman 55 Justice V. Lang 59, 210 Kadish v. Young 288, 304 Kalkhoff V. Nelson 181 Kane v. Hood 156, 158 Kearley v. Thomson 130 Keck V. Hotel Owners' Ins. Co. 296 Keeler v. Herr 162 Keightley v. Watson 139 Keir v. Leeman 112 Keller v. Ashford 224, 227 Kellogg V. Olmsted 65 Kelley v. Trumble 293 Kelly 0. Kelly 111 V. Stone 86 Kelsey v. Gibbs 198 Kemble v. Farren 189, 190 Kendall v. Hamilton 138, 140 V. May 236 Kendrick v. Neisz 267, 268 Kennedy v. Baker 266 Kerrison v. Cole 132 Kihlberg vi U. S. 166 Kimball v. Cuddy 236 King V. Atkins 191 V. Duluth M &N.Ry. Co. 71, 302 V. Edmiston 199 V. Hoare 138 V. State Mut Ins. Co. 116 V Sumraitt 195 V. Welcome 212 Kingsbury v. Sargent 257 Kingston v. Preston 153 Kirkland v Dinsmore, 50 Kitching u. Hicks 133 Klein v. Ins. Co. 185 Kneetle v. Newcomb 123 Knight V. Cooley 46 Knox «. Knox 237 Kraus v. Thompson 268 Kromer v. Heim 296 Kruschke v. Stefan 257 TABLE OF CASES. xxxm Lacy v. Getman 181 Ladies' Collegiate Inst. v. Frencli 78 Laidlaw v. Organ 248 Laird v. Pim 146, 165 Lalce Ontario K. R. Co. v. Curtis 221 Lakeman v. Pollard 182 Lamb v. Lathrop 280 Lambert v. Heath 290 Lamberton v. Dunham 255 Lampleigh v. Brathwalt 83 Lampman v. Cochran 190 Lancaster County Bank c. Moore 235 Laiida o. Shook 181 Langdon v. Hughes 196 Lange v. Werk 121 Lamed v. Andrews 102 Lasher v. M'Creery 270 Lathrop v. Knapp 79 Lattimore v. Harsen 70 Lavery v. Pursell 213 Law V. Redditch 189 V. Grant 248 Lawrence v. Fox 217, 218, 226 V. McArtei 231 V. McCalmont 60, 61 V. Stagg 187 Lawson v. Lovejoy 266 Layton v. Pearce 174 Leal V. Terbush 187 Leather Cloth Co. v. Hieron- imus 278, 285 Leavitt v. Dorer 72, 179 Lee V. Dick 87 V. Griffin 205 V. Muggerirdge 84 Lehigh Zinc Co. v. Bamford 252, 255 Lemon v. Grosskopf 131 Leroux w. Brown 211 Lester v. White 200 Lewis's Estate, In re, 282 Lewis V. Bannister 255 V. Browning 9.3 Lilly V. Waggoner 237 Lincoln v. Buckmaster 235 Lincoln Shoe Mfg. Co v. Sheldon 147 Lindell v. Rokes 58 Lindsay v. Smith 136 Lingenfelder v. Wainwright Brewing Co. 70, 302 Linneman v. Moross 216 Little V. Banks 218 Livingston v. Ralli 118 Llano Improvement Co. v. Pacific Imp. Co. 68 Lloyd V. Jewell 291 London, Chatham & Dover Ry. Co. V. South-Eastern Ry. Co. 305 London & N. W. Ry. v. M' Michael 263 Lonergan v. Buford 256 Long V. Woodman 250, 252 Longshore Printing Co. v. Howell 123 Longworth v. Mitchell 93 Lord V. Goddard 255 Lorillard v. Clyde 220 Loring v. Boston 93 Loud V. Pomona Land Co. 153, 154 Louisville, N. A. & C. Ry. Co. V. Herr 234 Louisiana v. New Orleans 4 Love V. Harvey 116 Loveren v. Loveren 115 Low V. Peers 119 Lowber v. Bangs 172, 186 Luce V. Foster 133 Ludlow V. Hardy 82 Lumley v. Gye 215 V. Wagner 300, 307 Lunn V. Sliermer 248 Lyle V. Rodgers 297 Lyman v. Lincoln 222 McCandless v. Allegheny Steel Co. 65 McOarren v. McNulty 184 McClair v. Wilson 257 M'Comb V. Wright 210 McConahey v. Griffey 202 McCormick r. Gray 297 McCormick, &c. Co. v. Ham- ilton 258 M'Cowan v. Baine 170 McCreerv i'. Dav 283, 285 McCrillis v. Carlton 265 M'Culloch V. Eagle Ins. Co. 94 McGarvy v. Roods 45 McGinnis v. Femandes 212 XXXIV TABLE OF CASES, Page Maegregor v. Macgregor 203 McGrew v. City Produce Exchange 116 Mack V. Bragg 212 Mackay v. Dick 164 McKenzie v. Harrison 282 M'Kinnell v. Robinson 126 McKown V. Furgason 265 Maclay v. Harvey 93 McMillan v. Fox 178 V. Michigan &c. «R. R. Co. 50 McNamara v. Gargett 105 McPherson v. Cox 201 McQuade v. Rosecrans 133 McRaven v. Crisler 154 Mactier v. Frith 94 Madan v. Sherard 49 Maddison u. Alderson 213 Maddox v. Rowe 206 Madison County v. Bartlett 305 Maggs V. Ames 195 Maguire v. Smock 108 Maiden v. Webster 140 Maine Mut. Marine Ins. Co. V. Hodgkins 36 Makin v. Watkinson 191 Mallalieu v. Hodgson 103 Mallan v. May 135 Mandeville v. Welch 273 Mangles v. Dixon 275 Manter v. Churchill 69 Marcy v. Marey 204, 212 Markham v. Jandon 117 Marsden v. Moore 159 Marsh v. Rainsford 83 Marston v. Bigelow 217 Martin v. McCormick 187 V. Richardson 131 V. Thomas 293 V, Tradesmen's Ins. Co. 293 Martinsburg & P. R. R. Co. V. March 166, 167 Mason c Eldred 138 V. U. S. 256 Materne w. Horwitz 104 Mather v. Butler County 304 V. Scoles 200, 201 Matthews v. Baxter 234 Matthiessen Co. v. McMahon 235 Mattock y. Kinglake 154 Maule V. Bucknell 197 May V. Williams 195 Page Maynard v. Tabor 92 Medbury v. Watsin 252 Meguire v. Corwine 107 Memphis v. Brown 296 Mentz V. Newwitter 208 Merchants' Fire Ins. Co. v. Grant 267 Merriam v. Cunningham 233 Merrick v. Giddings 75 Merrill v. Green 222 u. Packer 105 u. Peaslee 119 V. Wilson 265 Merriman v. Moore 221 Merritt v. Clason 209 Mersey Co. ,/. Navlor 157, 166, 186, 287 Methven v. Staten Island Light Co. 275 Meyers v. Schemp 201 Middleton v. Hoge 266 Miles V, New Zealand Alford Estate Co. 68 Miller v. Ammon 102 V. Craig 236 V. Long 195 V. Minor Lumber Co. 255 V. Rutledge 236 Mills V. Dunham 174 V. Wyman 84 Millward v. Littlewood 125 Ming y, Woolfolk 253 Minneapolis, &c. E. R, Co. v. Columbus Rolling Mill 92, 95 Minneapolis Gaslight Co. i. Kerr-Murray Mfg. Co. 182 Minnesota Oil Co. v. Collier, &c. Co. 93, 95 Mitchell V. Ryan 41 Mixer v. Howarth 205 Moggridge v. Jones 160, 292 Mohr i). Niesen 116, 117, 127 Molton V Camroux 235, 263 Monys v. Leake 132 Moore v. Bevler 188 V. Campbell 52, 284 V. Rogers 138 Moran v. Prather 169, 170 More V. Bennett 121, 122 V. Bonnet 136 Morehouse v. Second Nat. Bank 296 TABLE OP CASES. XXXV Page Morse v. Wheeler 267 u. Woodworth 256, 257, 258, 259 Morton v. Deau 208, 210 V. Lamb 159 Moses V. Lawrence County Bank 209 Moss, Ex parte 273 Moulton V. Kershaw 46 Muir V. Schenck 275 Mulholland v. Bartlett 68 Munroe v. Perkins 70, 71 Musick V. Dodson 84 Myrick v. Uame 138 Nash v. Armstrong 285 National Bank v. Grand Lodge 227 National Furnace Co. v. Key- stone Mfg. Co. 61 National Masonic Ass'n v. Burr 114 Neagle v. Kelly 196 Neblett v. Macfarland 264 Nefi V. Horner 292 Nelson v. Boynton 197 V. Rogers 220 Nester v. Continental Brew- ing Co. 121 New York Guaranty Co. v. Memphis Water Co. 274 N. Y. Life Ins. Co. v. Aitkin 226 V. Statham 150, 185 Newell V. Radford 208 Newington v. Levy 282 Newman v. Newman 135 Newton v. Tolles 187 Nichols V. Mudgett 107 V. Scranton Steel Co. 287 Niekelson v. Wilson 112 Noble V. Ward 284 Nolan V. Whitney 162, 167, 278 Noland v. Bull 183 Noonan v. Bradley 172 Nordenfelt v. Maxim-Norden- felt Co. 121 Norrington v. Wright 157, 166, 186, 286 Northrup v. Northrup 153, 154 Northwestern Ins. Co. v. Blankenship 235 Noyes v. Humphreys Nunez v. Uautel Page 197 183 Oakdale Mfg. Co. V. Darst 121 Odessa Tramways Co. v. Mendel 132 O'Donnell v. Leeman 208, 210 Oelricks v. Ford 50 Ofiord V. Davies 87, 96 Ohio V. Board of Education 182 Old Colony R. K. Co. u. Evans 210 Oliphant v. Markham 256 Oliver v. Hunting 51, 170, 207 OUive V. Booker 186 Omaha & R. V. Ry. Co. v. Brady 111 O'Neill V. Clark 225 Oregon Pac. R. Co. o. For- rest 256 Oregon Steam Navigation Co. u. Winsor 120, 135 Ormes v. Beadel 255 O'Rourke v. Burke 174 Osborn !^. Martha's Vine- yard R. R. Co. 138 Otis V. CuUum 290 Pacific Guano Co. v. Mc- Mullen 133 Packet Co. v. Sickles 202 Page V. Higgins 239 V. Morgan 210 V. Newman 305 V. Norfolk 52 V. Parker 252 Paget V. Marshall 240 Paine v. Brown 155 Palfrey v. Portland, &c. Ry. Co. 68 Pangborn v. Westlake 102 Parish v. U. S. 50 Parker v. Enslow 68 V. Russell 304 V. S. E. Ry. Co. 49 Parmentier v. Pater 257 Parsons v. Loucks 205 Partridge v. Hood 112 V. Messer 103 Patch V. Collins 280 Patrick v. Bowman 96 Payne v. Brecon 182 XXXVl TABLE OF CASES. Page Page Pearce v. Brooks 126 Potts V. Whitehead 93 Pecke V. Redman 69 Poulton V. Lattimore 161 Peirce v. Corf 209 Pratt V. Phllbrook 268 Peltz 1). Eichele 135 V. Trustees 98 Pemberton Bldg. & Loan Presbury v. Fisher 135 Ass'n V. Adams 233 Fenniman v. Hartshorn 209 Pennsylvania Co. v. Lora- bardo 111 Pennsylvania K. R. Co. v. Shay 36 People V. Globe Mut. Life Ins. Co. 177, 181 V. Harrison 138 V. Milk Exchange 122 Perkins v. Hadsell 210 V. Cummings 133 V. Lockwood 77 Peters v. Westborough 202, 203 Peugh V. Porter 274 Philadelphia, W. & B. R. R. V. Howard 153, 154, 173 Phillips V. Phillips 115 V. South Park Commis- sioners 111 Phillpotts V. Evans 304 Pliilpott V. Wallet 200 Pickering v. Ilfracombe Ry. Co. 132, 134 Pickersgill v. Lahens 139 Pierce v. Indreth 41 u. Paine 204 Pigot's Case 133, 134, 135, 136 Pillans V. Van Mierop 17, 55 Pinnel's Case 66 Pittsburg, Ft. W. & C. R. R. Co. V. Hazen 183 Pixley V. Boynton 116, 125 Planters' Bank v. Union Bank 131 Platner v. Patchin 277 Plummer v. People 258 Pool V. Boston 64 Poole V. Hill 164 Pope V. AUis 161 Porter v. Day 117 V. Richmond 219 Portner v. Kirschner 112 Postlethwaite v. Freeland 183 Potomac Steamboat Co. v. Upper Potomac Stbt. Co. 50 Potter V. Monmouth Fire Ins. Co. 260 Presbyterian Cliurch v. Cooper 78, 79, 218 Prewett v. Coopwood 129 Price V. Easton 216 Pritchard a. Norton 173 Proctor V. Sears 268 Prosser t). Edmonds 111 Pruitt V. Pruitt 223, 226 Pueblo R. R. Co. c. Taylor 133 Putnam v. Grace 92 K. Woodbury 74 Radich v. Hutchins 256 Raffles V. Wiclielhaus 90 Railroad Co. v. Mfg. Co. 50 V. Trimble 172 Ramsgate Hotel Co. v. Monte- fiore 93 Randall v. Randall 115 Rann v. Hughes 17, 55, 83 Rawson v. Clark 179 V. Johnson 158 Rayburn v. Comstock 289 Raynay v. Alexander 158 Read v. Nash 195 Redding v. Lamb 291 Redgrave v. Hurd 254 Reece i: Kyle 110 Reed v. Ins. Co. 170 V. Washington Ins. Co. 113 Reese v. United States 293 Reif V. Page 64 Remick ii. Sandford 210 Remington v. Palmer 212 Reynell v. Sprye 129 Reynolds v. Bridge 190 V. Robinson 52 Rhodes, Tn re 236 Rice V. D'Arville 300, 307 V. Goddard 291 Richards v. Heather 138 Richardson v. Crandall 124 V. Rowntree 49 Riddlesbarger v. Hartford Ins. Co. 151 Ridgway ;■. Wharton 51, 52, 207 Rigdon V. Walcott 265 TABLE 0¥ CASES. XXXVll Riggs u. Amer. Tract So- ciety 235 Bipley v. M'Clure 165, 288 Robb V. Vos 269 Robbins v. Eaton 266 Roberts v. Brett 159 V. Cobb 78 Robertson v. French 174 V. Robinson 106 Robinson v. Davison 181 V. Glass 36, 37 V. Gould 268 V. Ommanney 120 V. V. S. 170, 171 Robson ?>. Urummond 272 Rochester Lantern Co. v. Stiles & Parker Press Co. 273 Rockford, etc. K. R. Co. v. Shumiels 35 Roebling's Sons Bignold 114, 151 Vrooman v. Turner 221 Vougbt V. Williams 167 Vyse V. Wakefield 174, 191 Wabash Western Ry. v. Brow 283 Wachsmuth v. Martini 253 Wadsworth v. Sharpsteen 237 V. Warren 52 Wain V. Warlters 208 Walker v. Cronin 215 V. Johnson 202 V. Nussey 211 V. Tucker 178 Wallace v. Berdell 41 V. Rappleye 58 xl TABLE OF CASES. Wallace v. Townsend Wallingford !<. Mutual So- ciety Wallis V. Littell Wall's Appeal Walmesley v. Cooper Walter A. Wood, &c. Co. v. Smith Walton V. United States Wamell v. Reed Ware v. Allen Ward «. Lloyd Warlon' v. Harrison Warner v. Crouch Warnock v. Davis Warren v. Batchelder V. First Nat. Bank V. Warren Washburn v. Fletcher V. Interstate Investment Co. Washington Cent. Imp. Co. V. Newlands Waterman v. Banks 93, Watson V. Doyle Watts V. British & Amer. Mtg. Co. Waugh )-. Morris Way V. Sperry Webb V. Stephenson Webster v. Munger Wegg Prosser v. Evans Welch V. Mandeville V. Marvin V. Sackett Weller's Appeal Weller v. Goble Wells V. Calnan West V, Camdeu Western Union Tel. Co. v. B. & S. Ry. Co. V. Chicago & P. R. R. Co. Wharton v. Stoutenburgh V. Winch Wheat V. Rice Wheeler v. Frankenthal V. New Brunswick, &c. R. R. Co. V. Sage V. Stewart Whelpdale's Case Whinup V. Hughes Whipple V. Parker Page Page 98 White V. Barber 116 V. Bluett 32 190 V. Corlies 92 52 V. Cuyler 294 32 V. Equitable Union 119 283 V. Middlesex R. R. Co. 113 V. Tyndall 139 184 u. Vermont & Mass. R. 294 R. Co. 271 126 Whitney v. Hale 42 52 Whittaker v. Southwest Va. 112 Improvement Co. 257 46 Whittier v. Dana 284 59 Widoe V. Webb 133 116 Wieland i'. Kobick 233 223 Wilbur V. Stoepel 105 273 V. Warren 53 213 Wilcox V. Arnold 84 96 V. Howland 257 Wildes V. Savage 87 222 Wiley V. Athol 163 Wilkinson v. Byers 66 253 V. Johnson 292 185 Wilks V. Smith 154 237 Willard v. Wood 225, 227, 228 269 Willemin v. Batteson 113 124 William Butcher Steel Works 81 V. Atkinson 212 288 Williams v. Bayley 112 , 129 125 V. Carwardjne 8( ,113 139 V. Leper 198 274 V. Moor 81 200 V. Spurr 248 42 Wilmington Transportation 36 Co. V. O'Neil 180 222 Wilson V. Bevans 196 167 V. Carpenter 254 105 V. Powers 65 V. Wilson 115 135 Wilson S. M. Co. v. Curry 257 207 Winchester y. Nutter 118 52 Windhill Local Board v. Vint 112 287 WindmuUer v. Pope 165 221 Winn V. Bull 52 211 Withers v. Greene 292 V. Reynolds 157, 287 174 Wolf V. Marsh 164 131 Wolford V. Powers 57 216 Wood V. Boynton 188, 244 138 f. Moriarty 224 181 Woodberry v. Warner 164, 288 204 Woodman v. Innes 108 TABLE OF CASES. xli Page Woodstock Iron Co. o. Eich- mond & Danville Exten- sion Co. 105, 108, 109 212 166 219 210 120, 121 240 45 112 Worden v. Sharp Worsley v. Wood Wright V. Briggs V. Dannah V. Kyder Wyohe v. Greene Wyley v. Bull Wynne v. Whisenant Xbnos v. Wickham 8, 41, 42 Yerrington v. Greene 181 York V. Hinlde 257 Young V. Godbe 305 V. Power 282 V. Stevens 236 V. Young 282 Youngs V. Trustees 225 Yundt V. Roberts 133 Zaleski v. Clark 184 Zeigler v. Mize 111 Zuck V. McClure 288 ELEMENTS LAW OF CONTRACTS. INTRODUCTION. PART I. THE NATUKE OF CONTRACTUAL OBLIGATION. The word " contract " might well be supposed to have attained by this time a definite legal meaning. An ex- amination of the various ways in which the term is used, however, shows clearly that the different meanings given to the term in different connections render any one definition entirely Inadequate. For example, con- tracts are often divided into contracts of record, such as judgments and recognizances; specialties, or contracts under seal; and simple or parol contracts. The only feature in common possessed by these three classes of " contracts " is that an action ex contractu would lie at common law to enforce any of them. Again, contracts have been divided into executed and executory contracts. An executed contract represents a completed transaction between two parties. Thus, if A. exchanges horses with B., the transaction is spoken of as an executed contract. In an executory contract, on the other hand, something remains to be done by one 1 2 ELEMENTS OP THE LAW OF CONTBACTS. or both parties. ' Between executed and executory con- tracts , therefore, there is the most fundamental differ- ence. In an " executory contract " there exists some obligation on some one to do something; while in an "executed contract" there is no obligation whatever existing. The transaction is completed. Contracts again are divided by Blackstone into express and implied contracts. " Express contracts are where the terms of the agreement are openly uttered and avowed at the time of the making. . . . Implied are such as rea- son and justice dictate, and which therefore the law pre- sumes that every man undertakes to perform; . . . and upon this presumption makes him answerable to such per- sons as suffer by his non-performance." ^ Among these implied contracts Blackstone includes penal statutes, whereby & forfeiture is inflicted for transgressing the provisions therein contained. " The party offending is here bound by the fundamental contract of society to obey the directions of the legislature, and pay the for- feiture incurred to such persons as the law requires."^ Other implied contracts " arise from the general impli- cation and intendment of the courts of judicature, that every man hath engaged to perform what his duty or justice requires." The idea that every man has con- tracted to do his duty is a striking instance of those fictions in which the older law abounds; but on exami- nation of the different obligations which Blackstone treats as contracts, we find that their only common feature is that they are all enforceable by actions ex contractu. Again, it has been said that "Contract results from a combination of the two ideas of agreement and obliga- 1 Blackstone's Commentaries, II. 443; HI. 158. 2 Ibid., m. 159. THE NATTIRB OF CONTBACTUAL OBLIGATION. 3 tion. . . . Contract is that form of agreement which directly contemplates and creates an obligation." ^ But when we inquire whether it is the agreement that con- stitutes the contract, or the obligation resulting from the contract, we find the word "contract" variously used. Sometimes it is used to denote the fact of agree- ment, sometimes the nature of the agreement, some- times, in the case of a written undertaking, the written instrument containing the agreement, and sometimes the obligation resulting from the agreement. Then, too, we hear constantly of "void contracts" and "illegal con- tracts," which create no obligation whatever. More- over, the objections to Sir William Anson's definition of contract are clearly stated by himself. " This state- ment," he adds, "must be limited in its application to a scientific system of jurisprudence in which rights have been analyzed and classified. The conception of obli- gation, as we understand it, was probably not clearly present to the minds of the judges who first enforced promises to do and forbear ; and we may be quite sure that they did not rest their decisions, as to the validity of such promises, upon agreement or the union of wills." The statement that " the analysis is none the less accu- rate because it has not always been made or understood " may justly be questioned. A " scientific system of juris- prudence" seems to demand rather an analysis and classification of our own legal ideas and institutions than the attempt to superimpose upon our own law the analysis, however scientific, of another and alien sys- tem. Whatever may be the relation of agreement to the Roman law of contract, nothing is clearer than that agreement is not the fundamental idea underlying con- tractual obligation in the common law. The contractual obligations which the common law recognized were 1 Anson on Contracts (8th ed.), 1, 2. 4 EIiEMENTS OP THE LAW OP CONTRACTS. enforced, and are still enforced, not because those obli- gations are the result of agreement, but because certain forms of procedure afforded remedies for certain wrongs. It is therefore only by the study of the history of Eng- lish procedure that we can understand the principles of the English law of contract. The historical develop- ment of our modern theory of contract will be explained in the next chapter. The meaning of the word "contract," as used in legis- lative enactments, varies with the connection in which it is used. For example, the United States Constitution prohibits any State from passing any law "impairing the obligation of contracts." The Supreme Court has held that the term "contracts," as used in this clause of the Constitution, includes the charter of a corpo- ration,! which would not be regarded as a contract at common law, but does not include a judgment ob- tained against a municipality for damages caused by a mob,^ although such judgment is called a "contract of record." If then we seek to build up a definition of the term "contract," which shall include all things that have been called contracts, and shall exclude all things which have been held not to be contracts, the task is evidently im- possible. Nor is the reason for this impossibility far to seek. Terms which are used chiefly or exclusively by men of a given trade or profession soon acquire a definite technical meaning. Such terms, for exam- ple, as "seisin" and "conversion" can be clearly de- fined. Terms, however, which are in common use, and which by reason of their common use are also of frequent occurrence in the technical terminology of the law, or of any other science, are very apt to be 1 Dartmouth College v. "Woodward, 4 Wheat. 517. 2 Louisiana v. New Orleans, 109 U. S. 285; 3 S. Ct. 211. THE NATtTEE OF CONTEACTUAL OBLIGATION. 5 used in the loose way in which the word "contract"' has been used. Any definition of contract, therefore, must be either arbitrary or inexact. But there are certain well marked obligations which may be called contractual, which are capable of definition, and seem properly to call for dis- tinct treatment. With such obligations this book deals. In order to define these obligations we must first look for a moment at the general field of jurisprudence. The rights which courts of justice protect, and the obligations which they enforce, are of many kinds. For scientific purposes these rights and obligations must be properly classified, just as flowers must be classified by the botanist, and rocks by the geologist. This classifi- cation is rendered especially difiScult in our law by the fact that the law has crystallized around forms of pro- cedure. The history of English law shows a slow devel- opment from tbe superstitions of the dark ages, through the technicalities of later times, of those principles of justice which alone can give to law the approval of reason. In former days the procedure by which rights were enforced was regarded by the courts as of greater importance than the rights themselves. Consequently the classification of rights and obligations was deter- mined by the remedies given for their enforcement; which is about as satisfactory a method of classification to the student of jurisprudence as the classification of flowers or rocks by their color would be to the botanist or geologist. Obligations enforced in the same manner were given the same name. Every obligation enforce- able by an action ex contractu was termed a contract, regardless of the real character of that obligation ; and as actions ex contractu came to be used in a great variety of cases, there came to be so many kinds of "contracts," that to define a contract has become, as we have seen, an 6 ELEMENTS OP THE LAW OP CONTEACTS. impossibility. Nevertheless, in the case of many "con- tracts," using the word in its broadest sense, we find existing an obligation with certain definite characteris- tics which can easily be recognized. This obligation we shall venture to call "contractual." Of the forma- tion of this contractual obligation, of its construction, its assignment, its extinction, and its enforcement, this book is fco treat. How then are we to distinguish contractual obliga- tion from other legal obligations? In the first place, looking at the endless variety of obligations which the courts enforce, we notice that some . obligations are imposed upon a person without his consent, and with- out regard to any act of his own, while other obligations are the result of a voluntary act on the part of the person on whom they are imposed. The former may be termed irrecusable, the latter recusable * obligations. A clear example of irrecusable obligation is the obliga- tion imposed on every man not to strike another without some lawful excuse. Here the obligation is entirely independent of any act on the part of the person bound by it. In the case of recusable obligations, on the other hand, some act on the part of the person bound is a condition precedent to the genesis of the obligation. Eecusable obligations are either definite or indefinite in their character, according as the extent of the obliga- tion is or is not determined by the act of the party on whom the obligation is imposed. Indefinite recusable obligations may result from the fact that the party bound has undertaken to do something. The undertak- ing may be general, as where one engages in a public vocation, or it may be particular, being simply the undertaking of a specific act or trust. Thus the obliga- 1 These terms have been suggested by my colleagiue, Professor Wigmore, in 8 Harvard Law Rev. 200. THE NATUKE OP CONTRACTUAL OBLIGATION. 7 tion of an innkeeper to receive guests, and the obligation of a common carrier to receive goods for transportation, are general indefinite recusable obligations. Such obli- gations are recusable, for no one is bound to be an inn- keeper or common carrier; they are indefinite, because they are not determined by the act of the party on whom they are imposed; and they are general, because they extend to the public. The undertaking of a gratui- tous bailee, on the other hand, imposes on him a par- ticular indefinite recusable obligation. This obligation is recusable, because it is voluntarily assumed; it is indefinite, because its extent is not determined by the act of the party on whom the obligation is imposed, but by certain rules of law in regard to "due care"; and it is particular, because it extends only to the owner of the property bailed. * The obligation of a trustee is also a particular indefinite recusable obligation. The obliga- tion arises from a voluntary act, the acceptance of a trust; it is determined by the general principles of equity; and it extends only to the cestui que trust. In the case of definite recusable obligations, the extent of the obligation is fixed by the act giving rise to the obligation. Definite recusable obligations are of two kinds, which may be termed unifactoral and bifac- toral. A unifactoral obligation is created by the act of the party bound. A bifactoral obligation requires two acts, one by the party on whom the obligation is imposed, the other by the party to whom the obligation extends. 1 Professor Beale shows clearly the distinction between contracts and gratuitous undertakings in 5 Harvard Law Kev. 222. He main- tains, nerertheless, that the obligation of a carrier or innkeeper to the public is such that a breach of it sounds only in tort. A tort obliga- tion, however, is irrecusable, as pointed oat by Professor Wigmore in 8 Harvard Law Kev. 200 ; while the carrier's or innkeeper's obligation is recusable. 8 ELEMENTS OE THE LAW OF CONTRACTS. The existence of unifactoral obligations in the common law cannot be denied,^ although some of the jurists, it seems, would rather be rid of such obligations than modify their theories to meet the decisions of the courts. Thus, if a deed contains an acknowledgment of obliga- tion by the maker, its delivery gives rise to a unifac- toral obligation.^ In some States the common law rule has been altered, however, and acceptance of the deed has been held essential to its validity, the courts in those States treating the obligation created by a deed as necessarily bifactoral. A unifactoral definite re- cusable obligation may be termed contractual, and is so treated by the courts, if not by the jurists, most of whom maintain that contractual obligation must be bifactoral. Bifactoral definite recusable obligations are of two kinds. The nature and> characteristics of the act of the obligor, which may be called the primary act, resemble each other in both cases ; but the character of the sec- ondary act, or the act of the obligee, differs in these two kinds of obligations. In one case, the secondary act may be of an indefinite character; in the other case, the secondary act is fixed by the primary act. The first kind of obligation has a well known example in equity under the name of equitable estoppel, and seems to have obtained general recognition in the common law courts. To constitute an obligation of the first class, all that is essential is that the secondary act should be done in reasonable reliance on the primary act. How far such 1 Xenos V. Wickham, L. R. 2 H. L. 296. Professor Holland (Juris- prudence, p. 244) hopes " that this case may some day be explained away " ; and quotes the German jurists as stigmatizing the case as " ein juristisches Monstrum." Anson characterizes the existence of the unifactoral obligation as an anomaly. Contracts (8th ed.), p. 32. ' Xenos V. Wickham, supra. THE NATURE OF CONTEACTUAL OBLIGATION. 9 obligations are actually enforced by the courts is hard to state. In equity, the doctrine has long obtained that a man who makes a representation in reliance upon which he induces another to act will be estopped to deny the truth of that representation to the prejudice of the party who has so acted. The representation which will work an estoppel, however, must be a representation' of existing fact. In the common law courts the action on the case for deceit at the time when that action would lie for breach of a parol promise shows a recognition of a bifactoral obligation of similar character. Indeed, the present action for deceit is based on a bifactoral obligation, which, though recusable, is indefinite in character. For in deceit the extent of the obligation is not determined by the primary act, namely, the false representation by the defendant, but is indefinite in character, extending to all the damage which is the natural consequence of the plaintiff's acting in reliance on such false representation. The action for deceit for breach of a parol promise, however, has long since passed away. "Whether there is a broad common law principle that a false representation will give rise to an obligation if acted upon seems very doubtful, although there are specific cases which can best be supported by reference to such a principle. Certain it is, that both at law and in equity a bifactoral definite recusable obli- gation can be created only in two cases; first, where the primary act definitely fixes the character of the sec- ondary act; secondly, where the primary act is a repre- sentation of existing fact, in which case the secondary act may be indefinite in character, provided it is done in reasonable reliance on the primary act. Where the primary act definitely fixes the character of the second- ary act we have a bifactoral obligation which may be termed, as it is termed by the courts, contractual. The 10 ELEMENTS OF THE LAW OP CONTBACTS. primary act, as will be seen later, is the promise, the secondary act the consideration. We have chosen, then, to apply the adjective "con- tractual" to two kinds of obligation, one unifactoral, the other bifactoral. What are the common features of these two kinds of contractual obligation ? The answer is simple. In both the obligation is recusable, resulting from the voluntary act of the party bound ; and in both the obligation is determined by the act of the party on whom it is imposed. In the unifactoral contract the act of the obligor creates and defines the obligation. In the bifactoral contract the act of the obligor does not of itself create the obligation, but it fixes the terms on which the other party may, by performing the specified act, to wit, the consideration, impose such obligation on the obligor. The two essential features of contractual obligation, therefore, are, first, that it is the result of a voluntary act on the part of the obligor ; and secondly, that this voluntary act determines the extent of the obligation and all conditions necessary to its existence. We may here sum up the various resemblances and differences between contractual and other obligations. Contract differs from tort and quasi-contract in that contractual obligation is recusable, while tort obligation and quasi-contractual obligation are irrecusable. Con- tractual obligation resembles the obligation of a bailee or trustee in being both recusable and particular; the difference is that the former is definite, the latter indefi- nite. The obligation of a simple contract resembles the obligation to answer for damages caused by deceit, in this, that both obligations are recusable and bifactoral, and that in both the secondary act must be done in reliance on the primary act; simple contract obligation differs from deceit obligation in this, that the former is definite, the latter indefinite; that in the former the THE NATURE OF CONTEACTTJAIi OBLIGATION. 11 primary act determines the secondary act, while in the latter the secondary act is indeterminate; and also, though this distinction is perhaps less universally ac- cepted, that in the former the intention of the party is immaterial, while in the latter intention to deceive is an essential element. Finally, simple contract obliga- tion resembles equitable estoppel in this, that both are bif actoral definite recusable obligations ; it differs from estoppel in this, that in contract the primary act deter- mines the secondary act, while in estoppel the secondary act is indeterminate. Such being the nature of contractual obligation, what shall we fix upon as a "contract'' ? In the case of a unifactoral contract the answer is easy. The contract is the act which creates the obligation. In the case of bifactoral contracts it is more difficult to determine what constitutes the contract. The answer seems to depend upon whether the bifactoral contract is unilateral or bilateral. A contract is called bilateral if it imposes obligation on both parties; unilateral, if only one is bound. A unifactoral contract is necessarily unilateral, but a bifactoral contract may be either unilateral or bilateral. If A. promises B. to pay him f 1 for a day's work, and B. performs the work, A. 's promise to pay B. becomes a unilateral contract. But if A. promises to pay B. $1,000 if B. will agree to work for A. for a year, and B. accepts A.'s offer, we have a bilateral contract by which A. is bound to pay B. $1,000, and B. is bound to work for A. for a year. It is only where two parties incur mutual "obligations at the same time, and by acts of the same legal character, that a contract is bilateraL Two promises made in different forms , legally speaking, cannot, therefore, constitute part of the same contract, although such promises are mutual, and are given in consideration of each other. Thus, a promise under seal 12 ELEMENTS OP THE LAW OP CONTRACTS. cannot form part of the same contract with a promise not under seal; nor can a promissory note form part of any other contract. These propositions, although simple enough, and clear enough in principle, * have often been overlooked by the courts.* An entire transaction has often been treated as one contract, without regard to the inherent impossibility of a parol promise forming part of the same contract with a specialty. A promise not under seal requires a consideration to make it binding. Is the consideration part of the con- tract or not ? If the contract is unilateral, the con- sideration is clearly not part of the contract, but simply a condition precedent to its existence. If the contract is bilateral, it is composed of the mutual promises only, even though there be other considerations on each side, for such considerations are only conditions precedent to the existence of the contract, and cannot form part of it. In short, if the contract is unilateral, the "con- tract " is the primary act which gives rise to the obliga- tion, and the secondary act (if there is one) is not part of the contract; if the contract is bilateral, the contract is composed only of the primary acts giving rise to the obligation on each side. It has been customary to treat all contracts as if the idea of promise or agreement were common to all. As a matter of fact, however, contracts are of two distinct kinds, formal and simple. The nature of these two kinds of contracts is essentially different. The formal contract is a contract because the party executing it has done some formal act which establishes his legal obli- gation to the other party. The simple contract, on the other hand, is composed of a promise or promises. The attempt has been made to treat formal contracts as 1 Langdell, Summary of Contracts, § 117. '^ As in Hunt i'. Livermore, 5 Pick. 395 ; Langdell's Cases, 757. THE NATURE OF CONTEACTtTAIj OBLIGATION. 13 if they were necessarily promises or agreements; but this is historically incorrect. Formal contracts were originally regarded as grants, rather than promises, and the early ideas of such contracts still have an important influence on the law. If A. gives B. a deed acknowledg- ing that he is indebted to B. in the sum of $100, A. has made a contract whereby he has bound himself to pay B. $100. It may be said that such a deed implies a promise on A.'s part to pay B. $100. Historically, however, as just stated, such a deed has been regarded rather as a grant than as a promise. Moreover, it is clear that implying a promise from such a deed is a very different thing from implying a promise from a man's conduct in accepting the services of another. The truth is, that while such a deed is a contract, and gives rise to contractual obligation, that obligation is the result, not of a promise on A. 's part, but of a solemn formal act by which A. has created such obligation, and has furnished evidence of that obligation which he is not permitted, at common law, to contradict. So little weight, in fact, did the idea of promise have in such cases, that a promise under seal to pay a definite sum of money was enforceable originally only by the action of debt, which was in its nature a real action, brought to recover prop- erty ; and it was not until the seventeenth century that the action of covenant, which had come to be founded on the idea of promise, was allowed.^ In every simple contract there may be said to be a prom- ise. " Assurance, " however, is a more accurate term than " promise " ; for promise looks only to the future, while assurance is independent of tenses. A warranty, for example, that a horse is sound, or that a ship has sailed from port, is a contract; but it would require a stretch 1 PoUock and Maitland, Hist. Eng. Law, 11. 217 ; Ames, 2 Harvard Law Rev, 56. 14 ELEMENTS OF THE LAW OP CONTBACTS. of the word " promise " to make it apply to such warran- ties. In all simple contracts, however, there is always an assurance which may be in regard to the past, present, or future, and may be made with reference to some act within or not within the control of the party giving the assurance. When the assurance is that an event within the control of the party giving the assurance will happen, the assurance is properly a promise. The word " promise ," however, has practically become a technical term, and is generally used as equivalent to the more comprehensive term "assurance." Whether a person who makes a contract is bound to perform it, or whether he simply assumes the risk of having to pay damages is an important question, which will be discussed hereafter in connection with the sub- ject of remedies for breach of contract. THE HISTORY OF CONTEACTUAL ACTIONS. 15 PART n. THE HISTOKY OF CONTRACTUAL ACTIONS. The law of contracts has sometimes been treated as if the conception of contractual obligation had always existed. It seems clear, however, that the general idea of contractual obligation was unknown to our Anglo- Saxon ancestors, and that only in very recent times has that idea become fully developed. To understand the manifold inconsistencies and apparently arbitrary rules with which the student of contract law is constantly confronted, it is absolutely necessary to understand the development through long ages of our modern ideas of contract. Only in the last few years has historical research given us a satisfactory account of this devel- opment. Although there are still unsettled points in our legal history, it is now possible to understand in a general way the history of contract in English law. The history of English law is very largely the history of English procedure. In the early English law, as in the primitive law of other countries, the trial of a law- suit did not involve a judicial determination of the merits of the case by a judge or jury upon the evidence offered by the parties. "The conception of the trial," says a learned writer, " was that of a proceeding between the parties, carried on publicly under forms which the community oversaw." ^ The old forms of trial were by 1 J. B. Thayer, 5 Harvard Law Kev. 46. 16 ELEMENTS OP THE LAW OF CONTRACTS. a record, by charters or documents, by witnesses, by the party's oath with or without fellow swearers, by the ordeal, and by battle. The last two methods need only be mentioned, but the others are important on account of their effect on the law of contracts. And first as to trial by witnesses. These did not resemble our modern witnesses ; in fact, they were really triers, not witnesses at all in the modern sense. Their tes- timony was not subject to any consideration by judge or jury; their oaths given in proper form were conclusive.^ In the trial by oath, the defendant was compelled to clear himself of the charge brought against him by the plaintiff by swearing to his innocence. Sometimes his own oath was sufficient, but more commonly he had to produce a certain number of fellow swearers, called com- purgators. The number of compurgators varied with the rank of the parties and of the compurgators, with the value of the property if property were involved, and with the nature of the suit.^ The most usual number of compurgators seems to have been eleven. These compurgators swore, not to the facts in the case, but to the truthfulness of the defendant's oath, or to their belief in its truth. This mode of trial was also called wager of law. At first very common, it came to be used chiefly in detinue and in debt on simple con- tract. Wager of law never secured more than a precari- ous foothold in the United States, and was abolished in England in 1833.* Trial by record was used to determine the existence of facts alleged to have happened in court. The records of the superior courts, whether proved orally or by 1 Bigelow, History of Procedure, p. 308. ^ Ibid. 301. ' Thayer, 5 Harvard Law Rev. 63. THE HISTORY OF OONTKACTUAL ACTIONS. 17 inspection, were indisputable; those of the inferior courts could be impeached. ^ In the case of trial by charter, the charter was pro- duced at the trial. If it appeared to be genuine, the party who executed it was held to be bound by his solemn act or deed, and all statements and promises therein contained were binding on him in favor of the other party to the deed. The Saxon method of execut- ing a deed was for the party to subscribe his name if he could, and in any case to a£Bx the sign of the cross. ^ Seals were sometimes used, but were not essential to the validity of the deed. The Normans were more accustomed to the use of seals, and after the Norman conquest the seal came to be essential to the validity of the deed; but so late as the reign of Henry II. we have strong evidence that the use of seals was common only among great men.* Centuries later, in Pillans v. Van Mierop,* one of the greatest of English judges held a promise in writing to be binding without a seal ; but his decision proved of little consequence, as it was soon overruled by the House of Lords. ^ When the charter was produced in court, the judge determined its genuineness by comparison of the seal with other seals of the same party, if possible; other- wise, the party producing the charter might prove the seal by means of the duel. When it was once estab- lished that the seal was the defendant's, he was held bound by the deed, although the seal had been affixed without his consent ; but if he had lost his seal he was not responsible for its use; provided, at least, that he 1 Bigelow, History of Procedure, p. 319. 2 Blackstone's Com., II. 305. 3 Abbot Walter v. Baillol, Bigelow, Placita Ang.-Noirm. 175. * 3 Burrow, 1663; L. 177. 6 Rann v. Hughes, 7 T. R. 350, note a ; L. 187. 2 18 ELEMENTS OP THE LAW OE CONTKACTS. had given public notice of its loss.* The evidence afforded by the deed could only be contradicted or over- come by other evidence of an equally satisfactory char- acter. Oral testimony was inadmissible to impeach or to modify the effect of a deed when the genuineness of that deed was once established, — a rule which still prevails in common law courts. Justice in the king's courts was administered by means of the royal writ, directing the sheriff to sum- mon the defendant to appear before the court unless before a certain day he should grant the plaintiff's demand. In modern times the idea prevails that, if a man has a legal right, he must have a legal remedy to enforce that right. In early days, however, a man's rights in the king's courts were limited by the writs which he could get from the chancery, whence the writs were issued. These writs were few in number. Those that we must consider are the writs of debt, covenant, and account. The most striking thing about these writs is this, that though debt, covenant, and account are all called actions ex contractu, the writs in these actions show that they did not proceed upon the ground of enfor- cing any contractual obligation. These writs were all droitural writs ; that is to say, they all proceeded upon the theory that the defendant had certain property in his possession which belonged to the plaintiff, and com- manded the defendant, "juste et sine dilatione," justly and without delay, to restore that property to the plaintiff. The writ of debt had two forms. It was brought either in the debet and detinet, or in the detinet only, according to circumstances. "When brought in the debet and detinet, the writ stated that the defendant owed and unjustly detained the debt. This form was used in 1 Pollock, Contracts, p. 139. THE HISTOEY OF CONTEACTTJAL ACTIONS. 19 oases where the suit was brought by the original creditor against the original debtor, or against his heirs, if the latter were liable for the debt. When brought in the detinet only, the writ simply stated that the defendant unjustly detained the debt. This form of the writ was used when the action was by or against an executor for a debt due to or from his testator. Debt in the detinet was also the proper action for the recovery of a specific amount of unascertained chattels. In this form the action closely resembled that of detinue, which was for the recovery of a specific chattel.^ A debt at common law is a specific sum of money or a fixed amount of chattels due from the debtor to the creditor. To-day the term is applied only where money is due. The ways in which a debt could be created at common law were strictly limited. The action of debt, in so far as it would lie to enforce a contract, was con- fined to those cases where the contract was either real or formal. Contracts arising from the receipt of a thing are termed real contracts, in analogy to the contracts re of the Roman law; contracts which derive their binding force from the weight attached by the law to the formal character of the act creating an obligation are termed formal contracts. The formal contracts enforced by the action of debt were evidenced by a record or by a char- ter. As to informal contracts, debt was used chiefly, if not exclusively, in four cases. The action would lie for money lent, for the price of goods sold, for arrears of rent due upon a lease for years, and possibly for money due from a surety, though legal historians are not agreed as to whether a surety could be bound except by deed. At any rate, if an action would ever lie against a surety except on a deed, such action had disap- 1 Blackstone's Com., III. 155; Ames, 8 Harvard Law Rev. 260, note 1. 20 ELEMENTS OF THE LAW OF CONTRACTS. peared by the time of Edward III.^ Laying aside the question of a surety's obligation, it will be noticed that the cause of action in debt is always either the receipt of a thing by the debtor from the creditor, or the execu- tion of a deed which afforded conclusive evidence of the existence of the obligation set forth in the deed. In the Year Books the term " contract " was applied to the former class of transactions exclusively, while the con- tract under seal was described as a grant, an obligation, or a covenant.^ The thing from the receipt of which a debt arose came to be termed quid pro quo. It seems probable that ser- vices rendered by the plaintiff to the defendant would have been regarded, as they are to-day regarded, as on the same footing with goods sold and delivered.' A quid pro quo, then, was always some benefit rendered by the creditor to the debtor. A benefit rendered to a third person, however, was not a sufBcient quid pro quo to support an action of debt, though the defendant had expressly promised to pay therefor. This rule was finally modified so that the action of debt was allowed wherever the benefit was conferred on a third person at the defendant's request, provided such third person incurred no liability for the benefit received.* The writ of covenant was used to enforce a covenant or promise. It was originally confined to covenants concerning land,° and the judgment might be, in certain eases, for the recovery of the land which the defendant had agreed to convey; thus showing the droitural char- 1 In favor of the surety's liability, see Pollock and Maitland, Hist. Eng. Law, 11. 208; Holmes, Common Law, 264; contra, Ames, 8 Harr. Law Eev. 252. 2 Ames, 8 Harr. Law Rev. 253, note 3. ' Pollock and Maitland, Hist. Eng. Law, IL 209. * Ames, 8 Harv. La\* Kev. 262, 263. » Ibid. 253. THE HISTORY OF OONTBACTtTAIi ACTIONS. 21 acter of the writ, in which the breach of the defendant's covenant was looked upon as constituting a detention of the plaintiff's property.'^ Though the practice seems to hare varied at first, by the end of the fourteenth century the rule became firmly established that the covenant must be under seal, and the term "covenant" to-day means a promise under seal.^ This rule requiring a seal to every covenant prevented the writ of covenant from becoming a general remedy for the enforcement of contracts. The writ of account was used to compel a bailiff or factor to account for moneys received by him on behalf of his employers. It was used chiefly in the fourteenth and fifteenth centuries, and practically disappeared with the progress of equitable jurisdiction in such cases.* It is clear, then, that the king's courts recognized no general theory of contractual obligation. There were certain special obligations which might be enforced by the appropriate writs, but the technicalities of the rules of procedure prevented any development of a theory of contracts. The manorial courts, however, and doubtless other inferior courts, were not so strict in their rules of evidence, and seem to have enforced agreements more liberally. * The ecclesiastical courts, moreover, regarded the Icesio fidei, or breach of plighted faith, as a sin de- manding ecclesiastical penalties. Their jurisdiction was restricted, however, and seems to have had little or no influence on the development of the law of contracts in the king's courts. It is to the celebrated Statute of Westminster II., 13 Edw. I. c. 24, that the modern law of contracts owes its most important features. On account of the limited number and narrow scope of 1 PoUock, 6 Harr. Law Eev. 400. ' Ibid. 401, 402. 2 Ibid. 399-401. * 4 Selden Soc. 115. 22 ELEMENTS OP THE LAW OP CONTEACTS. the king's writs-, many wrongs were committed for which there was no remedy in the king's courts. This unfortunate condition of affairs led to the passage of the statute just mentioned, which provided that where there was a wrong, which, though analogous, was not within the scope of the writs in common use, the chancery clerks might issue a like writ in consimili casu, adapted to the circumstances of the particular case. This statute led to the introduction of writs of trespass on the case. The writ of trespass proper could be used only where the wrong complained of had been committed by the use of force by the defendant. The force might be very slight, and yet trespass would lie ; but for negligence and fraud there was no remedy. It was the unauthorized contract with the person or prop- erty of the plaintiff that was originally regarded as constituting a tort. The introduction of writs of tres- pass on the case gave a remedy where damages had resulted from the defendant's conduct with reference to the plaintiff's person or property, even though there was no forcible conti'act. Even in such cases, however, the defendant ■vvas not liable for negligence, unless h.0 had expressly undertaken some task which he performed improperly, or unless the nature of his occupation re- quired him to act with reasonable skill. Accordingly, a common carrier or common innkeeper was held liable for the loss of the plaintiff's goods intrusted to his care; but in the case of other bailees, the plaintiff had to allege and prove an undertaking on the part of the defendant to take charge of the goods.* So, in the case of a surgeon who was sued for negligence causing the death of the plaintiff's horse, it was held that the plain- tiff must show either that the surgeon was a common surgeon to cure such horses, or that he had expressly 1 Ames, 2 Harr. Law Rev. 6. THE HISTOEY OF C0NTBACTT7AL ACTIONS. 23 undertaken to cure the plaintiff's horse.' From the necessity of alleging an undertaking, or assumpsit, in such cases, these writs were known as writs of trespass on the case in assumpsit. In the course of time, how- ever, it came to be held that the defendant's negligence, and not his undertaking, was the gist of the action, so that the assumpsit was finally omitted.^ Another class of actions on the case included actions of deceit against the vendor of a chattel upon a false warranty. Here too an express warranty was necessary to charge the defendant, except in the case of one who, like a taverner or vintner, was bound by the nature of his occupation to sell articles of a certain quality.* For the class of actions that most nearly resembled the modern action of special assumpsit, however, we must turn to actions on the case for deceit for the simple breach of a parol promise. It was generally held that the action would not lie, because the plaintiff counted on a promise and showed no specialty. In the fifteenth century, however, the courts allowed the action when- ever the plaintiff had been induced to part with money or property on the strength of the defendant's promise, and the doctrine was soon extended so that the action might be brought whenever the plaintiff had incurred any detriment by acting on the defendant's promise. Although the allegation of deceit lingered till the present century, the action for breach of a parol promise had come to be regarded as an action ex contractu, and had developed into the action of special assumpsit.* The action of indebitatus assumpsit originated in the sixteenth century. The foundation of the action was a debt due from the defendant to the plaintiff, and a promise by the defendant to pay that debt. By the 1 Ame3, 2 Harv. Law Rev. 4. * Ihid. 9. 2 Ibid. 7. * Ihid. 10-16. 24 ELEMENTS OE THE LAW OF OONTKACTS. decision in Slade's Case,^ in 1603, the promise was rendered unnecessary, the court holding that proof of a simple contract debt was sufficient to support the action without proof of any promise to pay. The allegation of the undertaking, however, still remained necessary, the assumpsit becoming a fiction, though a necessary one." Indebitatus assumpsit finally became a concur- rent remedy with debt in all cases except where the debt was due by record, specialty, or for rent. It was also extended to most cases of quasi-contracts, as, for ex- ample, where the defendant had received money which in equity and good conscience belonged to the plaintiff." The action of assumpsit in the seventeenth century was extended to cases of contracts implied in fact; and the party who furnished goods or rendered services to another was allowed to recover on a quantum meruit or quantum valebant, by alleging a promise to pay what the goods or services were reasonably worth. A prom- ise implied in fact was thus recognized by the courts ; previously only an express promise had been considered binding.'* The ingenuity displayed by the common law courts, and the fictions they devised in extending the action of assumpsit, may have been due in some degree to the jealousy of the Court of Chancery entertained by the common lawyers. It is not possible here to trace the origin and growth of equity jurisdiction; suffice it to say, that persons who could get no redress in the common law courts applied to the Lord Chancellor, as "keeper of the king's conscience," for relief; and that the relief afforded by the courts of equity tended constantly to make suitors turn thither rather than to the common law courts, where there was so often either no adequate J 4 Rep. 92 a. » Ibid. 63-69. 2 2 Harv. Law Rev. 16, 17. * Ibid. 58. THE HISTOBY OP CONTKACT0AL ACTIONS. 25 remedy or no remedy at all. A court of equity had no general jurisdiction to enforce contracts ; but its juris- diction over cases of fraud and trust gave suitors so much relief that the common law judges devised the various fictions by which the action of assumpsit was extended, partly to promote justice, but partly, no doubt, to retain their jurisdiction over cases which otherwise would have gone into the equity courts. The extension of the action of assumpsit was accompanied by a restriction of the jurisdiction of the courts of equity. The action of assumpsit became the ordinary mode of enforcing all simple contracts. Indebitatus as- sumpsit had two great advantages over the action of debt. First, the former action rendered pleading less difficult. In debt the cause of action had to be stated very carefully and particularly. In indebitatus assumpsit, the debt was only the inducement to the assumpsit, and the plaintiff had only to state the gen- eral nature of his cause of action. Secondly, in debt on simple contract the defendant could wage his law, while in assumpsit the plaintiff could submit his case to a jury.^ It is clear, therefore, that there is no general theory of contracts to be found in the common law; which explains the zeal with which more than one writer has turned to the Roman law for a scientific and rational analysis of contract. The reason that there is no com- mon law theory of contracts is simple enough, however. Our ancestors were familiar with debt and covenant and account and assumpsit, but in their legal reasoning their inquiry always was, " Will debt lie ? or covenant ? or account ? or assumpsit ? " We have, therefore, a theory of debt, a theory of covenant, of account, of assumpsit; 1 2 Harv. Law Eer. 57. 26 ELBMEU^TS OF THE LAW OE CONTKACTS. but we have no theory of contracts except what has been developed in very recent times from a combination of the different theories already existing. To attempt to establish any theory of contract which does not rest on the rules and ideas governing the courts in their actual decisions is a grave mistake. To construct a scientific theory upon those rules and ideas is possible only by the exclusion of the notion that the same prin- ciples must always govern classes of contracts which have a widely different history. THE FOEMATION OP CONTEACT. 27 CHAPTER I. THE FOEMATION OF CONTRACT. § 1. lutroductory. We have defined contractual obligation as that obli- gation which is imposed by the law in consequence of a voluntary act, and which is determined as to its nature and extent by that act. From this definition it will be seen that there are four distinct elements essential to the existence of contractual obligation. These are, first, th^t the party bound should do an act; secondly, that this act should be voluntary ; thirdly, that the act should define the extent of the obligation, and the conditions of its creation; and fourthly, that the law should impose that obligation as the consequence of such act. With these four elements we shall deal in the order just given. § 2. Necessity of an Act. And first, as to the necessity of an act. It is a fun- damental proposition that mere inaction or silence can never subject any one to a contractual obligation. Ele- mentary as this proposition must seem, the fact that the courts have been compelled more than once to pass upon it shows that its true import has not always been clearly understood. The following instances will illustrate the general principle. A. writes to B. offering B. f 100 for his horse, and adding, "if I hear no more about him I consider the horse is mine at $100." B. fails to answer the letter, 28 ELEMENTS 01" THE LAW OF CONTRACTS. and A. claims that such silence amounts to a contract to sell the horse. But B. has done nothing, and there is therefore no contract.* A.'s agent goes to B.'s agent and asks him to renew certain insurance policies issued by B. on A. 's property. B.'s agent says nothing. There is no contract of renewal.^ A. buys goods of B. B. notifies C. that the goods will be charged to G. C. says nothing. C. is not liable for goods furnished A. before or after such notice, having done nothing.* It has been said that an act is necessary on the part of the party to be charged. The term " act " is here used in its broadest sense, to include not merely k single act, but a course of conduct. Present silence may be so coupled with previous speech, present inaction with previous action, that the silence and the speech, the action and the inaction, must all be taken together in order to determine the effect of a person's conduct. Whenever then the previous relations between the plaintiff and defendant have been such that silence by the defendant on a particular occasion justifies the plaintiff in assuming that the defendant intended to bind himself, the defendant is bound, not by his silence, but by his silence taken in connection with his previous conduct. This principle is well illustrated by the case of Hobbs v. Massasoit Whip Co.* The plaintiff in that case sent some eel-skins to the defendant. The defendant declined to accept the skins, but the plaintiff received no notice of its 1 Felthouse v. Biudley, 11 C. B. N. S. 869. 2 Eoyal las. Co. <.. Beatty, 119 Pa. St. 6 ; 12 A. 607 ; W. 514 ; H. & W. 21. 8 Grice v. Noble, 59 Mich. 515 ; 26 N. W. 688. 4 158 Mass. 194 ; 33 N. E. 495 ; H. & W. 24. THE FOBMATION OP CONTBACT. 29 refusal. The skins were kept by the defendant some months, and were then destroyed. The plaintiff then sued for the price of the skins. He had sent eel-skins in the same way to the defendant several times before, and they had been accepted and paid for. In fact there was a standing offer for such skins. " In such a condi- tion of things," said the court, "the plaintiff was war- ranted in sending the defendant skins conforming to the requirements, and even if the offer was not such that the contract was made as soon as skins corresponding to its terms were sent, sending them did impose on the defendant a duty to act about them; and silence on its part, coupled with a retention of the skins for an un- reasonable time might be found by the jury to warrant the plaintiff in assuming that they were accepted, and thus to amount to an acceptance." § 3. The Act must be Voluntary. Contractual obligation being recusable, the act which gives rise to it must be voluntary. An act is voluntary whenever it is caused by the wilt of the party doing it. The will in this respect must be sharply distinguished from the other functions of the mind. An insane person has a will, although his intellect is unsound. He may be entirely unable to appreciate the consequences of an act; but if he is capable of a conscious intention of doing that act, he is capable of making a contract at common law.