THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA LOS ANGELES SCHOOL OF LAW \ ecialty " has no technical meaning that necessarily embraces judgments,"^ and subse- quently the Supreme Court of Ohio declined to pass upon the question whether a foreign judgment was a " specialty " or not.* " A foreign judgment was not considered, like a judgment of a domestic court of record, as a record or a specialty."^ * Junction R. R. v. Bank, 12 Wall. Seymour v. Street, 5 Neb. 85. (U. S.) 226. 3 Tyler's Executors v. Winslow, 5 See §§ 13, 14. 15 O. S. 364, 368. 1 Bouvier Law. Diet. " Specialty "; * Fries v. Mack, 33 O. S. 52. Black. Com. II., 465; Lane v. Mor- 5 Hilton v. Guyot, 159 U. S. 113, ris, 10 Ga. 162, 167; Davis v. Smith, 200. See also to the same effect 5 Ga. 274, 285; 48 Am. Dec. 274, Walker v. Witter, 1 Dougl. 1 284; Kimball v. Whitney, 15 Ind. Phillips v. Hunter, 2 H. Bl. 402 280; Helm V. Eastland, 2 Bibb (Ky.) Smith v. Nicolls, 7 Scott 147; 5 193; Frazer v. Tunis, 1 Binn. (Pa.) Bing. N. C. 208; D'Arcy v. Ketchum, 254; Probate Court v. Child, 51 Vt. 11 How. (U. S.) 165; Mills v. Dur- 82. yee, 7 Cranch (U. S.) 481; Eissell 2 Stockwell V. Coleman. 10 O. v. Briggs, 9 Mass. 462; 6 Am- Dec. S. 33, 40. To the same effect see 88, FORMAL, CONTRACTS. CONTRACTS OF RECORD. 853 §546. Judgments classed as contracts of record. A judgment is the determination and sentence of the law, awarded and pronounced by the court.^ The code definition of a judgment is " the final determination of the rights of the parties in an action."^ At Common Law a judgment was classed as a contract,^ since the action of debt could be main- tained thereon.* This view was entertained in many of the tjarly American cases.^ In many of these cases the proposition that a judgiTient is a contract is wholly uncalled for, the real '^oint at issue being decided without reference thereto. Thus ';»^here the point actually decided was that a foreign judgment knust show that the court rendering such judgment had jurisdic- tion of the cause of action and of the defendant the court added the obiter : " A judgment for money is a contract of record to pay the amount thereof to the plaintiff. Such a contract, how- ever, is not entered into by the defendant in proper person, but by the court for him . . .'"^ and a judgment rendered by confession in favor of a bank, without the consent of such bank was held voidable at the bank's election, but on the unnecessary gj-ound of being " a new and different contract."^ So a judg- ment against a feme covert was held void, because it was " in the nature of a contract."^ A release of " all notes, accounts abd demands of every kind and nature " was held to include -«Bouvier's Law. Diet. "Judg- 3 Black. Com. III., 158. Bwnt"; Black. Com. III., 396; Jud- * Williams v. Jones, 13 M. & W. son V. Gage, 98 Fed. 540; Gould v. 628. Hayes, 71 Conn. 86; 40 Atl. 930; 5 Stuart v. Lander, 16 Cal. 372; Blystone v. Blystone, 51 Pa. St. 76 Am. Dec. 538; Reed v. Eldredge, 3T^. 27 Cal. 348; Henry v. Henry, 11 2^ev. Stat. Ohio, § 5310; King- Ind, 236; 71 Am. Dec. 354; Geb- mahv. Mfg. Co., 170U. S. 675; 7nre hard v. Garnier, 12 Bush. (Ky.) Smith, 122 CaL462; 7L. R. A. 240; 321; 23 Am. Rep. 721; Sawyer v. 65 I-ac. 249; Voisin v. Insurance Vilas, 19 Vt. 43. Co., 123 N. Y. 120; 25 N. E. 325; e Gebhard v. Garnier, 12 Bush. Cameron v. Workman, 30 O. S. 58; (Ky.) 321; 23 Am. Rep. 721. Moore v. Ogden, 35 O. S. 430; Cin- 7 Farmers' Bank v. Mather, 301 cinnati <. Steadman, 53 O. S. 312; la. 283. 45 N. E. 5. This definition of s Morse v. Tappan, 3 Gray; course applies to final judgments at (Mass.) 411. Common Law. S5i PAGE ON CONTEACTS. a judgment, on the ground that " a judgment is a demand — a contract of record."^ A judgment is often said to be a " con- tract of record"^" or " a debt of record."^^ Thus it has been said of consent judgments : " They are contracts in the most solemn form sanctioned by the court, and cannot be collaterally attacked.'"- §547. Judgment not founded on agreement. It is evident, however, that a judgment does not necessarily have anything to do with agreement. It may, it is true, be based on contract, or it may be entered by agreement; but on the other hand it may be based on tort and may be rendered only after all means of resistance have been exhausted. Fur- thermore, it possesses certain elements which are inconsistent with the modern idea of a contract. First, as between the parties thereto the record is conclusive as to matters litigated,^ and it is equally conclusive as to those claiming under such parties^ though it is not conclusive 9 Henry v. Henry, 11 Ind. 236; 71 Am. Dec. 354. 10 Barber v. International Co., 74 Conn. 652; 92 Am. St. Eep. 246; 51 Atl. 857. (Even where held not to be a contract for the purpose of the statute of limitations.) iiLynde v. Lynde, 162 N. Y. 405, 417; 76 Am. St. Rep. 332; 48 L. E. A. 679; 56 N. E. 979; Conrad V. Everich, 50 0. S. 476, 481; 40 Am. St. Rep. 679; 35 N. E. 58; Trowbridge v. Spinning, 23 Wash. 48, 64; 83 Am. St. Rep. 806; 62 Pac. 125. 12 Union Bank v. Boai'd of Com- missioners of Oxford, 90 Fed. 7, 12. iKeech v. Beatty, 127 Cal. 177; 59 Pac. 837; Naftzger v. Gregg, 99 Cal. 83; 37 Am. St. Rep. 23; 33 Pac. 757; Lancaster v. Snow, 184 111. 534; 56 N, E. 813; Bruce v. Osgood, 154 Ind. 375; 56 N. E. 25; Moy V. Moy, 111 la. 161; 82 N. W. 481 ; Willard v. Ostrander, 51 Kan. 481; 37 Am. St. Rep. 294; 32 Pac. 1092; Gregory v. Pike, 94 Me. 27; 46 Atl. 793; Faber v. Hovey, 117 Mass. 107; 19 Am. Rep. 398; Day V. De Jonge, 66 Mich. 550; 33 N. W. 527 ; De Camp v. Miller, 44 N. J. L. 617; Mershon v. Williams, 63 N. J. L. 398; 44 Atl. 211; Allen v. Text Book Co., 201 Pa. St. 579 ; 88 Am. St. Rep. 834; 51 Atl. 323; same case, sub nom., Allen v. Engineers' Co., 196 Pa. St. 512; 46 Atl. 899; Thornton V. Baker, 15 R. I. 553; 2 Am. St. Rep. 925; 10 Atl. 617; King v. Ross, 21 R. I. 413; 45 Atl. 146. 2 0'Connell v. Ry. Co., 184 111. 308; 56 N. E. 355; Scott v. Hall, 60 X. J. Eq. 451; 46 Atl. 611; revers- ing 58 N. J, Eq. 42; 43 Atl. 50; Wadsworth v. Murray, 161 N. Y. 274; 76 Am. St. Rep, 265; 55 N. E. 910. rOKMAL CONTRACTS. CONTRACTS OF RECORD. 855 as to strangers;^ as to a party suing in a different capacity,* or as to nominal parties without real interest.^ It is not con- clusive as to issues not passed upon,® or as to rights not litigated.^ It is, of course, not conclusive if the court rendering the judg- ment has no jurisdiction to render such judgment,^ or, it has been held, if the petition shows affirmatively that no cause of action against defendant exists.^ Second, the validity of a judgment cannot be attacked col- laterally if the court rendering it had jurisdiction of the subject matter and the person of the defendant against whom it is rendered," but if the judgment is void it is liable to collateral 3 Garland County v. Hot Springs County, 68 Ark. 83; 56 S. W. 636; Cloverdale v. Smith, 128 Cal. 230; 60 Pac. 851; Going v. Society, 117 Mich. 230; 75 N. W. 462; Seymour V. Wallace, 121 Mich. 402; 80 N. W. 242; Selleck v. Janesville, 104 Wis. 570; 76 Am. St. Rep. 892; 47 L. R. A. 691; 80 N. W. 944; Hart V. ]\Ioulton, 104 Wis. 349; 76 Am. St. Rep. 881; 80 N. W. 599; Hood V. Dorer, 107 Wis. 149; 82 N. W. 546. 4 Pollock V. Cox, 108 Ga. 430; 34 S. E. 213. 5 Walker v. Philadelphia, 195 Pa. St. 168; 78 Am. St. Rep. 801; 45 Atl. 657. <3 Beronio v. Lumber Co., 129 Cal. 232; 61 Pac. 958. 7 Smith V. Rountree, 185 111. 219; 56 N. E. 1130; affirming 85 HI. App. 161 ; Bacon v. Schepflin, 185 ni. 122; 56 N. E. 1123; affirming 85 HI. App. 553; Weeks v. Ed- wards, 176 Mass. 458; 57 N. E. 701; Rossman v. Tilleny, 80 Minn. 160; 83 N. W. 42; American, etc., Co. V. Macdonnell, 93 Tex. 398 ; 55 S. W. 737; Dillard v. Dillard, 97 Va.434; 34 S. E. 60. 8 Scott V. McXeal, 154 U. S. 34; Hall V. Melvin, 62 Ark. 439 ; 54 Am, St. Rep. 301; 35 S. W. 1109; Mc- Carty v. Kinsey, 154 Ind. 447; 57 N. E. 108; Morgan v. Dodge, 44 N. H. 255; 82 Am. Dec. 213; Springer v. Sha vender, 118 N. C. 33; 54 Am. St. Rep. 708; 23 S. E. 976; denying rehearing in 116 N. C. 12; 47 Am. St. Rep. 791; 33 L. R. A, 772; 21 S. E. 397; Melia v. Sim- mons, 45 Wis. 334; 30 Am. Rep. 746. 9 " Where a bill shows no cause of action against the defendants with reference to the subject-matter of the suit, tenders no issue with them but on the contrary shows that there never could be any issue with them, the complaint not even being sus- ceptible of amendment to show an issue, a decree based on such a bill is a nullity, no matter how at- tacked." Hall V. Melvin, 62 Ark. 439, 443; 54 Am. St. Rep. 301, 302; 35 S. W. 1109. (Citing Munday v. Vail, 34 X. J. L. 418; Spoors v. Coen, 44 O. S. 497; 9 N. E. 132; Seamster v. Blackstock, 83 Va. 232 ; 5 Am. St. Rep. 262; 2 S. E. 36.) 10 Van Wagenen v. Carpenter, 27 Colo. 444; 61 Pac. 698; Figge v. Rowlen, 185 111. 234; 57 N. E. 195; Lancaster v. Snow, 184 111. 534; 56 N. E. 813; Watkins v. Lewis, 153 856 PAGE ON CONTRACTS. attack.^^ Jurisdictional facts such as the entering by an at- torney of the appearance of a defendant who is not served^" may be attacked in a direct proceeding for that purpose. Further, a judgment operates as a merger of the cause of ac- tion on which it is rendered, so that after its rendition no liabil- ities exist except by reason of the judgment.^^ By statute a judgment operates under certain circumstances as a lien on realty; and a judgment may be enforced by execution. A subsequent suit thereon is not necessary in the jurisdiction in. which it was rendered. §548. Judgments held not to be contracts. Accordingly, there is a decided tendency at Modern Law to exclude judgments from the class of contracts,^ " The theory that a foreign judgment imposes or creates a duty or obligation is a remnant of an ancient fiction, assumed by Blackstone, say- ing that ^ upon showing the judgment once obtained, still iu full force, and yet unsatisfied, the law immediately implies that by the original contract of society the defendant hath contracted a debt, and is bound to pay it.' 3 Bl. Com. 159. That fiction, which embraced judgment upon default or for torts cannot Ind. 648; 55 N. E. 83; J. B. Wat- Neb. 248; 77 N. W. 680; Elmen- kins, etc., Co. v. JMuUen, 62 Kan. 1; dorf v. Elmendorf, 58 N. J. Eq. 113; 61 Pac. 385; reversing 8 Kan. App. 44 Atl. 164; O'Malley v. Fricke, 104 705; 54 Pac. 921; Benjamin v. Ear- Wis. 280; 80 N. W. 436. ly, 123 Mich. 93; 81 N. W. 973; 12 Mullins v. Eieger, 169 Mo. 521 ; Bengtsson v. Johnson, 75 Minn. 321; 92 Am. St. Rep. 651; 70 S. W. 4. 78 N. W. 3; State ex rel. Lacy v. i3 See § 1353. Brandhorst, 156 Mo. 457; 56 S. W. i Louisiana v. Xew Orleans, 109 1094 ; McKeen V. Converse, 68 N. H. U. S. 285; Freeland v. Williams, 173; 39 Atl. 435; Dauberman v. 131 U. S. 405; Morley v. By., 14ft Hain, 196 Pa. St. 435; 46 Atl. 442. U, S. 162; Smith v. Harrison, 33 11 McAllister v. Johnson, 108 la, Ala. 706; Larrabee v. Baldwin, 35 42; 78 X. W. 790; Kager v. Vickery, Cal. 155; Rae v. Hubert, 17 111. 572; 61 Kan. 342; 78 Am. St. Rep. 318; O'Brien v. Young, 95 N. Y. 428; 47 49 L, R. A. 153; 59 Pac. 628; Dux- Am. Rep. 64; Wyoming National bury V. Dahle, 78 Minn. 427; 81 Bank v. Brown, 9 Wyom. 153; 61 N. W. 198 ; Sackett v. Montgomery, Pac. 465 ; denying rehearing, 7 57 Neb. 424; 73 Am. St. Rep. 522; Wyom. 494; 75 Am. St. Rep. 935; 77 N. W. 1083; Lefferts v. Bell, 57 53 Pac, 291. FORMAL, CONTRACTS. CONTRACTS OF RECORD. 857 convert a transaction -wanting the assent of the parties into one "which necessarily implies it."" So a judgment was held not to be a contract with reference to the liability of a trustee of a corporation who has become liable for the " debts " of the cor- poration by failing to file a report of the corporation as required by law.^ §549. Judgments as affected by impairment of obligation of con- tract. The cases in which it now is material whether a judgment is a contract or not are generally cases involving the impairment of the obligation of contracts, the period of limitations, the rule as to necessary parties to actions, and other questions arising where the legislature has made different provisions for actions on contract from those for actions generally. While there are some decisions to the contrary^ the weight of authority, supported by decisions of the Supreme Court of the United States, is that a judgment is not a contract within the meaning of the clause in the United States' Constitution preventing a state from impairing the obligation of contracts. Hence the legislature may interfere with the collection of a judg- ment based on tort by forbidding the sale of property for an act done during the Civil War,^ or by reducing the tax rate in the municipality so that the judgment cannot be collected,^ or 2 Hilton V. Guyot, 159 U. S. 113 legal tender act was not a eon- (201). tract for the payment of a debt in. 3 Chase v. Curtis, 113 U. S. 452. gold or silver; hence the court in a Thus under a statute making stock- suit on such judgment after the pas- holders liable only on contracts en- sage of such act could not render tered into by the corporation while judgment for the payment of the they were stockholders, a judgment debt in gold or silver. rendered on a cause of action was i Skinner v. Holt, 9 S. D. 427 ; 62 held not to be a contract so as to Am. St. Eep. 878; 69 N. W. 595 bind a stockholder who bought stock (change in exemption laws), after the cause of action accrued, 2 Freeland v. Williams, 131 U. S. but before judgment. Larrabee v. 405. Baldwin, 35 Cal. 155. Reed v. El- 3 Louisiana v. New Orleans, 109 dredge, 27 Cal. 346, is really not in U. S. 285; State v. New Orleans, point. It holds that a judgment 38 La. Ann. 119; 58 Am. Rep. 168. rendered before the passage of the 858 PAGE ON CONTKACTS. by changing the rate of interest which the judgment bears, accruing after the passage of the act.* But in some cases a statute changing the rate of interest on judgments is held in- ajDplicable to judgments previously rendered.^ There is, there- fore, a decided conflict of authority on this point. As an ad- ditional complication some courts have tried to distinguish cases where the contract provides what rate a judgiuent rendered thereon shall bear® from all other cases, holding that in such cases a change in the rate of interest of judgments previously rendered would impair the obligation of contracts, but not in other cases. A subsequent statute as to fish-ways may affect a judgment authorizing a dam to be built across a creek, subject to such conditions as the court should impose concerning the obstruction of the passage of fish/ §550. Remedies given on judgments. It has been often said that " judgments are invariably classed with contracts with reference to remedies upon them."^ " There are authorities which hold that judgments for some purposes are not contracts ; but there is no authority that they are never to be treated as contracts, and all of them recognize the implied obligation of every judgment debtor to pay the judgment, and that for the purpose of actions and remedies upon them they are to be treated as contracts."^ At Common Law it was im- 4Morley v. Railroad Co., 146 U. entitled upon his pre-existing judg- S. 162; O'Brien v. Young. 95 N. Y. ment." Butler v. Rockwell, 17 Colo, 428; 47 Am. Rep. 64; Wyoming Nat. 290, 295; 29 Pac. 458. Bk. V, Brown, 9 Wyom. 153; 61 Pac. 6 Bond v. Dolby, 17 Neb. 491; 23 465; denying rehearing, 7 Wyom. N. W. 351. 494; 75 Am. St. Rep. 935; 53 Pac. 7 State v. Gilmore, 141 Mo. 506; 291. 42 S. W. 817. 5 Texas, etc.. Railroad Co. v. An- i Wattles v. Circuit Judge, 117 derson, 149 U. S. 237; Sharpe v. Mich. 662, 665; 72 Am. St. Rep. 590; Morgan, 44 111. App. 346; Cox v. 76 N. W. 115; Meyer v. Brooks, 29 Marlatt, 36 N. J. Law. 389; 13 Am. Or. 203; 54 Am. St. Rep. 790; 44 Rep. 454; Brauer v. Portland, 35 Pac. 281. Or. 471; 58 Pac. 861; 59 Pac. 117; 2 Gutta Percha, etc., Mfg. Co. v. 60 Pac. 378. "The legislature Houston, 108 N. 1^ 276, 279; 2 Am. could not thus alter the rate of St. Rep. 412; 15 N, E. 402. interest to which a creditor was FORMAL CONTRACTS. CONTRACTS OF RECORD. 859 portant to determine whether a judgment was a contract or not chiefly with reference to the form of action to be brought thereon. At Modern Law the form of action is usually imma- terial. Still, where the legislature has divided actions into those in tort and those on contract, a judgment is yet held to be a contract.^ Under a statute authorizing attachment on all contracts express or implied, attachment may be brought on a judgment based on tort,* or on a foreign judgment.^ This is generally, but not invariably, true. Thus a judgment is classed as a contract as concerns a statute forbidding arrest on execu- tion in actions on contract f as to the jurisdiction of a justice of the peace,^ as to joinder of causes of action,^ or as to the right of counterclaim.'' Under a statute authorizing suit against a foreign corporation by another foreign corporation on a " cause of action which arose within the state." An effort was made to maintain an action under such statute upon a judgment ren- dered in another state upon the theory that it was a contract of record and that failure to pay it was a continuing breach, so that the cause of action arose wherever the judgment debtor was doing business and demand might be made. This theory was held to be unsound.^'' 3 Johnson v. Butler, 2 la. 535; « Childs v. Mfg. Co., 68 Wis. 231; Moore v. Nowell, 94 N. C. 265. 32 N. W. 43. * Johnson v. Butler, 2 la. 535; » Taylor v. Root, 4 Keyes (N. Y.) Gutta Percha, etc., Mfg. Co. v. Hous- 335. But in Rae v. Hubert, 17 111. ton, 108 N. Y. 276; 2 Am. St. Rep. 572, a foreign judgment was held 412; 15 N. E. 402; Nazro v. Oil Co., not included in "contract or agree- 36 Hun (X. Y.) 296; Donnelly v. nient, express or implied," in a stat- Corbett, 7 N. Y. 500; First, etc., ute giving the right of set-off. Bank v. Van Vooris, 6 S. D. 548; lo Anglo- American Provision Co. 62 N. W. 378. V. Provision Co., 169 N. Y. 506; 88 5 Wattles V. Circuit Judge, 117 Am. St. Rep. 608; 62 N. E. 587. Mich. 662; 72 Am. St. Rep. 590; 76 The court said: " Doubtless a judg- N. W. 115; Gutta Percha, etc., Mfg. ment as a debt of record is a con- Co. V. Houston, 108 N. Y. 276; 2 tract obligation of the highest Am. St. Rep. 412; 15 N. E. 402; nature. The cause of action has be- Meyer v. Brooks, 29 Or. 203; 54 come merged, and the law implies Am. St. Rep. 790; 44 Pac. 281. the obligation and the promise of 6 Sawyer v. Vilas, 19 Vt. 43. the defendant to pay ; but it is not a 7 Stuart v. Lander, 16 Cal. 372; contract in the sense of any engage- 76 Am. Dec. 538. ment of the parties with each other. 860 PAGE ON CONTRACTS. A statute requiriiig action on contract to be brought in the name of the real party in interest, has been held not to apply to judgments/^ §551. Judgment as affected by statute of limitations. Where the limitation of actions is concerned, no question arises as to whether a judgment is a contract if the legislature has made specific provision for judgments.^ Where no such provision is made, a domestic judgment has been heM not to be a "written contract or a specialty" but foreign juG'^ments,^ a judgment rendered by a justice of the peace* and finiUngs of fact by a court,^ such as a finding of the amount due on fore- closure, there being no prayer for personal judgment,^ have been held specialties, or at least contracts of record governed by the statute of limitations which provides for specialties. §552. Recognizances. A recognizance, in the correct use of the term, is an obliga- tion of record entered into either before a court of record or The element of mutuality is want- 48 N. E. 1001; reversing 61 111- ing; for judicium redditur in in- App. 78; Kimball v. Whitney, 15 vitum" ..." We may concede Ind. 280 ; Burnes v. Simpson, 9 Kan. that an action on a foreign judgment 658 ; U. S. Bank v. Dallam, 4 Dana is an action ex contractu; but that (Ky.) 574; Bullard v. Bell, 1 Ma- there is, within the meaning of the son (U. S. C. C.) 243; Tyler v. statute a cause of action which Winslow, 15 O. S. 364. arose within the state, permits of 3 Stockwell v. Coleman, 10 0. S, grave doubt and puts a severe strain 33 ; Fries v. Mack, 33 0. S. 52. on what seems to be plain language." Contra, Todd v. Crumb, 5 McLean 167 N. Y. 509. (U. S. C. C.) 172; Barber v. Inter- 11 Wolffe V. Eberlein, 74 Ala. 99 ; national Co., 74 Conn. 652 ; 92 Am. 49 Am. Eep. 809; Lovins v. Humph- St. Rep. 246; 51 Atl. 857; Jordan ries, 67 Ala. 437. v. Robinson, 15 Me. 167; Richards 1 Shainwald v. Lewis, 69 Fed. 487; v. Bickley, 13 Serg. & R. (Pa.) 395. Schuyler, etc.. Bank v. Bradbury, * Pease v. Howard, 14 Johns. (N. 56 Kan. 3.55; 43 Pac. 254; Mead v. Y.) 479. Bowker, 168 Mass. 234 ; 46 N. E. s Doyle v. West, 60 O. S. 438 ; 54 625; Whiteside v. Catching, 19 N. E. 469. Mont. 394; 48 Pac. 747. c Doyle v. West, 60 O. S. 438; 2Epling V. Dickson, 170 HI. 329; 54 N. E. 469 (semUe). FORMAL CONTKACTS. CONTBACTS OF EECORD. 861 before a magistrate authorized by law to take such recognizance, conditioned to be void ujwn the doing of some specified act, otherwise to be in full force and effect/ " A recogTiizance at Common Law was an obligation entered into before soma court of record or magistrate duly authorized with a condition to do some particular act, as to keep the peace or api>ear and answer to a criminal accusation. It need not be signed by the party entering into it."" A recognizance thus was in form a judgment by confession, with a clause of defeazance.^ The condition is construed strictly.* On breach of the condition, the recogniz- ance became absolute. The fact that the party on whose ap- pearance in court the recognizance was conditioned remained in the city,^ or was recaptured,^ did not prevent enforcement of the recognizance. It must be entered of record. " It can exist only of record. It must be proved of record."^ " A recognizance differs from a bail bond merely in the nature of the obligation created. The former is an acknowledgment of record of an existing debt; the latter, which is attested by the signature and seal of the obligor, creates a new obligation."^ A parol recognizance is invalid.^ It need not, however, be en- tered on record upon the day that it was taken. ^'^ 1 Black. Com. II., 341; State v. in which such party did not appear. Walker, 56 N. H. 176; 178; State but after default judgment remained V. Kruise, 32 N. J. L. 313; State v. in the city until he obtained his Crippen, 1 O. S. 399. discharge in insolvency.) 2 People V. Barrett, 202 111. 287, 6 Reed v. Police Court, 172 Mass. 297; 95 Am. St. Rep. 230 (238); 427; 52 N. E. 633. 67 N. E. 23. Citing Shattuck v. 7 State Treasurer v. Merrill, 14 People, 4 Scam. (111.) 477; 2 Black. Vt. 64, 65. "Without record there is Cora. 341. no recognizance." Mendocino Coun- 3 Adair v. State, 1 Blackf. (Ind.) ty v. Lamar, 30 Cal. 627, 629; Peo- 200; Pugh V. State, 2 Head (Tenn.) pie v. Huggins, 10 Wend. (N. Y.) 227. 464. 4 State V. Murdock, 59 Neb. 521; s People v. Barrett, 202 111. 287, 81 N. W. 447. (A recognizance 297; 95 Am. St. Rep. 230 (238) ; 67 conditioned to appear at a given N. E. 23. term is not binding for appearance 9 Bloomington v. Heiland, 67 111. at a later term.) 278. 5 Parkman v. Bartlett, 173 Mass. loMcNamara v. People, 183 111. 475; 53 N. E. 906. (A civil action, 164; 55 N. E. 625. 862 PAGE ON CONTRACTS. At early Common Law a recognizance was a very common method of securing a debt/^ This is to-day closely paralleled by cases in which a judgment has been confessed for future advances.^" At Modern Law the use of recognizances is almost wholly confined to criminal or bastardy proceedings." The binding force of the recognizance arises out of the act of the court; hence a recognizance need not be signed by the recog- nizor, unless the statute specifically requires it/* and if signed, the signature may be treated as surplusage ;^^ but if the magis- trate or officer is not authorized to take the recognizance,^® or if taken in any other manner than that prescribed by law,^^ as where it is not conditioned with reference to any criminal charge,^^ it is invalid. Where a recognizance is required a bond cannot he given as a substitute therefor.^^ A recognizance is sometimes held at modern law to be a true contract."" The difficulties in making 11 Pollock & Maitland, History English Law, II., 201, 202 (original paging) . 12 Cook V. Whipple, 55 N. Y. 150; 14 Am. Rep. 202; Shenk's Appeal, 33 Pa. St. 371. 13 Even here the term recogniz- ance is often misused, where the obligation is not of record, but is merely a bond for appearance and the like. People v. :Mellor, 2 Colo. 705 ; New Haven v. Roger, 32 Conn. 221; In re Brown, 35 Minn. 307; 29 N. W. 131. "The bond in ques- tion is substantially a recognizance." Vierling v. State, 33 Ind. 218, 219. It is in some cases distinguished from a bond, McMicken v. Com- monwealth, 58 Pa. St. 213. i-iMcXamara v. People, 183 111. 164; 55 X. E. 625; Gay v. State, 7 Kan. 394; Madison v. Common- wealth, 2 A. K. Mar. (Ky.) 131; Irwin V. State, 10 Neb. 325; 6 N. W. 370; King v. State, 18 Neb. 375; 25 N. W. 519; Porter v. State, 23 0. S. 320. 15 Irwin v. State, 10 Neb. 325; 6 N. W. 370; King v. Staie, 18 Neb. 375; 25 N. W. 519. 16 Clink v. Russell, 58 Mich. 242 ; 25 N. W. 175. 17 Irwin v. State, 10 Neb. 325 ; 6 N. W. 370. (Omission of designa- tion of official character of officer taking recognizance.) State v. Pratt, 148 Mo. 402; 50 S. W. 113. (The statute in effect required the recognizance to be taken and signed in the presence of the officer who is to take it.) IS Cannon v. Commonwealth, 96 Va. 573; 32 S. E. 33. 19 Comfort v. Kittle, 81 Is*. 179; 46 N. W. 988. This is not true in states which treat recognizance and bond as synonymous terms. New Haven v. Rogers, 32 Conn. 221. 20 State V. Weatherwax, 12 Kan. 463. (Holding that a minor's recog- nizance for his own release is valid as a contract for necessaries, and saying that a recognizance, while " more than a contract " at Common FORMAL CONTRACTS. CONTRACTS OF RECORD. 863 such classification are that in criminal matters at least, the agreement is with the state in its sovereign capacity/^ and that the recognizance has the elements of conclusiveness and finality that belong to a judgment.^^ A recognizance was enforceable at Common Law by scire facias.'^ Suit may be brought on a recognizance/* but where the nominal amount of the judgment may be reduced to equal the actual damage, debt will not lie."^ §553. Statute merchant and statute staple. Statute merchant was an obligation of record analogous to a recognizance. The statute of Acton-Burnel,^ the first of a series of acts, passed primarily to extend English credit in that mediaeval struggle for trade in which England laid the foundation of her commercial greatness, attempted to provide a quick and easy method for securing debts due to merchants. " The merchant which will be sure of his debts shall cause his debtor to come before the mayor of London or of York or Bristol, or before the mayor and a clerk (which the King shall appoint for the same) for to knowledge the debt and the day of payment; and the recognizance shall be entered into a roll with the hand of the said clerk which shall be known." This statute then provided that a writing obligatory was to be made by the clerk, sealed with the seal of the debtor and the seal of the King. If the debtor did not pay at the day limited the Law, is a contract in Kansas. ) State 22McNamara v. People, 183 111. V. Crippen, 1 0. S. 399. 164; 55 N. E. 625; State v. Kruise, 21 Anson regards this as excluding 32 N. J. L. 313. it from true contract. Anson Cont. 23 Banta v. People, 53 111. 434; 51 (original paging). In Smith v. State v. Dwyer, 70 Vt. 96; 39 Atl. Collins, 42 Kan. 259; 21 Pac. 1058, 629. the court said that recognizances are 24 State v. Wheeler, 67 N. H. 511; "not contracts within the ordinary 41 Atl. 173. significance of the word " ; and ac- 25 State v. Dwyer, 70 Vt. 96 ; 39 cordingly held that suits on recog- Atl. 629. nizances were to be classed as pen- ill or 13 Ed. I.; Statutes at alties rather than as contracts with Large, I., 141 (edited by Danby reference to the jurisdiction of such Pickering), suit. 864 PAGE ON CONTRACTS. creditor could come before the said major and clerk with his bill obligatory ; and if it was found by the roll and the bill that the debt had been acknowledged and that the day of payment had expired and that the bill was unpaid, the mayor Avas forth- with to cause the movables of the debtor to be sold after ap- praisal until the amount of the debt was paid. Provision was made for levying on movables outside of the jurisdiction of the mayor. Imprisonment of the debtor was provided for if the movables did not bring enough to pay the debt. This statute proved ineffective, and its general principles were re- enacted and extended in the statute De mercatorihus.^ Before the passage of this act, feudal principles had given rise to the doctrine that real property was not liable for the debts of the owner. This rule had a depressing influence on the credit of English merchants, since their real estate could not be reached in any way. The Statute of Acton-Bumel was also shorn of its force by misinterpretation by the sheriffs, it is said in the preamble to the Statute De Mercatotnbus, and great injury was thus done to merchants. After specific provisions for recogniz- ance, execution against movables, and imprisonment, of the same general scope as the Statute of Acton-Burnel, but more exact in terms, the Statute De Mercaioribus provides for ex- tension of time for a quarter of a year, " And if he do not agree within the quarter (of a year) next after the quarter expired, all the lands and goods of the debtor shall be delivered to the merchant by a reasonable extent, to hold them until such time as the debt is wholly levied." The liability thus created was more than a mere obligation of record ; since it cre- ated an estate in lands defeasible upon condition subsequent, a chattel interest, but one like a freehold, since it might endure forever if the debtor's estate were a fee and the debt was not discharged.^ Statute Staple was a similar estate created under a later statute.* The Statute of the Staple intended to create 2 13 Ed. I.; St. 3, c. 1; I. Stat- 4 27 Ed. III., St. 2, eh. 9; II. utes at Large, 236 (edited by Danby Statutes at Large, 85 (edited by Pickering). Danby Pickering). 3 Black. Com. II. 160. FORMAL CONTEACTS. CONTEACTS OF KECOED. 865 certain market-places in England for v/ools, leather, wool-fells and lead. There was also a class of obligations of record known as recognizances in the nature of Statute Staples.^ No further discussion of these obligations of record is necessary, as they have all been long since obsolete. §554. Other contracts of record. Contracts of record other those enumerated are naturally rare. They are not, however, entirely unknown. It has been held that a contract made between the parties to pending litigation in open court, and entered on the journal as a proceeding in the cause, " has all the force and effect of a contract of record."^ Such a contract has been held not to be within the operation of the statute of frauds.^ 5 Black. Com. II. 160. 2See§ 737. 1 Huston V. Ry., 21 0. S. 235. 55 866 PAGE ON CONTKACTS. CHAPTER XXXIII. CONTRACTS UNDER SEAL. §555. History of the seal. The use of the seal as a means of authenticating instruments is often said to be due primarily to the ignorance of our ances- tors. This is not historically true. Before the E^orman con- quest we find that seals were used by the Duke of the Xormans and possibly a few of his great men. On the other side of the channel, Edward the Confessor carried his love for things Norman to the extent of using a private seal/ In the years immediately following the Norman Conquest the use of the seal was distinctive of the king and a few of the great men. Gradually the use of the seal extended downward in the social scale until by the time of Henry II. we find that it was assumed that formal instruments, executed by free men, would be under seal. We know of this change in the general use of the seal better than many more important facts about the history of our law. In a famous case between Abbot Walter and Gilbert de Baillol" we find that the validity of a charter of an earlier reign was attacked on the ground that the charter was unsealed. Richard de Lucy, the justiciar, replied that it was not the ancient custom that every petty knight should have a seal, which was suitable only for kings and pre-eminent personages.^ It is 1 Pollock & Maitland's History in this statement of the case for of English Law, I. 72 (original pag- prosecution which could be success- ing) ; II. 221 (original paging). fully controverted, as the Curia Re- 2 Bigelow Placita. 175; Pollock & gis possessed testimony on every Maitland's History of English Law, point; at the permission of the king, 11.221 (original paging) . Adams & the deeds of purchase and of gift Stephen's Select Documents of En- were read in the hearing of all. and glish Constitutional History, 9. also the charters of confirmation. ^ " ^ow, since there was nothing Since the other party had little to ^ CONTEACTS UNDEE SEAL. 8G7 true that the justiciar was sitting in a case in which his brother was deeply interested as plaintiff, and was doing everything in his power to bring about a decision in his brother's favor. His statement of the deterioration of human nature may be chal- lenged. At the same time his statement of the law seems to have been unquestioned. We may thus conclude that soon after the Xorman Conquest it was not expected that knights holding by military tenure would have private seals ; while by the reign of Henry II. it was assumed that every knight at least will have a seal, and by the end of the thirteenth century it is assumed that every free and lawful man will have a seal as a matter of course.* §556. What constitutes a seal. Any statement either of what a seal was or of its legal effect is constantly complicated b^^ the fact that the constant tendency of the law^, during the last century and a half, has been to abolish technical requirements as to the nature of the seal and as to its legal effect. This has been done in part by judicial decisions, in part by statute. It is, therefore, difficult in dis- cussing different steps in the development of the law to deter- mine whether given cases are merely extending a doctrine at a given stage of development, and adhering to it, though constru- answer to these, Gilbert de Baillol, quenee to have them, and in the old that he might not seem to make no times spite did not make men petti- objection, answered that he had foggers or sceptics." ("Moris an- heard the reading of the deeds given tiqiiitns non erat quemlibet militu- by his predecessors, but he took oc- lum sigillum habere, quod regibus et casion to note that no seals were praecijmis tantum competit per- affixed to them in attestation. Turn- sonis." Bigelow Placita, 177.) Ab- ing to him, that splendid and wise bot Walter v. Gilbert de Baillol ; man Richard de Lucy, the brother Bigelow's Placita, 175, 177; Adams of the said abbot, then the Justiciar & Stephen's Select Documents of of the lord king, inquired whether English Constitutional History, 9, he had a seal. Upon his reply that 10; decided in the reign of Henry he had a seal, the illustrious man II. smiled and said, " The old fashion 4 Pollock & Maitland's History of was not for every little knight to English Law, II. 221, 222 (original have a seal, but it was customary paging), for only kings and people of conse- 868 PAGE ON CONTKACTS. ing it more liberally than the earlier cases; or whether they mark a transition to the next stage of development. (1) The Common Law seal consisted originally of a distinct and individ- ual engraved or inscribed stamp with which impressions could be made upon wax or other substance capable of adhering to paper and of receiving impressions. It is in this sense of the word that Glanville and Britton speak of the loss of a seal.^ The term was, as it still is, an ambiguous one, as it also meant the im- pression made by such stamp upon such adhesive substance.^ " Sigillum est cera impressa quia cera, sine impressione, non est sigillum."^ While Coke speaks of a seal as necessarily an impression in wax, it has been held that any substance may be used, if both capable of receiving an impression and of adhering to the paper.* So an impression on a wafer^ or mucilage® was held sufficient. So an impression made directly upon the paper, causing indentations and elevations in its substance, might be a seal.^ (2) The next step in breaking down the technical requirements as to the form of a seal was to hold that a piece of wax or a wafer,^ a piece of paper" or other extrinsic substance affixed to the instrument and intended as a seal, might be a valid seal, though no distinctive impression of any sort appeared thereon. (3) The next step in breaking down tech- nical requirements as to the form of a seal was to hold that an mark upon the paper intended as a seal would be a valid seal, though no extrinsic substance was affixed to the paper and no impression of any sort was made upon the paper. Where this principle obtains an ink seal,^" a scrawl with the word seal 1 Glanville, Book X., ch. XII.; s Gillespie v. Brooks, 2 Redf. (N. Britton, I. 64&. Y.) 349. 2 Fish V. Brown, 17 Conn. 341; 7 pieice v. Indseth, 106 U. S. 546; Warren v. Lynch, 5 Johns. (N. Y.) Pillow v. Roberts, 13 How. (U. S.) 239. 472; Hendee v. Pinkerton, 14 All. 3 Co. Inst. Lib. III. 169. (Mass.) 381; Manchester Bank v. 4 Pillow V. Roberts, 13 How. (U. Slason, 13 Vt. 334. S.) 472. 8 Hughes v. Debnam, 8 Jones L. sTasker v. Bartlett, 5 Cush. (N. C.) 127. (Mass.) 359. » Turner v. Field, 44 Mo. 382. 10 Hastings v. Vaughn, 5 Cal. 315. CONTRACTS UNDER SEAL. 869 ■written within it," or printed/^ a scroll seal," the word " seal "^* the word " seal " printed within braekets,^^ the letters " L. S."^* or an ink mark intended as a seaP^ have been each held suffi- cient as seals. Many states, however, have not adopted this principle as a Common Law rule, and have held that if no impression is made on the paper, a mark no matter how clearly meant for a seal, such as the word " seal " surrounded by brack- ets,^^ or a scroll seal,^^ or the word " seal "^° is not sufficient as a seal. Under a statute specifically authorizing an impression upon the paper without the use of wax or wafers, wherever a seal was required, a scroll with the word " seal " written under it is not a valid seal if affixed to a contract which is not required by law to be under seal.^^ (4) The last step has been statutory and consists in abolishing the private seal. §557. Adoption of seal. If the impression or mark upon the paper is of such nature as to be recognized as a valid seal it need not be physically affixed or made by the obligor. He may, if he pleases, adopt as his own a seal already on the instrument,^ as where the seal is printed on a blank form.^ If several obligors execute an instru- ment it is not necessary that each should affix a separate seal. 11 Bacon v. Green, 36 Fla. 325; is Osborn v, Kistler, 35 O. S. 99. 18 So. 870; Cosner v. McCrum, 40 le Barnard v. Gantz, 140 N. Y. W. Va. 339; 21 S. E. 739; Putney 249; 35 N. E. 430; Lorah v. Niss- V. Cutler, 54 Wis. 66; 11 N. W. 437, ley, 156 Pa. St. 329; 27 Atl. 242; i2Carli]e v. People, 27 Colo. 116; Williams v. Starr, 5 Wis. 534. 25 Pac. 48. it Such as a dash. Hacker's Ap- is Jacksonville, etc., R. R. V. peal, 121 Pa. St. 192; 1 L. E. A. Hooper, 160 U. S. 514; Le Roy v. 861; 15 Atl. 500. Beard, 8 How. (U.S.) 451 (Wis.); is Manning v. Perkins, 86 Me. San Luis Obispo County v. White, 419; 29 Atl. 1114. 91 Cal. 432; 24 Pac. 864; 27 Pac. " Hendee v. Pinkerton, 14 All. 756; Brown v. Jardhal, 32 Minn. (Mass.) 381. 135; 50 Am. Rep. 560; 19 N. W. 20 Beardsley v. Knight, 4 Vt. 471. 650; Carpenter v. Frazier, 102 Tenn. 21 Providence, etc., Co. v. Engrav- 462; 52 S. W. 858. ing Co., 24 R. I. 175; 52 Atl. 804. 14 Cochran v. Stewart, 57 Minn. 1 Lorah v, Nissley, 156 Pa. St. 499; 59 N. W. 543; Cook v. Cooper, 329; 27 Atl. 242. 59 S. C. 560; 38 S. E. 218; Whitley 2 Osborn v. Kistler, 35 O. S. 99. V. Davis, 1 Swan (Tenn.) 333. 870 PAGE ON CONTRACTS. Two or more may adopt a common seal if they wish.^ A eur- poration may adopt such seal as it pleases if it is sufficient in law as the seal of a natural person,* such as a scroll seaP or the seal of a natural person.** So the District of Columbia may adopt the seals of its commissioners.'^ In order, however, that this principle applies, the seal already on the instrument must be in fact adopted by the obligor whose seal it is claimed to be.^ Thus a clause in a conveyance under seal whereby the grantee assumes a mortgage is not the specialty of the grantee.^ So a written guaranty of a signature, written on the back of a sealect instrument does not thereby become a sealed guaranty. ^"^ An unsealed addition to a sealed note is not itself under seal.^^ If the seal is omitted by accident and the contract is in all other respects duly executed and valid, equity can supply the omis- sion. ^^ The objection that a sealed contract is not dated is " too frivolous to require consideration."" 3 Ryan v. Cooke, 172 111. 302; 50 N. E. 213; affirming 68 111. App. .592; Bohannons v. Lewis, 3 T. B. Mon. (Ky.) 376; Bradford v. Ran- dall, 5 Pick. (Mass.) 496; Citizens' Building Association v. Cummings, 45 0. S. 664; 16 N. E. 841; Lamb- den V. Sharp, 9 Humph. (Tenn.) 224; Rollins v. Humphrey, 98 Wis. 66; 73 N. W. 331. 4 G. V. B. Mining Co. v. Bank, 95 Fed. 23; 36 C. C. A. 633; Blood v. Water Co., 113 CaL 221; 41 Pac. 1017; 45 Pac. 252; Royal Bank v. Depot Co., 100 Mass. 444; 97 Am. Dec. 115; Alfalfa Irrigation Dis- trict V. Collins, 46 Neb, 411; 64 N. W. 1086; Thayer v. Mill Co., 31 Or. 437; 51 Pac. 202. 5 Jacksonville, etc., R. R. v. Hoop- er, 160 U. S. 514. c Phillips V. Coffee, 17 111. 154; 63 Am. Dec. 357; Porter v. R. R., 37 Me. 349 ; Mill Dam Foundery Co. V. Hovey, 21 Pick. (Mass.) 417; Stebbins v. Merritt, 10 Cash. (Mass.) 27; Tenney v. Lumber Co., 43 N. H. 343; Middlebury Bank v. R. R., 30 Vt. 159. 7 District of Columbia v. Iron Works, 181 U. S. 453. 8 Ridley v. Hightower, 112 Ga. 476; 37 S. E. 733; Hess's Estate, 150 Pa. St. 346; 24 Atl. 676; Tay- lor V. Forbes's Administrator, 101 Va. 658; sub nomine, Taylor v» Forbes's Administratrix, 44 S. E, 888. 9 Taylor v. Forbes's Administra* tor, 101 Va. 658; sub nomine, Taylor V. Forbes's Administratrix, 44 S. E. 888. (As to the period of limita- tions.) 10 Ridley V. Hightower, 112 Ga, 476; 37 S. E. 733. 11 Sanders v. Bagwell, 32 S. C. 238; 7 L. R. A. 743; 10 S. E. 946. 12 Trustees of Wadsworthville Poor School V. Bryson, 34 S. C. 401 ; 13 S. E. 619. 13 Seigman v. Streeter, 64 N. J. L. 169, 170; 44 Atl. 888. CONTRACTS UNDER SEAL. 871 §558. Necessity of seal in contract of corporation. The original rule was that a corportion " acts and speaks only by its common seal. . . . It is the fixing of the seal, and that only, which unites the several assents of the individuals who compose the community and makes one joint assent of the whole."^ Exceptions were made to this rule in cases of trivial or routine business." When trading and manufacturing cor- porations became important, it was evident that to require the ease of the corporate seal would destroy the practical effective- ness of such corporations, and the exceptions multiplied until it may be said that in the United States they have become the rule, and now a corporation need not affix its seal to a contract,^ except in cases such as deeds,'* where a natural person should 1 Black. Com. I. 475 ; Preston v. R. R., 17 Beav. 114 (117) ; Gooday V. B. R., 17 Beav. 132 (136) ; Winne V. Bampton, 3 Atk. 473; Waller v. Bank, 3 J. J. Mar. (Ky.) 201; Gar- rison V. Combs, 7 J. J. Mar, (Ky.) 84; 22 Am. Dec. 120. 2 Church V. Imperial, etc., Co., 6 Ad. & El. 846; 33 E. C. L. 230; niggle V. R. R., 5 Exch. 442. 3 Gottfried v. Miller, 104 U. S. 521 ; First, etc.. Bank v. Mining Co., 89 Fed. 439 ; Crowley v. Mining Co., 55 Cal. 273; Savings Bank v. Da- vis, 8 Conn. 191; B. S. Green Co. v. Blodgett, 159 111. 169; 50 Am. St. Rep. 146; 42 N. E. 176; Columbia Casino Co. v. Columbian Exposition, 85 111. App. 369; Globe, etc., Co. v. Reid, 19 Ind. App. 203; 47 N. E. 947; modified on rehearing, 49 N. E. 291; Muscatine, etc., Co. v. Lumber Co., 85 la. 112; 39 Am. St. Rep. 284; 52 N. W. 108; Commercial Bank v. Mfg. Co., 1 B. Mon. (Ky.) 13; 35 Am. Dec. 171; Fitch v. Mill Co., 80 Me. 34; 12 Atl. 732; Speirs V. Drop-Forge Co., 174 Mass. 175; 54 N. E. 497; National, etc., Asso- ciation V. Stone Co., 49 Minn. 220; 51 N. W. 916; Carey, etc., Co. v. Cain, 70 Miss. 628; 13 So. 239; Goodwin v. Screw Co., 34 N. H. 378; Crawford v. Longstreet, 43 N. J. L. 325; Western, etc., Co. v. Bank, 9 N. M. 1; 47 Pac. 721; Leinkauf v. Caiman, 110 N. Y. 50; 17 N. E. 389; Hand v. Coal Co., 143 Pa. St. 408; 22 Atl. 709; Gassett v. Andover, 21 Vt. 342; Winterfield v. Brewing Co., 96 Wis. 239; 71 N. W. 101; Ford v. Hill, 92 Wis. 188; 53 Am. St. Rep. 902; 66 N. W. 115. The seal is especially unnecessary where the corporation has no seal. Omaha, etc., Co. V. Burns, 49 Neb. 229; 68 N. W. 492; Stevens v. Ball Club, 142 Pa. St. 52; 11 L. R. A. 860; 21 Atl. 797; Turner v. Lumber Co., 106 Tenn. 1 ; 58 S. W. 854. 4 Danville Seminary v. Mott, 136 111. 289; 28 N. E. 54; Caldwell v. Mfg. Co., 121 N. C. 339; 28 S. E, 475; Thayer v. Mill Co., 31 Or. 437? 51 Pac. 202. (Citing In re St. He- len Mill Co., 3 Sa^vy. (U. S. C. C.) 88.) 872 PAGE ON CONTKACTS. affix his seal.^ This rule applies to public as well as to private corporations at Modern Law, and a public corporation maj make a valid contract without affixing the corporate seal, if it is such a contract that a natural person would not be required to execute it under seal, and if the charter or other statute does not require a seal.'' The presence of a corporate seal has still some legal effect in some jurisdictions. An instrument sealed with a corjwrate seal is treated as- 'prima facie the instrument of the corjDoration,^ while if such seal is not affixed authority to execute the instrument must be shown.^ In some jurisdictions the absence of a corporate seal prevents the instrument from being a corporate obligation.^ In Tennessee it is held that the act abolishing private seals does not change the law as to corporate seals," but the omission of a seal from a corporate deed does not avoid it in equity, but only in law.^^ The seal is said to be unnecessary except in case of contract of unusual or extraordinary character.^" In Canada a contract must be in the form required by the charter or under seal.^^ In England the courts adhere to the old rule formally, though they have so honey-combed it with exceptions that it is practically obsolete. Where a seal is proper, it is held in most jurisdictions that any form of mark intended as a seal may be adopted and used by the corporation.^* Thus it may adopt the private seal of sBenbow v. Cook, 115 N. C. 324; Church, 3 Pen. (Del.) 229; 50 Atl. 44 Am. St. Rep. 454; 20 S. E. 453. 535. 6 Gordon v. San Diego, 101 Cal. lo Garrett v. Land Co., 94 Tenn. 522; 40 Am. St. Rep. 73; 36 Pac. 459; 29 S. W. 726. 18; affirming in bane 32 Pac. 885; n Precious Blood Society v. El- Frankfort Bridge Co. v. Frankfort, sythe, 102 Tenn. 40; 50 S. W. 759. 18 B. Mon. (Ky.) 41; Matthews v. 12 Diggle v. Ry., 5 Exeh. 442; Westborough, 134 Mass. 555; Bren- Paine v. Guardians, 8 Q. B. 326; 55 nan v. Weatherford, 53 Tex. 330 ; 37 E. C. L. 325. Am. Rep. 758. i3 Garland, etc., Co. v. Electric 7 Mills V. Mining Co., 132 Cal. Co., 301 Ont. 40. 95; 64 Pac. 122. i* Blood v. La Serena, etc., Co., sDegnan v, Thoroughman, 88 Mo. 113 Cal. 221; 45 Pac. 252; reversing App. 62. in banc 41 Pac. 1017; Johnston v. »St. Joseph's, etc., Society v. Crawley, 25 Ga. 316; 71 Am. Dec CONTRACTS UNDER SEAL. 873 one of its officers," or the word " seal,"" or " L. S.,"" or a scroll seal,^^ or a piece of paper attached by a wafer, without any sort of impression/® §559. Delivery of sealed instrument. The question of the delivery of a sealed instrument presents many of the questions involved in the delivery of a simple written contract. A discussion of the delivery of a sealed contract will therefore be deferred until the discussion of the delivery of a simple written contract.^ §560. Effect of seal at early Common Law. When the seal once had come into general use and had become the means of authenticating formal instruments it at once acquired an effect and a sanctity which it is hard to over- estimate or even appreciate. If a seal was affixed to an instru- ment it bound the party whose seal it was without reference to the person by whom it was affixed. If his agent or bailiff affixed it, even without authority, the principal was bound, for he should have provided a better custodian. The law went further than this, however. Glanville says^ that if the defend- ant acknowledges the seal to be his own but denies that the charter was made with his assent, " he is bound to warrant the terms of the charter and, in all respects, to observe the compact expressed in the charter as contained in it, without question, and to impute it to his own indiscretion if he incur 173; Porter v. R. R. Co., 37 Me. v. Mfg. Co., 121 N. C. 339; 28 S. E. 349; Tenney v. Lumber Co., 43 N. 475. H. 343; Ransom v. Bank, 13 N. J. it G. V. B. Mining Co. v. Bank, Eq. 212; Bank v. Ry. Co., 30 Vt. 95 Fed. 23; 36 C. C. A. 633; 160. modifying 89 Fed. 439. 15 Eureka Co. v. Bailey Co., 11 is Thayer v. Mill Co., 31 Or. 437; Wall. (U. S.) 488; Gashwiler v. 51 Pac. 202. Willis, 33 Cal. 11; 91 Am. Dec. i9 Mill, etc.. Co. v. Hovey, 21 Pick. 607; Leinkauf v. Caiman, 110 N. Y. (Mass.) 417. 50; 17 N. E. 389. i See § 577 et seq. 16 Jacksonville, etc., Co. v. Hoop- i Book X., ch. XII. (Beames's edi- er, 160 U. S. 514. Contra, Caldwell tion). 874 PAGE ON CONTRACTS. any loss by negligently preserving his own seal."" This seemst to mean that even if his seal is stolen or lost he is hound by it in the hands of any person who may use it. Britton seems to take the same view, but specifies a method whereby one who has lost his seal may, by public announcement of such fact, avoid subsequent liability thereunder. In speaking of defenses, Britton says : " Or he may plead, that this writing ought not to affect him, for at the time of it being made he had lost his seal, and caused it to be cried and published at the churches and markets, so that if anything was made under that seal after a certain day on which it was lost, it ought not to affect him ; and in such manner he may deny the deed, and thereupon let the truth be inquired by the neighborhood where the deed is supposed to have been made, and according to the verdict of the country, let him who shall be found to have been guilty of falsehood be adjudged to prison, and punished by fine."' §561. Effect of seal on consideration at Common Law. A sealed instrument was enforceable at Common Law be- cause of its solemnity of form. It needed no consideration, and at law want of consideration was no defense.^ So a sealed contract for the sale of realty shows consideration sufficiently to comply with the statute of frauds.^ So a seal, even if by statute presumptive evidence only of consideration, shows con- sideration sufficiently to comply with a statute requiring a sGlanville, Book X., ch. XII. v. Bank, 57 N. J. L. 27; 29 Atl. 320; (Beames's edition). Dorr v. Munsell, 13 Johns. (N. Y.) 3 Britton, I. Mb (Nichols's edi- 430; Cosgrove v. Cummings, 195 tion). Pa. St. 497; 46 Atl. 69; Anderson iRendleman v. Eendleman, 156 v. Best, 176 Pa. St. 498; 35 Atl. 111. 568; 41 N. E. 223; Gourley v. 194; Carter v. King, 11 Rich. L. By., 96 111. App. 68j Bullen v. Mor- (S. C.) 125; Barrett v. Garden, 65 rison, 98 111. App. 669; Leonard v. Vt. 431; 36 Am. St. Rep. 876; 26 Bates, 1 Blackf. (Ind.) 172; Ruth Atl. 530; Wing v. Peck, 54 Vt. 245; V. Ford, 9 Kan. 17; Van Valken- Harris v. Harris, 23 Gratt. (Va.) burgh V. Smith, 60 Me. 97; Erickson 737. V. Brandt, 53 Minn. 10; 55 X. \V. 2 .Johnston v. Wadsworth, 24 Or. 62; Saunders v. Blythe, 112 Mo. 1; 494; 34 Pac. 13. 20 S. W. 319; Ne\\ark, etc., Church CONTRACTS UNDER SEAL. 875 contract to answer for the debt of another to be evidenced by a written memorandum " expressing the consideration."^ It is often said that the seal imports a consideration,* or that it estops the covenantor to deny that there was a consideration,^ but this expression of the rule shows a misapprehension of the history of the seal. A sealed contract was enforceable as such at Common Law long before consideration was thought of as an element of a contract. Historically it would be more cor- rect to say that consideration was a substitute for the seal.*' To this Common Law rule there were at least two exceptions. Contracts in restraint of trade and marriage are, as has been pointed out elsewhere, '^ merely void and not illegal. Yet a contract under seal in restraint of marriage would not be en- forced, though a similar promise under seal to make a gift, without the consideration of a promise to refrain from mar- riage, would be enforceable.® So a contract in restraint of trade, even if reasonable and so not even void, but valid as to 3 Kuener v. Smith, 108 Wis. 549 ; 84 N. W. 850. 4Sivell V. Hogan, 119 Ga. 167; 46 S. E. 67 ; Forthman v. Deters, — 111. — ; 69 N. E. 97; Consolidated, etc., Ry. Co. V. O'Neill, 25 111. App. 313; Wing V. Chase, 35 Me. 200; Erick- son V. Brandt, 53 Minn. 10; 55 N. W. 62; Saunders v. Blythe, 112 Mo. 1; 20 S. W. 319; Parker v. Parmele, 20 Johns. (N. Y.) 130; 11 Am. Dec. 253; Wester v. Bailey, 118 N. C. 193; 24 S. E. 9; Ducker v. Whit- son, 112 N. C. 44; 16 S. E. 854. " The law of nudum pactum is in- applicable to instruments under seal. The very fact of having a seal attached imports a considera- tion." Brown v. Brown, 44 S. C. 378, 381; 22 S. E. 412. So Carter V. King, 11 Rich. L. (S. C.) 125. " Want of consideration is not a sufficient answer to an action on a sealed instrument. The seal imports a consideration, or renders proof of consideration unnecessary ; because the instrument binds the parties by force of the natural presumption that an instrument executed with so much deliberation and solemnity is founded upon some sufficient cause." Storm V. United States, 94 U. S. 76 (84). 5 Smith V. Smith. 36 Ga. 184; 91 Am. Dec. 761; Black v. Maddox, 104 Ga. 157; 30 S. E. 723. "The in- strument relied on in this case be- ing under seal, a consideration is im- ported which the promisors would be estopped to deny." Black v. Mad- dox, 104 Ga. 157, 163; 30 S. E. 723. 6 Walker v. Walker, 13 Ired. L. (N. C.) 335. 7 See §§ 373-381, 424, 510. 8 Baker v. White, 2 Vern. 215; Key v. Bradshaw, 2 Vern. 102 ; Lowe V. Peers, 4 Burr. 2225 ; Sterling v. Sinnickson, 5 N. J. L. 756. 876 PAGE ON CONTRACTS. subject-matter, would not be enforced without a valuable con- sideration, even if the contract was under seal.^ §562. In equity. If the question of the validity of a contract becomes material in equity the existence of a seal does not prevent equity from inquiring whether the instrument is supported by a valuable consideration, and from treating it as unenforce- able if it appears that no consideration exists.^ Thus specific performance will not be given in equity upon a gratuitous prom- ise under seal.^ This rule is especially true under a statute authorizing inquiry into the consideration of a contract under seal, to show want of consideration.