^ The validity of such a contract when made is another question, which will be discussed later, under the head of insanity.^ Many writers attempt to make contract rest on agreement; but whatever be the function of agreement in the Roman law, the existence of con- tractual obligation in the common law is to be deter- 1 Imperial Loan Co. v. Stone (1892), 1 Q. B. 599. 2 Post, p. 234. 30 ELEMENTS OP THE LAW OF CONTEACTS. mined by reference to the state not of the intellect, but of the -will. Volition, not consent, is the founda- tion of contract in our law, for how can consent be predicated of a lunatic ? How can there be a "meeting of minds " when one of the parties to the contract has lost his mind? If the act is caused by the will of the party acting, it is a voluntary act in the legal sense, however involuntary it may seem in the popular acceptation of the term. Thus, an act is voluntary, although caused by duress. The will in such a case is influenced by threats, but still it acts. No matter what force is used by another to bring about the act, the act is voluntary so long as that force acts only upon the motives of the party acting. A contract is a contract, therefore, though executed under duress. The right of the injured party to avoid the contract does not alter the fact that the contract exists until it is avoided. § i. The Act must determine the Extent of the Obli- gation. The act which gives rise to the contractual obligation also determines the extent of that obligation. The act in question, therefore, must be of such a character that the court can determine accurately the obligation which must result from it. This does not mean that the act giving rise to the obligation must be of such a character that the court can determine its meaning unaided. A contract may be made in a foreign tongue, or may con- tain abbreviations or technical terms which are utterly unintelligible to the court without further explanation. The maxim of the law is. Id oertum est quod cerium reddi potest, — "That is certain which can be rendered certain." All that is necessary is that the court should be able to determine from the language or conduct of THE FORMATION OF CONTEACT. 31 the party to be bound -wliat obligation he incurred, and ■what were the conditions of that obligation. The following instances will serve to show what the courts have or have not regarded as being sufficient to enable them to determine with certainty the extent of an obligation. In Taylor v. Brewer,'^ A. agreed with B. to perform certain services for such remuneration as should be deemed right, and the court held that B.'s promise was too indefinite to create a legal obligation; while in Henderson Bridge Co. v. McGrath,'^ it was held that the jury must determine whether a statement by an agent, that his principal would " do what was right " in regard to paying for certain work, was made with a contractual intent or not. la the former case, the amount to be paid was left entirely to the option of the defendant; in the latter case, it seems to have been a question of fact whether there was a promise to pay a reasonable compensation or not. A promise to pay good wages has been held void for tmoertainty.* A promise to execute a deed of separation contain- ing the "usual covenants" has been held sufficiently certain.* Where a trader borrowed money and agreed to pay a certain amount of interest, "with due allowance in a fair and reasonable manner," in case the borrower's profits should prove deficient, the court held the agree- ment void for uncertainty.^ A promise to convey one hundred acres of land, the land not being described, is too uncertain to be enforced.' » 1 M. & S. 290. " 134 U. S. 260 ; 10 S. Ct. 730. 3 Fairplay School Tp. v. O'Neal, 127 Ind. 95; 26 N. E. 686. * Hart V. Hart, 18 Ch. D. 670. « Re Vince (1892), 2 Q. B. 478. » Sherman v. Kitsmiller, 17 S. A E. 45; H. & W. 157. 32 ELEMENTS OP THE LAW OF CONTRACTS. A promise by a man that, if his niece would live with him, he would give her a good house as long as he lived, and provide for her at his death, has been held too indefinite.'^ Where a father made a promise to his son in consider- ation that the latter would stop making complaints of unfair treatment, the consideration was held too in- definite." Where a divorced husband promised his wife to pay her an allowance if she would conduct herself with sobriety, and in a respectable, orderly, and virtuous manner, the promise was held binding.* Where A. bought a horse from B., and promised that if the horse was lucky to him he would give five pounds more, or the buying of another horse , A. 's promise wag held too vague.* A promise to refrain from engaging in a certain busi- ness " as far as the law will allow " will not be enforced. The contract is construed as a contract in general restraint of trade, which is illegal; and the limitation " as far as the law will allow " is too indefinite to be regarded as modifying the general restraint." § 5. The Law must impose Obligation as the Result of the Act. The circumstances under which the law will impose obligation as the result of a voluntary act vary according as the contract is unifactoral or bifactoral. There are certain general principles, however, which are equally applicable to both kinds of contracts, and which will therefore be stated here. 1 "Walls' Appeal, 111 Pa. St. 460 ; 5 A. 220. 2 "White V. Bluett, 23 L. J. Ex. 36. » Dnntou ». Duntou, 18 "Vict. L. E. 114. * Gnthing v. Lynn, 2 B. & Ad. 232. 6 Davies v. Davies, 36 C. D. 859 ; W. 77. THE FOEMATION OF CONTRACT. 33 (a) Contractual Capacity, An act whicli would otherwise impose obligation on the party doing it may fail to cause such obligation on account of the personal status of such party. The per- son whose acts thus fail to produce their normal result is said to lack contractual capacity. Married women at common law had in general no conr tractual capacity, and therefore could not incur any contractual obligation. Exceptions to this rule existed in the case of the wife of the king of England; of the wife of a man civiliter moHuus ; ^ in the case of contracts touching separation and divorce; and by the custom of London in the case of a married woman's trading contracts.'' In equity a married woman could bind her equitable separate estate by an act showing her intention to do so. She could not bind herself personally, nor did her engagements create a charge upon her estate. The peculiar character of a married woman's separate estate has led to the suggestion that the separate estate " may be regarded as an artificial person created by courts of equity, and represented by the beneficial owner as an agent with full powers, somewhat in the same way as a corporation sole is represented by the person constitute ing it for the time being." 3 The power of married women to make contracts has everywhere been enlarged by legislation, so that their legal status must be deter- mined in every case from the statute-book. According to some authorities, an infant's contracts are void if they are necessarily prejudicial to him. The * That is, an outlaw, a convicted felon, or one "professed in religion." Anson, Contracts (4tli ed.), 117. 2 Ibid. (8th ed.), 122, 123. 8 See Pollock, Contracts, Appendix C, where the subject is fully discussed. 3 34 ELEMENTS 0¥ THE LAW OP CONTBACTS. better view, however, as we shall see later, is that an infant's contracts are voidable, and not void; that his acts may give rise to contractual obligation, although such obligation may be imperfect. ^ The establishment by judicial proceedings of the fact that a person is a lunatic (or, by statute, in many juris- dictions, a drunkard or a spendthrift) destroys the contractual capacity of that person. Corporations are sometimes said to have no capacity to make contracts not authorized by their charters. The invalidity of ultra, vires contracts, however, is due to a rule of public policy making such contracts illegal, and not to want of capacity on the part of the corpo- ration.' (b) Reasonableness of Promisee's Conduct. One fundamental principle of contract law is that the party who maintains that the act of another has resulted in a contract must show that he himself had a right, as a reasonable man, to suppose that the other party intended to assume legal responsibility for such act. (1) Jests and Social Engagements. — It follows, therefore, that mere social engagements, and promises made in jest,* cannot result in legal obligation. Ko reasonable man would suppose that a friend who accepted an invitation to dinner intended to assume legal liability in case of a failure to keep his engagement. (2) Inherent Impossibility. — No reasonable man would suppose that a promise to do a thing in its nature impossible was intended to create legal liability. Whether the impossibility be physical, as in the case of a promise to go to the moon, or legal , as in the case of a 1 Post, p. 231. 2 Post, p. 237. » St. Louis, V. & T. H. E. Co. v. Terre Haute & L R. Co., 145 U. S. 393 ; 12 S. Ct. 953. * Theiss v. Weiss, 31 A. 63 ; 166 Pa. St. 9. THE POEMATION OF CONTEACT. 35 promise to discliarge a man from an obligation to a third person, is of no consequence. A promise to do an im- possible thing cannot in any case impose any obligation to do tbat thing, but if the impossibility is natural or legal, no responsibility whatever can attach to such a promise ; while if the thing is not in its nature impossible, the promise may impose liability for its non-fulfilment.^ (3) Execution op Written Insteuments. — The law in regard to the execution of written instruments illustrates clearly the general principle that an act will give rise to contractual obligation only when the other party had a right to assume that the party acting intended to assume legal responsibility for such act. Thus, where an illiterate man executes a deed, it has been held for centuries that he is bound only by that part of the deed which is read to him.^ And if the deed is falsely read to him, his act in signing, sealing, and delivering the instrument does not make it his deed.' The same rule holds in the case of a blind man,* or of one who has no opportunity to read for want of spectacles.^ Nor does it make any difference whether the contents of the deed are misrepresented by the other party or by a stranger.' 1 "I think it is not competent to a defendant to say that there is no binding contract merely because he has engaged to do something which ia physically impossible. I think it will be found in all the cases where that has been said that the thing stipulated 'for was, accord- ing to the state of knowledge of the day, so absurd that the parties could not be supposed to have so contracted." Brett, J., in Clifford v. Watts, L. E. 5 C. P. 577 ; "W. 19. 2 Year Book, 14 H. VIII. 25, 26. 8 Thoroughgood's Case, 2 Co. Eep. 9 6; Eockford, &c. K. E. Co. v. Shumiels, 65 111. 223 ; Schuylkill County v. Copley, 67 Pa. St. 386 ; Stacy V. Eoss, 27 Tex. 3; Davis v. Snider, 70 Ala. 315. * Shulter's Case, 12 Co. Eep. 90. 6 Simons v. Great Western Ey. Co., 2 C. B. N. S. 620. 8 Thoroaghgood's Case, supra; Schuylkill County v. Copley, 36 ELEMENTS OP THE LAW OF CONTRACTS. If a man can read, however, lie is bound by the instru- ment which he executes without reading.* And one who cannot read is bound by his signature to a docu- ment which he does not ask to have read.* In both these cases the act of the party who executes the instru- ment sufficiently signifies his intention to be bound by it, and the actual state of his mind is therefore unim- portant. If a man can read, his act in executing a written con- tract is sufficient to establish a contract between the parties, even though the document has been misread to him. The contract in such a case may or may not be voidable, but it is not void." If, however, any trick or artifice is used to prevent the person who signs the document from reading it, the instrument is null and void; as where another instru- ment is surreptitiously substituted for the one which the signer intends to execute.* The question of the liability of a person who signs a contract without knowing its contents has been rendered supra. In Hawkins v. Hawiins, 50 CaL 558, the court held that an illiterate person was bound by a contract which he signed, though its contents were misrepresented by the opposite party. This case seems unsound, and opposed to the current of authority from Thorough- good's Case down. The better view is, that the burden of proof is on the party who seeks to establish the execution of a written instrument by an illiterate person, to show that the illiterate understood the con- tents of the instrument. Seldeu v. Myers, 20 How. 506 ; SufEem v. Butler, 18 N. J. Eq. 220. 1 Black V. Wabash, &c. Ry. Co., Ill HI. SSI ; Maine Mnt. Marine Ins. Co. b. Hodgkins, 66 Me. 109 ; Sanger«.Dun,47 Wis. 615 ; 3N.W. 388 ; Bishop v. Allen, 55 Vt. 423 ; Goetter v. Pickett, 61 Ala. 387. 2 Hallenbeck o. Dewitt, 2 Johns. 404 ; Pennsylvania R. R. Co. v. Shay, 82 Pa. St. 198 ; Weller's Appeal, 103 Pa. St. 594. 8 Seeright v. IHetcher, 6 Blackf. 380; Hazard ». Griswold, 21 P, 178; Robinson v. Glass, 94 Ind. 211. * Poster V. Mackinnon, L. R. 4 C. P. 704 ; Champion v. Ulmer, 70 lU. 322 ; Yan Yalkeubuigh v. Bonk, 12 Johns. 338. THE FOEMATION OF COKTEACT. 87 unnecessarily confusing by the loose use of tlie word "fraud." A man is not bound by a contract -which, he is induced to sign by the fraudulent misrepresentation of the other party, ^ or of a third person by the contrivance of the other party, ^ it is true. Such contract is voidable on the ground of fraud. Where, however, some trick is used to substitute another instrument for the one he intends to sign, his signature has no legal effect, and there is no contract whatever, not because the other party was guilty of fraud, but because the person who perpetrated the fraud knew that the other party had no intention of executing the instrument in question. Although the rules just given are the same whether one executes a deed or an ordinary written contract, the reason for the existence of the rule varies according as the instrument is or is not a deed. The binding force of a deed results from its delivery. Now delivery is a matter of intention. If A. intends to deliver a certain deed, it is his deed, no matter what his idea of its con- tents may be; but if he does not intend to deliver the deed, but some other piece of paper, the instrument he actually delivers is not his deed. In the case of a simple contract, however, the only reason that the writ- ing is binding when it fails to express the intention of the party is because the writing is regarded as settling the terms of the contract, so that oral evidence is inad- missible at law to show that the real agreement of the parties was not that which the writing sets forth. In both oases, if one party has no reason to suppose that the other intends to execute the instrument, the apparent execution has no effect; and in both cases, if one party 1 Horachfeld v. London, &c. Ry. Co., 2 Q. B. D. 1 ; Bliss v. N. Y., &c. E. R. Co., 160 Mass. 447 ; 36 N. E. 65 ; Shrimpton v. Netzorg, 62 N. W. 343; —Mich.—. 2 Eobinaon v. Glass, supra ; Archer v. California Lnmber Co., 33 P. 526 ; 24 Or. 341. 38 ELEMENTS OP THE LAW OF CONTKAOTS. has good reason to suppose that the other intended to execute the instrument, the instrument is the act of the party executing it, regardless of any fraud that may have been perpetrated on the signer. Fraud, in such cases, renders the act in question voidable; lack of reason to suppose the existence of an intention to exe- cute the instrument renders the act void. The foregoing rules as to the execution of written instruments apply where the parties to such instruments are concerned. The rights of third parties in such cases are governed by other principles. In the case of ordinary contracts, other parties may acquire rights by estoppel; in the case of negotiable instruments, they may be given rights by the law merchant. § 6. Formal and Simple Contracts. We pass now from the consideration of general prin- ciples to the examination of the particular rules gov- erning the formation of different kinds of contracts. Contracts in English law, as we have seen, are of two classes, formal and simple. The obligation of formal contracts is due to the weight attached by the law to the formal character of the act giving rise to the obligation. Simple contracts are binding for other reasons, hereafter to be explained. (a) Formal Contracts. The existence of formal contracts in our law is due to the rules of evidence previously discussed in connection with the history of contractual actions. Acts were classified according to the evidence by which they were proved. The highest form of evidence known to the law is a judicial record; next comes a deed, and last of all oral testimony. Formal contracts in our law are those the existence of which is established either by a record THE FOBMATION OF CONTKACT. 39 or by a deed. The former are termed contracts of record, the latter specialties. (1) CoNTKAOTs OP Eeooed. — A judicial record is taken as absolutely true and binding between the parties thereto, and those in privity with them. The record cannot be attacked collaterally; if it contains error, that error must be corrected by special proceedings for that purpose in the court that rendered it, or in some other court having jurisdiction to correct the error. Contracts of record are said to include judgments, recognizances, statutes merchant and staple, and recog- nizances in the nature of a statute staple. Statutes merchant and staple and recognizances in the nature of a statute staple have long been obsolete. A judgment is not a contract at all, but a judicial determination of fact entered of record. The sole reason for calling it a contract is, that an action of debt will lie upon it at common law. It seems, however, that a judgment entered by confession may be a true contract, since it is the result of a voluntary act, and the extent of the obligation is fixed by that act. A recognizance is a true contract. It is an obligation in the form of an acknowledgment of a debt made before a judge or officer having authority for that purpose, and enrolled in a court of record.^ The recognizor acknowl- edges that he is indebted in a certain sum, the obliga- tion to be null and void if the recognizor do some act specified in the recognizance. The recognizance is used chiefly to bind a party to appear in court or to keep the peace, and ordinarily runs to the sovereign. (2) Speciai-ties. — Next to a judicial record the highest form of evidence is a charter, deed, or specialty. These are all instruments under seal, "charter" and "deed" being generic words, while "specialty" is 1 Leake, Contracts, 141. 40 ELEMENTS 01" THE LAW OP CONTEACTS. applied to obligations. The immense weight attached to a deed as evidence in early times has been already described. Proof of a party's deed was sufficient to prove the party bound by all statements and promises therein contained. Originally, in fact, the deed was the obligation, and if the deed were lost or destroyed, the obligation also disappeared.^ In ancient times, as we have seen, proof of the se,al was sufficient proof of the genuineness of the deed. To-day, however, the essential requisites of a deed are, • first, that it should be in writing on paper or parchment ; * secondly, that it should be signed; thirdly, that it should be sealed ; and fourthly, that it should be delivered. (a) Signing. — Signing was the Saxon method of authenticating a deed. After the Norman Conquest, however, seals came into vogue, and the seal became the means of authentication, while the signature came to be regarded as unimportant. The Statute of Frauds, which required many instruments to be in writing, signed by the party executing them, did not apply to deeds ; * so that in England the requirement of a signa- ture seems even to-day unessential.* In this country, the universal practice of signing deeds would seem to make signing necessary. The signature, of course, may be by mark; and a party is bound by his signature written by another person in his presence and by his direction.* (6) Sealing. — As to what constitutes a seal, the student must consult the statutes and decisions of his own jurisdiction. According to Coke, a seal is wax 1 Ames, 9 Harv. Law Eev. 49. 2 Sbeppard's Touchstone, 54. This requirement barred out -wooden tallies, which were once used as evidence of contracts. Pollock, Con- tracts, 144. 8 Cherry v. Homing, 4 Ex. 631, 636. * Anson, Contracts (8th ed.), 52; Leake, Contracts, 113. * Gardner v. Gardner, 5 Cush. 483. THE FOKMATXON OF CONTRACT. 41 impressed. An impression on paper is now generally- held sufficient.^ By statute in many States a scrawl or scroll affixed by way of seal is sufficient. In some States, in order that such a scrawl shall constitute a seal there must be a recital in the deed that the scrawl was affixed as a seal." (c) Delivery. -^ Delivery is to-day essential to the validity of a deed. In order to constitute delivery, it is not necessary that the maker of the deed should part with the custody of the deed. All that is necessary is that the maker should do or say something to show that he intends the deed .to be presently binding on him." An unexpressed intention is insufficient.* A deed may be delivered conditionally, not to take effect until some condition is fulhlled. The deed is then said to be delivered in escrow, and is called an escrow. The general rule in America is that a deed cannot be delivered in escrow to the grantee.^ The English rule was formerly the same,' but whether it is still in force seems doubtful.' (d) Acceptance. — To the requirement that the deed must be delivered, some American courts have added the requirement that it must be accepted by the grantee or 1 Pierce v. Indreth, 106 IT. S. 546; 1 S. Ct. 418. 2 Cromwell v. Tate, 7 Leigh, 301; contra, Eames v. Preston, 20 m. 389. 8 Xenos V. Wickham, L. R. 2 H. L. 296 ; Mitchell v. Ryan, 3 Ohio St. 377. * Barnes v. Barnes, 161 Mass. 381 ; 37 N. E. 379. ' Stevenson v. Crapnell, 114 111. 19. This was the rule laid down in the early cases in New York (Braman v. Bingham, 26 N. Y. 483; Wallace v. BerdeU, 97 N. Y. 13) ; but this rule has recently been re- stricted so that it applies only to deeds relating to teal estate. Blewitt V. Boorum, 37 N. E. 119 ; 142 N. Y. 357. ^ Sheppard's Touchstone, 59. ' Leake, Contracts, 115; Anson, Contracts {8th ed.), 53; Hudson V. Revett, 5 Bing. 387. 42 ELEMENTS OP THE, LAW OP CONTKACTS. obligee. The English rule is, "If A. make an obli- gation to B., and deliver it to C, this is the deed of A. presently. But if C. offers it to B. , then B. may refuse it in pais, and thereby the obligation will lose its force." ^ Some of the American courts follow the com- mon law rule ; ^ others assert that the acceptance of the deed by the grantee or obligee is essential to its valid- ity.' It is often said the assent of the grantee or obligee to the deed will be presumed if the deed is beneficial to him ; * but it is not very clear whether this presumption of acceptance is a presumption of fact, from which the jury may or may not infer the acceptance of the deed; or whether it is a disputable presumption of law, ena- bling the party setting up the deed to dispense with evidence of an actual acceptance, but allowing the oppo- site party to defeat the deed by showing that there has never been any acceptance in fact ; or whether it is a so- called ^ conclusive presumption of law, making such a deed binding without acceptance. The idea that acceptance of a deed is necessary comes from a mistaken notion that the validity of a deed rests on the mutual assent of the parties thereto. As has already been shown, the importance of a deed was due originally to the rule of evidence that a party was bound by all statements and promises therein contained. The theory that mutual assent had any connection with the making of a deed was unknown to the common law. The requirement of delivery, originally unnecessary, was added in order to make the deed what it purported 1 Butler and Baker's Case, 3 Co. Eep. 26 b ; Xenos v. Wickham, L. K. 2 H. L. 296. 2 Jones V. Swayze, 42 N. J. L. 279. 8 Welch V. Sackett, 12 Wis. 243; Derry Bank v. Webster, 44 N. H. 264. * Dale V. Lincoln, 62 111. 22; Whitney c: Hale, 30 A. 417s — N. H.— . THE FOBMATION OF OONTKACT. 43 to be, the act and deed of the party bound by it. The theory that acceptance is necessary ignores the historical development of the contract under seal as a formal con- tract, dependent solely upon its execution for its valid- ity, and consequently ignores the existence of unifactoral contractual obligation in our law. The advocates of this theory have attempted to turn the formal contract of English law into the consensual contract of the Eoman law, which has no place in English jurispru- dence.^ In order to force an English obligation into a Eoman classification it has been necessary to set up the extremely artificial idea that a deed is not a contract until it is accepted, but only " an offer which cannot be withdrawn." (b) Simple Contracts. (1) Neoessaeilt Bifaotoeal. — Simple contracts are always bifactoral. A simple contract results from a primary act by one party, and a secondary act by the other. The primary act is always a promise, or, more accurately, an assurance. The secondary act constitutes the consideration for the promise, and makes it bind- ing. And first as to the primary act, or promise. (2) The Peimakt Act, oe Peomise. — The ways in which a promise can be made are innumerable. If the promise is made in words it is said to give rise to an express contract. If the promise is not made in words, the contract is said to be implied. There is no legal difference, however, between a promise made by words and one made by conduct. Any conduct which a reason- able man would regard as implying a promise is so regarded by the law. Certain special cases, however, require special explanation. (a) Acceptance of Benefits. — When one person renders 1 Hare, Contracts, 86. 44 ELEMENTS OF THE LAW OF CONTEACTS. services to anotlier, or furnishes tim with goods, with the expectation of being paid therefor, and the latter •has reason to know that the former was acting with that expectation, the acceptance of the goods or services amounts to a promise by the party accepting them that he will pay the reasonable value of such goods or ser- vices. Thus where the plaintiff erected a party wall, partly on his own land, and partly on that of the defendant, the court held that " if the plaintiff undertook and completed the building of the wall with the expec- tation that the defendant would pay him for it, and the defendant had reason to know that the plaintiff was so acting with that expectation, and allowed him so to act without objection, then the jury might infer a promise on the part of the defendant to pay the plain- tiff." ^ If, however, the party benefited has no opportunity to reject the services in question, it is clear that he can- not be said to make any promise to pay for them. The Eoman law recognized a certain obligation quasi ex eow tractu in such cases, but even such obligation is unknown to the common law.'' ..• The rule that the defendant is not bound to pay,;for goods unless he accepts them with the knowledge or with reason to know that the plaintiff expects to be paid for them is well illustrated by the case oi' Boston Ice Co. V. Potter.' In that case A. had bought ice of B., but, becoming dissatisfied, had ceased to deal with B., and had made a contract for ice with C. Afterwards B. bought C.'s business without A.'s knowledge, and kept 1 Day V. Caton, 119 Mass. 513; Pattee'g Cases on Contracts, 190. Fogg V. Portsmouth Athensenm, 44 N. H. 115 ; H. & W. 10. , " Taylor v. Laird, 25 L. J. Ex. 329; Bartholomew v. Jacksoi^ 20 Johns. 28 ; H. & W;. 14. • . ' ,. 3 123 Mass. 28 ; H. & "W. 243. See aisp Boultou v. 3oTa.es, 2 H. & N. 564. THE FORMATION OF CONTEACT. 45 on delivering ice to A. as C. had done previously. When A. learned that the ice had been supplied by B., he refused to pay for it, and the court sustained him in his refusal. A. had accepted and used B.'s ice, and B. had expected to be paid for it; but A. had no reason to know of B.'s expectation when he consumed the ice, so that A.'s conduct did not amount to a promise to pay B. for the ice. So when, A. appeared in a suit as attorney for the United States, with the expectation of being paid for his services by private clients who were interested in the suit, it was held that the allowance by the authorities of the use of the name of the United States as plaintiff created no liability on the part of the United States to pay for the services rendered by A.^ The general presumption that the acceptance of a benefit implies a promise to pay for it does not exist where the person conferring the benefit is a member of the same family with the person receiving it. In order that one member of a family should have a claim against another for board furnished or services rendered, it must appear that the circumstances were such as to entitle the person conferring the benefit to believe that the other intended to pay for it.^ The family relation, not blood relationship, is what overcomes the ordinary pre- sumption in such cases. ^ {b) Business Circulars and Proposals, — It is clear that a mere inquiry about the price of goods does not constitute a promise to take any of the goods.* Nor 1 Coleman v. U. S., 152 U. S. 96. 2 Cooper V. Cooper, 147 Mass. 370, 17 N. E. 892 ; Freeman v. Free- man, 65 111. 106; Bostwick v. Bostwiels, 71 Wis. 273; 37 N. W. 405; Howe V. North, 69 Mich. 272 ; 37 N. W. 213 ; McGarvy v. Eoods, 73 la. 363 ; 35 N. W. 488 ; Cann v. Cann, 20 S. E. 910 ; — W. Va. — . » Wyley v. Bull, 41 Kans. 206 ; 20 P. 855 ; Thorp v. Bateman, 37 Mich. 68. * Ahearn v. Ayres, 38 Mich. 692. 46 ELEMENTS OE THE LAW OP CONTEACTS. does the statement that one holds property at a certain price amount to a promise to sell the property at that price. ^ Nor do business circulars and advertisements as a rule constitute representations that the party issu- ing them intends to incur legal liability thereby. To draw the line, however, between statements which do and those which do not amount to promises in the legal sense is by no means easy. The case of Moulton v. Kershaw ^ illustrates the practical difficulty which such cases present. In that case A. wrote^ to B. as fol- lows : — " Dear Sir, — In consequence of a rupture in the salt trade, we are authorized to offer Michigan fine salt, in full car load lots of eighty to ninety-five bbls. delivered at your city, at 85 c. per bbl., to be shipped per C. & N. W. E. K. only. At this price it is a bar- gain, as the price in general remains unchanged. Shall be pleased to receive your order." The plaintiff replied ordering 2,000 bbls. of salt. The court held there was no contract, construing A.'s letter "as a simple notice to those dealing in salt that the defendants were in a condition to supply that article for the prices named, and requesting the person to whom it was addressed to deal with them." (c) Auctions. — An announcement that an auction sale of property will be held at a certain time and place does not bind the owner of the property to put it up at auction.' If, however, the property is actually put up at auction, and the sale is without reserve, the auctioneer is bound to knock down the property to the highest bidder.* But the mere solicitation of proposals for the 1 Harvey ii. Facey (1893), A. C. 552 ; Knight v. Cooley, 34 la. 218. 2 59 Wis. 316 ; 18 N. W. 172 ; H. & W. 67. ' Harris v. Nickerson, L. R. 8 Q. B. 286. * Warlow t). Harrison, 1 E. & E. 295. THE FOBMATION OP CONTRACT. 47 doing of work,^ or for the purchase of property,^ im- poses no obligation on the solicitor to accept the lowest bid for the work, or the highest bid for the property. In the case of an auction it must be noticed that there are three distinct acts on the part of the auctioneer. First, there is the announcement of the sale. This announcement, as we have just seen, gives rise to no legal obligation. Secondly, there is the actual offer of the property for sale. This offer is a promise to sell to the highest bidder, and the man who bids the highest has furnished the consideration for the promise, which thereupon is turned into a unilateral contract on the part of the auctioneer to knock down the property to the highest bidder. Finally, the bidder in turn promises to take the property at the price which he bids, and when the auctioneer accepts his bid by knocking down the property to him, we have a bilateral contract, con- sisting of mutual promises, on the one side to buy, on the other to sell. (d) Time Tables. — The publication of time tables by a railway company has been held to amount to a promise that the company will use due care and skill to trans- port its passengers punctually according to such time tables. ° (e) Acceptance of Documents. — A bailee who receives the goods of another has certain duties imposed upon him by law with reference to the safe-keeping of such goods. These duties, however, may be modified by contract between the bailor and the bailee. So, too, the duty of a common carrier to receive goods or passengers, and to transport them to their destination, which exists 1 Leskie v. Haseltine, 155 Pa. St. 98 ; 25 A. 886. 2 Spencer v Harding, L. R. 5 C. P. 561 ; W. 470. » Gordon v. Manchester, &c. R. R. Co., 52 N. H. 596 ; Sears v. Eastern R. R. Co., 14 Allen, 433. 48 ELEMENTS OE THE LAW OP CONTEACTS. independently of contract, may be modified by contract in like manner. Tlie most common mode in which a carrier or other bailee attempts to limit his liability is by means of written or printed stipulations contained in a ticket, bill of lading, receipt, or other document which is given to the bailor, shipper, or passenger. The effect of such a document has often been considered by the courts. When a receipt, ticket, or bill of lading is signed by the person receiving it, this of course constitutes a promise by the signer to be bound by the terms thereof, and this though he does not read the document, and is ignorant of its terms. ^ When the person receiving the document does not sign it, he is bound by its terms if he knows what they are. He is also bound if he knows or has reason to know that he is receiving a document containing the terms of a contract, and those terms are reasonably brought to his notice ; and this on the ground that the person taking such document so acts as to repre- sent to the other party that he has looked at it and read it, or is content to be bound by its contents without ascertaining them. The foregoing principles are clearly illustrated by the following cases. A. deposits his luggage with B. for safe keeping, receiving a ticket, on the face of which, together with other writing, are the words " subject to conditions on the other side." A. knows that there are conditions on the ticket, but does not read them. A. is bound by the conditions of the ticket.'' A. deposits his luggage witi B., receiving a ticket containing conditions on the back, with the words, "See back" on the face of the ticket. A. knows there is writing on the ticket, but does not know that the writing contains conditions. A. is bound by the conditions if 1 Boylan u. Hot Springs R. R. Co., 132 IT. S. 146 j 10 S. Ct. 50. a Harris v. Great 'Western Ry. Co., 1 Q. B. D. 515. THE FORMATION OP CONTEACT. 49 he has reasonable notice of them ; and the question of reasonable notice is for the jury.-' A. accepts a ticket or receipt which shows on its face that it contains the terms of a contract. A. is bound by the terms of the document.^ A. purchases a railway ticket bearing on its face the words "Dublin and Whitehaven." On the back are certain conditions limiting the liability of the railway company. A. knows nothing of the existence of the conditions. He is not bound by them, because there is nothing on the face of the contract to connect the words on the face with the conditions on the back.* When the document is received under such circum- stances that the party receiving it has no reason to suppose that it contains the terms of a contract, such party is not bound by its terms.* Therefore, where a receipt containing conditions is delivered to a for- eigner who cannot read English, and who has no actual notice of the conditions, he is not bound by them.^ In the case of a bill of lading, acceptance by the shipper of the bill of lading is construed very differently by different courts. It is held, on the one hand, that the custom of carriers to limit their liability by stipulations and conditions contained in the bill of lading is so uni- versal that the consignor is bound to know that the 1 Parker v. S. E. Ry. Co., 2 C. P. D. 416 i followed and approved in Richardson v Rowntree (1894), A. C. 217. 2 Belger v. Dinsmore, 51 N. Y. 166; Fonseca v. Cnnard S. S. Co., 153 Mass. 553 ; 27 N. E. 665 ; H. & "W. 15. ' Henderson v. Stevenson, L. R. 2 Sc. App. 470 ; Brown v. Eastern R. R. Co., 11 Cush. 97. * Henderson v. Stevenson, supra; Brown v. Eastern R. R. Co., supra ; Simons v. Great Western Ry. Co., 2 C. B. N. S. 620 ; Madan v. Sherard, 73 N. Y. 329 ; Blossom v. Dodd, 4.3 N. Y. 264. 6 Camden & Amboy R. R. Co. v. Baldanf, 16 Pa. St. 67. 4 50 ELEMENTS OP THE LAW OP CONTRACTS. receipt or bill of lading may contain such conditions, and' that his acceptance of such receipt or bill of lading is a representation that he assents to its terms. ^ Other courts hold, however, that the acceptance of the receipt or bill of lading by the consignor is insuffi- cient to bind him unless he expressly assents to the terms thereof, and this on grounds of public policy. Says the United States Supreme Court, " If the parties were on an equality in their dealings with each other, there might be some show of reason for assuming acquiescence from silence, but in the very nature of the case this equality does not exist, and therefore every intendment should be made in favor of the shipper when he takes a receipt for his property with re- strictive conditions annexed, and says nothing, that he intends to rely upon the law for the security of his rights."^ (/) Written Contracts. — Whenever the parties have reduced the terms of the contract to writing, that writing is regarded as finally settling their respective rights and obligations, and all preliminary negotiations are merged in the contract.* Evidence that the writ- ing did not constitute a completed contract is always admissible; but oral evidence to vary the terms of a written contract can never be received at law.* Such evidence is admitted, however, in equity, in those cases where it is offered to support or to oppose the exercise of the exclusive jurisdiction of equity, as in ^ KirWand v. Dinsmore, 62 N. Y. 171 ; McMillan v. Michigan, &c R. R. Co., 16 Mich. 79, 114-116 ; Hutchinson on Carriers, § 240. 2 Railroad Co. v. Mfg. Co., 16 Wall. 318, 329. * Van Ness v. Washington, 4 Pet. 232 ; Potomac Stht. Co. v. Upper Potomac Stht. Co., 109 U. S. 672 ; 3 S. Ct. 445 ; 4 S. Ct. 15; Parish v. U. S., 8 Wall. 489 ; Van Weel u. Winston, 115 U. S. 228 ; 6 S. Ct. 22 ; Ins. Co. V. Mowry, 96 U. S. 544. * OeWcks V. Ford, 23 How. 49 ; Ins. Co. v. Mowry, supra. THE FORMATION OF CONTEACT. 61 cases where the reformation or cancellatioa of a con- tract is sought.* It is sufi&cient that the terms of the contract have been reduced to writing in order that the rules govern- ing written contracts should apply; it is not neces- sary that the writing should be signed.' On the other hand, if the writing does not contain all the terms of the contract, the rules governing written contracts do not apply. Writings which are sufficiently connected with each other may be regarded as constituting a written contract. The connection must be established by a reference in one writing to the other writing which it is sought to connect with the first.' If there is any ambiguity in such reference, oral evidence is admissible to identify the writing referred to.* Where negotiations are carried on by correspondence, and the contract has to be gathered from different letters, everything that passed between the parties must be taken into consideration. It follows, therefore, that where two letters seem on their face to constitute a com- plete contract, it may still be shown that these letters did not constitute a contract, and that other terms not mentioned in the letters were to be agreed on subse- quently.* Evidence of subsequent negotiations has been received to show that a contract apparently completed by correspondence was not regarded as finally settled by the parties." Oral evidence is admissible not only to show that a 1 Leake, Contracts, 157, 158. 2 Hotson V. Browne, 9 C. B. N. S. 442. 8 Brown v. Langley, 4 M. & G. 466. 4 Oliver V. Hunting, 44 Ch. D. 205 ; Ridgway v. Wharton, 6 H. L, C. 238; Beckwith v. Talbot, 95 U. S. 289. ' Hussey v. Home-Payne, 4 A. C. 311. • Bristol Aerated Bread Co. v. Maggs, 44 C. D. 616. 52 ELEMENTS OP THE LAW OF CONTKACTS- ■writing is not, as it purports to be, a contract, but also that it was executed conditionally, to be binding only on the happening of a certain event, i Oral evidence of a collateral agreement is admissible, provided such collateral agreement does not contradict the terms of the written contract.^ (g) Agreement for Future Contract. — Persons often agree to enter into a contract in the future, and the question then arises whether such agreement is in it- self a contract. If the agreement leaves any essential terms of the future contract to be determined, the agreement itself is not a contract.* So if the agree- ment shows that it was not intended to be binding until a formal contract had been executed.* The fact that the agreement refers to a contract to be drawn up in the future does not show conclusively that the par- ties did not intend to bind themselves until the formal contract was signed, although the fact that such formal contract was to be drawn up is evidence of the invalid- ity of the informal agreement.' Whether the informal agreement is binding or not is to be determined by the apparent intention of the parties in each case, taking all the circumstances into consideration. ^ 1 TVallis V. Littell, 1 1 C. B. N. S. 369 ; Moore v. Campbell, 10 Ex. 323; Ware v. Allen, 128 TJ. S. 590; 9 S. Ct. 174; Reynolds v. Robin- son, 1 10 N. Y. 654 ; 18 N. E. 127 ; H. & W. 502 ; Wadsworth v. Warren, 12 Wall. 307. 2 Angell ./. Duke, L. R. 10 Q. B. 174 ; Thompson v. Ins. Co., 104 U. S. 252. s Sibley w. Felton, 156 Mass. 273, 31 N. E. 10; Shepard v. Carpen- ter, 54 Minn. 153 ; 55 N. W. 906 ; Page v. Norfolk, 70 L. T. 781. * Eads V, Carondelet, 42 Mo. 113 ; Page v. Norfolk, supra; Winn V. Bull, 7 C. D. 29. 5 Ridgway v. Wharton, 6 H. L. C. 238 ; Wharton v. Stoutenburgh, 35 N. J. Eq. 266 ; Allen v. Chouteau, 102 Mo. 309 ; 14 S. W. 869 ; Cross- ley V. Maycock, L. R. 18 Eq. 180. 8 Sanders v. Pottlitzer Bros. Emit Co., 144 N. Y.209; 39 N. B. 75; V and cases supra. THE rOKMATION OF CONTRACT. 53 (3) The Sbcondakt Act, oe Consideration. — (a) Origin of the Doctrine of Consideration. — The doc- trine of consideration has played so important a part in the English law of contract that consideration is often spoken of as an essential element of contract. In order to reconcile the idea that consideration is essen- tial to a contract with the well known rule of law that a contract under seal is binding without regard to there being a consideration therefor, it has often been asserted that a seal "imports a consideration," or "is conclusive evidence of a consideration." Such statements are not merely erroneous, but absolutely misleading as to the very nature of a sealed instrument. As we have seen, it has been the rule for ages that the evidence afforded by a deed can only be overcome by evidence of an equally high character. The fact that a man has bound himself by deed is conclusive evidence that he is bound, not that he received a consideration for his promise. Nevertheless, so wide-spread is the erroneous idea that there is a real connection between the seal and the doctrine of consideration, that statutes have been passed in New York and other States, providing that a seal " shall be only presumptive evidence of a considera- tion." * The effect of such statutes is to change, not a rule of evidence, but the very nature of contracts under seal. A specialty is binding by reason of its form ; a promise not under seal only by virtue of some considera- tion. The New York statute has the effect of making all contracts depend for their validity upon the existence of some consideration. The rule that a simple contract requires a considera- tion has three distinct sources. These are the action of debt and the action of assumpsit in the common law courts, and the peculiar doctrines governing the courts 1 N. Y. Code, § 840; WUbur v. Warren, l()4 N. Y. 192. 54 ELEMENTS OF THE LAW OP CONTBACTS. of equity in their administration of equitable relief. In the action of debt, as we have seen, a quid pro quo was necessary in all cases where the debt was not proved by a record or by a charter. This quid pro quo was the benefit conferred upon the defendant by the plaintiff at the time of the creation of the debt and was in fact the cause of the debt, which was regarded as arising rather from the receipt of the benefit than from the promise to pay for it. In this respect debt resembled the contract re of the Roman law, in which the transfer of property gave rise to an obligation. Consideration, as the quid pro quo came to be termed, always meant in the action of debt a benefit conferred by the plaintiff upon the defendant. In the action of assumpsit we find an entirely different idea of consideration. The chief root of the modern action of special assumpsit, as we have seen, was the action on the case for deceit. In this action the plain- tiff alleged that the defendant had made him a promise or representation, intending to deceive him, and that, relying on that promise or representation, he, the plain- tiff, had incurred some detriment. Originally this detriment meant parting with money or property, or performing services; but it was finally extended to cases where the only detriment incurred by the plaintiff consisted in the fact that he had bound himself to the defendant by mutual promises. In indebitatus assumpsit, the antecedent debt was treated as a sufficient consideration to support the promise to pay it. When the promise, however, came to be held unnecessary, indebitatus assumpsit lost its original character as a true contractual action, and stood practically on the same footing as debt. In equity peculiar doctrines of consideration pre- vailed. Two kinds of consideration were here recog- THE FOEMATION OF CONTRACT. 55 nized, — good consideration, which meant relationship within certain degrees of consanguinity, and valuable consideration, which was the consideration recognized in the common law courts, and meant some benefit to the promisor or some detriment to the promisee. A court of equity would never enforce a contract unless there were a good or valuable consideration therefor; while the common law courts knew nothing of good con- sideration, and did not require any consideration for contracts under seal. The equitable doctrine of con- sideration somewhat resembled the Eoman law theory of causa,^ by which the chancellors may have been influenced. Causa, like consideration in equity, meant a sufScient legal reason for enforcing a promise, without which a promise was called nudum pactum. What is such a sufficient reason is a question of positive law. Liberality in the Eoman law was a sufficient causa, as relationship was a good consideration in equity for a covenant to stand seised to the use of another. Good consideration in equity, however, did not make a con- tract binding which was not binding at law; it merely rendered a covenant to stand seised enforceable by a court of equity, which would raise a use upon such a covenant only where there was such consideration. It was not until 1778 that the requirement of con- sideration for simple contracts was definitely established. Previous to that time Lord Mansfield had held that a promise in writing was binding without consideration, saying that the ancient notion about the want of con- sideration was for the sake of the evidence only, and did not apply to promises in writing.'' In Eann v. ^M^'Aes,' however, the House of Lords overruled Lord 1 Langdell, 1 Harv. Law Rev. 367. 2 Pillans V. Van Mierop, 3 Burrow. 1663 ; L. 177. 8 7 T. R. 350, note o ; L. 187. 56 ELEMENTS OP THE LAW OP CONTEACTS.' Mansfield's decision, holding that all contracts were either by specialty or by parol, and that for all promises not under seal a consideration was necessary. Consideration, which is now used to mean valuable consideration only, is of two kinds, one antecedent, the other subsequent to the promise which it supports. Any pecuniary obligation will suffice for an antecedent consideration. Consideration is more commonly used, however, to denote subsequent consideration only, and it will be used in that sense hereafter unless otherwise specified. (6) Definitions and Instances of Consideration. — Con- sideration has been defined as a benefit to the promisor or a detriment to the promisee. What connection is there between benefit to the promisor and detriment to the promisee that gives rise to such a definition in the alternative ? The answer to this is found in the two common law sources of the doctrine of consideration, the action of debt and the action of assumpsit. The quid pro quo in debt was a benefit to the debtor, while the origin of the defendant's liability in assumpsit was that the plaintiff had been induced to act in reliance upon his promise. The consideration of assumpsit, or the detriment to the promisee, is the consideration upon which our modern theories of simple contracts are based. The " detriment to the promisee " which constitutes a consideration, is not necessarily a detriment at all ; it is simply the surrender of a legal right. So long as a legal right is surrendered, there is a sufficient consider- ation, although the surrender of that right may be of no value to the other party, and may actually benefit the party surrendering such right. The following examples will show what an infinite variety of things may consti- tute a consideration. THE FORMATION OP CONTKACT. 57 The surrender of a document is a sufficient considera- tion, though that document be a written instrument of no legal value. * The holder of the document is under no legal obligation to part with it; hence his parting with it is a surrender of his legal right to keep it. Permission by the promisor to weigh certain boilers belonging to the promisee is a sufficient consideration for a promise, the surrender of possession by the promisee being the surrender of a legal right.^ The execution of a release of land to which the promisee has no title is a sufficient consideration; the promisee is not bound to execute the release.' The naming of the promisee's child after the prom- isor is a sufficient consideration, the promisee having the right to give the child any name.^ A promise to pay a sum claimed to be due by one party, and denied by the other, if the claimant will swear to the correctness of the claim, is binding if the promisee takes the required oath, since he is under no legal obligation to do so.° It is of no consequence that the promisee is benefited by the act that constitutes the consideration. Thus, where the defendant's testator promised the plaintiff to pay the plaintiff's expenses if he would take a trip to Europe, the incurring of the expense of such a trip was held a sufficient consideration for the promise. ^ So a promise to pay another a certain sum of money if he will abstain from the use of liquor and tobacco for a given time is binding in favor of the party who so 1 Haigb V. Brooks, 10 A. & E. .'!23 ; L. 210 ; Judy v. Louderman, 29 N. E. 181; 48 Ohio, 562. 2 Bainbridge v. Firmstone, 8 A. & E. 743 ; L. 209. 3 Sykes v. Chadwick, 18 WaU. 141. » WoUord V. Powers, 85 Ind. 294. ' Brooks V. Ball, 18 Johns. 237 ; L. 200. 6 Devemon v. Shaw, 69 Md. 199 ; 14 A. 464 ; W. 547 ; H. & W. 141. 58 ELEMENTS OP THE LAW OP CONTEACTS. abstains.^ A man has a legal right to use liquor and tobacco, and his abstinence amounts to a surrender of that right. The surrender by a mother of her illegitimate child is a good consideration for a promise by the father to support the child.* A xJromise to come to the promisor's funeral is a suffi- cient consideration to support a promise. ° A most interesting question as to the sufficiency of consideration arose in Carlill v. Carbolic Smoke Ball Co.* In that case the defendants, proprietors of a "Carbolic Smoke Ball," advertised in a newspaper, offering a reward of £100 to any person who should contract influenza after having used the ball for two weeks. The plaintiff read the advertisement, and bought one of the balls, and after using the ball in the pre- scribed manner contracted influenza; whereupon she sued the defendants, and recovered the amount of the award. The court held that her performance of the conditions of the advertisement was a sufficient con- sideration for the defendants' promise to pay the £100. (e) Mutual Promises. — To incur a legal obligation is, of course, to surrender a legal right to act freely in respect to the subject matter of an obligation. A promise to do an act will therefore be a consideration whenever the doing of the act would be. The rule that mutual promises are the consideration for each other 1 Hamer v. Sidway, 124 N. Y. 538 ; 27 N. E. 256 ; H. & W. 143 ; Lindell u. Rokes, 60 Mo. 249; Talbotfc •:. Stemmons, 89 Ky. 222; 12 S. W. 297. ■2 Benge v. Hiatt, 82 Ky. o66 ; contra, Wallace v. Eappleye, 103 HL 229, on the ground that the mother was benefited by such surrender. 3 Earle v. Angell, 157 Mass. 294; 32 N. E. 164. * (1893) 1 Q. B. 256. THE FORMATION OP CONTRACT. 69 has been recognized since 1555.* When the considera- tion is a promise, it is called executory; when the con- sideration is an act performed, it is said to be executed. It is always important to keep in mind the fact that where the consideration is executory it is the promise, and not the performance, that constitutes the considera- tion and makes the contract binding. This elementary proposition has sometimes been lost sight of by the courts. Where the consideration is executed, the con- tract is always unilateral; where the consideration is executory, the contract is bilateral, provided the promises are mutual. In order that a promise should constitute a considera- tion, it must impose some legal liability on the party making it. Therefore, a married woman's promise, being void at common law, would constitute no con- sideration.^ It is not necessary, however, that the liability imposed should be perfect. Thus, an infant's promise is a good consideration for an adult's,' although the infant's promise is voidable. So an oral promise within the Statute of Frauds is a good consideration for a promise in writing.* (d) Distinction between Consideration and Condition Precedent. — An act may or may not be a considera- tion as the parties do or do not treat it as such. In the case of a bailment for the benefit of the bailor it is said that the delivery of possession of the property is the consideration for the bailee's promise to take care of the goods.* It has been pointed out, however, by Mr. 1 Ames, 8 Harv. Law Rev. 259 ; Pecke v. Bedman, Dyer, 113 a. " "Warner v. Crouch, 14 Allen, 163. 8 Holt V. Ward Claiencieux, 2 Strange, 937 ; L. 397 ; Baldwin v. Van Deusen, 37 N. Y. 487. * Justice V. Lang, 42 N. T. 493. 6 Hart V. Miles, 4 C. B. N. S. 371 ; L. 391 ; where the plaintifi's con- 60 ELEMENTS OP THE LAW OF CONTRACTS. Justice Holmes,* that, although the delivery of posses- sion may be a consideration, it will not necessarily be one; and that the delivery of possession can only be regarded as a consideration when it is so treated by the parties. In case the bailee accepts the charge of the goods simply as a matter of favor to the bailor, the delivery of possession is no consideration, but a mere condition precedent to the performance of the promise. (e) Adequacy of Consideration. — The adequacy of the consideration has nothing to do with the validity of the contract.^ The fact that the consideration is of less value than that which the promisor is to give for it is, in itself, of no consequence. The promisor has the absolute right to determine upon what consideration he will consent to be bound; but when he has designated the consideration, he is bound by his act, regardless of his wisdom or folly in making a bargain. But though inadequacy of consideration does not affect the validity of a contract, such inadequacy may be one element in the unfair dealing for which a court of equity may set the contract aside. The consideration, however inadequate, must never- theless be real. That is to say, there must really be an act or promise which is regarded by the parties as a true consideration. If the consideration is merely colorable, it will be disregarded by the courts. Thus one cent has been held an insufficient consideration for a promise to pay $700 ; ' and $1 insufficient to support a promise to pay $1,000.* In both these cases the consideration sent to the retention by the defendant of two bills of exchange was held a good consideration. 1 Common Law, 291, 292. 2 Lawrence v. McCalmont, 2 How. 426 ; Haigh v. Brooks, 10 A. & E. 323 ; L. 210. 3 Schnell «. Nell, 17 Ind. 29 ; H. & W. 138. • Shepard v. Rhodes, 7 E. I. 470. THE POEMATION OP CONTEACT. 61 was regarded by the courts as merely colorable. Yet a promise to pay $1,000 for a particular dollar of great rarity is unquestionably binding, the dollar in such case being a real consideration for the promise to pay. And, vice versa, $1 is a good consideration, it seems, for any promise except a promise to pay a larger sum of money absolutely.^ (/) Contingent Consideration. — Incurring a legal obligation is a good consideration, even though that obligation- be contingent. If a man promises to act in a certain way upon the happening of a certain event, he thereby limits his freedom of action in case such event occurs. Thus, if A. promises B. to buy of him all articles of a certain kind which A. may require in his business for a given period, A. 's promise is a good consideration for B. 's promise to sell such articles at a certain price ; for though A. may not require any of the articles during that period, still, if he does require any, he is bound to buy them of B., and he has therefore parted with his right to buy wherever he sees fit.^ In regard to such indefinite agreements there has been some confusion of thought, but the principles governing such cases seem clear. Where an offer is made to sell goods or render services at a fixed price, if the amount of goods or the quantity of service to be furnished is fixed, acceptance of the offer completes a contract. This contract is bilateral, consisting of mutual promises to buy and to sell. If the amount of goods or the quantity of service is not fixed, but is to be determined by some future event, does the offeree's saying, "I accept your offer," make a 1 Lawrence v. McCalmont, 2 How. 426; Dutchman v. Tooth, 5 Bing. N. C. 577. 2 Smith V. Morse, 20 La. Ann. 220 ; National Furnace Co. v. Key- stone Mfg. Co., 110 111. 427 ; contra, Bailey v. Austrian, 19 Minn. 535. 62 ELEMENTS OF THE LAW OP CONTRACTS. contract ? This depends upon whether such an accept- ance imposes any obligation on the acceptor. If such acceptance in no way limits the freedom of action of the acceptor, then there is no contract, because there is no consideration for the offerer's promise to sell the goods or to render the services.* Thus in Chicago & Great Eastern Railway Co. v. Dane,'' the defendant offered to transport from New York to Chicago not exceeding 6,000 tons of iron at a fixed price during a given period. The plaintiff wrote "accepting" this offer; but the court held there was no contract, there being no con- sideration for the defendant's promise to transport the iron. The plaintiff's acceptance did not bind him to deliver for transportation any iron whatever, either ab- solutely or conditionally. If, however, the acceptance binds the acceptor, though only conditionally, there is a binding contract, for there is then a consideration for the offerer's promise. For this reason, as just stated, if the offer is to sell all the goods the offeree may need in his business during a given period at a fixed price, acceptance by the offeree completes the contract. Such an agreement has been held not binding in Minnesota,' on the ground that the acceptor does not promise to order any goods ; but this reasoning seems erroneous, because it ignores the fact that the acceptor parts with his right to buy goods of any one but the offerer-. Although an acceptance of an offer which does not bind the acceptor has no effect to bind the other party, an offer of an indefinite amount of goods at a fixed price is rendered binding by an acceptance of the offer as to a definite amount of the goods. Thus in Great Northern 1 Thayer v. Burchard, 99 Mass. 508 ; American Cotton Oil Co. v. Kirk, 68 F. 791, — U. S. App. — . 2 43 N. Y. 240; W. 510. ' Bailey v. Austrian, supra. THE FORMATION 01" COKTEACT. 63 Railway Co. v. Witham,^ the defendant offered to supply the plaintiff with such quantities of stores as the plaintiii might order at prices named. The plaintiff wrote " accepting " this offer. Several orders for iron were given by the plaintiff and executed by the defend- ant; but at last the defendant refused to fill any more orders, and the plaintiff sued for breach of contract. Judgment was given for the plaintiff. The considera- tion in this case was not the "acceptance" of the defendant's offer by the plaintiff's letter, because such acceptance did not bind the acceptor in any way. The consideration was the actual sending of an order for a definite amount of the iron. " Accepting " the defend- ant's offer imposed no obligation on the plaintiff, while ordering a definite amount of iron bound the plaintiff to take and pay for the iron so ordered. In Cooper v. Lansing Wheel Co."^ the plaintiff sent the defendant an order for all the wheels "we may want during the season of 1890," at certain specified prices, and the defendant accepted the offer. The plaintiff gave certain orders, which were filled, but subsequent orders were not filled, and the plaintiff sued for breach of contract. The court held the plaintiff entitled to recover, but on grounds that are hardly tenable. The court said that the defendant could have withdrawn the offer to supply the goods at any time before the plain, tiff had acted upon it by ordering goods. This seems erroneous, because the plaintiff's agreement to buy all the wheels he needed of the defendant was a good con- sideration for the defendant's promise to sell such wheels. The court went on to say, however, that, though the plaintiff's order and the defendant's accept- ance did not constitute a contract, still, when the plain- 1 L. K. 9C. P. 16;W. 471. 2 54 N. W. 39 ; 94 Mich. 272 ; H. & W. 50. 64 ELEMENTS OF THE LAW OP CONTKACTS. tiff gave one order for wheels, the defendant thereupon became bound to deliver all other wheels the plaintiff might thereafter order. This seems erroneous also, for if the defendant is to be regarded as offering wheels for sale at such a price, the plaintiff's order of a certain number of wheels would turn such offer into a contract to deliver the wheels ordered, and not all wheels the plaintiff might order in the future. The Michigan court relied on the case of Great Northern Railway Co. v. Witham, in which the court merely held that one who offered an indefinite amount of goods for sale at a given price was bound by an order for a definite amount of goods, not that such order would turn the offer into a binding contract to fill all future orders. The facts in Cooper V. Lansing Wheel Co. were similar to those in Great Northern Railway Co. v. Witham, and the decision was therefore properly in favor of the plaintiff; but the reasoning of the court in the Michigan case is not sup- ported by the English decision. (jr) Performance of Legal Obligation. — Consideration involves the surrender of a legal right, or the incurrence of a legal obligation. We have seen that the right sur- rendered or the obligation incurred may be very slight, but some right or obligation there must be. Accordingly, if the promisee does or promises to do only that which he is already bound to do, it is clear that there is no consid- eration for the promise of the other party. Illustrations of this principle are very numerous. Thus, it is no con- sideration to surrender property which the possessor has no right to retain.* Nor is the performance of his duty by a public officer a good consideration;" but the per- formance of extra services is of course sufficient.' 1 Tolhurst V. Powers, 133 N. Y. 460; 31 N. E. 326; H. & W. 174. " Pool V. Boston, 5 Cush. 219 ; Smith v. Whildin, 10 Pa. St. 39 ; H. & W. 176. 8 England v. Davidson, 11 A. & E. 856; L. 220; Keif v. Page, 55 THE FORMATION OF CONTRACT. 65 It is of no consequence whether the obligation im- posed upon the promisefe is a general duty, or is the result of his own contract; in neither case is the ful- filment or the promise to fulfil such obligation a good consideration. Thus, the prompt payment of rent or interest due on a contract is no consideration. * Nor is a promise by a debtor to pay interest at the same or at a less rate than his contract calls for a good consideration for a promise by the creditor to extend the time of payment." If, however, the debtor agrees to pay interest for a fixed time after the debt is due, he thereby deprives himself of the right to pay the debt before that time, and thus stop the running of interest; so that a promise to pay interest for a fixed time at the same or even at a lower rate than the con- tract calls for is a good consideration.* This distinc- tion between a promise to pay interest for a definite and for an indefinite time, though sound in principle, is not recognized by all courts.* From the general principle that doing what one is bound to do is no consideration, it follows that the pay- Wis. 496 ; 13 N. W. 473; McCandless v. Allegheny Steel Co., 152 Pa. St. 139 ; 25 A. 579. 1 Booth V. Wiley, 102 111. 84. 2 Wilson V. Powers, 130 Mass. 127 ; KeUogg v. Olmsted, 25 N. T. 189. In Vereycken v. Vandenbrooks, 102 Mich. 119, 60 N. W. 687, a note drew 10%, and the creditor agreed to let the debtor hare the money after maturity at 8%, no time being fixed for the pay- ment of this 8% interest. The court said that such an agreement " was binding when acted upon " ; the retention of the money by the debtor being treated by the court as a consideration for the creditor's promise to reduce the interest. The opinion of the court on this point was mere dictum, but the dictum is so astonishing as to be worthy of notice. 8 Fowler v. Brooks, 13 N. H. 240 ; Fawcett v. Freshwater, 31 Ohio St. 637. * Wilson V. Powers, supra ; Kellogg v. Olmsted, supra. 5 66 ELEMENTS OF THE LAW OF CONTEACTS. ment of part of a debt already due is no consideration for a promise to release the balance of the debt.^ But pay- ment of a less sum before the debt is due/ or at a different place from that where the debtor is bound to pay,^ is a good consideration. So is the giving of a specific article,* or of a negotiable security for a less a,mount than the debt/ or of any other security. ° (1) Effect of UucEETAiifTY as to One's Eights. — If there is no debtj but an unliquidated sum due, pay- ment of less than the amount claimed is a good con- sideration.'' In such cases the uncertainty as to the exact rights of the parties renders the payment of a certain amount a sufficient consideration. Indeed, it may be laid down as a general principle, that wherever two parties are uncertain as to their rights in a given matter, an agreement for a definite settlement is bind- ing, the consideration on both sides being the exchange of an uncertainty for a certainty.^ This general prin- ciple has been subjected to certain limitations which will soon be considered. In accord with this principle it has been held that where a tract of land is sold by metes and bounds, as containing a certain number of acres, a subsequent agreement between grantor and 1 Foakes v. Beer, 9 A. C. 605 ; W. 335 ; U. S. v. Bostwick, 94 U. S. 53, 67; Fire Ins. Ass'n v. Wickham, 141 U. S. 564, 577 ; 12 S. Ct. 84; Harriman v. Harriman, 12 Gray, 341. In some States this rule is changed by statute. 2 Brooks V. "White, 2 Met. 283 ; Pinuel's Case, 5 Eep. 117. 8 Jones V. Perkins, 29 Miss. 139. * Brassell «. Williams, 51 Ala. 349. 6 Sibree v. Tripp, 15 M. & W. 23 ; Boyd v. Hitchcock, 20 Johns. 76 ; Guild V. Butler, 127 Mass. 386. • 6 Jaffray v. Davis, 124 N. Y. 164 ; 26 N. E. 351 ; H. & W. 187. ■^ Wilkinson v. Byers, 1 A. & E. 106 ; L. 203 ; Tompkins v. Hill, 145 Mass. 379; 14 N. E. 177; Donohue u. Woodbury, 6 Gush. 148 ; Baird V. U. S., 96 U. S. 430. 8 Good Fellows v. Campbell, 17 E. L 402 ; 22 A. 307. THE FOEMATION 01" CONTKACT. 67 grantee that the land shall be surveyed, and that in case the actual amount of land exceeds that mentioned in the deed the grantee shall pay the grantor so much per acre for the excess, while in case of a deficiency the grantor shall pay the grantee so much per acre for the deficiency, is binding. ^ The grantor's promise to pay for the possible deficiency is the consideration for the grantee's promise to pay for the excess, and vice versa. If, however, one of the parties knew the exact amount of land, and knew that he would not be obliged to pay anything under such an agreement, his promise would be without consideration, because there could be no un- certainty on his part, and therefore his promise could not possibly be regarded as a legal detriment. Uncer- tainty in regard to existing facts, on the other hand, is treated on the same basis as uncertainty in regard to the future. The assumption of a risk is a good con- sideration, and a risk may just as truly be assumed with reference to an unknown fact in the present or past as with reference to an uncertain event in the future. Indeed, if one accepts the theory of predestination, the future is as certain as the past, and what we call uncer- tainty is in all cases simply lack of knowledge. It would seem as if this reasoning might be universally applied, so that the surrender of a supposed legal right in regard to the existence of which the party surrender- ing it is uncertain would in any case constitute a good consideration. The courts, however, have not always carried out the general principle alDove stated to its full extent. The question of consideration often arises in the case of a compromise of a disputed claim, and the authorities are not in harmony. The English courts hold that the abandonment of a serious claim honestly made is a good consideration ; and a claim is said to be 1 Seward v. Mitchell, 1 Coldwell, 87 ; W. 554. 68 ELEMENTS OP THE lAW OF CONTEACTS. honest if the claimant does not know that his claim is unsubstantial, or if he does not know facts, to his knowl- edge unknown to the other party, which show that his claim is a bad one.* This is on the ground that, if an intending litigant bona fide forbears a right to litigate a question of law or fact which it is not vexatious or frivolous to litigate, he thereby gives up something of value ; and that " the reality of the claim which is given up must be measured, not by the state of the law as it is ultimately discovered to be, but by the state of the knowledge of the person who at the time has to judge and make the concession.'"' The same principle applies to cases where there is a forbearance to sue on a bona fide claim.' The doctrine of the English cases seems sound, and there is strong American authority to the same effect.^ Other American decisions hold that forbearance to insist upon a claim is a good considera- tion only when the claim is valid,' or at least when the claim seems doubtful to the court.' The real question involved in such cases is this: Has a man a right to litigate a claim which he honestly believes to be good, or only a claim which a reasonable man might honestly believe to be good? It is the surrender of this right to 1 Miles V. New Zealand Alford Estate Co., 32 C. D. 266 ; W. 556 ; Callisher v. BischofEsheim, L. E, 5 Q. B. 449 ; L. 281 ; Cook v. Wright, 1 B. & S. 559 ; L. 308. 2 Bowen, L. J., in Miles v. New Zealand Co., supra, at p. 291. ' Callisher v. Bischoftsheim, supra. * Craus V. Hunter, 28 N. Y. 389 ; Union Bank u. Geary, 5 Pet. 99 ; Grandin a. Grandin, 49 N. J. L. 508 ; 9 A. 756 ; Hewett v. Currier, 63 Wis. 386; 23 N. W. 884; Parker ». Enslow, 102 Bl. 272; Llano Im- proTement Co. v. Pacific Imp. Co., 66 F. 526 ; — TJ. S. App. — . " Ecker v. McAllister, 54 Md. 362 ; Palfrey v. Portland, &c. Ey. Co., 4 Allen, 55 j Foster v. Metts, 55 Miss. 77 ; H. & W. 164 ; Fink v. Smith, 32 A. 566 ; — Pa. St. — . 6 Barlow v. Ocean Ins. Co., 4 Met. 270; Tattle v. Tuttle, 12 Mefc 551 ; MulhoUand v. Baitlett, 94 SI. 58. THE FOEMATIOK OP CONTEACT. 69 litigate which constitutes the consideration, and by the extent of that right to litigate is to be determined the question whether or not his abandonment of or forbear- ance to prosecute his claim is or is not a good con- sideration.' The actual forbearance, or a promise to forbear to prosecute a claim which one has a right to litigate, is universally held a good consideration. Nor need a promise to forbear to sue state a definite time for for- bearance, a reasonable time being understood in such cases.'' But a promise to forbear for such time as the plaintiff shall elect is not a good consideration, since it imposes no obligation to forbear for any length of time.' Actual forbearance is a sufftcient consideration without a promise to forbear, if such forbearance be at the request of the promisor and in reliance on his promise.* The mere withdrawal of a petition ^ or a caveat " is like- 1 In Fire Ins. Ass'n v. Wickham, 141 TJ. S. 564, at p. 577, Brown, J. savs : " If there be a bona fide dispute as to the amount due, such dis- pute may be the subject of a compromise and payment of a certain sum as a satisfaction of the entire claim ; but where the larger sum is admitted to be due, or the circumstances of the case show that there was no good reason to doubt that it was due, the release of the whole upon payment of part will not be considered as a compromise, but will be treated as without consideration and void." The distinction between good faith ("a. bona. fide dispute") and reasonable conduct (" no good reason to doubt ") seems here, as in many other cases, to be entirely overlooked. Yet such distinction is of the utmost importance, for honesty and reasonableness are by no means inseparable. 2 Traders' Nat. Bk. v. Parker, 130 N. Y. 41 5 ; 29 N. E. 1094 ; Howe V. Taggart, 133 Mass. 284 ; Hockenbury v. Meyer, 34 N. J. L. 346 ; Elting u. Vanderlyn, 4 Johns. 237. 8 Strong V. Sheffield, 144 N. Y. 392 ; 39 N. E. 380. * Edgerton v. Weaver, 105 HI. 43; Crears v. Hunter, 19 Q. B. D. 341 ; contra, Manter v. Churchill, 127 Mass. 31. * Harris v. Venables, L. E. 7 Ex. 235 ; disapproving Eoss v. Moss, Cro. Eliz. 560. 6 St. Mark's Church v. Teed, 120 N. Y. 583 ; 24 N. E. 1014. 70 ELEMENTS OP THE LAW OF CONTBACTS. wise a sufficient consideration, even though, a new sxdt may be begun at once. (2) Pekfoemance of Beokek Conteact. — There are certain cases that may seem inconsistent with the rule that doing what one is bound to do is not a suffi- cient consideration. Thus, it has been held that, if A. is bound by a contract with B. to build a house for f 5,000, and A. refuses to complete the house unless B. will agree to pay him |1,000 extra, a promise by B. to pay A. this extra |1,000 is binding. The courts which sustain the validity of B.'s promise reason as follows. A. is under no legal obligation to perform his contract; he has the right to break it if he chooses, and pay damages ; hence, if A. consents to perform his contract instead of paying damages, he is doing something which he is not legally bound to do, and there is therefore a sufficient consideration for B.'s promise.^ Other courts take the posibion that A. is legally bound to perform his contract, and that there is therefore no consideration for B.'s promise to give him additional compensation.^ The latter view seems more in accordance with justice, and with the equitable theory of contractual obligation ; but the former view has the support of those who, like Mr. Justice Holmes, regard the making of a contract as the mere taking of a risk.' Even in those jurisdictions where a promise to perform what the promisor had bound himself to do by a previous contract is held a good consideration, it is generally held that the promise to pay additional compensation for 1 Cooke V. Murphy, 70 111. 96 ; Bishop v. Bnsse, 69 111. 403 ; Goebel V. Linn, 47 Mich. 489 ; 11 N. W.. 284 ; W. 308 ; Munroe v. Perkins, 9 Pick. 298; W. 302; Lattimore v. HaTBen7T4 Johns. 330. " Vanderbilt v. Schreyer, 91 N. Y. 392 ; Lingenfelder v. Wainwright Brewing Co., 103 Mo. 578 ; 15 S. W. 844; H. & W. 181. 8 Post, Chapter XL THE FORMATION OP CONTEACT. 71 such performance is binding only when the transaction amounts to the substitution of a new contract for the old one.^ Whether there has been such a substitution or not is a question for the jury.* A peculiar doctrine has recently been enunciated in Minnesota. The court adopts the view that the obliga- tion imposed by a contract is an obligation to perform the contract, and not merely to pay damages; that the party who performs his contract is simply doing what he is legally bound to do, and that there is therefore no consideration for a promise by the other party to pay additional compensation for such performance. So far the court seems right in its decision, although it refuses to follow the majority of American courts. The court goes on, however, to say, " But where the party refusing to complete his contract does so by reason of some un- foreseen and substantial difficulties in the performance of the contract, which were not known or anticipated by the parties when the contract was entered into, and which cast upon him an additional burden not contem- plated by the parties, and the opposite party promises him extra pay or benefits if he will complete his con- tract, and he so promises, the promise to pay is sup- ported by a valid consideration."* The fallacy here is apparent. " An additional burden not contemplated by the parties " cannot mean any increased difficulty in the performance of the contract, for the "burden contem- plated by the parties " is that one person shall perform his part of the contract, and the other shall pay him for 1 Munroe v. Perkins, supra; Endriss v. Belle Isle Ice Co., 49 Mich. 279; 13 N. W. 590; W. 310; H. & W. 180; Vanderbilt v. Schreyer, supra ; contra, Cooke v. Murphy, 70 HI. 96. 2 Endriss v. Belle Isle Ice Co., supra ; Coyner v. Lynde, 10 Ind. 282 ; H. & W. 177. 8 King V. Dnluth M. & N. By. Co., 63 N. W. 1105 ; — Minn. — . 72 ELEMENTS OP THE LAW OP CONTRACTS. it.* To hold, for example, that an unexpected increase in the price of bricks will render valid a promise by A. to B. to pay B. $6,000 for building a house, when such promise would not be binding if the price of bricks had remained stationary, by reason of a pre-existing contract on B.'s part to build the house for $5,000, is to overthrow any logical theory of contractual obligation. Such a proposition can rest only on the notion that unexpected difficulties in the performance of a contract alter the obligation to perform that contract, ignoring the fact that the object of the contract is to throw all such risks on the party who promises to perform. ' The result of the decisions enforcing promises to pay additional compensation for the same performance is certainly a curious one. The courts hold that the prom- ise to pay an additional amount for the performance of work which the promisee has bound himself to per- form by a previous contract is not binding for lack of consideration, unless such promise forms part of a new contract. If there is a new contract, the promise of performance by the one party is the consideration for the promise of payment by the other. Now if we regard a contract as imposing an obligation to perform, and not simply to pay damages in case of non -performance, the obligation to perform still exists under the old con- tract, until the old contract is discharged. The dis- charge of the old contract, however, is supposed to take place by the substitution of a new contract; but the new agreement is no contract, because the only considera- tion for A.'s promise to pay is B.'s promise to perform, and B. is already bound to perform under the old con- tract. On the other hand, if B.'s obligation is only to pay damages in case he fails to perform his contract, then his second promise of performance can impose no 1 See Leavitt v. Dover, 32 A. 156 ; — N. H. — . THE FOEMATION OP CONTBACT. 73 greater obligation than his first, so that even this view does not justify one in regarding the new agreement as a contract. The situation may be illustrated as follows : — A.'s promise to pay FiEST Ageebment. in consideration of. (B.'s promise to perform) B.'s obligation to perform. A.'s promise to pay additional com- pensation Second Ageeement. in consideration of (B.'s promise to perform) B.'s obligation to perform. In this case it is clear that there is no change in B. 's obligation between the first and second agreements, and therefore no consideration for A. 's second promise. Or, taking the other view of B.'s obligation, we have : — A.'s promise to pay First Ageeement. in consideration of (B.'s promise to perform) B.'s obligation to pay damages ia case of non-per- formance. A.'s promise to pay additional com- pensation Second Ageeement. in consideration of (B.'s promise to perform) B.'s obligation to pay damages in case of non-per- formance. So that, whatever view is taken of the obligation of contract, the decisions upholding the validity of A.'s 74 ELEMENTS OB THE LAW OP CONTKACTS. promise to pajan additional amount for B.'s perform- ance seem unsound.^ (3) Perfokmance of Conteact with Thied Peeson. — Whether a promise by A. to B. to perform a contract already existing between A. and C^ is a good considera- tion or not, is a question upon which the authorities are divided. The English courts treat such a promise as a good consideration,^ while the American courts,' with the exception of the Supreme Court of Massachusetts,* adhere to the opposite view. Various views on this point have been advanced by learned writers, and there is no consensus of opinion as to the validity of such contracts. It is true, of course, that a promise to per- form, or the actual performance of, a legal obligation is, in general, not a valid consideration; but there seems to be no satisfactory reason why this rule should not be limited to cases where the obligation is irrecusable, or is to the promisor, or to the public of whom the promisor is one. The rule might then be thus stated : a j)roim^e or of master and servant,* charity to the poor,^ and the exercise of the legal profession." In America the rules against champerty and mainte- nance are in some jurisdictions said not to exist.' In other jurisdictions the existence of such rules is recog- nized, but the extent of the rules is much narrowed by the courts.^ The tendency in America is to diminish the force of these rules ; in England, to adhere strictly to the common law.' It is essential in order to constitute champerty that the compensation for the services rendered should consist of a part of the proceeds of the litigation. *° Where the right to compensation is not confined to an interest in the thing recovered, but gives a right of action against the party, although pledging the avails of the suit, or a part of them, as security for payment, the agreement is not champertous." 1 This excuse applies in England only to maintenance, and not to champerty. Hutley v. Hutley, L. R. 8 Q. B. U2 ; W. 162 ; and see Barnes v. Strong, 1 Jones Eq. 100. '■' Thallhimer v. Brinckerhoft, 3 Cow. 623. See preceding note. 8 Ibid. * Ibid. 5 The idea of charity excludes champerty, of course. " This excuse applies only to maintenance. Blaisdell v. Ahern, 144 Mass. 393 ; 11 N. E. 681 ; "W. 167. ' Schomp V. Schenck, 40 N. J. L. 195, 202-206. 8 Reece v. Kyle, 49 Ohio St. 475 ; 31 N. E. 747 ; Brown v. Bign^, 21 Or. 260; 28 P. 11 ; where the court limits the rules against champerty and maintenance to cases of oppression, gambling, and extortion. 9 Alabaster w. Harness, (1895) 1 Q.B. 339. 1° Blaisdell v. Ahern, supra, " Thompson v. Reynolds, 73111. 11 ; W. 169; Blaisdell v. Ahern, supra. ILLEGAL CONTEACTS. Ill It is generally held that in order to make an agree- ment champertous the party who is to receive a portion of the proceeds of the suit must also agree to contribute to the expense thereof; that the mere rendering of services without advancing money is insufficient.'' The assignment of a chose in action is in some cases void on the ground of maintenance. The ancient law was very strict in this respect, but in modern times the courts have shown a more liberal tendency in recogniz- ing the validity of assignments. The assignment of a right to recover money due on a contract is almost uni- versally legal. But the assignment of a right to file a bill in equity on the ground of fraud is void for mainte- nance.^ And in general rights of action for personal injuries cannot be assigned. As to the sale of property which is in litigation. " the sale of an interest to which a right to sue is incident is good ; but the sale of a mere right to sue is bad." * The question of champerty can be raised only in a controversy between the parties to the contract. It is no defence to an action that the attorney for the plain- tiff is prosecuting the suit under a champertous agree- ment with his client.* 1 Phillips V. South Park Commissioners, 119 111. 626, 10 N. E. 2.30; AUard v. Lamirande, 29 Wis, 502; Hamilton v. Gray, 31 A. 315; — Vt. — ; contra, Ackert v. Barker, 131 Mass. 436 ; W. 165; H. & W.3.54. 2 Illinois Land & Loan Co. a. Speyer, 138 lU. 137; 27 N. E. 931 ; Prosser v. Edmonds, 1 Y. & C. Ex. 481. 8 Pollock, Contracts, 299; Prosser «.• Edmonds, supra; Dickinson V. Burrell, L. R. 1 Eq. 337, 342. « Small V. Chicago, &c. R. R. Co., 55 la. 583 ; 8 N. W. 437 ; W. 175 ; Bnrnes v. Scott, 117 U. S. 582 ; 6 S. Ct. 865 ; Chamberlain v. Grimes, 60 N. W. 948 ; 42 Neb. 701 ; Omaha & R. V. Ry. Co. v. Brady, 39 Neb. 27 ; 57 N. W. 767 ; Zeigler v. Mize, 132 Ind. 403 ; 31 N. B. 945 ; Tor- rence v. Shedd, 112 111. 466; Pennsylvania Co. v. Lombardo, 49 Ohio St. 1 ; 29 N. E. 573: contra, Barker v. Barker, 14 Wis. 131 ; Kelly v. Kelly, 86 Wis. 170; 56 N. W. 637. 112 ELEMENTS OF THE LAW OP CONTBACTS. 2. Contracts tending to stifle Prosecution. — An agreement tending to stifle the prosecution of a crime is illegal.^ It has been held that an agreement to com- promise a prosecution for a misdemeanor is legal.'' This doctrine is unsound in principle, and does not prevail in this country ; ' while in England it is now limited to cases in which the offence is not a matter of public concern.^ An agreement to recommend a nolle prosequi in consideration that an accused person will give evi- dence against others is not illegal.* Nor is it illegal for a creditor to take security from a debtor who has committed a crime, if there is no agreement to stifle the prosecution. ° A contract is illegal not merely when made in consideration of the stifling of the prosecution, but also when it is made in such a way as to induce the promisor to believe that the prosecution will be stopped.' Mere expectation, however, that the prosecution will be stopped is insufficient.' 3. Miscellaneous. — An agreement to pay for procuring ' or suppressing i" evidence is illegal, ex- 1 Williams v. Bayley, L. K. 1 H. L. 200; W. 177; Henderson v. Palmer, 71 111. 579; Friend v. Miller, 52 Kans. 139; 34 P. 397. 2 Fallowles v. Taylor, 7 T. R. 475. 8 Jones V. Rice, 18 Pick. 440; Partridge u. Hood, 120 Mass. 403, H. & W. 348 ; Wynne v. Whisenant, 37 Ala. 46. * Keir v. Leeman, 6 Q. B. 308; 9 Q. B. 371 ; Windhill Local Board V. Vint, 45 C. D. 371. 5 Nickelson v. Wilson, 60 N. Y. 362 ; W. 189. 8 Flower v. Sadler, 10 Q. B. D.572 ; W. 187 ; Ward v. Lloyd, 6 M. & G. 785; Thorn u. Pinkham, 84 Me. 101; 24 A. 718; Portuer v. Kirschner, 169 Pa. St. 472; 32 A. 442. ' Williams v. Bayley, supra; but see Portner v. Kirschner, supra. 5 Ward V. Lloyd, supra. ' Gillet V. Logan Comity, 67 HI. 256 ; Goodrich v. Tenney, 144 111. 422 ; 33 N. E. 44. 1" Valentine v. Stewart, 15 Cal. 387 ; Bierbauer v. Wirth, 5 F. 336 ; Crisup V. Grosslight, 79 Mich. 380 ; 44 N. W. 621. ILLEGAL CONTRACTS. 113 cept where a reward is offered for the detection of crime. ^ The following contracts have also been held illegal as tending to interfere with the administration of justice. A contract by an attorney with his client to defend the latter against all prosecutions for violation of the liquor law, in consideration of a stipulated salary;^ a con- tract by a justice of the peace with an attorney not to charge his lawful fees ; ' an agreement to indemnify the surety on a bail-bond in case of the escape of criminal ; * an agreement to pay a justice of the peace a certain percentage of the stolen property recovered from one accused of larceny before him.^ 4. CoNTBACTS TO SuBMiT TO Akbiteation. — Con- tracts to refer matters in dispute to arbitration have sometimes been said to be contrary to public policy. The eiiect of such a contract, however, is this: the con- tract itself is not illegal, and damages will be awarded for the breach of it.* The contract, however, will not be specifically enforced,' and will not in any way oust the ordinary jurisdiction of the courts.' If, however, the contract provides that no action shall be brought upon it until the matter has been referred to arbitration and an award made, the making of the award is in such case a valid condition precedent to a right of action for 1 Williams v. Carwardine, 4 B. & Ad. 621 ; L. 12. 2 Bowman v. Phillips, 41 Kans. 364 ; 21 P. 230. 8 Willerain v. Batteson, 63 Mich. 309 ; 29 N. W. 734. * Herman v. Jeuchner, 15 Q. B. D. 561. 6 Brown v. First Nat. Bank, 137 Ind. 655 ; 37 N. E. 158. 6 LiTingston v. Ralli, 5 E. & B. 132. ' Tobey v. County of Bristol, 3 Story, 800. 8 Thompson ti. Chamock, 8 T. R. 139 ; Reed v. Washington Ins. Co., 138 Mass. 572; W. 207 ; White v. Middlesex R. R. Co., 135 Mass. 216 J W. 203. 8 114 ELEMENTS OE THE LAW OP CONTRACTS. breach of contract.* The Nebraska courts alone seem to deny the validity of such a condition.^ (3) CONTKAOTS TENDING TO INJURE THE CITIZENS OF THE State as Individuals. — The State may be injured not merely by a contract hindering the proper adminis- tration of its affairs, but also by a contract injurious to its citizens as individuals. A contract is against public policy when it tends to injure the morals of the com- munity, or to deprive individuals of that freedom which is regarded as essential to the welfare of the State, or to create a monopoly injurious to the public welfare. (a) Contracts Injurious to Public Morals. — Contracts which are illegal because they tend to injure the morals of the community comprise contracts tending to promote sexual immorality, contracts tending to interfere with the marriage relation, and wagering or gambling contracts. 1. Sexual Immorality. — As regards the first class of these contracts the reasons for their illegality are sufficiently obvious. A contract involving future illicit relations is illegal,' but a contract made in considera- tion of past cohabitation is not illegal, having no tendency to produce immoral results.^ 2. Contracts tending to interfere with the Marriage Relation. — Contracts tending to interfere with the marriage relation are regarded as injurious to the welfare of society, in which the family is so impor- 1 Scott V. Avery, 5 H. L. C. 811 ; W. 195 ; Viney v. Bignold, 20 Q. B. D. 172 ; "W. 201 ; Caledonian Ins. Co. v. Gilmour, (1893) A. C. 85 ; Hamilton v. Liverpool Ins. Co., 136 U. S. 242 ; 10 S. Ct. 945 ; H. & W. 352; Hood v. Hartshorn, 100 Mass. 117. ''■ National Masonic Ass'n v. Burr, 44 Neb. 256 ; 62 N. W. 466 ; Ins. Co. V. Bachler, 44 Neb. 549 ; 62 N. W. 911. 8 Ayerst v. Jenkins, L. R. 16 Eq. 275; Baldy w. Stratton, 11 Pa. St. 316 ; Boigneres v. Boulon, 54 Cal. 146 ; H. & W. 357. 4 Bunn V. Winthrop, 1 Johns. Ch. 329. ILI^GAL CONTEACTS. 115 tant an institution. Contracts looking to a future sepa- ration of husband and wife are regarded as tending to offer inducements for the breach of marital duties, and are illegal.* But contracts for immediate separation are valid, the breach of duty in such cases being past.^ Con- tracts facilitating divorce, such as agreements for the withdrawal of opposition to divorce proceedings are illegal.' 3. Wageking Contracts. A wagering contract is one in which one party for a consideration assumes a risk by promising to do something upon the happening of some future event, which is uncertain, or the time of which is uncertain, or upon the ascertainment of the existence of a present or past state of facts as to the existence of which there is a difference of opinion be- tween the parties, unless the object of the contract is to indemnify the promisee against loss, or to insure the life, health, or safety of the promisee or of some one in whose life, health, or safety, he has an insurable interest, or to offer a reward for the exercise of strength, skill, or judgment. Wagers were not re- garded as illegal at common law unless they led to indecent evidence, or were calculated to injure the rights or feelings of a third person, or to induce one to violate the law, or to interfere with the administra- tion of the government.* In England the common law has been changed by various statutes. In this country the courts have generally treated all wagers as against public policy.* Two reasons for this doctrine are given: 1 Cartwright v. Cartwright, 3 D. M. & G. 982 ; Gaines v. Poor, 3 Met. (Ky.) 503, 507; EandaU v. Randall, 37 Mich. 563, 571. 2 "Wilson V. Wilson, 1 H. L. C. 538; Fox v. 'Davis, 113 Mass. 255. * PhiUips V. Phillips, 10 Or. 494; Loveren v. Loyeren, 106 Cal.509; 39 P. 801 ; Cross v. Cross, 58 N. H. 373 ; H. & W. 361. * Beadles v. Bless, 27 HI. 320. 6 Irwin V. Williar, 110 U. S. 499; 4 S. Ct. IRO; Harvey v. Merrill, 150 Mass. 1 ; 22 N. E. 49 ; W. 147 ; H. & W. 383. 116 ELEMENTS Or THE LAW OF CONTEACTS. first, that the time of the courts ought not to be taken up with settling idle bets ; ' second, that gambling is a vice, and wagers therefore immoral.* In the present state of public sentiment in this country the latter is the chief reason for holding wagers illegal. Contracts for insurance are wagering contracts unless the insured has what is termed "an insurable interest in the property or person insured."* Contracts for "options" in commodities, that is, pretended sales for future delivery, in which the intention of the parties is not to deal in the commodity, but to perform the con- tract by paying the difference between the contract price and the actual price when the time for delivery arrives, are gambling contracts.* If one of the parties is inno- cent of any illegal intent, he can enforce the contract, ° unless the statute provides otherwise. ° A contract between principal and agent by which the latter is to make legal contracts for the sale or purchase of goods, but the principal is not to be required to deliver or receive any goods, but simply to settle with the agent by receiving or paying differences, has been sustained in England' and declared illegal in this country.^ 1 Lore V. Harvey, 114 Mass. 80 ; H. & W. 324. 2 Bernard v. Taylor, 23 Or. 416 ; 31 P. 968. ' King V. State Mut. Ins. Co., 7 Cush. 1, 10 j Wamock v. Davis, 104 U. S. 775 ; H. & "W. 333. * Harvey v. Merrill, supra ; Bona's Appeal, 55 Pa. St. 294 ;' White V. Barber, 123 U. S. 392; 8 S. Ct. 221 ; Mohr v. Mieaen, 47 Minn. 228 ; 49 N. W. 862 ; H. & W. 325. s Frost V. Clarkson, 7 Cow. 24 ; Pixley v. Boynton, 79 HI. 351 ; W. 155. 8 As in Missouri; Connor v. Black, 119 Mo. 126; 24 S. W. 184; and in Tennessee ; McGrew v. City Produce Exchange, 85 Tenn. 572 ; 4 S. W. 38. ' Thacker v. Hardy, 4 Q. B. D. 685 ; W. 132. ' Harvey v. Merrill, supra; Mohr v. Miesen, supra; Embrey v. Jemison, 131 U. S. 336 ; 9 S. Ct. 776 ; Flagg v. Baldwin, 38 N. J. Eq. 219. ILLEGAL CONTEACTS. 117 In England wagers were not illegal at common law, and as the contract between principal and agent did not violate the statute the contract was held good. In this country, wagers being illegal in their very nature, the contract between principal and agent is tainted by the illegality of the principal's intention to speculate. A distinction has been drawn between the case of principal and agent and the case of customer and broker, ^ but this distinction seems of doubtful validity." If there is a mere expectation on the part of the principal and broker that the persons from whom stocks are bought or to whom stocks are sold will be willing to settle the tran- sactions by the payment of differences, there is no illegality in the contract even in this country.* The ordinary contracts which are made on the Board of Trade, the Stock Exchange, and in similar places, are not gambling contracts, but simple purchases and sales for future delivery.* The American decisions in the cases above cited of contracts between principal and agent are to be supported not on the ground that the agent is employed to make an unlawful contract, but on the ground that the unlawful intention of the principal to speculate, known to the agent, taints the contract between them. The offer of a reward for the exercise of strength, speed, skill, or judgment is not a wager. ^ But if A. and B. put up a purse of $100 in C.'s hands, the entire amount to go to the one whose horse shall win in a given ' Markham v. Jandon, 41 N. Y. 235, 256 ; Flagg v. Baldwin, supra. * Mohr V. Miesen, supra. 8 Barnes v. Smith, 159 Mass. 344 ; 34 N. E. 403. * Bibb V. Allen, 149 U. S. 481 ; 13 S. Ct. 950. 6 Harris v. White, -81 N. Y. 532; Alvord v. Smith, 63-Ind. 58; Delier v. Agricultural Society, 57 la. 481 ; 10 N. W. 872 ; Porter v. Day, 71 Wis. 296 ; 37 N. W. 259. 118 ELEMENTS OP THE LAW OP CONTRACTS. race, this constitutes a wager. ^ As to the effect of a race which is run for stakes consisting of the entrance fees paid by each contestant, it has been held that there is no illegality in such a contest,^ but it seems hard to reconcile this doctrine with the preceding rule. It would seem that a distinction might be drawn between cases where the stakes are made up of the entrance fees, and cases where a prize is offered and the entrance fees are charged simply to cover the expenses of the race. A contract to furnish goods to two persons is not rendered illegal by the fact that the two vendees have made a bet as to which should pay for the goods.* A contract to pay a certain sum for property pur- chased, and to pay more if some subsequent" event tending to increase its value shall occur, is valid. ^ And a contract between the vendor and the vendee of a tract of land which was supposed at the time of the sale to contain a certain number of acres , that the land shall be surveyed, and that the vendor should pay the vendee so much per acre in case of a deficiency, while in case of an excess the vendee should pay the vendor the same amount per acre, has been sustained; ^ though no point was made as to the wagering character of the transaction. (b) Contracts tending to Limit Necessary Individual Freedom. — Every contractual obligation limits the free- dom of action of the party on whom that obligation is imposed. Now although the law is very liberal in allowing persons to make what contracts they choose, 1 Diggle V. Higgs, 2 Ex. D. 422 ; overruling Batty v. Marriott, 5 C. B. 818 ; Trimble o. Hill, 5 A. C. 342 ; Gibbons v. Gouvemeur, 1 Denio, 170. 2 Harris v. White, 81 N. Y. 532. 8 Winchester v. Nutter, 52 N. H. 507 ; W. 157. * Ferguson v. Coleman, 3 Richardson (Law), 99 ; W. 160. 6 Seward v. MitcheU, 1 Coldwell, 87 ; W. 554. ILLBGAX, OONTEACTS. 119 there are certain matters in regard to which it is deemed by the courts that the public welfare requires individual action to remain untrammelled by contractual obliga- tion. Under this head came contracts ati'ectiiig the freedom of marriage, of testamentary disposition, and of trade ; and contracts depriving an individual of rights with which public policy requires he should not part. 1. CONTBACTS AFFECTING FbEEDOM OF MakkIAGE, — A contract may be illegal either because it restrains the freedom of the individual to marry, or because it contemplates the use of influence to bring about a marriage for a pecuniary consideration, A contract to marry a particular person is good, of course;^ but a contract not to marry, '^ or a contract tending to prevent marriage within a given time,' or a contract to marry no one but A. is void.'* Marriage brokage contracts are also void, because they tend to bring about marriages by means of influence which is moveci by pecuniary considerations." It has been held that an agreement by a husband to pay his wife a certain sum if she would not sue for divorce is illegal,' but this decision seems questionable. It would seem that public policy is subserved rather than antagonized by such an agreement. 2. Contracts affecting Freedom of Testamentakt Disposition. — Contracts to procure a third person to make a will in favor of a particular person or object, or to use influence to procure such testamentary disposition 1 Holt V. Ward Clarencieux, 2 Strange, 937 ; L. 397. 2 Low V. Peers, Wilmot, 371. 8 Chalfant v. Payton, 91 Ind. 202; "White v. Equitable Union, 76' Ala. 251. These were also wagering contracts. * Low V. Peers, supra. 5 Cole V. Gibson, 1 "Ves. Sr. 503 ; Johnson v. Hunt, 81 Ky. 321. ^ Merrill v. Peaslee, 146 Mass. 460; 16 N. E. 271. Three judges dissented. 120 ELEMENTS OP THE LAW OF CONTKACTS. are illegal.* But a contract whereby one person binds himself to make a certain will is valid." 3. CoNTKAOTS IN Ebstkaint OF Tbade. — Contracts in restraint of trade may be illegal as against public policy either because they tend to prevent individuals from earning their living by working in a given way, or because they tend to destroy competition, and thereby subject the public to the extortions of monopolies. The subject of contracts in restraint of trade is one of vast importance, but legislation is constantly altering the common law. As has already been seen, contracts in restraint of trade require consideration even though under seal, but the adequacy of the consideration is of no more impor- tance than in the case of other contracts.* A contract by which a person agrees never to engage in a certain business is void.* If the contract is limited, however, in its restraint of trade, and the restraint is reasonably necessary for the protection from competi- tion of the promisee, the contract is valid. It was formerly held that if the restraint extended throughout a State, it was unreasonable, and the contract void ; ^ but the later cases take a different view, and recognize .no arbitrary limitations as to space.' As to whether a restraint can be reasonable which is limited in time but 1 Debenham v. Ox, 1 Ves. Sr. 276. 2 Robinson v. Ommanney, 23 C. D. 285 ; Logan v. McGinniss, 12 Pa. St. 27. s Hitchcock v. Coker, 6 A. & E. 438. * Davies ». Davies, 36 C. D. 359; W. 77; Alger v. Thacher, 19 'Pick. 51. 6 Wright V. Ryder, 36 Cal. 342; Taylor v. Blanchard, 13 Allen, 370. 8 Oregon Steam Navigation Co. v. Winsor, 20 Wall. 64 ; Herreshoff V. Boutineau, 17 R. L 3; 19 A. 712; W. 95; Diamond Match Co. v. Roeber, 106 N. Y. 473 ; 13 N. E. 419 ; W. 112 ; H. & W. 362. HiLBGAL CONTEACTS. 121 unlimited as to space the authorities differ. It was formerly thought in England that the restraint must be limited as to space in any case, but after some waver- ing ^ the law is now settled to the contrary.^ In this country there are authorities to the effect that a contract in restraint of trade is void if unlimited as to space.' The tendency of the later cases, however, is in accord with the latest decisions in England ; reasonableness is the sole test of the validity of the restraint, and a restraint unlimited as to space is not necessarily unreasonable.* It has been held in Illinois that the only contracts in restraint of trade which the law will enforce are con- tracts in which the vendor of a business, or an employee therein, agrees not to enter into competition with his vendee or employer.^ The law in regard to agreements made for the purpose of preventing competition is in an unsettled state. It is clear that an attempt to "cor- ner" the market is illegal.' Agreements tending to create a monopoly of staple articles of commerce,' or of any article of necessity, are also undoubtedly 1 Davies v. Davies, supra. 2 Rousillon 0. Rousillon, 14 C. D. 351 ; "W. 70; Badische Anilin Fabrik v. Schott, (1892) 3 Ch. 447; W. 93 ; Nordenfelt v. Maxim- Nordenfelt Co., (1894) A. C. 535. s Bishop V. Palmer, 146 Mass. 469 ; 16 N. E. 299 ; W. 104 ; H. & W. 380 ; Lange v. Werk, 2 Ohio St. 519 ; Wright v. Eyder, supra; Taylor V. Blanchard, supra. * Consumers' Oil Co. ». Nnnnemaker, 41N. E. 1048; — Ind. — ; Dia- mond Match Co. V. Eoeber, supra ; Oakdale Mfg. Co. v. Garst, 28 A. 793;— R. I. — ; Gibbs W.Baltimore Gas. Co., 130 U.S. 396, 409 ; 9 S. Ct. 553; Fowle „. Park, 131 U. S. 88; 9 S. Ct. 658; Ellerman v. Chicago Junction Ey. Co., 49 N. J. Eq. 217 ; 23 A. 287. 5 More V. Bennett, 140 111. 69 ; 29 N E. 888 ; W. 120. 8 Samuels n. Oliver, 130 111. 73 ; 22 N. E. 499. 7 Emery v. Ohio Candle Co., 47 Ohio St. 320 ; 24 N. E. 660 ; W. 124 ; Nester v. Continental Brewing Co., 161 Pa. St. 473 ; 29 A. 102. 122 ELEMENTS OF THE LAW OF CONTRACTS. illegal.^ Whether the mere fact that an agreement is intended to prevent competition renders it illegal is unsettled. It is held on the one hand, in Massachu- setts, that since undue competition is injurious to the public, an agreement limiting such competition is valid.'' The business in that case was the manufacture and sale of shade-rollers. In New York it has been held that agreements entered into for the purpose of enhancing the price of coal ^ and of mutton * are unlawful. It has also been held that an agreement to control the price of milk is unlawful, though the agreement was formed by dealers in order to reduce the price. " The price was fixed," says the court, "for the benefit of the dealers, and not the consumers, and the logical effect upon the trade of so fixing the price by the combination was to paralyze the production and limit the supply, and thus leave the dealers in a position to control the market, and at their option to enhance the price to be paid by the con- sumers." ' In Illinois a combination of stenographers to fix a uniform scale of payment for their work has been held illegal, ° a decision which places all trades-unions under the ban of the law. No principles can be stated which will harmonize the varying decisions, but it seems that public policy ought to be satisfied with the rule that agreements in restraint of trade are valid if reason- able; that it makes no difference what the nature of such agreements may be ; whether between vendor and 1 Gamewell Fire Alarm Tel. Co. i-. Crane, 1 60 Mass. 50;35N. E.98; W. 108 ; Judd v. Harrington, 139 N. Y. 105 ; 34 N. E. 790. 2 Central Shade Roller Co. v. Cushman, 143 Mass. 353 ; 9 N. E. 629 ; W. 99. 8 Arnot V. Coal Co., 68 N. Y. 558 ; People v. Sheldon, 139 N. Y. 251 ; 34 N. E. 785. * Judd V. Harrington, supra. 6 People V. Milk Exchange, 145 N. Y. 267 ; 39 N. E. 1062. 6 More V. Bennett, supra. ILLEGAL CONTRACTS. 123 vendee, employer and employee, or between different employers on the one hand,^ and different employees on the other. ^ Such a statement of the law seems in accordance with the best authorities; but so dominant has been the Manchester school of political economy that competition is still regarded by some courts as an unmixed blessing, and any interference with it as illegal. 4. COKTEACTS TO SuEEENDEK CeeTAIN EiGHTS. — The attempted surrender of rights which public policy requires should not be surrendered is ineffectual. Thus in some States it is held that a debtor cannot waive the statutory exemptions in his favor.' So a mortgagor cannot waive his equity of redemption.* It is against public policy that persons pursuing pub- lic vocations, such as common carriers, telegraph com- panies, and others, should impose unreasonable terms upon those who employ them. The freedom of con- tract allowed to others is restricted in the case of those pursuing public vocations, for the reason that the under- taking of a public vocation imposes duties which can be avoided by contract only to a reasonable extent.* The nature and extent of such duties is beyond the scope of this work. A contract by which one party seeks to prevent him- self from recovering damages for a future tort is against public policy and void.° But a contract that if the 1 As in Central Shade Roller Co. v. Cushman, supra. 2 Collins V. Locke, 4 A. C. 674 ; W. 62 ; Commonwealth v. Hunt, 4 Met. Ill ; Snow v. Wheeler, 113 Mass. 179; Longshore Printing Co. V. Howell, 26 Or. 527 ; 38 P. 547. 8 Kneetle v. Newcomb, 22 N. Y. 249 ; contra, Shelly's Appeal, 36 Pa. St. 373. * Bayley v. Bailey, 5 Gray, 505. 6 See Greenhood, Public Policy, Part X., oh. 2. * Hayes v. Hayes, 8 La. Aim. 468 ; Roesner v. Hermann, 8 F. 782. 124 ELEMENTS OP THE LAW OF CONTKACTS. employee of a railway company shall accept the benefit of insurance in a company to which the railway com- pany contributes, his right of action against the rail- way company for damages caused by an accident shall be discharged, is binding. ^ The contract in such case does not bar the right of action; it is the acceptance of the insurance which discharges it. § 3. General Rules as to Illegality. Having seen what classes of contracts the law regards as illegal, we have now to consider certain general rules as to the nature and effect of illegality. (a) Object Unlawful . — When the object of an agree- ment is the accomplishment of an unlawful purpose, the agreement is of course unlawful. (6) Consideration Illegal. — When the consideration for a promise is illegal, the contract is illegal.'' (c) Contract Legal, Intention Innocently Illegal. — When a contract can be legally performed, and there is an intention on the part of the parties to perform it in an illegal manner, the performance of the contract in a legal manner will be enforced if the parties con- tracted in ignorance of the law and with no intention of violating it.* (d) Tendency Illegal. — If the tendency of the con- tract is to accomplish an illegal result, or a legal result by illegal means, the contract is illegal.* Thus where there was printed on the back of a lottery ticket an offer of a reward to any person who would produce a ticket 1 Chicago, B. & Q. R. Co. v. Bell, 44 Neb. 44 ; 62 N. W. 314. 2 Featherston v. Hutchinson, Cro. Eliz. 199. 8 Waugh V. Morris, L. E. 8 Q. B. 202 ; W. 257. * Egerton v. Earl Brownlow, 4 H. L. C. 1 (not a contract case) ; Richardson v. Crandall, 48 N. Y. 348, 362 ; Holladay w. Paterson, 5 Or. 177, 180. ILLEGAI, CONTRACTS. 125 that had drawn a prize and not been promptly cashed, it was held that the offer could not be enforced.* An agreement to indemnify one against the conse- quences of an illegal act is illegal,'' unless it appears that there is no intention to commit such illegal act. Where A. agreed to publish a book to be written by B. , and B. agreed to hold A. harmless from all libel suits, the agreement was held valid because it did not appear that there was any intention to publish libellous matter.* (e) Intention of One Party Illegal. — Where the con- tract is to do a thing lawful in itself, but where the intention of one party is to accomplish an unlawful object,' or where some fact known to one party and not to the other renders the performance of the contract unlawful,^ the innocent party may recover damages against the other for breach of contract, and may refuse to perform the contract on discovering the illegal inten- tion of the other party. ° (/) Vendee's Intention Illegal. — When property is sold " with a view " to an illegal use, the transaction is illegal.' When property is sold with knowledge by the vendor that the vendee intends to use it " for the perpetration of a heinous crime," the transaction is illegal.' When the vendor has knowledge of the illegal inten- 1 Dieckhoff v. Tox, 56 Minn. 438 ; .57 N. W. 930. 2 Babcock v. Terry, 97 Mass. 482. 3 C. F. Jewett Publishing Co. v. Butler, 159 Mass. 517; 34 N. E. 1087 ; W. 245. 1 Pixley V. Boynton, 79 HI. 351 ; "W. 155. 6 Millward v. Littlewood, 5 Ex. 775 ; W. 255. « Cowan V. Milbourn, L. R. 2 Ex. 230 ; W. 235 ; Church v. Proctor, 66 F. 240 ; — U. S. App. — . 7 Webster v. Mnnger, 8 Gray, 584; Graves v. Johnson, 156 Mass. 211 ; 30 N. E. 818 ; H. & W. 391. ' Hananer v. Doane, 12 Wall 342 126 ELEMENTS OP THE LAW OE CONTEACTS. tion of the vendee, and aids him in any way in the accomplishment of his unlawful purpose, he cannot enforce payment for the property.'' When the vendor knows that the vendee intends to use the property for an illegal purpose other than the commission of " a heinous crime," there is a conflict of authority as to the right of the vendor to enforce pay- ment for the 'property. It is held in England that the vendor's knowledge of the vendee's illegal intention renders the transaction illegal.'^ In this country the opposite rule prevails.' If knowledge on the part of the vendor of the vendee's illegal purpose is insufficient to render the contract illegal, a fortiori, reasonable cause to know of such intention is insufficient.* (g) Borrower's Intention Illegal. — Where money is loaned for the' purpose of accomplishing an illegal object, the contract is illegal, and the money cannot be recovered. ° It seems that the rules as to the effect of the lender's knowledge of the borrower's illegal inten- tion are the same as in the case of a vendor's knowledge of his vendee's illegal intention.* (h) Illegal and Void Contracts. — It is important to notice here a distinction between two classes of con- tracts, both of which are ordinarily called illegal. 1 Gaylord v. Soragen, 32 Vt. 110; Foster v. Thurston, 11 Cush. 322 ; Wamell v. Eeed, 5 T. E. .599 ; Aiken v. BlaisdeU, 41 Vt. 655 ; W. 264. 2 Pearce v. Brooks, L. R. 1 Ex. 213 ; "W. 231. 8 Green v. Collins, 3 Cliff. 494; Dater v. Earl, 3 Gray, 482; Anhenser-Busch Br'g Ass'n v. Mason, 44 Minn. 318; 46 N. W. 558; Delayina i'. Hill, 65 N. H. 94; 19 A. 1000. * Adams v. CouUiard, 102 Mass. 167. 5 Cannan v. Bryce, 3 B. & Aid. 179; M'Kinnell v. Eobinson, 3 M. & W. 435. « Tyler v. Carlisle, 79 Me. 210 ; 9 A. 356 ; W. 249 ; H. & W. 390; Howell V. Stuart, 54 Mo. 400; Armstrong o. American Exchange Bank, 133 U. S. 433; 10 S. Ct. 450. ILLEGAL CONTEACTS. 127 External limitations upon freedom of contract are im- posed by the law either because the object of the con- tract is the accomplishment of some purpose which the law regards as injurious to the public welfare, or be- cause the contract is one which the law does not deem it proper to enforce, although the accomplishment of the object of the contract is not regarded as against public policy. In the former case the contract is always called illegal ; in the latter case it is sometimes called illegal, and sometimes simply void. In so far as the contract itself is concerned the distinction is of little consequence. So long as no contractual obligation results from the acts of the parties it matters little for what reason the law refuses to recognize the validity of the contract. Nevertheless, the distinction in question has most important results. If the contract is merely one which the law refuses to enforce, the invalidity of the contract does not affect other transactions or other rights and obligations ; but if an unlawful object is con- templated, the illegality of such object is suincient to taint other transactions not otherwise illegal. The dis- tinction in question is well illustrated by the different views taken of wagers in this country and in England. In this country wagers are regarded as detrimental to public morality. It follows, therefore, not merely that wagering contracts are illegal, but also that other con- tracts are rendered illegal when the object of such con- tracts is to accomplish a purely speculative purpose.^ In England, on the other hand, wagers are declared void by statute ; but they are not regarded in general as immoral or unlawful transactions. It follows, accord- ingly, that in England, while the wagering contract is 1 Harvey v. Merrill, 150 Mass. 1 ; 22 N. E. 49; W. 147; H. & W. 383 ; Embrey v. Jemison, 131 U. S. 336 ; 9 S. Ct. 776 ; Mohr v. Miesen, 47 Minn. 228 ; 49 N. W. 862 ; H. & W. 325. 128 ELEMENTS OF THE LAW OE CONTEACTS. invalid, other contracts which do not come within the prohibition of the statute are sustained, even though their object is purely speculative.* In considering the effect of illegality, therefore, on other rights and obliga- tions of the parties than those springing from the con- tract itself, it is always necessary to bear in mind this distinction between contracts whose object is unlawful, and contracts which the law simply refuses to enforce. It seems that all contracts void as against public policy at common law are illegal," and that all contracts which the courts think the legislature intended to prohibit are illegal, in the strict sense ; but that the mere fact that the contract is declared by the legislature to be void does not render it illegal unless the legislative intention is to prohibit the making of the contract.' (i) Securities for Illegal Contracts. — All securities given for money due or to become due on illegal trans- actions are themselves illegal contracts; * but a bond to secure the payment of money due on a contract that is merely void is valid. ° U) ^ff^ot of Elegality. — The courts will never lend their aid to enforce an illegal contract; nor will they allow an illegal contract to be set up as a defence to an action on a legal obligation," but the illegality of a con- tract apparently legal may be shown to defeat an action on such contract. "^ The courts will not assist a party who seeks their aid 1 Thacker v. Hardy, 4 Q. B. D. 685 ; W. 132. 2 Harvey v. Merrill, supra ; Bishop v. Palmer, 146 Mass. 469 ; 16 N. E. 299 ; W. 104 ; H. & W. 380. ' Thacker v. Hardy, supra. * Tillock V. Webb, 56 Me. 100; W. 248; Fisher v. Bridges, 3 E. & B. 642. ^ Ayerst v. Jenkins, 16 Eq. 275. 6 Ackert v. Barker, 131 Mass. 436 ; W. 165 ; H. & W. 354. ' Prost V. Gage, 3 Allen, 560; W. 241. ILLEGAL CONTKACTS. 129 to avoid an illegal contract where he is himself at fault. The legal maxim is, " In pari delicto potior est conditio defendentis." ^ This rule, however, is not an absolute one, and its limitations are not entirely clear. The rule proceeds on the ground that it is contrary to pub- lic policy that the courts should interfere, not only to enforce illegal contracts, but also to assist in any way the parties who have made such contracts. The rule requires that the parties shall be in pari delicto. If, therefore, one of the parties has been persuaded to enter into the illegal contract by the fraud, oppression, or undue influence of the other, the rule does not apply, and the party who is relatively innocent can call upon the court to relieve him from the consequences of his act.'' Inasmuch as the object of the foregoing rule is to protect the public interest, the courts will not apply the rule where their interference will tend to prevent the accomplishment of the illegal purpose. If money is paid on goods delivered for an illegal purpose, the per- son who has so paid the money or delivered the goods may recover them back whenever such recovery will tend to defeat the illegal object of the contract.' This rule is frequently applied in cases of wagers, where either party is allowed to recover the money he has deposited with a stake-holder at any time before it has 1 St. Louis, V. & T. H. E. Co. v. Terre Haute & L E. Co., 145 U. S. 393 ; 12 S. Ct. 953. The maxim in tliat case was applied to an ultra vires contract of a corporation. 2 Williams v. Bayley, L. E. 1 H. L. 200; W. 177; Atkinson v. Denby, 7 H. & N. 934 ; Eeynell v. Sprye, 1 D. M. & G. 660 ; Prewett V. Coopwood, 30 Miss. 369; Bell v. Campbell, 123 Mo. I ; 25 S. W. 359 ; Duval v. Wellman, 124 N. Y. 156 ; 26 N. E. 343 ; H. & W. 402. 8 Duval V. Wellman, supra; Bernard v. Taylor, 23 Or. 416 ; 31 P. 968; H. & W. 407. 9 130 ELEMENTS OF THE LAW OE CONTRACTS. been paid over.^ So when A. makes a fictitious assign- ment of goods for the purpose of defrauding his credi- tors, he may recover the goods from his assignee before anything has been done to defraud his creditors.^ In such cases there is said to be a locus jpcenitentim. If, however, the illegal object has been actually accom- plished by the payment of the money or the delivery of the goods, the money or goods cannot be recovered. Thus if A. deposits money with B. in order to indem- nify B. for going bail for him, he cannot recover the money from B., even though the time for which the bail-bond was given has not yet expired. The illegal purpose is accomplished by the simple deposit of the money, which deprives the public of the interest which the surety would otherwise have to prevent the forfeiture of the bond.* So when A. deposits money in a bank in B.'s name in order to give B. a fictitious credit, he can- not recover the money after B. becomes insolvent, since the illegal purpose has been accomplished.* Part accom- plishment of the illegal purpose will destroy any locus poBnitenticB that might otherwise exist. ° If the illegal agreement has been abandoned before the accomplish- ment of any part of the illegal purpose, one who has paid money thereunder can recover the money.' It is sometimes said that a party can recover money paid on an illegal contract whenever the illegal purpose has not been accomplished; but the true test is not the accomplishment or non-accomplishment of the illegal 1 Bernard v. Taylor, 23 Or. 416 ; 31 P. 968 ; H. & W. 407 ; Hampden V. Walsh, 1 Q. B. D. 189 j W. 126. 2 Taylor v. Bowers, 1 Q. B. D. 291. ^ Herman v. Jeuchner, 15 Q. B. D. 561. * Re Great Berlin Steamboat Co., 26 C. D. 616. 6 Kearley v. Thomson, 24 Q. B. D. 742. « Spring Co, v. Knowlton, 103 U. S. 49. TULKGAL CONTEACTS. 131 purpose, but the actual effect of the restoration of the money. ^ Thus if money is paid to induce one to com- mit a crime, to allow the recovery of the money before the commission of the crime would tend to induce the recipient of the money to commit the crime, and thereby insure the retention of the money; while if A. were to transfer a ship to B. in order that B. might commit piracy, to allow A. to recover the ship would tend to prevent the crime by depriving B. of the means of committing piracy." (k) Receipt of Proceeds of Illegal Transaction. — Where there is an illegal contract of agency or partner- ship no accounting will be decreed, either of profits or losses.* But where money is paid or goods delivered to A. for the use of B., A. must account for the money or goods, although they were received as the proceeds of an illegal transaction.* Theoretically, there is a dis- tinction between enforcing the illegal contract and enforcing a duty not springing from the contract, but arising solely from the receipt of the money or goods. Practically it seems impossible to reconcile the actual decisions on this point, though the rules laid down are those just stated. Where the profits of an illegal transaction have been actually divided or invested in other property the ille- gality of the original transaction in no way affects the 1 DuTal V. Wellman, 124 N. T. 156 ; 26 N. E. 343 ; H. & W. 402. 2 Anson, Contracts (4th ed.), 200. 8 Wheeler v. Sage, 1 Wall. 518; Bartle v. Nutt, 4 Pet. 184; Craft V. McConoughy, 79 111. 346; Jackson v. McLean, 100 Mo. 130; 13 S. W. 393 ; Ibid., 36 F. 213. " Lindley, Partnership, I. 107; Evans v. Trenton, 24 N. J. L. 764; Sharp II. Taylor, 2 Ph. 801 ; Planters' Bank v. Union Bank, 16 Wall. 483; Martin v. Eichardson, 94 Ky. 183; 21 S. W. 1039; contra, Lemon V. Grosskopf, 22 Wis. 447. 132 ELEMENTS OP THE LAW OF CONTKACTS. title to such property or subsequent dealings in regard to it.i (J) Partial Illegality. — An agreement may consist of several distinct and independent contracts contained in one instrument. In such case the connection between the different contracts is physical, not legal; and the illegality of one contract will not affect the validity of another unless they are connected with each other in such a way that the illegality of one contract must taint the other. Where security is given for a debt, and that security is in the form of an instrument which is prevented from accomplishing its intended result by the operation of some positive rule of law, though the security itself be void, a covenant or agreement to pay the debt, con- tained in such instrument, will be upheld.