^ §563. Under modem statutes. The Common Law efPect of the seal as dispensing with the necessity of consideration has been greatly modified by statute in many states. In some states the affixing of a seal has no practical effect unless the instrument is one required by law to be imder seal.^ A seal may be ignored as surplusage if the instrument to which it is affixed is not necessarily under seal, and the addition of the seal would vitiate the instrument, as where the seal is affixed by an agent whose authority is created by parol.^ So a contract under seal, made by an unauthorized agent, and not being necessarily under seal, may be ratified sMitchel v. Eeynolds. 1 P. Wms. 3 Winter v. Ry., 160 Mo. 159; 61 181; Palmer v. Stebbins, 3 Pick. S. W, 606. (Mass.) 188; 15 Am. Dec. 204; i Edwards v. Dillon, 147 111. 14; Keeler v. Taylor, 53 Pa. St. 467; 91 37 Am. St. Rep. 199; 35 N. E. 135; Am. Dee. 221. Barton v. Gray, 57 Mich. 622; 24 iHervey V. Audland, 14 Sim. 531; X. W. 638; Blewitt v. Boorum, 142 Hale V. Dressen, 73 Minn. 277; 76 N. Y. 357; 40 Am. St. Rep. 600; 37 jSr. W. 31; Lamprey v. Lamprey, 29 N. E. 119; McXeal, etc., Co. v. Walt- Minn. 151; 12 N. W. 514; Winter man, 114 N. C. 178; 19 S. E. 109. V. Ry., 160 Mo. 159; 61 S. W. 606. sHartnett v. Baker, — Del. — ; 2Crandall v. Willig, 166 111. 233; 56 Atl. 672; Mcintosh v. Hodges, 46 X. E. 755; Buford v. McKee, 1 110 Mich. 319, 322; 68 X. W. 158; Dana (Ky.) 107; Bosley v. Bosley, 70 X. W. 550. 85 Mo. App. 424. CONTEACTS UNDER SEAL, 877 "bj parol, the seal being ignored.^ These statutes may be grouped under two general classes. (1) Some statutes provide that even though an instrument is under seal, want of consid- eration may be inquired into.* The same result seems to have been reached in some states without the aid of statute.^ Some jurisdictions hold that the purpose of these statutes is merely to allow inquiry into failure of consideration where a valuable consideration was contemplated, but not to make invalid sealed instruments which were intended to be without ■ consideration.^ Other jurisdictions treat such statutes as abol- ishing voluntary promises under seal, and reducing the seal to a mere prima facie evidence of consideration which may be rebutted.^ While consideration may be presumed from the use of the seal, this presumption does not arise where the language of the contract shows that it had no consideration.® (2) In other jurisdictions the private seal has been abolished by stat- ute.^ The effect of such statutes is to reduce all specialties to simple contracts. Even if a ^eal is affixed to a contract, it is, under such statutes, mere surplusage.^" §564. Extrinsic evidence in sealed contracts. The question of what facts and circumstances, outside of the words of a contract under seal, can be considered in connection 3 Smyth V. Lynch, 7 Colo. App. 6 Rendleman v. Rendleman, 156 383; 43 Pac. 670; Bless v. Jenkins, 111. 568; 41 N. E. 223; AUer v. Al- 129 Mo. 647; 31 S. W. 938. ler, 40 N. J. L. 446. So at equity 4 Withers v. Greene, 9 How. (U. independent of statute. Meek v. S.) 213; McCarty v. Beach, 10 Cal. Frantz, 171 Pa. St. 632; 33 Atl. 461; Williams v. Haynes, 27 la. 413. 251; 1 Am. Rep. 268; Coyle v. Fow- 7 Render v. Been, 78 la. 283; 5 ler, 3 J. J. Mar. (Ky.) 472; Baird L. R. A. 596; 43 N. W. 216; Judy V. Baird, 145 N. Y. 659; 28 L. R. v. Louderman, 48 0. S. 562; 29 N. E. A. 375; 40 N. E. 222; Gray v. Bar- 181. ton, 55 N. Y. 68; 14 Am. Rep. 181; 8 Render v. Been, 78 la. 283; 5 Judy V. Louderman, 48 O. S. 562; L. R. A. 596; 43 N. W. 216. 29 N. E. 181; McLean v. Houston, » Bradley v. Rogers, 33 Kan. 120; 2 Heisk. (Tenn.) 37 (41). 5 Pac. 374; Garrett v. Land Co., 94 5 Solomon v. Kimmel, 5 Binn Tenn. 459 ; 29 S. W. 726 ; Murray v. (Pa.) 232; Swift v. Hawkins, 1 Beal, 23 Utah 548; 65 Pac. 726. Ball. (Pa.) 17; Mattock v. Gibson, lo See anie, this section. 8 Rich. L. (S. C.) 437. 878 PAGE ON CONTRACTS. ■with siicli words, as forming a real part of the contract, is in many respects the same question as that presented in determin- ing what facts and circumstances, outside of the words of a simple written contract, can he considered as a part thereof. The two questions will, therefore, for the most part, be con- sidered together.^ There are, however, certain special topics in which the law of the sealed contract is different from that of the simple written contract, on account of the peculiar force of the seal. These topics will, therefore, he discussed separately in the following sections. The use of these facts outside of the words of the contract is referred to as " extrinsic evidence." As will be seen later" this is a very poor name to express the idea, as it is rarely evidence in the proper sense, any more than the contract itself is evidence, and it is often not extrinsic to the contract, though it is not contained in the writing. It is used, however, because it is one of the terms commonly employed by the courts in describing such facts and circum- stances.^ The effect of a sealed^ contract as merger of prior rights and liabilities is elsewhere discussed.* §565. Incomplete contracts under seal. If a contract under seal is incomplete on its face, and some of its terms must be supplied by extrinsic evidence of the oral agreement of the parties, it is clear that such a contract cannot be said to be under seal. The principle is carried so far that even if blanks are purposely left in a sealed instrument and such blanks are, after delivery of the instrument, filled by one having parol authority to fill them, the instrument is with- out effect as an instrument under seal.^ This rule is very gen- 1 See §1123. Am, Dec. 549; Mickey v. Barton, 2 See § 1189. 194 111. 446; 62 N. E. 802; People 3 See § 1189. v. Organ, 27 111. 27; 79 Am. Dec. 4 See § 1354. 391; Basford v. Pearson, 9 All. iHibblewhite v. M'Morine, 6 M. (Mass.) 387; 85 Am. Dec. 764; & W. 200 (disapproving Texira v. Clark v. Butts, 73 Minn. 361; 76 N. Evans, which is referred to in the W. 199; Williams v. Crutcher, 5 opinion of the court in 1 Anst. 228) ; How. (Miss.) 71; 35 Am. Dec. 422; Ingram v. Little, 14 Ga. 173; 58 Blacknall v. Parish, 6 Jones. Eq. (N. CONTRACTS UNDER SEAL. 879 erally recognized where the instrument is so incomplete before the blanks are filled as to be without legal effect,^ but it is denied in some states where the instrument is merely incom- plete before the blanks are filled, but is not wholly inoperative.^ The cases thus far discussed are those in which the contract is required by law to be under seal, and hence the real question is as to the validity of the contract as a sealed con- tract, since the oral contract, even if complete, does not comply with the requirements of the law. If, however, the contract is one which is valid if not under seal, it is not merged in a subsequent contract under seal if the latter is incomplete or invalid.* Accordingly the validity of a prior simple contract is not affected by a subsequent defective contract under seal. §566. Adding party to sealed contract by extrinsic evidence. At Common Law it could not be shown by extrinsic evidence that a contract under seal was intended to bind any party other than those whom it purported to bind since all the terms of a contract under seal, including the nature of the liability im- posed and the identity of the parties upon whom such liability is imposed must be gathered from the instrument itself.^ Hence it cannot be shown that the apparent obligor is merely the agent of an undisclosed principal to enable the obligee to sue such undisclosed principal upon such sealed contract.^ In this re- spect the law of contracts under seal is sharply contrasted with C.) 70; 78 Am. Dec. 239; Shirley Pac. 1046; Wiley v. Moor, 17 S. & V. Burch, 16 Or. 83; 8 Am. St. Rep. R. (Pa.) 438; 17 Am. Dec. 696. 273; 18 Pac. 351; Preston v. Hull, 4 Gray v. Fowler, 1 H. Bl. 462; 23 Gratt. (Va.) 600; 14 Am. Rep. Robinson v. Bland, 2 Burr. 1077; 153. Thurston v. Percival, 1 Pick. 2 Burns v. Lynde, 6 All. (Mass.) (Mass.) 415. 305. 1 Beckham v. Drake, 9 M. & W. 3Drury V. Foster, 2 Wall. (U. S.) 79 (93) ;. Morrison v. Bowman, 29 24; Brown v. Colquitt, 73 Ga. 59; Cal. 337; Nobleboro v. Clark, 68 Me. 54 Am. Rep. 867; Swartz v. Ballou, 87; 28 Am. Rep. 22; New England 47 la. 188; 29 Am. Rep. 470; South Dredging Co. v. Granite Co., 149 Berwick v. Huntress, 53 Me. 89; 87 Mass. 381; 21 N. E. 947; Deluis v. Am. Dec. 535; Cribben v. Deal, 21 Cawthorn, 2 Dev. Law. (N. C.) 90. Or. 211; 28 Am. St. Rep. 746; 27 2 Nobleboro v. Clark, 68 Me. 87; 880 PAGE ON CONTRACTS. the law of ordinary simple contracts in writing.^ So if an agent without authority executes a sealed instrument in the name of his principal, extrinsic evidence is inadmissible to show the agent's intention to be bound personally.* Accordingly the liability of such agent is in tort. Still less can the apparent obligor use extrinsic evidence when sued upon a sealed instru- ment, for the purpose of showing that by the real understand- ing of the parties, he was acting merely as agent and was to incur no personal liability.^ To do this would be to contra- dict the plain intention of the parties as shown in the contract. In this respect the law of the contract under seal is the same as that of the simple written contract.^ §567. Modification of contract under seal by subsequent agree- ment. The original Common Law rule required a discharge by the act of the parties to be of as high a nature as the instrument to be discharged. Applying this rule to the subject of the sealed contract, it made a sealed contract or other sealed in- strument essential to the discharge of a contract under seal. A subsequent oral agreement could not discharge or modify a contract under seal before breach thereof.^ Where the common forms of action and rules of pleading are still in force, and an action is brought in covenant, the entire contract relied upon must be under seal, and a subsequent oral modification of the sealed contract cannot be enforced, even after performance.* 28 Am. Rep. 22; Briggs v. Par- ley, 8 Exch. 668; Smith v. Lewis, tridge, 64 N. Y. 357; 21 Am. Rep. 24 Conn. 624; 63 Am. Dec. 180; 617; Delius v. Cawthorn, 2 Dev. Goldsborough v. Gable, 140 111. 269 ; Law. (N. C.) 90. 15 L. R. A. 294; 29 N. E. 722; 3 See § 606. Jones v. Chamberlain, 97 111. App. 4 Delius V. Cawthorn, 2 Dev. (N. 328; Loach v. Farnum, 90 111. 368; C.) 90. Kendal v. Talbot, 1 A. K. Mar. sLutz V. Linthieum, 8 Pet. (U. (Ky.) 321; Brown v. Staples, 28 S.) 165. Me. 497; 48 Am. Dec. 504; French 6 See § 1233. v. New, 28 N. Y. 147 ; Sherwin v. 1 Countess of Rutland's Case, R. R., 24 Vt. 347. Coke (Part 5), 256; West v. Blake- 2 Phillips, etc.. Co. v. Seymour. 91 way, 2 M. & G. 729; Spence v. Hea- U. S. 646 (decided under Illinois CONTRACTS UNDER SEAL. 881 Even at Common Law a different rule applied after breach of the sealed contract, and the right of action arising therefrom could be discharged by parol.^ The original rule has, how- ever, undergone several modifications in different jurisdictions. If the subsequent oral agreement has been performed it has been held that such performance operates as a discharge of the original contract under seal/ In cases of this sort the oral agreement is used as a defense and is not generally relied on as the basis of an action. The difficulty caused by the technical requirements of the Common Law as to the form of action does not, therefore, arise in such cases Courts have in some juris- dictions gone farther, and have allowed a contract imder seal to be discharged by a subsequent oral contract not under seal, even if not performed^ and if still executory.^ Here again the oral contract is generally used as a defense and not as a basis of action. Where no technical rule as to form of action is in force, the modern rule is that a contract under seal may be modified by subsequent oral agreement, and that an action may be brought on such contract as thus modified/ This rule is well settled in equity* and is recognized at law/ A written al- law) ; J. C. Winsliip Co. v. Wine- 7 District of Columbia v. Iron man, 77 111. App. 161. Works, 181 U. S. 453; Canal Co. v. 3 May V. Taylor, 6 M. & G. 261 Ray, 101 U. S. 522 ; Platte Land Co. (262, note a) ; Suyclam v. Jones, 10 v. Hubbard, 12 Colo. App. 465; 56 Wend. (N. Y.) 180; 25 Am. Dee. Pac. 64; Tuson v. Crosby, 172 Mass. 552. 478; 52 N. E. 744; Munroe v. Per- 4 Worrell v. Forsyth, 141 111. 22; kins, 9 Pick. (Mass.) 298; 20 Am. 30 N. E. 673; Drury v. Improve- Dec. 475; McCreery v. Day, 119 N. ment Co., 13 All. (Mass.) 168; Sie- Y. 1 ; 16 Am. St. Rep. 793; 6 L. R. bert V. Leonard, 17 Minn. 433; Mc- A. 503; 23 N. E. 198; Homer v. Creery v. Day, 119 N. Y. 1 ; 16 Am. Ins. Co., 67 1^J. Y. 478; Prouty v. St. Rep. 793; 6 L. R. A. 503; 23 Kreamer, 199 Pa. St. 273; 49 Atl. N. E. 198; Davis v. Inscoe, 84 N. 66. C. 396; Reed v. McGrew, 5 Ohio 375. « Canal Co. v. Ray, 101 U. S. 522. 5 Ryan v. Dunlap, 17 111. 40; 63 » District of Columbia v. Iron Am. Dec. 334; Adams v. Battle, 125 Works, 181 U. S. 453; Fleming v. N. C. 152; 34 S. E. 245; McCauley Gilbert, 3 Johns. (N. Y.) 528; Le V. Keller, 130 Pa. St. 53; 17 Am. St. Fevre v. Le Fevre, 4 S. & R. (Pa.) Hep. 758; 18 Atl. 607. 241; 8 Am. Dec. 696; McCombs v. eKromer v. Heim, 75 N. Y. 574; McKennan, 2 W. & S. (Pa.) 216; 37 31 Am. Rep. 491. Am. Dec. 505. 56 882 PAGE ON CONTRACTS. teration in a sealed contract made after delivery with the assent of all the parties thereto is valid and the new provision becomes an essential part of the sealed contract.^'* loSpeake v. United States, 9 derson, 43 111. App. 317; Collins v. Cranch (U. S.) 28 j Kneedler v. An- Collins, 51 Miss. 311. WRITTEN SIMPLE CONTEACTS. 883 CHAPTER XXXIV. WRITTEN SIMPLE CONTRACTS NOT REQUIRED TO BE IN WRITING NOR TO BE PROVED BY WRITING. I. FoBM OF Contract. §568. Written contracts in general. While the growth of our law has been steadily obliterating the once important distinction between the formal and the simple contract, a new classification of simple written contracts has developed. Simple written contracts are to be divided into three classes i (1) Contracts which are in writing, but which neither need to be in wa'iting nor to be proven by writing; (2) contracts which do not need to be in writing, but must be proven by writing; and (3) contracts which must be in writing. This classification is not one of grade or rank of the various kinds of contract. They are all of the same rank, being all simple contracts, nor is the dift'erence between them in the manner of execution. These three classes of contracts present many resemblances and but few differences in questions arising out of the material on which and with which the contracts are to be written, the method and form of signature, and delivery. The great distinction between these classes of contracts arises on the question of what in law can constitute the contract, for the purpose of determining the terms thereof. They differ from one other upon the question whether part of the contract may be written and part oral, or whether the oral agreement of persons to a written contract may make them parties to such contract without signing it. The first of these classes of con- tracts to be discussed will be those contracts which the parties have actually put in writing but which are not required by 884 PAGE ON CONTRACTS. law either to be in writing or to be proved by writing. If tlie contract is one which is in whole or in part in writing, but is not required to be proven by a writing, or to be in writing, three classes of questions generally arise. (1) Under the facts, has a contract been entered into, and if so who are the parties thereto; (2) to what extent is extrinsic evidence admissible to show the intention of the parties; (3) under which clause of the statute of limitations does the contract in question come. Tor convenience and economy of space contracts which are re- quired to be in writing, such as negotiable instruments, and contracts which, are in writing but are not required either to be in writing or to be proved by writing, will be discussed in this chapter as far as questions of execution and deliveiy are con- cerned. Contracts required to be proved by writing are dis- cussed elsewhere.^ §569. What materials may be used. While there is little authority on the point, there seems no reason why a written contract may not be made upon any ma- terial which can receive a legible impression of any kind ; and there seems to be no reason why any material which is capable of making a legible impression may not be used as a means of writing. Paper is now the common material upon which to write, and ink the common material with which writing is done, whether it is applied by means of a pen or a typewriter. Writing in lead pencil has, however, received the sanction of the court,^ as where a signature made with a lead pencil has been held valid, even in case of negotiable contracts which must be in writing.^ So a signature to a promissory note may be printed,^ as where a signature is lithographed in facsimile and printed on the contract.* iSee Ch. XXXV. 2 Brown v. Bank. 6 Hill (X. Y.) 1 Myers v. Vanderbelt, 84 Pa. St. 443; 41 Am. Dec. 7.55. 510; 24 Am. Rep. 227; Reed v. 3 Weston v. Myers. 3.3 111. 424. Roark, 14 Tex. 329; 65 Am. Dec. * Pennington v. Baehr, 48 Cal. 127. 565. WEITTEIf SIMPLE CONTRACTS. 885 §570. Necessity of signature. A written contract not required to l>e in writing or to be proved by writing is valid thongb not signed if the parties intend it to take effect without signing.^ Thus if one party signs it and the other acquiesces therein,^ as by acting under it^ such contract is binding, both on the party signing,* since the liability of the adversary party is a consideration for his liability, and on the party who does not sign.^ Thus a bill of lading,*' or a railroad ticket,^ or a pass* containing contractual iHinote v. Brigman, — Fla-. — ; 33 So. 303; Sellers v. Greer, 172 111. 549; 40 L. R. A. 589; 50 N. E. 246; Farmer v. Gregory, 78 Ky. 475; David Bradley v. Bower (Neb.), 99 N. W. 490. 2 Ross V. Parks, 93 Ala. 153; 30 Am. St. Rep. 47; 11 L. R. A. 148; 8 So. 368; Vassault v. Edwards, 43 Cal. 465; Sellers v. Greer, 172 111. 549; 40 L. R. A. 589; 50 N. E. 246; Vogel V. Pekoe, 157 111. 339; 30 L. R. A. 491; 42 N. E. 386; Memory V. Niepert, 131 111. 623; 23 N. E. 431; Ames v. Moir, 130 111. 582; 22 N. E. 535; Plumb v. Campbell, 129 111. 101; 18 N. E. 790; Harlan v. Gas Co., 133 Ind. 323; 32 N. E. 930; Midland Ry. Co. v. Fisher, 125 Ind. 19; 21 Am. St. Rep. 189; 8 L. R. A. 604; 24 N. E. 756; New Iberia Rice-Milling Co. v. Romero, 105 La. 439; 29 So. 876; Western Ry. Corp. v. Babcock, 6 Met. (Mass.) 356 ; Bacon v. Daniels, 37 O. S. 279 ; Orove V. Hodges, 55 Pa. St. 504; Swisshelm v. Laundry, 95 Pa, St. 367; Sylvester v. Born, 132 Pa. St. 467; 19 Atl. 337; McPherson v. Fargo, 10 S. D. 611; 66 Am. St. Rep. 723; 74 N. W. 1057; Lowber V. Connit, 36 Wis. 176; Vilas v. Dickinson, 13 Wis. 488. "Where a party accepts and adopts a written contract, even though iti is not signed by him, he shall be deemed to have assented to its terms and conditions, and to be bound by them." Forthman v. Deters, 206 111. 159; 69 N. E. 97. 3 Sellers v. Greer, 172 111. 549; 40 L. R. A. 589; 50 N. E. 246; McKee v. Cowles, 161 111. 201; 43 N. E. 785; Vogel v. Pekoe, 157 111. 339; 30 L. R. A. 491; 42 N. E. 386. 4Whatley v. Reese, 128 Ala. 500; 29 So. 606; Lavenson v. Wise, 131 Cal. 369 ; 63 Pac. 622. 5 Harts V. Emery, 184 111. 560; .56 N. E. 865 ; Edwards v. Gildemeister, 61 Kan. 141; 59 Pac. 259; Ameri- can, etc., Co. v. Walker, 87 Mo. App. 503 ; Carnegie Natural Gas Co. V. Philadelphia Co., 158 Pa. St. 317; 27 Atl. 951; Slayden v. Stone, 19 Tex. Civ. App. 618; 47 S. W. 747. 6 Field V. Ry., 71 111. 458; Anchor Line v. Dater, 68 111. 369; Adams Express Co. v. Carnahan, 29 Ind. App. 606; 63 N. E. 245; 64 N. E. 647 ; Gaines v. Union Transporta- tion Co., 28 O. S. 418; Ryan v. Ry., 65 Tex. 13; 57 Am. Rep. 589. 7 Walker v. Price, 62 Kan. 327; 84 Am. St. Rep. 392; 62 Pac. 1001; Dangerfield v. Ry., 62 Kan. 85; 61 Pac. 405 ; Rahilly v. R. R., 66 Minn. 153; 68 N. W. 853; Gregory v. R. R., 10 Neb. 250; 14 N. W. 1025; Abram v. Ry., 83 Tex. 61 ; 18 S. W. 321; Drummond v. R. R., 7 Utah 118; 25 Pac. 733. sQuimby v. R. R., 150 Mass. 365; 5 L. R. A. 841 ; 23 N. E. 205. 886 PAGE ON CONTKACTS. provisions is valid though unsigned. Thus a treasurei who assents to a bond purporting to be given by him for money received, but does not sign it, is liable thereon.® So, while a guardian's bond which is assented to by the guardian, but not signed by him, is not good as a statutory bond it may be good as a Common Law bond." A gave an order for a mowing machine to B's agent, X. The order w.as signed by A., and provided for reserving to A " the full benefit of the warranty endorsed hereon." On the back of the order was a printed warranty with vendor's signature printed thereunder, and the blanks unfilled. It was held that such reference made the warranty a part of the written contract, and accordingly the vendor's acceptance of the order made the warranty as binding upon him as if he had signed it.^^ If it is the imderstanding of the parties that a contract is not to "he binding upon the person named therein until he signs it, his omission or refusal to sign it will, prevent it from being his obligation.^^ The ques- tion of the necessity of signature by the parties to a written contract is complicated with the doctrine of mutuality. Written agreements are made which impose obligations on one party, provided the other person will do certain things, but do not, expressly or by implication, require such other person to do such things. Such written agreement is in the nature of a written offer. If the party upon whom obligation is not imposed performs the acts upon which the obligation of the other party was conditioned, this amounts to an acceptance, and the contract is in legal effect a written contract.^^ Thus, a contract signed by a lumber company to pay a certain amount for water if a water company would extend its mains to the lumber yard, is binding on the lumber company as a written contract if the water company extends the mains in accordance with the con- aSenoiir v. Masehinat (Ky.), 31 Am. St. Rep. 533; 27 >?. W. 579. S. W. 481. 12 Meyer v. Labau, 51 La. Ann. 10 Painter v. Maiildin, 119 Ala. 1726; 26 So. 463. 88 ; 72 Am. St. Rep. 902 ; 24 So. 769. is Phmib v. Campbell, 129 111. 101 ; "Grieb v. Cole, 60 Mich. 397; 1 18 N, E. 790. WRITTEN SIMPLE CONTRACTS. 887 dition of such written agreement/* A person upon whom obligations are not imposed by such writing, may subsequently accept such written offer orally and agi'ee to perform the con- ditions therein indicated. This contract is valid as between the parties, but as part of it consists of oral terms, it is for technical purposes treated as an oral contract/^ The part of it which is in writing falls within the parol evidence rule, how- ever, and can not be contradicted by extrinsic evidence any more than if the entire contract were in writing. §571. Place of signature. In the absence of statute specifying in what part of the contract the signature must be written, a signature may be written anywhere upon the contract/ While the name must be written with the intention that it shall operate as an execu- tion of the contract in order to constitute a signature, this de- pends upon a different principle, and has nothing to do with the place at which the name is to be written. Thus a signature may be written in the body of the contract itself.^ So, where a written contract contained the provision, " this agreement fur- ther continued below," followed by the signatures of the parties, below which were additional terms of the contract, such con- tract was held to be properly signed.^ If A signs near the lower right-hand corner of the instrument, opposite a seal, and B signs a little to the left and slightly below A's signature, it has been held that this is p'ima facie A's instrument and that B is a witness thereto.* A statute which provides that a con- tract must be " subscribed," has been held to require a signature at the end of the instrument, and to make invalid a signature in 1* Muscatine Water Co. V. Lumber 104; Noe v. Hodge, 3 Humph. Co., 85 la. 112; 39 Am. St. Rep. (Tenn.) 162. 284; 52 N. W. 108. 2 Noe v. Hodge, 3 Humph. (Tenn.) isHulbut V. Atherton, 59 la. 91; 162; Fulshear v. Eandan, 18 Tex. 12 N. W. 780. 275; 70 Am. Dee. 281. 1 Dickson v. Conde, 148 Ind. 279; 3 Dickson v. Conde, 148 Ind. 279; 46 N. E. 998; Coddington v. God- 46 N. E. 998. dard, 16 Gray (Mass.) 436; Saun- 4 steininger v. Hoch, 39 Pa. St, ders V. Hackney, 10 Lea (Tenn.) 263; 80 Am. Dec. 521. PAGE ON CONTRACTS. tlie body of the instrument.^ A contract required by law to be in writing, as a negotiable instrument, may be signed at any part thereof, as in the body of the note® or on the back/ §572. Form of signature. — Name. In the absence of statute any visible mark upon the paper, intended by a party to be his signature thereto, is sufficient as his signature. The common and most approved form of sig- nature is for the party to write his full name with his own hand. This is not, however, necessary. If a person signs by a Chris- tian name alone it is sufficient.^ Thus a mortgage of realty in which the name of the grantor's wife appears in full in the premises and in the acknowledgment, although she signs by her Christian name alone is valid.^ So a deed has been held valid where the true name of the grantor appeared in the premises and in the certificate of acknowledgment, although when he signed he wrote his name " Edmund " instead of " Edward."^ So a signature by one's surname alone is sufficient.* A signa- ture may be valid although it is not the true name of the party signing. Thus one who enters into a contract not required by law to be in writing, under an assumed name, he is bound thereby.^ Thus, a party to a contract was named William Couture. " Couture " being the French for " seam," he signed his name to the contract " William Seam." Such signature was 5 Globe Accident Co. v. Reid, 19 ciety v. Edmonds, 95 Tenn. 53; 31 Ind. App. 203; 47 N. E. 947; modi- S. W. 168. See § 1231. fied, 49 N. E. 291. i Walker v. Walker, 175 Mass. 6 Taylor V. Dobbins, 1 Stra. 399. 349; 56 N. E. 601. (Citing San- 7 Good V. Martin, 95 U. S. 90; born v. Flagler, 9 All. (Mass.) 474; Quin V. Sterne, 26 Ga. 223; 71 Am. Peck v. Vandemark, 99 X. Y. 29; Dec. 204; Allison v. Circuit Judge, 1 N. E. 41.) 104 Mich. 141; 62 N. W. 152; 2 Zann v. Haller, 71 Ind. 136; 36 Schultz V. Howard, 63 Minn. 196; 56 Am. Rep. 193. Am. St. Rep. 470; 65 N. W. 363; 3 Middleton v. Findla, 25 Cal. 76. Salisbury v. Bank, 37 Neb. 872; 40 * Hodges v. Nalty, 113 Wis. 567; Am. St. Rep. .527; 56 K W. 727; 89 N. W. 535. Seymour v. Mickey. 15 O. S. 515; s Scanlan v. Grimmer, 71 Minn. Bright V. Carpenter, 9 Ohio 139; 34 351; 70 Am. St. Rep. 326; 74 N. W. Am. Dec. 432; Provident, etc., So- 146. WRITTEJSr SIMPLE ■ CONTRACTS. 889 held to be valid.® So a promissory note signed by the maker's initials is valid.' Misspelling the maker's name does not invali- date his signature to a promissory note if he can be identified. Thus a maker signed a note payable to himself and omitted one letter from such signature. He then indorsed it, spelling his name correctly in the indorsement. This was held to be a valid note.* §573. Mark. In the absence of some statute to the contrary, a signature by mark affixed by the party whose signature it is intended to be, is sufficient,^ Thus where a grantor signed by mark im- mediately below a clause which contained his name, and opposite a seal, such signature was held to be sufficient." It is not neces- sary that an attesting witness sign in addition thereto.