^ Thus where a rent-charge created by a vicar was illegal and void, a personal covenant to pay the amount of the rent-charge contained in the same instrument was held binding.' So where a mortgage given by a corporation was ultra vires, a covenant in the mortgage to repay the money borrowed was enforced.* Where an agreement is lawful and complete on its face, and another agreement is made supplemental to the first, and substantially a part of the same transac- tion, which second agreement is unlawful, the law will enforce the first agreement in spite of the illegality of the second.* 1 Brooks V. Martin, 2 Wall. 70. 2 Kerrison v. Cole, 8 East, 231 ; Pickering v. Bfracomlje Ey. Co., L. R. 3 C. P. 235. 8 Monys o. Leake, 8 T. R. 411. 4 Payne v. Brecon, 3 H. & N. 572. ^ Odessa Tramways Co. v. Mendel, 8 C. D. 235 ; Ohio v. Board of Education, 35 Ohio St. 519. illegaij contracts. 133 Where an instrument operates upon two classes of property, as to one of which the instrument is illegal, or void for want of compliance with some legal require- ment, while in regard to the other class of property the instrument would be valid, the instrument will be upheld as to that kind of property upon which it may lawfully operate. Thus where a debtor made an assignment of his goods and book-debts, which was void as to the goods for want of the registration required by law, the assignment was held valid as to the book-debts.* So in Louisiana, where a husband gave his wife a dation en paiement of land and movables, which were valued separately, the dation, though void as to the land was upheld as to the movables, by reason of the separate valuation.'' Where the consideration for a promise is in part illegal, the entire contract is illegal.* In a dictum in Pigofs Case,* it was resolved by the judges, " that if some of the covenants of an indenture, or some of the conditions indorsed upon a bond are against law, and some good and lawful; that in this case the covenants or conditions which are against law 1 KitchiDg V. Hicks, 6 Ont. Rep. 739. 2 Glaze V. Dnson, 40 La. Ann. 692; 4 S. 861. ' Featherston v. Hutchinson, Cro. Eliz. 199; Carleton v. Whitcher, 5 N. H. 196; Foley o. Speir, 100 N. Y. .552; 3 N. E. 477; Bixby v. Mow, 51 N. H. 402 ; H. & W. 378 ; Filson v. Himes, 5 Pa. St. 452 ; Perkins v. Cummings, 2 Gray, 258 ; Snyder v. Willey, 33 Mich. 483 ; Widoe V. Webb, 20 Ohio St. 431 ; McQuade v. Rosecrans, 36 Ohio St. 442 ; Deering v. Chapman, 22 Me. 488 ; Gotten v. McKenzie, 57 Miss. 418; Pacific Guano Co. v. McMuUen, 66 Ala. 582; Carleton v. Woods, 28 N. H. 290; Pueblo R. R. Co. u. Taylor, 6 Col. 1 ; Bishop k. Palmer, 146 Mass. 469 ; 16 N. E. 299 ; W. 104 ; H. & W. 380; Luce v. Foster, 42 Neb. 818 ; 60 N. W. 1027 ; contra, Yundt v. Roberts, 5 S. & R. 139. And see Hynds v. Hays, 25 Lid. 31. * 11 Co. Rep. 27 b. 134 ELEMENTS OP THE LAW OP CONTBACTS. are void ab initio, and the others stand good." From this dictum has sprung the generally accepted doctrine that where there is a promise to do two things, one of which is legal and the other illegal, the promise to do the legal act will be enforced, and the illegal act will be disregarded. 1 At one time it was supposed that there was a difference between partial illegality due to a pro- hibitory statute, and partial illegality at common law. It is now recognized, however, that there is no such difference, except where a statute expressly declares that any instrument containing an agreement which it prohibits shall be void.^ The United States Supreme Court has said that " where there is no imputation of malum in se, the bad parts (of a contract) do not affect the good. The valid may be enforced. " * The exact force of the qualification that there must be no imputation of malum in se is not quite clear. . If the covenants or agreements are clearly separable, it is hard to see how one illegal agreement can under any circumstances impute malum in se to the entire contract; while, of course, if the legal part of the contract cannot be separated from the illegal part, the contract must fail in any case. Under the rule in Pigot's Case, as developed by the modern authorities, it makes no difference whether there x| be two distinct promises, or whether there be one promise which is divisible ; nor does it matter whether the consideration for the two promises be an entire con- 1 Bank of Australasia v. Breillat, 6 Moore P. C. 201 ; Pickering v. nfracombe Ry. Co., L. R. 3 C. P. 235 ; TJ. S. v. Bradley, 10 Pet. 343; Gelpke v. Dubnque, 1 Wall. 221. If the promise is indivisible, the whole contract is of course illegal. Consumers' Oil Co. v. Nunne- maker, 41 N. E. 1048 ; — Ind. — . 2 Pickering v. Ilfracombe Ry. Co., supra. ^ Gelpke v. Dubuque, supra. ILLEGAL CONTEACTS. 135 sideration or an apportionable one.^ One of the most common instances of the application of this rule is in the case of agreements in restraint of trade. Where an agreement imposes restrictions upon trade which are unreasonable and exceed the limits allowed by law, if the unreasonable part of the restriction can be separated from that which is reasonable, the agreement will be enforced within such reasonable limits. Thus where it was agreed between A. and B. that A. should become assistant to B. in his business of surgeon dentist for four years, that B. should instruct A. in the business, and that at the expiration of the term A. should not carry on that business in London, or in any of the, towns in England and Scotland where B. might have been practising before the expiration of said service; it was held that the covenant in restraint of trade was unreasonably broad, but that being divisible, it was binding on A. as far as practising in London was concerned.^ The reasoning in these cases is, that the covenant in restraint of trade, if divisible, is equivalent to two dis- tinct covenants, one of which is legal and the other illegal, and that therefore, under the rule in Pigot's Ccbse? the illegal covenant should be disregarded, and the legal covenant enforced. In California, however, this reasoning is disapproved where the covenant sued on, though divisible, is yet founded upon an entire con- 1 Greenwood v. Bishop of London, 5 Taunt. 727 ; Newman v. New- man, 4 M. & S. 66 ; Presbury v. Fisher, 18 Mo. 50; Erie Ry. Co. v. Union Locomotiye Co., 35 N. J. L. 240 ; H. & W. 373. 2 Mallan v. May, 11 M. & W. 652 ; Chesman v. Nainbry, 2 Strange, 739; 2 Lord Eaym. 1456; Dean v. Emerson, 102 Mass. 480; Peltz v. Eichele, 62 Mo. 171; Smith's Appeal, 113 Fa. St. 579; 6 A. 251; Western Union Tel. Co. v. B. & S. Ry. Co., 3 McCrary, 130; Oregon St. Nav. Co. 0. Winsor, 20 Wall. 64. 8 11 Co. Eep. 27 b. 136 ELEMENTS OE THE LAW OP CONTRACTS. sideration.i And in North Carolina the rule in Pigot's Case is not followed where the consideration for the divisible promise is not apportionable.'' In applying the rule in Pigot's Case most courts have been led into decisions which are plainly inconsistent. In consideration of X. , A. promises B. to do two acts, M. and N. , of which M. is legal and N. illegal. If X. is an executory consideration, that is, a promise, such promise is void because the consideration for it, viz. : A.'s promise to do M. and N". is partly illegal. But mutual promises are the consideration for each other, so that as B.'s promise is not binding, A.'s promise is not binding. Yet if A.'s promise is under seal, or if X. is an executed consideration, the courts generally hold that A.'s promise to do M. is enforceable. In California* and North Carolina,* however, a different view is taken, and when there is one entire consideration for two promises, and one promise is for the performance of an illegal act, the entire contract is illegal. This seems a more logical view, since it recognizes the distinction between a divisible promise and a divisible contract, as most courts fail to do. The inconsistency just pointed out has led the Indiana courts to hold that if the consideration is divisible, the promise, though entire, will be enforced to the extent of the legal consideration, though part of the consideration is illegal.* 1 More V. Bonnet, 40 Cal. 251. 2 Lindsay v. Smith, 78 N. C. 328. * More V. Bonnet, supra. * Lindsay v. Smith, supra. * Hynds v. Hays, 25 Ind. 31. Tor a further discussion of partial illegality, see \ Northwestern Law Eey. 42. JOINT AND SEVEKAL CONTBACTS. 137 CHAPTER III. JOINT AND SBVEKAL CONTKACTS. A BIGHT may belong to two or more individuals jointly; it cannot belong to each severally. An obli- gation, however, may be imposed upon two or more jointly, and upon each severally, at the same time. When two or more parties unite in making a promise they become joint promisors. When a promise is made to two or more jointly, they become joint promisees. When the promise is made by two or more jointly, and at the same time each makes the same promise severally, they become joint and several promisors. Promisees cannot be both joint and several.* A contract is an entire thing, and therefore all who are parties to it must join as plaintiffs and be joined as defendants. A difference exists, however, in the man- ner of taking advantage of such non-joinder. If the declaration shows a non-joinder of the proper parties, advantage of such non-joinder may be taken by de- murrer, or by motion in arrest of judgment; for the declaration shows that it is fatally defective.^ If the declaration sets forth a promise by the defendant B. to the plaintiff A. , and the evidence shows a promise by B. to A. and C. jointly, there is a fatal variance, for A, has no separate right in the contract and cannot sue 1 Slingsb/g Case, 5 Co. 19 a. 2 Bragg II. Wetzell, .5 Blackf. 95 ; H. & W. 486 ; Gilman v. Eives, 10 Pet. 298; Sweigart v. Berk, 8 S. & R. 308 ; H. & W. 490; Parni v. TessoD, 1 Black, 309. 138 ELEMENTS OP THE LAW OF CONTEACTS. alone. ^ If the declaration sets out a promise by the defendant B. to the plaintiff A. , and the contract sued on contains a joint promise by B. and C. , B. cannot say that he has not promised, and must therefore plead in abatement the non-joinder of C. as defendant.^ The common law rule is that on the death of one joint promisor the surviving promisors alone remain liable ; " and that on the death of one joint promisee the right of action accrues to the survivors.* Any cause operating to discharge the right of action of one promisee will destroy the right of action of all.° In like manner, any cause operating to destroy the right of action against one of several joint promisors will discharge all of them;* except where one receives a purely personal discharge, as in bankruptcy. Where the contract is joint and several a judgment against the promisors jointly is a bar to an action against any of them severally ; ' and a judgment against one of them severally is a bar to an action against them jointly.^ But where one of two joint promisors gives a check for the debt, a judgment recovered on this check does not 1 Jell V. Douglas, 4 B. & Aid. 374; W. 273. " Whelpdale's Case, 5 Co. 241 ; W. 270 ; Richards v. Heather, 1 B. & Aid. 29; W. 270. ' Eichards v. Heather, supra. * Jell V. Douglas, supra, 6 Myrick v. Dame, 9 Cush. 248 ; Austin v. Hall, 13 Johns. 286 Decker v. Livingston, 15 Johns. 479; Dyer u. Sutherland, 75 111. 583 Osborn v. Martha's Vineyard R. E. Co., 140 Mass. 549 ; 5 N. E. 486 W. 293. 8 Mason v. Eldred, 6 Wall. 231 ; overruliug Sheehy v. Mandeville, 6 Cranch, 254 ; King v. Hoare, 13 M. & W. 494 ; W. 273 ; Kendall v. Hamilton, 4 A. C. 504; W. 287 ; .Tansen v. Grimshaw, 125 111. 468; 17 N. E. 850 ; Moore v. Bevier, 62 N. W. 281 ; — Minn. — . ' U. S. V. Price, 9 How. 83; contra, Moore v. Rogers, 19 lU. 347; People V. Harrison, 82 111. 84. 8 Clifford, J., in Sessions v. Johnson, 95 U. S. 347, 348. JOINT AND SEVERAL CONTRACTS. 139 discharge the other, since the original claim is not merged in such a judgment.^ It is sometimes said that joint contracts will be treated as joint and several in eq^uity. Such a state- ment, however, is inaccurate. A joint contract will be treated as joint and several in equity only when there is some equitable reason for so treating it. Thus, if money is loaned to two persons who give a joint obliga- tion for its repayment, a court of equity will enforce the obligation against the representatives of the deceased obligor, " on the ground that the lending to both creates a moral obligation in both to pay, and that the reason- able presumption is the parties intended their contract to be joint and several, but through fraud, ignorance, mistake, or want of skill, failed to accomplish their object." ^ Where no such equity exists, however, as in the case of a joint obligation by principal and surety, equity follows the law and recognizes only the legal obli- gation of the surety, which is discharged by his death.* A few rules of construction for determining whether a contract is joint or several may here be given. An obligation entered into by two or more parties is construed as a joint obligation unless it appears that the parties intended otherwise.* A contract will be construed to be joint or several, according to the interests of the parties appearing on the face of the contract, if the words are capable of such construction; but the express language of the promise must govern.^ 1 Drake v. Mitchell, 3 East, 251 ; Wegg Prosser v. Evans, (1895) 1 Q. B. 108, OTerruling Cambefort v. Chapman, 19 Q. B. D. 229. '^ Davis, J., in Pickersgill v. Lahens, 15 Wall. 140, 144. ' U. S. V. Price, supra. 4 Elliott «. BeU, 37 "W. Va. 834; 17 S. E. 399 j White v. Tyndall, 13 A. C. 263 ; Eller v. Lacy, 137 Ind. 436 ; 36 N. E. 1088. 5 Fami ti. Tesson, 1 Black, 309; Keightley u. Watson, 3 Ex. 716; W. 281 ; Duncan v. Willis, 51 Ohio St. 433 ; 38 N. E. 13. 140 ELEMENTS OF THE LAW OE CONTKACTS. The presumption that a contract is joint is not de- feated by the fact that each promisor is to contribute separately to the entire result for which they bargain, and is entitled to a distinct interest under the contract for which he would have a separate remedy.* A note signed by two or more, and running, "we promise to pay," is jpint; " but if it runs, "I promise to pay," it is joint and several.* Partnership contracts are joint. In equity they are sometimes said to be joint and several. This is incor- rect; the only foundation for the statement is that part- nership creditors are allowed to come into equity to obtain payment from the estate of a deceased partner, which is not liable at law.* In equity, where two persons loan money to a third, there is a presumption of fact that they are tenants in common both of the debt and of any security given for it.* 1 Alpaugh V. Wood, 53 N. J. L. 638 ; 23 A. 261. 2 Barnett v, Juday, 38 Ind. 86. ' Hemmenway v. Stone, 7 Mass. 58; Maiden v. Webster, 30 Ind. 317 ; Dill V. White, 52 Wis. 456 ; 9 N. W. 404. * Lord Cairns, C, in Kendall v. Hamilton, 4 A. C. 504, 516; W. 287. 6 Steeds v. Steeds, 22 Q.B. D. 537; W. 352. CONDITIONS. 141 CHAPTER IV. CONDITIONS. § 1. Nature of Conditions. A condition is a fact or event which must precede some change in the legal relations of two parties. (To constitute a condition, however, the fact in question must be uncertain.) Thus in the case of a promise to pay f 100 on the 1st of January next, the arrival of the 1st of January is not a condition, for the reason that the day is sure to arrive. Nor is a promise to pay within a certain time after a man's death conditional, because the death is certain to occur.* It was held in one English case that a promise to pay at a certain time after a government ship was paid off was not a condi- tional promise, because the government is sure to pay ;* but this decision seems questionable. The uncertainty in regard to a fact which makes that fact a condition need not be objective uncertainty; it is sufficient if that uncertainty exists in the mind of the party who seeks to treat that fact as a condition. Thus where a charter-party was made of a ship "now in the port of Amsterdam," although the ship was not in the port of Amsterdam at the time, the uncertainty of the charterer in regard to the location of the ship rendered that loca- 1 Eoffey V. Greenwell, 10 A. & E. 222 ; Conn v. Thornton, 46 Ala. 587. ^ Andrews v. Franklin, 1 Strange, 24. 142 ELEMENTS OF THE LAW OP CONTRACTS. tion a condition.^ Similar principles as to what con- stitutes legal uncertainty we have already seen applied with reference to the subject of consideration. § 2. Classification of Conditions. Conditions may be divided in three ways, by three different modes of classification as far as contracts are concerned. They may be divided, first, with reference to their giving rise to some right, or putting an end to some right already existing. A fact or event which gives rise to a right is called a condition precedent. A fact or event which gives some one the right to put an end to some existing right of another is called a condition subsequent. It is important to distinguish between a condition subsequent and a limitation. A limitation defines the extent or duration of a right, while a condition subse- quent simply gives some one the right to put an end to that right. Thus if A. promises to pay B. an annuity so long as B. shall refrain from the use of tobacco, the extent of A.'s obligation is limited with reference to B.'s abstinence from tobacco, and the use of tobacco by B. in itself puts an end to A. 's obligation. But if A. gives B. an estate on condition that B. shall not use tobacco, the use of tobacco by B. gives A. a right to put an end to the estate, but does not of itself bring the estate to an end. Conditions, again, may be divided according as they afiect the formation of contract or the obligation of contract. Finally, conditions may be divided according as they are facts which, the parties have fixed upon as condi- 1 Behn v. Bumess, 1 B. & S. 877 ; 3 B. & S. 751 ; L. 556 ; Davison V. Von Lingen, 113 U. S. 40; 5 S. Ct. 346; H. & W. 265. CONDITIONS. 143 tions, or facts which the law treats as conditions with- out regard to the intention of the parties. The former may be called internal, the latter external conditions. Internal and external conditions alike may be prece- dent or subsequent, and may affect the formation of contract or its obligation. Under the head of Forma- tion of Contract we have already seen what external conditions precedent the law regards as essential to the formation of contract. External conditions subsequent alfecting the contract itself will be treated under the head of Eescission of Contract. External conditions subsequent affecting the obligation of contract concern the Discharge of Contract; external conditions precedent to the obligation of a contract seem not to exist. Internal conditions alone are usually treated under the head of Conditions ; and when the word condition is used it is ordinarily to be understood as meaning an internal condition. Conditions in this narrow sense are of two kinds, those which affect the formation of contract, and those affecting its obligation. If A. covenants to pay B. f 100 in one year, provided B. goes to Eome, B.'s going to Eome is a condition precedent to A.'s obligation. If A; covenants to pay B. $100 per annum for ten years , pro- vided B. does not use tobacco during that time, B.'s use of tobacco is a condition subsequent, entitling A. to be discharged from his obligation to pay the annuity. If A. insures B.'s life on condition that the facts stated in B.'s application for insurance are true, the truth of B.'s statements is a condition precedent to the formation of the contract of insurance. If A. sells a cow to B. as a Jersey cow for $100, and agrees that B. may return the cow if she is not a Jersey, the fact that the cow is not a Jersey is a condition subsequent, entitling B. to rescind the contract. No fact can be a condition affecting the 144 ELEMENTS OP THE LAW OP CONTEACTS. formation of a contract unless such fact exist at the time the contract is entered into. It is said by Professor LangdelP that " a covenant or promise cannot be con- ditional unless it first exist; it is only the performance of it' that the condition renders uncertain. An event, therefore, which, must happen before a covenant or promise is made, does not make the covenant or promise conditional. If the event happens, the covenant or promise is absolute ; if it does not happen, no covenant or promise is made." This statement must be taken with some qualification and explanation. When a unilateral contract is conditional upon the existence of a certain fact, if the fact does not exist, the contract is void; or to speak more accurately, the apparent contract is not a contract at all. In the case of a bilateral contract, if all the promises of both parties are conditional upon the existence of a certain fact, and that fact does not exist, the agreement is void. For example, A. agrees to sell and B. to buy a certain cargo of corn which is supposed to be on board a certain ship destined for England. As a matter of fact, the cargo has already been unloaded and sold. If the existence of the cargo is a condition upon which the parties make their agreement, the apparent contract is void.^ If, however, one party's promise is absolute, and the promise of the other party is conditional upon the existence of a certain fact, the non-existence of that fact renders the contract not void, but voidable at the option of the party whose promise is conditional. Whenever one of the parties to a contract warrants the existence of a certain fact, the non-existence of that fact may be a condition subsequent, entitling the other party to avoid the contract, but cannot affect the obli- 1 Summary of Contracts, §§ 27, 28. 2 Couturier v. Hastie, 5 H. L. C. 673. CONDITIONS. 145 gation of the party giving the warranty. If, however,, as in Couturier v. Hastie,^ the existence of a fact is not warranted, it may be a condition precedent to the, formation of the contract. In the leading case of Behn v. Burness '^ it was agreed by a charter-party between the plaintiff and the de-, fendant that the plaintiff's ship, "now in the port of Amsterdam," should proceed to another port for a cargo.. The ship was not in the port of Amsterdam at the time the charter-party was executed. The court therefore gave judgment for the defendant. What the effect of. the charter-party was has been much discussed. One, view is that the statement as to the position of the ship being untrue, the defendant had made no promise.* Another view is that the charter-party was void, but that the plaintiff would have been estopped from show- ing that his own statement that the ship was in the port of Amsterdam was untrue.* It seems clear, however, from the opinion of the court, that the charter-party was regarded as voidable by the charterer, and not as void. In a similar case in the United States Supreme Court there were cross-actions on a similar charter- party. The ship-owner sued to recover for an alleged breach by the charterer, and was defeated because his stipulation in regard to the ship had not been fulfilled, and was regarded as a condition precedent to the char- terer's obligation under the contract. The charterer sued for breach of the stipulation in regard to the ship, and recovered judgment on the ground that such stipu- lation was a warranty by the owner. ° In both these ^ Supra. 2 3 B. & S. 751 ; L. 556. 8 Langdell, Summary, § 28. * Pollock, Contracts, p. 489, note (b). ^ Davison v. Von Lingen, 113 U. S. 40; 5 S. Ct. 346 ; H. & W. 265. 10 146 ELEMENTS OF THfi LAW OF CONTRACTS. cases the stipulation in regard to the ship was looked upon as a condition precedent afEecting the charterer's obligation under the contract, and as a condition subse- quent, entitling the charterer to rescind the contract itself. Thus the same fact may be a condition prece- dent as regards a party's obligation under a contract, and a condition subsequent as regards the validity of the contract itself. Again, a certain fact may be a condition precedent affecting the obligation of a party under one contract, and a condition subsequent giving him the right to avoid another contract. Whenever a sale occurs and the purchase-money is unpaid there are always in reality two contracts, one bilateral, the other unilateral. The bilateral contract is this: A. promises to sell B. cer- tain goods in consideration of A.'s promise to take those goods and pay for them. This bilateral contract is a contract to sell, on the one hand, and to buy, on the other, and it has in view the making of a subsequent contract of sale. The contract of sale, on the other hand, is unilateral. In consideration of the transfer by A. to B. of the title to the goods, B. agrees to pay A. the purchase price, which thereupon becomes a debt due from B. to A. The bilateral and the unilateral contract may be actually simultaneous, but theoretically the bi- lateral contract may always be regarded as preceding the unilateral. The distinction between these two con- tracts is of great importance, though it is sometimes lost sight of. Thus if B. refuses to receive the goods tendered by A. in accordance with the bilateral con- tract, B. is liable in assumpsit for damages, the measure of damages being the injury sustained by A. through B.'s refusal to accept the goods.' If, however, the goods are accepted by B., B. thereupon becomes liable to 1 Benjamin on Sales, § 762 ; Laird v. Pim, 7 M. & W. 474 ; L. 914. CONDITIONS. 147 A. in debt or indebitatus assumpsit for the price agreed upon.i This distinction has been ignored by some courts, which allow A. to recovet the price, although the title to the goods has not passed to B.^ Now a given fact may be a condition precedent to the obliga- tion of the vendee to accept the goods under the bi- lateral contract, and a condition subsequent affecting the validity of the unilateral contract to pay the price. Thus it is a condition precedent to the obligation of the buyer to accept the goods that the vendor should tender goods of the description called for by the contract.' If the title to the goods tendered once passes to the vendee, the passage of title gives rise to a unilateral contract on the part of the vendee to pay the price. If the vendee subsequently discovers the goods to be different from those called for by the bilateral contract, and the defect amounts to a breach of the condition upon which he accepted the goods, he may avoid the contract by restor- ing or offering to restore the goods.* Thus the failure of the goods tendered to correspond with the goods described in the executory contract will prevent the seller from insisting that the buyer is bound to take them, because it is a condition precedent to the buyer's obligation under the bilateral contract that the goods shall correspond with the description; while after the goods have been accepted, such defect, if sufficiently important, will amount to a condition subsequent affect- ing the validity of the unilateral contract to pay the price. Similar principles apply to the case of insurance pol- icies. An insurance policy is a unilateral contract, ^ Benjamin On Sales, § 765. 2 Lincoln Shoe Mfg. Co. v. Sheldon, 44 Neb. 279 ; 62 N. W. 480. ' Benjamin on Sales, § 600. * Ibid. § 600 ; Alden v. Hart, 161 Mass. 576 ; 37 N. E. 742. 148 ELEMENTS OP THE LAW OP CONTRACTS. which is preceded theoretically by a bilateral contract. The bilateral contract consists of mutual promises, the insurer's promise to issue the policy, and the promise of the insured to accept it. The issue and acceptance of the policy constitute a performance of the bilateral contract, and give rise to one or two unilateral con. tracts; one, if the premium is paid, two, if it is not, as the premium becomes a debt on the acceptance of the policy. 1 So in the case of a lease, an agreement to lease is a bilateral contract, while the lease itself is only partly bilateral. An event, then, which is to happen before the beginning of the tenancy, such as the repair of the premises by the lessor, is a condition precedent affecting the lessee's obligation to become a tenant; ^ but if the lessee does become a tenant, the lessor's failure to repair does not affect the lessee's obligation to pay the rent.* So in a charter-party, the seaworthi- ness of the vessel at the time of sailing may be a condi- tion precedent to the obligation of the charterer to take the vessel, but on principle it cannot be a condition precedent to his obligation to pay the freight after he has once accepted the vessel.* If, however, the condi- tion of the vessel is such that the vessel is lost and the freighter is thereby deprived of any benefit under the contract, the freighter has the right to treat the loss of the vessel as a condition subsequent, entitling him to rescind the contract. 1 Langdell, Summary, § 119. 2 Tidey v. MoUett, 33 L. J. C. P. 235 ; L. 567. * Langdell, Summary, § 119. * Ibid, The opinion to the contrary in Thompson v. Gillespy, 5 E. & B. 209, L. 537, is conclusively shown by Professor Langdell to he unsound. CONDITIONS. 149 § 3. Conditions distinguished from Representations and 'Warranties. It is important to distinguish between representa- tions, warranties, and conditions. A representation is a statement made by one party to the other before or at the time of making the contract in regard to some matter or circumstance relating to the subject matter of the contract. If the party making the representation assumes legal responsibility for its truth, the represen- tation thereupon becomes a warranty. If the represen- tation amounts to a description of the subject matter of the contract, it becomes a condition. If the party entitled to insist upon this condition has received sub- stantially what he bargained tor, though the condition has not been fulfilled, the condition then becomes what has been termed a warranty ex post facto. This term is inappropriate, because if a representation amounts to a warranty it is a warranty at the time the contract is made. The fact that the representation is a condition as well, and that it subsequently ceases to be a condi- tion, does not in any way affect its character as a war- ranty. The terms warranty and condition are often confused and used interchangeably. The distinction, however, is clear. In speaking of a representation by A. to B. as a warranty, we are looking at that repre- sentation with reference to A.'s obligation. When we speak of the same representation as a condition, we are dealing with the effect of that representation on B.'s obligation. § 4. Suspension and Discharge of Obligation by Condi- tions. A condition subsequent may operate as a partial or as an entire discharge of the contract. If a state of facts occurs which releases the promisor from his obligation 150 ELEMENTS OP THE LAW OP CONTKACTS. to perform his coatract so long as that state of facts continues to "exist, and the state of facts in question lasts so long, or is of such a character that the failure of performance caused thereby goes to the root of the contract, the contract is discharged entirely;^ otherwise the contract is only suspended during the continuance of such state of facts.* § 5. Conditions Subsequent in Form, Precedent in Fact. There are contracts in which conditions are expressed as conditions subsequent, when in reality the conditions are conditions precedent. Thus in the case of an ordi- nary bond the obligor acknowledges that he is bound to the obligee in a certain sum, provided that the obliga- tion shall be void if a certain event shall happen. The obligation to pay the penalty of the bond does not arise until the time specified for the event to occur has elapsed, and the condition has been broken. What is apparently a breach of a condition subsequent, therefore, is in reality the fulfilment of a condition precedent.' Yet by reason of the form of the bond the defendant is compelled to show performance of the condition.* § 6. Conditions affecting Right of Action. A condition may be annexed as well to the right of action for breach of contract as to the contract itself. Thus it is a common provision that disputes in regard to breaches of contract shall be referred to arbitration, and such reference may be made a condition precedent 1 Geipel v. Smith, L. B. 7 Q. B. 404 ; Jackson v. Union Ins. Co., L. E. 10 C. P. 125 ; New York Life Ins. Co. v. Statham, 93 U. S. 24. 2 Hadley v. Clarke, 8 T. R. 259. ' Langdell, Summary, § 44; Cage v. Acton, 1 Ld. Eaym. 615; L. 772. * Gray v. Gardner, 17 Mass. 188; L. 785. CONDITIOJS'S. 151 to a right of action upon the contract.^ Or it may be agreed that an action for breach of contract shall be barred if not brought within one year, and the failure to bring an action within that period will operate as a condition subsequent discharging the right of action.^ § 7. Concurrent Conditions. There is a class of conditions which are called con- current. " A concurrent condition must consist of some act to be done by the covenantee or promisee, which can be done at the same moment that the covenant or promise is performed." It seems, however, that such conditions may properly be reduced to conditions prece- dent, by treating an offer to perform the act called a condition concurrent as a condition precedent. Thus in the case of mutual promises to marry, performance on each side is said to be a condition concurrent of the promise on the other side. The contract may be looked upon, however, as containing a condition precedent to the obligation of either party that the other party shall offer to perform the contract. § 8. Express and Implied Conditions. Conditions are divided by Professor Langdell' into express conditions, which are expressed in terms ; con- ditions implied in fact, which are implied from something contained in the covenant or promise; and conditions implied by law, which are not based upon the interpre- » Scott !). Avery, 5 H. L. C. 811 ; W. 195 ; Viney ». Bignold, 20 Q. B. D. 172; W. 201 ; Caledonian Ins. Co. v. Gilmour, (1893) A. C, 85; Hamilton v. Liverpool Ins. Co., 136 U. S. 242 ; 10 S. Ct, 945 ; H. & W. 351 ; Hood v. Hartshorn, 100 Mags. 117. * Eiddlesbarger v. Hartford Ins. Co., 7 Wall. 386. 8 Summary, § 32. 152 ELEMENTS OP THE LAW OF CONTRACTS. tation of the covenant or promise, but upon its construc- tion. Whatever may have been the former importance of this distinction, it seems to be of little or no prac- tical consequence at the present day. It has been urged by Professor Keener ^ that conditions implied by law are not true conditions, because they are only found when the party to a contract has failed to protect himself by the insertion of express conditions. With regard to a certain class of conditions, which are really external to the contract, this criticism is sound ; but with reference to internal conditions it is not well taken. Internal conditions are always gathered from the contract itself, and when they are implied by the law they are always implied because the law supposes that the intention of the parties is to treat a given fact as a condition, even though they have not manifested that intention in express words. The fact that the court always tries to discover the intention of the parties by looking at the entire contract, and that such intention is the sole rule for determining whether a given fact is or is not a con- dition, shows clearly that an internal condition implied by law is just as much a part of the real contract of the parties as if the condition had been set forth in express words. When the court goes beyond the contract itself, however, as it sometimes does, and attempts to intro- duce conditions which cannot possibly be based upon any construction of the contract, then it is not enforcing the contract obligation, but is modifying that obligation by taking other things than the contract into con- sideration. § 9. Dependent and Independent Promises. When the obligation to perform one of two covena.nts or promises is conditional upon the performance of the 1 Quasi-Contracts, p. 225. CONDITIONS. 153 other, the former is said to be dependent on the latter. When the obligation of each of two promises is condi- tional upon an offer to perform the other, the two cove- nants or promises are said to be mutually dependent. If the condition is express , the dependency is express ; if the condition is implied, the dependency is implied. The doctrine of implied dependency was introduced by Lord Mansfield in 1773.^ Before Lord Mansfield's time if there was no express dependency of one promise on another the breach of his promise by one party gave the other only a right to a cross-action, and was no defence to an action by the party who had thus broken the contract. At the present day the distinction between express and implied dependency, like that between express and implied conditions, seems immaterial. Whether covenants or promises are dependent or inde- pendent is a question of the intention of the parties, to be determined from the whole contract." Arbitrary rules, therefore, are useless; but the following general principles govern the courts in their construction of contracts. If the time for the performance of an act is fixed solely by reference to some other event, and is to hap- pen after such event, that event is a condition prece- dent to the obligation to perform such act ; * but if the time for such performance is to be determined without 1 Kingston r. Preston, cited in Jones v. Barkley, Dong. 684; L. 901 ; Langdell, Summary, § 143. 2 Loud V. Pomona Land Co., 153 U. S. 564; Stavers v. Curling, 3 Bing. N. C. 355 ; L, 876 ; Seeger v. Duthie, 29 L. J. C. P. 253 ; 30 L. J. C. P. 65 ; L. 691 ; Philadelphia, W. & B. R. K. v. Howard, 13 How. 307. ' Loud V. Pomona Land Co., supra ; Holdipp v. Otway, 2 Wms. Saunders, 106 ; L. 445 ; Northrup v. Northrup, 6 Cowen, 296 ; H. & W. 576; L. 721. 154 ELEMENTS OP THE IA"W OE CONTRACTS. reference to sucli event, that event is not a condition precedent to such obligation.* Hence if one of two promises is to be performed at a given, time after the performance of another, the first promise is dependent on the second.^ But if the time for the performance of one promise is not fixed with reference to the performance of the other, the promises are independent. Thus if a contract fixes a time for the payment of the purchase money for land, and no time for the conveyance of the land, the promise to pay the purchase money is independent of the promise to convey the land.» So where there is a promise on one side to finish the performance of work by a certain day, and on the other to pay for the work in monthly instalments, the two promises are independent.* When the time for the performance of each act is fixed, as when A.'s promise is to be performed on November 1, and B.'s promise on December 1, it seems that B.'s promise is not dependent on A.'s performance, but that a failure by A. to perform his promise may amount to a condition subsequent -entitling B. to a dis' charge from his liability. Professor Langdell main- tains' that B.'s promise is dependent on A.'s promise; but the ease of Grant v. Johnson,'^ relied on by him, seems unsound in its reasoning. In fact, the New York courts have developed a peculiar and erroneous doctrine with regard to instalment contracts. It is held in New York that where the purchase money for land is to be 1 Mattock V. Kinglake, 10 A. & E. 50 ; L. 662 ; Wilks v. Smith, 10 M. & W. 355 ; L. 666 ; Dicker v. Johnson, 6 C. B. 103 ; L. 676. * Loud V. Pomona Land Co., supra; Northrup v. Northrup, supra. ' Mattock V. Kinglake, supra ; Wilks v. Smith, supra ; Dicker ». Johnson, supra : McRaven v. Crisler, 52 Miss. 542 ; H. & W. 577. 4 Philadelphia, W. & B. R. R. v, Howard, 13 How. 307. 6 Summary, § 122. 6 1 Seld. 247 ; L. 603. CONDITIONS. 155 paid in instalments, and some of such instalments are to be paid before the delivery of the deed, if the vendor sues before the time fixed for the delivery of the deed, and before the instalments are all due, he may recover for such instalments as are then due.i If the vendor sues after all the instalments are due, however, he must prove an offer to convey the land before bringing suit. When the last instalment falls due the payment of the whole of the purchase money and the conveyance of the land become mutual concurrent conditions.^ The same rule applies when an action is brought for any instal- ment payable at or after the time fixed for the delivery of the deed.^ These decisions rest on two erroneous ideas: first, that the tender of the deed is a condition precedent to the right of recovery of all instalments due after the date fixed for the delivery of the deed; second, that two promises not originally dependent may become so by reason of some subsequent event. It is clearly an unwarrantable construction to place on a con- tract to say that the promise to pay an instalment at a fixed date is dependent upon a promise to convey the land simply because the date set for the delivery of the deed occurs prior to the date fixed for the payment of such instalment. And it is entirely inconsistent with any theory of dependency whatsoever, to hold that two promises originally independent may become dependent by virtue of some event which happens after the time fixed for the performance of the promise which is treated as dependent. If A. promises to convey land to B. on February 1, and B. promises to pay A. $200 for the 1 Paine v. Brown, 37 N. Y. 228; Harrington v. Higgins, 17 Wend. 376. 2 Beecher v. Conradt, 13 N. Y. 108; X. 767; Hill v. Grigsby, 35 Cal. 656 ; H. & W. 580 ; Shelly v. Mikkelson, 63 N. W. 210 ; — S. T>. — . s Grant v. Johnson, supra; Eddy v. Davis, 116 N. Y. 247; 22 N. E. 362; W. 613. 156 ELEMENTS OF THE LAW OP CONTKACTS. land, f 100 January 1, and f 100 March 1, the promise to pay $100 January 1 is necessarily independent, and when January 1 arrives the obligation to pay arises. To hold that this obligation to pay f 100, which is abso- lute January 1, becomes conditional February 1, on the delivery of the deed by A. , is to take a wholly untenable position. The true rule in regard to such instalment contracts is this: that the promises to pay those instalments which become due before the date set for the delivery of the deed are absolute and independent, and are in no way affected by a failure to deliver the deed at the time specified.* But where the deed is to be delivered simul- taneously with the payment of the last instalment, then on payment of the previous instalments the tender of the deed and the tender of the last instalment become mutual concurrent conditions.'' If A. 's promise is to be performed at a fixed time, and B.'s promise requires continued performance before and after that time, A.'s promise is independent of B.'s, and performance by B. is not a condition precedent to A.'s obligation. Entire performance by B. cannot in the nature of the case be a condition precedent; and there is no reason to suppose that the parties intended A.'s promise to be conditional upon partial performance by B.' In such a; case, however, B.'s failure to per- form may be a condition subsequent, entitling A. to put J Kane v. Hood, 13 Pick. 281 ; L. 760 ; Sheeren o. Moses, 84 HI. 448 ; Duncan v. Charles, 5 lU. 561. 2 Kane v. Hood, supra ; Sheeren v. Moses, supra ; Duncan ». Charles, supra; Headley v. Shaw, 39 HI. 354. ' Judson V. Bowden, 1 Ex. 162 ; L. 673 ; Campbell v. Jones, 6 T. B. 570 ; L. 839 ; Carpenter v. Cresswell, 4 Bing. 409 ; L. 870 ; Golds- borough y. Orr, 8 Wheat, 217. Professor Langdell regards perform- ance by B. up to the time fixed for performance by A. as a condition precedent to his obligation. Summary, § 129. CONDITIONS. 157 an end to the contract, if such failure amounts to a repudiation of the entire contract.^ If the obligation of A.'s promise is contingent upon some future event, performance by A. will not be an implied condition precedent to the obligation of B.'s promise. Thus, when B. promises A. to pay A. a sum of money in consideration of A.'s guaranteeing that C. will perform some act, the performance of such act by C. will not be a condition precedent to B.'s obligation to pay the money." Where a contract is made for the sale of goods, and the goods are to be delivered in instalments and paid for upon or after delivery, tender of each instalment in accordance with the terms of the contract is a condi- tion precedent to the vendee's obligation to accept such instalment.* So also readiness and willingness to accept the goods on the part of the buyer is a condition prece- dent to the vendor's obligation to deliver.* The pay- ment for an instalment by the vendee, however, is not a condition precedent to the vendor's obligation to deliver other instalments.^ A promise which can only be performed on the happen- ing of a certain event is conditional upon the happening of that event.' Hence if any option is to be exercised 1 See cases supra. 2 Christie v. Borelly, 29 L. J. C. P. 153 ; L. 688. 8 Norrington v. Wright, 115 U. S. 188 ; 6 S. Ct. 12 ; W. 593 ; H. ftW 584 ; Hoare v. Reunie, 5 H. & N. 19 ; L. 549 ; Cleveland EoUing Mill V. Rhodes, 121 U. S. 255; 7 S. Ct. 882; contra, Gerli v. Poidebard Mfg. Co., 31 A. 401 ; — N. J. L. — . * Honck V. Mailer, 7 Q. B. D. 92; W. 578; Creswell Ranch Co. a. Martindale, 63 F. 84 ; 1 1 C. C. A. 33 ; 27 U. S. App. 277 ; contra, Gerli v. Poidebard Mfg. Co., supra. 6 Mersey Co. v, Naylor, 9 A. C. 434 ; W. 586 ; Pranklin v. Miller, 4 A. & E. 599 ; L. 872 ; Withers v. Reynolds, 2 B. & Ad. 882 ; L. 740 ; Freeth v. Burr, L. R. 9 C. P. 208; L. 712. ^ Langdell, Summary, § 41. 158 ELEMENTS OF THE LAW OP CONTKACTS. by one party to the contract, the exercise of such option is a condition precedent to the other's obligation.' In order that two promises may be mutually depend- ent they must be capable of performance at the same time and place, and they must involve an exchange of rights between the parties." Professor Langdell main- tains that in order that two promises may be mutually dependent the performance of the one must be regarded as full payment for the performance of the other. ° This theory of equivalency, however, although most ingen- iously developed by Professor Langdell, does not seem to be based on satisfactory authority.' It seems that the true test of mutual dependency is not whether or not the promises in question are legally equivalent to each other, but whether the parties intend that the two promises shall be simultaneously per- formed.^ Whenever the contract contemplates an ex- change of rights between the parties, and no time is fixed for such exchange, or the contract provides that the promises shall be performed at the same time and place, then the promises are mutually dependent. Thus in every contract for the sale of goods where no time is specified for performance of the contract, tender of the goods and tender of the price are mutual conditions concurrent. ° 1 Raynay v. Alexander, Yelv. 76; L. 443; Coombe v. Greene, 11 M. &W. 480; L. 497. * Langdell, Summary, § 133. » Ibid. § 136. * " The circumstance that one of the conditions of a contract only affects part of the consideration is not per se sufficient to make it col- lateral to the main contract." Bank of China v. American Trading Co., (1894) A. C. 266, 271. ° Kane v. Hood, 13 Pick. 281 ; L. 760; Sheeren v. Moses, 84 111. 448 ; Headley v. Shaw, 39 111. 354; Duncan v. Charles, 5 HI. 561; Glaze- brook V. Woodrow, 8 T. R. 366 ; L. 732. * Eawson v. Johnson, 1 East, 203 ; L. 805. CONDITIONS. 159 So where the contract calls for an exchange of rights and the time is fixed for the performance of one party's promise, but not for the performance of the others, the two promises are mutually dependent. * The mere fact that mutual promises are to be per- formed within the same period does not make them mutually dependent unless the contract contemplates their performance at the same instant. Thus where a contract contained various stipulations on each side, and provided that each party should give security to the other for the performance of the contract within ten days, the promises to give security were held not to be mutually dependent; but giving security by each party was treated as a condition precedent to the other's obligation to perform.'' One promise can be dependent on another only where they both constitute parts of the same contract. There may be two or more contracts contained in the same instrument. If A. agrees to sell B. a horse for $100, and B. agrees to sell A. a cow for $100, these are two distinct contracts, though both agreements are contained in the same instrument.' But if A. agrees to sell B. a horse for $100, and to take B.'s cow in payment for the horse, there is only one contract.* Promises contained in two unilateral contracts cannot be dependent, even though they are given in considera- tion for each other.* This is especially true in the case of bills and notes, which by definition must be absolute obligations. A promissory note cannot be dependent on another promise, for that would make the note condi- 1 Morton V. Lamb, 7 T. R. 12.5 ; L. 727 ; Marsden v. Moore, 4 H. & N. 500 ; L. 750; Langdell, Summary, § 133. 2 Roberts v. Brett, 11 H. L. C. 337 ; L. 575. ' Laugdell, Summary, § 115. « Atkinson v. Smith, U M. & W. 695 ; L. 743. 6 Langdell, Summary, § 117. 160 ELEMENTS OP THE LAW OE CONTRACTS. tional.^ The American courts, however, have generally maintained the clearly erroneous doctrine that two uni- lateral contracts make one contract if each of the two contracts is the consideration for the other,^ § 10. Inconsistent Descriptions. Contracts often occur in which two inconsistent descriptions are applied to the subject matter. If both these descriptions are regarded by the parties as essen- tial, there is no contract, because there is no subject matter. Thus if A. agrees to sell to B. "this bar of gold," and the bar is not gold, there are two inconsistent descriptions of the subject matter. " This " describes the bar specifically, while "of gold " describes its nature. If the parties contract only on the supposition that the bar is gold , and there is no intention to deal with the bar in question if it is not gold, then there is no con- tract, because there is nothing in existence represented by the words "this bar of gold," and these words are therefore meaningless.' If, however, A.'s promise to sell is absolute, and not conditional on the bar's being gold, while B.'s promise to buy is conditional, A.'s promise may be interpreted thus: "I will sell you this bar, and I warrant that it is gold." In such a case the agreement is not meaningless. A. is bound by his promise to deliver the bar, and is responsible in damages for the fact that the bar is not gold.* B., on the other hand, is not bound to accept the bar, because his promise 1 Moggridge v. Jones, 14 East, 486; L. 638; Spiller v. "Westlake, 2 B. & Ad. 155; L. 654. 2 Duncan v. Charles, 5 111. 561 ; Bailey v. Cromwell, 4 111. 72 Hunt V. Livermore, 5 Pick. 395 ; L. 757 ; Hall i: Perkins, 5 111. 548 Ft. Payne Coal & Iron Co. v. Webster, 163 Mass. 134; 39 'n. E. 786 Hillr. Grigsby, 35 Cal. 656; H. & W. 580; Shelly v. Mikkelaon, 63 N. W. 210 ; — S. D. — . " See Couturier i). Hastie, 5 H. L. C. 673 ; Holmes, Common Law,311. * Davison v. "Von Lingen, 113 U. S. 40; 5 S. Ct. 346 ; H. & W. 265. CONDITIONS. 161 is conditional on the bar's being gold.^ The bar not being gold, A. cannot compel B. to accept it, because the condition precedent of B.'s promise has not been performed. If, however, B. does accept the bar, the bilateral contract becomes a unilateral contract, and B. is bound to pay for the bar. This unilateral obligation of B., however, is subject to a condition subsequent, by virtue of which B. may avoid his obligation to pay for the bar by offering to return it; ^ and even the return is unnecessary if the bar has no value.* The rules just stated apply where the two inconsist- ent descriptions of the subject matter of the contract are both esseijtial. If two inconsistent descriptions are applied to the subject matter of a contract, and one is essential while the other is not, the non-essential description has no effect unless it be construed as a warranty on the part of one of the parties that such description is correct. If the contract is executory, as in the case of a bilateral contract to sell, A. must ten- der performance in accordance with his warranty as a condition precedent to B.'s obligation.* If the con- tract becomes unilateral, as in the case of a contract of sale where the property has passed to the buyer, the buyer's promise becomes absolute, and he cannot avoid his obligation to pay for the goods by reason of the breach of warranty. This principle is logically sound, and is followed in England and in many American courts.® In some States, however, to avoid circuity of Davison v. Von Lingen, mpra ; Behn v. Burness, 1 B. & S. 877 ; 3 B. & S. 751 ; L. 556. 2 Benjamin on Sales, § 887. 8 Poultou V. Lattimore, 9 B. & C. 259. * Pope V. Allis, 115 U. S. 363 ; 6 S. Ct. 69 ; H. & W, 595 ; Davison V. Von Lingen, supra ; Behn v. Burness, supra. s Frevman u. Knecht, 78 Pa. St. 141 ; H. & W. 607; Benjamin on Sales, § 888 ; and pp. 903, 904 (Bennett's 6th ed.). 11 162 ELEMENTS OP THE LAW OP CONTKACTS. action a warranty may be treated as a condition sub- sequent; and the vendee may avoid his obligation to pay by offering to return the goods, as in the case of conditions proper.^ § 11. Performance of Conditiona. Contractual obligation is the result of a voluntary act ■which determines the extent of that obligation. If, then, the promisor attaches any conditions precedent to his promise, he cannot be bound unless those conditions are performed.* This rule is fundamental, and is subject only to the rule de minimis non curat lex. There may, however, be a quasi-contractual obligation imposed by the law on a party who has received a benefit at the hands of another to pay for the benefit received, although there is no contractual obligation to pay therefor. In some States a peculiar doctrine exists, under which, if A. has substantially performed his contract with B. , and has attempted to perform in good faith, A. may recover the contract price of B., less the amount necessary to compensate B. for the damages caused by A.'s failure to perform the contract exactly.' Good faith is essen- tial; and a wilful refusal to perform will prevent A.'s recovery.* This doctrine is clearly erroneous, and can- not be supported either on contractual or quasi-contrac- tual theories. A. has no right to demand the contract price, because he has not performed the conditions of the contract ; while if B. 's obligation is quasi-contractual, 1 Bryant i*. Isburgb, 13 Gray, 607 ; H. & W. 609 ; Benjamin on Sales, uK supra. 2 Cutter I). Powell, 6 T. R. 320; Taylor v. Renn, 79 111. 181. 8 Nolaua v. Whitney, 88 N. Y. 648 ; W. 575 ; H. & W. 542 ; Hay- ward V. Leonard, 7 Pick. 181 ; Keeler v. Herr, 157 111. 57; 41 N. E. 750. * Van Clief v. Van Vechten, 130 N. Y. 571 ; 29 N. E. 1017 ; Elliott o. Caldwell, 43 Minn. 357 ; 45 N. W. 845. CONDITIONS. 163 it must be measured by the actual value of A. 's per- formance, not by the contract price less the damages caused by non-performance. The true rule is that the obligation in such cases, if any exists , is quasi-contractual and limited to the value of the benefit received.* § 12. Waiver of Conditions. Conditions precedent and subsequent may both be waived by the act of the party for whom they are imposed; and such waiver may be either express or implied. Waiver may take place by an acceptance of perform- ance that does not fulfil the conditions of the contract. When a contract has been performed in a substantial part, and the other party ha,s voluntarily accepted and received the benefit of the part performance, knowing that the contract is not being fully performed, such acceptance may amount to a waiver of his right to require complete performance as a condition of his liability, and render him liable to pay for what he has received.^ In like manner, such acceptance of performance will operate as a waiver of the condition subsequent, in case the failure to perform in accordance with the contract would be a breach entitling ' the injured party to be discharged from the contract.' A condition precedent is waived when the party for whose benefit the condition is imposed prevents its per- 1 Blood V. Wilson, 141 Mass. 25 ; 6 N. E. 362; Atkins v. Barnstable, 97 Mass. 428; Keener, Qnasi-Contracts, p. 313, note 2; Taylor v. Renn, 79 111. 181. 2 Sykes v. St. Cloud, 62 N. "W. 613 ; —Minn. — ; "Wiley v. Athol, 150 Mass. 426; 23 N. E. 311 ; Harber Bros. Co. v. Moffat Cycle Co., 151 111. 84 ; 37 N. E. 676. Cahen v. Piatt, 69 N. T. 348 ; "W. 608 ; Harber Bros. Co. v. Mof- fat Cycle Co., supra; Elarelock v. Geddes, 10 East, 555; L. 857. 164 ELEMENTS OP THE LAW OP CONTEACTS. formance.i This rule applies to two classes of cases: first, where the condition precedent cannot be performed without some positire act first being done by the party who sets up the condition; and second, where such party by an affirmative act prevents the performance of the condition. Thus in England a vendor of land is bound to tender a deed to the purchaser, but the purchaser is bound to prepare the deed for execution; and therefore failure of the purchaser to prepare the deed will excuse the tender of the deed by the vendor.^ Positive acts which will excuse the performance of conditions may be of various kinds. Thus the defend- ant may direct the plaintiff not to perform the condi- tion.' Or he may render its performance impossible or useless in various ways.^ Thus if A. and B. are engaged to marry each other, the promises to marry are mutually dependent, and either party must ordinarily show a request to marry and a refusal by the other in order to sustain an action for breach of promise. But if one of the parties marries a third person and is thereby dis- abled from marrying the other party, the latter may sue without making any request for the performance of the contract.^ ' St. Louis & P. R. R. Co. v. Kerr, 153 HI. 182; 38 N. E. 638 ; Mackay v. Dick, 6 A. C. 251. 2 Poole V. Hill, 6 M. & W. 835 ; L. 825. 8 Hinckley v. Pittsburgh Steel Co., 121 TT. S. 264; 7 S. Ct. 875. * Batterbury v. Vyse, 2 H. & C. 42 ; L. 835 ; Hinckley v. Pittsburgh Steel Co., supra; Wolf v. Marsh, 54 Cal. 228 ; H. & W. 560; Dela- mater n. Miller, 1 Cowen, 75 ; H. & W. 561 ; Woodberry v. Warner, 53 Ark. 488; 14 S. W. 67 ; H. & W. 574 ; Hale v. Trout, 35 Cal. 229 ; H. & W. 561 ; St. Louis & P. R. R. Co. v. Kerr, supra ; James v. Burchell, 82 N. T. 108 ; W. 609. 5 Short V. Stone, 8 Q. B. 358 ; L. 921 ; Caines v. Smith, 15 M. & W. 189 ; L. 926. CONDITIONS. 165 A refusal by one party to perform his part of the con- tract will operate as a waiver of conditions precedent in favor of the other party.^ The refusal, however, will operate as a waiver only in case it is an absolute renun- ciation of the contract, and is so treated by the other party. ^ Much confusion has arisen with regard to the eflEect of one party's refusal to perform upon the obliga- tion of the other party. In a contract between A. and B., if B.'s promise is dependent on, A.'s, performance by A. is a condition precedent to B. 's obligation. If, however, B.'s promise is not dependent on A.'s, B.'s obligation is not subject to such a condition precedent, but is subject to a condition subsequent, viz. : a renun- ciation of the contract by A., which entitles B. at his option to refuse to go on with the contract. In the first case, B.'s obligation does not arise until A. has per- formed; in the second case, B.'s obligation continues until he acts upon A.'s renunciation. The distinction is clear, but it has often been ignored. Thus in New Jersey it is held that where goods are to be delivered and paid for in instalments, default by either buyer or seller with reference to one instalment will not dis- charge the other party from his obligation to proceed with the contract, unless the conduct of the party in default be such as to evidence an intention to abandon the contract, or a design to be no longer bound by its 1 Hinckley v. Pittsburgh Steel Co., supra ; Greenup v. Stoker, 3 Gilm. 202 ; Jones v. Barkley, Doug. 684 ; L. 901 ; Laird v. Pirn, 7 M. & W. 474 ; L. 914 ; Cort v. Ambergate Ry. Co., 17 Q. B. 127 ; L. 937 ; Windmnller v. Pope, 107 N. Y. 674 ; 14 N. E. 436 ; H. & W. 555 ; Frost V. Knight, L. E. 7 Ex. Ill ; W. 386; Daniels v. Newton, 114 Mass. 530; W. 406; Burtis u. Thompson, 42 N. Y. 246; W. 419 ; Stokes V. Mackay, 41 N. E. 496 ; — N. Y. — . 2 Ripley v. M'Clure, 4Ex. 345; L. 927; Johnstone v. MiUing, 16 Q. B. D. 460; W. 391. 166 ELEMENTS OP THE LAW OP CONTEACTS. terms.* This is clearly erroneous, and the error arises from ignoring the distinction just mentioned. The tender of each instalment of goods in accordance with the terms of the contract is a condition precedent to the buyer's obligation to accept the goods; and the buyer is not bound to perform the contract unless such con- dition precedent is fulfilled.^ On the other hand, pay- ment for one instalment is not a condition precedent to the seller's obligation to deliver the next instalment; and failure to make such payment will discharge the seller from further obligation under the contract only when such failure amounts to a renunciation of the contract.' The distinction between the tender of each instalment of the goods as a condition precedent to the buyer's obligation, and the refusal to pay for the goods as a condition subsequent affecting the seller's obligation is overlooked by the New Jersey court. Nothing can excuse the performance of a condition but the act of the party for whose benefit it is imposed. Thus if a certificate of a third party is made a condition precedent to the promisor's obligation, a mistake by such third party, or lack of substantial reason for refusing to give the certificate, will not excuse its production.* Such a condition, however, is construed as meaning that the third party shall act in good faith.* Some courts 1 Gerli v. Poidebard Mfg. Co., 31 A. 401 ; — N. J. L. — . » Norringtou v. Wright, 115 U. S. 188; 6 S. Ct. 12; W. 593; H. & W. 584. » Mersey Co. v. Naylor, 9 A. 0. 434 ; W. 586. * Bradner v. Roffsell, 31 A. 387 ; — N. J. L. — ; Bowman v. Stewart, 30 A. 988 ; 165 Pa. St, 394 ; Woraley v. Wood, 6 T. R. 710; L. 472 ; Thumell v. Balbirnie, 2 M. & W. 786 ; L. 489 ; Clarke v. Watson, 18 C. B. N. S. 278 ; L, 572 ; Chicago & S. P. R. R. Co. u. Price, 138 U. S. 185 ; 11 S. Ct. 290 ; Martinsburg & P. R. R. Co. v. March, 114 U. S. 549 ; 5 S. Ct. 1035 ; Sweeney v. U. S., 109 U. S. 618 ; 3 S. Ct.344 ; Kihlberg V. U. S. 97 tr. S. 398; Gilmore v. Courtney, 158 111.432; 41 N.E. 1023. 6 Kihlberg v. U. S., supra; Sweeney v. U. S., supra ; Martinsburg & coiroiTiONS. 