^ Thus a signature to a mortgage by mark, without the signature of any attesting witness thereto is sufficient."* A signature by mark is sufficient, even if the name of the person whose mark is affixed is not added by any one.^ The signature to an instrument re- quired by law to be in writing, as a promissory note,® may be made by mark. Thus in a case often cited' an indorsement in lead-pencil of the figures " 1. 2. 8.," intended as a signature in a contract of indorsement of a bill of exchange, was held valid. 6 Augur V. Couture, 68 Me. 427. 82 Am. St. Rep. 186; 26 So. 898; 7 Weston V. Myers, 33 111. 424. Finlay v. Prescott, 104 Wis. 614; 47 8 Bank v. Sherer, 108 Cal. 513; L. E. A. 695; 80 N. W. 930. 41 Pac. 415. 4Meazels v. Martin, 93 Ky. 50; IS 1 Bates V. Harte, 124 Ala. 427; S. W. 1028. 82 Am. St. Rep. 186; 26 So. 898; s Zimmerman v. Sale, 3 Rich. L. Foye V. Patch, 132 Mass. 105; San- (S. C.) 76. born V. Cole, 63 Vt. 590; 14 L. R. 6 Handyside v. Cameron, 21 111. A. 208; 22 Atl. 716; Finlay V. Pres- 588; 74 Am. Dec. 119; Shank v. cott, 104 Wis. 614; 47 L. R. A. Butsch, 28 Ind. 19 ; Staples v. Bank, 695; 80 N. W. 930. 98 Ky. 4.51; 33 S. W. 403; Lyons 2 Devereux V. McMahon, 108 N. C. v. Holmes, 11 S. C. 429; 32 Am. 134; 12 L. R. A. 205; 12 S. E. Rep. 483. 902. 7 Brown v. Bank, 6 Hill (N". Y.) 3 Bates V. Harte, 124 Ala. 427; 443; 41 Am. Dec. 755. 890 PAGE ON CONTRACTS. Siicli signature is valid tlioiigli no attesting witness signs.® If a note is signed by the maker's mark, his name being written thereto and an attesting witness signs, proof of such witness's fcigiiature is sufficient where he is dead at the time of the triak® Anyone who is a competent witness at law may act as attesting witness to a note. Thus, where by statute the par- ties and their wives are competent witnesses in an action at law, the wife of the payee^" may act as attesting witness to a note. The construction of some statutes requires a signature by mark to be attested by the signature of an attesting witness Avho can write ; as this provision is made to obviate the chance of fraud, the payee cannot be such subscribing witness. ^^ A promissory note signed by the maker by mark in the presence of the payee, no third person being present, is therefore invalid.^" §574. Signature by another. If a stranger to the contract signs the name of a party to the contract in the presence of such person, and with his authority, this is a sufficient signature.^ Thus where a grantor authorized the acknowledging officer to sign for him, and such signature was made in grantor's presence, it was held to be valid." The fact that the party to the contract, at the time of such execu- tion, added that she would have nothing to do with the contract, does not affect its validity where not known to the adversary party. ^ A surety, who was not at that time in antagonistic relations with his principal, may sign the name of such princi- pal, and the latter is bound thereby.* If a party to an instru- 8 Shank v. Butsch, 28 Ind. 19; i Jansen v. McCahill, 22 Cal. 563 ; Staples V. Bank, 98 K-y. 451; 33 S. 83 Am. Dec. 84; Wyatt v. Guano W. 403. Co., 144 Ga. 375; 40 S. E. 237; Nye 9 Sanborn v. Cole, 63 Vt. 590; 14 v. Lowry, 82 Ind. 316. L. R. A. 208; 22 Atl. 716. 2 Lewis v. Watson, 98 Ala. 479; 10 Shepard v. Parker, 97 Me. 86 ; 39 Am. St. Eep. 82 ; 22 L. R. A. 53 At!. 879; Alexander v.. Hanley, 297; 13 So. 570. 64 Vt. 361; 24 Atl. 242. 3 Wyatt v. Guano Co., 114 Ga. ii^a? parte Miller, 49 Ark. 18; 4 375; 40 S. E. 237. Am. St. Rep. 17; 3 S. W. 883. 4 Wright v. Forgy, 126 Ala. 389; 12 Sivils V. Taylor. 12 Okla. 47; 69 28 So. 198. Pae. 867. WRITTEN SIMPLE CONTRACTS. 891 ment affixes his mark thereto after another person has signed his name, in his presence, and by his authority, the instrument is valid, if either form of signature complies with the law. Thus, A signed B's name to an instrument in B's presence, and by B's authority, and B then added his mark. The statute required that a mark must be attested by a witness, ^o attest- ing witness signed. Such signature, however, was held to be valid.^ In a written contract which is not required by law to be proven by writing, or to be in writing, one party to a contract may affix the signature of the other party thereto in his pres- ence and at his request.® If a stranger to a note signs the maker's name thereto in the presence of the maker and at his request, such signature is valid.'^ At A's request B wrote A's name to a note and A then made his mark thereto. This was held valid as a signature by A for B, even if A's signature by mark was invalid as not complying with the statutory require- ment that A's signature by mark must be attested by a witness who could write.^ The fact that B then signed the note by B's own name as surety for A did not invalidate this mode of signature. Signature by one duly authorized is sufficient whether in the presence of the maker or not.^ §575. Adoption of signature. In absence of statute a party to a contract may adopt a signa- ture thereto as his own, even if made without authority.^ Thus delivery of such an instrument may be an adoption of the sig- nature thereon." So the principal in a power of attorney may adopt the signature thereto, by an acknowledgment of the sig- nature as his own.^ A certificate purporting to be signed by 5 Wright V. Forgy, 126 Ala. 389; 9 Blaiikenship v. Ely, 98 Va. 359; 28 So. 198. 36 S. E. 484. 6 Crow V. Carter, 5 Ind. App. 169 ; i Bowman v. Rector (Tenn. Ch. 31 N. E. 937. App.), 59 S. W. 389. 7 Crumrine v. Crumrine, 14 Ind. - Davis v. Cotton Co., 101 Gi. App. 641; 43 N. E. 322. 128; 28 S. E. 612. 8 Wright V. Forgy, 126 Ala. 389; 3 Munger v. Baldridge, 41 Kan. 28 So. 198. 236; 13 Am. St. Rep. 273; 21 Pae. 159. 892 PAGE ON CONTRACTS. highway commissioners was in fact signed by the clerk. The commissianers afterward made an endorsement on the back of such certificate, and sig-ned such endorsement. This was held to amount to an adoption of the signatures on the face of the instrument.* So a grantor may adopt a signature to a deed as his own.^ Even if by mistake he acknowledges a forged deed, thinking it to be one that he had previously signed, he can not deny the validity of such deed against a bona fide pur- chaser.*' The maker of a negotiable instrument may adopt the signature thereto as his own.'^ §576. Effect of omission of revenue stamp. The act of Congress, approved June 13, 1898, to provide ways and means to meet war expenditures and for other purposes, provided that revenue stamps must be placed on certain kinds of instruments ; made omission so to do a misdemeanor, punish- able by fine or imprisonment or both ; made certain provisions concerning the validity of instruments from which such stamps v^^ere omitted, and other provisions concerning the use of such instruments as evidence. The earlier acts of 1862, 1864 and 1866 contained similar provisions. The effect of such omission will therefore be considered without discussion of the specific statute under which the case was decided. The revenue stamp is no part of the instrument.^ A petition not averring that the instrument is stamped is not demurrable.^ The stamp need not therefore be described in an indictment for forging such instru- ment.^ An unstamped note may be the subject of forgery.* 4 Just V. Wise Township, 42 Mich, ris v. McMorris, 44 Miss. 441 ; 7 573; 4 K. W. 298. Am. Rep. 695. sBlaisdell v. Leach, 101 Cal.405; 2 Ebert v. Gitt, 95 Md. 186; 52 40 Am. St. Rep. 65; 35 Pac. 1019. Atl. 900. 6Blaisdell V. Leach, 101 Cal. 405; 3 Laird v. State, 61 Md. 309; 40 Am. St. Rep. 65 ; 35 Pac. 1019. State v. Mott, 16 Minn. 472 ; 10 Am. TBartlett v. Tucker, 104 Mass. Rep. 152; Miller v. People, 52 N. Y. 336; 6 Am. Rep. 240. 304; 11 Am. Rep. 706; Beer v. State, iThomasson v. Wood, 42 Cal. 42 Tex. Cr. P.ep. 505; 96 Am. St. 416; Green v. Holway, 101 Mass. Rep. 810; 60 S. W. 962. 243; 3 Am. Rep. 339; Trull v. ■* Kin^ v. State. 42 Tex. Cr. Rep. Moulton, 12 All. (Mass.) 396; Mor- 108; 96 Am. St. Rep. 792; 57 S. W. WRITTEN SIMPLE CONTRACTS. 893 While the stamp is not technically a part of the instrument, the eifeet of its omission on the use of the instrument as evidence must be considered. The federal statute of 1898 provides that an instrument not duly stamped shall not be '' admitted or used as evidence in any court."^ This clause would appear at first glance to make a class of contracts somewhat like those under the statute of frauds — that is, a class of contracts on which no action can be brought, since the contract itself cannot be proved. In spite of the broad language of the statute, however, this has been held to apply only to the United States courts and to have no application whatever to state courts.^ This holding is based on the theory that the power of Congress to make rules of evi- dence for state courts is very doubtful, and that, accordingly, the statute will be construed as having " a meaning which will give it full operation and effect within the recognized scope of the constitutional authority of Congress."^ Some courts go farther and base their holdings chiefly on the proposition that whatever the intention of Congress, it had no power to make rules of evidence for the state courts,® while other courts have 840; Thomas v. State, 40 Tex. Cr. reyson, 4 Nev. 124; Maynard v. Rep. 562; 76 Am. St. Rep. 740; 46 Johnson, 2 Nev. 25) ; Cassidy v. St. L. R. A. 454; 51 S. W. 242; State Germain, 22 R. I. 53; 46 Atl. 35; V. Peterson, 129 N. C, 556 ; 85 Am. Kennedy v. Roundree, 59 S. C. 324 ; St. Rep. 756; 40 S. E. 9. 82 Am. St. Rep. 841; 37 S. E. 942; 5 Section 14 of Act. Ins. Co. v. Estes, 106 Tenn. 472 ; 82 GBumpass v. Taggert, 26 Ark. Am. St. Rep. 892; 62 S. W. 149; 398; 7 Am. Rep. 623; Garland v. sub nomine, Southern Ins. Co. v. Gaines, 73 Conn. 662; 84 Am. St. Estes, 52 L. R. A. 915; Sporrer v. Rep. 182; 49 Atl. 19; Griffin v. Eifler, 1 Heisk. (Tenn.) 633; Miller Ranney, 35 Conn. 239; Small v. v. Morrow, 5 Heisk. (Tenn.) 689 Slocumb, 112 Ga. 279; 81 Am. St. (reversing on rehearing Miller v. Rep. 50; 53 L. R. A. 130; 37 S. E. Morrow, 3 Cold. (Tenn.) 587); 481; United States Express Co. v. Walt v. Walsh, 10 Heisk. (Tenn.) Haines, 48 111. 248; Bunker v. 314. Green, 48 111. 243 ; Green v. Hoi- ^ Carpenter v. Snelling, 97 Alass. ■way, 101 Mass. 243; 3 Am. Rep. 452, 458; quoted in Knox v. Rossi, 339; Carpenter v. Snelling, 97 Mass. 25 Nev. 96, 100; 83 Am. St. Rep. 452; Sammons v. Halloway. 21 566; 48 L. R. A. 305; 57 Pac. 179. Mich. 162; 4 Am. Rep. 465; Knox « Duffy v. Hobson, 40 Cal. 240; V. Rossi, 25 Nev. 96; 83 Am. St. 6 Am. Rep. 617; Bowen v. Byrne, 55 Rep. 560; 48 L. R. A. 305; 57 Pac. 111. 467; Latham v. Smith, 45 111. 179 (overruling Wayman v. Tor- 29; Wallace v. Cravens, 34 Ind. 894 PAGE ON CONTRACTS. preferred to base their decision upon the construction of the statute.^ Some states have held, contrary to the foregoing views, that such statutes applied even to state courts.^" The next point to be considered is the validity of a contract from ■which a revenue stamp is omitted, contrary to the statute, apart from questions of its use as evidence. The act of Congress, approved June 13, 1898, provided" that " such instrument, document, or paper, not being stamped according to law shall be deemed invalid and of no effect." This has been held not to apply to cases, otherwise covered by the act, where the omission to affix a stamp was not fraudulent ; but occurred through mere inadvertence.^" Hence on compliance with the provisions of the statute for supplying stamps which had been omitted inad- vertently the instrument is as valid as if originally stamped.^^ If the instrument is one from which the stamp has been omitted with fraudulent intent, we are confronted with the question whether Congress has power to invalidate an instrument whose 534; Hunter v. Cobb, 1 Bush. (Ky.) 239; Sporrer v. Eifler, 1 Heisk. (Tenn.) 633; Schultz v. Herndon, 32 Tex. 390. 9 Trowbridge v. Addoms, 23 Colo. 318; 48 Pac. 535; Clemens v. Con- t-ad, 19 Mich. 170; People v. Gates, 43 N. Y. 40; Stewart v. Hopkins, 30 O. S. 502; Talley v. Robinson, 22 Gratt. (Va.) 888; Weltner v. Riggs, 3 W. Va. 445. 10 Muscatine v. Sterneman, 30 la. 526; 6 Am. Rep. 685; Chartiers, etc., Co. V. McNamara, 72 Pa. St. 278; 13 Am. Rep. 673. 11 Section 13 of Act. 12 Campbell v. Wilcox, 10 Wall. (U. S.) 421; Trowbridge v. Ad- doms, 23 Colo. 518; 48 Pac. 535; Craig V. Dimock, 47 111. 308 ; Mitch- ell V. Ins. Co., 32 la. 421 (overruling Muscatine v. Sterneman, 30 la. 526; 6 Am. Rep. 685; Berry v. Boyd, 28 la. 410; Botkins v. Spurgeon, 20 la. 598) ; Emery v. Hobson, 63 Me. 33; Black v. Woodrow, 39 Md. 194; Moore v. Quirk, 105 Mass. 49; 7 Am. Rep. 499; Green v. Holway, 101 Mass. 243; 3 Am. Rep. 339; Cab- batt V. Radford, 17 Minn. 320; Mor- ris V. McMorris, 44 Miss. 441 ; 7 Am. Rep. 695; Stewart v. Hopkins, 30 O. S. 502; Gaylor v. Hunt, 23 0. S. 255; Harper v. Clark, 17 O. S. 190; Atkins v. Plympton, 44 Vt. 21; Smith v. Scott, 31 Wis. 437; Fenelon v. Hogaboom, 31 Wis. 172. Insurance policy, Ins. Co. v. Estes, 106 Tenn. 472; 82 Am. St. Rep. 892; 62 S. W. 149; sub nomine. South- ern Ins. Co. V. Estes, 52 L. R. A. 915, Assignment of mortgage, Win- gert V. Ziegler, 91 Md. 318; 80 Am. St. Rep. 453; 51 L. R. A. 316; 46 Atl. 1074. Note, Rowe v. Bowman, 183 Mass. 488; 67 N. E. 636. 13 Wingert v. Ziegler, 91 Md. 318; 80 Am. St. Rep. 453; 51 L. R. A. 316; 46 Atl. 1074; Cooke v. En- gland, 27 Md. 14; 92 Am. Dec. 618. WEITTEN SIMPLE CONTRACTS. 895 validity depends in other respects upon state law, for fraudulent and wilful omission of revenue stamps. Upon this question we find that it is generally either assumed or decided that Congress has no power to make such instruments invalid ; and hence they are held to be valid even if the requisite revenue stamp is omit- ted.^* It is true that in some of the cases cited this point is scarcely touched upon ; but it is assumed necessarily in these decisions : since the courts discuss the admissibility of the in- strument in evidence, and on holding it to be admissible, often even in cases where the revenue stamp is omitted wilfully, de- cide the case on the theoiy that if admissible in evidence the instrument must necessarily be enforceable. If the statute does not specifically provide that the instrument is to be void if the stamp is omitted, omission of the stamp will not make it void.^^ II. Deliveey. §577. Nature of delivery. The question as to the existence and nature of delivery ma;^ take two distinct forms: (1) has the instrument been delivered in any way by the obligor, so as to take effect at all; and (2) if it has been delivered by him is the delivery one which takes effect at once or is it a delivery in escrow ? These questions will be considered in the following sections. Whether posses- sion of an instrument by the obligee raised a presumption of delivery, raises a question upon which there is a conflict of authority. Possession of a negotit^ble note has been held to raise a presumption of delivery.^ It has been held that delivery i*DuflFy V. Hobson, 40 Cal. 240; 64 S. W. 642; Sporrer v. Eifler, 1 6 Am. Rep, 617; Bowen v. Byrne, Heisk, (Tenn.) 633. 55 111. 467 ; Hanf ord v. Obrecht, 49 is Carothers v. Covington ( Tex. 111. 146; Latham v. Smith, 45 111. Civ. App.), 27 S. W. 1040. 29; Prather v. Zulauf, 38 Ind. 155; i Garrigus v. Missionary Society, Steeley's Creditors V. Steeley (Ky.), 3 Ind. App. 91; 50 Am. St. Rep. 262; 28 N. E. 1009. 896 PAGE OiSr CONTEACTS. of a non-negotiable instrument cannot be inferred from the mere possession thereof by the obligee." §578. Necessity of delivery. A written contract which is not required by law to be proved by wi'iting, or to be in writing, is of no effect unless it is delivered, unless there is a valid oral contract between the parties, intended by the parties to be effective before delivery. Thus, a written subscription to a corporation is of no validity unless it is delivered.^ A made a mortgage to B to secure a loan made by X. B took no part in the transaction, and did not know of the existence of the mortgage. It was held that such mortgage was not delivered, and never took effect.^ So a deed which has not been delivered is of no validity,^ and may be cancelled in equity.* Accordingly, where a corporation has executed a written contract, the true date of the contract is the date of the execution and delivery, and not the date of the resolution of the corporation.^ So, if a due bill is signed and retained by the person signing it, no delivery exists, and it never takes effect.^ If delivery is necessary to give the con- tract validity, the instrument cannot be delivered after the maker's death. '^ Thus, A executed a note payable to B, and told B that he had done so. B never saw the note, and on A's death it was found among his papers. It was held that there was no delivery.® So an indorsed note cannot be delivered after the death of the indorser so as to put his contract into effect." 2 Wilbur V. Stoepel, 82 Mich. 344 ; 39 Am. St. Rep. 67; 11 So. 743. 21 Am. St. Rep. 568; 46 N. W. 724. 5 Keystone, etc., Co. v. Bates, 196 1 Davis V. Kneale, 103 Mich. 323; Pa. St. .566; 46 Ail. 887. 61 N. W. 508; s. c, 97 Mich. 72; 56 « Cann v. Cann, 40 W. Va. 138; 20 N. W. 220; White v. Crosly (Tex. S. E. 910. Civ. App.), 51 S. W. 350. 7 Michigan Ins. Co. v. Leaven- 2 Shirley v. Burch, 16 Or. 83; 8 worth, 30 Vt. 11. Am. St. Rep. 273; 18 Pac. 351. » Purviance v. .Jones, 120 Ind. 162; 3 Gore V. Dickinson, 98 Ala. 363; 16 Am. St. Rep. 319; 21 X. E. 1099. 39 Am. St. Rep. 67 ; 11 So. 743. » Clark v. Sigourney, 17 Conn. 4 Gore v. Dickinson, 98 Ala. 363; 511; Clark v. Boyd, 2 Ohio 56. WRITTEN SIMPLE CONTEACTS. 897 §579. Elements of delivery. Delivery consists of two distinct elements: (1) A party delivering tlie instrument must surrender control of the same, and the other party must take either actual or constructive possession thereof.^ (2) This surrender of control must be accompanied by the intention of both the parties that the in- strument shall take effect thereby. Mere change of custody without this intention does not amount to a delivery. If an instrument is taken from the custody of the person who executes it, without his knowledge, as where it is removed in his absence," no delivery exists. If a written instrument is taken from the person by whom it is executed without his consent, as where it is snatched from his hand while he is threatened with physical violence,^ no delivery exists. §580. Actual delivery. Actual delivery exists when the written instrument comes under the control of the obligee. This usually involves a change of physical possession. While the obligor by person or agent usually delivers physical possession to the obligee, this is not necessary. A manager of an insurance company put upon his desk a policy on the life of a solicitor which had been issued by the company. He intended the solicitor to take the policy, as it was his custom to deliver policies by leaving them upon his desk for the solicitor to take and deliver when the premium was paid or arranged for. The solicitor took this policy in the absence of the manager. It was held to be a valid delivery.^ Even change of physical possession is not necessary. A made out a note to his daughter B, for a val- uable consideration, in her presence. The note was thus for a time under her control. With her assent A deposited the note in a separate pocket of a note-case in A's safe in the bank. iStreissguth v. Kroll, 86 Minn. 3 Palmer v. Poor, 121 Ind. 135; 6 325; 90 N. W. 577. L. R A. 469; 22 N. E. 984. 2 Salley v. Terrill, 95 Me. 553; 85 i Massachusetts, etc., Association Am. St. Rep. 433; 55 L. R. A. v. Sibley, 158 111. 411 ; 42 N. E. 137; 730; 50 Atl. 896. affirming 57 111. App. 246, 57 898 PAGE ON CONTRACTS. This was held to be a valid delivery.^ The same principle ap- plies where a deed is executed in the grantee's presence and is for the time being under grantee's control.^ A deposit of a contract in the mail, for transmitting to the obligee, with the intent that it shall thereby take effect, amounts to a delivery.* Hence, if the obligee dies after the contract is so deposited, but before it reaches him, the contract is in full force and effect.^ It has, however, been held that a bank-check which is mailed to the payee, but is never received by him, remains the property of the sender.^ §581. Recording as delivery. If a grantor causes a deed to be recorded with the actual or presumed assent of the grantee, such act amounts to a delivery.^ Thus if grantee sends a deed to grantor for execution, and asks him to have it recorded, delivery to the recorder is delivery to the grantee.^ If the actual assent of grantee to such recording is shown delivery is conclusively presumed.^ Recording raises a prima facie presumption of assent of grantee, which is suf- ficient in the absence of evidence to the contrary.* The pre- 2 Reeves' Estates, 111 la. 260; 82 e Garthwaite v. Bank, 134 Cal. N. W. 912. To the same eflFect, see 237; 66 Pac. 326. Sharmer v. Mcintosh, 43 Neb. 509; i Gulf, etc., Co. v. O'Neal, 131 sub nomine, Sharmer v. Johnson, 61 Ala. 117; 90 Am. St. Rep. 22; 30 N. W. 727. So. 466; Brady v. Huber, 197 111. 3Delaplain v. Grubb, 44 W. Va. 291; 90 Am. St. Rep. 161; 64 N. E. 612; 67 Am. St. Rep. 788; 30 S. E. 264; McReynolds v. Grubb, 150 Mo. 201. The evidence did not contra- 352; 73 Am. St. Rep. 448; 51 S. W. diet the presumption of delivery 822. arising on these facts but strength- - Prignon v. Daussat, 4 Wash, ened it. 199; 31 Am. St. Rep. 914; 29 Pac 4 Triple Link, etc., Association v. 1046. Williams, 121 Ala. 138; 77 Am. St. 3 Brady v. Huber, 197 111. 291; Rep. 34; 26 So. 19; Kirkman v. 90 Am. St. Rep. 161; 64 N. E. 264. Bank, 2 Cold. (Tenn.) 397. * McReynolds v. Grubb, 150 Mo. 5 Triple Link, etc., Association v. 352; 73 Am. St. Rep. 448; 51 S. W. Williams, 121 Ala. 138; 77 Am. St. 822; Sweetland v. Buell, 164 N. Y. Rep. 34; 26 So. 19. 541; 79 Am. St. Rep. 676; 58 N. E. 663. WRITTEN SIMPLE CONTKACTS. 899 sumption of delivery is especially strong in case of a voluntary deed, as to a grantee's wife^ or children.® If, however, it can be shown that the gi-antee, being of full age and of sound mind, knew nothing of the existence or recording of such deed, the mere act of recording it will not make it take effect until he assents thereto/ §582. Constructive delivery. Delivery may, however, be constructive, as well as actual. If a note is made out, and placed by the maker in his safe, with the consent of the payee, simply for the purpose of safe keeping, it has been held to be constructively delivered/ In an extreme case, a note was held to be constructively delivered where the maker intended it to be a complete and binding obli- gation without any further act on his part." So where A drew a check payable to B or order and the check never came into B's hands, but into X's, who by false representations got the bank to pay him, this was treated as such a delivery that B could maintain an action thereon.^ A made a deed to his son B, conveying real estate for which B was to pay A three hundred dollars a year until A's death. B at once went into possession of such property, paid this sum to A annually, paid the taxes on the property, erected improvements, and treated it as his own. A always retained the custody of the deed. A few days before A died he directed another son to deliver this deed to B. 5 Shields v. Bush, 189 111. 534; 38 Am. St. Rep. 606; 22 S. W. 736. 82 Am. St. Rep. 474; 59 N. E. 962. So of a chattel mortgage, National 6 Gulf, etc., Co. V. O'Neal, 131 State Bank v. Morse Wilson Co., 73 Ala. 117; 90 Am. St. Rep. 22; 30 la. 174; 5 Am. St. Rep. 670; 34 So, 466; Parker v. Salmons, 101 N. W. 803. Ga. 160; 65 Am. St. Rep. 291; 28 i Victor v. Swisky. 87 111. App. S. E. 681; Abbott v. Abbott, 189 583. 111. 488; 82 Am. St. Rep. 470; 59 2 Rowan v. Chenoweth. 49 W. Va. N. E. 958. 287; 38 S. E. 544. 'Weber v. Christen, 121 111. 91; 3 pickle v. Muse, 88 Tenn. 380; 2 Am. St. Rep. 68; 11 N. E. 893; 17 Am. St. Rep. 900; 7 L. R. A. 93; Cravens v. Rossiter, 116 Mo. 338; 12 S. W. 919. 900 PAGE ON CONTKACTS. This was not done until after A died. These facts were held to amount to a constructive delivery.* §583. Effect of re-delivery. After rights have become fixed by the delivery of a written contract, the subsequent fate of the written instrument is, apart from questions of commercial paper, immaterial. Hence, the fact that the obligee ultimately regains possession of such writ- ten instrument, does not destroy the effect of a prior valid delivery.^ Thus, where an insured returned his policy to the insurance agent and requested that it be cancelled, but the agent induced him not to insist upon so doing, it was held that the policy was in force.^ Thus, after a deed has been delivered unconditionally to the duly authorized agent of the grantee, a subsequent retention thereof, either by another agent of the grantee^ or by the agent to whom the deed is delivered* at the grantee's request to hold till some designated future event, is not a delivery in escrow. If the re-delivery is intended by the parties as a release by each to the other, of their respective rights under the contract, a different question is, of course, pre- sented, and the original contract between the parties will be discharged, not by the mere fact of re-delivery, but by the new contract.^ 4Rodmeier v. Brown, 169 111. 347; 121 Mich. 690; 80 N. W. 793. (In 61 Am. St. Rep. 176; 48 N. E. 468. this case the note given by the in- 1 Deed, Tabor v. Tabor, — Mich, sured became due after the insured — ; 99 N. W. 4; Schuffert v. Grote, was suffering from his last illness 88 Mich. 650; 26 Am. St. Rep. 316; and incapable of doing business. It 50 N. W. 657; mortgage, Bradtfeldt was not paid by him, but the agent V. Cooke, 27 Or. 194; 50 Am. St. insisted on the payment. The pol- Rep. 701 ; 40 Pac. 1 ; insurance icy. on the death of the insured, policy. Shields v. Assurance Society, was held to be in full force and 121 Mich. 690;' 80 N. W. 793; cer- effect.) tificate given by architect to con- 3 Von Schmidt v. Widber, 105 tractor, Arnold v. Bournique. 144 Cal. 151; 38 Pac. 682. 111. 132; 36 Am. St. Rep. 419; 20 4 Parrish v. Steadham. 102 Ala. L. R. A. 493; 33 N. E. 530. 615; 15 So. 354. 2 Shields v. Assurance Society, 5 See Ch. LXII. WRITTEN SIMPLE CONTRACTS. 901 §584. Nature of delivery in escrow. A written instrument is delivered in escrow when it is de- livered by the obligor to a third person, to be held by such third person until some contingency occurs, or some condition is complied with, upon the performance of which condition it is to be delivered to the obligee and to become of full force and effect.^ If a written instrument is in the possession of a person other than grantor or grantee, the question whether this is a delivery in escrow or not, turns on the question of the relation of such holder to the parties to the instrument and the agree- ment under which he received it. If the obligor has parted with control over the instrument, except in case of the non- happening of the contingency or condition upon which it is to take effect, and the obligee has no rights thereunder until the happening of such contingency or condition, the instrument is delivered in escrow.^ Thus, A delivered a deed which con- tained a clause providing that the holder should deliver it to the grantee upon the death of the grantor, or should re-deliver it to the grantor at her request. The grantee subsequently ob- tained such deed and erased the clause providing for re-delivery to grantor. The deed was then put in the custody of the original depositary. This was held to be a valid delivery in escrow.