167 construe such a condition as meaning that the third party shall act reasonably,^ but this is clearly wrong. The object of the parties in inserting such conditions is to provide a mode of settling their disputes ; and if the court is to inquire into the reasonableness of the con- duct of the party who is to give the certificate, the whole question is thrown open once more to be deter- mined only by the lawsuit which the parties sought to avoid. § 13. Equitable View of Conditions. Courts of equity take a different view of conditions from courts of law. Thus in the case of a contract to convey land, tender of a conveyance to the land and to the estate therein described in the contract is a condi- tion precedent to the obligation of the purchaser to pay the purchase money.* In equity, however, if the differ- ence between the property contracted for and that ten- dered does not go to the essence of the contract, specific performance will be granted with compensation to the vendee for such difference. This equibable rule ap- plies only where equity has jurisdiction of the subject matter of the contract. In Kew York, and perhaps in other States where the distinctions between common law and equity are abolished, there is a marked ten- dency to extend this equitable doctrine to cases where it could never have been applied by a court of equity for the simple reason that a court of equity would not have P. R. R. Co. V. March, supra ; Chicago & S. T. R. R. Co. v. Price, supra; Chism V. Shipper, 51 N. J. L. 1. 1 Vought V. WiEiams, 120 N. Y. 253 ; 24 N. E. 195 ; Nolan v. Whit- ney, 88 N. Y. 648 ; W. 575 ; H. & W. 542 ; Crouch v. Gutman, 134 N. Y. 45 ; 31 N. E. 271. 2 St. Albans v. Shore, 1 H. Bl. 270; L. 464; WeUs v. Calnan, 107 Mass. 514 ; L. 615. 168 ELEMENTS OE THE LAW OE CONTRACTS. had jurisdiction of the subject matter. This tendency, however, has called forth a protest from one of the judges of the New York Court of Appeals.^ 1 " The tendency, called equitable, of courts to relieve persons from the performance of engagements deliberately entered into, and In legal effect, to make for litigants new contracts which they never entered into, and which it cannot be supposed they ever would have entered into, has been and is being carried to a length which cannot be justi- fied in reason." EoUett, C. J., in Crouch v. Gutmann, 134 N. Y. 45 ; 31 N. E. 271 ; H. & W. 543, note. THE CONSTEUCTION OP CONTEACTS. 169 CHAPTER V. THE CONSTEUCTION OF CONTEACTS. The extent of the obligation of a contract is deter- mined by the construction placed by the law on the con- duct of the parties which gives rise to the contract. From our definition of contractual obligation the act which creates that obligation must define the extent of the obligation. Given, then, the voluntary act from which a contract springs, we must always inquire into the meaning of that act. The general principle govern- ing the courts in their construction and interpretation of such legal acts is that such acts are to be regarded as bearing that construction which a reasonable man would place upon them. This broad general principle has given rise to numerous special rules which must here be considered. § 1. General Rules of Construction. The primary rule for the construction of language is that words are to be construed according to their natural meaning.^ The literal meaning of the words must yield to that meaning in which the parties must be regarded as hav- ing used those words. The ordinary meaning does not apply where the context shows that a different inter- pretation is proper. Where the conventional meaning of the words is not the same as their legal sense, the construction to be 1 Moran v. Prather, 23 Wall. 492. 170 ELEMENTS OP THE IlA.W OP CONTEACTS. placed upon the language depends on whether or not the parties had the law in contemplation in making the contract.* In any case the circumstances surrounding the parties at the time of making the contract must be taken into consideration to determine the meaning of the words used." It follows, therefore, that it may always be shown that the parties contracted with reference to a particular custom or usage.* Thus where A. sold B. four thousand shingles, evidence was received to show that the term " thousand " was ordinarily used in the lumber trade to mean two packs of shingles of certain dimensions, without regard to the number of pieces in the pack.* The custom must not, however, be absolutely repug- nant to or inconsistent with the contract,' or contrary to any rule of law." The existence of the custom or usage is admissible solely for the purpose of showing that such custom or usage formed part of the contract into which the parties entered, although not expressed in terras in such con- tract; it is not admissible for the purpose of varying 1 Per Lord Watson, M'Cowau v. Baine, (1891) A. C. 408. 2 Reed v. Ins. Co., 95 U. S. 23 ; H. & W. 511. " You are always entitled in regarding the construction and meaning of a written docu- ment to inquire into the circumstances under which it was written, not in order to find an interpretation by the writer of the language, but to ascertain from the surrounding facts and circumstances with reference to what, and with what intent, it must have been written." Kekewich, J., in Oliver v. Hunting, 44 C. D. 209. 8 Brown v. Byrne, 3 E. & B. 703 ; Hostetter v. Park, 137 IT. S. 30; 11 S. Ct. 1 ; Eobinson v. U. S., 13 WaU. 363 ; BHveu v. New Eng. Screw Co., 23 How. 420. 4 Soutier v. Kellermau, 18 Mo. 509 ; H. & W. 508. 6 Moran v. Prather, supra; Barnard v. Kellogg, 10 Wall. 383. ^ Crouch V. Credit Poncier, L. R. 8 Q. B. 374 ; U. S. v. Buchanan, 8 How. 83; Thompson v. Riggs, 5 Wall. 663. THE CONSTRUCTION OF CONTRACTS. 171 the contract actually made.^ It must therefore be shown that the party against ■whom the custom is alleged had knowledge thereof,' and that he contracted with refer- ence thereto.' The existence of a custom, however, if sufficiently general, may raise a presumption that the parties contracted with reference to it.* Several writings executed between the same parties, substantially at the same time, relating to the same subject matter, are to be construed together if they are parts of the same transaction.^ So where two parties simultaneously execute bonds to each other the bonds are to be construed together.' And in a contract made by correspondence the whole correspondence must be construed.' In many cases the courts in applying these rules have ignored the real nature of the rules. A rule of construction can only be applied when there is some- thing to construe. To determine the meaning of lan- guage used in one instrument by reference to another instrument executed at the same time and with reference to the same subject matter is perfectly proper. When, however, the court goes beyond this, and attempts to make one bilateral contract out of two unilateral con- tracts, on the alleged ground that the two instruments are to be "construed" together, the bounds of construc- tion are clearly ignored. Yet it is very common for courts to say that two unilateral contracts executed at 1 Barnard v. Kellogg, supra ; Oelricks v. Ford, 23 How. 49. 2 Irwiu V. Williar, 110 U. S. 499; 4 S. Ct. 160. * Bliven v. New Eng. Screw Co., supra. * Soulier v. Kellerman, supra ; Hostetter v. Park, supra ; Robinson V. XJ. S., supra. 5 Bailey u. R. R. Co., 17 Wall. 96 ; Joy v. St, Louis, 138 U. S. 1 ; 11 S. Ct. 243. « Holt V. Rogers, 8 Pet. 420. ' U. S. V. Bostwick, 94 U. S. 53. 172 ELEMENTS OP THE LAW OP CONTRACTS. the same time are to be "construed" as one contract.* It may or may not be legitimate, for example, to say that an absolute promise contained in a unilateral con- tract, such as a promissory note, shall be treated by the court as conditional upon the performance of some other promise by the payee; but to say that the court in lay- ing down such a rule is " construing " the contract, is to disregard the very meaning of the term "construction." In case the construction of an instrument is doubtful, the language is to be construed most strongly against the party ilsing it.^ If the language used is to be equally imputed to both parties, in case of doubt the construction is in favor of the promisor.' Where particular words are in conflict with the gen- eral intention of the parties as shown by the language of the entire contract, the general intention to be gathered from the whole contract will control the construction of the particular words. ^ Thus general words in an in- strument may be limited by other parts of the instru- ment which show that the general words have really a particular application. ° Where the language of a contract is of doubtful effect, the construction placed thereon by the parties is entitled to great weight, if it is not controlling; « but such con- struction cannot control the clear meaning of the con- tract.' The construction placed upon such contract by 1 As in Hunt v. Livermore, 5 Pick. 395 ; L. 757. S! Garrison v. V. S., 7 Wall. 688 ; Noonan v. Bradley, 9 Wall. 394. 8 Butler V. Wigge, 1 Wms. Saund. 66. * Ford V. Beech, 11 Q. B. 866 ; W. 323 ; Boardman v. Eeed, 6 Pet. 328. 6 Bock V. Perkins, 139 TJ. S. 628 ; 11 S. Ct. 677. 6 Topliff V. Topliff, 122 U. S. 121 ; 7 S. Ct. 1057 ; District of Colum- bia V. Gallagher, 124 U. S. 505 ; 8 S. Ct. 585 ; Chicago <;. Sheldon, 9 Wall. 50 ; Lowber v. Bangs, 2 Wall. 728 ; Cincinnati v. Cincinnati Gaslight Co., 41 N. E. 239 ; — Ohio St. — . ' Railroad Co. v. Trimble, 10 Wall. 367. THE CONSTEUCTION OF CONTEACTS. 173 the successors of those who made it, or by public officers, is entitled to much less weight.^ And the understand- ing of one party to the contract cannot affect its con- struction unless such understanding was induced by the conduct of the other party. ^ That construction of a contract is to be preferred which will render the contract enforceable. Verba sunt intel- ligenda ut res magis valeat quam, pereat. If, therefore, a contract provides for alternative methods of perform- ance, one of which is legal and the other illegal, the courts will enforce performance in the legal manner and disregard the alternative method. Thus where a note was given payable in Confederate money or in Tennessee money , it was held that payment in Tennessee money might be enforced, although the promise to pay in Con- federate money was unlawful.* So where the contract refers to a class of objects in general terms, and some of the objects in the class are lawful and others unlaw- ful, the agreement will be construed as applying only to those objects in regard to which the parties might legally contract.* So when a contract is valid by the law of one place and invalid by that of another, and there is doubt where the contract is to be performed, the contract will be construed as calling for performance in the place where it is valid.' And a clause in a contract providing for a forfeiture will in case of doubt be con- strued as allowing the avoidance of the executory part of the contract only, rather than the destruction of rights already vested by the execution of the contract." 1 Cincinnati v. Cincinnati Gaslight Co., supra. 2 Bank v. Kennedy, 17 Wall. 19. 8 Hanauer v. Gray, 25 Ark. 350. 4 Gaskell v. King, 11 East, 165 ; Harrington v. Kloprogge, 2 Brod. & B. 678. 5 Pritchard v. Korton, 106 U. S. 124; 1 S. Ct. 102. 6 Philadelphia, W. & B. R. E. Co. v. Howard, 13 How. 307. 174 ELEMENTS OP THE LAW OP CONTRACTS. Punctuation may be considered in determining the meaning of a contract;* but only as a last resort.^ If there is an inconsistency between written and printed words in an instrument, the written words are entitled to greater weight.' In the case of alternative and optional contracts, the person who is to perform has the right of election* unless some act is necessary on the part of the promisee as a condition precedent to the obligation of the con- tract.* Thus an agreement to accept from two to six hundred tons of a commodity gives the seller the option, because he must tender the goods before the buyer is bound to accept.' If the promisee has the election, he must notify the promisor.' Contracts of guaranty are to be construed liberally.' Contracts affecting public interests are to be construed in favor of the public' Contracts in restraint of trade are to be construed like ordinary contracts." § 2. Impossibility. A promise to do a thing in its nature impossible can- not, as we have seen, give rise to a contract. A man, however, may promise to-do a thing which is in its 1 Joy V. St. Louis, 138 tJ. S. 1 ; 11 S. Ct. 243. 2 Ewing V. Burnet, 11 Pet. 41. ' Robertson v. French, 4 East, 130; American Express Co. «. Pinckney, 29 111. 392 ; O'Rourke v. Burke, 44 Neb. 821 ; 63 N. W. 17. * Layton v. Pearce, 1 Doug. 1 5. 6 Thorn v. City Rice MiUs, 40 C. D. 357 ; Honck v. MuUer, 7 Q. B. D. 92; W. 578. 8 Wheeler v. New Brunswick, &c., R. R. Co., 115 U S. 29 ; 5 S. Ct. 1061, 1160. ' Vyse a. Wakefield, 6 M. & W. 442 ; L. 969; Honck v. MuUer, $upra. 8 Davis V. Wells, 104 TJ. S. 159. » Joy V. St. Louis, 138 TJ. S. 1 ; 11 S. Ct. 243. l» Mills u. Dunham, (1891) 1 Ch. 576. THE COKSTEUCTION OF CONTEACTS. 175 nature possible, but whicb is actually impossible at the time of the making of the contract, or which may subse- quently become impossible. If the impossibility exists at the time the contract is made, the effect of such impos- sibility depends upon the character of the contract. If the impossibility is due to the fact that two inconsistent descriptions are applied to the subject matter, and both those descriptions are essential, then, as we have seen, the contract is void, in the absence of any warranty that the descriptions are both correct.^ If one party, how- ever, warrants the correctness of the descriptions, the contract is binding on him, but voidable by the other party. ^ Strictly speaking, of course, the performance of a contract can never be legally impossible. If a thing cannot be done, there can clearly be no obligation to do it. There may, however, be an obligation to compen- sate the other party for the non-performance of a promise which cannot be performed.* The real ques- tion therefore is, is there any duty to pay damages for non-performance of a contract, where the performance proves impossible? This is purely a question of con- 1 Coaturier v. Hastie, 5 H. L. C. 673. 2 Behn a. Burness, 1 B. & S. 877 ; 3 B. & S. 751 ; L. 556 ; Davison V. Von Lingen, 113 U. S. 40 ; 5 S. Ct. 346 ; H. & W. 265 ; ante, p. 144. ' " There can be no question that a party may by an absolute con- tract bind himself or itself to perform things which subsequently become impossible, or pay damages for the non-performance, and such construction is to be put upon an unqualified undertaking where the event which causes the impossibility might have been anticipated and guarded against in the contract j or where the impossibility arises from the act or default of the promisor." Jackson, J., in Chicago, M. & St. P. Ey. V. Hoyt, 149 U. S. 1, 14, 15 ; 13 S. Ct. 779 ; W. 22, note. " I think it is not competent to a defendant to say that there is no binding contract merely because he has engaged to do something which is physically impossible." Brett, J., in Clifford v. Watts, L. E. 5 C. P. 577 ; W. 19. 176 ELEMENTS OF THE LAW OF CONTRACTS. struction.^ Impossibility has in itself no effect on the contract; but if the contract is construed as imposing an obligation to do X., then, clearly, failure to perform Y. cannot constitute a breach of contract. We have then to consider the cases in which the language of the con- tract is construed as not applying to some situation ■which renders its literal performance impossible. (a) Legal Impossibility. — A condition is ordinarily implied in a contract that if the law subsequently ren- ders the performance of the contract according to its terms unlawful or impossible, the promisor shall be discharged from his obligation. Thus where a paddock was taken by a railway company under an Act of Parliament authorizing the compulsory purchase of land for the railway, it was held that the erection of a- building by the railway company did not constitute a breach of a covenant by a previous lessee of the land with his lessor that neither the lessee nor his assigns would permit the erection of a building on the paddock. The covenant was held not to apply to the case in ques- tion.'^ So where the lessee of a wooden building agreed to rebuild the same in a suitable time in case of destruc- 1 " The words of a contract are to be construed to include all cir- cumstances which the parties actually contemplated at the time the contract was made, or which if they had thought properly about the matter they ought to hare contemplated. If something has happened which it is obvious that no person of intelligence could have contem- plated, the contract is construed as not applying to the circumstances thus produced." Lord Esher, in Harrison n. Muncaster, (1891) 2 Q. B. 680, 686 ; W. 28, note. " Where the event is of such a. character that it cannot be reasonably supposed to have been in the contempla- tion 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 particu- lar contingency which afterwards happens." Jackson, J., in Chicago, M. & St. P. Ry. V. Hoyt, supra. s Baily v. De Crespigny, L. E. 4 Q. B. 180; W. 15. THE CONSTEUCTION OF CONTRACTS. 177 tion by fire, and the building was burned, it was beld that the subsequent passage of a city ordinance forbid- ding the erection of a wooden building in that locality discharged the lessor from his obligation to rebuild.^ So where A. was under a contract of employment by a corporation, and the corporation was enjoined from carry- ing on business at the instance of the State , the contract was held to be discharged." Where work was begun on a building, under an agreement that no extras should be paid for unless agreed to in writing, and the city build- ing inspector ordered changes in the work, the defend- ant was held bound to pay for extra work caused by such orders, although there was no agreement in writ- ing in regard to them.' Where A. agreed that if he left B.'s service without giving two weeks' notice he should receive nothing for wages due, it was held that the arrest and imprisonment of A. dispensed with the requirement of notice.* A declaration of war discharges all contracts which require trading with the enemy for their performance. ° The fact that a foreign law renders the performance of a contract impossible is held to be of no consequence,' except in the case of a charter-party of a foreign ship, where impossibility caused by the law of the State to which the ship belongs is an implied condition dis- charging the contract.' (J) Existence of Subject Matter. — As we have 1 Cordes v. Miller, 39 Mich. 581 ; H. & W. 645. 2 People V. Globe Mut. Life Ins. Co., 91 N. Y. 174 ; W. 49. « Cnnningham v. Fourth Baptist Church, 159 Pa. St. 620 ; 28 A. 490. * Hughes V. "Wamsutta Mills, 11 Allen, 201 ; H. & W. 647. 6 Esposito V. Bowden, 7 E. & B. 763 ; Hanger v. Abbott, 6 Wall. 532, 536. 6 Barker v. Hodgson, 3 M. & S. 267. 7 Leake, Contracts, 615 j The Teutonia, L. E. 4 P. C. 171. 12 178 ELEMENTS OP THE LAW OE CONTKACTS. seen, the existence of the subject matter "of a contract is ordinarily construed as a condition precedent to the existence of the contract, unless it appears that the intention of the parties was to make a contract regard- less of the existence of the subject matter. And where the subject matter is in existence at the time the eon- tract is made, the continual existence of the subject matter may be an implied condition of the contract. Thus where there is an agreement for the use of a hall, the destruction of the hall by fire discharges the contract.^ So where A. leased a mine to B., and B. agreed to work the mine and pay so much a ton for the clay removed, and to remove a certain quantity yearly, it was held that the exhaustion of the clay discharged B. from his contract.^ But where the lessee of a coal mine covenanted absolutely to raise a given quantity of coal in each year, or to pay a minimum rent which should represent the minimum amount of coal agreed to be worked, the lessee was held bound to pay the minimum rent at all events.* Where there is an agreement for the sale of specific property, the existence of the property at the time per- formance Is due is an implied condition of the contract. Thus in a contract for the sale of specific goods, the destruction of the goods before delivery discharges the contract.^ So where there is a contract for the sale of a crop to be grown on specified land, and the crop fails, the contract is discharged. ° But this rule does not apply 1 Taylor v. Caldwell, 3 B. & S. 826. 2 Clifford V. Watts, L. E. 5 C. P. 577; W. 19; Walker v. Tucker, 70 111. 527. 8 Bute V. Thompson, 13 M. & W. 487. * Dexter v. Norton, 47 N. Y. 62; H. & W. 649; McMillan v. Fox, 90 Wis. 173; 62 N. W. 1052. 6 Howell V. Coupland, 1 Q. B. D. 258 ; W. 25 THE CONSTKtrCTION OP CONTEACTS. 179 where the contract is for a certain quantity of the article without specifying the land on which it is to be raised.-' Nor does it apply where one who has con- tracted to sell goods is unable to manufacture them on account of an accident to his machinery." When one contracts to furnish labor and materials, and to construct a chattel or to build a house on the land of another, the destruction of the chattel or build- ing before the time fixed for its completion will not excuse him.* Nor will a latent defect in the soil,^ nor the necessity of draining the land, ° be a sufficient excuse. So where one contracts to build a well according to cer- tain specifications, and the specifications call for a curb which is inadequate for the purpose, the inadequacy of the curb does not affect the obligation to build the well.° In such cases the impossibility in question has no effect on the contract because the co;itract is con- strued as absolute. But where A. contracts to make repairs on B.'s house, or to furnish a part of the work and materials used in the erection of B.'s house, and the destruction of the house renders performance of the con- tract impossible, A. may recover pro rata for the work done under his contract.' The English courts in such 1 Anderson v. May, 50 Minn. 280; 52 N. "W. 530 ; "W. 40; H. & W. 639. 2 Snmmers v. Hibbard, 153 HI. 102; 38 N. E. 899. * Adams a. Nichols, 19 Pick. 275; School District v. Dauchy, 25 Conn. 530. « Dermott v. Jones, 2 Wall. 1 ; H. & W. 641 ; School Trustees v. Bennett, 27 N. J. L. 513. 6 Stees V. Leonard, 20 Minn. 494 ; W. 33. 6 Lea-ritt v. Dorer, 32 A. 156 ; — N. H. — . 7 Cleary v. Sohier, 120 Mass. 210; Butterfield v. Byron, 153 Mass. 517; 27 N. E. 667 ; W. 41 ; HoUia v. Chapman, 36 Tex. 1 ; Clark v. Franklin, 7 Leigh, 1; Schwartz v. Saunders, 46 111. 18; Rawson v. Clark, 70 Bl. 656; Clark y. Busse, 82 Bl. 515. 180 ELEMENTS OP THE LAW OP CONTKACTS. cases allow no recovery.' If any recovery is to be •allowed in such cases it must be on the ground of an implied agreement by the owner of the building that he will pay ;pro rata for the actual performance of the work in case the building is destroyed. In some of the decisions, however, the ground on which recovery is allowed seems to be regarded as quasi-contractual;^ which seems clearly erroneous.^ (c) Bailment Contracts. — The obligation arising from a bailment is not necessarily contractual, but springs from the undertaking of the bailee. Where, however, there is a contract of bailment, the obligation of the contract will not, it seems, be construed as difEer- ing from the obligation imposed by the undertaking,* unless it affirmatively appears that the contract is in- tended to increase or to diminish the obligation which would otherwise exist. ^ Thus the obligation of a com- mon carrier to receive and carry goods is not con- tractual, but is imposed by law. That obligation is to receive goods offered to him and to carry them safely to their destination unless prevented by the act of God, or of a public enemy. This obligation may be modified by contract so as to increase or to diminish the carrier's liability; but it must appear that the contract was intended to alter the common law obligation. In accordance with this principle it has been held that the charterer of a ship is not liable where the ship 1 Appleby v. Myers, L. E. 2 C. P. 651 ; Anglo-Egyptian Nav. Co. V. Rennie, L. R. 10 C. P. 271 ; and see Brumby v. Smith, 3 Ala. 123. 2 Cook V. McCabe, 53 Wis. 250 ; 10 N. W. 507. ^ See Keener, Quasi -Contracts, 254. * Field t!. Brackett, 56 Me. 121 ; Seevers v. Gabel, 62 N. W. 669; — la. — ; contra, Harvey ». Murray, 136 Mass. 377. 5 As in Wilmington Transportation Co. v. O'Neil, 98 Gal. 1 ; 32 P. 705 ; H. & W. 654. THE CONSTEtJCTION OF CONTEACTS. 181 is destroyed by the act of God ; ^ but that if a bond is given conditioned for the return of the vessel, the obligors are liable on the bond notwithstanding such destruction of the vessel.^ This distinction between the contract of bailment, or charter-party, and the bond gjven for the performance of the contract, seems at least of doubtful validity. The United States Supreme Court has held that sureties on a collector's bond conditioned for the payment of the money received were not liable where the money was captured by a public enemy, on the ground that the collector was a bailee, and that the bond was really conditioned only for the performance of his duties as bailee, so that there had been no breach of condition.^ (d) Personal Conteacts. — Contracts involving per- sonal performance by either of the parties, or by a third person, which can only be executed by the particular individual , are subject to the implied condition that the person shall be able to perform the contract; and his death or disability discharges the contract.* The death of the employer terminates a contract of employment, as well as the death of the employee.^ And the dissolu- tion of a corporation terminates its contracts with its employees ; ° unless the dissolution of the corporation is voluntary.' And the death of one of two joint con- tractors puts an end to the contract where the contract calls for personal performance by both.^ 1 Ames V. Belden, 17 Barb. 513. 2 Steele v. Buck, 61 lU. 343. 8 U. S. V. Thomas, 15 Wall. 337. i Spalding v. Eosa, 71 N. Y. 40; W. 47; H. & W. 655; Boast v. Firth, L. K. 4 C. P. 1 ; Eobinson v. Davison, L. E. 6 Ex. 269. 6 Lacy V. Getman, 119 N. Y. 109 ; 23 N. E. 452 ; W. 54 ; Yerrington V. Greene, 7 E. 1. 589 ; Whincup v. Hughes, L. R. 6 C. P. 78 ; Farrow v. Wilson, L. E. 4 C. P. 744. 6 People V. Globe Mut. Life Ins. Co., 91 N. Y. 174 ; W. 49. 7 Kalkhoff V. Nelson, 62 N. W. 332 ; — Minn. — . 8 Landa v. Shook, 30 S. W. 536 ; — Tex. — . 182 ELEMENTS OP THE LAW OP CONTEACTS. The prevalence of cholera in a certain place has been held to justify a laborer in refusing to work in that place. ^ But the prevalence of small-pox in a school dis- trict was held not to discharge the school district from liability to a teacher hired for a given period where the district had closed the schools during that period on account of the small-pox in the vicinity. '^ § 3. Reasonableness. Where a contract calls for the performance of a cer- tain act and the contract is silent as to the time or manner of performance, the contract is construed as im- posing an obligation to act reasonably. Thus, where no time is specified in a contract for its performance, the contract is construed as calling for performance within a reasonable time.' A reasonable time means a reason- able time under the particular circumstances of the case. Thus, where a bill of lading specified no time for the discharge of the cargo of a ship, it was held that the consignees were bound to discharge the cargo within a reasonable time, and that the consignees were not lia- ble for a delay in unloading caused by a strike of dock laborers, over which the consignees had no control.* Whether a strike by the servants of the consignees would be a sufficient excuse for the delay is perhaps uncertain. On principle, it would seem that such a strike ought to be a sufficient excuse, if the consignees were unable to obtain a sufficient number of laborers on reasonable terms. It has been held in New York, how- 1 Lakeman v. PoUard, 43 Me. 463 ; W. 58. 2 Dewey v. Alpena School District, 43 Mich. 480 ; 5 N. W. 646 ; W. 60. " Minneapolis Gaslight Co. v. Kerr-Murray Mfg. Co., 122 U. S. 300; 7 S. Ct. 1187. * Hick V. Raymond (1893), A. C. 22. THE CONSTEUCTIOK OP CONTKACTS. 183 ever, that a common carrier is not excused for delay in the delivery of goods, although no time was set for their delivery, where the delay is caused by a strike of the laborers employed by such carrier.* Possibly a distinc- tion may be drawn between the case of a common carrier and that of an ordinary contractor, on the ground that, as a matter of public policy, the risk of a strike should be borne by the carrier, and not by the shipper.^ It is established that, if the delay is caused by the active interference of the strikers, it is excused;' and there seems to be no valid reason for distinguishing between an impossibility caused by the violence of the strikers, and an impossibility caused by their refusal to work on reasonable terms, unless the reason of public policy just mentioned be sufficient.* When a contract provides for the payment of money as soon as certain property of the debtor is sold, the debtor is bound to pay within a reasonable time, unless it is clear that the obligation is purely contingent.* The words " with all despatch as customary " in a charter-party mean that the charterer is not responsible for delay due to impediments arising from the custom of the port,' but is liable for delay caused by extraneous impediments such as a strike.' Where the promisor's obligation is conditional upon his satisfaction with the performance of the promise, 1 Blackstock w N. Y. & B. E. R. Co., 20 N. Y. 48. 2 1 Northwestern Law Rev. 131. 8 Geismer v. Lake Shore & M. S. R. Co., 102 N. Y. 563 ; 7 N. E. 828; Haas v. Kansas City, &c. R. Co., 81 Ga. 792; 7 S. E. 629; Pitts- burg, Ft. W. & C. R. R. Co. V. Hazen, 84 111. 36. * 1 Northwestern Law Rev. 131. 6 Nunez v. Dautel, 19 Wall. 560; Noland v. Bull, 24 Or. 479; 33 P. 983 ; Fisher v. Chadwick, 34 P. 899 ; — Wy. — . ■i Postlethwaite v. Freeland, 5 A. C. 599. T Castlegate Stp. Co. v. Dempsey (1892), 1 Q. B. 54; W. 31. 184 ELEMENTS 01" THE LAW OP CONTRACTS. the condition will sometimes be construed as meaning that the promisor shall act reasonably. If the contract in question does not involve the personal equation of the promisor, the tendency of the courts is to construe the contract as meaning that the promisor shall act reasonably.^ If the personal taste of the promisor is concerned, the contract will be construed literally, and the promisor's obligation will be construed as condi- tional on his actual satisfaction.^ Thus in a contract for household furniture ,' or for a suit of clothes ,* or for a work of art,' or for a dwelling-house heater, ° to be paid for if satisfactory to the promisor, actual satisfac- tion has been held necessary. The parties, however, may agree in any case that the promisor shall have an unqualified option.' The promisor must always act in good faith ; * and in New York it is held, contrary to the general rule, that he must act reasonably.' § 4. The Essence of the Contract. Many contracts contain more than one promise, even though there is apparently only a single promise involved. Thus a promise to do something at a par- 1 Hawkins v. Graham, 149 Mass. 284 ; 21 N. E. 312 ; W. 6 ; Duplex Safety Boiler Co. u. Garden, 101 N. Y. 387 ; 4 N. E. 749 ; H. & W. 546. 2 Duplex Safety Boiler Co. v. Garden, supra ; Hawkins v. Graham, supra; Walter A. Wood, &c. Co. v. Smith, 50 Mich. 565; 15 N. W. 906. " McCarren v. McNuIty, 7 Gray, 139. * Brown v. Foster, 113 Mass. 136. ' Zaleski v. Clark, 44 Conn. 218. 6 Adams Radiator Works v. Schrader, 155 Pa. St. 394; 26 A. 745- H. & W. 549. ■J Walter A. Wood, &c. Co. v. Smith, supra ; Hawkins ,.. Graham, supra; Singerly v. Thayer, 108 Pa. St. 291 ; 2 A. 230; W. 11. ' Singerly <,. Thayer, supra; Adams Radiator Works v. Schrader, supra. 9 Doll V. Noble, 116 N. Y. 230; 22 N. E. 406; W. 9. THE CONSTKTJCTION OF CONTKAOTS. 185 ticular time or place, or in a particular manner, may often be resolved into two component, promises: a promise to do the thing, and a promise to do it at a certain time or place, or in a particular manner. So a contract may provide for the sale of a particular article, and two descriptions may be given to the article ; in which case there may or may not ' be a promise that the article shall answer both descriptions. In every case the question arises, What is the essence of the contract, and what promises or descriptions are merely subsidiary to the main object of^the contract? This is a question of construction in every case, and the courts are not always agreed, but there are certain general principles of construction which are usually adhered to. When a contract provides that something shall be done at a particular time, and the time is not of the essence of the contract, equity will seek to give effect to the main object of the contract, notwithstanding a failure of performance as to time. Time will not be regarded as of the essence of the contract, unless it affirmatively appears that the parties so regarded it.^ Time is of the essence of the contract wherever the parties so stipulate ; ^ and the nature of the contract may make the time of performance essential. Thus, in life insurance policies the time fixed for the payment of premiums is of the essence of the contract. ° So in the case of a contract for the sale of property subject to rapid fluctuations in value, such as mineral property.* In mercantile contracts the time of shipment or delivery 1 Secombe v. Steele, 20 How. 94 ; Brown v. Guarantee Trust Co., 128 U. S. 403; 9 S. Ct. 127. 2 Cheney v. Libby, 134 TJ. S. 68; 10 S. Ct. 498. » New York Life Ins. Co. v. Statham, 93 IT. S. 24 ; Klein v. Ins. Co., 104 U. S. 88. * Waterman v. Banks, 144 U. S. 394 ; 12 S. Ct. 646. 186 ELEMENTS OP THE LAW OP CONTRACTS. of goods is part of the essential description of the goods.-' The avowed object of the purchaser may ren- der time of the essence of the contract when it would not be otherwise.^ In charter-parties, the specification of a fixed time for the ship to be in a certain place, or to sail for a certain port, or to be in a certain condition, will ordinarily niake time of the essence of the con- tract.* If, however, the time is not definitely fixed, but is described in general terms, it is not ordinarily treated as essential.* Fixing a time for the payment of money does not ordinarily have the same effect as fixing a time for the delivery of goods. " December wheat " is an entirely distinct thing from " January wheat " in the eyes of merchants; but December dollars do not differ essentially from January dollars.* The effect of inconsistent descriptions of the subject matter of a contract has already been explained in the chapter on Conditions. We have here to consider in what cases an inconsistency has been regarded as material. This is a question of construction, for the parties may make whatever they choose material; the province of the court is simply to determine the mean- ing of their contract. Many cases of mistake, where the mistake has been in attributing to the subject 1 Bowes u. Shand, 2 A. C. 455; Norrington v. Wright, 115 U. S. 188; 6 S. Ct. 12; W. 593; H. & W. 584; Hoare v. Eeiinie, 5 H. & N. 19 ; L. 549 ; Cleveland Rolling Mill v. Rhodes, 121 U. S. 255 ; 7 S. Ct. 882 ; Honck i'. MuUer. 7 Q. B. D. 92 ; W. 578 ; Cresswell Ranch Co. v. Martindale, 27 U. S. App. 277 ; 63 P. 84 ; 11 C. C. A. 33 ; contra, Gerli V. Poidehard Mfg. Co., 31 A. 401 ; — N. J. L. — . 2 Tilley v. Thomas, L. R. 3 Ch. 61. » Glaholm v. Hays, 2 M. & G. 257 ; L. 492 ; Behn v. Burness, 1 B & S. 877 ; 3 B. & S. 751 ; L. 5.56 ; Ollive v. Booker, 1 Ex. 416 ; L. 501. * Tarrabochia K. Hickie, 1 H. & N. 183 ; L. 681 ; Preeman v. Taylor, 8 Bing. 124 ; L. 483 ; contra, Lowber i;. Bangs, 2 Wall. 728. 6 See Mersey Co. v. Naylor, 9 A. C. 434 ; W. 586. THE CONSTRUCTION OP CONTEACTS. 187 matter of the contract some quality which it does not possess, involve simply the question whether the par- ties have regarded that quality as part of the essential description of the subject matter or not. The existence of the subject matter of the contract is construed as a condition of the contract,* unless one party warrants the existence of the subject matter, when it becomes a condition only of the other party's obliga- tion.^ If a particular quality is attributed to the sub- ject matter by the parties, and that particular quality goes to the essence of the contract, bhe result is the same. In the following instances the failure of the subject matter to possess some given attribute has been held to go to the essence of the contract. A substantial variance- between the quantity of land in a given tract, and the quantity specified in the con- tract has been held to go to the essence.* A substantial difference in the title to property has been held to go to the essence in many cases.* In other cases a substan- tial difference in title has been held immaterial where the difference between the supposed and the actual title arose from a mistake of law,^ — a doctrine which seems erroneous. The quality of land was held an essential part of the description where the land was supposed to contain coal, but did not.' Whether in the sale of a 1 Couturier o. Hastie, 5 H. L. C. 673 ; Strickland v. Turner, 7 Ex. 208 ; Alien v. Hammond, 1 1 Pet. 63. 2 Davison v. Von Lingen, 113 U. S. 40; 5 S. Ct. 346; H. & W.265. 8 Lawrence v. Stagg, 8 E. I. 256; Newton i;. Tolles, 19 A. 1092; — N. H. — . < Vamum a. Highgate, 65 Vt. 416; 26 A. 628; Bingham v. Bing- ham, 1 Ves. Sr. 126; Cooper v. Phibbs, L. E. 2 H. L. 149 ; Martin a. McCormick, 8 N. Y. 331 ; Ankeny v. Clark, 148 U. S. 345 ; 13 S. Ct. 617. « Clapp V. Hoffmann, 159 Pa. St. 531 ; 28 A. 362 ; Hamblin v. Bishop, 41 F. 74; Leal v. Terbush, 52 Mich. 100; 17 N. W. 713. 6 Pritzler v. Eobinson, 70 la. 500; 31 N. W. 61. 188 ELEMENTS OP THE LAW OF CONTKACTS. chattel a mere supposition that the chattel possesses a particular quality is to be regarded as an essential part of the description or not, is. rendered somewhat doubt- ful by the authorities. On principle, if the parties contract for the sale of a specific thing, the mere sup- position that that thing possesses a particular qual- ity is immaterial unless that quality is expressed in the description of the thing sold. Thus, where a diamond was sold for a dollar, in ignorance of the real character of the stone, the mistake as to the quality of the stone was held immaterial'.^ So where a note was sold, secured by a deed of trust, and the parties erroneously supposed that the deed gave a first lien on some stock, their mistake was held immaterial.^ On the other hand, where a cow which was supposed to be barren was sold, and proved to be a breeding cow, of much greater value, the Michigan court held that the mistake went to the essence of the contract, although it did not appear that the contract specifically called for a barren cow.' The confusion that has arisen in the cases is due to a misun- derstanding of the efiiect of mistake upon a contract. Mistake, in itself, as will be shown in the chapter on Eescission of Contracts, has no legal effect on contracts. There are many cases where mistake appears to produce legal results, but as far as contracts are concerned these results may all be shown to be due to some other cause. What the parties to a contract thought is of conse- quence only in so far as it concerns what they did. Tlie province of the court is only to interpret the acts of tlie parties. When the court goes beyond the interpreta- tion of legal acts, it is no longer concerned with the construction of contracts, but is in reality enforcing irrecusable obligations. 1 Wood V. Boynton, 64 Wis. 265 ; H. & W. 257. 2 Sample i-. Bridgforth, 16 S. 876; — Miss. — . 8 Sherwood v. Walker, 66 Mich. 568 ; 33 N. W. 919 ; H. & W. 249. THE CONSTKTJCTION OF CONTEACTS. 189 § 5. Penalties and Liquidated Damages. A contract may provide that upon a breach by one party he shall pay the other a fixed sum. This sum may be either a penalty, imposed to secure the per- formance of the contract; or it may be intended as an assessment in advance of the amount of damage that may be caused by the breach of contract. Whether the fixed sum is a penalty or liquidated damages is a question of construction. In the case of an ordinary bond with condition subse- quent, the bond in form acknowledges the existence of a debt from the obligor to the obligee, and provides that the obligation shall be discharged by performance of the condition. The common law courts used to enforce such bonds strictly in accordance with their terms ; and an action of debt would lie for the amount of the bond upon the non-performance of the condition. In equity, however, the bond was regarded simply as security for the performance of the condition, and the obligee was not allowed to recover more than the actual damage he had sustained by the breach of condition. The equitable view now prevails in the common law courts , although the procedure in such cases varies considerably in different jurisdictions. In the case of other contracts the use of the term "penalty" or " liquidated damages" is of little conse- quence. * The question is one of the intention of the parties in every case, and the following principles are applied in the construction of such contracts. The fact that the damages are difficult of assessment tends to make the courts regard the fixed sum as liqui- 1 Kemble v. Farren, 6 Bing. 141 ; Law v. Pedditch (1892), I Q. B. 127; Bignall v. Gould, 119 U. S. 495; 7 S. Ct. 294; Hennessy v. Metz- ger, 152 111. 505 ; 38 N. E. 1058 ; Sanford v. First Nat. Bank, 63 N. W. 459 ; — la. — . 190 ELEMENTS OE THE LAW OF CONTEACTS. dated damages.* This rule applies where there are various stipulations of uncertain value.'' But where there are several stipulations in an agreement, the damages for the non-performance of some of which are easily ascertainable by a jury, and the damages for the non-performance of the others cannot easily be meas- ured, a sum named as damages for breaSh of any stipula- tion is treated as a penalty.* The fact that the damages fixed appear to be excessive does not in itself make the sum a penalty.* If the sum fixed is to be paid as damages on non-payment of a smaller sum, it is pre- sumptively a penalty ; ^ but a provision that a debt pay- able in instalments shall become due on non-payment of any instalment is not a penalty, for it merely affects the time of performance of the contract.^ § 6. Notice. Where a party stipulates to do a certain thing in a certain specific event which may become known to him, or with which he can make himself acquainted, his obligation is not conditional upon notice unless so stipulated. Thus where A. made a lease to B., and cov- enanted to keep the buildings on the demised premises in repair, having the right to enter to view the premises, A. was held bound to repair ,the buildings without notice.' So where A. promises to pay B. a certain sum when B. marries C. ; ' or to pay B. a certain sum when 1 Gobble V. Linder, 76 111. 157 ; Kemble v. Farren, supra. " Reynolds v. Bridge, 6 E. & B. 528. " Kemble v. Earren, supra; Higginson v. Weld, 14 Gray, 165; Lampman v. Cochran, 16 N. Y. 275 ; Trower v. Elder, 77 111. 452. * Reynolds v. Bridge, 6 E. & B. 528. 6 Kemble v. Earren, supra. Wallingford v. Mutual Society, 5 A. C. 685. ' Hayden v. Bradley, 6 Gray, 425 ; W. 4. 8 Beresford v. Goodrouse, 1 Rolle's Abr. 462, pi. 3, 4 ; L. 965. THE COKSTKUCTION OP CONTKACTS. 191 C. does a certain act; * or to save B. harmless from certain suits. ^ If, hov(ever, one promises to do a thing under cir- cumstances or conditions which are within the peculiar knowledge of the opposite party, his promise is con- strued as conditional upon his receiving notice to per- form. Thus, where a lessor covenants to repair, his covenant is conditional upon notice by the lessee, be- cause the lessor has no means of knowing what repairs are necessary, not having the right to enter the premises. ° So where A. agrees to pay B. a certain sum when B. shall return from London, B. must give notice of his return.^ So a covenant by A. that he will not do any act to prejudice an insurance policy which B. may take out on A. 's life in any insurance company in Lon- don is conditional upon notice that such insurance has been effected.' 1 Haverleigh v. Leighton, Jenkins, 311 ; L. 963; Fowle v. Haggar, Cro. Jac. 492 ; L. 966. 2 King V. Atkins, 1 Siderf. 442 ; L. 968. 8 Makin v. Watkinson, L. E. 6 "Ex. 25 ; L. 978 ; Hugall v. McLean, 53 L. T. 94 ; W. 3. * Gable v. Morse, 1 Bulstrode, 44 ; L. 963. 6 Vyse V. Wakefield, 6 M. & W. 442; L. 969. 192 ELEMENTS OP THE LAW OP CONTBACTS. CHAPTEE VI. THE STATUTE OP FEAtTDS. § 1. Introductory. The purely formal part played by the court in the trial of cases was one of the peculiarities of primitive English procedure which has already been mentioned. One party or the other was ordered to prove his case, and, if certain forms were satisfied, the judgment of the court was given in favor of the party complying with such formal requirements. Originally, as we have seen, the only contracts which the courts recognized were real contracts , where the defendant had received a quid pro quo, and formal contracts, where the defendant's obliga- tion was established by his own deed. At first the writ- ing, and afterwards the defendant's seal, was regarded as the only means of proving the defendant's promise. The requirement of the seal as an essential part of a deed had the effect, of course, to make a mere written promise of no greater force than an oral promise; and both oral and written promises alike came to be enforced only by the new and constantly developing action of assumpsit. As this action originally sounded in tort, and as consideration came to be its essential feature, the form of the promise was of no consequence. Promises could be made by writing, by word of mouth, or by eon- duct without words, and were of equal effect in sustain- ing the action of assumpsit. Negotiable instruments alone were required to be in writing, and this only by THE STATUTE OP PKAUDS. 193 the custom of merchants, which had little influence on the general development of contract law. The utter absence of any formal requirements for con- tracts enforceable by the action of assumpsit seems to have made it very difi&cult for the courts to determine the truth in cases where one party set up an oral con- tract, and the other denied its existence. Accordingly, in 1676, an act was passed for the prevention of frauds and perjuries. This act was the celebrated Statute of Frauds, 29 Car. II. c. 3, and has been most productive of litigation. In whole or in part this statute is gen- erally in force to-day throughout the United States. Two sections of the act affect contracts the fourth and the seventeenth. The fourth section is as follows : — "No action shall be brought whereby to charge any executor or administrator upon any special promise, to answer damages out of his own estate; or whereby to charge the defendant upon any special promise to answer for the debt, default, or miscarriages of another person ; or to charge any person upon any agreement made upon consideration of marriage; or upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them ; or upon any agreement that is not to be performed within the space of one year from the making thereof; unless the agreement upon which such action shall be brought, or some memorandum or note thereof, shall be in writing, and signed by the party to be charged therewith, or some other person thereunto by him lawfully authorized." The seventeenth section is as follows : — "No contract for the sale of any goods, wares, or merchandises for the price of £10 sterling, or upwards, shall be allowed to be good, except the buyer shall accept part of the goods so sold, and actually receive 13 194 ELEMENTS OP THE LAW OP CONTRACTS. the same, or give sometliing in earnest to bind the bar- gain, or in part of payment, or that some note or memo- randum in writing of the said bargain be made and signed by the parties to be charged by such contract, or their agents thereunto lawfully authorized.'' We have then to consider, first, to what contracts these sections apply; secondly, what is required by the statute in the case of such contracts; and thirdly, the effect of the statute upon contracts which do not conform to its requirements. § 2. Contracts within the Statute. And first as to the contracts included in the fourth section. (a) Fourth Section. (1) Executors and Administratoes. — The first class of contracts is described as follows : " Any special promise by any executor or administrator to answer damages out of his own estate." Executors and admin- istrators are liable for claims against the estates of their decedents only in their representative capacity. Judg- ment against an executor as such is de bonis testatoris. Executors and administrators, however, may bind them- selves personally to pay such claims, and the statute requires such contracts to be in writing. To be within the statute the promise must be to answer for some lia- bility of the estate; hence a promise by an executor to pay an heir for forbearing to contest the will of the testator need not be in writing.^ (2) Guaranties. —"Any special promise to answer for the debt, default, or miscarriage of another." This includes all contracts by which any person agrees to be responsible for any civil liability imposed by another. In every case within the statute there must be three par- 1 Bellows V. Sowles, 57 Vt. 164 ; H. & W. 110. THE STATUTE OF FEAtTDS. 195 ties inTolved: C, the creditor; B., the principal debtor; and A., the guarantor. A promise, to fall within the statute, must be a promise by A. to C. to answer to C. for B.'s liability to C. There must be a real liability of B. to C. Hence a promise to answer for the " debt " of a married woman at common law is not on principle within the statute ; though it has been held otherwise.^ If credit is given to a married woman on the strength of her separate estate, however, the statute applies.^ The guaranty of an infant's contract is within the statute, because an infant's contracts are not void, but only voidable.* The promise must be a promise to pay the debt, and not to pay a certain sum for a collateral act. Thus, a promise to pay the plaintiff in a suit £50 to withdraw his suit need not be in writing.* There is a conflict of authority as to whether a promise of indemnity is within the statute. If A. in- duces B. to go surety for Q. on an obligation to D., it is held by some courts that A.'s promise to indemnify B. is within the statute.^ The better rule, however, is that such contracts are not within the statute, because A.'s promise is really a promise to B. to pay any claim that D. may have against B. ; so that the promise is to the debtor, B., and not to the creditor, D.* It is in 1 Maggs V. Ames, 4 Bing, 470; 1 M. & P. 294 ; Miller v. Long, 45 Pa. St. 350. ^ Connerat v. Goldsmith, 6 Ga. 14. 8 Dexter v. Blanchard, 11 Allen, 365 ; Scott v. Bryan, 73 N. C. 582 ; Brown v. Farmers', &c. Bank, 31 S. W. 285 ; — Tex. — ; contra, King V. Summitt, 73 Ind. 312. 4 Read v. Nash, 1 Wils. 305. 6 May V. Williams, 61 Miss. 125 ; H. & W. 113 ; First Nat. Bank v. Bennett, 33 Mich. 520 ; Draughan v. Bunting, 9 Ired. 10. 6 Thomas v. Cook, 8 B. & C. 728 ; Guild v. Conrad (1894), 2 Q. B. 885, where the promise was to indemnify the plaintiff from liability if 196 ELEIIENTS OP THE LAW OF CONTEACTS. reality not the contingent liability of C. to B., but the liability of B. to D. for which A. agrees to be answerable toB. If the effect of the promise is to discharge the debtor's liability, it is not within the statute, which contem- plates that the primary liability of the debtor shall be supplemented by the secondary liability of the guarantor. Hence if a novation takes place by which A^. agrees to pay B.'s debt to C. in consideration that C. will dis- charge B. and accept A. as his debtor instead, A.'s promise is not within the statute.^ If the promise is made to the debtor, it is not within the statute. The promise in such a case imposes a direct and original obligation on the promisor to pay the amount of the debt, and the fact that the debtor designates that that amount shall be paid to the creditor has no different effect from a direction that the promisor shall deposit the money in a bank. The promise in such a ease is not to answer for the liability of another, but to perform a certain act which has been designated by the debtor as the consideration for some promise or act on his own part. Thus, if A. sells property to B., and B. promises, in consideration of the sale, to pay A.'s debt to C, the statute does not apply to B.'s promise.^ It is often said that if the moving consideration for a promise to pay money be the liability of a third per- son, the promise must be in writing; but if there be a new consideration moving from the promisee to the he would accept certain bills of exchange ; Aldrich v. Ames, 9 Gray, 76 ; Anderson v. Spence, 72 Ind. 315 ; Jones v. Bacon, 145 N. Y. 446 ; 40 N. E. 216. 1 Eden v. Chaffee, 160 Mass. 225 ; 35 N. E. 675 ; Langdon v. Hughes, 107 Mass. 272. 2 Wilson V. Bevans, 58 HI. 232; Gold v. Phillips, 10 Johns. 412; Townsend v. Long, 77 Pa. St. 143 ; Eirst Nat. Bank v. Chalmers, 144 N. Y. 432 ; 39 N. E. 331 ; Neagle v. Kelly, 146 Dl. 460 ; 34 N. E. 947. THE STATUTE OE EEATJDS. 197 promisor , that makes it a new agreement, which is not within the statute. This doctrine is frequently laid down by the courts, but has been justly criticised. The statute applies to any special promise to answer for the debt, default, or miscarriage of another. Neither the motive inducing the promise, nor the consideration therefor, can determine whether the promise is in reality to answer for the liability of another. There are three classes of cases, however, which are said to come under the new consideration rule, which can easily be explained. Where A. owes B. and B. owes C, an agreement that A. shall pay to C. the debt due from him to B. is clearly not within the statute; A.'s prom- ise is to pay his own debt, not the debt of another.^ Again, where A. contracts a debt to B., which he agrees to pay by paying C.'s debt to B., the contract is not within tlie statute, for the same reason. Thus where B. surrenders to A. an insurance policy held by B. as security for a debt due from C. to B. , in order that A. may collect the money on the policy, A.'s promise to B. to pay C.'s debt creates a debt of A.'s own, and is therefore not within the statute.^ In such a case there is really a purchase by A. from B. of the insurance policy for the amount of C.'s debt. If, however, the transaction between A. and B. does not create a debt on A. 's part, A. 's promise is, it seems, within the statute. Now a simple contract debt can be created only by the receipt of a quid pro quo; so that if A. does not receive a quid pro quo from B. his promise to pay C.'s debt to B. is within the statute.^ The courts are not unani- 1 Clymer v. De Young, 54 Pa. St. 118; Sanders v. Classon, 13 Minn. 379. 2 Borchsenins v. Canutson, 100 111. 82. s Curtis V. Brown, 5 Cush. 488 ; Nelson u. Boynton, 3 Met. 396 ; Noyes v. Humphreys, 11 Gratt. 636 ; Maule v. BuckneU, 50 Pa. St. 39; 198 ELEJIENTS OF THE LAW OF CONTKACTS. mous, however, on this point. Thus, it has been held in Illinois that an oral promise to a surety to pay the debt of the principal, in consideration of the surety's abandoning his right to have the debt made by execu- tion against the principal, is binding. ^ The third class of cases in -which the "new considera- tion " rule is said to take the promise out of the statute is where property of the debtor is surrendered to the promisor for the purpose of having the promisor pay the amount of the debt to the creditor out of the pro- ceeds. In such a case, the defendant is in effect, if not technically, a trustee.^ If the promisor has a personal, immediate, and pecuniary interest in a transaction in which a third party is the original obligor, the statute does not apply. " Whenever the main purpose and object of the promisor is not to answer for another, but to subserve some pecuniary or business purpose of his own, involving either a benefit to himself, or damage to the other con- tracting party, his promise is not within the statute, although it may be in form a promise to pay the debt of another, and although the performance of it may incidentally have the effect of extinguishing that liaf bility."* Thus where A. was a creditor of a mining company, and chiefly interested in the working of a mine, his promise to B. to pay B. for services rendered by the latter in transporting ore for the company was held not to come within the statute.* So where the defendant had employed a party to build a house, and Kelsey v. Hibbs, 13 Ohio St. 340 ; Browne, Statute of Frauds, §§ 212, 2Ue. 1 Bunting v. Darbyshire, -75 111. 408. 2 Williams v. Leper, 3 Burr. 1886 ; Browne, Statute of Frauds, § 206. s Clifford, J., in Emerson v. Slater, 22 How. 43. 4 Davis V. Patrick, 141 U. S. 479 ; 12 S. Ct. 58. THE STATUTE OP FRAUDS. 199 on his failure the plaintiff, who was a sub-contractor, agreed to go on with the work if the defendant would pay him, the defendant's oral promise to pay was sus- tained.^ The true test in such cases is whether the de- fendant is interested in the transaction in regard to which the promise is given, or whether he is totally unconnected with it except by means of his promise to pay the loss. In the former case the contract is one of indemnity, and is not within the statute; in the latter case the contract is one of guaranty, and comes within the statute." This principle is illustrated in a late English case.' The plaintiffs, who were stockbrokers, made an oral agree- ment with the defendant that he should introduce clients to them, and that the plaintiffs should transact business on the Stock Exchange for the clients thus introduced. It was agreed between plaintiffs and defendant that defendant should receive half the commissions earned by plaintiffs on transactions for such clients, and should pay to plaintiffs half the loss which plaintiffs might suffer in consequence of such transactions. The con- tract was held not to be within the statute, partly on the ground that it was a contract of indemnity, and partly because it was to regulate the terms of the plaintiffs' employment. If goods are sold or services rendered upon the sole credit of the defendant, the fact that the goods are delivered or the services rendered to a third person does not bring the defendant's promise to pay for them within the statute, for there is no liability on the part of the recipient of the goods or services to which the defendant's promise can be collateral.* But if any 1 Clifford V. Luhring, 69 111. 401. 2 SuttOQ V. Grey (X894), 1 Q. B. 285. •S Ibid. i Hartley v. Varner, 88 111. 561 ; King v. Edmiston, 88 111. 257. 200 ELEMENTS OP THE LA"W OP CONTBAOTS. credit be given to the third party, the defendant's promise must be in writing.^ (3) Marriage Contracts. — " To charge any person upon any agreement made upon consideration of mar- riage." This includes all promises made in considera- tion of actual marriage, or of promise of marriage, with the exception of mutual promises to marry. Mutual promises to marry were originally held to be within the statute,^ but the modern doctrine excludes them." If, however, the promise to marry is part of an ante-nup- tial agreement, and dependent on it, it is within the statute.* (4) Concerning Lands. — " Upon any contract or sale of lands, tenements, or hereditaments, or any interest in or concerning them." This clause is sweeping in its language, and applies to all contracts affecting in any way the title to any kind of interest in any kind of real property. The distinctions between realty and per- sonalty need not be here discussed. Some illustrations of the application of the statute are here given, how- ever.* The statute applies to a contract for the transfer of a pre-emption right ; ^ of an equitable interest ; ^ and of a right of possession.' It applies to a contract by A. to procure a conveyance from B. to C, or to pay C. a certain sum ; ^ to a contract for the sale of debentures 1 Anderson v. Hayman, 1 H. Bl. 120; Welch v. Marvin, 36 Mich. 59 ; Browne, Statute of Frauds, § 197. 2 Philpott V. Wallet, 3 Lev. 65. 8 Clark V. Pendleton, 20 Conn. 495; Browne, Statute of Frauds, § 215 a. * Chase v. Fitz, 132 Mass. 359. 5 Lester v. White, 44 111. 464. « Dougherty v. Catlett, 129 111. 431 ; 21 N. E. 932. ' Howard o. Eastou, 7 Johns. 205; Boyd v. Paul, 125 Mo. 9; 28 S. W. 171. 8 Mather v. Scoles, 35 Ind. 1. THE STATUTE OF EBAUDS. 201 which constitute a floating charge on the property of a company, such property comprising certain leaseliolds.' An agreement to refrain from a certain use of land is not within the statute if the agreement does not create an easement.^ A contract for a partnership to trade in lands is not within the statute ; ' but an agreement for the dissolution of a partnership which provides that one of the parties shall assign to the others a certain in- terest in land must be in writing.* A contract by A. with B., by which A. agrees to sell land to a purchaser whom B. shall find, and to pay B. all the money received over and above a iixed price, is not within the statute.^ If the contract is entire, covering both realty and per- sonalty, it is within the statute ; * and so if the contract is in the alternative, and one alternative is within the statute.' (5) Pbeformance within One Year. — " Upon any agreement that is not to be performed within one year from the making thereof." This clause applies only to contracts which by their terms cannot be performed within one year. Hence, if no time for performance is fixed, the statute does not apply. ^ Nor is a contract within the statute if the time for performance depends upon a contingency that may happen within one year, as in the case of a promise by a man to marry when he 1 Driver v. Broad (1893), 1 Q. B. 744. 2 Hall V. Solomon, 61 Conn. 476 ; 23 A. 876. 8 Dale V. Hamilton, 5 Hare, 369 ; Holmes v. McCray, 51 Ind. 358 ; Speyer v. Desjardins, 144 lU. 641 ; 32 N. E. 283 ; contra, Smith y. Burn- ham, 3 Sumner, 435. * Gray v. Smith, 43 C. D. 208, per Kekewich, J. 6 Hayes v. Philips, 37 Cal. 529; H. & W. 118. 6 Meyers v. Schemp, 67 111. 469 ; Thayer v. Rock, 13 Wend. 53. '' Mather v. Scoles, supra. " McPherson v. Cox, 96 U. S. 404; Haussman v. Burnham, 59 Conn. 117; 22 A. 1065. 202 ELEMENTS OP THE LAW OF CONTRACTS. recovers his health.* Nor does the statute apply to a contract to do something until the happening of a cer- tain event, which may happen within the year.^ Nor to a contract to do something "within" five years.' A distinction should be drawn between the case of a contract to do something until the happening of a cev- tain event, which may happen within the year, and that of a contract to continue for more than one year, but with a proviso that on the happening of a given event the contract shall be discharged. In the former case there is a limitation, in the latter a condition subse- quent. Hence if the contract is by its terms not to be performed within one year, the fact that either party' is given an option to terminate the contract within the year does not prevent the ap|Tlica;tioJ'''of~ the statute.*^ So where a contract provided for the use of a patent cut-off on a steamboat, and provided that the user should pay a certain sum for the use of the patent during . its continuance (which was to be twelve years), if the steamboat should last so long, the contract was held to be within the statute.^ The application of the foregoing principles has resulted in a conflict of authority^ Where the contract is to do something for more than one year, but is of a personal character, so that it does not bind the representatives of the promisor, the question arises whether such contract is within the statute. On principle, it seems that the question is really one of construction; that if the life of 1 McConahej v. Griffey, 82 la. 564 ; 48 N. W. 983. ' 2 Hutchinson v. Hutchinson, 46 Me. 154 ; Peters ■.■. Westborough, 19 Pick. 364 ; H. & W. 120. 3 Walker v. Johnson, 96 TJ. S. 424. * Dobsou V. CoUis, 1 H. & N. 81 ; Birch v. Earl of Liverpool, 9 B. & C. 392 ; contra, Blake v. Voigt, 134 N. Y. 69 ; 31 N. E. 256. 6 Packet Co. v. Sickles, 5 Wall. 580. THE STATUTE OF FKATJDS. 203 the person is to be regarded as marking the limitation of the contract, the statute does not apply; but that if death is to be regarded as a condition subsequent put- ting an end to the contract, the statute should apply ; and that whether death is to be treated /as a limitation or as a condition should depend on the terms of the con- tract, and not upon any arbitrary rule.\ If A. promises to do something as long as he lives, A. 's life marks the natural duration of the obligation; and so if A. promises to do something as long as B. lives, B.'s life marks the duration of the obligation. The period of life is uncertain, and may be less than one year; on principle, therefoi'e, the statute should not apply to the cases just put. If, however, A. promises to do some- thing for a period of five years, the contract is not per- formed until the five years have elapsed, and A. 's death, or B.'s death, if the contract is personal in its character, operates simply as a condition discharging the contract;' unless the contract is of such a character that it may properly be construed as extending only during the life of A. or B. Thus an agreement by A. to work for B. | for five years is within the statute,^ although death will discharge it; but an agreement by A. to support B. for five years, ^ or to refrain from doing something for five years, is not within the statute." If all that is to be done on one side may be per- formed within one year, the statute does not apply, although performance on the other side will require more than one year. This is the English doctrine , but the American courts are divided, some following the 1 Shute V. Dorr, 5 Wend. 204; Hill v. Hooper, 1 Gray, 131. 2 Peters v. Westborough, 19 Pick. 364; H. & W. 120; Macgregor V. Macgregor, 21 Q. B. D. 424. * Doyle V. Dixon, 97 Mstsp. 208 ; contra, Davey v. Shannon, 4 Ex. D. 81 ; Browne, Statute of Frauds, § 282 b. 204 ELEMBJSTTS OP THE LAW OE CONTRACTS. leading English case of Donellan v. Bead,^ while others hold that the statute does apply. ^ The better rule would seem to be that if the promise of the defendant is not capable of performance within one year, a writing should be required; but that if the defendant's promise is to be performed within one year, the fact that the plaintiff's promise is not to be performed within that time is immaterial.' " One year " means one calendar year from the day oh which the contract is made, excluding that day.* (S) Seventeenth Section. The seventeenth section of the statute applies to con- tracts " for the sale of any goods, wares, and merchan discs for the price of £10 sterling or upwards." (1) "Contract fob the Sale of." — It was at one time thought that the statute did not apply to contracts for the future delivery of goods,* but the cases were conflicting, and the law was settled to the contrary, in England, by Lord Tenterden's Act, 9 Geo. IV. c. 14, § 7, and by the Sales of Goods Act, 56 & 57 Vict. c. 71, § 4 (2). Whether a contract is for the sale of goods or for the performance of services is a difficult question. The English rule is that if the subject-matter of the contract 1 3 B. & Ad. 899; Curtis v. Sage, 35 HI. 22; Grace v. Lynch, 80 Wis. 166; 49 N. W. 751. 2 Whipple V. Parker, 29 Mich. 369 ; Pierce v. Paiue, 28 Vt. 34 ; Marcy v. Marcy, 9 Allen, 8 ; Jackson Iron Co. v. Negaiinee Concen- trating Co., 65 P. 298 ; — U. S. App. — . ' Browne, Statute of Frauds, §§ 290, 290 a; Sheehy w. Adarene, 41 Vt. 541. * Dickson v. Frisbee, 52 Ala. 165. * Clayton v. Andrews, 4 Burr. 2101 ; W. C. S. 716; conira, Rondeau V. Wyatt, 2 H. EI. 63; W. C. S. 717 ; Garbutt v. Watson, 5 B. & Aid. 613; W. C. S. 718. THE STATITTE OF FEAtTDS. 205 is a chattel to be afterwards delivered, the contract is within the statute.^ The Massachusetts rule is that a contract for the sale of articles now existing, or such as the vendor in the ordinary course of his business manu- factures or procures for the general market, whether on hand at the time or not, is a contract for the sale of goods, and within the statute.^ But if the goods are to be manufactured especially for the purchaser, and upon his special order, and not for the general market, the case is not within the statute.* The New York rule is that an agreement for the sale of any commodity not in existence at the time, which the vendor is to manufac- ture or put in a condition to be delivered is not within the statute ; * unless the acts to be done by the vendor do not alter the essential .nature of the thing contracted for.s (2) "Goods, Waebs, and Merchandises." — This includes all tangible personal property. The statute in England is held not to apply to incorporeal property, such as shares of stock.* In this country shares of stock are regarded as within the statute.' Some courts hold all ehoses in action to be within the statute,^ but the better American rule limits the application of the statute to ehoses in action which have a visible and palpable form, like shares of stock.' 1 Lee V. Griffin, 1 B. & S. 272 ; W. C. S. 722. 2 Mixer v. Howarth, 21 Pick. 205 ; W. C. S. 725 ; Goddard v. Binney, 115 Masa. 450; W. C. S. 727; H. & W. 127. 8 Spencer v. Cone, I Met. 283. * Parsons v. Louoks, 48 N. Y. 17 ; W. C. S. 731. 6 Cooke V. Millard, 65 N. Y. 352. 6 Humble v. Mitchell, 11 A. & B. 205, W. C. S. 758. 7 Tisdale v. Harris, 20 Pick. 9. 8 Greenwood v. 'Law, 55 N. J. L. 168 ; 26 A. 134 ; H. & ^. 131. ' Baldwin v. Willianis, 3 Met. 365; Somerby v. Buntin, 118 Mass. 279 ; Dalzell v. Dueber Mfg. Co., 149 U. S. 315 ; 13 S. Ct. 886. 206 ELEMENTS OE THE LAW OF CONTRACTS. (3) "Foe the Peige of £10 Steeling and Up- WAEDS." — Lord Tenterden's Act substituted the words "of the value " for " for the price," and the Sales of Goods Act follows Lord Tenterden's Act in this respect. Where several articles are sold at the same time and as part of the same transaction, if the total value exceeds the amount fixed by the statute, the statute applies.^ In England a distinction is drawn in the case of auction- sales of successive lots, ^ the sale of each lot being held a separate contract ; but this distinction is not universally recognized in this country.' §3. Requirements of the Statute. The requirements of the two sections of the statute are different. They resemble each other, however, in this, that a memorandum or note in writing of the agreement or bargain signed by the party to be charged or his lawfully authorized agent will take a contract out of the statute , whether such contract comes under the fourth or the seventeenth section. The requirements of the menjorandum are practically the same in both sec- tions, and the subject of the memorandum may be treated with reference to both sections. (a.) Memoeandum. — No particular form of words is required, nor any particular kind of document. Any writing containing the terms of the contract and the parties to it is sufficient. Thus the memorandum of a contract contained in a will is sufficient to charge the testator.* If an offer is in writing it is a suflJcient memorandum to bind the party making it, though the 1 Baldey v. Parker, 2 B. & C. 37; "W. C. S. 759. ^ Emerson v. Heelis, 2 Taunt. 38. ' Jenness v. Wendell, 51 N. H. 63 ; Benjamin on Sales (Bennett's ethed.) 129. * Re Hoyle (1893), 1 Ch. 84 ; Maddox v. Eowe, 23 Ga. 431. THE STATUTE OE PEAXJDS. . 207 offer is accepted by parol. ^ If the memorandum is in the form of a deed, the deed must be delivered.'^ Bought and sold notes constitute a sufficient memoran- dum where they correspond and contain all the terms of the contract. ° The memorandum may consist of several different letters or papers, provided they are connected, consistent and complete, so that the contract can be clearly estab- lished without any resort to oral testimony.* If, how- ever, one document refers to another in ambiguous terms, parol evidence is admissible to identify the lat- ter, and so to connect the two documents.^ And it has been held that parol evidence, if clear and satisfac- tory, may be received to connect two documents which do not directly refer to each other; ' but this seems questionable. The memorandum must show who are the parties to the contract.' It is sufficient if the obligee is described with reasonable certainty in the memorandum. ^ The agency of the party to whom the memorandum is addressed may be shown by parol.' Parol evidence is also admissible to show which party is buyer, and which is seller.^" 1 Western Union Tel. Co. . Still- THE OPERATION OF CONTEAOT. 221 does not go in discharge of any obligation of the promisee. Where B. agrees to furnish C. such sums of money as may be necessary to pay C.'s current expenses, a person who furnishes C. with goods cannot sue B.^ A contract between A. and B. to subscribe for stock in a corporation cannot be enforced by the corporation.^ Where corporation A. leases a railroad to corporation B., and corporation B. guarantees to pay to corporation A. an annual amount equal to a 10% dividend on the capital stock of corporation A., a stockholder in corpo- ration A. cannot enforce this contract because he has no right to dividends as against corporation A. , there being no legal obligation on the part of a corporation to pay dividends.* Where A. agrees to pay a certain proportion of B.'s indebtedness, C, a creditor of B., cannot sue A. on this contract, because there is no agreement to pay any special amount in proportion of the claim of any individual creditor; and while the performance of the contract Tiiay go in discharge of B.'s obligation to C. it will not necessarily do so. It is essential that the performance of the contract must go in discharge of such obligation.* Where A. promises to pay B.'s debts and to make certain advances, the total amount to be paid by A. to man, 43 Minn. 126 ; 4.5 N. W. 2 ; Vrooman v. Turner, 69 N. Y. 280 ; Carter v. Holahan, 92 N. Y, 498 ; contra, Merriraan v. Moore, 90 Pa. St. 78 ; Brewer v. Maurer, 38 Ohio St. 543 (dictum) ; Dean ii. Walker, 107. 111. 540 (dictum). 1 Burton «. Larlsin, 36 Kans. 246 ; 13 P. 398. 2 Morawetz, Corporations, § 49 ; Lake Ontario E. E. Co. v. Curtis, 80 N. Y. 220. 8 Beveridge v. N. Y. El. E. Co., 112 N. Y. 1 ; 16 N. E. 489 ; Elagg V. Manhattan Ry. Co., 20 Blatchf. 142. 1 Wheat V. Rice, 97 N. Y. 296 ; Serviss v. McDonnell, 107 N. Y. 260 ; 14 N. E. 314. 222 ELEMENTS OP THE LAW OF CONTKACTS. be limited to a certain sum, B.'s creditors cannot sue A. on this contract. The contract is in effect simply to advance a certain sum of money, and not to pay any specific debt of B.'s.^ Where A. agrees with B. to erect buildings and apply the money received for materials and labor, "to the end" that there shall be no liens, and C. guarantees to B. the performance of A.'s contract, D., who furnishes material for the buildings, cannot sue C. The contract does not provide for the payment of D.'s claim, but simply that the money received by B. shall be applied in payment of similar claims,^ Where A. simply promises B. to indemnify him against a claim of C, C. cannot sue A/ Thus where A. gave a bond to B., conditioned for the payment of B.'s note to C, the court held that C. could not sue A. on the bond for the reason that there was no promise by A. to pay the note to C* A fortiori, where D. guar- antees such a bond, C. cannot sue D. on his guaranty.^ But if A. promises B. to pay B.'s note to C, and D. guarantees the performance of A.'s promise, C. can sue D. on the guaranty. ^ It has been held in Nebraska that where a bond is given to a city by contractors, conditioned that they will pay for all labor and material furnished, persons furnishing labor and material can sue on the bond ; ' but the Minnesota courts take the opposite view.' In 1 Washburn v. Interstate Investment Co., 26 Or. 436 ; 38 P. 620. 2 Weller v. Goble, 66 la. 113 ; 23 N. W. 290. ' Berry v. Brown, 107 N. Y. 6.59 ; 14 N. E. 289 ; Merrill v. Green, 55 N. Y. 270 ; Simson v. Brown, 68 N. Y. 355. * Turk V. Ridge, 41 N. Y. 201 ; Merrill «. Green, supra. 5 Simson v. Brown, supra. 6 Claflin w. Olstrom, 54 K Y. 581. 7 Lyman v. Lincoln, 38 Neb. 794 ; 57 N. W. 531. 8 Jefferson v. Asch, 53 Minn. 446 ; 55 N.W. 604 ; Union Ey. Storage Co. V. McDermott, 53 Minn. 407 ; 55 N. W. 606. THE OPERATION OF CONTRACT, 223 Iowa C. may sue on the bond by virtue of a statute to that effect.^ Where a contract for the sale of land by A. to B. recites that part of the price "is going to C," C. cannot sue B.2 (2) Nature of such Bight. — Having seen on what contracts a stranger is and is not allowed to sue in many American courts, we have to consider the theory upon which sueh actions are allowed. In the cases where the third party is in reality one for whose benefit the contract is made there seems to be an extension of the idea of trust by the common law courts. In many of the States statutes provide that "the real party in interest must sue ; " and it is generally held that the beneficiary is the real party in interest. Indeed, in Missouri the promisee is declared a trustee for the beneficiary.^ In Indiana the court says there is an "executed gift of the promise to the beneficiary."* In Illinois the court says that "such a promise invests the person for whose use it is made with an immediate interest and right, as though the promise had been made to him." ^ The New Hampshire doctrine is that a third party can sue on a contract only where there has been a nova- tion. If A. promises B. to pay B.'s debt to C, and C. assents to this arrangement, B. is thereby discharged, and A. is substituted as C.'s debtor. C.'s assent, it is held, may be given after the agreement between A. and B., but must be given before suit is begun. ^ It seems 1 Jordan v. Kavanaugh, 63 la. 152 ; 1 8 N. W. 851 ; Baker v. Bryan, 64 la. 561 ;, 21 N. "W. 83. 2 Crandall v. Payne, 154 Dl. 627 ; 39 N. E. 601. 8 Rogers v. Gosnell, 51 Mo. 466 (by statute). * Pniitt V. Prnitt, 91 Ind. 595. 6 Bay V. "Williams, 112 Dl. 91, 97. « Warren o. Batchelder, 16 N. H. 580 ; Butterfield v. Hartsliorn, 7 N. H. 345 ; Clough v. Giles, 64 N. H. 73 ; 5 A. 835. 224 ELEMENTS OF THE LAW OF CONTRACTS. very questionable whether this theory of novation can be supported. In Maine,' on the other hand, in a case like that just put, A.'s promise to B. imposes on A. an obligation to C, and C. has his election to sue either B. or A., but cannot sue both.^ In Rhode Island the court hesitates between the Maine and the New Hampshire doctrine, but holds that C. can sue only one of the parties; and that in order to obtain the benefit of the new contract he must show a release of the old, whether the view of the Maine or of the New Hampshire courts be adopted.^ Where the contract between A. and B. involves a promise by A. to perform B.'s obligation to C, the right of C. to sue A. seems largely influenced by the doctrine of subrogation. Even in those jurisdictions where the common law rule prevails, and a stranger to the con- tract cannot sue upon it, C. is allowed to avail himself in equity of B.'s rights against A. wherever a case of subrogation arises. The ground upon which equity gives C. a right against A., however, is not that G. is regarded as having any right by virtue of the contract between A. and B., but that in equity a creditor has a right to the benefit of any obligation or security given by the principal to the surety for the payment of the debt. In equity, the assumption of a mortgage by a vendee is regarded, as between vendor and vendee, as making the vendee primarily liable for the debt, and placing the mortgagor in the position of surety for the vendee, so that the mortgagee is subrogated to the rights of the mortgagor, and may compel the vendee to pay the mortgage.' Subrogation, where the common 1 Bohanah v. Pope, 42 Me. 93. 2 Wood V. Moriarty, 15 R. I. 518 ; 9 A. 427 ; H. & W. 430. 8 Keller v. Ashford, 133 U. S. 610 ; 10 S. Ct. 494. THE OPERATION OF CONTBACT. 225 law doctrine prevails, is the only right which the mortgagee can acquire by the vendee's assumption of the mortgage. 1 In other jurisdictions, subrogation is the only remedy of a stranger to a sealed contract, but an action at law is allowed on a simple contract." In other jurisdictions a stranger may sue on any con- tract, whether under seal or not, if such contract falls within one of the two classes previously described.' In such jurisdictions the equitable right of subrogation is said to be " swallowed up in the greater equity of the legal right founded on the theory of a promise made for the benefit of the creditor." * There are important differences to be noticed between the right of subrogation, and the right of a third party to sue on a contract. The former is equitable, the latter legal. Where the right of subrogation exists, the mort- gagee stands strictly in the shoes of the mortgagor, and hence if the mortgagor releases his vendee from his assumption of the mortgage, the mortgagee's rights against the vendee are destroyed,^ unless the release is fraudulent.' Where the legal right of the stranger to the contract is recognized, it is held in some cases that this right springs from the contract itself, and cannot be destroyed by any act of the promisee.' In Indiana the third party is regarded as having an interest by vir- tue of the contract only when the contract is intended 1 Tbid. ; ■Willard v. Wood, 135 U. S. 309 ; 10 S. Ct. 831. 2 Joslin V. New Jersey Car Spring Co., 36 N. J. L. 141 ; Hamis v. McCormick, 132 111. 104 ; 22 N. E. 511. s Bassett v. Hughes, 43 Wis. 319 ; W. 541 ; H. & W. 428 ; Carter V. Mayor of Albany, 43 N. Y. 399 ; Garrin ». Mobley, 1 Bush, 48. * Gifford V. Corrigan, 117 N. Y. 257 ; 22 N. E. 756 ; W. 535. 6 Youngs V. Trustees, 31 N. J. Eq. 290; O'Neill v. Clark, 33 N. J. Eq. 444. 6 Trustees v. Anderson, 30 N. J. Eq. 366. ' Bay V. Williams, 112 111. 91 ; Bohanan v. Pope, 42 Me. 93. 15 226 ELEMENTS OF THE LAW OP CONTRACTS. for the sole benefit of sucli third party. In such cases, a release by the promisee cannot affect the rights of the beneficiary ; ^ while if the promisee has an interest in the performance of the contract he may release the promisor at any time before the third party has assented to the contract.^ In New York and many other States a release by the promisee will destroy the rights of the third party if such release is made before the third party has assented to the contract." After he has assented, his rights can- not be affected by any act of the promisee.* The outcome of Lawrence v. Fox in New York seema to be that a legal right of a stranger to a contract to sue is recognized; that the courts have been influenced in their decisions as to the extent of this right by the equitable rules governing subrogation; and that the tendency of the decisions is to minimize the differences between this legal right and the generally recognized right of subrogation. (d) Doctrine of the Federal Couets. — The law of the Federal Courts as to the right of a third party to sue on a contract does not seem clearly settled. In Hendrick v. Lindsay,^ the United States Supreme Court says that while no one can sue on a promise under seal who is not named in the deed, "the right of a party to maintain assumpsit on a promise not under seal, made to another for his benefit, although much controverted, is now the prevailing rule in this country." In National 1 Pruitt V. Pruitt, 91 Ind. 595. 2 Berkshire Life Ins. Co. v. Hatchings, 100 Ind 496. 8 Brewer v. Maurer, 38 Ohio St. 543 j Comley v. Dazian, 114 N. Y. 161 ; 21 N. E. 135; Berkshire Life Ins. Co. v. Hutchings, supra. '■ Dodge V. Moss, 82 Ky. 441 ; Gifford v. Corrigan, 117 N. Y. 257 ; 22 K E. 756; W. 535 ; N. Y. Life Ins. Co. v. Aitkin, 125 N. Y. 660; 26 N. E. 732 ; Basset v. Hughes, 43 Wis. 319 ; W. 541 ; H. & W. 428. s 93 U. S. 143. THE OPERATION OP OONTEACT. 227 Bank v. Grand Lodge,^ tlie court says that while the general rule is that a stranger to the contract cannot sue upon it, "there are confessedly many exceptions" to the rule. The two exceptions mentioned by the court are, first, the so-called exception when the defendant has assets to which the plaintiff is really entitled; and second, "where the plaintiff is the beneficiary solely interested in the. promise, as where one person con- tracts with another to pay money or deliver some valu- able thing to a third." The court goes on to say, "But whefe a debt already exists from one person to another, a promise by a third person to pay such debt being primarily for the benefit of the original debtor, and to relieve him from liability to pay it (there being no novation), he has a right of action against the promisor for his own indemnity; and if the original creditor can also sue, the promisor would be liable to two separate actions, and therefore the rule is that the original creditor cannot sue." This language is quoted with approval in Keller y. Ashford,^ where the court held that the sole right of a mortgagee against the grantor of the mortgagor who assumes the mortgage, is in equity, and rests on the equitable doctrine of subroga- tion. The general rules laid down by the Supreme Court thus coincide with the common law rules prevailing in England, Massachusetts, and Michigan; but it seems uncertain whether the second exception in National Bank v. Grand Lodge would really be treated as an exception if the case should actually come before the court. There are certain important questions on which the decisions of the Supreme Court throw little light. In 1 98 U. S. 123 ; W. 518. 2 133 U. S. 610; 10 S. Ct. 494 ; Willard v. Wood, 135 U. S. 309 ; 10 S. Ct. 831. 228 ELEMENTS OE THE LAW OF CONTEACTS. Willard v. Wood ^ the court holds that the remedy of a third party on a contract is determined by the lex fori; and that in the District of Columbia the sole remedy of the mortgagee against a purchaser who as- sumes the mortgage is in equity. But the contract in that case was made in New York; and in New York the right of the third party is a legal right to sue on the contract, and he is not compelled to resort to the doc- trine of subrogation in order to recover. It is clear that a third party may be able to sue on a contract in New York, and yet not be able to sue in equity in the Dis- trict of Columbia, because in the District of Columbia he would have to show himself entitled to subrogation ; while in New York he is not bound to establish a right to subrogation in order to enforce the contract. It would seem, therefore, that the decision in Willard v. Wood has the effect to deprive a man in the District of Columbia of substantive rights which he has acquired in New York. On the other hand, in Union Life Insurance Co. v. Hanford,^ the court holds that in an action brought in the Federal court sitting in Illinois, an extension of time given by a mortgagee to his mortgagor's grantee who has assumed the mortgage, discharges the mort- gagor, because such assumption of the mortgage places the grantee in the position of principal and the mort- gagee in the position of surety with regard to the mort- gage debt. This case proceeds on the theory that the law of Illinois is to govern the substantive rights of the parties in the Federal Court sitting in that State. It seems impossible to reconcile this case with Willard V. Wood. 1 135 U. S. 309 ; 10 S. Ct. 831. 3 143 U. S. 187; 12 S. Ct. 437. The law of Illinois on this point seems to have been misunderstood. See Fish v. Glover, 154 HI. 86 ; 39 N. E. 1081. KESCISSION OF CONTBAOT. 229 CHAPTER VIII. RESCISSION 01" CONTRACT, § X. Introductory. A contract may exist and yet be subject to some con- dition subsequent which entitles one of the parties to the contract to rescind the contract. Such a contract is called voidable. The term rescission is loosely used. Strictly speaking, rescission of a contract signifies the restoration of the parties to the position which they occupied before the contract was made. A contract can be rescinded only by reason of some fact existing at the time of its formation. Thus if A. sells B. a cow with the privilege of returning the cow if she is not a Jersey, and the cow is not a Jersey, B. may rescind his contract to pay for the cow by returning her to A. If, however, A. sells the cow to B. with the privilege of returning her if she does not give ten quarts of milk a day, B. may discharge himself from his obligation to pay for the cow by returning her to A. if she does not give the specified amount of milk. The term rescission is often applied to both these cases, but incorrectly. In the first case the contract is rescinded; in the second, it is discharged. In the first case a condition subsequent attaches to B.'s promise, in the second case only to the obligation of B.'s promise. We have already examined conditions subsequent which are attached to the contract by the parties them- selves, and which we have termed internal conditions. 230 ELEMENTS OF THE LAW OP CONTEACTS. We now come to conditions subsequent whicli the law attaches to the contract without regard to the intention of the parties, which may be called external conditions subsequent. In other words, we have to consider, first, what facts, not treated by the parties themselves as conditions, will entitle one of the parties to rescind his contract; secondly, how such rescission may be effected; and thirdly, how the right to rescind may be lost. § 2. Causes for Rescission. All external conditions subsequent affecting the con- tractual nexus, that is, all causes for rescission recog- nized by the law without regard to the intention of the patties, have this in common : — they are all facts tend- ing to prevent the party who seeks to rescind from act- ing with a due regard to his own interest in making the contract. Yet though all such causes for rescission are facts which tend to cause such disregard of his own interests by the party seeking to rescind, it is not always necessary that the particular fact whicih is set up as the ground for rescinding a particular contract should actually have operated to the injury of such party. If the fact in question is one which in legal contemplation is sufficient to induce a party to enter into a contract which he would not enter into but for the existence of that fact, that contract is voidable in two classes of cases. In the first class the contract is voidable by reason of an arbitrary and positive rule of law ; in the second class the contract is voidable because one party knows of the existence of the fact which improperly affects the motives of the other party, and seeks to gain an unfair advantage thereby. RESCISSION OP CONTBACT. 231 (ft) Facts Prejudicially Affecting Motives in Legal Con- temptation. The first class of voidable contracts includes most con- tracts of infants, and in some jurisdictions the contracts of insane persons. (1) Infancy. — Persons under twenty-one years of age are called infants at common law. A person becomes of age on the day preceding his twenty -first birthday.* Statutes in many States regulate the duration of infancy. In some States women become of age at eighteen; and in some States there are statutory proceedings whereby an infant may acquire the rights of majority. Some contracts of an infant are said to be void, some voidable, and some binding. An opinion formerly pre- vailed that contracts which were for an infant's benefit were binding, contracts apparently to his prejudice void, and contracts where the question of benefit or prejudice was uncertain, voidable. It is important here to dis- tinguish between motive and capacity with reference to infants' contracts. If an infant's contract is void it is because he lacks contractual capacity ; but if it is void- able, it is because the law regards his youth as an insup- erable obstacle to rational action in making a contract, and for the infant's protection permits him to escape the consequences of his acts. It seems doubtful if any contracts of an infant are void at the present day except by virtue of some statute.^ It is settled, however, that an infant cannot execute a power of attorney to confess judgment or to execute a deed.' 1 Herbert v. Turball, I Keble, 589 ; Ewell's L. C. 1 ; State v. Clarke, 3 Harring. 557 ; Ewell's L. C. 2. 2 Pollock, Contracts, 52-59, 8 Saunderson v. Marr, 1 H. Bl. 75 ; Ewell's L. C. 35 ; Trueblood V. Trueblood, 8 Ind. 195 ; H. & W. 218 ; Ewell's L. C. 36 ; Lawrence v. McArter, 10 Ohio, 37. 232 ELEMENTS OF THE LAW OF CONTRACTS. All contracts which the law expressly authorizes an infant to make , and all contracts made by the infant in discharge of a legal obligation, are binding. Thus the contract of a minor with the mother of his bastard child to support the child is valid where the law imposes an obligation on the father to support such child. ^ As to whether any other contracts of an infant are binding, there is a difference between the English and the American authorities. It is frequently said that an infant's contracts for necessaries are binding. It is now generally recognized in this country, however, that while an infant is liable for necessaries actually received by him his liability is only quasi-contractual.^ Thus it is generally held that an infant is liable only for the actual value of the necessaries he has received; and this even in jurisdictions where the other party is allowed, by an anomalous procedure, to sue upon the infant's express contract.' The quasi-contractual nature of the infant's liability is clearly recognized in a very recent case in Connecticut.* In England contracts for an infant's benefit are bind- ing. 5 This doctrine seems anomalous. The American doctrine that an infant's contracts are voidable regard- less of the question of benefit or injury to the infant, or the fairness of the conduct of the other party, is arbitrary, and has proved so unjust that it has been modified by statute in several States. Such a doctrine, however, is at least simple and easy of application. A more rational 1 Stowers V. Hollis, 83 K7. 544. ^ Keener, Quasi-Contracts, 20. ' Trainer v. Trumbull, 141 Mass. 527 ; 6 N. B. 761 ; H. & W. 220. * Gregory v. Lee, 64 Conn. 407 ; .SO A. 53. 5 Fellows V. Wood, 59 L. T. (n. s.) 513 ; Evans v. Ware (1892), 3 Ch. 502 ; Clements v. London & N. W. Ry. Co. (1894), 2 Q. B. 482. But see De Francesco v. Barnum, 43 C. D. 165, 174. EESCISSION OF COKTKACT. 233 rule would be to place contracts between infants and adults on the same basis as those between a trustee and his cestui que trust, and simply require the adult to show that the contract is fair to the infant. The question of fairness is a question of fact, which can be tried in every case. But the question whether a contract is or is not for an infant's benefit is a question of law to be deter- mined by the court from an inspection of the contract; and yet benefit is in reality a question of fact, which is not to be determined by the application of legal principles. The practical justification of the English doctrine is that it accomplishes the desired result of protecting the infant from his improvident contracts without allowing him to avoid all his contracts in the arbitrary manner permitted by the American courts. The privilege of avoiding a contract on the ground of infancy is an absolute one, and is therefore not affected by the fact that the infant has falsely represented himself to be of full age."^ (2) Mental Incapacity. — In Massachusetts an insane person's contracts, like an infant's, are voidable regardless of the fairness of the other party's conduct, or of such party's ignorance of the former's insanity. "The fairness of the defendant's conduct," says the court, "cannot supply the plaintiff's want of capacity." * There is a fallacy here in th^ use of the word capacity. A lunatic may lack natural capacity to make a contract, but he does not lack legal capacity. A married woman, 1 Merriam v. Cnnningham, 11 Cnsh. 40; Sims v. Everhardt, 102 U. S. 300 ; Studwell v. Shapter, 54 N. Y. 249 ; Carpenter v. Carpenter, 45 Ind. 142; Wieland v. Kobick, 110 HI. 16 ; Conrad v. Lane, 26 Minn. 389 ; Burdett v. Williams, 30 F. 697. This rule is changed hj statute in some States. And see contra, Pemberton Bldg. & Loan Ass'n v. Adams, 31 A. 280 ; — N. J. Eq. — . 2 Seaver v. Phelps, 11 Pick. 304; Ewell's L. C. 610. 234 ELEMENTS OF THE LAW OE CONTRACTS. on the other hand, has natural capacity to make a con- tract, but at common law lacks legal capacity. Conse- quently a married woman's contracts are void, while a lunatic's contracts are only voidable. The effect of the Massachusetts doctrine is to place lunatics' contracts on the same basis as those of infants, and to make both infants' and lunatics' contracts voidable absolutely by virtue of an arbitrary rule of law. The Massachusetts doctrine seems unsound in principle , and is opposed to the weight of authority. By the better rule the voidable contracts of insane persons belong, not in the first class of voidable contracts, but in the second. (6) Facts Prejudicially Affecting Motives to the Knowledge of the Other Party. In this second class of voidable contracts the contract is voidable because of the existence of some fact tending improperly to influence the motives of one party, of which fact the other party has knowledge, and seeks to take advantage. Under this head come contracts voidable on account of mental incapacity, misunderstanding (including mistake and fraud), duress, and undue influence. (1) Mental Incapacity. — The difference between mental and legal incapacity has already been pointed out. Mental incapacity has various forms , of which the extreme is insanity. There are cases holding that the contract of a lunatic is void,i but the weight of modern authority is overwhelmingly in favor of the proposition that such contracts are at most only voidable.'' A power 1 Burke v. Allen, 29 N, H. 106 ; Ewell's L. C. 576. 2 Carrier v. Sears, 4 Allen, 336 ; Ewell's L. C. 574 ; Matthews v. Baxter, L. R. 8 Ex. 132 ; Louisville, N. A. & C. Ry. Co. v. Herr, 135 Ind. 591 ; 35 N. E. 556 ; Ashmead v. Reynolds, 127 Ind. 441 ; 26 N.E. 441. RESCISSION OF CONTKACT. 235 of attorney given by an insane person, however, is held to be absolutely void.^ Logically, and on the most recent English authority, a lunatic's contract is voidable only when the other con- tracting party knows of the insanity.^ An insane per- son's contracts, therefore, properly belong in the second class of voidable contracts. As we have already seen, however, in Massachusetts such contracts are voidable absolutely without regard to the state of mind of the sane contracting party." In many American courts an anomalous doctrine prevails. This doctrine is that if the sane party is ignorant of the other's insanity, and the contract is fair and cannot be rescinded so as to place the parties in statu quo, it is binding.* This doc- trine rests on some loose statements in an English case * decided half a century ago. The present English doc- trine is perfectly clear and logical ; so is the Massachu- setts doctrine, although the latter seems arbitrary; but the attempt to make the validity of a contract depend upon its performance does not and cannot lead to satis- factory or intelligible results. Reasonable ground to know of the insanity is equivalent to actual knowledge.' A lunatic's contracts for necessaries are said to be binding ; ' but if the party furnishing the necessaries is 1 Dexter v. HaU, 15 "WaU. 9 ; E well's L. C. 570. ' Imperial Loan Co. u. Stone (1892), 1 Q. B. 599 (C. A.) ; Leake, Contracts, 501 ; Lancaster County Bank v. Moore, 78 Pa. St. 407 ; Pattee's Cases on Contracts, 109. 3 Seaver v. Phelps, 11 Pick. 304 ; EweU's L. C. 610. * Yonngw. Stevens, 48 N. H, 133 ; Riggs v. Amer. Tract Society, 84 N. Y. 330 ; Matthiessen Co. i). McMahon, 38 N. J. L. 536 ; Alexander V. Haskins, 68 la. 73 ; 25 N. W. 935 ; Northwestern Ins. Co. v. Blanken- ship, 94 Ind. 535. 5 Melton V. Camroux, 2 Ex. 487 ; 4 Ex. 17 ; EweU's L. C. 614. « Lincoln v. Buckmaster, 32 Vt. 652. 7 Bagster v. Earl of Portsmouth, 5 B. & C. 170; Ewell's L. C. 632. 236 ELEMENTS OP THE LAW OE CONTRACTS. aware of the insanity, the Insane person's liability is really quasi-contractual in its nature.^ In some cases the lunatic has been held liable not only for necessaries, but also for other things reasonable and proper for the lunatic's comfort.' The contracts of an insane person are voidable because his lack of mental capacity prevents his forming a rational estimate of the legal consequences of his acts, and because the other party, knowing of the insanity, has no right to attempt to bind the insane person by contract. Mere weakness of mind falling short of insanity is not sufficient to invalidate the contract.' Nor does the fact that a party is a monomaniac entitle him to rescind his contract,* unless the monomania affects his understanding in regard to a particular con- tract. If, however, the monomania affects the contract in question, the contract is voidable. Thus where a man of seventy-two was a monomaniac on the subject of spiritualism an ante-nuptial agreement to deliver property to a female medium was held voidable.* If a man does not understand what he is doing when he makes a contract it is of no consequence whether his lack of understanding is due to idiocy or insanity, or whether it is brought about by drunkenness,' or by the 1 Sceva V. True, 53 N. H. 627 ; Sawyer v. Lufkin, 56 Me. 308 ; Re Ehodes, 44 C. T>. 94, 105 ; Keener, Quasi-Contracts, 20. 2 Kendall v. May, 10 Allen, 59. ' Stone V. Wilbern, 83 111. 105 ; Pattee's Cases on Contracts, 144 ; Kimball .;. Cuddy, 117 III. 213 ; 7 N. E. 589 ; Miller v. Craig, 36 111. 109 ; Dennett v. Dennett, 44 N. H. 531 j Ewell's L. C. 547 j Miller v. Eutledge, 82 Va. 863 ; 1 S. E. 201. * Boyce v. Smith, 9 Gratt. 704. s Connor v. Stanley, 72 Cal. 556 ; 14 P. 306. " Gore V. Gibson, 13 M. & W. 623 ; Ewell's L. C. 734 ; Barrett v. Buxton, 2 Aikens, 167; Ewell's L. C. 728; H. & W. 228; Bush v. Breinig, 113 Pa. St. 310; 6 A. 86. EESCISSION OF CONTEAOT. 237 use of opiates ; ^ and conversely, if he does know what he is doing, his intoxication is no defence to an action on the contract.^ It has been held, however, that if the party's mind is "in an abnormal state superinduced by drunkenness," he may avoid a contract made by him when in such state.' Whatever the cause of the mental derangement, such derangement must, of course, exist at the time the contract is made, in order to render the contract voidable.* A judicial declaration of a person's insanity deprives him of legal contractual capacity, and all contracts made thereafter are not voidable, but void.* A judgment of insanity, however, has no retroactive effect.' (2) Misunderstanding. — There is often in contracts some misunderstanding on the part of one or both par- ties. This misunderstanding may be in regard to the promise or promises actually made, or it may be with reference to the subject-matter of the contract; it may or may not be common to both parties; and the mis- understanding of one party may or may not be induced by the conduct of the other. (a) Common to Both Parties. And first, with regard to cases where the misunder- standing in question is common to both parties. This misunderstanding may be with reference to the terms of the contract or to the subject-matter of the contract. 1 Chicago, &c. Ry. Co. v. Lewis, 109 Ill._120. 2 Bates V. Ball, 72 111. 108 ; Watson v. Doyle, 130 HI. 415 ; 22 N. E. 613. ' Franks v. Jones, 39 Kans. 236 ; 17 P. 663. * Conley v. Nailor, 118 U. S. 127 ; 6 S. Ct. 1001 ; Watson v. Doyle, supra ; Lilly v. Waggoner, 27 111. 395. 5 Wadsworth v. Sharpsteen, 8 N. T. 388. 6 Knox V. Knox, 30 S. C. 377 ; 9 S. E. 353. 238 ELEMENTS OF THE LAW OE CONTRACTS. (1) As TO THE Teems op the Contract. — If there is a mutual mistake in regard to the terms of the con- tract it is because the parties have intended to bring about a certain change in their legal relations by means of the contract, and have failed to express themselves so as to produce that change, either on account of a mistake in the use of language, or on account of a mis- take as to the legal effect of the language used. We have already seen that when the parties have once agreed that a written document shall be regarded as expressing the terms of their contract, oral evidence is inadmissible to vary the terms of such written contract. If this rule were an absolute one it would clearly work great injustice; and to prevent such injustice a court of equity will, under proper circumstances, interfere to reform the writing in question to conform to the inten- tion of the parties. This reformation may be looked upon as a rescission of the contract actually made, and a substitution therefor of the contract which the parties intended to make. The subject of reformation of instru- ments therefore may properly be treated in connection with the rescission of contracts. The fundamental rule of equity with reference to the reformation of written instruments may be stated as follows. Where the parties to a given transaction have intended to bring about a certain change in their legal relations by means of a written instrument, and that instrument fails to produce the intended legal result, a court of equity will reform the instrument in question so as to make it conform to the intention of the parties. It is apparent from the foregoing rule that a mistake as to the nature of the promise will not be ground for the reformation of the instrument unless such mistake is common to both parties.^ "It must appear that both 1 Fowler v. Fowler, 4 De G. & J. 250. EESCISSION OP C03S-TEACT. 289 have done what neither intended ; " ^ and it must also appear that both intended to do the same thing. Hence there may be a mistake on each side, and yet such double mistake will not be ground for reforming an instrument. Thus in Page v. Higgins,^ A. executed a deed to B. under an agreement to sell all his land in a certain town. B. supposed that A. owned two tracts, X. and Y., and drew the deed so as to include both. A. owned only X., and supposed that the deed conveyed only X. The court refused to reform the deed because, though each party, had made a mistake, the mistake on one side was different from that on the other. Mistake on one side, however, is recognized as ground for reforming an instrument where such mistake is. caused by the fraud of the other party." This doctrine seems unsound in principle. In so far as a party is injured by fraud his rights are to be restored to the position which he would have occupied had not the fraud been committed. Now if a written contract is executed by A. and !B., and B. executes the contract because A.'s fraud has misled B. as to its terms, the effect of the fraud has been to induce B. to execute a contract which he would not otherwise have executed, and B. is therefore entitled to a rescission of such con- tract. A., however, has executed the exact contract which he intended to execute, and to reform the con- tract is for the court to impose an obligation upon him which is not really contractual, since it is not the obliga- tion created byhis act in executing the written contract. By virtue of this doctrine B. has the right to enforce the contract as executed, or to enforce an obligation. 1 Hearne v. Marine Ins. Co., 20 Wall. 488, 491. 2 150 Mass. 27 ; 22 N. E. 63. 8 Simmons Creek Coal Co. v, Doian, 142 U. S. 417, 435; 12 S. Ct. 239 ; Bergen v. Ebey, 88 I]l. 269. 240 ELEMENTS OP THE LAW OP CONTBACTS. which A. never incurred by virtue of any contract, but simply through the decree of the court " reforming " the contract in question. Some courts carry this doctrine even farther, and decree a reformation of the contract whenever one party has made a mistake with regard to its terms of which the other party was cognizant.* This case differs from fraud in that the mistake is not caused by the conduct of the other party. The true rule, in such cases, how- ever, is this: — if A. and B. enter into a contract, and- A. makes a mistake with reference to its terms, of which B. is aware, a court of equity will rescind the contract at A.'s request unless B. consents to its ref- ormation in accordance with A.'s understanding of its terms. ^ It is often said that equity will correct a mistake of fact, but not a mistake of law ; that if the parties to a contract say X. when they mean Y., the contract will be reformed, and Y. substituted for X. ; but that if the parties make a mistake only as to the legal effect of the word X., the court will not interfere. The true rule, however, is this. When there is an intention on the part of both parties that a certain contract shall be exe- cuted, and the written instrument which they execute does not have the effect which they intend, it makes no difference whether the mistake of the parties is in regard to the terms of the contract or as to the legal effect of those terms. In either case the court will cor- rect the instrument by making it conform to the inten- tion of the parties. If, however, in addition to the general intention of executing a certain contract, the 1 Wyche v. Greene, 26 Ga. 415 ; Eoszell v. Roszell, 109 Ind. 354; 10 TT. E. 114 ; Essex v. Day, 52 Conn. 483. ' Paget V. Marshall, 28 C. D. 255 ; Garrard v. Frankel, 30 Beav. 445; Pehlberg v. Cosine, 16 B. I. 162 ; 13 A. HO. EESCISSION or CONTEAOT. 241 parties have the speeilic intention of executing the par- ticular instrument in question, then the specific inten- tion controls, and thecourt cannot reform the instrument to make it conform to th>e general intention of the par- ties. This specific intention must, it seems, be some- thing more than the intention of doing an act which is inferred from the voluntary doing of that act. The specific intention must be the result of deliberation and choice.-' ■" The foregoing principles are illustrated by the fol- lowing cases. A. sells a piece of land to B. By mistake the haben- dum in the deed runs "to B, and his bodily heirs," instead of "to B. and his heirs;" thereby conveying an estate-tail instead of a fee^simple. The mistake is a mistake of law as to the effect of the words "bodily heirs," but the deed will be reformed-.^ A. B. and C. form a partnership. A. takes out an insurance policy on cotton belonging to the firm. A. communicates the facts in regaTd to the ownership of the cotton 'to the insurance agent, who tells him that a policy in A. 's name will protect the interest of the firm. The policy is issued in A.'s name, but by reason of a mistake as to the law does not protect the firm. The policy will be reformed.' A. signs a bond conditioned that B. shall "abide by and perform the orders and decrees " of the court in a certain action. The bond is intended simply as security for B.'s appearance in court so as to be amenable to such "orders and decrees." There is no mistake as to the words of the bond, but there is a mistake as to 1 See Bigelow's note to Story's Equity Jurisprudence (13th ed.), §111. 2 Dinwiddie v. Self, 145 111. 290; 33 N. E. 892. 8 Snell V. Ins. Co., 98 U. S. 85. 16 242 ELEMENTS OP THE LAW OP CONTRACTS. the legal effect of the words used. The bond will be reformed.^ Some courts still cling to the idea that there is a dis- tinction between mistake of law and mistake of fact. Thus the Supreme Court of Illinois in a recent case states the law of that State as follows : " If the words are written as the parties intended they should be written or supposed they were written, no matter how much they may be mistaken in the meaning of those words, no relief can be granted either at law or in equity." "^ In that case some grantors intended to con- vey land to A. with remainder to his children, and gave instructions to a conveyancer accordingly. The convey- ancer used the word "heirs" instead of "children" in the deed, thereby altering its legal effect. The grantors executed the deed, supposing it would give effect to their intention, and the court refused to reform the deed. While a mistake of law will not prevent the court from reforming a contract so as to give effect to the intention of the parties, the principle that the specific intention controls the general intention is illustrated by the leading case of Hunt v. Rousmaniere.^ In that case the defendant's intestate had borrowed money of the plaintiff, and had given as security a power of attorney to sell certain vessels. The general intention of the parties was to give the plaintiff a lien on the vessels. The plaintiff was advised by counsel, however, that a power of attorney would be preferable to a mortgage, and such power of attorney was accordingly given. The borrower died insolvent, and the plaintiff sought to enforce his supposed lien on the vessels. The power of 1 Griswold v. Hayward, 141 U. S. 260; 11 S. Ct. 972, 999. 2 Fowler v. Black, 136 111.363; 26 N. E. 596; contra, Brock v. O'Dell, 21 S. E. 976 (S. C), which supports the principles stated in the text. » 1 Pet. 1. EESCISSIOK 01" CONTRACT. 243 attorney, however, was revoked by the debtor's death, and the court refused to treat it as a mortgage. The general intention of the parties that a lien on the vessels should be given was controlled- by their specific inten- tion that the power of attorney should be executed instead of a mortgage; and as their specific intention had been carried out, there was no ground on which the court could interfere. (2) As TO THE Subject-Mattee. — When there is a common mistake as to the subject-matter, such mistake has, in itself, no legal effect. There are various cases in which such mistake seems to have legal conse- quences, but those consequences are in reality due to other causes. A common case of mistake occurs when two inconsis- tent descriptions are applied to the subject-matter of the contract; as where there is a contract for the sale of "this bar of gold," and "this bar "is not "of gold." The rights of the parties in such case are not in any way affected by reason of the mistake in itself, but are determined by the rules heretofore given under the head of Conditions. If the two inconsistent descriptions are both essential, and there is no warranty that both descriptions are correct, the contract is void. This is not because there is a mutual mistake, but because there ' is nothing in existence corresponding to the terms used in the contract, so that the contract is meaningless. If, however, one of the parties warrants that both descrip- tions are correct, the contract is not void, but voidable at the option of the other party. This is because the correctness of both descriptions is a condition subse- quent afi'ecting the promise of the latter party, while the promise of the party warranting such correctness is absolute. Finally, if the two descriptions, though inconsistent, are not both essential, a mistake as to the 244 ELEMENTS OF THE LAW OF CONTEACTS. nori'essential deseriptiOn does uot affect the validity of the 'contract. That a common mistake as to the subject-matter does not affect the validity ef the contract unless there is some condition, express or implied, in the contract it- self, is clear. Thus where A. sold to B. for $1 a stone of the nature -of which both parties were ignorant, and the stone subsequently proved to be a diamond, the con- tract was held 'binding.^ So where A. sold a note to B., and the makers of the note were insolvent, the fact that the parties both supposed the makers solvent was held immaterial.^ Mistake as to the existence of the subject-matter is really a special case of inconsistent descriptions, and the same rules apply as in the case of such inconsistent descriptions." Mistake as to the identity of the subject-matter is said to render the contract void. Where there is a mis- take as to the identity of the subject-matter the contract is usually void. In the case of simple contracts, how- ever, the contract is void because there is no considera- tion for the promise, as has already been shown. In. the case of formal contracts it is not clear that the mis- take as to identity of the subject-matter can have" any ' effect unless some condition can be imported into the contract itself. If A. covenants to give Blackaere to B., and there are two estates called Blackaere, the fact that A. means one of those estates, and B. thinks A. means another can hardly be regarded as rendering A.'s covenant void. If, however, A. and B. execute a char- ter-party of the ship "Peerless," and there are two 1 Wood V. Boynton, 64 Wig. 265 ; 25 N. W. 42 ; H. & W. 257. 2 Hecht V. Batcheller, 147 Mass. 335 ; 17 N. E. 651 ; H. & W. 255. 3 Gibson v. Pelkie, 37 Mich. 380; H. & W. 247; Couturier v. Ha^tie, 5 H. L. C. 673 ; Strickland v. Turner, 7 Ex. 208. KESCISSION^ 0P eONTEACT. 246 ships named "Peerless," it seems proper to regard A. as chartering ship No. 1 to B. on condition that B. agrees to take that ship, and B. as agreeing to take ship No. 2 on condition that A. charters that ship;- so that such a charter-party is void. Mistake as to the identity of the promisee is said to render the contract void. This rule rests in reality on two simple principles. The first is that if A. makes a promise to B., C. cannot enforce that promise by palm- ing himself off as B. The second is that if A. accepts a benefit from B. , not knowing or having reason to know that B. expects to be paid for it, A. 's acceptance of the benefit does not constitute a promise to pay B. for it.* (5) Of One Party Only. (1) Not Known to the Othbe. — It has been stated that voidable contracts of the second class are rendered voidable by reason of the existence of some fact which tends to prevent one of the parties from acting with a due regard to his own interest, of the existence of which the other party is aware and seeks to take advantage. Any misunderstanding or mistake, therefore, of one party, of which the other party does not know or has not good reason to know does not affect the validity of the con- tract.^ Thus where the general agent of a railroad com- pany quotes a certain freight, rate to a local agent, and the local agent by mistake quotes a lower rate to the shipper, the railroad company is bound if the shipper does not know of the mistake.' In the application of the foregoing rule it must always, be remembered that there are two questions to be 1 See ante, p. 44. 2 Comer v. Grannis, 75 Ga. 277 ; Griffin v. O'Neil, 4-8 Kans. 117; 29 P. 143 ; Scott V. Littledale, 8 E. & B. 815. 8 Borden v. Richmond, &c. R. R. Co., 113 N. C. 570; 18 S. E. 392. 246 ELEMENTS OP THE LAW OP CONTRACTS. answered: first, is there a contract? and second, is the contract voidable? A mistake of one party of which the other party is ignorant may prevent the formation of a contract, as we have already seen ; ^ but if a con- tract is actually made such a mistake does not render it voidable. (2) Known to the Other. — A misunderstanding of one party of which the other party is aware has three distinct phases: first, where such misunderstanding is not due to the conduct of the other party; second, where the misunderstanding is caused by the innocent conduct of the other party; and third, where the misunderstand- ing is caused by the fraudulent conduct of the other party. The first phase is commonly treated under the head of Mistake; the second under the head of Misrep- resentation ; and the third under the head of Traud. In all three cases the contract may be voidable, but there are certain important distinctions between Mistake, Misrepresentation, and Fraud, which require examina- tion. (a) Not Caused hy the Other Party — Mistake. — And first as to Mistake, that is, misunderstanding of one party not caused by the other. Mistake as to the nature of a promise by one party, if known to the other, renders the contract voidable.^ Thus where A. leases land to B, and by mistake fixes the rent at £130 instead of £230, and B. knows of the mistake, A. is not bound.' Sb where by a mistake in a rate-sheet a railroad rate is given as $15 less than it should be, a person who buys a ticket at that rate knowing of the mistake cannot hold the railway company.* ^ Ante, p. 35. ^ Everson v. International Granite Co., 65 Vt. 658 ; 27 A. 320. ' Garrard o. Frankel, 30 Beav. 445. 4 Shelton v. Ellis, 70 Ga. 297 ; H. & W. 262. EESCISSION OF CONTRACT. 241 The foregoing principle was applied by the United States Supreme Court in Hume v. United States. ^ The plaintiff sued for the price of shucks furnished the defendant. The plaintiff had submitted bids for fur- nishing various articles on blank schedules provided by the government. It was customary to buy shucks by the hundredweight, but in the schedule the printed word "pounds" had not been changed, so that the plaintiff submitted a bid for furnishing shucks at 60 cents a pound, which was accepted. The shucks were worth less than 2 cents a pound. The court held that the plaintiff knew or ought to have known that there was a clerical error in the contract, and that the government agents could not have intended to accept a bid for shucks at thirty times their real value. The contract was therefore held not binding on the government. The same principle was applied in the leading English case of Smith v. Hughes.^ In that case A. agreed to buy some oats of B. The court held that if A. thought B. was agreeing to sell old oats and B. knew that A. thought so, B. could not compel A. to accept new oats. (h) Caused by the Other Party — Misrepresentation and Fraud. — Where the misunderstanding in question is caused by the conduct of the other party to the con- tract, such conduct constitutes Misrepresentation. If the misrepresentation is fraudulent, it is called Fraud. A false representation by one party in regard to a material fact made for the purpose of inducing the other party to enter into a contract, and actually inducing the latter to enter into the contract, renders the contract voidable. A false representation may consist either in an act or in an omission. An omission to communicate facts which one person is bound to communicate to another 1 132 U. S. 406 ; 10 S. Ct. 134. 2 L. R. 6 Q. B. 597. 248 ELEMENTS OE THE LAW OE CONTRACTS. amounts to a representation tbat those facts do not exist. A person cannot,, of course, be bound to com- municate knowledge whieli he does not possess. There is no general duty resting on any one to dis- close to another all material facts with reference: to a contract between the parties. Parties dealing with each other at arm's length^like vendor and vendee, are not in general bound to disclose; facts affecting the value of the subject-matter of the contract.* Even if the vendor is aware that the purchaser thinks that the thing sold pos- sesses a certain quality, and would not enter into the contract if he knew the truth, the vendor's failure to correct the purchaser's mistake does- not render the con- tract voidable.* The common law maxim is, eaveat. emptor; but there are American cases which treat the vendor as under obligation, to disclose latent defects m the thing sold.* The existence of a fiduciary relation between the parties to a contract imposes on the fiduciary the duty ©f acting with the utmost fairness; and if he fails ta disclose all facts within his knowledge affecting the transaction the contract is voidable.* There are certain contracts in whirfh the promise of one party is conditional upon the disclosure of all mate- rial facts by the other party. Such contracts are termed 'uberrirruB fidei. In contracts of marine insurance the policy is conditional upon the disclosure of all material 1 Laidlaw 71. Organ, 2 Wheat. 178; H. & W. 282; Bigelow, Fraud, i. 591 ; Benjamin, Sales; § 430. 2 Smith V. Hughes, L. R. 6 Q. B. .597 ; Law v. Grant, 37 Wis. 548 ; Williams v. Spurr, 24 Mich. 335 ; contra, Cecil w. Spurger, 32 Mo. 462 ; Lunn V. Shermer, 93 N. 0. 164. 8 Grigsby u. Stapleton, 94 Mo. 423 ; 7 S. W. 421 ; H. & W. 285 ; Benjamin, Sales (Bennett's 6th ed.), 451. * Bigelow, Fraud, i. 315. KESCISSION OF QONTEACT. 249 facts by the insured. Non-disclosure in such a case prevents the formation of a contract. And in any con- tract of insurance the policy insures only the risk therein described; hence if the risik is not properly described there is no contract. There may, however, be a contract of insurance in which the risk is described with essential accuracy, and yet there may be a failure to disclose all material facts. In such a case it seenjs that there is a contract, which is voidable on the ground of misrepresentation.