^ A deed has been held to be delivered in escrow where the grantor reserved the right to recall it, but never in fact attempted to exercise such right.* It is not necessary that the terms under which a deed is deposited in escrow should be expressed in writing.^ If an instrument is placed in the hands 1 Davis V. Clark, 58 Kan. 100; 2 Shiilts v. Shults, 159 111. 654 48 Pac. 563. See to the same ef- 50 Am. St. Rep. 188; 43 N. E. 800 feet, Mudd v. Green (Ky.), 12 S. 3 Fulton v. Priddy, 123 Mich W. 139. "An escrow ex vi ter- 298; 81 Am. St. Rep. 201; 82 N mini is a deed delivered to some W. 65. third person to be by him delivered 4 Lippold v. Lippold, 112 la. 134 to the grantee upon performance 84 Am. St. Rep. 331; 83 N. W of some precedent condition by the 809. grantee or another or the happen- s Tharaldson v. Everts, 87 Minn ing of some event." Duncan v. 168; sub nom., Thoraldsen v, Pope, 47 Ga. 445, 451. Hatch, 91 N. W. 467. 902 PAGE ON CONTKACTS. of a third person for delivery to the vendee, on performance by him of a certain condition of sale, it has been held that this amounts to a delivery in escrow.^ If, however, the person with whom the instrument is' deposited is simply holding, subject to the obligor's instructions, but not under any agreement made with the obligee, or conferring rights upon him, such delivery is not in escrow/ If a grantor deposits a deed with a third per- son, and subsequently recalls the deed and destroys it, and there is nothing to show the terms upon which such deposit was made, this can not be assumed to be such a delivery in escrow as to confer any right to the grantee.* A delivery of a deed together with a will, to the grantor's sister-in-law, with the instructions to deliver them to the one who should settle grantor's estate, is not a delivery in escrow, especially where grantor subsequently takes such package of papers back, and places it in her desk, though with instructions to the sister-in-law to take the papers in case the grantor should become sick.^ A deed delivered to a third person, with instructions to deliver to the grantee in case the grantor died of the illness with which she was then suffering, but otherwise to be returned to the grantor, is not a delivery in escrow. ^° If any future agreement must be made between the obligor and obligee, before the written instrument in the hands of a third person can be delivered, no delivery in escrow exists." Thus, where deeds were deposited with a third person to be delivered, each in exchange for the other, if, after examination of title,, everything was found " all right and perfected,"^^ or drafts which had been accepted were de- eHillhouse v. Pratt, 74 Conn. 351; 80 Am. St. Rep. 240; 58 N. E. 113: 49 Atl. 905. 439. 7 Promissory note, Nichols, etc., lo Williams v. Daubner, 103 Wis. Co. V. Bank. 6 N. D. 404; 71 N. W. 521; 74 Am. St. Rep. 902; 79 N. 135; stock certificate, Clark v. W. 748. Campbell, 23 Utah 569; 90 Am. St. "Miller v. Sears, 91 Cal. 282; Rep. 716; 54 L. R. A. 508; 65 Pac. 25 Am. St. Rep. 176; 27 Pac. 589. 496. 12 Miller v. Sears, 91 Cal. 282; sShiilts V. Shults. 159 111. 654; 25 Am. St. Rep. 176; 27 Pac. 589. 50 Am. St. Rep. 188; 43 N. E. 800. However a deed delivered to a third 9 Osborne v. Eslinger, 155 Ind. person to hold "till we got proper WRITTEN SIMPLE CONTEACTS. 903 posited to be delivered if the acceptor approved the merchandise against v^hich such drafts were drawn/^ it is not a delivery in escrow. A executed to B a note to take up a note of A's which B had held, but which had been mislaid. The note was placed in the hands of X, with instructions to X to deliver the note to B when B produced A's former note ; and if such note could not be found, then X was to deliver the note when B had given sufficient indemnity, to be agreed upon thereafter between him- self and A. A died before B had found the note, or before A and B had agreed upon the amount of the indemnity to be given. This was held not to be a delivery in escrow, but X's agency was held to terminate on A's death.^* §585. Rights of parties when delivery is in escrow. " The depositary of an escrow is regarded as an agent of both obligor and obligee, and he can neither return the deed or other instrument to the former without the latter's consent, nor, save upon the fulfillment of the agreed conditions, deliver it to the latter without the former's consent."^ On the one hand, the obligor, or grantor, who has deposited such instrument with the holder in escrow, has no right to reclaim the same with- out the consent of the obligee or grantee." If the instrument deposited in escrow passes title to realty it is valid as against subsequent devisees of the grantor or his grantees without con- sideration.^ If the grantor subsequently obtains possession of abstracts of title," was said to be 48 Pac. 563; to the same effect are held in escrow. Hoyt v. McLagan, Cannon v. Ilandley. 72 Cal. 133; 87 la. 746; 55 N. W. 18. 13 Pac. 315; Grove v. Jennings, 46 13 Lehigh Coal & Iron Co. v. Steel Kan. 366 ; 26 Par. 738 ; Fred v. Co., 91 Wis. 221, 225; 64 N. W. 746. Fred (N. J. Eq.) , 50 Atl. 776; Shir- The court gave as a reason that the ley v. Ayers, 14 Ohio 307; 45 Am. acceptor " retained absolute con- Dee. 546 ; Gammon v. Bunnell, 22 trol over them and could by keeping Utah 421 ; 64 Pac. 958. silent prevent their delivery for all 2 Tharaldson v. Everts, 87 Minn, time." 168; sub nomine Thoraldsen v. 14 Farmer v. Marvin, 63 Kan. Hatch. 91 N. W. 467. 250; 65 Pac. 221. 3 Bury v. Young. 98 Cal. 446; 35 iDavisv. Clark, 58 Kan. 100, 105; Am. St. Rep. 186; 33 Pac. 338. 904: PAGE ON CONTKxiCTS. the deed deposited in escrow/ and even destroys it,^ the rights of the grantee in escrow are not thereby destroyed. On the other hand, the obligee or grantee under the instrument de- posited in escrow, has no right to the custody of the instrument until the conditions of the deposit have been complied with, nor can the instrument take effect till then as between the par- ties.® If the depositary of a deed in escrow delivers it to the grantee before the conditions of the escrow are complied with, such delivery is of no validity as between the grantor and the grantee.^ So delivery of a lease® or mortgage'* which has been deposited in escrow is of no effect if delivered before the condi- tions have been complied with. So a mortgagee who has placed a release of a mortgage in escrow may enjoin the mortgagor from having it recorded before the condition on which it was de- livered has been complied with.^** If the grantee under a deed deposited in escrow obtains it from the depositary by fraud, such deed is of no effect as between grantor and grantee.^* The same rule applies where it is taken without the knowledge of the depositary.^^ l^either is it of any validity as against per- sons claiming under such grantee who are not hona fide pur- chasers for value.^^ Whether such delivery is of any validity against hona fide purchasers for value, is a question upon which there is a conflict of authorities. Some authorities hold that such deed passes title as to hona fide purchasers for value;" 4 Grove V. Jennings, 46 Kan. 366; Civ. App. 419; 38 S. W. 223. 26 Pae. 738. ^ Roberson v. Reiter, 38 Neb. 198 ; sRobbins v. Rascoe, 120 N. C. 56 N. W. 877. 79; 58 Am. St. Rep. 774; 38 L. R. lo Matteson v. Smith, 61 Neb. A. 238; 26 S. E. 807. 761; 86 N. W. 472. 6 Wilson V. Savings Association, n Hanley v. Sweeny, 109 Fed. 42 Fed. 421. 712; 48 C. C. A. 612; Burnap v. THogueland v. Arts, 113 la. 634; Sharpsteen, 149 111. 225; 36 N. E. 85 N. W. 818; Jackson v. Rowley, 1008; Everts v. Agnes, 6 Wis. 453; 88 la. 184; 55 N. W. 339; Lewis v. affirming same case in 4 Wis. 343; Prather (Ky.), 21 S. W. 538; Mat- 65 Am. Dec. 314. teson V. Smith, 61 Neb. 761; 86 N. 12 Jackson v. Lynn, 94 la. 151; W. 472; Tyler v. Gate, 29 Or. 515; 58 Am. St. Rep. 386; 62 N. W. 704. 45 Pac. 800 ; Landon v. Brown, 160 is Roberson v. Reiter, 38 Neb. Pa. St. 538; 28 Atl. 921. 198; 56 N. W. 877. 8 Gentry v. Gatlin, 14 Tex. " Schurtz v. Colvin, 55 0. S. WRITTEN SIMPLE CONTRACTS. 905 Others hold that it does not.^^ So, if a non-negotiable contract, deposited in escrow, is delivered before the terms of the deposit are complied with, it is of no validity against the obligor.^* Where a deed has been improperly delivered by the depositary, the grantor may subsequently ratify such delivery." By re- maining silent, and seeing third persons without knowledge of the facts alter their condition, in reliance upon the apparent delivery, he may estop himself to deny the validity of such delivery.^^ So a promissory note deposited in escrow and de- livered by the depositary before the terms of the delivery are complied with is invalid except when in the hands of a bona fide holder who acquires legal title for value and before maturity.^^ In the hands of a bona fide holder, however, a negotiable instru- ment, wrongfully delivered by a holder in escrow, is valid."" A depositary of a promissory note in escrow who delivers it before the conditions are complied with, in consequence of which the maker is obliged to pay the note to an innocent holder for value, is liable in damages to such maker. ^^ A party to a delivery in escrow, for whose benefit certain conditions were imposed, may, however, waive such conditions and allow the deed to be de- livered without the performance thereof.^^ 274; 45 N. E. 527; Blight v. ic Daniels v. Gower, 54 la. 319; Schenck, 10 Pa. St. 285; 51 Am. 3 N. W. 424; 6 N. W. 525. Dec. 478; Everts v. Agnes, 4 Wis. it Dixon v. Bank, 102 Ga. 461; 66 343; 65 Am. Dec. 314. Am. St. Rep. 193; 31 S. E. 96. 15 Dixon V. Bank, 102 Ga. 461; is Dixon v. Bank, 102 Ga. 461 ; 66 Am. St. Eep. 193; 31 S. E. 96; 66 Am. St. Rep. 193; 31 S. E. 96; Quick V. Milligan, 108 Ind. 419; 58 Reese v. Medlock, 27 Tex. 120; 84 Am. Rep. 49; 9 N. E. 392; Jackson Am. Dec. 611. V. Lynn, 94 la. 151 ; 58 Am. St. i9 Jamison v. McFarland. 10 S. D. Eep. 386; 62 N. W. 704; Tyler v. 574; 74 N. W. 1033. Gate, 29 Or. 515; 45 Pac. 800; 20 gclimid v. Frankfort, 131 Mich. Smith V. Bank, 32 Vt. 341; 76 Am. 197; 91 N. W. 131; Chase National Dec. 179; Everts v. Agnes, 6 Wis. Bank v. Faurot, 149 N. Y. 532; 35 453; affirming same case in 4 Wis. L. R. A. 605; 44 N. E. 164. 343; 65 Am. Dee. 314. (In the 21 Riggs v. Trees, 120 Ind. 402; ease in 4 W^is. supra it did not ap- 5 L. R. A. 696; 22 N. E. 2.54. pear definitely that the subsequent 22 Smith v. Goodrich, 167 111. 46; purchaser acted lona fide, in 6 Wis. 47 N". E. 316; Tharaldson v. Ev- stipra the record showed him to be erts, 87 Minn. 168; sub nomine a bona fide grantee.) Thoraldsen v. Hatch, 91 N. W. 467. 906 PAGE ON CONTRACTS. §586. Necessity of second delivery of escrow. Whether the failure or omission of the depositary in escro-w to deliver the instrument to the party entitled to it when the conditions of the deposit in escrow have been complied with defeats the rights of the parties under the instrument, is a ques- tion upon which there is a conflict of authority. In some juris- dictions it is held that at the instant that the conditions of the delivery in escrow are complied with, the party so complying has a right to the possession of the instrument, and the act of the depositary in withholding such delivery cannot affect his rights.^ In other jurisdictions, it is held that the party who has a right to such instrument cannot maintain an action thereon until it is delivered to him.^ §587. Fiction of relation to original delivery in escrow. By a legal fiction an instrument which has been deposited in escrow may relate back uix)n the performance of the conditions of delivery to the time of the delivery in escrow, and for some purposes, take effect from such time.^ This doctrine is gen- erally invoked where the obligor has died before the conditions of the escrow have been complied with. A mere agency would be revoked by such death, but by the theory given, the law treats the instrument delivered in escrow as valid, notwithstand- 1 So with deeds, White Star, etc., ' quoted Davis v. Clark, 58 Kan. 100, Co. V. Moragne, 91 Ala. 610; 8 So. 106; 48 Pac. 563. 867; Conneau v. Geis, 73 Cal. 176; 2 So with bonds, Jackson, etc., Co. 2 Am. St. Rep. 785; 14 Pac. 580; v. Peareon, 60 Fed. 113. Davis V. Clark, 58 Kan. 100; 48 i Perryman's Case, 5 Co. 84a; Pac. 563; notes, Couch v. Meeker, Bostwick v. McEvoy, 62 Cal. 496; 2 Conn. 302; 7 Am. Dec. 274; Tay- Peck v. Goodwin, Kirby (Conn.) lor V. Thomas, 13 Kan. 217. "A 64; Price v. R. R., 34 111. 13; Wal- note placed in escrow takes effect lace v. Harris. 32 Mich. 380; Rug- the instant the conditions of the gles v. Lawson, 13 Johns. (N. Y.) escrow are performed, even though 285; 7 Am. Dec. 375; Shirely v. the depositary has not formally Ayers, 14 Ohio 307; 45 Am. Dec. delivered it to the payee." Syllabus 546 ; Gammon v. Bunnell, 22 Utah of Taylor v. Thomas. 13 Kan. 217; 421; 64 Pac. 958. WRITTEN SIMPLE CONTKACTS. 907 ing the death of the obligor. Deeds^ and bank-checks' held in escrow may thus take effect upon delivery after the obligor's death. Whether a deed can be delivered in escrow upon a con- dition which by its terms cannot be performed until after the grantor's death, so that upon performance of the condition the deed will relate back to the original delivery is a question upon which there is a conflict of authority. If a deed is placed in the hands of a third person, to be delivered on grantor's death, provided that after grantor's death grantee performs some con- dition precedent, it has been held that such delivery is not a valid delivery in escrow.* On the other hand a deed deposited with a third person and delivered in accordance with conditions imposed by the grantor's will has been held to relate back, no third person's rights being injured thereby.^ Like other legal fictions, however, the fiction of relation will not be extended to cases not intended by the fiction originally. Thus, where the rights of third persons will be prejudiced by such relation, the relation will not exist as to them. Thus, A made a deed of gift to his son B, and delivered it in escrow to X, to be delivered to B on A's death. It was held that such delivery was ineffect- ive as against subsequent creditors of A who had extended credit to him, relying upon his apparent ownership of such prop- erty.® The doctrine of relation will not be invoked where it is contrary to the apparent intention of the parties. Thus, where a deed has been delivered in escrow, and before the conditions of the escrow were complied with, a building upon the land ■which belonged to a third person, of which fact the grantee had aSchuur v. Rodenbaek, 133 Cal. 22 S. W. 1077; Eosseau v. Bleau, 85; 65 Pac. 298; Trask v. Trask, 131 N. Y. 177; 27 Am. St. Rep. 90 la. 318; 48 Am. St. Rep. 446; 578; 30 N. E. 52. 57 N. W. 841; Davis v. Clark, 58 3 whitehouse v. Wliitehouse, 90 Kan. 100; 48 Pac. 563; Brown v. Me. 468; 60 Am. St. Rep. 278; 38 Stutson, 100 Mich. 574; 43 Am. St. Atl. 374. Rep. 462; 59 N. W. 238; Tharald- 4Taft v. Taft, 59 Mich. 185; 60 son V. Everts, 87 Minn. 168; sub Am. Rep. 291; 26 N. W. 426. nomine Thoraldsen v. Hatch, 91 N. 5 Dettmer v. Behrens, 106 la. 585; W. 467 ; Lindley v. Groff, 37 Minn. 68 Am. St. Rep. 326 ; 76 N. W. 853. 338 ; 34 N. W. 26 ; White v. Pollock. 6 Rathmell v. Shirey, 60 0. S. 117 Mo. 467; 38 Am. St. Rep. 671; 187; 53 N. E. 1098. 908 PAGE ON CONTKACTS. notice, was purchased by the grantee to prevent the owner from removing the same, it was held that upon performance of the conditions of the delivery, the deed did not relate back to the time of the delivery in escrow, in order to hold the grantor for the value of such building upon his covenants of warranty.'' Thus where a deed has been delivered in escrow under an agreement that the grantee is to desist from all further defense to a particular suit, and that in case a certain judgment is affirmed, the deed is to be delivered to the grantee, the deed will not, upon performance of such condition, relate back to the time of its original delivery for the purpose of defeating the judgment in question, w^iich, besides the title to the land conveyed by such deed, operated as an adjudication as between the grantor and the grantee, as to their rights. For the purpose of determining their rights the deed will be treated as taking effect only from the time of the performance of the conditions of the delivery ; that is, from the affirmance of the judgment.* If a grantor has delivered a deed in escrow and at the time of his death the conditions of the escrow have not been performed, it has been held that the legal title thereto descends to the heirs and devisees of such grantor subject to be divested by the performance of the conditions of the delivery.^ §588. Who can be depositary in escrow. — Obligor. The question of delivery depends in part upon the relation of the person in whose custody and possession the instrument is, to the instrument itself, or to the parties thereto. A written instrument may be, (1) retained by the party executing it; (2) delivered to his agent; (3) delivered to a person who is not a party to the instrument, and who does not take as the agent of either party, or who may be said to take as the agent of both parties; (4) delivered to the agent of the adversary party; or, (5) delivered to the adversary party himself. The THovt v. McLagan, 87 la. 746; 264; 48 Am. St. Rep. 37; 14 So. 55 X. W. 18. C63. 8 Ashford v. Prewitt, 102 Ala. » Charlwick v. Tatem, 9 Mont. 354; 23 Pac. 729. WRITTEN SIMPLE CONTRACTS. • 909 effect of each of these states of fact must, therefore, be con- sidered. A written contract which is executed by one party and retained in his custody, and of which tlie possession and control has never been surrendered to the adversary party, is of no validity.^ The same principle makes invalid a deed which is executed by the grantor and retained by him in his posses- sion," or which is placed in the jDOSsession of one of two or more joint grantors, as where a deed executed by a husband and wife is put in the custody of the husband,^ or of the wife,* though Avith the expectation of delivering it at a later time. If an instrument is executed by both parties thereto, and is in- tended to take effect, a valid delivery exists if it is left in the custody of either of such parties.^ Under any other rule an instrument executed by both adversary parties could never be delivered between them. §589. Unauthorized delivery by co-obligor. If an obligor, such as a surety, leaves an instrument to which he has afHxed his name with a co-obligor to be delivered only if some other party signs it as co-obligor, and the custodian of the instrument delivers it to the obligee, who does not know that such signing is conditional, the party so signing is liable to the obligee.^ The rules governing delivery by a holder in 1 Harrison v. Morton, 83 Md. 456; i Dair v. United States, 16 Wall. 35 Atl. 99. (U. S.) 1; State v. Pepper, 31 Ind. sParrott v. Avery, 159 Mass. 76; Carter v. Moiilton, 51 Kan. 9; 594 ; 38 Am. St. Rep. 465 ; 22 L. R. 37 Am. St. Rep. 259 ; 20 L. R. A. A. 153; 35 K E. 94; Tyler v. Hall, 309; 32 Pac. 633; Flannery v. Bank 106 Mo. 313; 27 Am. St. Rep. 337; (Ky.), 52 S. W. 847; Millett v. 17 S. W. 319; Cazassa v. Cazassa, Parker, 2 Met. (Ky.) 608; State 92 Tenn. 573; 36 Am. St. Rep. 112; v. Peck, 53 Me. 284; Board of Edu- 20 L. R. A. 178; 22 S. W. 560. cation v. Robinson, 81 Minn. 305; 3 Kopp V. Reiter, 146 HI. 437 ; 37 84 N. W. 105 ; Fowler v. Allen. 32 Am. St. Rep. 156; 22 L. R. A. 273; S. C. 229; 7 L. R. A. 745; 10 S. E. 34 N. E. 942. 947; Dun v. Garrett, 93 Tenn. 650; 4 Morris v. Candle, 178 111. 9; 42 Am. St. Rep. 937; 27 S. V^\ 1011 ; 69 Am. St. Rep. 282; 44 L. R. A. Turnbull v. Mann, 99 Va. 41; 37 489; 52 N. E. 1036. S. E. 288. sTempleton v. Twitty, 88 Tenn. 595; 14 S. W. 435, 910 PAGE ON COXTRACTS. escrow do not applv, as a co-obligor is not a holder in escrow.^ The requirement that the obligee must take without notice implies that the instrument is complete on its face and does not show that it is not to take effect until others sign.^ If this re- quirement appears on the face of the instrument the obligee is charged with notice thereof. So a condition that a Avritten contract which has been delivered to the promisee is not to take effect until other parties sign cannot be interposed as against third persons who have a right to rely, and who have relied, upon such contract. Thus persons who sign and deliver a sub- scription for stock complete on its face under an oral agreement, that it shall not take effect until others subscribe, cannot set up such oral condition as to subsequent subscribers who subscribe in reliance on the validity of such prior subscription.* But where A, a surety on a bond of indemnity, signed it and left it with B, the obligor, on condition that C, another specified surety, would sign, and B forged the name of C and delivered the bond it was held that A was not liable, as the obligee was bound to know the genuineness of the signatures.^ The fact that after B made default C voluntarily made a payment on such bond does not make A liable. If the obligee of an instrument knows that it has been signed by a party thereto, upon condition that his liability should not attach until some additional party had signed, and such instrument is left in the custody of an obligor, and is delivered by him contrary to his agreement, it is held in many courts that such instrument does not take effect as to a party signing upon such conditions.^ If the payee has notice of the fact that the surety signed on condition that others were to sign before the instrument was delivered, and that the maker 2 Carter v. Moulton, 51 Kan, 9 ; 5 Southern Cotton-Oil Co. v. Basg, 37 Am. St. Rep. 259; 20 L. R. A. 126 Ala. 343; 28 So. 576. And see 309; 32 Pac. 633. as to such facts in signing a note, 3 Dun V. Garrett, 93 Tenn. 650; Sharp v. Allgood, 100 Ala. 183; 42 Am. St. Rep. 937; 27 S. W. 1011. 14 So. 16. ■i Minneapolis Threshing Machine estate Bank v. Evans, 15 N. J. Co. V. Davis, 40 Minn. 110; 12 Am. L. 155; 28 Am. Dec. 400; Black v. St. Rep. 701; 3 L. R. A. 769; 41 Lamb, 13 N. J. Eq. (2 Beas.) 455; N. W. 1026. 12 N. J. Eq. (1 Beas.) 108. WRITTEN SIMPLE CONTRACTS. 911 has delivered such note in violation of such agreement, some authorities hold that the payee cannot recover/ §590. Ag-ent of obligor. If a written instrument is delivered to one who holds as the agent of the grantor, this does not amount to delivery which will give the instrument legal effect. Thus a deed delivered to one who is agent of the grantor, is of no validity, even if the grantor has instructed him to deliver it to the grantee.^ Thus A deposited certain stock with a bank and gave the bank written instructions to deliver it to B on payment by B of seventy-five thousand dollars before ISTovember 24, 1898. B paid such amount upon such date. In the meantime, on !No- vember 22nd, a dividend had been declared. It was held that the bank took as the agent of the grantor, who had in the mean- time full control over such stock, and that title thereto did not pass until payment by B and delivery to him. Accordingly the dividends did not pass to B.^ The test for determining whether the holder of the written instrument is the agent of the maker thereof or not turns on the question of the right of the maker to recall the instrument. If the maker has such right the holder is acting as his agent and no delivery exists.^ §591. Agent of obligor taking in different capacity. On the other hand, an instrument may be delivered to one who is the agent of the maker and yet he may not take in his capacity of agent. A executed a note, placed it in an envelope, TStricklin v. Cunningham, 58 111. C. 201; Large v. Parker (Tex. Civ. 293; Bank v. Bormiian, 124 111. 200; App.), 56 S. W. 587. 16 N. E. 210; Coffman v. Wilson, i Furenes v. Eide, 109 la. 511; 2 Mete. (Ky.) 542; Jackson v. 77 Am. St. Rep. 545; 80 N. W. 539. Cooper (Ky.), 19 Ky. Law Eep. 9; 2 Clark v. Campbell, 23 Utah 569; 39 S. W. 39; Williams v. Luther 90 Am. St. Rep. 716; 54 L. R. A. (Ky.), 17 Ky. Law Rep. 311; 30 S. 508; 65 Pac. 496. W. 199; Dunn v. Smith, 12 Smedes s Miller v. Sears, 91 Cal. 282; 25 & M. (Miss.) 602; Read v. McLe- Am. St. Rep. 176; 27 Pac. 589; more, 34 Miss. 110; Hill v. Sweetser, Nichols v. Opperman, 6 Wash. 618; 5 N. H. 168; Cowan v. Baird, 77 N. 34 Pac. 162. 912 PAGE ON" CONTRACTS. sealed the envelope, and marked it with the initials of the payee, and delivered it to A's domestic servant, with instructions to be sure that the payee got it at A's death. It was held that unless. A had reserved the right to recall such note this was a good delivery in escrow, and could be delivered by such servant to the payee after A's death. A verdict finding that this was a delivery in escrow was sustained.^ A executed a deed and de- livered it to his housekeeper, with instructions to deliver the deed to his son at A's death. This was held to be a valid de- livery in escrow if A had no right to recall the deed. The fact that the houskeeper subsequently put the deed in A's trunk for safe-keeping did not invalidate such delivery.^ A's intention, to put the deed beyond his recall by such delivery was held to be shown from the fact that he did not try to recall it, and also from the fact that he made such delivery after receiving an opinion from his attorney that such delivery would be valid, and would be binding upon A. A grantor who has sold land through a real estate agent may deposit the deed to the property sold in escrow with such agent.^ So, if an application is made for insurance, under a contract that if the application for insur- ance is accepted the insurance will take effect from the time of the application, and the application is accepted, and the policy is forwarded to the agent of the insurance company with un- conditional instructions to deliver to the insured, such jwlicy takes effect, even though the manual possession of the policy is not surrendered by the agent to the insured.^ This principle 1 Daggett V. Simonds, 173 Mass. 33; Young v. Assurance Society, 30 340; 46 L. R. A. 332; 53 N. E. 907. Fed. 902; Harrigan v. Ins. Co., 128 2Munro v. Bowles, 187 111. 346; Cal. 531; 61 Pac. 99; incorrectly 54 L. E. A. 865; 58 N. E. 331. entitled Harrington v. Ins. Co.. in 3 McLaughlin v. Wheeler, 1 S. D. 58 Pac. 180; Fireman's Fund Ins. 497; 47 S. W. 816; modified on an- Co. v. Pekor, 106 Ga. 1; 31 S. E. other point 2 S. D. 379; 50 N. W. 779; Xew York Life Ins. Co. v. 834. Babcock, 104 Ga. 67; 69 Am. St. 4Xenos V. Wickham, L. R., 2 Rep. 134; 42 L. R. A. 988; 30 S. E, H. L. 296; Union Central Life Ins. 273; Medearis v. Ins. Co., 104 la. Co. V. Phillips, 102 Fed. 19; 41 88; 65 Am. St. Rep. 428; 73 N. W. C. C. A. 263 ; reversing on another 495 ; Mutual Life Ins. Co. v. Thom- ground Phillips v. Ins. Co., 101 Fed. son, 94 Ky. 253; 22 S. W. 87; Lee WEITTEN SIMPLE CONTEACTS. 913 applies even where, by the terms of the contract, the policy is not to take effect until its delivery.^ This holding shows that the court looks upon such facts as amounting to a delivery. In other cases the controlling theory may be that the contract of insurance was effective between the parties, even if no delivery had ever been made. So, if the insured is notified by the agent that the policy is in the hands of the agent subject to his orders, delivery exists even though he does not in fact call for it.'' Thus a policy delivered by the insurance company to its agent under unconditional instructions to deliver to the insured, but retained by the agent until the insured has reimbursed the agent for the premium advanced by such agent, is delivered to the insured so as to take effect.^ If, on the other hand, there is some other and further act to be done before the policy takes effect, delivery to the agent does not amount to delivery to the insured.^ Thus, if the policy is not to take effect until the premium is paid, and such premium has not been paid and payment thereof has not been waived, possession by the agent of the insurance com- pany does not amount to the delivery to the insured.^ So if the insured is not bound to take the policy, but has the right to accept or reject it, delivery to the agent of the insurance com- pany is not delivery to the insured.^" So if the agent does not take under unconditional instructions for delivery, as where he is directed to hold the policy, pending an investigation by the V. Ins. Co. (Ky.), 41 S. W. 319; 134; 42 L. R. A. 88; 30 S. E. 2Y3. Dibble v. Assurance Co., 70 Mich. 1 ; 6 Phoenix Assurance Co. v. McAu- 14 Am. St. Rep. 470; 37 N. W. thor, 116 Ala. 659; 67 Am. St. Rep. 704; Newark Machine Co. v. Ins. 154: 22 So. 903. Co., 50 O. S. 549 ; 22 L. R. A. 768 ; 7 Fireman's Fund Ins. Co. v. Pe- 35 N. E. 1060; Porter v. Ins. Co., kor, 106 Ga. 1; 31 S. E. 779. 70 Vt. 504; 41 All. 970. "The s piuegrass Ins. Co. v. Cobb, 109 agent and the mails were only the Ky. 339; 58 S. W. 981. vehicles to carry it to him and it aJurgens v. Ins. Co., 114 Cal. was the same thing as if mailed 161; 45 Pac. 1054; 46 Pac. 386; or sent directly to the plaintiff." Griffith v. Ins. Co., 101 Cal. 627; Hallock V. Ins. Co., 26 N. J. L. 268. 40 Am. St. Rep. 96; 36 Pac. 113. 279; affirmed 27 N. J. L. 645; 72 lo Dickerson's Administrator v. Am. Dec. 379. Assurance Society (Ky.) , 52 S. W. 5 New York Life Ins. Co. v. Bab- 825. cock, 104 Ga. 67; 69 Am. St. Rep. 58 914 PAGE ON CONTKACTS. insurance company of the truth of the statements in the appli- cation/^ or where it is held by the insurance company's agent, pending the approval of the company of the risk/' even if it has been exhibited to the agent of the insured, no deliver}^ exists. §592. Depositary representing both obligor and obligee. A delivery of an instrument to a third person to hold free from control of the obligor, and free from the control of the obligee, until the happening of a certain event, and then to deliver such instrument, on the happening of such event, to the obligee, is a delivery in escrow.^ Thus a delivery of a deed to one who agreed to deliver to the grantee on the grantor's death, and who placed the deed in his own box in a safety vault, amounts to a delivery in escrow.^ So, where grantor executed a deed and grantee executed a lease back to grantor for life, and the two parties deposited both instruments in a bank, with an indorsement that they should be delivered to the grantor or, upon the grantor's death, to the grantee, is a valid delivery.^ If grantor delivers a deed to the officer who takes the acknowledg- ment, with instructions to deliver to the grantee under certain contingencies, this is a valid delivery in escrow.* So, where grantor delivered deeds to a third person with instructions, '' Take these papers and keep them until I am gone, and give them to the ones that they belong to," a delivery in escrow exists.^ It is not necessary to the validity of the delivery of a deed in escrow that the grantee should know of its existence when it is so delivered. If he learns of it, and accepts the deed subse- quently, the original delivery is a valid delivery in escrow.^ "Oliver v. Ins. Co., 97 Va. 134; L. R. A. 242; 32 Pac. 287. 33 S. E. 536. * Appleman v. Appleman, 140 12 Nutting V. Ins. Co., 98 Wis. Mo. 309; 62 Am. St. Rep. 732; 41 26; 73 N. W. 432. S. W. 794; Brown v. Westfield, 47 iBeloit, etc., Ry. v. Palmer, 19 Neb. 399; 53 Am. St. Rep. 532; 66 Wis. 594. N. W. 439. 2Haeg V. Haeg, 53 Minn. 33; 55 s Shea v. Murphy, 164 111. 614; N. W. 1114. 56 Am. St. Rep. 215; 45 N. E. 1021. 3 Martin v. Flaharty, 13 Mont. e Clark v. Clark, 183 111. 448; 75 fl6; 40 Am. St. Rep. 415; 19 Am. St. Rep. 115; 56 N. E. 82. WRITTEN SIMPLE CONTEACTS. 915 A depositary in escrow is relieved from liability on delivering the instrument deposited with him in escrow, in accordance with the agreement made between the parties to the depositary/ On the one hand, he is not bound by agreements between the parties to the instrument not disclosed to him.^ On the other hand, other instructions given him by one of the parties can not alter his duty to deliver in accordance with the terms of the deposit/ A delivery of a mortgage in escrow, to be delivered on the joint request of the two parties, does not give the mortgagee a right to its delivery until such joint request is made.^" But where the parties agree to make a joint request for delivery upon the per- formance of certain conditions, apd delivery is then to be made, an arbitrary refusal to one party to consent to the delivery does not defeat the rights of the other party/^ Under an agreement with B, A placed notes in the hands of X to be delivered to B when called for. This was held to be a sufficient delivery/^ §593. Agent of obligee. A delivery by the obligor to the agent of the obligee, without imposing any conditions or restrictions, is in legal effect a de- livery to the obligee himself. Thus a non-negotiable note,* or a negotiable note,' or an insurance policy,^ delivered uncondi- tionally to the agent of the obligee take effect at once. §594. Agent of obligee in different capacity. Whether the obligor can deliver to one who is the agent of the obligee and in making such delivery can impose such conditions 7 Bean v. Trust Co., 122 N. Y. L. R. A. 406; 40 S. W. 656. 622;26N. E. 11. i Stockton, etc., Society v. Gid- 8 Walker v. Bamberger, 17 Utah dings, 96 Cal. 84; 31 Am. St. Rep. 239; 54 Pac. 208. 181; 21 L. R. A. 406; 30 Pae. 1016. Porter v. Metcalf, 84 Tex. 468; 2 Shaw v. Camp, 160 111. 425; 43 19 S. W, 696. N. E. 608; affirming 61 111. App. 10 Belding Savings Bank v. 62 ; Enneking v. Woebkenberg. 88 Moore, 118 Mich. 150; 76 N. W. Minn. 259; 92 N. W. 932; Merrill 368. V. Hurley, 6 S. D. 592; 55 Am. St. "Fred v. Fred (N. J. Eq.), 50 Rep. 859; 62 N. W, 958. Atl. 776. 3 Connecticut Indemnity Associa- 12 School District v. Sheidley, 138 tion v. Grogan's Administrator Mo. 672; 60 Am. St. Rep. 576; 37 (Ky.), 52 S. W. 959. 916 PAGE ON CONTi^ACTS. as to make a delivery in escrow, is a question upon which there is a conflict of autliority. In some jurisdictions an agent of the obligee may hold in escrow wherever the acceptance by him of the agency of escrow involves no violation of duty to his princi- pal/ Thus a deed delivered to an attorney of the grantee with a written memorandum signed by the grantor, setting forth the t^rms on which such deed was to be delivered to the grantee, is an escrow.^ So a delivery of a bond to the agent of the obligee under an agreement on his part not to surrender it to the obligee until twelve more names have been added, is delivered in es- crow.^ In other jurisdictions it is said that a delivery to the agent of the oblige is in legal -effect an absolute delivery to the obligee himself, and can not be a delivery in escrow.* So it has been held that a promissory note cannot be delivered in escrow to the agent of the payee.^ This last principle applies on where delivery is to the grantee's agent in his capacity of agent. The fact that a grantee under a deed delivered in escrow has paid the depositary to represent him under certain conditions, does not make the depositary his agent or attorney, so that a delivery to him is a delivery to the grantee.*' The divergence of authority as to the power of an agent of the obligee to hold in escrow is in part a special application of conflicting views enter- tained by different jurisdictions upon the question whether the obligee himself can hold in escrow or not.^ In some jurisdic- tions, however, which deny that an obligee may hold in escrow, it is held that an agent of the obligee may so hold if the duties 1 Deed, Watkins v. Nash, L. R. s Fertig v. Bucher, 3 Pa. St. 308. 20 Eq. 262; Ashford v. Prewitt, * Deed, Duncan v. Pope, 47 Ga. 102 Ala. 264; 48 Am. St. Rep. 37; 445; Hubbard v. Greeley, 84 Me, 14 So. 663; Southern, etc., Co. v. 340; 17 L. R. A. 511; 24 Atl. 799; Cole, 4 Fla. 359; Cincinnati, etc., Bond v. Wilson, 129 N. C. 325; 40 R. R. V. Iliff, 13 O. S. 254; Mer- S. E. 179. chants' Ins. Co. v. Nowlin (Tex. s Stewart v. Anderson, 59 Ind. Civ. App.), 56 S. W. 198; con- 375. tract, Humphreys v. Ry., 88 Va. 6 Dixon v. Bank, 102 Ga. 461; 66 431; 13 S. E. 985. Am. St. Rep. 193; 31 S. E. 96. 2 Ashford v. Prewitt, 102 Ala. 7 See §§ 595-596. 264; 48 Am. St. Rep. 37; 14 So. 663. WRITTEN SIMPLE CONTKACTS. 917 of a depositary in escrow are not inconsistent with those of agent. ^ §595. Obligee. — Theory that he can hold simple contract in escrow. Whether an instrument can be delivered to the obligee, to hold until some event or contingency occurs, not appearing on its face, and then to take effect, is a question, upon which there is a great divergence of authority. The weight of authority in cases of simple contracts is that they may be delivered to the adversary party to take effect only upon some other and further condition.^ Thus a promissory note" or an insurance policy^ may be so delivered. A contract executed by some of the parties of one part and delivered to the party of the other part, to take effect only if the rest of the parties of the one part sign it, is, according to this view, of no effect until such parties sign it." A promissory note delivered to payee but not to take effect until another party signs it is ineffective till then.^ Thus if a contract signed by a surety is delivered upon condition that such contract shall take effect only if some additional surety signs it, the weight of authority treats this as a delivery which is conditional only, and not absolute ; and the surety thus signing is not bound unless the additional surety signs. Thus a promissory note, de- livered to payee upon condition that it shall take effect only when signed by an additional security, is held not to take effect 8 See ante this section. N. Y. 654; 18 N. E. 127; Jordan v. 1 Wilson V. Powers, 131 Mass. Jordan, 10 Lea. (Tenn.) 124; 43 539; Blewit v. Boorum, 142 N. Y. Am. Rep. 294. 357; 40 Am. St. Rep. 600; 37 N. E. 3 Westerfleld v. Ins. Co., 129 Cal. 119; Benton v. Martin, 52 N. Y. 68; 61 Pac. 667; 58 Pae. 92. 570. 4Flinn v. Mowry, 131 Cal. 481; 2 Burke v. Dailaney. 153 U. S. 63 Pac. 724; modified 63 Pac. 1006; 228; MacFarland v. Sikes, 54 Conn. Packer v. Benton, 35 Conn. 343; 95 250; 1 Am. St. Rep. Ill; 7 Atl. Am. Dec. 246. 408; Watkins v. Bowers, 119 Mass 5 Belleville Savings Bank v. 383; Brown V. St. Charles, 66 Mich. Bornman, 124 111. 200; 16 N. E. 71; 32 N. W. 926; Westman v. 210; German-American National Krumweide, 30 Minn. 313; 15 N. Bank v. Peoples Gas Co., 63 Minn. W. 255; Reynolds v. Robinson, 110 12; 65 N. W. 90; McCormick Har- 918 PAGE ON CONTRACTS. until such additional surety signs.® This principle has been applied to delivery of a bond which was required by law, to public officers, to take effect only if some additional party signs such bond/ So where a surety signed a bond in replevin and delivered it to a deputy sheriff to be by him delivered to the clerk of court only in case an additional surety signed, de- livery by the deputy sheriff without the signature of such addi- tional surety does not make the instrument effective.* The obligee must, however, have notice of the conditions upon which the instrument was delivered. An officer of the school district asked A to sign the bond of X, the district treasurer. A signed, upon an understanding that such bond should only take effect if B also signed it. The bond was delivered. It was held that the bond took effect, even if B did not sign it, since the officer was not acting in his official capacity in asking A to sign such bond, and notice to him was not notice to the public corporation.^ §596. Obligee. — Theory that he cannot hold simple contract in escrow. Some authorities, however, hold that a written simple contract cannot be delivered to the obligee in escrow. In some jurisdic- tions, negotiable instruments are specially singled out as instru- ments which cannot be delivered in escrow to the payee.^ A negotiable " note may be delivered as an escrow to a third person, but it cannot be so delivered to the payee."^ Thus, if a nego- vesting Machine Co. v. Faulkner, 7 ^ Board of Education v. Robin- S. D. 363; 58 Am. St. Rep. 839; 64 son, 81 Minn. 305; 84 N. W. 105. N. W. 163. 1 Garner v. Fite, 93 Ala. 405; 9 6 Knight V. Hurlbut, 74 111. 133; So. 367; Scott v. Bank, 9 Ark. 36; McCormick Harvesting Machine Co. Walker v. Crawford, 56 111. 444; 8 V. Faulkner, 7 S. D. 363; 58 Am. Am. Rep. 701; Murray v. W. W. St. Rep. 839; 64 N. W. 163; Ma- Kimball Co., 10 Ind. App. 184; 37 jors V. McNeilly, 7 Heisk. (Tenn.) K E. 734; Dils v. Bank, 109 Ky. 294. 757; 60 S. W. 715; Hurt v. Ford, TGatling v. San Augustine Coun- 142 Mo. 283; 41 L. R. A. 823; 44 ty, 25 Tex. Civ. App. 283; 61 S. W. S. W. 228; Henshaw v. Button, 59 432. Mo. 139. 8 Smith V. Spragins, 109 Ky. 535; 2 Clanin v. Machine Co., 118 Ind. 59 S. W. 855. 372, 374; 3 L. R. A. 863; 21 N. E. WRITTEN SIMPLE CONTRACTS. 919 liable instrument is delivered to the payee to take effect only if some other person signs such instrument, such condition is invalid and the instrument takes effect at once, even if such ad- ditional party does not sign it.^ A surety who signed an instru- ment which was delivered to an obligee to take effect only if additional sureties signed it, may, in jurisdictions where such instrument is held to take effect at once, maintain an action against such obligee for damages which he has suffered by reason of the breach of such agreement.* §597. Contracts under seal delivered to obligee in escrow. In case of sealed contracts and other instruments under seal the weight of authority is that they can not be delivered in escrow to the obligee unless the condition of such delivery appears upon the face of the instrument.^ Thus, by the weight of authority, a deed can not be delivered in escrow to the grantee, but such delivery takes effect at once." So a contract under seal takes effect at once upon delivery to the obligee, and can not be delivered to him in escrow.^ If a sealed instru- 35; citing Stewart v. Anderson, 59 for in traditionibus chartarum non Ind. 375. quod dictum sed quod factum, est 3 Scott V. Bank, 9 Ark. 36; Dils inspieitur." Shep. Touch., 59 quot- V. Bank, 109 Ky. 757; 60 S. W. ed in Ordinary v. Thatcher, 41 N. J. 715; Hubble v. Murphy, 1 Duv. L. 403, 407; 32 Am. Rep. 225. (Ky.) 278; Hurt v. Ford, 142 Mo. 2 Blewett v. Ry., 51 Fed. 625; 283; 41 L. R. A. 823; 44 S. W. 228; affirming 49 Fed. 126; Darling v. Henshaw v. Button, 59 Mo. 139. Butler, 45 Fed. 332; 10 L. R. A. 4 Bond, Hudspeth's Administrator 469 ; Haworth v. Norris, 28 Fla. V. Tyler, 108 Ky. 520; 56 S. W. 973; 763; 10 So. 18; McCann v. Ather- Note, Dils V. Bank, 109 Ky. 757; 60 ton, 106 111. 31; McGee v. Allison, S. W. 715. 94 la. 527; 63 N. W. 322; Dyer 1 Newman v. Baker, 10 App. D. v. Shadan, 128 Mich. 348; 92 Am. C. 187. "If I seal my deed and St. Rep. 461; 87 N. W. 277; Wor- deliver it to the party himself to rail v. Munn, 5 N. Y. 229, 238; 55 whom it is made as an escrow upon Am. Dec. 330; Miller v. Fletcher, 27 certain conditions, etc., in this case Gratt. (Va.) 403; 21 Am. Rep. 356. let the form of words be what it s Reed v. Latham, 1 Ark. 66 ; will, the delivery is absolute and Ryan v. Cooke, 172 111. 302; 50 N. the deed shall take effect as his E. 213; Pickett v. Green, 120 Ind. deed presently and the party is not 584; 22 N. E. 737; Ordinary v. bound to perform the conditions; Thatcher, 41 N. J. L. 403; 32 Am. 920 PAGE ON COTSTRaCItS. meiit shows upon its face thai the parties ?^,gniiig w at** to he bound only in ease additional parties signed, delivery to the obligee does not make the instrument operative iznti] such addi- tional parties sign.* Thus a deed shov^'ing on its face that it is to be signed by husband and wife, but which is signed by the husband alone and is then delivered to the attorney of the grantee to take effect when the wife signs, is ineffective till then.^ The courts are not unanimous as to what shows on its face that a sealed instrument is incomplete. The fact that the body of the instrument contains the names of persons who have not signed the instrument, when it is delivered, has been held not of itself to show that the signatures of those who execute the instrument are not to take effect until such addi- tional parties signed it.® Even in Case of sealed instruments, however, it may always be shown that a surrender of the actual custody of the instrument is not done with the intent of putting it into effect, but for some other purpose. Thus, handing a deed before proper acknowledgment by the grantor to grantee so that his lawyer can examine it,^ or handing a deed to grantee to put in the grantor's box at the bank,^ or to hold as grantor's agent, subject to his orders,'' does not amount to a delivery. So the obligor under a sealed instrument may show that the instrument was taken from his possession surreptitiously.^" III. Effect of Reducing Contract to Writing. §598. What constitutes the terms of a written contract. In discussion of the question of what may constitute the terms of a written contract of this class we find even greater Rep. 225; Easton v. Driscoll, 18 R. 67 Am. St. Rep. 860; 74 N. W. I. 318; 27 Atl. 445. 778. 4 Sullivan County v. Ruth, 106 » Hayes v. Boylan, 141 111. 400; Tenn. 85; 59 S. W. 138. 33 Am. St. Rep. 326; 30 N. E. 5 Shelby v. Tardy, 84 Ala. 327; 1041. 4 So. 276. 9 Wilson v. Wilson. 158 111. 567; 6 Ordinary v. Thatcher, 41 N. J. 49 Am. St. Rep. 176; 41 N. E. 1007. L. 403; 32 Am. Rep. 225. lo Southern, etc.. Co. v. Cole, 4 7 Curry v. Colburn, 99 Wis. 319; Fla. 350; Black v. Shreve, 13 N. J. Eq. 455. WRITTEN SIMPLE CONTRACTS. 921 difficulty than usual in separating one topic from its context of allied topics. Any such division is in its nature more or less arbitrary, yet for ployment which lasts three and a half years, is not within the statute f nor is a contract for one year's employment brought with the statute by a vague promise to pay a better salary for the ensuing year if possible/ So a contract is not within the statute if by its terms the parties con- template performance within the year, but add extra time for emergencies, and so exceed the year.^ §669. Contracts to be performed on one side within the year. In most jurisdictions it is held that the statute has no applica- tion to a contract which is to be performed on one side within the year and on fhe other side not within the year.^ Some juris- 622; 24 N, W. 638; Warren, etc., Co. v.Holbrook, 118 N. Y. 586; 16 Am. St. Rep. 788; 23 N. E. 908; Moore v. Fox, 10 Johns. (N. Y.) 244; 6 Am. Dec. 338; Walker v. R. R., 26 S. C. 80; 1 S. E. 366; Long Mfg. Co. V. Gray, 13 Tex. Civ. App. 172; 35 S. W. 32. "In order to bring a case within the operation of the statute of frauds, there must be an express and specific stijiulation in the contract that it is not to be per- formed within the year, or it must appear therefrom that it was not the intention of the parties that the agreement should be performed within that period." Powder River Livestock Co, v. Lamb, 38 Neb. 339, 348; 56 N. W. 1019. sWoodall V. Mfg. Co., 9 Colo. App. 198; 48 Pae. 670; Russell v. Slade, 12 Conn. 455; Wiggins v. Keizer, 6 Tnd. 252; Aiken v. Nogle, 47 Kan. 96; 27 Pac. 825; Cole v. Singerly. 60 Md. 348; Reynolds v. Bank, 62 Neb. 747; 87 N. W. 912; Powder River Livestock Co. v. Lamb, 38 Neb. 339; 56 N. W. 1019; War- ren, etc., Co. V. Holbrook, 118 N. Y. 586; 10 Am. St. Rep. 788; 23 N. E. 908; Kent v. Kent, 62 N. Y. 560; 20 Am. Rep. 502. 6Kiene v. Shaeffing, 33 Neb. 21; 49 N. W. 773. 7 Woodall V. Mfg. Co., 9 Colo. App. 198; 48 Pac. 670. 8 Jones V. Pouch, 41 O. S. 146. 1 Miles V. New Zealand, etc., Co., 32 Ch. Div. 266; Donellan v. Read, 3 Barn. & Adol. 899; Trimble v. Lanktree, 25 Ont. 109; McDonald v. Crosby, 192 111. 283; 61 N. E. 505; Lowman v. Sheets, 124 Ind. 416; 7 L. R. A. 784; 24 N. E. 351; Hough- ton V. Houghton, 14 Ind. 505; 77 Am. Dec. 69; Smalley v. Greene, 52 la. 241; 35 Am. Rep. 267; 3 N, W. 78 ; Mackey v. Thisler, 7 Kan. App. 276; 53 Pac. 767; McDowell v. Mil- ler, 1 Kan. App. 660; 42 Pac. 402; Dant V. Head, 90 Ky. 255; 29 Am. St. Rep. 369; 13 S. W. 1073; Bot- kin V. Land Co. (Ky.), 66 S. W. 747; Langan v. Iverson, 78 Minn. 299; 80 N. W. 1051; Blanding v. Sargent, 33 N. H. 239 ; 66 Am. Dec. 720; Durfee v. O'Brien, 16 R. I. 213; 14 Atl. 857 ; Sheehy v. Adarene, 41 Vt. 541; 98 Am Dec. 623; Grace V. Lynch, 80 Wis. 166; 49 N. W. 1006 PAGE ON CONTBACTS. dictions hold that such contracts are within the statute of frauds." Their view seems to be correct on sound principle, though overborne bj weight of authority. The courts that hold such contracts are not within the statute seem to have confused the right to recover property parted with under an unenforce- able contract with the right to enforce the contract.^ x\mong the cases held not to be within the statute because performance on one side is to be made within the year, are the following: A contract whereby A delivers to B a certain number of sheep, and B agrees to deliver back double the number at a time longer than one year from the making of the contract ;^ a contract whereby A conveys a lease and a trade-mark to B, and B agrees to pay one hundred dollars a year for eight years in consideration of the trade-mark,^ a contract whereby a grantee assumes and agrees to pay a debt of grantor not due for more than a year; an oral promise to indemnify against liability on a bond which is to take effect in the future and continue in force a year;'' a contract to repay, 751; Washburn v. Dosch, 68 Wis. 436; 60 Am. Rep. 873; 32 N. W. 551; Treat v. Hiles, 68 Wis. 344; 60 Am. Rep. 858; 32 N. W. 517; McClelland v. Sanford, 26 Wis. 595. This rule was laid down in England in Donellan v. Read, 3 B. & A. 899, was doubted in Sduch v. Straw- bridge, 2 M. G. & S. 808, was never- theless followed in Cherry v. Hem- ing, 4 Exch. 631, and was criticised but held to be too firmly settled to be overthrown in Miles v. New Zea- land, etc., Co., 32 L. R. Ch. D. 266. See the historical discussion of the doctrine in Kendall v. Garneau, in which after summing up the history of the doctrine in England and America the court held that the Nebraska legislature, in adopting the statute, adopted the English rule as a settled principle of construc- tion, saying: "We here adopt the English rule, not as being a correct construction of their statvite, but because we are convinced that in the light of history it is the construc- tion which our legislature intended should be adopted." Kendall v. Garneau, 55 Neb. 403, 408; 75 N. W. 852. 2Marcy v. Marcy, 9 All. (Mass.) 8 ; Pierce v. Pierce, 28 Vt. 34. 3 See § 749 et seq. 4 Trimble v. Lanktree, 25 Ont. 109; Contra, Dietrich v. Hoefel- meier, 128 Mich. 145; 87 N. W 111. sDant V. Head, 90 Ky. 255; 29 Am. St. Rep. 369; 13 S. W. 1073. 6 Reynolds v. Bank, 62 Neb. 747 ; 87 N. W. 912; Langdan v. Iverson, 78 Minn. 299; 80 N. W. 1051; Ken- dall V. Garneau, 55 Neb. 403 ; 75 N. W. 852. But an agreement to pay " at its maturity " a note due in more than one year is within the statute, even if the maker or guaran- tor might by exercising an option to CONTKACTS WHICH MUST BE PROVED BY WEITING. 1007 at an interval of time greater than a year, money already borrowed/ and a contract of subscription to corporate stock which passes title at once, though payment is not to be completed or the certificate to issue for more than one year.^ A contract to execute an instrument within the year, which will, when executed, affect the rights of the parties for a period longer than a year, has been held not within this clause of the statute; such as an oral agreement to execute a written lease for the term of three years, within- seven months,® or to dismiss a suit and execute a new contract extending payment for five years/" §670. Contracts to last a year from a future date. A contract which is to last for a year from the time that performance begins, and the performance of which is to begin at a day subsequent to the day on which it is made, is not a contract which can be performed within a year from the date of the making thereof, and accordingly is within this clause of the statute.^ Thus a contract of employment for a year to begin in the future," an oral agreement to lease property for pay before maturity pay the note 156; 79 Am. St. Rep. 36; 49 L. R. within the year. McKeany v. Black, A. 141 ; 60 Pac. 764; Cooney v. Mur- 117 Cal. 587; 49 Pac. 710. ray, 45 111. App. 463; Holloway v. 7 Fernald V. Oilman, 123 Fed. 797 ; Hampton, 4 B. Mon. (Ky.) 415; McDonald v. Crosby, 192 111. 283; Frary v. Sterling, 99 Mass. 461; 61 N. E. 505. Reynolds v. Bank, 62 Xeb. 747; 87 8 Reed v. Gold, — Va. — ; 45 S. N. W. 912. E. 868. 2 Strong v. Bent, 31 X. S. 1; 9 Eaton V. Whitaker, 18 Conn. Meyer v. Roberts, 46 Ark. 80; 55 222; 44 Am. Dec. 586. (The court Am. Rep. 567; Fish v. Glass, 54 111. suggested that a contract to convey App. 655; Caldwell v. Huntington, the fee in seven months was capable 132 Ind. 92; 31 X. E. 566; Shumate of performance in less than a year, v. Farlow, 125 Ind. 359; 9 L. R. A. hence a contract to lease for three 657; 25 X. E. 432; Clark Covmty v. years must be.) Howell, 21 Ind. App. 495; 52 X. E. 10 Julian v. Bauer, 82 111. App. 769 ; Kleeman v. Collins, 9 Bush. 157 (citing Peter v. Compton, (Ky.) 460; Davis v. Ins. Co.. 127 Skinner 353; 1 Smith. Lead. Cas. Mich. 559; 86 X. W. 1021; Lally v. 351 [marginal paging]; Walker v. Lumber Co., 85 Minn. 257 ; 88 X. W. Johnson. 96 U. S. 424). 846: Kansas City, etc., Ry. v. Con- iWiekson v. Mfg. Co., 128 Cal. lee, 43 Xeb. 121 ; 61 X. W. Ill; 1008 PAGE ON CONTRACTS. a year, to begin in the future/ or a promise to abstain from a certain business for a year, to begin in the future,* are all Avithin this clause of the statute. If the statute specifically authorizes an oral lease for a term not longer than one year, an oral lease for one year, to begin in the future, is valid.^ However, an oral agreement made in March, to leave ice in an ice-house on the expiration of the renewed lease thereof, a year from the first of April thereafter, has been held not within the statute, since the ice must be put in during the season for ice-cutting, which ends within a year from the time of making the contract.^ §671. Computation of the year. If any appreciable interval of time is to intervene between the making of the contract and the time of performance, no matter how slight, and the contract is by its terms not to be performed until at least a year from the time that performance Jellett V. Rhode, 43 Minn. 166; 7 L. R. A. 671; 45 N. W. 13; Sutcliffe v. Atlantic Mills, 13 R. I. 480; 43 Am. Rep. 39; Hillhouse v. Jennings, 60 S. C. 373; 38 S. E. 599; Mendelsohn V. Banov, 57 S. C. 147; 35 S. E. 499 ; Duckett v. Pool, 33 S. C. 238 ; 11 S. E. 689; Moody v. Jones (Tex. Civ. App.), 37 S. W. 379; Lee v. Hill, 87 Va. 497; 24 Am. St. Rep. 666; 12 S. E. 1052; Draheim v. Evi- son, 112 Wis. 27; 87 N. W. 795. The view taken in the above cases, holding that a contract of employ- ment may be within the statute of frauds, seems inconsistent with that taken by the cases cited elsewhere (see § 676) that such contracts are not within the statute since they are discharged by the death of either party. 3 Bain v. McDonald. Ill Ala. 269; 20 So. 77; Wickson v. Mfg. Co., 128 Cal. 156; 79 Am. St. Rep. 36; 49 L. R. A. 141; 60 Pac. 764; Comstock v. Ward, 22 111. 248; Thomas v. Mc- manus (Ky.), 64 S. W. 446; Hitt V. Greeser, 71 Mo. App. 206; White V. Holland, 17 Or. 3; 3 Pac. 373. Contra, Higgins v. Gager, 65 Ark. 604; 47 S. W. 848; Whiting v. Ohlert, 52 Mich. 462; 50 Am. Rep. 265; 18 N. W. 219; McCroy v, Toney, 66 Miss. 233 ; 2 L. R. A. 847 ; 5 So. 392. 