* A contract of suretyship is not uperrimcB fidei. It is not necessary, therefore, that, the creditor should dis- close all facts in regard to the transaction. The silence of the creditor mxist amount to a positive misrepresenta- tion in order to render the contract, voidable.'' Although silence does not ordinarily amount to a representation, a partial disclosure of the truth may give a false impression because the whole truth is not told. In such a case the concealment of part of the truth coupled with a confession of the rest may amount to a misrepresentation. Thus where A. promised to marry B., and B. told A. she had obtained a divorce from a former husband, the concealment by B. of the fact that her former husband had also obtained a divorce from her was held to amount to a positive misrepresen- tation. » And in contracts of suretyship it is held iju England that the creditor impliedly represents, to the surety that he knows of nothing in the transaction that would be regarded as unnatural with reference to the transaction in question.* 1 Bigelow, Fraud, i. 623. 2 Ibid., i. 601 ; Pollock, Contracts, 493 ; Leake, Contracts, 347 ; Anson, Contracts (8th ed.), 161. 8 Van Houten v. Morse, 162 Mass. 414 ; 38 N. E. 705. * Bigelow, Fraud, i. 601. 250 ELEMENTS OP THE LAW OF CONTRACTS. The representation must, in general, be a representa- tion of fact. An expression of opinion is not a repre- sentation of fact, nor is a prediction of a future event. ^ A positive expression of opinion, however, in regard to facts susceptible of knowledge, or the positive predic- tion of a future event, may amount to a representation that the party expressing the opinion or making the prediction is acting in good faith, and knows nothing contrary to what he has said.^ So a statement of opinion in regard to facts peculiarly within the knowl- edge of the party making the statement may amount to a representation that the party making the statement knows facts which justify his opinion. = A representation of intention ordinarily either gives rise to a contract or has no effect.* Nevertheless, inten- tion is a matter of fact, and if a man represents that he has a certain intention when he has not, he clearly makes a false representation of fact.* Thus it is gen- erally held that the purchase of goods amounts to a representation that the buyer intends to pay for them, and if he intends not to pay for them he is guilty of fraud.' In some cases a representation of intention has been held not to amount to fraud under any cir- cumstances ; ' while some decisions draw a distinc- tion between an intention not to pay for goods and an intention not to perform some other promise, hold- 1 Bigelow, Fraud, i. 473; Southern Development Co. v. Silva, 125 U. S. 247 ; 8 S. Ct. 881 ; Sheldon ». Davidson, 85 Wis. 138 ; 55 N. W. 161 ; H. & W. 295 ; Dawe v. Morris, 149 Mass. 188 ; 21 N. E. 313 ; H. & W. 292. » Bigelow, Fraud, i. 474, 475. » French v. Ryan, 62 N. W. 1016; — Minn. — . * Dawe V. Morris, supra ; Long o. Woodman, 58 Me. 49 ; Bigelow, Fraud, i. 483. 6 Ibid., i. 484. '' Smith u. Smith, 21 Pa. St. 367. • Ibid., i. 486 ; Donaldson v. Farwell, 93 U. S. 631. RESCISSION OP CONTRACT. 251 ing that the former constitutes fraud, ^ but not the latter. « A representation of law does not ordinarily affect the validity of a contract.' "A representation of law," says Sir George Jessel, " is this, — when you state the facts and state a conclusion of law so as to distinguish be- tween facts and law." * A statement of fact which involves a conclusion of law is nevertheless a state- ment of fact. And even a misrepresentation of the law will stand on the same ground if the party to whom it is made is justified in relying upon it. In New York the following rule has been laid down. " Where there is a mistake of law on one side, and either positive fraud on the other, or inequitable, unfair, and deceptive con- duct which tends to confirm the mistake and conceal the truth, it Is the duty of equity to give relief." ' This rule, however, seems somewhat broadly stated. Ordi- narily, one man is not justified in relying upon another's representations in regard to the law; but if the party making the representation of law occupies a fiduciary position toward the other,' or if from his superior means of information the other party is reasonably entitled to accept his statements in regard to the law,' a statement of law has the same effect as a statement of fact. In- deed, in all cases of misrepresentation, the fundamental question is as to the right of the party to whom the 1 Allen V. Hartfleld, 76 HI. 358 ; Farwell v. Hanchett, 120 111. 573 ; II N. E. 875. 2 Gage 1). Lewis, 68 HI. 604. " Upton V. Tribilcock, 91 U. S. 45 ; Fish v. Cleland, 33 HI. 237 ; H. & W. 288. * In Eaglesfield ». Londonderry, 4 C. D. 693. « Haviland v. Willets, 141 N. Y. 35, 50 ; 35 N. E. 958. • Sims V. Ferrill, 45 Ga. 585. ' Boss V. Drinkard, 35 Ala. 434 ; H. & W. 291 ; Bigelow, Fraud, i. 489 ; Titus v. Rochester German Ins. Co., 31 S. W. 127 ; — Ky. — . 252 ELEMENTS- OF THE IA"W OF CONTRACTS. representation is made to aot upon it.^ The character of the representation is an important thing to be con- sidered in determining whether or not action upon the representation is justified, but all the other cir- cumstances of the case are also to be taken into consideration. Even a false representation of fact is not sufficient to justify the other party in acting upon it if it comes under the head of what are termed " seller's statements, " or sim- plex commendatia.^ Under this head come statements by the vendor of property in regard to its value." Eepresen- tations in regard to the productiveness of land have been placed on the, same footing.* In some States representa- tions by the vendor as to the cost of an article or as to offers made for it are also treated as seller's statements.' All such representations,, however, may be mad« under circumstances entitling the buyer to rely upon them, as where a fiduciary relation exists between the parties, or where one party has or assumes to have special knowl- edge of the value of the property upon which he knows the other relies.* The party to whom the representation is made must be induced thereby to enter into the contract. That isy he must be ignorant, of the truth, must believe the repre- sentation, and must enter into the contract as a result 1 Griel v. Lomax, 94 Ala. 641 ; 10 S. 232. « Lehigh Zinc Op. v. Bamford, 150 U; S. 665; Southern Develop- ment Co. «. Silra, 125 U. S. 247 ; 8 S. Ct. 881 ; Gordon v. Butler, 105 U. S. 5.53 ; Bigelow, Fraud, i. 490. » Ibid., i. 491 ; Conly »., Coffin, 115 N. C. 563; 20 S. E. 207. * Gordon v. Parmelee, 2 Allen, 212. ' Bigelow, Fraud, i. 492 ; Medbury v. Watson, 6 Met. 246 ; Long V. Woodman, 58 Me. 52 ; contra^, Page v. Parker, 43 N. H. 363 ; Jack- son V. Armstrong, 50 Mich. 65 ; 14 N. W. 702. * Bigelow, Fraud, i. 496 ; Chrysler v. Canaday, 90 N. Y. 272 ; Stover V. Wpod, 26 N. J. Eq. 417. KESCISSION OP CONTKACT. 253 of that belief. 1 A man ■who aets upon the strength of his own information,^ or upon a representation by a third party,' cannot avoid his contract on the ground of misrepresentation, because the misrepresentation has not been the cause of his entering into the contract. But it is not necessary that the false representation should have been the sole inducement to the contract; it is sufficient if it was a material inducement, though there may have been other material inducements.* The party acting on the misrepresentation must ha,ve been justified in so acting. The representation must therefore be made either to him personally, or to a third person to be communicated to him. Thus a report of the state of the affairs of a corporation filed with a pub- lic officer as required by law is not a representation on which any one is justified ill acting.' The representation must be acted on within a reason, able time after it is made." According to some courts a person must use reason- able diligence to discover for himself facts obvious to an ordinary observer, of which the means of knowledge are equally available to both parties, and if he fails to do this he cannot set up that he has been misled by the other party.' In the application of this rule, says the Supreme Court of Massachusetts, " the circumstances of 1 Bigelow, Fraud, i. 521 ; Ming v. Woolfolk, 116 U. S. 599; 6 S. Ct. 489. 2 Diokinson v. Lee, 106 Mass. 557. 8 Wachsmuth v. Martini, 154 111. 515 ; 39 ISf. E. 129. * Ruff V. Jarrett, 94 111. 475 ; Sioux 'Nat. Bank v. Norfolk Sta,te Bank, 56 F. 139 ; 5 C. C. A. 448 ; 12 U. S. App. 347. 6 Hunnewell v. Duxbury, 1 54 Mass. 286 ; 28 N. E. 267 ; H. & "W. 303. 6 Sharpless v. Gummey, 166 Pa. St. 199; 30 A. 1127. ' Slaughter v. Gerson, 13 Wall. 379,; Washington Cent. Imp. Co. V. Newlands, 11 Wash. 212 ; 39 P. 366 ; Brady v. Finn, 162 Mass. 260 ; 58 N. E. 506 ; Hoist u. Stewart, 161 Mass. 516; 37 N. E. 755. 254 ELEMENTS 01" THE LAW OP CONTRACTS. each ease should be considered to determine whether the plaintiff has been guilty of such inexcusable negligence as should preclude him, under a general rule of public policy, from having a remedy against one who has fraud- ulently abused his confidence."^ What rule of public policy requires the courts to uphold a fraud is not clear. The more rational rule is that a man who has deceived another has no right to say "you ought not to have trusted me " in any case, if the other party has actually relied on his representations." The negligence of one party doubtless aids the other in perpetrating a fraud, but there is no good reason why the shrewd rascal should therefore be allowed to take advantage of the careless innocent. It has already been stated that misrepresentation may be innocent or fraudulent. In either case the contract is voidable, but the methods of obtaining rescission are different. The diiferences in regard to the manner of rescission will be explained later; but it is here neces- sary to point out the difference between innocent and fraudulent misrepresentation, or to use other terms, between misrepresentation and fraud. If a misrepresentation is made with knowledge of its falsity it is always fraudulent. A misrepresentation made without belief in its truth is fraudulent. And a misrepresentation made recklessly without caring whether it be true or false is fraudulent.' So far the authorities are in harmony. On the question whether a false statement made with an honest belief in its truth but without reasonable grounds for such belief is fraudu- * Hoist 17. Stewart; supra. ^ BigeloTV, Fraud, i. 524-528 ; Speed v. Hollingsworth, 54 Kans. 436; 38 P. 496; Wilson v. Carpenter, 21 S. E. 243; — Va.— ; Red- grave V. Hurd, 20 C. D. 1. ' Lord Hersehell, in Derry v. Peek, 14 A. C. 337. EESCISSION OF CONTEACT. 255 lent there is a difference of opinion. It is held hy the House of Lords that want of reasonable ground to believe that a statement is true does not make such statement fraudulent; * and this is the doctrine of some American courts.'^ On the other hand, other courts hold that a positive statement of a fact within one's means of knowl- edge implies that one has knowledge of the truth of his statement; and that such a statement is therefore fraudu- lent.' The doctrine of the United States Supreme Court is not clear. That court has held erroneous an instruction that lack of reasonable ground for belief in a statement constitutes fraud;* but it has also said "that a person who makes representations of material facts, assuming or intending to convey the impression that he has actual knowledge of the existence of such facts, when he is conscious that he has no such knowledge, is as much responsible for the injurious consequences of such representations, to one who believes and acts upon them, as if he had actual knowledge of their falsity." s (3) DuEESs. — A person who is induced by duress to enter into a contract may avoid the contract on the ground of such duress. The duress operates as a con- dition subsequent affecting the validity of the contract. The contract is voidable, not void," because the act of 1 Derry v. Peek, supra. 2 McKown V. Purgason, 47 la. 636 ; H. & W. 301 ; Xamberton v. Dnnham, 165 Pa. St. 129; 30 A. 716. 8 Chatham Furnace Co. v. Moffatt, 147 Mass. 403; 18 N. E. 168 H. & W. 298 ; Cole v. Cassidy, 138 Mass. 437 ; Glaspie v. Keator, 12 TJ. S. App. 281 ; 56 F. 203 ; 5 C. C. A. 474 ; Cabot v. Christie, 42 Vt. 121. * Lord V. Goddard, 13 How. 198. 6 Lehigh Zinc Co. 2 Ex. 487 ; 4 Ex. 17 ; Ewell's L. C. 614. 264 ELEMENTS OP THE LAW OP CONTRACTS. factory solution of the question, for reasons already given.' With the exception of the cases of infancy and mental incapacity, it is a general principle that rescission is granted only where there can be a restitutio in integrum ; and that the party seeking rescission shall do every- thing in his power to bring about such restitution.^ This rule is not absolute, but rests on general principles of equity. Accordingly if the party seeking to rescind has received no benefit from the contract he may obtain rescission even where there can be no restitutio in inte- grum. Thus where A. was induced by B.'s misrepre- sentation to form a partnership with B., it was held that A. was entitled to rescission of the contract of partnership, and to the recovery of the capital he had put in, although the partnership business had failed.' So where A. sold property to B., and the contract was voidable on account of A.'s misrepresentations, B. was allowed to rescind the contract, although the property had been taken from B. by a sale under a prior lien.* So where the thing received has been destroyed, rescis- sion will nevertheless be granted.^ And in any case where without fault of his own the party seeking rescis- sion is unable to restore what he has received, rescission will nevertheless be granted if the court can so mould its decree as to restore the parties to their original position." 1 Ante, p. 235. 2 Bigelow, Fraud, i. 420 ; Sarery v. King, 5 H. L. C. 627 ; TJrquhart V. McPherson, 3 A. C. 831 ; Neblett v. Macfarland, 92 U. S. 101 ; Boane V. Lockwood, 115 111. 490; Carlson v. Segog, 62 N. W. 1132; — Minn. — ; The Ernest M. Munn, 66 F. 356 ; — U. S. App. — . * Adam ». Newbigging, 13 A. C. 308. * Henninger v. Heald, 51 N. J. Eq. 74 ; 26 A. 449. ^ Neblett v. Macfarland, supra ; Scott v. Perrin, 4 Bibb, 360. 6 Thackrah v. Haas, 119 U. S. 499 ; 7 S. Ct. 3U ; Savery v. King, supra. BESCISSION OF CONTEACT. 265 Tender of what one has received is essential if the thing received is of any value -whatever to either party. ^ If the party seeking rescission has by his own act rendered a restitutio in integrum impossible he is not entitled to rescission, although he may have acted in ignorance of the facts rendering the contract voidable.^ Rescission need not go to the whole contract if the contract is divisible, and the cause for rescission affects only part of the contract. If, however, either the promise or the consideration be indivisible, there can be no par- tial rescission.* § 4. How the Right of Rescission may be Lost. The right of rescission may be barred by ratification, by laches, and by the statute of limitations. (a) Batification, Certain peculiar rules governing infants' contracts render it necessary to examine the question of ratifica- tion of such contracts separately. An infant can ratify a voidable contract only after attaining majority. In order that the ratification may be set up in a given action, it must take place before that action is brought.* "What will constitute a ratification depends upon the nature of the transaction. Where an infant purchases 1 Bigelow, Fraud, i. 426 ; Bassett v. Brown, 105 Mass. 551 ; Fewell ». Deane, 21 S. E. 1 ; — S. C. — . 2 Bigelow, Fraud, i. 423; McCrillis v. Carlton, 37 Vt. 139; Hand- forth V. Jackson, 150 Mass. 149; 22 N. E. 634 ; Rigdon v. Walcott, 141 m. 649; 31 N. E. 158. 8 Bigelow, Fraud, i. 422 ; Barrie v. Earle, 143 Mass. 1 ; 8 N. E. 639; Merrill v. Wilson, 66 Mich. 232; 33 N. W. 716. * Thornton v. Blingworth, 2 B. & C. 824; Ford v. Phillips, 1 Pick. 202 : Hale v. Gerrish, 8N. H. 374; Ewell'sL. C. 171 ; coniro, Buchanan V. Hubbard, 119 Ind. 187; 21 N. E. 538. 266 ELEMENTS 01" THE LA"W OF CONTEACTS. property, any aet after he attains majority consistent only with, an intention on his part to assert his own- ership of the property will amount to a ratification.^ Thus the sale of the property " or the retention of it for an unreasonable length of time," will amount to a ratification of the purchase. The retention of the property, however, may be so explained as not to con- stitute a ratification. Thus where lumber was furnished to an infant for building a house, it was held that retention of the property after the infant came of age did not amount to a ratification, the lumber having lost its original form.^ Any act showing that a person intends to be bound by a contract which he made before coming of age will constitute a ratification. Bringing suit on the contract is of course a ratification.' Where there is a contract by an infant to serve for a given time, which extends beyond his minority, if the infant remains in his employer's service after coming of age he ratifies the contract.' Where an infant buys land and gives a purchase- money mortgage, by asserting his title to the land after coming of age, he ratifies the mortgage.' Only acts which show an intention on the part of the infant to afiirm the contract can constitute a ratification. A mere failure to disaffirm the contract does not amount 1 Lawsou V. Lorejoy, 8 Me. 405 ; Swell's L. C. 166 ; Henry v. Root, 33 N. Y. 526 ; Pattee's Cases on Contracts, 20. ^ Lawson v. LoTejoy, supra ; Henry v. Root, supra. s Delano v. Blake, 11 "Wend. 85; Boyden v. Boy den, 9 Pick. 519; Pattee's Cases on Contracts, 94. * Bloomer v. Nolan, 36 Neb. 51 ; 53 N. W. 1039. ' Middletou v. Hoge, 5 Bush, 478. ' Porsyth v. Hastings, 27 Vt. 646 ; State v. Dimick, 12 N. H. 194. ' TJecker t>. Koehn, 21 Neb. 559 ; 32 N. W. 583 ; Kennedy v. Baker, 159 Pa. St. 146; 28 A. 252; Eobbins v. Eaton, 10 N. H. 561. EESCISSION OF CONTKACT. 267 to a ratification.^ There is an exception to this xiile, as we have seen, where an infant acquires property to which certain obligations are attached. In such cases, failure to disaffirm the purchase within a reasonable time after arriving at majority constitutes a ratification of the purchase." A mere acknowledgment that a debt is due is insuffi- cient,* even though accompanied by a statement that the creditor will get his pay.* Part payment of a debt will not amount to a ratification;^ nor will an offer to compromise.' The making of a will directing that the testator's just debts should be paid has been held not to amount to a ratification of debts contracted during minority.' Eatification must be voluntary, and not brought about by fear of arrest.* A ratification is valid though made in ignorance of the law giving the party the right to avoid his contract on the ground of infancy.' 1 Smith V. Kelley, 13 Met. 309 ; Ford v. Phillips, 1 Pick. 202 ; Goodsell V. Myers, 3 Wend. 479 ; Pattee's Cases on Contracts, 19 ; Carrell v. Potter, 23 Mich. 377. 2 Ante, p. 262. 8 Ford V. Phillips, supra ; Keudrick v. Neisz, 17 Col. 506; 30 P. 245 ; Goodsell v. Myers, supra. 4 Hale V. Gerrish, 8 N. H. 374; Ewell's L. C. 171. 6 Kendrick v. Neiaz, supra; Catliu v. Haddex, 49 Conu. 492; Hinely v. Margaritz, 3 Pa. St. 428; contra, American Mtg. Co. v. Wright, 101 Ala. 658; 14 S. 399. 6 Bennett v. Collins, 52 Conn. 1. ' Smith V. Mayo, 9 Mass. 62 ; but see Merchants' Fire Ins. Co. v. Grant, 2 Edw. Ch. 544. 8 Harmer v. Killing, 5 Esp. 102. » Morse v. Wheeler, 4 Allen, 570 ; Anderson v. Soward, 40 Ohio St. 325 ; American Mtg. Co. a. Wright, supra ; Clark v. Van Court, 100 Ind. 113, overruling Felton v. Wiseman, 40 Ind. 148; contra, Hinely v. Margaritz, supra. 268 ELEMENTS OP THE LAW OF CONTRACTS. •Eatification may be conditional, in which case the condition must be performed in order that the rat- ification may be set up to overcome the defence of infancy.* The subject of infants' contracts in England is now governed by the Infants' Relief Act of 1874.^ Contracts made by parties lacking in mental capacity may be ratified when the disability ceases." Knowledge of the law rendering such contracts voidable is not essential to the validity of such ratification.* It seems that the acts set up as constituting a ratification must, as in the case of an infant's contracts, show an intention to affirm the contract. In the case of contracts voidable for mistake, mis- representation, fraud, or unfair dealing, ratification con- sists in some act or course of conduct showing, first, a knowledge of the facts rendering the contract voida- ble; and secondly, a willingness to abide by the eon- tract. An act done in ignorance of the facts rendering the contract voidable cannot be a ratification of the contract.* In every case of a voidable contract the injured party has his election to afiirm or disaffirm the contract. "Any decisive act by a party, with knowledge of his rights and of the facts, determines his election in the 1 ETerson v. Carpenter, 17 Wend. 419; Proctor v. Sears, 4 Allen, 95; Kendrick v. Neiaz, 17 Col. 506; State ^. Binder, 31 A. 215; — N. J. L. — . " Anson, Contracts (Sth ed.). 111. ' Carpenter v. Kodgers, 61 Mich. 384 ; 28 N. W. 156. * Arnold v. Richmond Iron Works, 1 Gray, 434. 6 Brophy v. Lawler, 107 111. 284; Baker v. Maxwell, 99 Ala. 558; 14 S. 468; Kraus «. Thomp.sion, 30 Minn. 64; Pratt v. Philbrook, 41 Me. 132 ; Hays v. Midas, 104 N. Y. 602 ; 11 N. E. 141 ; Equitable Co-op. Foundry v. Hersee, 103 N. Y. 25 ; 9 N. E. 487. EESCISSION OF CONTEACT. 269 case of inconsistent remedies. " ^ The commencement of an action on the contract is therefore a ratification.^ Merely advertising land for sale under a mortgage after filing a bill to rescind the mortgage for fraud is not a ratification of the mortgage, where no attempt to sell is made.' Where the plaintifE tenders back property- received under a voidable contract, and the property is refused, rescission takes place, and a subsequent sale of the property by the plaintiff is not a ratification of the contract.^ In order to constitute an election there must be a deliberate assertion of one of two alternative rights. An action brought hastily upon the contract, and after- wards dismissed, is not, therefore, a bar to a subsequent rescission of the contract.^ Deliberation, however, is presumed in such cases, but the presumption is rebut- table.^ Election is sometimes confounded with estoppel,' though the distinction is very clear. The deliberate act of one party constitutes an election, while an estoppel can arise only when the other party's position has been changed.' (5) Laches. Laches consists in the neglect to assert a right. "The length of time during which the party neglects 1 Eobb t'. Vos, 155 TJ. S. 13, 43. 2 Thompson v. Howard, 31 Mich. 309 ; Thomas v. Watt, 62 N. W. 345 ; — Mich. — ; Evans v. Eothschild, 54 Kans. 747 ; 39 P. 701 ; Connihan v. Thompson, 111 Mass. 270; Conrow v. Little, 115 N.Y. 387 ; 22 N. E. 346. 8 Watts V. British & Am. Mtg. Co., 60 F. 483 ; 9 C. C. A. 98. * Barnett v. Speir, 93 Ga. 762; 21 S. B. 168. 6 Johnson-Brinkman Co. v. Missouri Pac Ky. Co., 126 Mo. 344 ; 28 S. W. 870. 6 Bigelow, Fraud, i. 437. ' As in Johnson-Brinkman Co. v. Missouri Pac. Ey. Co., supra. ' 3 Northwestern Law Eeview, 157. 270 ELEMENTS OE THE LAW OF CONTKACTS. the assertion of his rights, which must pass in order to show laches, varies with the peculiar circumstances of each case, and is not, like the matter of limitations, subject to an arbitrary rule. It is an equitable defence, controlled by equitable considerations , and the lapse of time must be so great, and the relations of the defend- ant to the rights such, that it would be inequitable to permit the plaintiff to now assert them."* Laches cannot be imputed to one who is ignorant of his rights." (c) Statutes of Limitations. The statute of limitations may prevent the bringing of an action for rescission, and it may operate also to bar rescission by plea. 1 Halstead v. Grinnan, 152 TJ. S. 412, 416; Alsop ii. Eiker, 155 U. S. 448. 2 Halstead v. Grinnan, supra; Lasher v. M'Creery, 66 E. 834. THE ASSIGNMENT OP CONTEACT. 271 CHAPTEE IX. THE ASSIGNMENT OF CONTEACT. § 1. At Common La-w. The right to enforce a contract is a chose in action. Choses in action at common law were in general not assignable by the act of the owner. At common law, therefore, the attempt of a party to a contract to transfer his rights thereunder to a third party had no effect.^ An exception to this rule was recognized by the law merchant in the case of bills of exchange. Bills of exchange are negotiable; that is, the bill is regarded as a thing to which the legal title may be transferred in some cases by delivery, and in any case by indorsement. Whether promissory notes were also negotiable was a disputed question, but the statute of 3 & 4 Anne , c. 9, settled their negotiability. Checks are negotiable ; and in this country corporate bonds payable to bearer are negotiable by custom.^ § 2. In Equity. In equity different rules prevail. While an assign- ment of an ordinary contract in equity does not give the assignee the title to that contract, the assignment imposes certain duties on the assignor and on the other party to the contract. These duties, though originally ignored by the common-law courts, were enforced in 1 Glenn v. Marbury, 145 U. S. 499 ; 12 S. Ct. 914. 2 White V. Vermont & Mass. R. R. Co., 21 How. 575. 272 ELEMENTS OF THE LAW OP CONTRACTS. equity. When a party to a contract has assigned his rights thereunder, a court of equity will compel him to respect such assignment. The assignee may therefore compel the assignor to permit him to sue at law in the assignor's name, upon giving the assignor indemnity against the costs of the action.* The other party to the contract will also be compelled to respect the rights of the assignee in so far as he has notice thereof. Even in equity not all contracts are assignable. Whenever the personal performance of the contract by the assignor is of the essence of the contract, an assign- ment of the contract while the assignor is still under any obligation to perform the contract personally is ineffectual. Thus where A. hired a carriage of B., a coachmaker, for five years at a yearly rent, payable in advance each year, the carriage to be kept in repair and painted once a year by the maker, it was held that B. could not assign the contract, since it involved personal performance on his part.^ But where certain railway wagons were let with an agreement that the owner would keep them in repair, and "cause them to be repaired " upon notice, it was held that the contract was not personal in its nature and could be assigned.' When the contract involves the performance by one party of his part of the contract on the strength of the other party's credit, the one to whom credit is given cannot assign the contract so that the other party can be compelled to accept the credit of the assignee, for the giving of credit rests on the personal confidence of the creditor in the debtor.* But when goods are to be paid 1 Croucli V. Credit Foncier, L. R. 8 Q. B. 380 ; Henderson v. Welch, 3 Gilra. 340. 2 Robson V. Drummond, 2 B. & Ad. 303. 3 British Waggon Co. v. Lea, 5 Q. B. D. 149 ; W. 449. * Arkansas Valley Smelting Co. v. Belden Mining Co., 127 V. S. 379 ; 8 S. Ct. 1308 ; W. 453 ; H. & W. 438. THE ASSIGNMENT OF CONTRACT. 273 for on delivery, the vendee can assign his rights under the contract, though not his liabilities.^ In short, a party cannot be compelled to accept any other perfor- mance of a contract than that for which he has bar- gained; and in so far as the assignor's rights under the contract are necessarily bound up with his liabilities thereunder, since the liabilities cannot be Jtsaigned, the rights cannot be assigned. To constitute an equitable assignment there must be some significant act expressing the intention of the assignor that the assignee shall have the debt or right in question. If the assignment is voluntary, that is, without consideration, enough must have been done by the assignor to make a complete gift of the chose in action; for if the transfer is incomplete, equity will not aid a volunteer by compelling its completion.^ The assignment of part of a fund is generally recognized in equity as valid.* Whether such assignment is good- without the consent of the debtor is a disputed point.* A distinction is drawn in some States between as- signments of claims against individuals and against public corporations, and partial assignments of claims against the latter are held to be against public policy, as tending to embarrass the administration of public affairs.^ 1 Rochester Lantern Co. v. Stiles & Parker Press Co., 135 N. Y. 209 ; 31 N. E. 1018 ; H. & W. 447. 2 Harding v. Harding, 1 7 Q. B. D. 442. 8 James v. Newton, 142 Mass. 366 ; 8 N. E. 122; W. 461 ; Field v. Mayor, 2 Seld. 179; H. & "W. 453; Ex parte Moss, 14 Q. B. D. 310; Warren v. First Nat. Bk., 149 111. 9 ; 88 N! E. 122. * James v. Newton, supra. That the debtor's consent is necessary, see Mandeville v. "Welch, 5 Wheat. 277; contra, Field v. Mayor, supra; Warren v. First Nat. Bk., supra. 6 Delaware County v. Diebold Safe Co., 133 U. S. 473 ; 10 S. Ct 399. 18 274 ELEMENTS OF THE LAW OF CONTRACTS. An assignment may be made before a right has accrued, and if made upon a valuable consideration it will be given effect by a court of equity when the right does come into existence.^ In order that an assignment may impose any duty to the assignee upon the party liable under the contract, it is necessary that such party should have notice of the assignment; ^ but as between assignor and assignee the assignment is good without notice.* The growth of equitable ideas in the common-law courts has modified the doctrines of such courts with reference to assignments. Courts of law will now pro- tect the interest of the assignee of the whole of a fund, so that the debtor cannot deal with the assignor after notice of assignment to the detriment of the assignee.* In many States statutes authorize the assignee to sue in his own name at law. Even in the States where the common-law rule prevails and the assignee can sue at law only in the name of the assignor, the assignee's rights are so well protected by the common-law courts that it is only in exceptional instances that the assignee of the whole of a fund can bring suit in equity to enforce his claim ; ° but the assignee of part of a claim must always sue in equity." The assignment of a contract transfers to the assignee only such rights as his assignor possesses against the other party at the time the latter receives notice of the ' Field V. Mayor, supra; Peugh v. Porter, 112 U. S. 737; 5 S. Ct. 361. 2 Spain V. Hamilton, 1 Wall. 604. ' Gorringe v. Irwell Works, 34 C. D. 128. * Welch V. Mandeville, 1 Wheat. 233. 5 New York Guaranty Co. v. Memphis Water Co., 107 U. S. 205 ; 2 S. Ct. 279 ; Hayward v. Andrews, 106 U. S. 672 ; 1 S. Ct. 644 ; Carter V. United Ins. Co., 1 Johns. Ch. 463 ; H. & W. 452. s Field u. Mayor, 2 Seld. 179 ; H. & W. 453. THE ASSIGNMENT OE CONTEACT. 275 assignment/ unless the contract itself provides that the assignee shall have greater rights than his assignor.^ As between successive assignments of the same fund there are two theories as to the priority of the different assignees. According to the highest authority in Eng- land and America a purchaser for value and without notice of a prior assignment who gives notice to the debtor or trustee is entitled to priority over a prior assignee who has failed to give such notice.' Various State courts, however, hold that successive assignments have priority according to the order in which they are actually made.* § 3. Negotiability. Some contracts are negotiable as well as assignable. Bills of exchange, promissory notes, and checks are negotiable instruments ; other instruments may be nego- tiable by custom or statute. An instrument which is negotiable is looked upon for many purposes as a thing. The instrument is ordinarily regarded as the contract, and the transfer of the legal title to the instrument transfers the right to sue at law on the contract. The transfer of the legal title takes place by indorsement, if the instrument is payable to order; by delivery, if the instrument is payable to bearer. If the legal title is not transferred, as where a note payable to order is transferred by delivery, the transferee's rights are 1 Mangles v. Dixon, 3 H. L. C. 702 ; Tlmted States v. Buford, 3 Pet. 12 ; Scott V. Shreere, 12 Wheat. 605. 2 Re Blakely Ordnance Co., L. R. 3 Ch. 158 ; Ex parte Asiatic Banking Ass'n, L. R. 2 Ch. 397. ' Dearie v. Hall, 3 Russ. 1 ; Foster v. Cockerell, 3 CI. & F. 456 ; Jndson v. Corcoran, 17 How. 612, 615 ; Spain v. Hamilton, 1 Wall. 604, 623 ; Methven v. Staten Island Light Co., 66 F. 113 ; — U. S. App. — . * Thayer v. Daniels, 113 Mass. 129; Muir v. Schenck, 3 Hill, 228; Sutherland v. Reeve, 151 Dl. 384; 38 N. E. 130. 276 ELEMENTS OF THE LAW OF CONTEACTS. simply those of an assignee of any chose in action. He must sue at law in the name of his assignor, and he stands in his assignor's shoes. The transfer of the legal title to the instrument, however, places the transferee on an entirely different footing. He becomes the owner of the instrument, and may enforce the contract in his own name. Moreover, if he is a purchaser of the in- strument for value before maturity, and without notice of any defences, he becomes entitled to demand of the party liable on the instrument the sum of money called for by the contract, and may therefore stand in a better position than his assignor. The special rules governing negotiable instruments belong not to the general law of contracts, but to the law merchant.^ § 4. Assignment by Operation of Lavr. A chose in action may be transferred from one person to another by operation of law. The ordinary ways iu which such transfer takes place are by death, by mar- riage, by bankruptcy or insolvency, and by the convey- ance of land. (a) By Death. The executor or administrator of a deceased person succeeds to the personal estate of the deceased, and becomes liable in his representative capacity for all claims against such estate. If a contract involves the personal performance of any essential act by the deceased the contract is construed as conditional on his life, and is terminated by his death.* Eights of action for breaches of contract occurring in the lifetime of a deceased person pass to his executor or 1 The student will find the stthject of Negotiable Instruments ably treated in Bigelow on Bills and Notes. 2 Dickinson v. Calahan, 19 Pa. St. 227 ; H. & W. 479. THE ASSIGNMENT OF CONTRACT. 277 administrator; but the personal representative cannot recover any damages for strictly personal injuries. Thus in a suit for breach of promise of marriage, the executor of the injured party can recover only the pecuniary damages sustained by his testator.* (b) By Marriage. At common lawy upon a woman's marriage, the right to collect her choses in action passed to her husband. If, however, he failed to reduce them into possession during coverture her rights remained unchanged by the coverture.^ The marriage also made the husband jointly liable with his wife for all liabilities she had incurred before marriage ; ' but this liability existed only during coverture.* The rights of married women are now almost universally altered by statute. (c) By Bankruptcy and Insolvency. Statutes in some jurisdictions provide for the involun- tary transfer of the property of an insolvent debtor to a trustee. (d) By the Transfer of Land. The transfer of land has the effect to transfer the benefit of certain contracts, and the obligation of certain contracts in regard to that land. The subject of cove- nants running with the land, however, is more properly treated in a work on Real Property. 1 Chamberlain v. 'Williamson, 2 M. & S. 408. 2 Fleet V. Perrina, L. R. 4 Q. B. 500. 8 Plainer v. Patcliin, 19 Wis. 333; H. & W. 478. * Bell V. Stocker, 10 Q. B. D. 129. 278 ELEMENTS OP THE LAW OP CONTEACTS. CHAPTER X. THE DISCHABGB OF CONTBACT. CoNTKACTUAL obligation may be discharged by perform- ance ; by the happening of an event which is an internal condition subsequent; by the happening of an event which is an external condition subsequent; and by the discharge of the right of action arising fronl breach of contract. § 1. Performance. The performance of an obligation necessarily dis- charges that obligation. The performance must be in strict accordance with the terms of the contract, subject only to the rule de viinimis non curat lex. It is held in some states that substantial performance in good faith of a condition precedent may be sufiS.cient; ^ but this rule applies only to the performance of conditions, not to the performance of obligations. Performance in a different manner from that called for by the contract will discharge the obligation if such performance is accepted by the promisee;'' and if the promisee requests a change iu the manner of perform- ance, the promisor is discharged if the promisee pre- vents him from performing in the substituted manner.' 1 Nolan V. 'Whitaey, 88 N. Y. 648 ; W. 57.5 ; H. & "W. 542 ; ante, p. 162. 2 Leather Cloth Co. v. Hieronimus, L. R. 10 Q. B. 140; Swain v. Seamens, 9 Wall. 254 ; Rogers v. Rogers, 139 Mass. 440 ; 1 N. E. 122. s Cummings v. Arnold, 3 Met. 486 ; Stearns v. Hall, 9 Cush, 81. THE DISCHABGE OF CONTKACT. 279 It makes no difference in this respect wliether the original contract is within the Statute of Frauds or uot.i Performance may be conditional; that is to say, an act may be accepted as performance, subject to some condition subsequent. If the condition subsequent happens, the performance no longer operates as a dis- charge of the obligation, and the promisee has a right of action on the original contract. A common instance of conditional performance is where a negotiable instru- ment is given in discharge of an obligation. Such an instrument may operate either as an absolute or as a conditional discharge. If the discharge is absolute, the original obligation is forever gone; if the discharge is conditional, the obligation is discharged by the nego- tiable instrument; but if the negotiable instrument is dishonored at maturity, the original obligation is revived. Whether a negotiable instrument is to operate as a conditional or as an absolute discharge of the original obligation is a question of intention. There is a conflict of authority as to the presumption in such a case, but the weight of authority supports the view that a negotiable instrument is presumed, in the absence of evidence, to operate only as a conditional discharge.^ § 2. Tender. Tender is not equivalent to performance. Tender consists in attempted performance.' If the promise is to pay money, tender of the money, if the tender is kept good, will stop the running of interest, and will prevent the promisee from recovering costs. If the contract to » Browne, Statute of Frauds, §§ 423, 424. 2 The cases are collected in Benjamin on Sales (Bennett's 6th ed.), pp. 723-727. 8 Anson, Contracts {8th ed.), 284. 280 ELEMENTS OP THE LAW OF CONTBACTS. pay the money is unilateral, the obligation to pay is not discharged by the tender. If the contract is bilat- eral, a refusal by the promisee to accept performance may amount to a renunciation of the contract, and may be treated by the promisor as a discharge of the con- tract.^ If the contract is trnjlateral, and is not for the payment of money, a refusal to accept performance will discharge the promisor.'' Tender must, of course, corre- spond in all respects to the terms of the contract,' § 3. Internal Conditions Subsequent. The happening of an event which is an internal con- dition subsequent, that is to say, which is a condition subsequent according to the construction of the contract itself, will discharge the contract. Thus in a contract of sale with a provision that the thing sold may be returned if not satisfactory to the vendee, the return of the thing sold will discharge the vendee's obligation to pay for it.* There are other internal conditions which are not expressed in terms, but which are, nevertheless, according to a true construction of the contract, part of the contract. Among such internal conditions may be mentioned legal impossibility; the death of a party to a contract for personal services ; and the destruction of the subject-matter of the contract. The circumstances under which such events will be construed as internal conditions subsequent have been already explained in the chapter on the Construction of Contracts. Again, the failure of a thing sold to answer the description in the contract of sale may. if the article is actually 1 See post, pp. 287 et seq. 2 Lamb v. Lathrop, 13 Wend. 95. 8 Patch V. Collins, 1.58 Mass. 468 ; 33 N. E, 567 ; Dixon k. Clarke, 5 C. B. 379. ■• BnckstafE v. Russell, 151 U. S. 626; and see Head v, Tattersall, L. R. 7 Ex. 7. THE DISOHABGE OF CONTKACT. 281 received, amount to a condition subsequent entitling the vendee to return the article and thereby be discharged from his obligation to pay for it. In England the right of return is limited to cases where the thing received is essentially different from the thing bargained for. Some of the American courts allow a mere breach of warranty to be treated as a condition subsequent, ^ but the English rule is more commonly followed.^ § 4. External Conditions Subsequent. The external conditions subsequent which will dis- charge contractual obligation, that is, the facts which the law recognizes as discharging such obligation, in- clude waiver; gift; release; the substitution of a new contract; breach of contract; repudiation; "failure of consideration"; the alteration or loss of a written instrument; merger, and estoppel. (a) Waiver. Waiver is not sufficient to discbarge a contract in this country, nor generally in England. In the case of a bill of exchange or promissory note the English courts have held that waiver by the holder of his rights will discharge the parties to the instrument.' Such waiver is now required by the Bills of Exchange Act, 45 & 46 Vict. , c. 16, § 62, to be in writing. (J) Gift. The promisee may make a gift of the obligation to the promisor. A gift must be executed; that is, there must 1 Bryant v. Isbnrgh, 13 Gray, 607 ; H. & "W. 609. ' Freyman v. Knecht, 78 Pa. St. 141 ; H. & W. 607 ; BenjamiB on Sales (Bennett's 6th ed.), 904. 8 Foster v. Dawber, 6 Ex. 839. 282 ELEMENTS OP THE LAW OP CONTBAOTS. be an act done sufficient in law to amount to a transfer of the property given. A chose in action is, of course, the subject of gift. If the chose in action is evidenced by a written instrument, delivery of the instrument is ordinarily necessary.* If delivery is impossible, a re- ceipt in full is sufficient, if executed with the intention of making a gift.^ (c) Release. A release at common law is a deed discharging an obligation. A release may be conditional, subject either to a condition precedent or to a condition subsequent. Thus in Gibbons v. Vouillon,^ a deed provided that the defendant should carry on business under the inspection of trustees ; that his creditors, who were parties to the deed, should not sue him for five years ; and that if any creditor should interfere with the defendant the defend- ant's obligation to such creditor should be discharged. It was held that the deed operated as a release, subject to the condition precedent of the plaintiff's interference with the defendant. On the other hand, where a deed of composition contained a release of their claims by the creditors, with a condition that the release should be void if the composition was not paid, the non-pay- ment of the composition was held to restore the creditors to their original rights. * A release must be distinguished from a covenant not to sue. A release discharges the obligation, while a 1 Young V. Power, 41 Miss. 197 ; Buswell v. Fuller, 156 Mass. 309 ; 31 N. E. 294; Slade v. Mutrie, 156 Mass. 19; 30 N. E. 168; Young v. Young, 80 N. Y. 422. 2 Green v. Langdon, 28 Mich. 221 ; Lewis's Estate, 139 Pa. St. 640 ; 22 A. 635 ; McKenzie v. Harrison, 120 N. Y. 260 ; 24 N. E. 458. » 8 C. B. 483; W. 311. * Newingtou v. Levy, L. E. 6 C. P. 180. THE DISCHARGE OF CONTRACTS. 283 covenant not to sue is an independent contract, and does not affect the right of action on the original claim. * A covenant never to sue, however, may be pleaded in bar of the action by the covenantee, in order to prevent circuity of action,^ A covenant not to sue is purely a personal defence, available only between the parties to the covenant." A release, being under seal, requires no consideration at common law. In some States, however, statutes have been passed declaring that "a seal is only presumptive evidence of consideration." The effect of such statutes is to make a release invalid without consideration.* In New Jersey, however, a different interpretation is placed on such a statute ; and a sealed instrument without con- sideration is held binding if the parties intended there should be no consideration.^ (d) New Contract. A contract may be discharged by another contract. A contract to discharge an existing contract may be inferred from the making of another contract incon- sistent with the first.* In case the first contract is bilateral, an agreement by each party to release the other is a new contract which consists of the mutual promises of the parties." In case the first contract is unilateral a mere agreement to discharge the contract is, of course, not binding on the promisee unless there is some distinct consideration for his promise to dis- 1 Ford V. Beech, 11 Q. B. 852 ; W. 323. 2 Ibid. 8 Deau V. Newhall, 8 T. E. 168; Walmesley v. Cooper, 11 A. & E. 216. * Wabash Western Ry. ». Brow, 65 F. 941 ; — U. S. App. — , 6 AUer V. Aller, 40 N. J. L. 446 ; H. & W. 82. 6 Thornhill v. Neats, 8 CIB. (Nr's.) 831. ' CoUyer v. Moulton, 9 E. I. 90; H. & W. 522 ; McCreery v. Day, 119 N. Y. 1 ; 23 N. E. 198; W. 360. 284 ELEMENTS 01- THE LAW OP CONTRACTS. charge.^ On principle, where A. and B. make a bilateral contract, such contract can be discharged by a new con- tract only where that new contract varies the obligations on both sides. If A.'s obligation alone is increased, while B. remains under the same obligation as before, there is no consideration for A.'s promise to incur the additional obligation; while if A.'s obligation remains the same, and the new agreement simply diminishes B.'s obligation, there is no consideration for A. 's promise to release B. from his pre-existing obligation. The courts are not agreed on this point, however.^ Any valid alteration of the terms of the original con- tract will amount to the substitution of a new contract, and the discharge of the original contract.' The new contract will be identical with the old, except so far as the terms have been altered. A written contract may be rescinded by a subsequent oral contract; and this though the original contract is within the Statute of Frauds.'* But if the new contract is itself within the Statute of Frauds, it must expressly rescind the old.' If the second contract is within the Statute of Frauds as well as the first, and is not in substitution for the first, the first contract remains in force.* The distinction between the substitution of a new contract for the old, by which the old is entirely discharged, and the sub- stitution of a new mode of performance must be kept carefully in mind. Although the second contract may not be in substitution for the first, the performance of 1 Bragg V. Danielson, 141 Mass. 195 ; 4 N. E. 622. 2 Ante, pp. 70-74. 8 Taylor v. Hilary, 1 C. M. & K. 741 ; W. 297. * Goss V. Lord Nugent, 5 B. & Ad. 65 ; Cummings v. Arnold, 3 Met. 486. ^ Noble V. Ward, L. R. 2 Ex. 135 ; Moore v. Campbell, 10 Ex. 323. * Moore v. Campbell, supra ; Whittier v. Dana, 10 Allen, 326. THE DISCHAEGE OP CONTRACTS. 285 the second contract may be accepted as a substituted performance of the first, and so discharge the first con- tract. In that case, however, it is not the second con- tract, but the performance of it, which discharges the original contract.* The rule of the common law is unumquodque ligamen dissolvitur eodem ligamine quo ligatur, — BYevy obliga- tion must be dissolved in the same manner in which it is created. This rule rested on the rules of procedure by which evidence was classified, and records, deeds, and parol contracts ranked in the order named. In no case at common law could a contract under seal be mod- ified or discharged before breach by a contract not under seal.'' In equity different rules prevailed, and a con- tract under seal could be modified or discharged by a subsequent parol agreement.' And even at common law, a new contract not under seal was binding, though it did not discharge the original contract.^ The equitable rule now prevails in England," and in many of the United States by statute ; ° while in other jurisdictions the common-law courts have adopted it of their own accord.' The code of civil procedure adopted in many of the States is responsible for the introduction of many equitable rules into the common law. (e) Breach of Contract. In a bilateral contract the obligation of one party may be discharged by a breach of contract by the other 1 Rogers v. Rogers, 139 Mass. 440; 1 N. E. 122; Hickman v. Haynes, L. R. 10 0. P. 598; Leather Cloth Co. v. Hieronimns, L. E. 10 Q. B. 140. 2 Spence v. Healey, 8 Ex. 668. 8 Very v. Levy, 13 How, 345, 357 ; Canal Co. v. Eay, 101 U. S. 522. * Nash V. Armstrong, 10 C. B. (n. s.) 259. 6 Steeds v. Steeds, 22 Q. B. D. 537 ; "W. 352. 8 McCreery v. Day, 119 N. Y. 1 ; 23 N. E. 198 ; "W. 360. ' Hastings v. Lorejoy, 140 Mass. 261 ; 2 N. E. 776. 286 ELEMENTS OP THE liAW OP CONTEACTS. party.* In order that the breach of contract should operate as a discharge, the breach must go to the essence of the contract.^ What is or is not of the essence of the contract is a matter of construction which has been already discussed.^ The breach of contract going to the essence operates as an external condition subse- quent; that is to say, the law treats such breach as a condition subsequent, entitling the other party to be discharged from his obligation. The breach does not, however, operate to discharge the contract unless the injured party elects to treat it as a discharge; and there- fore until he treats the contract as discharged it remains in force. The right to treat the breach as a discharge may, of course, be waived.* There is a great deal of confusion in the cases as to the nature of conditions, as already pointed out in the chapter on Conditions. In every bilateral contract if there are two promises, X. and Y., and promise Y. is dependent on promise X., performance of X. is an internal condition precedent to the obligation of Y. But where X. and Y. are independent, performance of X. cannot be a condition precedent to the obligation of Y. In such case, however, if X. goes to the essence of the contract, breach of X. is an external condition subsequent, entitling the injured party to a discharge from promise Y. This distinction between the internal condition precedent and the external condition subse- quent is fundamental, and the failure to appreciate it has been the cause of much confusion in the decisions of courts and the opinions of text-writers. ° 1 Norrington v. Wright, 115 U. S. 188 ; 6 S. Ct. 12 ; W. 593; H. & W. 584. 2 Mersey Co. v. Naylor, 9 A. C. 434 ; W. 586. » Ante, pp. 174-188. * Cahen v. Piatt, 69 N. Y. 348; W. 608; Langdell, Summary, § 177. ^ See ante, pp. 165, 166. THE DISCHAEGE OP CONTEACTS. 287 (/) Repudiation. The absolute and unqualified refusal of one of the parties to a bilateral contract to perform the contract entitles the other party to treat such a refusal as a dis- charge. Such renunciation or repudiation is, like a breach of contract going to the essence, an external con- dition subsequent. There is this difference between an actual breach, however, and a repudiation of the con- tract, that the former will operate as a discharge only when it goes to the essence of the contract; ^ while the latter will operate as a discharge in every case.^ If, however, the contract is only partly bilateral, repudia- tion will not operate as a discharge unless an actual breach would so operate. Thus where A. leases land to B., and the lease contains various stipulations, a refusal by A. to perform a particular stipulation will entitle B. to a discharge from his obligations only in the case where an actual breach would entitle him to such dis- charge. Now an actual breach of a stipulation by A. can discharge B. only where B.'s promise is dependent on A.'s, or where B. is entitled to throw up his lease on account of such breach. If, therefore, there is no dependency between the two promises, and the actual breach by A. of a given promise would not entitle B. to throw up the lease, A. 's refusal to perform cannot operate to discharge B. from his obligations under the lease.' To constitute repudiation there must be either an act 1 Mersey Co. v. Naylor, 9 A. C. 434 ; W. 586 ; contra, Wharton v. Winch, 140 N. Y. 287 ; 35 N. B. 589. 2 lUd. ; Engg v. Moore, 1 10 Pa. St. 236 ; 1 A. 320 ; W. 603 ; Withers V. Reynolds, 2 B. & Ad. 882 ; L. 740; Nichols v. Scranton Steel Co., 137 N. Y. 471 ; 33 N. E. 561 ; Harber Bros. Co. v. Moffat Cycle Co., 151 111. 84 ; 37 N. E. 676; Bradley ». King, 44 lU. 339. s Johnstone v. Milling, 16 Q. B. D. 460; W. 391. 288 ELEMENTS OF THE LAW OF CONTEACTS. rendering performance impossible,^ or an absolute refusal to perform.^ An announcement of "entire inability " to perform has been held sufacient.» If an act is done rendering performance impossible, this is a repudiation of the contract, although the promisor might be able by- some subsequent act to undo the consequences of the first act. Thus if a man promises to marry a woman at a certain time and marries another before that time, this is a repudiation of the contract, although the death of his wife might enable him to perform his promise at the specified date.^ So if one promises to sell property, and before 'the time appointed for its conveyance sells it to another, this is a repudiation of the contract.* Eepudiation, like breach of contract, does not put an end to the contract, but only entitles the injured party to put an end to the contract.' The renunciation may therefore be withdrawn at any time before it is accepted 1 Short V. Stone, 8 Q. B. 358; L. 921; Gaines v. Smith, 15 M. & W. 189 ; L. 926 ; Ford v. Tiley, 6 B. & C. 325 ; Woodherry ;;. Warner, 53 Ark. 488 ; 14 S. W. 67 ; H. & W. 574 ; James v. Burchell, 82 N. Y. 108 ; W. 609 ; Delamater v. Miller, 1 Cow. 75 ; H. & W. 561. "• Hocheter v. De la Tour, 2 E. & B. 678 ; W. 377 ; Harber Bros. Co. V. Moffat Cycle Co., 151 111. 84 ; 37 N. E. 676 ; Bradley v. King, 44 111. 339; Dingley i'. Oler, 117 U. S. 490; 6 S. Ct. 850; W. 399 ; H. & W. 556; Johnstone v. Milling, 16 Q. B. D. 460; W. 391; Burtis v. Thomp- son, 42 N. Y. 246 ; W. 41 9 ; Frost v. Knight, L. R. 7 Ex. 1 1 1 ; W. 386. ' Chamber of Commerce v. SoUitt, 43 HI. 519; * Short V. Stone, supra ; Caines v. Smith, supra. ^ Delamater w. MiUbt, supra ; James w. Burchell, supra; Ford v. Tiley, supra ; Wooibeiij v. Warner, supra ; Synge v. Synge (1894), 1 Q. B. 466 ; contra, on the ground that the vendor may repurchase before the time set for the conveyance, Webb v. Stephenson, 1 1 Wash. 342 ; 39 P. 952 ; Garberino v. Roberts, 41 P. 857 ; — Cal. — . ° Avery v. Bowden, 5 E. & B. 714 ; Dingley v. Oler, supra ; John- stone V. Milling, supra ; Zuck «. McClure, 95 Pa. St. 541 ; W. 422 ; Kadish v. Young, 108 111. 1 70 ; W. 431 ; Roebling's Sons v. Lock Stitch Fence Co., 130 111. 660 ; 22 N. E. 518 ; Ripley «. M'Clure, 4 Ex. 345 j L. 927 ; Brown v. Muller, L. E. 7 Ex. 319. THE DISCHABGE OP CONTRACTS. 289 by the other party; ' and the party repudiating may take advantage of any event which happens before such acceptance which would entitle him to a discharge from the contract.^ (g) "Failure of Consideration" A contract may be discharged in certain cases by the breach of another contract. In the case of a bilateral contract, as we have seen, there are two ways in which a breach of contract by one party may affect the obliga- tion of the other. B.'s promise Y. may be dependent on A.'s promise X., in which case unless X. is per- formed, B. is not bound to perform Y. ; or X. and Y. may be independent, in which case a breach of X. will discharge Y. if X. goes to the essence of the contract. Dependency can exist only in a bilateral contract, although the courts, by a process Iniscalled construc- tion, often attempt to make one bilateral contract out of two unilateral contracts.* And the rule that a breach of contract by one party may discharge the other, applies, as we have seen, only to bilateral contracts. Nevertheless, a doctrine has sprung up in this coun- try, and is very generally approved, to the effect that "failure of consideration " will discharge a contract. Strictly speaking, there can be no such thing as a "failure of consideration." Either the promisor re- ceives the consideration he has bargained for, or he does not. If he does not receive the consideration, there is no contract; if he does receive the consideration, there can be no "failure" of consideration thereafter. The term " failure of consideration " is used, however, to 1 Kayburn v. Comstock, 80 Mich. 448 ; 45 N. W. 378 ; W. 426 ; Frost V. Knight, L. R. 7 Ex. Ill ; W. 386. 2 Frost V. Knight, supra ; Avery v. Bowden, supra. 8 Ante, pp. 171, 172. 19 290 ELEMENTS OP THE LAW OF CONTKACTS. express the situation that arises first, where there is a unilateral contract with an internal condition subse- quent which is broken; and second, where the consider- ation for one promise is another promise, and the second promise is broken. If, for example, in a contract of sale, the thing sold fails to correspond with the descrip- 'tion in the contract of sale under such circumstances that the vendee has a right to return the property received, the sale gives rise to a unilateral contract by the Vendee to pay the price, which contract is subject to an internal condition subsequent whereby the vendee may return the property and be discharged from his obligation. The term " failure of consideration " is often applied to the failure of the property sold to answer the descrip- tion. The important question in such cases is, what was the contract of sale? For example, A. agrees to sell B. a certain chose in action ; is the agreement a contract for the sale of a valid right or claim, or is it simply a con- tract that A. shall assign whatever right he may have? This is a question of fact in each case.^ If the agree- ment is to assign a valid claim, and the claim proves invalid, the assignee is entitled, by virtue of an internal condition subsequent, to be discharged from his obliga- tion to pay the price ; but if the contract simply calls for the assignment by A. of whatever right he possesses, it is clear there is no ground on which B. can escape payment. So in the case of the sale of land, the ques- tion is, does the purchaser agree to pay for a deed from his vendor, or for a good title to the land? While the contract is executory it is bilateral, and the purchaser is not bound to accept a defective title ; but if he does accept a conveyance with covenants by the vendor, does a failure of title enable him to escape payment of the pur- chase-money? It is held in England and by some courts 1 Lambert v. Heath, 15 M. & W. 486 ; Otis v. CuUum, 92 TJ. S. 447. THE DISCHAEGE OF CONTEACTS. 291 in this country that such failure of title does not affect the purchaser's obligation to pay the purchase-money j^^ but other American courts take a difEerent view.^ The term "failure of- consideration" is also used, in cases where one unilateral contract is made in consider- ation of another unilateral contract, and the second con- tract is broken. Such failure of consideration is no defence at common law, the two unilateral contracts being entirely independent.* The common-law rule still prevails in the Federal courts;* but in many of the State courts a breach of one unilateral contract may operate to discharge the obligation of a second contract for which the first is the consideration. The courts often attempt to justify this result by saying that the two unilateral contracts are to be construed as one bilateral contract, and that the doctrines governing dependency therefore apply. Dependency, in the proper sense, however, is purely a matter of construction; while to make one bilateral contract out of two unilateral contracts is not construction at all. Where promise X. and promise Y. are contained in one bilateral contract, the dependency of promise Y. on promise X. is caused by the fact that the performance of X. is construed as an internal condition precedent to the obligation of Y. ; but where X. and Y. are contained respectively in two separate unilateral contracts, a breach of X. can only operate as an external condition subsequent affecting Y. In the case of a specialty, inasmuch as consideration is not an essential element of the contract, failure of consideration is no defence at common law.^ In the 1 Soper V. Arnold, 14 A. C. 429 ; Lloyd v. Jewell, 1 Greenl. 352. 2 Bice V. Goddard, 14 Pick. 293; Redding v. Lamb, 81 Mich. 318; 45 N. W. 997. 8 Ames, 9 Harvard Law Rev. 52. * Hartshorn u. Day, 19 How. 211, 222. 6 Ibid. 292 ELEMENTS OF THE LAW OF CONTRACTS. case of a negotiable instrument, however, consideration is essential to the validity of the instrument. If, then, there has been what is sometimes called a " total failure of consideration," that is, if the maker of the instru- ment has actually received nothing of value, the instru- ment is not binding because there is no consideration for it. If, however, the consideration for the instru- ment is a promise, the breach of such promise cannot, at common law, affect the validity of the instrument; for the consideration is not the performance, but the promise.^ These principles, as just stated, are not generally followed in our State courts." Partial failure of consideration, such as arises, for example, from a breach of warranty in a contract of sale, is no defence at common law ; ' but the modern practice is generally to admit such failure of consideration as a defence in Older to avoid circuity of action.* (K) Alteration or Loss of a Written Instrumsnt. The intentional alteration of a written contract by one of the parties to the contract in a material partic- ular without the consent of the other party discharges the obligation of the other party. The alteration must be intentional ; if made by accident or mistake it is of no consequence.^ But though a mistake in making the alteration renders the alteration immaterial, if the mis- take is as to the legal consequences of the alteration, the 1 Moggridge v. Jones, U East, 486 ; L. 638 ; Spiller v. Westlake, 2 B. & Ad. 155 ; L. 654 ; Trickey v. Lane, 6 M. & W. 278. 2 Duncan v. Charles, 5 111. 