4 Higgins V. Gager, 65 Ark. 604; 47 S. W. 848. 5 Hayes v. Arrington, 108 Tenn. 494; 68 S. W. 44. 6 Brown v. Throop, 59 Conn. 596 ; 13 L. R. A. 646; 22 Atl. 436. (While this was probably the per- foi'mance intended, it was not that contracted for. It made no differ- ence where the ice came from if it was left in the ice house when the lease expired. The court upheld the- contract by a strained construction.) CONTEACTS WHICH MUST BE PROVED BY WRITING. 1009 begins, the statute applies/ Thus in a contract to last for a year from the time that performance begins an interval of two,^ three/ seven* or twelve^ days, or of one,*' two,' or three^ months, brings the contract within this clause of the statute." A con- tract to last a year, commencing with the date of the contract, is not within this clause of the statute. A contract to last a year beginning on the day after the making of the contract is not within the statute, since by the rules controlling compu- tation of time, the day on which the contract is made must be excluded in computing the year.^° In order to come within the statute, the contracts must by its terms definitely postpone performance to a future date. If performance may or may not begin at once, or if by subsequent agreement jierformance is postponed, but the original contract contemplated that perform- ance would begin at once, the contract is not within the statute.^^ A contract to keep books for a year, and to work for one month to see if both parties will be satisfied, is a contract the perform- ance of which may begin on the date of the contract and last for one year, and is not, therefore, within the statute. ^^ A con- tract by A to work for B for one year, to begin as soon as A is released by his present employer, is one of which the per- formance may begin at once, and is not, therefore, within the statute, though six days elapsed in fact before performance iWickson v. Mfg. Co., 128 Cal. St. Rep. 666; 12 S. E. 1052. 156; 79 Am. St. Rep. 36; 49 L. R. 8 Mendelsohn v. Banov, 57 S. C. A. 141 ; 60 Pac. 764 ; Mendelsohn v. 147 ; 35 S. E. 499. Banov, 57 S. C. 147 ; 35 S. E. 499. 9 Aiken v. Nogle, 47 Kan. 96 ; 27 2 Reynolds v. Bank, 62 Neb. 747; Pac. 825; Sanborn v. Ins. Co., 16 87 N. W. 912. Gray (Mass.) 448; 77 Am. Dec. 3Wickson v. Mfg. Co., 128 Cal. 419. 156; 79 Am. St. Rep. 36; 49 L. R. lo Britain v. Rossiter, 11 Q. B. A. 141; 60 Pac. 764. Div. 123; Dickson v. Frisbee, 52 4 Davis V. Ins. Co., 127 Mich. 559; Ala. 165; 23 Am. Rep. 565; citing 86 N. W. 1021; Sutcliffe V. Atlantic and following, Cawthorne v. Cor- Mills. 13 R. I. 480; 43 Am. Rep. drey. 13 C. B. X. S. 406. Contra, 39. ]\IcElroy v. Ludlum, 32 N. J. Eq. 5 Kansas City, etc., Ry. v. Con- 828. lee, 43 Neb. 121; 61 N. W. 111. n Baltimore Breweries Co. v. Cal- eDraheim v. Evison, 112 Wis. 27; lahan, 82 Md. 106; 33 Atl. 460. 87 N. W. 795. 12 A. B. Smith Co. v. Jones, 75 7 Lee V. Hill, 87 Va. 497; 24 Am. Miss. 325; 22 So, 802. 64 1010 PAGE ON CONTRACTS. began,''^ So, if the original contract requires performanCO within the year, a subsequent oral modification extending the time of performance more than a year from the date of the original contract, but less than a year from the date of the oral modification, does not bring the contract within the statute/* The " making thereof " from which time the year is to be computed is the moment when the contract comes into existence, and not the time fixed for performance to begin on the one hand,^^ nor the time at which the first offer was made on the other/'' Thus where certain promoters of a corporation as- sumed to make a contract on its behalf before it was formed, and the corporation adopted the contract after it was formed, the date of the adoption of the contract is the date from which the year is to be computed/^ A contract for a year's employ- ment, to begin in the future, is within the statute, although payment therefor is to be made in monthly installments/^ §672. Contracts which cannot he performed within the year. A contract which for its performance requires payment of money or delivery of property at intervals extending over a year from the date of making the contract is within the statute.*" Thus a promise to pay money in thirteen" or in fourteen' months ; to pay one hundred dollars a year for four years ;* to pay money annually during the life of a contract for ten years ;* to repay the money paid for a patent-right in three years, if the profits during that time do not equal the purchase price;® to 13 Baltimore Breweries Co. v. Cal- is Kansas City, etc., Ry. v. Conlee, lahan, 82 Md. 106; 33 Atl. 460. (In 43 Neb. 121; 61 N. W. 111. this case the writing was held suf- i Jackson Iron Co. v. Concentrat- fieient to satisfy the statute.) ing Co., 65 Fed. 298; 12 C. C. A. 14 Ward V. Matthews, 73 Cal. 13; 636; De Montague v. Bacharach, 14 Pac. 604. 181 Mass. 256; 63 N. E. 435. 15 Blake v. Voigt, 134 N. Y. 69 ; 2 Cowles v. Warner, 22 Minn. 449. 30 Am. St. Rep. 622; 31 N. E. 256. 3 Tierman v. Granger, 65 111, 351. 16 McArthur v. Printing Co., 48 4 Parks v. Francis, 50 Vt, 626 ; 28 Minn. 319; 31 'Am. St. Rep. 653; 51 Am. Rep. 517. N. W. 216. 5 Jackson Iron Co. v. Concentrat- 17 McArthur v. Printing Co.. 48 ing Co., 65 Fed. 298; 12 C. C. A. 636. Minn. 319; 31 Am. St Rep. 653; c Lapham v. Whipple. 8 Met. 51 N. W, 216. (Mass.) 59; 41 Am. Dec. 487. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1011 extend a note for five years ;'' to deliver personal property during two years/ or at the end of four years ;^ or to make exclusive use of a patent-right for seventeen years ;^" to give an exclusive right to carry passengers from a certain wharf for three years f^ a contract between the holder of certain overdue notes and the guarantor thereof that if the holder will foreclose the mortgage securing the notes and buy in the property, the guarantor will pay the amount due on the notes and the cost of foreclosure, if by the end of the period allowed for redemption after the sale, the debt is not paid and the property redeemed, where the redemption period is such as to postpone performance beyond the year f^ a contract of employment for five years f^ and a con- tract to operate a telephone line for twenty years ;^^ are all con- tracts which fall within this clause of the statute. So a contract to advance money and supplies necessary to produce successive crops will,. in the course of nature, extend over more than one year and is within the statute.^^ §673. Contracts to be performed within a given time. A contract by its terms to be performed " inside of a year " is clearly not within the statute.^ If the time within which joerformance may be made is longer than one year, the principles applied to this subject by most courts would exclude such a contract from the statute, since by its terms it may be performed within the year. Some courts so hold," though some courts take 7 Morgan v. Wickliffe, 110 Ky. loBulil v. Stevens, 84 Fed. 922. 215; 61 S. W, 13; rehearing denied, n Green v. Steel Co., 75 Md. 109; 61 S. W. 1017. 23 Atl. 139. sKelley v. Thompson, 175 Mass. izVeazie v, Morse, 67 Minn. 100; 427; 56 N. K 713. (A promise to 69 N. W. 637. deliver milk at a reduced price, to is Peck v. Machine Co., 196 111. apply on a note due in two years, 295; 63 X. E. 731; Hanson v. Gun- application to be made when note is derson, 95 Wis. 613; 70 X. W. 827. due.) 14 Bastin Telephone Co. v. Tele- 9 Dietrich v. Hoefelmeir, 128 phone Co., — Ky. — ; 77 S. W. 702. Mich, 145; 87 N. W. 111. (A prom- is Eikelman v. Perdew, 140 Cal. ise by A to deliver to B a certain 687: 74 Pac. 291. number of sheep, and by B to re- i Denn v. Peters. 36 Or. 486 ; 59 deliver to A twice that number in Pac. 1109. four years.) 2 Lewis v. Tapman, 90 Md. 294; 1012 ' PAGE ON CONTKACTS. the opposite view.^ A contract made on !N"ovember fourteenth to charter a tug for the ensuing season was held not within the statute, where the season began April first and ended December fifth.'' §674. Time of performance indefinite — may occur within the year. Contracts for the jierformance of which no time is fixed, and which from their subject-matter admit of performance within the year, are not within this clause of the statute,^ even if it is probable that the contract will be performed after the year." Thus a contract to furnish goods to a new corporation ex- clusively, no time being specified,^ or a contract to marry in the future, no time being fixed,'* even if the parties may not antici- pate marriage within the year,^ as where the marriage is to take place when promisor recovers his health,^ are not within the statute. So a contract in the fall of one year to raise and divide a crop of tobacco during the season of the following year;'^ a contract made on June 5, 1883, to furnish material for four buildings, three of them to be erected in the season of 1883 and the fourth in the season of 1884 f and a contract made 47 L. R. A. 385; 45 Atl. 459 (a 210; Hintze v. Krabbenschmidt contract to many "within three (Tex. Civ. App.), 44 S. W. 38. years"); Kent v. Kent, 18 Pick. sMcConahey v. Griffey, 82 la. (Mass.) 569. 564; 48 N. W. 983; MacElree v. 3 Mills V. O'Daniel (Ky.), 62 S. Wolfersberger, 59 Kan. 105; 52 W. 1123. (A contract to accept a Pac. 69; Durgin v. Smith, 115 certain sum in full if paid "within Mich. 239; 73 N. W. 361. two years " held within the statute.) 3 Durgin v. Smith, 115 Mich. 239; 4De Land v. Hall, — Mich. — ; 73 N. W. 361. 96 X. W. 449. 4 Clark v. Reese, 26 Tex. Civ. App. iDevalinger v. Maxwell, — Del. 610; 64 S. W. 783. — ; 54 Atl. 684; Vocke v. Peters, 5 MacElree v. Wolfersberger, 59 58 111. App. 338; Sprague v. Ben- Kan. 105; 52 Pac. 69. son, 101 la. 678 ; 70 N. W. 731 ; Fain e McConahey v. Griffey, 82 la. V. Turner, 96 Ky. 634; 29 S. W. 564; 48 N. W. 983. 628; Neal v. Parker, — Md. — ; 57 7 Burden v. Lucas (Ky.), 44 S. Atl. 213; Durgin v. Smith, 115 W. 86. Mich. 239; 73 N. W. 361; Gault v. s Sarles v. Sharlow, 5 Dak. 100; Brown, 48 N. H. 183; 2 Am. Rep. 37 N. W. 748. CONTRACTS WHICH MUST BE PEOVED BY WRITING. 1013 in October, 1886, for the delivery of a quantity of corn, at a price to be fixed as the market price of corn in that county at any date that vendor chooses between the date of delivery and May, 1888,'' are all contracts which may be performed within a year from the date of making. So a contract to construct a street if the adversary party buy a lot and build on it, is not within the statute, as it may be performed within the year." §675. Performance on happening of uncertain event which may occur within the year. If the contract provides for performance upon the happening of some event which may or may not take place within the year, such contract is not within the statute. Thus a contract to be performed on the sale of certain property, such as paying com- missions,^ or to divide profits,^ as on the winding-up of a business,^ or a contract to construct a railroad,'* or to hold property until reimbursed out of the profits for certain improvements,^ or to continue " until I have made the net profit of $.50,000,"® are none of them within the statute of frauds. So a contract of employment to last as long as the employee does faithful and honest work,'^ or as long as his 9 Powder River Livestock Co. v. Gregor v, McGregor, 21 Q. B. Div. Lamb, 38 Neb. .3.39; 56 N. W. 1019. 424.) Jackson v. Higgins, 70 N. H. 10 Drew v. Wiswall, 183 Mass. 637; 49 Atl. 574. 554; 67 N. E. 666. 2 Durham v. Hiatt, 127 Ind. 514; . 1 Bartlett v. Mystic River Cor- 26 N. E. 401 ; Jordan v. Miller, 75 poration, 151 Mass. 433; 24 N. E. Va. 442. So of a contract to buy 780; Scribner v. Mfg. Co., 175 and operate a quarry and divide the Mass. 536; 56 N. E. 603. (Citing profits. Treat v. Hiles, 68 Wis. 344 ; Peters v. Inhabitants of Westboro. 60 Am. Rep. 858; 32 N. W. 517. 19 Pick. 364; Lyon v. King, 11 3 Qsment v. McElrath, 68 Cal. Mete. 411; 45 Am. Dec. 219; Doyle 466; 58 Am. Rep. 17; 9 Pae. 731. V. Dixon, 97 Mass. 208 ; 93 Am. * Burns v. Chisholm, 32 N. B. 588. Dec. 80; Somerby v. Buntin. 118 s Dailey v. Cain (Ky.), 13 S. W. Mass. 279; 19 Am. Rep. 459; Bart- 424. lett V. River Corp., 151 Mass. 433; 6 Hodges v. Mfg. Co.. 9 R. I. 482. 24 N. E. 780; Carnig v. Carr, 167 7 Louisville, etc., R. R. v. Offutt, Mass. 544; 57 Am. St. Rep. 488; 35 99 Ky. 427; 59 Am. St. Rep. 467; L. R. A. 512; 46 N. E. 117; Mc- 36 S. W. 181. 1014 PAGE ON CONTRACTS. services are satisfactory/ or as long as both parties are " mu- tually satisfied/"* or as long as the employee wishes to work/" or as long as the employer continues in business/^ is not within the statute. So a contract to occupy land until the lessor should demand possession^" or should get another tenant/^ or a contract to marry when promisor regains his health/* or to buy a note, j)ayable in five years, from the payee if she should marry and need the money before it came due,^^ are none of them within this clanse of the statute. So a contract to be performed when certain stock is issued by a corporation is not within the stat- ute.^*' §676. Contracts to be performed during life. Human life is uncertain and any person alive at a given time may die within a year from that time. On this principle a contract which by its terms is not to be performed for a longer period than during the life of a given person is held not to be within this clause of the statute.^ Thus a contract to support one for life,^ or to perform services for the life, either of the 8 Sax V. R. R., 125 Mich. 252; 84 Am. St. Rep. 572; 84 N. W. 314; Harrington v. Ry., 60 Mo. App. 223. 9 Greene v. Harris, 9 R. I. 401. 10 Carter White Lead Co. v. Kin- lin, 47 Neb. 409 ; 66 N. W. 536 ; East Line, etc., R. R. v. Scott, 72 Tex. 70; 13 Am. St. Rep. 758; 10 S. W. 99. 11 Yellow Poplar Lumber Co. v. Rule, 106 Ky. 455; 50 S. W. 685; Carter ^^^^ite Lead Co. v. Kinlin, 47 ^"eb. 409 ; 66 N. W. 536. 12 Hintze v. Krabbensehmidt ( Tex. Civ. App.), 44 S. W. 38. 13 Drew V. Billings-Drew Co., — Mich. — ; 92 N. W. 774. i4McConahey v. Griffey, 82 la. 564; 48 N. W. 983. 15 Hughes V. Frum, 41 W. Va. 445; 23 S. E. 604. 16 Gadsden v. Lance, 1 McMul- lan's Eq. (S. C.) 87; 37 Am. Dec. 548. 1 Wooldridge v. Stern, 42 Fed. 311 ; 9 L. R. A. 129; Haussman v. Burn- ham, 59 Conn. 117; 21 Am. St. Rep. 74; 22 Atl. 1065; Atchison, etc., R. R. V. English, 38 Kan. 110; 16 Pae. 82; Carr v. McCarthy, 70 Mich. 258; 38 N. W. 241; Weatherford, etc., Ry. V. Wood, 88 Tex. 191; 28 L. R. A. 526; 30 S. W. 859; Thomas v. Armstrong. 86 Va. 323; 5 L. R. A. 529; 10 S.E. 6. - Harper v. Harper, 57 Ind. 547 ; Bull V. McCrea, 8 B. Mon. (Ky.) 422; Stowers v. Hollis, 83 Ky. 544; Eiseman v. Schneider, 60 N. J. L. 291; 37 Atl. 623. (Citing Peter v. Compton, Skinner 353 ; 1 Smith Lead. Cas. 351 ; Kind v. Hanna, 9 B. Mon. 369; Sword v. Keith. 31 Mich. 247; McConahey v. Griffey, 82 Iowa 564: 48 N. W. 983; Hutchin- son V. Hutchinson, 46 Me. 154; Blanchard v. Weeks, 34 Vt. 589; CONTEACTS WHICH MUST BE PROVED BY WKITING. 1015 person rendering them^ or of the person for whose benefit they are to be rendered/ is not within this clause of the statute. Accordingly a contract for permanent employment is not within this clause of the statute.^ So a contract to furnish free trans- portation to one and his family for his life is not within the statute.® A contract to make a will is not within this clause of the statute, since it may be performed at once and must be performed, if at all, during the life of the promisor.'^ So a contract to pay money during the life of a given person is not within the statute.® So a contract to pay money at the death of a certain person is not within this clause of the statute,^ even if the promisor is the person at whose death the money is payable, and the law for the administration of estates will give his administrator more than a year in which to pay the money.^" So a contract not to compete in business,^^ or in the practice of a profession,^^ can be performed within the life of the prom- isor and is, therefore, not within the statute. If the contract, by its terms, is to last for more than a year it is within the Burney v. Ball, 24 Ga. 505; Hough- ton V. Houghton, 14 Ind. 505; 77 Am. Dec. 69; Bull v. McCrea, 8 B. Mon. (Ky.) 422; Howard v. Burgen, 4 Dana (Ky.) 137.) 3 Boggs V. Laundry Co., 86 Mo. App. 616. 4 Thomas v. Feese (Ky.), 51 S. W. 150; Smalley v. Mitchell, 110 Mich. 650; 68 N. W. 978; Updike v. Ten Broeck, 32 N. J. L. 105; Kent V. Kent, 62 N. Y. 560; 20 Am. Rep. 502. 5 Carnig v. Carr, 167 Mass. 544; 57 Am. St. Rep. 488; 35 L. R. A. 512; 46 N. E. 117. 6 Park V. Turnpike Co. (Ky.), 1 L. R. A. 198. 7 Bell V. Hewitt, 24 Ind. 280; Story V. Story (Ky.), 61 S. W. 279; rehearing denied, 62 S. W. 865; Thomas v. Feese (Ky.), 51 S. W. 150; Krell v. Codman, 154 Mass. 454; 26 Am. St. Rep. 260; 14 L. R. A. 860; 28 N. E. 578; Jilson v. Gilbert, 26 Wis. 637; 7 Am. Rep. 100. If realty is to pass by the will such contracts may come under another clause of the statute. See § 658. 8 Wiggins V. Keizer, 6 Ind. 252; Hutchinson v. Hutchinson, 46 Me. 154. 9 Kent V. Kent, 62 N. Y. 560; 20 Am. Rep. 502; Westropp v. West- ropp, 13 Ohio C. C. 244; 7 Ohio C. D. 14. 10 Westropp v. Westropp, 13 Ohio C. C. 244; 7 Ohio C. D. 14. 11 Dickey v. Dickinson, 105 Ky. 748; 88 Am. St. Rep. 337; 49 S. W. 761; Lyon v. King, 11 Met. (Mass.) 411; 45 "Am. Dec. 219; Zanturjian v. Boormazian, — R. I. — ; 55 Atl. 199. i2Blanchard v. Weeks, 34 Vt. 589. 1016 PAGE ON CONTRACTS. statute, even though the death of one party will operate a* a diseharge.^^ So it has been held that a contract of employment, if by its terms to last for more than a year, is within the statute even if subject to be discharged by the death of either party within the year.^* Thus an oral agreement by employee not to leave his employer's service for two years,^^ or an oral agree- ment that each of two partners shall pay half the wages of the employee for five years,^^ or a contract of apprenticeship,^^ which by their terms are for so long a period as to last more than a year from the date of the making thereof, are within this clause of the statute, even though the death of either party would discharge the contract. So a contract not to engage in business for a period of time greater than a year from the time of making the contract has been held to be within the statute.^^ There is, however, a divergence of authority upon this last proposition. The principle that a contract which must be performed during the life of a person in being is not within this clause of the statute, has been carried so far that many courts have held that a contract which by its terms was to last for a period of time gi'eater than the year was nevertheless not within this clause of the statute, if it was of such character that the death of one or both of the parties thereto would dis- charge liability thereunder.^® Thus a contract for personal services, which is discharged by the death of either party 13" If the death of the promisor derson, 95 Wis. 613; 70 N. W. 827. within the year would merely pre- is Bernier v. Mfg. Co., 71 Me. 506; vent full performance of the agree- 36 Am. Rep. 343. ment, it is within the statute; but is Hanson v. Gunderson, 95 Wis. if his death would leave the agree- 613; 70 N. W. 827. ment fully performed, and its pur- i7 Barrett v. .Riley, 42 111. App. pose fully carried out, it is not." 258; Baker v. Lauterback, 68 Md. Doyle V. Dixon, 97 Mass. 208, 212; 64; 11 Atl. 703. 93 Am. Dec. 80. is Self v. Cordell, 45 Mo. 345; "Bernier v, Mfg. Co., 71 Me. Gottschalk v. Witter, 25 O. S. 76. 506; 36 Am. Rep. 343; Hill v. Hoop- i9 Carnig v. Carr, 167 Mass. 544; er, 1 Gray (Mass.) 131; Wilkinson 57 Am. St. Rep. 488; 35 L. R. A. V. Heavenrich, 58 Mich. 574; 55 512; 46 N. E. 117; Weatherford, Am. Rep. 708; 26 X. W. 139; Milan etc., Ry. v. Wood. 88 Tex. 191; 28 V. Ry. (Tex. Civ. App.), 37 S. W. L. R. A. 526; 30 S. W. 859; Thomas 165; Miller v. Wisener, 45 W. Va. v. Armstrong. 86 Va. 323; 5 L. R. A. 59; 30 S. E. 237; Hanson v. Gun- 529; 10 S. E. 6. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1017 thereto,"" or a contract to support and educate a minor until lie comes of age,"^ or until his apprenticeship is ended," or a contract not to engage in a certain business, whether for a definite term of years'^ or for such period as the vendee of the business shall continue it,^* or for an indefinite period,"® or a contract to give annual passes to A and his family for ten years, and to stop trains at his house for that period,^" or a con- tract to keep a horse for a year from a future date, for the use of it,^^ or a contract to support a child till it reached a certain age, which event would occur more than a year after the contract was made,^^ are none of them within this clause of the statute. §677. Contract for fixed period greater than the year, but termin- able within the year. If a contract, by its terms, is to continue beyond the year from the date of the making thereof, but by a further provision may be discharged or performed by the happening of some 20 Hill V. Jamieson, 16 Ind. 125; 79 Am. Dec. 414; Pennsylvania Co. V. Dolan, 6 Ind. App. 109; 51 Am. St. Rep. 289; 32 N. E. 802; Sax v. E. R., 125 Mich. 252; 84 Am. St. Rep. 572; 84 N. W. 314; Smalley v. Mitchell, 110 Mich. 650; 68 N. W. 978. It is said that this principle applies whether the term of service is definite or indefinite. Hill v. Jamieson, 16 Ind. 125; 79 Am. Dec. 414; Pennsylvania Co. v. Dolan, 6 Ind. App. 109; 51 Am. St. Rep. 289; 32 N. E. 802; Sax v. Ry., 125 Mich. 252; 84 Am. St. Rep. 572; 84 N. W. 314. 2iWooldridge v. Stern, 42 Fed. 311; 9 L. R. A. 129; Peters v. West- borough, 19 Pick. (Mass.) 364; 31 Am. Dec. 142. 22 Myers v. Korb (Ky.), 50 S. W. 1108. 23 Doyle V. Dixon. 97 Mass. 208; 93 Am. Dec. 80; Erwin v. Hayden (Tex. Civ. App.), 43 S. W. 610. Contra, Higgins v. Gager, 65 Ark. 604; 47 S. W. 848. 24 Cotton V. Crawford (Ky.), 44 S. W. 954. 25 Hall V. Solomon, 61 Conn. 476; 29 Am. St. Rep. 218; 23 Atl. 876; Dickey v. Dickinson, 105 Ky. 748; 88 Am. St. Rep. 337; 49 S. W. 761; Carnig v. Carr, 167 Mass. 544; 57 Am. St. Rep. 488; 35 L. R. A. 512; 46 N. E. 117; Lyon v. King, 11 Met. (Mass.) 411; 45 Am. Dec. 219; Worthy v. Jones, 11 Gray (Mass.) 168; 71 Am. Dec. 696; Blanchard v. Weeks, 34 Vt. 589. 26 Weatherford, etc., Ry. v. Wood, 88 Tex. 191; 28 L. R. A. 526; 30 S. W. 859; affirming, 29 S. W. 411. 27 Martin v. Batchelder, 69 N. H. 360; 41 Atl. 83 (since the horse may die within the year from the date of making the contract) . 28Wilhelm v. Hardman, 13 Md. 140; Peters ^ V. Westborongh, 19 Pick. (Mass.) 364; 31 Am. Dec. 142. 1018 PAGE ON CONTRACTS. event before the end of tlie year, the weight of authority is that such contract is not within the statute of frauds, even if such contingency is not probable/ Thus a contract to last one year from a future date, but subject to be terminated at the option of either party within a year from the date of making such contract," or one to last ninety-nine years, subject to be term- inated at any time on three months' notice if the business should prove unprofitable f or one to last " five years, or so long as A shall continue to be agent of " a given corporation ;* or one to last " five years, or as long as A should continue in business,"^ are none of them within this clause of the statute. Such con- tracts are held by some courts to be within this clause of the statute.^ §678. Performance on happening of uncertain event which can- not reasonably happen within the year. If the time of performance is fixed only by reference to the happening of a future event which, in the ordinary course of nature, cannot happen inside of a year, the contract is within the statute. Thus a contract in the spring of one year to raise potatoes during the following year, and to deliver them f- or a contract to buy a colt when it is four^ or five^ months old, the contract being made when the period of gestation begins, and such period being so long that in the natural course of events 1 Johnston v. Bowersock, 62 Kan. Am. St. Rep. 622; 31 X. E. 256. 148; 61 Pac. 740; Standard Oil Co. 3 Johnston v. Bowersock, 62 Kan. V. Denton (Ky.), 70 S. W. 282; 148; 61 Pac. 740. Linscott V. Mclntire, 15 Me. 201; 4 Roberts v. Rockbottom Co., 7 33 Am. Dec. 602; Lyon v. King, 11 Met. (Mass.) 46. Met. (Mass.) 411; 45 Am. Dec. 219; s Standard Oil Co. v. Denton Peters v. Westborough, 19 Pick. (Ky.) , 70 S. W. 282. (Mass.) 364; 31 Am. Dec. 142; c Meyer v. Roberts, 46 Ark. 80; Blanding v. Sargent, 33 N. H. 239 ; 55 Am. Rep. 567. 66 Am. Dec. 720; Blake v. Voigt, i Pitkin v. Noyes, 48 N. H. 294; 134 N. Y. 69; 30 Am. St. Rep. 622; 97 Am. Dec. 615; citing Emery v. 31 N. E. 256; Lockwood v. Barnes, Smith, 46 N. H. 151. 3 Hill (N. Y.) 128; 38 Am. Dec. 2 Butler v. Shehan, 61 111. App. 620. 561. 2Estey V. Aldrich, 46 N. H. 127; 3 Groves v. Cook, 88 Ind. 169; 45 Blake v. Voigt, 134 N. Y. 60; 30 Am. Rep. 462. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1019 the addition of four or five months thereto would carry it be- yond the year are all held to be within this clause of the statute. Contracts which are intended by the parties as per- manent arrangements, but which may be discharged within the year by some change of circumstances, are held by many courts not to be within this clause of the statute. Thus a contract by a railway company to keep up a switch for one as long as he needs it ;* or to keep up cattle-guards on A's land as long as the railroad is operated over such land f or to pay half the expenses of erecting gates and maintaining a watch- man at the intersection of a steam railwa}^ and an electric railway,^ have none of them been held to be within this clause of the statute. The theory on which they are decided is that within the year the railway may change its location, go out of business, and the like, and thus discharge the contract. This reasoning is not followed by all the courts, however. Thus an oral agreement to stop cars permanently at a given point was held to be within the statute.^ A contract of insurance is generally held not to be within this clause of the statute of frauds,^ even if by its terms the insurance is to be in force for more than one year, as for three^ or five^" years. This rule rests on the theory that a loss may happen within the year, discharging the contract. If the contract of insurance is to be in force a year,^^ or is to be renewed from year to year,^" the 4 Warner v. Ry., 164 U. S. 418; 508; 52 Am. St. Rep. 902; 21 S. E. reversing, 54 Fed. 922; Sweet v. 854. Lumber Co., 56 Ark. 629; 20 S. W. 9 Sanford v. Ins. Co., 174 Mass. 514. 416; 75 Am. St. Rep. 358; 54 N. E. 5 Arkansas, etc., Ry. v. Whitley, 883. 54 Ark. 199; 11 L. R. .\. 621; 15 S. loWiebeler v. Ins. Co., 30 Minn. W. 465. 464; 16 N. W. 363. 6 Richmond, etc., Ry. v. R. R., n Howard Ins. Co. v. Owen, 94 96 Va. 670; 32 S. E. 787. Ky. 197; 21 S. W. 1037; Sanborn v. 7 Pitkin v.'R. R., 2 Barb. Ch. (N. Ins. Co., 16 Gray (Mass.) 448; 77 Y.) 221; 47 Am. Dec. 320. Am. Dec. 419. 8 Franklin v. Ins. Co., 20 Wall. 12 Phoenix Ins. Co. v. Ireland. 9 (U. S.) 560; Commercial Fire Ins. Kan. App. 644; 58 Pac. 1024; First Co. V. Morris, 105 Ala. 498; 18 So. Baptist Church v. Ins. Co., 19 N. 34; Emery v. Ins. Co., 138 Mass. Y. 305; s. c, 28 N. Y. 153. 398; Croft v. Ins. Co.. 40 W. Va. 1020 PAGE ON CONTRACTS. statute clearly lias no application. The courts are not unani^ mous on the foregoing propositions, however. The Massachu- setts, courts distinguish between contracts in which the happen- ing of the event within the year prevents full performance and those in which it leaves the contract fully perfornied.