561 ; Hunt v. Livermore, 5 Pick. 395 ; L. 757 ; Ft. Payne Coal Co. v. Webster, 163 Mass. 134 ; 39 N. E. 786 ; Edwards v. Pyle, 23 HI. 354. 8 Thornton v. Wynn, 12 Wheat. 183. * Withers o, Greene, 9 How. 213. 5 Wilkinson v. Johnson, 3 B. & C. 428 ; Neff v. Horner, 63 Pa. St. 327. THE DISCHAEGE OF CONTEACTS. 293 alteration is treated as intentional, and discharges the contract.'' The alteration must be material; that is, it must alter the legal effect of the instrument upon the rights or remedies of the parties.'' If the alteration is with the consent of the other party, the contract is not discharged ; " and consent to the alteration may be given after, as well as before the alteration has been made.* It is the alteration of the instrument that discharges the contract; whether the alteration injures or benefits the other party is immaterial.* The alteration which destroys the instrument does not discharge a debt which exists independent of the instrument," unless such alter- ation is made fraudulently.' In England the alteration of an instrument by a stranger while in the possession of one of the parties, though without his knowledge, destroys the obligation of the other party; * but in this country such alteration has no effect. ^ The loss of a negotiable instrument at common law destroyed the rights of the owner; ^^ but equity would compel the payment of the note if the owner offered proper indemnity, ^^ and the equitable doctrine has some- times been applied in this country by courts of law.^^ 1 Bank of Hindostan v. Smith, 36 L. J. C. P. 241 ; Kelly v. Trurable, 74 111. 428. 2 Gordon v. Third Nat. Bank, 144 U. S. 97 ; 12 S. Ct. 657. 8 Speake v. United States, 9 Cranch, 28. * Stiles V. Probst, 69 Bl. 382. 5 Martin v. Thomas, 24 How. 315 ; Eeese i-. United States, 9 "WaU. 13. 6 Clough V. Seay, 49 la. Ill ; H. & W. 665. " Smith V. Mace, 44 N. H. 553 ; H. & "W. 660. 6 Davidson v. Cooper, 13 M. & W. 343. 9 Church V. Fowle, 142 Mass. 12 ; 6 N. E. 764 ; Martin v. Tradesmen's Ins. Co., 101 N. T. 498 ; 5 N. E. 338 ; Condict v. Flower, 106 lU. 105. 1° Hansard v. Eohinson, 7 B. & C. 90. 11 Ibid. 12 Daniel, Negotiable Instruments, II. § 1478. 294 ELEMEKTS OF THE LAW OP CONTEACTS. (i) Merger and Estoppel. When a given obligation exists, and by act of the parties or of the law that obligation becomes established by a higher form of evidence, the original obligation is merged in the obligation of higher order. The three classes of evidence, it will be remembered, are parol evidence, deeds, and records. If, then, a simple con- tract exists, and a new contract is made identical with the old as to parties,^ and subject matter," but under seal, the simple contract is merged in the specialty, and thereby discharged. The simple acknowledgment of a simple contract debt by a deed merges the simple con- tract in the specialty; ' but if the purpose of the deed is to provide for settling a dispute as to the amount of the debt, there is no merger.* Nor does merger take place if the new contract is conditional, so long as the condition is unperformed.' Nor is there any merger where the new contract is taken as a collateral security for the old.^ There can be no merger of an oral in a written con- tract, because oral and written contracts are of equal rank. The written contract, however, may be a sub- stitute for a preceding oral contract. The difference between substitution and merger is this : that the ques- tion whether a new contract is substituted for an old one is a question of fact, depending upon the intention of the parties; while the question of merger is one of law, since merger takes place without regard to the intention of the parties. The term merger is often > White V. Cnyler, 6 T. E. 176 ; Banorgee v. Hovey, 5 Mass. II. 2 Walton V. United States, 9 Wheat. 651. ^ Isaacson v. Harwood, L. R. 3 Ch. 225. * Bank of Columbia v. Patterson, 7 Cranch, 299. 6 Baits V. Peters, 9 Wheat. 556. * Day V. Leal, 14 Johns. 404. THE DISCHAEGE OP CONTEACTS. 295 used, however, to denote the fact that an oral agreement has been reduced to writing. The judgment of a court of competent jurisdiction discharges the obligation which the action is brought to enforce. The judgment may operate either to merge the original obligation, in so far as judgment is ren- dered for the plaintiff; or to estop the plaintiff from subsequently setting up his original claim, in so far as judgment is rendered for the defendant. The effect of a record, as we have seen, is to furnish conclusive evi- dence of the matters therein contained as between the parties to the record. § 5. Discharge of Right of Action for Breach of Contract. The right of action arising from breach of contract may be discharged by an internal or by an external condition subsequent. (a) Internal Conditions Subsequent. The right of action is discharged by an internal con- dition subsequent whenever an event happens which the contract provides shall bar the action. Thus in insur- ance policies there is often a provision that the right of action shall be barred if a claim is not filed within a certain time after a loss occurs. (b) External Conditions Subsequent. The right of action may be barred by an external condition subsequent whenever an event happens which the law regards as putting an end to that right. The various external conditions subsequent recognized by the law are waiver, gift, release, the alteration or loss of a written instrument, merger, estoppel, accord and satisfaction, arbitration and award, and certain statutory 296 ELEMENTS OJP THE LAW OP CONTBACTS. discliargeg. Tbe r\iles governing waiver, gift, release, the alteration and loss of a written instrument, merger and estoppel have already been explained. (1) AccoED AND Satisfaction, — A breach of con- tract gives the injured party a right to sue and obtain a judgment for damages . An agreement to accept something in lieu of the damages to be awa,rded by the judgment of the court is called an accord ; the actual acceptance of the thing agreed upon constitutes satisfaction. An accord without satisfaction does not discharge the right of action.* But though an accord will not dis- charge a right of action, the acceptance of a new con- tract in satisfaction of the right arising from breach of the original contract will operate as a discharge.^ It is a question of fact in every case whether what is given by the defendant is accepted as satisfaction by the plain- tiff. Whether the plantiff has a right to apply a check sent in full satisfaction of the debt in part payment thereof is a question on which the authorities are not agreed. It is held in England' and Massachusetts* that he has that right, while in New York^ and Iowa 6 the acceptance of the check is held to operate as a satisfaction. In the case of a composition with creditors, they may agree to accept the composition agreement itself as a satisfaction,'' or they may agree 1 Allen V. Harris, 1 Ld. Kaym. 122 ; W. 320 ; Memphis v. Brown, 20 Wall. 289 ; Kromer v. Heim, 75 N. Y. 574 ; W. 357 ; H. & W. 627 ; Hosier v. Hursh, 151 Pa. St. 415 ; 25 A. 52 ; W. 359, note 1. 2 Babcock v. Hawkins, 23 Vt. 561 ; W. 365 ; Evans v. Powis, 1 Ex. 601 ; Morehonse v. Second Nat. Bank, 98 N. Y. 503 ; Fleg^l v. HpQTer, 156 Pa. St. 276; 27 A. 162. 8 Day V. McLea, 22 Q. B. D. 610 ; W. 355. 4 Tompkins v. Hill, 145 Mass. 379; 14 N. E. 177. 5 Fuller V. Kemp, 138 N. Y. 231. 6 Keck V. Hotel Owners' Ins. Co., 89 la. 200 ; 56 N. W. 438. ' Good V. Cheesman, 2 B. & Ad. 328 ; W. 320. THE DISCHAKGE 0¥ CONTEACTS, 297 to accept only the actual payment of the composition,^ The satisfaction must be furnished in every case by the party liable, or by some one in his behalf.'' The rule of the common law previously mentioned, unumquodque ligamen dissolvitur eodem ligamine quo ligatur, required that where the cause of action was established by a deed, as in the case of a single bond, or of a covenant to pay an existing debt, no release or satisfaction of that cause of action could be proved except by means of a deed,^ But where the deed did not show that an obligation existed at the time of its execution, an accord and satisfaction in discharge of the obligation sued on could be shown by parol.* Thus in the case of a covenant to do a certain act, as to repair a house, though the obligation to repair is created by the deed, the cause of action arises from the failure of the defendant to repair, and not from the deed itself; so that in an action on such a covenant accord and satis- faction was a good defence.* Equity, however, recog- nized accord and satisfaction as a defence, though the cause of action sprang from the deed itself, and the rules of equity have in many jurisdictions superseded those of the common law. (2) Aebitration and Awaed. — If the parties to a contract submit a dispute to arbitration, the award of the arbitrators is binding upon them. The award must be certain ,^ and must conform to the terms of the sub- mission.' When an award determines simply the 1 Re Hatton, L. B., 7 C. A. 723; W. 333; Clarke v. White, 12 Pet. 178. 2 James v. Isaacs, 12 C. B. 791 ; W. 330. 8 Blake's Case, 6 Co. 43 6 ; W. 317. 4 Ibid. 6 Lyle V. Bodgers, 5 Wheat. 394. 6 McGormick v. Gray, 13 How. 26 ; De Groot v. United States, 298 ELEMENTS OF THE LAW OF CONTBACTS. amount of an existing debt, the original cause of action is not discharged, but the amount of the debt is con- clusively determined by the award; but where the award creates a new duty, as where a claim for unliquidated damages is submitted to arbitration and a fixed sum awarded, the original cause of action is discharged.^ A submission to arbitration is a power which may be revoked at any time before the publication of the award. ^ Equity has jurisdiction to set aside an award for mis- take so gross as to imply bad faith or failure to exercise an honest judgment; but not for mistake in general.^ (3) Statutory Dischabges. — Lapse of time does not discharge a right of action, though laches may deprive a party of the assistance of a court of equity to enforce his rights. In all jurisdictions, however, there are statutes limiting the time within which actions may be brought. A discharge in bankruptcy is a common statutory form of discharge, which is personal to the debtor. There is at present no National Bankrupt Act in this country, and the interference of the States with the obligation of contracts is limited by the United States Constitution. 5 Wall. 419 ; Boston & Lowell R. R. v. Nashua, &c. R. R., 139 Mass. 463 ; 31 N. E. 751 ; W. 372. 1 Freeman v. Bernard, 1 Ld. Raym. 247 ; W. 367 ; Commings v. Heard, L. R., 4 Q. B. 669 ; W. 369. 2 Boston & Lowell R. R. v. Nashua, &c. R. R., supra. 8 Burchellw. Marsh, 17 How. 344; Bispham v. Price, 15 How. 162. THE ENPOKCEMENT OE CONTEACT. 299 CHAPTER XI. THE BNFOECEMENT OP CONTRACT, § 1. Sanctions. Legal obligations are enforced by means of sanctions and remedies. The sanction is imposed for the purpose of compelling the fulfilment of the obligation; while the remedy is given for the purpose of redressing the wrong done by the violation of the obligation. Sanctions are of two kinds, intermediate and ultimate. Sanctions which consist merely in liability to a duty are called intermediate sanctions; sanctions which consist not of liability to a duty, but of liability to some other evil are called ultimate sanctions.^ Ultimate sanctions com- prise bodily pain, including death, imprisonment, and forfeiture.^ The last two sanctions only apply to con- tractual obligation. In the enforcement of contracts there may be one or more intermediate sanctions. Thus if A. promises to convey land to B., and breaks his con- tract, the breach of the primary obligation to convey the land gives rise to a secondary or sanctioning obligation to pay damages.' If an action is brought for the damages, and judgment obtained against B., the judg- ment gives rise to another intermediate sanction; to wit, the duty to pay the judgment. If the judgment is not paid, it is enforced by one of two ultimate sanctions, 1 Martty, Elements of Law, § 840. 2 Ibid., § 841. » Ibid., §§ 183, 184. 300 ELEMENTS OP THE LAW OF CONTBACTS. imprLsonment or forfeiture. Imprisonment as an ulti- mate sanction for the non-payment of a debt has become very rare, though it was formerly very common. For- feiture, or the seizure and sale of the debtor's property in execution, is the ordinary ultimate sanction in such cases. If, in the case put, instead of an action for damages, a suit is brought for specific performance, the decree of the court awarding specific performance gives, rise to an intermediate sanction, and if the decree is violated it may be enforced by the ultimate sanctions of imprisonment for contempt, and of forfeiture, in accord- ance with the practice of courts of equity. In looking at the sanctions of contractual obligation we are looking at the matter from the standpoint of the promisor; but the more common and more important question is the question of remedies, which must be looked at from the standpoint of the promisee. § 2. Remedies. Eemedies are of two kinds ; those which are intended to prevent, and those which are intended to redress a breach of obligation.^ A threatened breach of contract may be prevented in certain cases by injunction. In- junction is an equitable remedy, and will therefore only be granted when adequate redress for the threatened injury could not be obtained by the ordinary remedy at law. Thus it has been held that a singer who contracts to sing at a particular theatre exclusively may be pre- vented by injunction from singing elsewhere during the term of her engagement.'' The remedies for the redress of a breach of contract are of two kinds : an action for damages, and an action 1 Holland, Jurisprudence, 281. ^ Lumley v. Wagner, 1 D. M. & G. 604 ; contra, Rice v. D'Arville, 162 Mass. 559 ; 39 N. E. 180 {semUe). THE ENTOECEMENT OE CONTRACT. 301 for specific performance. The former remedy is legal; the latter equitable in character. Before considering the character of these remedies we must first examine once more the nature of contractual obligation. A man may incur contractual obligation with reference to a past, present, or future event. If he contracts that something is, or has been, what is the nature of his obligation? Clearly, in such a case, he simply assumes a risk and binds himself to pay to the other party a sum of money sufiicient to compensate' the latter for the non- fulfilment of the assurance. In such a case the contract is broken, if at all, as soon as it is made, and the primary obligation necessarily coincides with the secon- dary or sanctioning obligation to pay damages. If the contract provides that something shall happen in the futare, the promised event may or may not be within the control of the promisor. If the event is not within his control, his promise can amount only to the assump- tion of a risk, as in the preceding case. In this case also the primary obligation to compensate the other party for the non-occurrence of the promised event is also necessarily coincident with the secondary or sanc- tioning obligation to pay damages for breach of contract. If, however, the promised event is one which in its nature is within the control of the promisor, a different situation arises. Here the primary obligation of the promisor is to perform his promise; and his failure to perform gives rise to a secondary obligation to pay damages. In every contract, therefore, there is the assumption of a risk; and every breach of contract gives rise to a secondary obligation to pay damages; but in contracts where the thing promised is within the control of the promisor there is, in addition, a distinct primary obligation to perform the contract; while in other contracts the primary obligation is necessarily 302 ELEMENTS OF THE LAW OE CONTRACTS. coincident with the secondary obligation. Mr. Justice Holmes maintains ^ that the true view of contract is that a man who makes a contract incurs an obligation to re- spond in damages for the non-fulfilment of the contract, which obligation is defeasible by performance. That this is true in all cases where the thing promised is not within the control of the promisor is clear. That there is no primary obligation to perform a contract when per- formance is within the control of the promisor is a doc- trine open to the following objections. First, the doctrine seems to rest only on the limitations of procedure in the king's courts, and not on any true historical theory of contract." Second, the doctrine is entirely opposed to all equitable ideas ; and the whole tendency of our mod- ern law is in the direction of equitable theories.' Third, the doctrine involves an unreasonable departure by the law from fundamental ethical principles. In addition to the secondary obligation to pay damages for breach of contract, which exists in all cases, and the primary obligation to perform the contract when it is within the promisor's power to do so, there is another obligation resulting from certain contracts which is generally recognized. This is the obligation which exists before the time for performance has arrived, not to violate the right of the promisee to have the contract kept open as a subsisting and effective contract. A 1 Common Law, 298-303. 2 " The oldest actions of the common law aim for the most part not at ' damages,' hut at what we call ' specific relief.'. . . Even when the cause of action is in our eyes a contractual obligation, the law tries its best to give specific relief. . . . The common law has excellent inten- tions; what impedes it is an old-fashioned dislilce to extreme mea- sures." Pollock & Maitland, History English Law, n. 593, 594. 8 Lingenfelder v. Wainwright Brewing Co., 103 Mo. 578 ; 15 S. W. 844 ; H. & W. 181 ; King «. Duluth, M. & N. Ry. Co., 63 N. W. 1105; — Minn. — . THE ENPOECEMENT OF CONTEACT. 303 violation of this right of the promisee constitutes what is known as an " anticipatory breach " of contract. An anticipatory breach of contract may occur in one of two ways. The promisor may absolutely repudiate the contract;! or he may do some act putting it out of his power to fulfil the contract." In general the rules gov- erning the right of action for an anticipatory breach of contract are similar to those governing the right of one party to treat the repudiation of the other party as a discharge. That is, to say, the act relied upon as con- stituting an anticipatory breach must be of such a char- acter as to justify the injured party in putting an end to the contract, and must be treated by him as discharging the contract except so far as his own right of action for damages is concerned. Most of the cases sustaining the right of the injured party to treat the other party's repudiation of the contract as a discharge also support the doctrine of anticipatory breach. The limitations of the right of the promisee to have the contract kept open as a subsisting and effective contract until the time for performance arrives are not absolutely defined. It seems clear, however, that a refusal to pay a debt cannot give a right of action before the maturity of the debt. In Massachusetts the general doctrine of anticipatory breach is repudiated ,' although the court does not deny the possibility that in certain contracts present obligations may arise, though the time for performance is in the future; as for example, in the case of an engagement to marry. The Massachuseftts 1 Hochster v. Be la Tour, 2 E. & B. 678 ; "W. 377 ; Erost v. Knigit, L. E. 7 Ex. Ill ; W. 386; and see ante, pp. 287 et seq. 2 Short ti. Stone, 8 Q. B. 358 ; L. 921 ; Caines v. Smith, 15 M. &W. 189; L. 926; Delamater v. Miller, 1 Cow. 75; H. & W. 561. As to what amounts to repudiation, see ante, pp. 287 et seq. 8 Daniels v. Newton, 114 Mass. 530; W. 406. 304 ELEMENTS OE THE LAW OP CONTRACTS. courts, however, are not logically consistent; for al- though they refuse to allow a man to recover damages for a refusal to perform a contract before the time for performance has arrived, they permit him, after the time for part performance has arrived, to treat a refusal to perform as a breach of the entire contract, and to recover damages for not performing the contract in the future.^ Where there is an actual breach of contract the injured party is bound to use reasonable efforts to pre- vent unnecessary loss; ° but where there is an anticipa- tory breach no such duty arises, for such anticipatory breach can only be regarded as a breach in case the injured party wishes so to treat it.* In computing damages the following general prin- ciples are to be observed. The object of damages for breach of contract is to compensate the injured party for the loss actually sustained; except in the case of breach of promise of marriage) where in an action for breach of contract damages are awarded as if for a tort.* The extent of contractual obligation is fixed by the act giving rise to the obligation; hence only such damages for breach of contract will be allowed as a reasonable man would suppose the contract was intended to provide for.^ 1 Parker v. Russell, 133 Mass. 74 ; W. 414. ' Leake, Contracts, 906; Clark i;. Marsiglia, 1 Denio, 317; "W. 417; H. & W. 572; Derby v. Johnson, 21 Vt. 17; H. & W. 568; Mather v. Butler County, 28 la. 253 ; H. & W. 612. As to contracts of employment, see Huffcut, Agency, 74. " Kadish v. Young, 108 111. 170; W. 431 ; Roebling's Sons Co. v. Lock Stitch Fence Co., 130 HI. 660; 22 N. E. 518 ; Phillpotts v. Evans, 5 M. & W. 475. * Anson, Contracts (8th ed.), 253. 5 Hadley v. Baxendale, 9 Ex. 341. THE ENPOECEMENT OE CONTKACT. 305 In the case of a unilateral contract, the damages are measured by the difference between the performance called for and that actually rendered. In the case of a bilateral contract, there are two elements to be esti- mated in computing the damages: first, the actual expense incurred by the injured party, and the actual value of his services ; and second, the loss of anticipated profits.^ Interest is not recoverable at common law as damages for the detention of money due unless the contract so provides, or unless there is an implied contract to pay such interest by reason of the usage of trade, as in the case of mercantile instruments.^ In this country, how- ever, interest is generally recoverable on liquidated claims, that is, where the amount of the claim is fixed.* The parties to a contract may agree upon the damages to be paid in case of a breach. Whether the specification in the contract of a fixed sum to be paid for a breach makes that sum liquidated damages or a penalty is a question of construction which has been already discussed.* When the performance of his contract is within the control of the promisor, his primary obligation is to perform his contract. This is the equitable view of contractual obligation. This also was the view of con- tractual obligation taken in the common-law courts in early times.* The common-law courts, however, in 1 United States v. Behan, 110 U. S. 338; 4 S. Ct. 81. 2 Page V. Newman, 9 B. & C. 378 ; London, Chatham, & Dover Ry. Co. V. South-Eastern Ry. Co. (1893), A. C. 429; Madison County v. Bartlett, 1 Scam. 67. 8 Young V. Godbe, 15 Wall. 562 ; Curtis v. Innerarity, 6 How. 146; Cooper V. Coates, 21 Wall. 105. * Ante, Ch. V. § 5. 6 Ante, p. 302, u. 2. 20 306 ELEMENTS OE THE LAW OE CONTRACTS. administering justice, came to award damages only for breach of contract; and tMs limitation on their power of enforcing obligations seems to have given rise to the idea that because a common-law court could give only- damages for breach of contract, the contractamounted only to the assumption of a risk ; and the promisor had the right to break the contract if he chose. This view of contract has been adopted in many cases, ^ and has received the support of at least one distinguished jurist.^ The constant progress of equitable doctrines and equit- able ideas, however, seems to render it impossible that a conception of contractual obligation so far below that of ordinary business morality should long continue to receive the sanction of the law. The equitable theory of contractual obligation is that a man is bound to perform his contracts if he can. This is the primary obligation which equity will enforce, in a proper case, by its peculiar remedies of injunction and specific performance. This primary obligation may exist side by side with a secondary obligation to pay damages. But though this is the equitable theory of contractual obligation, it does not follow that equity will in every case interfere to enforce such primary obligation. On the contrary, the interference of equity must be sought on equitable grounds, namely, that the complainant has not an adequate remedy at law. If the contract contains only negative stipulations, it can be specifically enforced by injunction. If the contract contains only positive stipulations, a decree for specific performance is necessary. If the contract contains both positive and negative stipulations, the jurisdiction of equity to enforce the negative stipu- lations by injunction when it cannot enforce the pos- 1 Ante, pp. 70-74. 2 Holmes, Common Law, 298-303. THE ENFOECEMENT OP CONTBACT. 307 itive stipulations by a decree for specific performance is disputed.^ Whether the contract be negative or positive in its character, equity will only interfere where the damages which the plaintiff could recover at law would be an inadequate remedy. Negative contracts are more readily enforced than positive ones, because a decree for specific performance will only be granted when the court can supervise the performance of the contract. The juris- diction of equity in the case of positive contracts is chiefly confined to contracts affecting land and cer- tain special kinds of personal property. In decreeing specific performance the court is governed by many principles of equity which cannot be discussed here.^ The most important thing to notice in a work on Con- tracts is that consideration is always essential to every contract which equity will enforce; while at law, as we have seen, consideration has nothing to do with the obligation of formal contracts. 1 See Lumley v. Wagner, 1 D. M. & G. 604; Rice w. D'Arville, 162 Mass. 559 ; 39 N. E. 180 ; Cort v. Lassard, 18 Or. 221 ; 22 P. 1054 ; H. & W. 619. 2 The student is referred to Sir Edward Fry's treatise on Specific Performance for further information on this difficult branch of equity jurisdiction. ADDENDUM. Page 41. Seal. The United States Supreme Court has just decided that a scroll or mark may be a sufficient seal. Jacksonville, &c. Railway v. Hooper, 160 U. S. 514. INDEX. A. Faok ACCEPTANCE. (See also Offer and Acceptance.) relation of, to consideration 85 in unilateral and bilateral contracts 85 communication of 86-89 must correspond with offer 89-95 distinguished from counter offer 92 must not be conditional 92 must be made in manner prescribed by offer ... 93 must be furnished within the time specified in the offer, or within reasonable time 93 as consideration 61-64 as essential to validity of deed 41-43 of benefits 43-45 of documents 47-50 by mail 94 by telegraph 95 barred by previous rejection of offer 95 ACCEPTANCE AND RECEIPT, under statute of frauds 210-211 ACCORD AND SATISFACTION 296-297 ACCOUNT, droitural nature of writ 18 action of 21 ACTION, condition affecting right of 150 ACTIONS EX CONTRACTU ! . 1, 2, 5 droitural nature of 18 of debt ■ 13, 18 of covenant 13, 20 310 INDEX. Pask ADEQUACY OF CONSIDERATION 60 ADMINISTRATORS. (See Executors and Admin- istrators.) AGENCY, relation of, to past consideration 83 AGENT, appointment of, under statute of frauds ...... 210 contracts to cause breach of duty by, illegal . . . 105 AGREEMENT, relation of, to contract 12 AGREEMENT FOR FUTURE CONTRACT ... 52 ALIEN ENEMY, trading with 106 ALTERATION OF WRITTEN INSTRUMENT, as discharge of contract 292-293 ALTERNATIVE CONTRACTS, construction of 174 ANTECEDENT CONSIDERATION, in negotiable instruments 100 ANTICIPATORY BREACH 302-304 APPOINTMENT TO PUBLIC OFFICE, contracts tending to interfere with, are illegal . . . 106 ARBITRATION, as condition precedent 150 contracts to submit to 113 and award 297-298 ASSIGNMENT OF CHOSE IN ACTION, legality of Ill ASSIGNMENT OF EMOLUMENTS OF PUBLIC OFFICE, illegal 107 ASSIGNMENT OF CONTRACT 271-277 at common law 271 in equity 271-275 by operation of law 276-277 of personal contracts 272-273 of part of fund 273 necessity of notice of 274-275 negotiability 275-276 rNDEX. 311 Page ASSIGNMENT OF CONTRACT — conimuerf, by death 276 by marriage 277 by bankruptcy and insolvency 277 by transfer of land 277 ASSUMPSIT. (See also Indebitatus Assumpsit.) origin of 23 in action for negligence 23 relation of, to deceit 23, 80 consideration in 54 ASSURANCE. See Promise. ATTORNEY, contracts of, to defend against criminal prosecution . 113 AUCTIONS 46,47 fraud in 104 B. BAIL, agreement to indemnify, illegal 113 BAILMENT 22 as an indefinite recusable obligation 7 obligations of, as modified by contract .... 47-50 BAILMENT CONTRACTS, consideration in 59 impossibility of performance in 180-181 BANKRUPTCY, assignment of contract by 277 consideration for new promise to pay debt discharged in 81 as discharge of contract 298 BENEFICIARY, right of, to sue on contract 216-228 BENEFIT, as consideration 54 acceptance of, as constituting promise 43-45 BIFACTORAL OBLIGATIONS, negotiable instruments as 100 312 INDEX. Page BILATERAL CONTRACTS 11 of sale 146-147 of insurance 147-148 leases 148 formed by construction of two unilateral contracts 171-172 acceptance in 85 consideration in 59 BILLS OF LADING, as evidence of contract 47-50 BLINDNESS, effect of, on execution of written instruments . . 35-38 " BOHEMIAN OATS " CONTRACTS 105 BONDS, conditions in, subsequent in form and precedent in fact 150 BREACH OF CONTRACT, as discharge 285-286 distinguished from dependency of promises .... 286 anticipatory 302-304 BUILDING CONTRACTS, agreements to pay additional compensation . . . 70-74 BUSINESS CIRCULARS AND PROPOSALS ... 45 C. CANCELLATION OF DOCUMENTS 261 CAPACITY, CONTRACTUAL 33 of married women 33 of infants 33,231 of lunatics 34 of drunkards 34 of spendthrifts 34 of corporations 34 CAUSA, relation of, to consideration 55 CAVEAT EMPTOR 248 CERTAINTYi necessity of, in contracts 30 instances of 31, 32 INDEX. 313 Paob CERTIFICATE, of third party as condition of contract .... 166-167 CHAMPERTY. (See Maintenance and Champerty.) CHARTER. (See Deed; Covenant; Formal Con- tract; Specialty; Contract under Seal.) CHARTER-PARTIES, conditions in 145, 148 COHABITATION, contracts in consideration of 114 COMBINATIONS, to limit competition. (See Restraint op Trade.) COMMON CARRIER. (See also Railways.) modification of liability by contract 47-50 is under indefinite recusable obligations 7 liability of 22 COMMUNICATION OF ACCEPTANCE .... 86-89 COMPETITION, contracts to stifle 104 (See also Restraint of Trade.) COMPOSITION WITH CREDITORS, as discharge of contract 296-297 consideration in 77 fraud in 103, 104 COMPROMISE, as consideration 67-70 COMPURGATION 16 CONCURRENT CONDITIONS 151 (See also Conditions.) CONDITIONAL ACCEPTANCE 92 CONDITION PRECEDENT, arbitration as 113, 150 distinction between consideration and 59 CONDITIONS 141-168 in contract of sale 144, 146-147 in charter-parties 145, 148 in insurance policies 147-148 in leases 148 distingnished from representations and warranties . 149 nature of 141 314 INDEX. Page CONDITIONS — continued, classification of 142-148 internal and external 143, 151, 152 express and implied 151 precedent and subsequent 142 suspending and discharging obligation 149 subsequent in form, precedent iu fact 150 in bonds 150 affecting right of action 150 requiring arbitration 150 concurrent ]51 mutual 158, 159 in optional contracts 157 in instalment contracts for sale of land . . . .154-156 mutual dependency 158-159 impossible in negotiable instruments 159 in cases of inconsistent description 160-162 performance of 162 waiver of 163-167 reasonable performance of 166-167 certificate of third party 166-167 equitable view of 167 satisfaction of promisor 183-184 CONDITIONS SUBSEQUENT, internal, discharging contract 280-281 external, discharging contract 281-295 internal, discharging right of action for breach of contract 295 external, discharging right of action for breach of contract 295-298 as causes for rescission. (See Rescission of Contract.) CONSIDERATION, as a secondary act in bifactoral contractual obligations 10 as part of the contract 12 as a benefit to the promisor 20 origin of 53-56 seal as evidence of 53 in debt 54 quid pro quo as 54 in special assumpsit 54 detriment as 54 INDBX. 315 Fasb CONSIDERATION— continued, benefit as 54 relation of, to deceit 54 in indebitatus assumpsit 54 antecedent 54, 56 subsequent 56 past 56 relation of, to causa 55 good and valuable 55 necessity of, in simple contracts 56 definition of 56 instances of 56-58 in equity 54, 55 mutual promises 58 in bilateral contracts 59 executed and executory 59 distinction between, and consideration precedent . . 59 in bailment contracts, 59 delivery of possession as 59 adequacy of 60 nominal or colorable 60 contingent 61 acceptance as 61-64 performance of legal obligation 64-77 payment of interest as 65 part payment of debt as 65, 66 effect of uncertainty 66-70 assumption of risk as 67 compromise and forbearance to sue as .... 67-70 performance of broken contract 70-74 agreement to pay additional consideration for per- formance of contract 70-74 performance of contract with third person . . . 74-77 composition with creditors 77 of subscription papers 78 must be furnished in reliance upon the promise . 80-85 relation of deceit to 80 mutual promises 80 pre-existing obligation 81 past 81-85 executed 81-85 316 INDEX. Fasb CONSIDERATION — continued, new promise of infant 81 in indebitatus assumpsit 82 executed upon request 83 moral obligation as 84 relation of offer and acceptance to 85 is determined by promise 89-95 in deeds 99 in negotiable instruments 99 antecedent and subsequent, in negotiable instruments 100 illegal 124 partial illegality of 133-136 requirement of, in memorandum under statute of frauds 208-209 failure of, as discharge of contract 289-292 CONSTRUCTION OF CONTRACTS 169-191 general rules 169-174 effect of custom or usage 170-171 of several writings as part of the same contract . 170-171 language construed against the party using it . . . 172 general intention controls particular words .... 172 in case of doubt, in favor of promisor 172 effect of construction by parties 172 contract to be construed as valid if possible . . . 173 punctuation to be considered as a last resort . . . 174 written words entitled to greater weight than printed 174 alternative and optional contracts 174 of contracts of guaranty 174 of contracts affecting public interests 174 of contracts in restraint of trade 174 of bailment contracts 180-181 penalties and liquidated damages 189 essence of the contract 184 as to requirement of notice 190-191 of two unilateral contracts as one bilateral contract 171-172 CONSTRUCTION OP STATUTES with reference to illegal contracts 102 CONTINGENT CONSIDERATION 61 CONTRACT, agreement for future 52 IKDEX. 317 Page CONTRACTS, various uses of the term 1 executed and executory 1 express and implied 2 obligation of 4 of record 1 89 judgments l' 39 recognizances 1 39 specialties 1 (See also Foemal Contracts; Contracts under Seal; Deeds; Charters; Covenants.) parol contracts 1 simple contracts 1 enforced by action of debt 19 under seal i (See also Formal Contracts; Deeds ; Charters; Covenants ; Specialties.) bilateral and unilateral 11 what constitutes a 11 formal contract 12 enforced by action of debt 19 real contracts 19 original use of the term 20 implied in law. (See Quasi-contracts.) implied in fact 24 formation of ... 27 impossible 34 distinguished from estoppel 91 bilateral and unilateral, offer and acceptance in . . 85 involving personal performance 181-182 joint and several 137-140 illegal 101-136 external limitations of 101 written 50-52 CONTRACTUAL CAPACITY. (See Capacity, Con- tractual.) CONTRACTUAL OBLIGATION, relation of, to agreement 3 unifactoral 8 bifactoral 9 definition of 10 318 INDEX. Pass CONTRACTUAL OBLIGATION — continued, relation of, to other obligations 10 no general theory of, recognized at common law . 21, 25 nature of 301-306 " CORNERS," contracts for, illegal 121 CORPORATIONS, contractual capacity of 34 CORRESPONDENCE, contracts by 51 CO-TENANT, fraud on 104 COUNTER-OFFER, distinguished from acceptance 92 COVENANT, allowed as well as debt on formal contracts .... 18 droitural nature of writ 18 action of 20 definition of 21 not to sue distinguished from release 282-283 CREDITORS, consideration in composition with 77 fraud in composition with 103-104 CRIME, contracts to commit 102 CUSTOM, effect of, on construction of contract 170-171 D. DAMAGES 301-806 measure of 304-305 interest as 305 liquidated 189 DEATH, as a revocation of offer gg INDEX. 319 Faob DEATH — continued, as a discharge of personal contracts 181 assignmeut of coutract by 276 DEBT, as a real action 13 droitural natuie of writ 18 two forms of writ 18 in the debet and detinet 18 in the detinet 19 definition of 19 writ used to enforce real and formal contracts ... 19 as a concurrent remedy with indebitatus assumpsit 24, 25 (See also Indebitatus Assumpsit.) DECEIT, relation of, to contract 9 to assumpsit 23 action of, for breach of warranty 23 relation of, to doctrine of consideration .... 54, 80 DEED. (See also Covenant ; Formal Contracts ; Specialties; Contracts uhdek Seal; Writ- ten Instruments.) execution of 17 effect of 17 requisites of 40 signature of 40 necessity of seal 40 delivery of 41 in escrow 41 acceptance of 41-43 consideration in ' 99 DELIVERY of deeds 41 in escrow 41 of possession as consideration 59 DEPENDENT AND INDEPENDENT PROMISES . 1.52-160 dependency a question of intention 153 mutual dependency 158-159 dependency impossible in unilateral contracts . . . 159 dependency distinguished from discharge of contract by breach 286 320 INDEX. Paob DESCRIPTIONS, INCONSISTENT. (See Inconsis- tent Descriptions.) DETRIMENT as consideration 54 DISCHARGE OF CONTRACT 278-298 by pei-fonuance 278-279 by tender 279-280 payment as 278-279 by internal conditions subsequent 280-281 by external conditions subsequent 281-295 by waiver 281 by breach of warranty 281 by gift 281 by release 282-28.3 by new contract 283-285 within statute of frauds 284-285 under seal 285 by breach 285-286 distinguished from dependency of promises .... 286 by repudiation 287-289 by failure of consideration 289-292 by alteration or loss of written instrument . . . 292-293 by merger and estoppel 294-295 discharge of right of action for breach .... 295-298 by accord and satisfaction 296-297 by arbitration and award 297-298 by laches 298 by statute of limitations 298 by bankruptcy 298 by composition with creditors 296-297 by destruction of subject matter 178-180 by impossibility in bailment contracts .... 180-181 by impossibility in contracts involving personal per- formance 181-182 by death 181 of joint and several contracts 138-140 distinguished from rescission 229 DISCHARGE OF RIGHT OF ACTION FOR BREACH OF CONTRACT 295-298 by internal conditions subsequent 295 by external conditions subsequent 295-298 INDEX. 321 Faoe DISCHARGE OF RIGHT OF ACTION FOR BREACH OF COXTR ACT — continued, by accord and satisfaction 296-297 by arbitration and award 297-298 by lacbes 298 by statute of limitations 298 by bankruptcy 298 DIVISIBLE CONTRACTS, effect of illegality on 132-136 DIVORCE, contracts facilitating, illegal 115 not to sue for 115 DOCUMENTS, acceptance of 47-50 DRUNKARDS, contractual capacity of 34 DRUNKENNESS, effect of, on contract 236-237 DURESS 255-258 ground for rescission at law 261 E. EARNEST, under statute of frauds 211 ELECTION OF PUBLIC OFFICERS, contracts to interfere with, illegal 106 ELECTION OF REMEDIES 268-269 distinguished from estoppel 269 ENFORCEMENT OF CONTRACT 298-307 sanctions 299-300 remedies 300-307 EQUITY, jurisdiction of, over contracts 24 treatment of conditions in 167 part performance in, under statute of frauds . . 213-214 ESCROW 41 ESSENCE OF THE CONTRACT 184-188 21 322 INDEX. Faob ESTOPPEL, relation of, to contract 8, 91 under statute of frauds 213 distinguished from election of remedies 269 as discharge of contract 294-295 EVIDENCE, contracts to pay for procuring or suppressing of . . 112 oral, not admissible to vary written contract . . 50-52 admissible to show that writing is not a contract . . . . ' 51-52 admissible to show agreement collateral to writ- ten contract 52 EXECUTED AND EXECUTORY CONSIDERA- TION 59 (See also Past Consideration.) EXECUTORS AND ADMINISTRATORS, contracts of, within statute of frauds 194 EXPRESS CONDITIONS 151 EXTERNAL CONDITIONS 143, 151, 152 EXTERNAL LIMITATIONS OP CONTRACT . 101 F. FAILURE OF CONSIDERATION, as discharge of contract 289-292 FIDUCIARY, contracts to cause breach of duty by, illegal . . . 105 FORBEARANCE TO SUE, as consideration 67-70 FORMAL CONTRACTS ■ • • 12,38 (See also Specialties; Contracts under Seal; Deeds; Covenant.) originally regarded as grants 13 nature of 13 FORMATION OF CONTRACT 27 necessity of an act by party bound 27 act must be voluntary 29 and must determine the extent of the obligation . . 30 INDEX. 823 Page FRAUD 247-255 (See also Misrepresentation.) distinguished from innocent misrepresentation . 254-255 ground for equitable rescission 261 contracts to commit 102-105 in composition with creditors 103-104 in execution of written instruments 35-38 fictitious premium on shares 104 selling goods with false labels 104 on co-tenant ' 104 FUTURE CONTRACT, agreement for 52 G. GAMBLING CONTRACTS 105, 115-118 GIFT, as discharge of contract 281 GOOD CONSIDERATION 55 GOOD FAITH, confusion of, with reasonableness 69, note 1 "GOODS, WARES, AND MERCHANDISE," what are, within statute of frauds 205 GUARANTY, construction of contracts of 174 communication of acceptance of 86-89 conditions in contracts of 157 contracts of, within statute of frauds 194-200 of infant's contract, within statute of frauds 195 of married woman's contract, within statute of frauds 195 H. HORSE-RACING CONTRACTS 117-118 I. IGNORANCE OF LAW, in illegal contracts 124 32-4 INDEX, Paoe ILLEGAL CONTRACTS 101-130 classes of 101-1-i prohibited l""- to do a prohibited act ■ l'^- contemplatina; an injury to legal rights of a third party .- • -102-105 tending to cause breach of duty by fiduciaries ... 105 " Bohemian oats " contracts lOo gambling contracts 10°, 11 o against public policy • • lOo-l'-l tending to injure the state in its external relations . 106 trading with alien enemy . . • 1'-'^ tending to interfere with the internal administration of the government lOG-114 tending to interfere with the election or appointment of public officers 106 tending to prevent public officers from performing their duties ■..•■•■ 107-109 to pay property owners for signing petition . . . . 108 lobbying contracts 107, 108 to pay for establishing station 109 tending to obstruct administration of justice . . 109-114 maintenance and champerty 109-111 tending to stifle prosecution 112 to pay for procuring or suppressing evidence . . . 112 by attorney to defend against criminal prosecutions 113 by justice of the peace not to charge fees 113 to indemnify surety on bail-bond 113 to pay justice percentage for stolen property recovered 113 to submit to arbitration 113 tending to injure citizens of a state as individuals 114-124 contracts injurious to public morals 114-118 contracts involving sexual immorality . ... 114 tending to interfere with marriage relation . . . . 114 to facilitate divorce 115 tending to limit necessary individual freedom . .118-124 contracts to afiect the freedom of marriage .... 119 contracts affecting the freedom of testamentary dis- position 119 contracts in restraint of trade 120-123 "corners" 121 INDEX. 325 Paoe ILLEGAL CO'STRACTS — continued, to waive exemptions 123 contracts imposing unreasonable terras on persons dealing with those engaged in public occupations . 123 to waive damages for future tort 123 distinguished from void contracts 126 securities for 128 ILLEGALITY, EFFECT OF 124-136 object unlawful 124 consideration illegal 124 contract legal, intention innocently illegal . . . 124 tendency illegal 124 intention of one party illegal 125 borrower's intention illegal 126 illegal and void contracts 126 security for illegal contracts 128 in pari delicto potior est conditio defendentis . . . 129 where there is a ZocMS jiffiTOtenft'cB . . . .129-131 receipts of proceeds of illegal transaction . . . 131 partial illegality 132-136 on divisible contracts 132-138 of past consideration 82 ILLITERACY, effect of, on execution of written instruments . . 35-38 IMMORAL CONTRACTS 114-118 involving sexual immorality 114 tending to interfere with the marriage relation . . 114 BIPLTED CONDITIONS 151 IMPLIED CONTRACTS, acceptance of benefits 43-45 IMPOSSIBILITY, inherent 34 legal 34 physical 34 effect of, on contracts 174-182 legal 176-177 non-existence of subject-matter 177-180 no excuse for non-performance of conditions unless caused by act of party entitled to insist upon con- dition 164-166 326 INDEX. Pase IMPOSSIBILITY — continued, of performance, when equivalent to repudiation . 287-289 IN PARI DELICTO POTIOR EST CONDITIO DE- FENDENTIS 129 INCONSISTENT DESCRIPTIONS 144, 146, 160-162, 186- 188 INDEBITATUS ASSUMPSIT, origin of 23 as a concurrent remedy with debt 24-25 advantages of, over debt 25 consideration in 54 INDEMNITY, contract of, not within statute of frauds .... 195, 199 illegal contract of 113, 125 INDEPENDENT AND DEPENDENT PROMISES 152-160 INFANCY ground for rescission at law 261 INFANT, who is an 231 contractual capacity of 83, 231 promise of, good consideration 59 consideration for new promise of 81 contracts of 231-233 for necessaries 232 right of, to rescind not affected by false statement as to age 233 contracts of, requisites of rescission 262-263 INFORMAL AGREEMENTS 52 INJUNCTION 800, 306-307 INN-KEEPER, is under general indefinite recusable obligation . . 7 liability of 22 INSANE PERSONS. (See Lunatics.) INSANITY, revocation of offer by 99 INSOLVENCY, assignment of contract by 277 INSTALMENT CONTRACTS, for conveyance of land 154-156 for sale of goods 61-64, 157 IKDEX. 327 Page INSTALMENT CONTRACTS — con(m«erf, conditions in 165-166 INSURANCE, contracts of 248-249 INSURANCE POLICIES, conditions in 147-148 INTEREST, payment of, as consideration 65 as damages 305 INTERNAL CONDITIONS 143, 151, 152 INTOXICATION, effect of, on contracts 236-287 IRRECUSABLE OBLIGATIONS 6 J. JEST, contracts made in , . . . . 34 JOINT AND SEVERAL CONTRACTS .... 137-140 in equity 139 JUDGMENT 39 as discharge of contract 295 JUSTICE OF THE PEACE, agreement by, not to charge lawful fees 113 agreement to pay percentage to, on recovery of stolen property, illegal 113 K. KNOWLEDGE, of ofier essential to contract « . . 80 L. LACHES, as a bar to rescission of contract 269-270 as discharge of contract 298 LJSSIO FIDEI 21 328 INDEX. Paoe LAND, assignment of contract by transfer of 277 contracts concerning, within statute of frauds . . . 200 LEASE, as bilateral contract 148 conditions in 148 LIBEL, contracts to publish 102 LIMITATIONS, STATUTE OF. (See Statute of Limitations.) LIQUIDATED DAMAGES 189 LOAN, effect of borrower's illegal intention 126 LOBBYING CONTRACTS 107-108 LOCUS PCENITENTIJE, eifect of, on illegal contract 129-131 LOSS OF WRITTEN INSTRUMENT, as discharge of contract 292-293 LUNATIC, contract of, voidable 233-237 void after judicial declaration of insanity . . . 237 liability for necessaries 235-236 contractual capacity of 34 M. MAINTENANCE AND CHAMPERTY .... 109-111 MALICIOUS INTERFERENCE WITH CONTRACT 215 MARRIAGE, assignment of contract by 277 contracts in consideration of, within statute of frauds 200 not part performance under statute of frauds . . . 213 MARRIAGE BROKAGE CONTRACTS 119 MARRIAGE RELATION, contracts tending to interfere with 114 MARRIED WOMAN, contractual capacity of 33 promise of, no consideration 59 INDEX. 829 Page MEMORANDUM, required under statute of frauds 206-210 what is sufficient 206-209 what it must show 207-209 how it must be signed 209-210 when it must be made . . . , 210 MENTAL INCAPACITY, as ground for rescission of contract 233-237 Massachusetts doctrine 233-234 English doctrine 235 ground for rescission at law 261 requisites of rescission for 263 MERGER, as discharge of contract 294-295 MISREPRESENTATION, and fraud 247-255 by partial disclosure 249 as to opinions 250 as to intention 250 as to law 251 seller's statements 252 simplex commendatlo 252 must be acted on to render contract voidable . . 252-254 must be acted on within a reasonable time .... 253 innocent and fraudulent 254-255 ground for equitable rescission 261 MISTAKE. (See also Inconsistent Descriptions.) as to subject-matter of contract . . . 160-162, 243-244 common to both parties 237-245 as to terms of contract 90, 91, 238-243 as ground for reformation of contract .... 238-243 of law 240-243 as to inconsistent description 243-244 as to existence of subject-matter 187, 244 as to identity of subject-matter 90, 244 as to identity of promisee 245 of one party 245-255 not known to the other 245-246 ]inown to the other 246-255 of one party as to nature of promise 246-247 330 INDEX. Page MISTAKE — continued, as to existence of subject-matter 144 as to location of ship in charter-party 145 in execution of written instruments 35-38 as to title to property 187 as to quality of subject-matter 187-188 ground for equitable rescission 261 MISUNDERSTANDING. (See Mistake, Misrepre- sentation. ) MORAL OBLIGATION as consideration 84 (See also Past Consideration.) MORTGAGE, assumption of 219, 224, 228 MOTIVE, inducing acceptance of offer, material 80 MUTUAL DEPENDENCY 158-159 MUTUAL PROMISES, as consideration for each other 11, 58, 80 in subscription papers 79 N. NEGLIGENCE, liability for 22 of party defrauded 253-254 NEGOTIABILITY 275-276 NEGOTIABLE INSTRUMENTS 275-276 cannot be conditional 159 consideration in 99 as unifactoral and bifactoral obligations 100 ■ cannot form part of any other contract 12 NEGOTIATIONS, merged in contract 51 NOTICE, of revocation of offer 96-98 in case of optional contracts 174 contracts conditional on 190-191 INDEX. 331 Page NOVATION, contract of, not within statute of frauds .... 198 New Hampshire doctrine 223 NUbUM PACTUM 55 (See also Consideration.) 0. OBLIGATION, performance of, as consideration 64-77 OBLIGATION OF CONTRACT . . .4,70-74,301-304 OBLIGATIONS, classification of 5 recusable and irrecusable 6 unifactoral and bifactoral 7 OFFER, must be accepted within prescribed time 93 or within reasonable time 93 must be accepted in prescribed manner or in a reason- able manner 93 in formal contracts 43 (See also Promise.) and acceptance, relation of, to consideration ... 85 must correspond 89-95 revocation of, by operation of law 98-99 by death 98 by notice 96 by offeree's knowledge of impossibility of per- formance 96-98 by insanity 99 of reward 80 knowledge of, essential to contract 80 of reward, revocation of 98 OFFICERS, PUBLIC. (See Public Officers.) OPERATION OF CONTRACT 215-228 as to obligations 215 as to rights 216-228 at common law and in equity 216 contract can be enforced only by party 216 exceptions to the foregoing rule 216-217 332 INDEX. Page OPERATION OF CO^ST^ ACT — continued, right of stranger to contract to sue 217-228 cases in which such right is recognized .... 217-223 nature of such right 223-226 doctrine of Federal courts 226-228 OPTIONAL CONTRACTS 61-64 construction of 174 conditions in 157 P. PART PAYMENT, of debt as consideration 65-66 under statute of frauds 211 PART PERFORMANCE, effect of, on contracts within statute of frauds . . 212-214 PARTIAL ILLEGALITY 132-136 PARTNERSHIP CONTRACTS, not joint and several 140 PAST CONSIDERATION 81-85 illegality of 82 in indebitatus assumpsit 82 relation of, to agency 83 PAYMENT, as discharge of contract 278-279 PENALTIES, and liquidated damages 189 effect of imposition of, on contracts 102 PERFORMANCE, of broken contract as consideration 70-74 of contract with third person as consideration . . 74-77 of conditions 162 reasonableness in 166-167 as discharge of contract 278-279 substituted 284-285 POSSESSION, delivery of, as consideration 59 PRE-EXISTING OBLIGATION as consideration 81 INDEX. 333 Page PREFERENCE, in fraudulent composition with creditors .... 103-104 PRIVITY OF CONTRACT. (See Opeuation of Con- tract.) PROCEDURE, history of (See Actions; Trial.) PROHIBITED CONTRACTS 101 PROMISE, ■what constitutes a 43-52 acceptance of benefits 43-45 not under seal cannot form part of sealed contract . 11 (See Contracts.) mutual promises 11, 58, 79, 80 relation of, to contract 12 used as equivalent of assurance 1-3 determines consideration 89-95 revocation of .... 95-99 PROMISES, dependent and independent 152-160 PROMISSORY NOTE. (See Negotiable Instru- ments.) PROPERTY OWNERS, agreements to p'ay, for consenting to improvements . 108 PROPOSALS 45,46 PROSECUTION, contracts to stifle, illegal 112 PUBLIC OFFICERS, contracts tending to interfere with election or ap- pointment of, illegal 106 contracts tending to prevent performance of duties of 107-109 PUBLIC POLICY, contracts against 106-124 tending to injure state in its external relations 106 trading with alien enemy 106 tending to interfere with internal administra- tion of the government 106-114 334 INDEX. Page PUBLIC POLICY — continued, tending to interfere with election or appoint- ment of officers 106 tending to prevent public officers from perform- ing their duties 107-109 to pay property owners for signing petition . . 108 lobbying contracts 107-108 to pay for establishing station 109 tending to obstruct administration of justice . 109-1 li maintenance and champerty 109-111 tending to stifle prosecution 112 to pay for procuring or suppressing evidence . . 112 by attorney to defend against criminal prosecu- tion 113 by justice of the peace not to charge fees . . . 113 to indemnify surety on bail-bond 113 to pay justice percentage for stolen property recovered 113 to submit to arbitration 113 tending to injure citizens of the state as indi- viduals 114-124 contracts injurious to public morals .... 114-118 tending to interfere with marriage relation . . 114 to facilitate divorce 115 tending to limit necessary individual freedom 118-124 contracts affecting freedom of marriage . . . 119 contracts affecting freedom of testamentary dis- position 119 contracts in restraint of trade 120-123 " corners, ' contracts for, illegal 121 contracts to waive exemptions 123 contracts imposing unreasonable terms on per- sons dealing with those engaged in public occupations 123 contracts to waive damages for future tort . . 123 PUNCTUATION, to be considered as a last resort in construction of contracts 174 INDEX. 335 Q. Page QUANTUM MERUIT. (See also Assumpsit; Indeb- itatus Assumpsit.) origin of 24 QUANTUM VALEBANT. (See also Assumpsit ; In- debitatus Assumpsit.) origin of 24 QUASI-CONTRACTS, enforced by indebitatus assumpsit 24 infant's liability for necessaries 232 QUID PRO QUO 20 (See also Consideration.) as consideration in debt . - 54 E. RAILWAYS, effect of time-tables 47 modification of liability by contract 47-50 contracts to pay for establishing station, illegal . . 109 RATIFICATION, of infant's contracts 265-268 of insane person's contracts 268 of voidable contracts in general 268-269 of an unauthorized act with reference to considera- tion 83 REASONABLE TIME, offer must be accepted within 93 REASONABLENESS, in performance of condition 166-167 promisee's conduct must be reasonable 34 in construction of contract 182-184 reasonable time 182-183 reasonable satisfaction 183-184 confusion of, with good faith 69, note 1 RECEIPT, as evidence of contract 47-50 under statute of frauds 210-211 RECOGNIZANCES 39 336 INDEX. Page RECORD, CONTRACTS OF. (See Contkacts op Recoed.) RECUSABLE OBLIGATIONS, definition of 6 definite and indefinite 6 REFORMATION OF CONTRACT 238-2i3 distinction between, and rescission 239-2iO RELEASE, as discharge of contract 282-283 distinguished from covenant not to sue . . 282-283 by promisee, effect of, on beneficiary's right to sue 225-226 REMEDIES 300-307 injunction 300, 306-307 damages 301-306 specific performance 306-307 RENUNCIATION, of contract. (See Repudiation.) REPRESENTATIONS, distinguished from conditions and warranties . . . 149 REPUDIATION OF CONTRACT, as waiver of conditions 165, 166 as discharge of contract 287-289 as anticipatory breach 303-304 RESCISSION OF CONTRACT 229-270 definition of 229 distinguished from discharge 229 causes for 230-259 distinction between, and reformation 239-240 modes of . . .■ 260-262 in pais 260-262 by plea 260-262 judicial rescission 260-262 by reply 260 requisites of 262-265 may be barred by ratification 265-269 or by laches 269-270 or by statute of limitations 270 RESTITUTIO IN INTEGRUM 264-265 INDEX. 337 Fase RESTRAINT OF TRADE, contracts in 120 require consideration 120 must be reasonable in extent 120-123 construction of contracts in 174 REVENUE LAWS, contracts in violation of 102 REVOCATION OF OFFER 95-99 of reward 98 of time-tables 98 by notice 96 by operation of law 98, 99 by death 98 by offeree's knowledge of impossibility of perform- ance 96-98 by insanity 99 REWARD, OFFER OF 80 not a wager 117 revocation of 98 RISK, assumption of, as consideration 67 S. SALE, distinction between executory aod executed con- tract of 146-147 conditions in contract of 146-147 effect of warranty in case of inconsistent descrip- tions 144,146,161 effect of vendee's illegal intention 125-126 of goods, contract of, within statute of frauds . . 204-206 what is contract for sale of goods 204-205 SANCTIONS 299-300 SATISFACTION, contracts conditional on 183-184 SEAL. (See also Deed; Covenant; Formal Con- tract; Specialties.) necessity of, in deeds 17, 21, 40 22 338 INDEX. Page SEAL — continued, effect of 17 defiuitiou of 40-41, 307 as presumptive evidence of consideration .... 283 SEPARATION, of husband and wife, contract for 115 SEXUAL IMMORALITY, contracts involving , 114 SIGNATURE, to meuioraudum, required by statute of frauds . 209-210 of deeds 40 SILENCE, not a representation 248-249 unless there is a duty to speak 248-249 cannot give rise to contractual obligation .... 27 uuless coupled with previous conduct 28 SIMPLE CONTRACTS, necessarily bifactoral . 43 SIMPLEX COMMENDATW 252 SOCIAL ENGAGEMENTS, not contracts 84 SPECIALTIES 39 requisites of 40 SPECIFIC PERFORMANCE 306-307 SPENDTHRIFTS, contractual capacity of 34 STATUTE OF FRAUDS 192-214 executors' and administrators' contracts 194 guaranties 194-200 contracts of indemnity, not within 195-199 novation, not within 196 guaranty of contract of married woman, within . . 196 guaranty of contract of infant, within 196 " new consideration " rule 196-200 marriage contracts 200 " lands, tenements, and hereditaments ". . . .200-201 contracts not to perform within one year .... 201-204 contracts for sale of goods 204-206 what is contract for sale of goods 204-205 what are ' ' goods, wares, and merchandise '' . . . 205 INDEX. 339 Page STATUTE OF FRAUDS — continued, requirements of, memorandum 208-210 acceptance and receipt 210-211 earnest and part payment 211 effect of 211-214 effect of part performance on 212-214 discharge of contract within 284-285 oral promise good consideration 59 STATUTE OF LIMITATIONS, consideration for new promise to pay debt debarred by 81 as a bar to rescission of contract 270 as discharge of contract 298 STATUTE OF WESTMINSTER II 21 STATUTES, construction of, with reference to illegal contracts . 102 merchant and staple 39 STIFLING COMPETITION, in auctions 104 STIFLING PROSECUTION, contracts, illegal 112 SUBROGATION, distinction between, and right of stranger to sue on contract 224-228 SUBSEQUENT CONSIDERATION, in negotiable instruments 100 SUBSCRIPTION PAPERS, consideration in ' 78 SUBSCRIPTION TO STOCK 80 SUBSTITUTED CONTRACT, as discharge of contract 283-285 distinguished from substituted performance . . 284-285 SUBSTITUTED PERFORMANCE, distinguished from substituted contract .... 284-285 SURETY, liability of, on parol contract 19 agreement to indemnify, on bail-bond, illegal . . . 113 SURETYSHIP, contracts of 249 340 INDEX. Page SURVIVORSHIP, in joint and several contracts 138-140 SUSPENSION OF CONTRACT, by internal condition 149 T. TENDER,. as discharge of contract 279-280 TESTAMENTARY DISPOSITION, contracts affecting freedom of 119 TICKETS, as evidence of contract 47-50 TIME, reasonable 182-183 as essence of contract 185-186 TIME-TABLES 47 revocation of 98 TORT, contracts to commit 102-105 contract to waive damages for future, illegal . . . 123 TRADE, RESTRAINT OF. (See Restraint of Trade.) TRADES-UNIONS, contracts of 122 TRADING WITH ALIEN ENEMY 106 TRESPASS, writ of ... 22 TRESPASS ON THE CASE. (See also Assumpsit.) writs of 22 TRIAL, old forms of 15 by record 16 by charters or documents 16, 17 by witnesses 16 by oath 16 by ordeal 16 by battle 16 TRUST, gives rise to indefinite recusable obligation .... 7 INDEX. 341 Faoe TRUST — continued, extension of theory of, by common law courts . . . 223 TRUSTEE, contracts to cause breach of duty by, illegal . . . 105 TRUSTS. (See Restraint op Trade.) U. UDERRIMAE FIDE I, contracts 248-249 UNCERTAINTY, effect of, -with reference to consideration . . . 66-70 UNDERTAKING, distinction between, and contract 7 necessity of, in assumpsit 22, 23 UNDUE INFLUENCE 259 ground for equitable rescission 261 UNFAIR DEALING 259 UNIFACTORAL OBLIGATIONS, negotiable instruments as 100 UNILATERAL CONTRACTS 11 acceptance in 85 of sale 146-147 of insurance 147-148 construction of two, as a bilateral contract . . . 171-172 USURY, eifect of new promise to pay debt originally void for . 82 V. VALUABLE CONSIDERATION. (See Considera- tion.) VENDEE'S INTENTION ILLEGAL 125 VENDOR AND PURCHASER, instalment contracts 154-156 VOID CONTRACTS, distinguished from illegal contracts 126 VOIDABLE CONTRACTS. (See Rescission of Con- tract.) 342 INDEX. Page VOLUNTARY ACT, definition of 29, 30 W. WAGER OF LAW 16, 25 WAGERING CONTRACTS 105 void in England, illegal in America 127 of insurance 116 for, options on futures 116-117 effect of, between principal and agent .... 116-117 WAIVER, as discharge of contract 281 of conditions 163-167 WARRANTY 13 action of deceit for breach of 23 breach of, as discharge of contract 281 distinguished from conditions and representations . 149 (See also Conditions.) effect of, in cases of inconsistent description 144, 146, 161 WILL, contract to make 120 WRITS, in contractual actions 18 WRITTEN CONTRACTS, cannot be varied by oral evidence 50-52 execution of . , 35 mistake and fraud in the execution of .... 35-38 Y. YEAR, contracts not to be performed within, under statute of frauds 201-204 KF 801 H29 c.l Author Vol. Arriamn, Edward Avery Title Elements of the law of Copy c jnxracTs Date Borrower's Name