^^ Other authorities seem to make the same distinction, holding that discharge within the year, as distinguished from performance, does not keep the statute from applying to contracts whose per- formance is to be postponed beyond the year,^* VII. The Seventeenth Section of the Statute of Peauds. §679. The seventeenth section. The seventeenth section of the original statute of frauds provided : " And bee it further enacted by the authority afore- said that from and after the said fower and twentieth day of June noe contract for the sale of any goods, wares or merchan- dises for the price of ten pounds sterling or upwards, shall be allowed to be good, except the buyer shall accept part of the goods soe sold and actually receive the same or give something in earnest to bind the bargaine, or in part of payment, or that some note or memorandum in writing of the said bargaine be made and signed by the partyes to be charged by such contract or their agents thereunto lawfully authorized."^ This section has been substantially re-enacted in many of the states of the Union. Its effect upon contracts must therefore be considered in connection with the fourth section. §680. What is a " contract for sale." This section of the statute includes sale proper, that is. transfer of the title to personalty in consideration of a price in 13 See §676. 139; 22 Minn. 449; Blanding v. 14 Packet Co. v. Sickles, 5 Wall. Sargent. 33 N. H. 239. (U. S.) 580; Wilkinson v. Heaven- i English Statutes. Revised Edi- rieh, 58 Mich. 574; 55 Am. Rep. tion. (By authority) I, 777. 708; Cowles v. Warner, 26 N. W. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1021 monej.^ It also includes barter, or conveyance of the title to personalty in consideration of a conveyance, in return, of title to other personalty.^ A contract to transfer the title to certain goods in payment of an antecedent debt is held to be a sale within the meaning of this section.^ Other contracts for pay- ing a debt by transferring personalty have been held not to be within the statute. Thus a contract of employment by the terms of which the employee was to be paid partly in cash and partly in corporation stock is not a sale of such stock within the meaning of this section.* A contract which does not attempt to pass title to a chattel from one of the contracting parties to the other, or to provide for passing such title, is not a contract of sale. Thus a contract between a debtor and his attaching creditor, by which the creditor agrees to account to the debtor for the cost price of the goods sold, no matter what the selling price might be, and to credit him with all sums received on book accounts;^ or a contract between two judgment-creditors that the property should be sold on execution issued on one of the judgments,® are none of them within the statute. A contract to give a chattel mortgage has been held not to be within the statute.'^ So a contract to extend the time of pay- ing the mortgage debt, even after foreclosure, is not within 1 Stewart v. Cook, 118 Ga. 541; Pac. 914; Norwegian Plow Co. v. 45 S. E. 398. Hawthorn, 71 Wis. 529; 37 N. W. 2 Raymond v. Colton, 104 Fed. 825. Whether the agreement to ap- 219; 43 C. C. A. 501; Kuhns v. ply the price of the goods to the Gates, 92 Ind. 66; Dowling v. Mc- debt amounts to a part payment or Kenney, 124 Mass. 478 ; Gorman v. not is another question. See § 706. Brossard, 120 Mich. 611; 79 X. W. * Spinney v. Hill, 81 Minn. 316; 903; Harris Photographic Supply 84 N. W. 116. Co. V. Fisher, 81 Mich. 136; 45 K 5 Jacobs Sultan Co. v. Mercantile W. 661; Ash v. Aldrich, 67 N. H. Co., 17 Mont. 61; 42 Pac. 109; 581; 39 Atl. 442. 6 Mygatt v. Tarbell, 78 Wis. 351; 3 Norton v. Davison (1899), 1 Q. 47 N. W. 618. B. 401 ; Galbraith v. Holmes, 15 Ind. 7 Bates v. Wiggin, 37 Kan. 44 ; 1 App. 34; 43 N. E. 575; Gorman v. Am. St. Rep. 234; 14 Pac. 442; Brossard, 120 Mich. 611; 79 N. W. Sparks v. Wilson, 22 Neb. 112; 34= 903; Brabin v. Hyde, 32 N. Y. 519; N. W. 111. Milos V. Covacevich, 40 Or. 239; 66 1022 PAGE ON CONTEACTS. the statute.^ A clause in the original contract of sale provid- ing for a rescission of the contract npon the happening of some event, the original vendor agreeing to take back the goods and refund the purchase-money, is not a sale within this section." A subsequent rescission of an executed contract of sale has been held not to be a sale. Thus where A sold and delivered 1x) a firm of which he was a member, goods for which he was not paid, a subsequent oral contract of rescission as part of the contract of dissolution was held not within the statute.^" If, instead of a contract for rescission, the agreement is one for a re-sale- it is of course within the statute.^^ Executory contracts of sale, in which the title is not to pass till some future time, were held by the early English authori- ties not to be within the statute.^" This view has been aban- doned in England^^ and has never been entertained in the United States. The statute is held here to include executory contracts of sale as well as executed contracts.^* §681, Contract for work and labor. If the contract is essentially one for work and labor, and the title to personalty is not to pass as a result thereof, it is not within the statute. Thus a contract for publishing an ad- vertisement,^ or a contract to pay a commission to an agent for selling personal property, the amount to depend upon the price obtained,^ are not within the statute. This principle applies 8 Phelps V. Hendrick, 105 Mass. sary in deciding these cases, since 106. they may be as well explained by 9 Williams v. Burgess, 10 Ad. & E. treating them as contracts for work 499; Hilliard v. Weeks, 173 Mass. and labor. See § 681. 304; 53 N. E. 818; Johnston v. i3 Rondeau v. Wyatt, 2 H. Bl. 63. Trask, 116 N. Y. 136; 15 Am. St. i* Weeks v. Crie, 94 Me. 458; 80 Rep. 394; 5 L. R. A. 630; 22 N. E. Am. St. Rep. 410; 48 Atl. 107; Gil- 377; Fay v. Wheeler, 44 Vt. 292. man v. Hill, 36 N. H. 311; Carman 10 Dickinson V. Dickinson, 29 Conn. v. Smick, 15 N. J. L. 252; Ide v. 600. Stanton. 15 Vt. 685; 40 Am. Dec. 11 Boardman v. Cutter, 128 Mass. 698. 388. iGoodland v. Le Clair, 78 Wis. 12 Alexander v. Comber, 1 H. Bl. 176; 47 N. W. 268. 20; Clayton v. Andrews, 4 Burr. 2 Hamilton v. Frothingham, 59 2101. This principle was not neces- Mich. 253; 26 N". W. 486. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1023 where A agrees with B to buy goods from X and to divide them with B on being compensated therefor; but the courts are not harmonious in the results reached. If the contract is held to be essentially one of agency, in which A acts as B's agent, it is not within the statute,^ but if it is in effect a contract by A to buy and resell to B, it is within the statute.* §682. Contract of sale distinguished from contract for work and labor. It is often difficult to determine whether a contract is one for the sale of a chattel and so within the statute of frauds, or for work and labor, and so not within the statute. The courts do not agree as to the test for distinguishing these two classes of contracts. The following tests, different in form though not always differing in practical results, are the chief of those adopted by the courts: (1) According to some authorities if the goods to be delivered are not in existence, but are to be man- ufactured thereafter, the contract is not within the statute.^ (2) In some states it is held that if any work must be performed upon the chattel sold before delivery, to put it in a condition different from what it was when the contract of sale was made, the contract is not a contract of sale.^ So a contract to cut lumber and to deliver it, is not within the statute under this theory.^ By statute in some states, if " labor, skill or money, are necessarily to be expended in producing or procuring " the chattel to be delivered, the contract is not one of sale. As construed, this statute applies only where special skill or labor is necessary. Hence a sale of growing grain, to be harvested 3 Hatch V. McBrien, 83 Mich. 159; lard, 65 N. Y. 352; Crookshank v. 47 N. W. 214. Burrell, 18 Johns. (N. Y.) 58; 9 4 Mace V. Heath, 30 Neb. 620; 46 Am. Dec. 187. N. W. 918. sRentch v. Long, 27 :\Id. 188; 1 Warren Chemical, etc., Co. v. Eichelberger v. McCaiiley, 5 Harr. & Holbrook, 118 N. Y. 586; 16 Am. St. J. (Md.) 213; 9 Am. Dec. 514. Rep. 788 ; 23 N. E. 908 ; Higgins v. 3 Bagby v. Walker, 78 Md. 239 ; 27 Murray, 73 N. Y. 252; Cooke v. Mil- Atl. 1033. 1024 PAGE ON CONTRACTS. and threshed by vendor/ or a sale of corn, to be shelled and corn unfit for shelling to be thrown out/ or a sale of corn to be sorted and put in bags/ are all sales of chattels within such statute. (3) Another test applied by some courts is this: if, by the contract the vendor is to perform certain work person- ally, the contract is not one of sale,^ but if he can perform the contract by procuring the property to be delivered by him from such source as he pleases, the contract is one of sale.' (4) A still different test is the following: if the goods are to be manufactured upon a special order and of a particular de- sign, the contract is not one of sale/ while, if the goods to be manufactured are such as are manufactured in the ordinary course of the manufacturer's business, and are marketable, the contract is one of sale.^" A contract to manufacture an article " to order and as a thing distinguished from the general busi- ness of the maker " is said not to be a sale.^^ Thus a contract o manufacture iron-work for a building,^" or stone-work,^^ or ■*Mighell V. Dougherty, 86 la. «be; 41 Am. St. Rep. 511; 17 L. R. A. 755; 53 N. W. 402. 5 Lewis V. Evans, 108 la. 296; 79 N. W. 81. (Citing Downs v. Ross, 23 W.md. (N. Y.) 270; Hardell v. McClu^e, 1 Chand. (Wis.) 271; Brown v. Sanborn, 21 Minn. 402.) 6 Dieri^on v. Petersmeyer, 109 la. 233; 80 N. W. 389. 7 A co.ntraet for the sale of pota- toes to be raised in the future. Pit- kin V. Noyes, 48 N. H. 294; 2 Am. Rep. 218; 97 Am. Dec. 615. Contra, Forsyth v. Mann, 68 Vt. 116; 32 L. R. A. 788; 34 Atl. 481. sPrescott v. Locke, 51 N. H. 94; 12 Am. Rep. 55. 9 Goddard v. Binney, 115 Mass. 450; 15 Am. Rep. 112; Brown, etc., Co, V. Wunder, 64 Minn. 450; 32 L. R. A. 593; 67 X. W. 357; Hientz v. Burkhard, 29 Or. 55; 55 Am. St. Rep. 777; 31 L. R. A. 508; 43 Pac. 866; Puget Sound Machinery Depot V. Rigby, 13 Wash. 264; 43 Pac. 39; Goss V. Heekert, — Wis. — ; 97 N. W. 952. 10 Pratt V. Miller, 109 Mo. 78; .32 Am. St. Rep. 656; 18 S. W. 965; Williams-Hayward Shoe Co. v. Brooks, 9 Wyom. 424; 64 Pac. 342. See for other cases recognizing this test Flynn v. Dougherty. 91 Cal. 669; 14 L. R. A. 230; 27 Pac. 1080; Atwater v. Hough, 29 Conn. 508; 79 Am. Dec. 229; Lewis v. Evans, 108 la. 296; 79 N. W. 81; Abbott v. Gilchrist, 38 Me. 260 ; Mixer v. How- arth, 2fl Pick. (Mass.) 205; 32 Am, Dec. 256; Lamb v. Crafts, 12 Met. (Mass.) 353; Gardner v. Joy, 9 Met. (Mass.) 177; Meincke v. Talk, 55 Wis. 427; 42 Am. Rep. 722; 13 N. W. 545. 11 Finney v. Apgar, 31 N. J. L. 266. 270. 12 Hientz v. Burkhard, 29 Or. 55; 54 Am. St. Rep. 777; 31 L. R. A. 508; 43 Pac. 866. "Flynn v. Dougherty, 91 Cal. 669; 14 L. R. A. 230; 27 Pac. 1080. CONTEACTS WHICH MUST BE PROVED BY WRITIN^G. 1025 a contract to manufacture and erect a monument/* or to manu- facture lumber of special sizes, as for a narrow-gauge railroad,^^ or to manufacture hoe-shanks according to a pattern to be fur- nished by the party ordering them,^'' or to furnish and erect certain " patent portable houses,"^^ are each held not to be contracts for the sale of goods with the statute of frauds. On the other hand, a contract to deliver shoes to be made to order, but of a kind suitable for the general trade,^^ is a sale within the meaning of the statute. Where this distinction obtains a contract for an article to be made on special order, which will not be marketable when made, is not a sale of goods, though the manufacturer purchases most of the different parts of the article and puts them together.^* Where A agrees with B to order certain goods from X, to be made to order by him and delivered to A, who is to deliver them to B, some courts hold that the contract between A and B is a sale,"" while others hold that it is not." (5) The test finally adopted in England is that the intention of the parties controls, and if they intend the contract primarily to result in transferring the title of a chattel from one person to another, the contract is one of sale, no matter by whom or how the chattel is to be produced. Thus in the leading case adopting this test,^^ A made to order for B, two sets of false teeth to fit B's mouth. The contract was held to be a sale, though clearly the teeth were not marketable. 14 Forsyth v. Mann, 68 Vt. 116; v. Rigby, 13 Wash. 2G4; 43 Pac. 39. 82 L. R. A. 788; 34 Atl. 481; Fox 20 Smalley v. Hamblin, 170 Mass. V. Utter, 6 Wash. 299; 33 Pac. 354. 380; 49 K E. 626. This view was 15 Orman v. Hager, 3 N. M. 568 ; taken on the principle of Pitkin v. 9 Pac. 363. Noyes, 48 N, H. 294; 2 Am. Rep. 16 Eight V. Ripley, 19 Me. 137. 218; 97 Am. Dec. 615, that the per- 17 Phipps V. McFarlane, 3 Minn. sonal services of the adversary party 109 ; 74 Am, Dec. 743. were not contracted for ; but on the 18 Pratt V. Miller, 109 Mo. 78; 32 contrary, the work could be done by Am. St. Rep. 656; 18 S. W. 965; another. Williams - Hayward Shoe Co. v. 21 Bird v. Muhlinbrink, 1 Rich. L. Brooks, 9 Wyom. 424; 64 Pac. 342. (S. C.) 199; 44 Am. Dec. 247. 19 Puget Sound Machinery Depot 22 Lee v. Griffin, 1 B. & S. 272. 65 1026 PAGE ON CONTKACTS. g683. Contract to improve realty. A contract to attach property to realty and to furnish laLor for so doing is held not a contract for the sale of goods. Thus, contracts to erect a building/ a monument,^ a bridge/ or attach- ing stoking apparatus to boiler/ or setting up a steam-heating apparatus in a factory/ are none of them contracts of sale. This rule may be referred to the principle already given/ that if an article is to be made upon a special order and of a par- ticular design, the contract is not within the statute. §684. Meaning of "goods, wares and merchandise." — Incor- poreal personalty. Whether the term " goods, wares and merchandise " includes incorporeal personalty which passes by assignment or by deliv- ery of a written evidence thereof, such as notes, drafts, checks, bonds, stocks and the like, is a question on which there has always been a conflict. The English courts finally held that such forms of property were incapable of delivery and hence not within this section of the statute,^ and this view has been fol- lowed in some jurisdictions in the United States. Thus sub- scriptions to stock in a corporation,^ or a sale of an interest in a partnership,^ or a contract to sell a promissory note,* are none of them within the statute. In other jurisdictions incorporeal personalty is classed with " goods, wares and merchandise." 1 Flynn V. Dougherty, 91 Cal. 669 ; 25 R. I. 548; 56 Atl. 1033. 14 L. R. A. 230; 27 Pac. 1080; 6 See § 682, Brown, etc., Co. v. Wiinder, 64 Minn. i Humble v. Mitchell, 11 Ad. & E. 4.50; 32 L. R. A. 593; 67 N. W. 205.- 357 ; Scales v. Wiley, 68 Vt. 39 ; 33 2 Rogers v. Burr, 105 Ga. 432 ; Atl. 771. 70 Am. St. Rep. 50; 31 S. E. 438; 2 Forsyth v. Mann, 68 Vt. 116; Des Moines Savings Bank v. Hotel 32 L. R. A. 788; 34 Atl. 481; Fox Co., 88 la. 4; 55 N. W. 67; Webb V. Utter, 6 Wash. 299; 33 Pac. v. Ry., 77 Md. 92; 39 Am. St. Rep. 3.54. 396; 26 Atl. 113. 3 McDonald V. Webster's Estate, 71 3 Sherley v. Sherley, 97 Ky. 512; Vt. 392; 45 Atl. 89.5. 31 S. W. 275; Vincent v. Vieths, 4 Underfeed Stoker Co. v. Salt Co. 60 Mo. App. 9. — Mich.— ; 97 N. W. 950. 4 Vawter v. Griffin, 40 Ind. 593. 5 Putnam, etc., Co. v. Canfield, CONTRACTS WHICH MUST BE PROVED BY WRITING. 1027 Thus a contract to sell a bond and mortgage,^ promissory notes,® or stock/ or a chose in action which the assignor is to put in judgment/ are each within the statute. A contract to resign an office is not a contract for the sale of goods, wares and mer- chandise.^ If the statute of frauds specifically includes " things in action " incorporeal personalty is thereby included. Thus ah option to buy another option for the purchase of stock,^*' or a contract to sell stock,^^ or land scrip/- are each within the statute. Even where contracts for the sale of incorporeal per- sonal property in general is held to be within the statute, a con- tract for the transfer of an interest in a patent-right is not within the statute,^'' nor is a contract to share the profits and losses arising out of the sale of stock theretofore owned by one of the parties.^* VIII. Methods of Satisfying the Fourth Section of the Statute of Frauds. §685. When memorandum must be made. The fourth section of the statute of frauds provides that no action shall be brought upon contracts of the classes therein enumerated unless the agreement or some note or memorandum thereof shall be in writing and signed by the party to be charged therewith or by some other person thereunto by him lawfully authorized. The seventeenth section has a similar provision, coupled with alternative provisions to be discussed hereafter.^ We will first consider the form and nature of the memorandum 5 Greenwood v. Law, 55 N. J. L. lo Walker v. Bamberger, 17 Utah 168; 19 L. R. A. 688; 26 Atl. 134. 2.39; 54 Pac. 108. 6 Gooch V. Holmes, 41 Me. 523 ; n Tompkins v. Sheehan, 158 N. Y. Baldwin V. Williams, 3 Met. (Mass.) 617; 53 N. E. 502. 365. 12 Smith v. Bouck, 33 Wis. 19. 7 North V. Forest, 15 Conn. 400; is Cook v. Electric Co., 118 Fed. Mann V. Bishop. 136 Mass. 495. 45; Somerby v. Buntin, 118 Mass. s French v. Schoonmaker. 69 N. J. 279 ; 19 Am. Rep. 459. L. 6; 54 Atl. 225. i* Bnllard v. Smith, 139 Mass. sColton V. Raymond, 114 Fed. 492: 2 N. E. 86. 863 ; 52 C. C. A. 382. i See § 705 et seq. 1028 PAGE ON CONTKACTS. required by the fourth and the seventeenth sections. It is clear that the statute does not require the contract to be in writing. It is sufficient if any note or memorandum thereof is in writing in the form specified." The note or memorandum need not be made at the time that the oral contract is entered into. It may be made before the contract is entered into. Thus a written offer signed by the party to be charged, setting out the terms of the contract and subsequently accepted orally by the adversary party is a sufficient memorandum.^ It may be made subsequently up to the time that the action is brought.* Thus letters written after the contract is made,^ even though at a long interval of time," or even after the breach 2 Ingrahara v. Strong, 41 111. App. 46. " The memorandum and the con- tract or agreement are not to be confounded as one and the same thing. The memorandum is under- stood to be a note or minute, in- formally made, of the agreement which may have but a verbal exist- ence expressing briefly the essential terms and never intended to stand as and for the agreement itself." Catterlin v. Bush, 39 Or. 496, 501 ; 65 Pac. 1064; 59 Pac. 706. 3 Bibb V. Allen, 149 U. S. 481; Brewer v. Horst-Lachmund Co., 127 Cal. 643; 50 L. R. A. 240; 60 Pac. 418; Western Union Telegraph Co. v. R. R., 86 111. 246; 29 Am. Rep. 28; Austin v. Davis, 128 Ind. 472; 25 Am. St. Rep. 456; 12 L. R. A. 120; 26 N. E. 890; Williams v. Smith, 161 Mass. 248; 37 N. E. 455; Sanborn v. Flagler, 9 All. (Mass.) 474; Hiekey v. Dole, 66 N. H. 336; 49 Am. St. Rep. 614; 29 Atl. 792; Thayer v. Luce, 22 0. S. 62. * Dominick v. Randolph, 124 Ala. 557; 27 So. 481; Lamkin v. Mfg. Co., 72 Conn. 57; 44 L. R. A. 786; 43 Atl. 593, 1042; Whiton v. Whit- on, 179 111. 32; 53 X. E. 722; affirm- ing 76 111. App. 553; Miller v. R. R., 58 Kan. 189; 48 Pac. 853; Tyler v. Onzts, 93 Ky. 331; 20 S. W. 256; Bird v. Munroe, 66 Me. 337; 22 Am. Rep. 571; McManus v. Boston, 171 Mass. 152; 50 N. E. 607; Mer- son V. Merson, 101 Mich. 55; 59 N. W. 441; Sheehy v. Fulton, 38 Neb. 691; 41 Am. St. Rep. 767; 57 N. W. 395 ; Gardels v. Kloke, 36 Neb. 493 ; 54 N. W. 834 ; Curtis v. Portsmouth, 67 N. H. 506; 39 Atl. 439; Argus Co. V. Albany, 55 N. Y. 495; 14 Am. Rep. 296; Townsend v. Ken- nedy, 6 S. D. 47; 60 N. W. 164; Ide V. Stanton, 15 Vt. 685; 40 Am. Dec. 698; Newport News, etc., Co. v. Ry. Co., 97 Va. 19; 32 S. E. 789; Prig- non V. Daussat, 4 Wash. 199; 31 Am. St. Rep. 914; 29 Pac. 1046. 5 Bayne v. Wiggins, 139 U. S. 210; Pitcher v. Lowe, 95 Ga. 423; 22 S. E. 678; Lyons v. Wait, 51 N. J. Eq. 60 ; sub nom., Lyons v. Pyatt, 26 Atl. 334; Townsend v. Kennedy, 6 S. D. 47; 60 N. W. 164; Ide v. Stanton, 15 Vt. 685; 40 Am. Dec. 698. 6 Lee v. Butler, 167 Mass. 426; 57 Am. St. Rep. 466; 46 N. E. 52 j Newkirk v. Place, 47 N. J. Eq. 477 j 21 Atl. 124. CONTKACTS WHICH MUST BE PROVED BY WRITING. 1029 of the contract if before suit thereon/ may be such memoranda as will satisfy the statute. A memorandum is said, however, not to have a retroactive effect as far as the rights of third per- sons are concerned.^ A subsequent reduction to writing of an oral contract in consideration of marriage has been held invalid.' A written contract executed after the verbal contract is a suf- ficient compliance with the statute, even though there is no new consideration for the written contract.^** It has been said that the memorandum must at least be made before action is brought upon the contract and cannot be made afterwards." The correctness of this view may be doubted both on principle and on authority. If the statute of frauds is a rule of evidence there seems no good reason why the evidence should be limited to that in existence at the time of commencing the action. Written declarations against the interest of the party making them may be admitted in proper cases, even though made after the action has begun^ and there seems to be no good reason why a different rule should obtain in cases con- trolled by the statute. Accordingly memoranda made after the action has begun have been held sufficient in some jurisdictions to satisfy the statute.^^ Thus a sheriff's return made after the jury was impanelled was held sufficient.^^ So where the ven- dor files an answer admitting the oral contract and stating that he is willing to perform it, such answer is a sufficient memo- randum.^* However, a pleading which sets up an oral contract but seeks to avoid it because it is oral, is not a memorandum within the meaning of the statute.^^ 7 Bird V. Munroe, 66 Me. 337; n Gaines v. McAdam, 79 111. App. 22 Am. Eep. 571. 201. sFelthouse v. Bindley, 11 C. B. 12 Walker v. Walker (Ky.), 55 S. (N. S.) 869; Bird v. Munroe, 66 Me. W. 726. 337; 22 Am. Rep. 571; Emery v. i3 Remington v. Linthicum, 14 Terminal Co., 178 Mass. 172; 86 Pet. (U.S.) 84. Am. St. Rep. 473; 59 N. E. 763. i* Walker v. Walker (Ky.), 55 S. 9 McAnnulty v. McAnnulty. 120 W. 726 ; and see Sanders v. Bryer, 111. 26; 60 Am. Rep. 552; 11 N. E. 152 Mass. 141; 9 L. R. A. 255; 25 397. N. E. 86. loSheehy v. Fulton, 38 Neb. 691; is Davis v. Ross (Tenn. Ch. 41 Am. St. Rep. 767; 57 N. W. 395. App.). 50 S. W. 650. 1030 PAGE ON CONTRACTS. §686. "Undelivered instrument as memorandum. If A and B enter into an oral contract within the statute of frauds, and A subsequently makes and signs a written mem- orandum of such contract, which memorandum is not delivered but is retained by him in his own custody, the weight of author- ity holds that such memorandum is not a compliance with the statute.^ Some of the courts have been very positive in stating the uniform application of this rule." Thus a deed not deliv- ered,^ or delivered only in escrow,* or a deed repudiated by the vendee and destroyed by his consent,^ or a mortgage," or lease,'^ not delivered, are none of them sufficient memoranda. In other jurisdictions a Avritten undelivered memorandum has been held sufficient.® In such jurisdictions a deed, though de- iDay V. Lacasse, 85 Me. 242; 27 Atl. 124; Merriam v, Leonard, 6 Cush. (Mass.) 151; Sanborn v. San- born, 7 Gray (Mass.) 142; Grant v. Levan, 4 Pa. St. 393 ; Nichols v. Op- perman, 6 Wash. 618; 34 Pac. 162. 2 " We have been able to find no case in which a writing signed by a party and kept in his possession without a delivery has been held to be a compliance with the stat- ute." Johnson v. Brook, 31 Miss. 17; 66 Am. Dec. 547; quoted in Steel V. Fife, 48 la. 99; 30 Am. Rep. 388. "We have made a pretty thorough search but have been unable to find any case which sustains the position that an undelivered deed may be treated as a memorandum in writ- ing." Wier V. Batdorf, 24 Neb. 83, 89; 38 N. W. 22. "To make it operative it must have been exe- cuted and delivered to the plaintiff's, or to some one in their behalf." Parker v. Parker, 1 Gray (Mass.) 409, 411. " It is essential that the writing required by the statute be delivered." Nichols v. Opperman. 6 Wash. 618; 34 Pac. 162. 3 Lodgsdon v. Newton, 54 la. 448 ; 6 N. W. 740; Morrow v. Moore, 98 Me. 373; 57 Atl. 81; Parker v. Parker, 1 Gray (Mass.) 409; Comer V. Baldwin, 16 Minn. 172; Schneider V. Vogler (Neb.), 97 N. W. 1018; Wier V. Batdorf, 24 Neb. 83; 38 N. W. 22; Brown v. Brown, 33 N. J. Eq. 650; Wilson v. Winters, 108 Tenn. 398; 67 S. W. 800. 4Kopp V. Reiter, 146 111. 437; 37 Am. St. Rep. 156; 22 L. R. A. 273; 34 N. E. 942; Day v. Lacasse, 85 Me. 242; 27 Atl. 124; Cogger v. Lansing, 43 N. Y. 550; Nichols v. Opperman, 6 Wash. 618; 34 Pac. 162; Popp V. Swanke, 68 Wis. 364; 31 N. W. 916. 5 Sullivan v. O'Neal, 66 Tex. 433 ; 1 S. W. 185. 6 Merriam v. Leonard, 6 Cush. (Mass.) 151. 7 Chesebrough v. Pingree, 72 Mich. 438 ; 1 L. R. A. 529 ; 40 N. W. 747. 8 Johnson v. Dodgson, 2 Mees. & W. 653; Drury v. Young. 58 Md. 546; 42 Am. Rep. 343; Hovekamp V. Elshoff, 3 Ohio N. P. 158. CONTKACTS WHICH MUST BE PROVED BY WRITING. 1031 livered in escrow," or though not delivered at all/° is a sufficient memorandum. An undelivered deed has been treated as at least an admission of some contract to convey.^^ In some of the cases often cited on this point, the court either expressly avoids deciding the question,^" or decides it in obiter." If the parties have entered into a contract a memorandum of which has been delivered, an undelivered deed may be read in connection with such memorandum to show the terms of the contract.^* Several questions, involved in these cases, are not always sep- arated in discussion. First is the question whether the deed is so delivered as to constitute full performance on the part of the vendor.^^ If full performance is had, it makes no difference whether the deed is a sufficient memorandum or not.^® If the deed is not delivered so as to constitute full performance, the question of its sufficiency as a memorandum becomes important. Such a deed may not be sufficient as a memorandum because it is not delivered. It may also be insufficient because it does not set forth the terms of the contract.^^ Both these objections may exist at once, as where the deed is not delivered at all,^^ or is de- livered in escrow.^" In most of the adjudicated cases, however, holding that the deed is not a sufficient memorandum the court has discussed one or the other of these objections exclusively. 9 Grid V. Lomax, 89 Ala. 420; 6 of the existence of the memorandum So. 741. delivered. 10 Jenkins v. Harrison, 66 Ala. is See § 714 e* seg. 345; Work v. Cowhick, 81 111. 317; le See § 713 e* seq. Bowles V. Woodson, 6 Gratt. (Va.) i? Swain v. Burnette, 89 Cal, 564; 78. 26 Pac. 1093; Kopp v. Reiter, 146 "Hart V. Carroll, 85 Pa. St. 508; HI. 437; 37 Am. St. Rep. 156; 22 McGibbony v. Burmaster, 53 Pa. •St. L. R, A. 273 ; 34 N. E. 942 ; Over- 332. man v. Kerr, 17 la. 485; Parker v. 12 Steel V. Fife, 48 la. 99; 30 Am. Parker, 1 Gray (Mass.) 409; Ducett Rep. 388. X. Wolf, 81 Mich. 311; 45 N. W. 13 Remington v. Linthicum, 14 829; Cagger v. Lansing, 43 N. Y. Pet. (U. S.) 84; Harman v. Har- 550; Campbell v. Thomas, 42 Wis. man, 70 Fed. 894; 17 C. C. A. 479. 437; 24 Am. Rep. 427. 14 Thayer v. Luce, 22 0. S. 62; ap- is Swain v. Burnette, 89 Cal. 564; proved but distinguished in Wier v. 26 Pac. 1093. Batdorf, 24 Neb. 83; 38 N. W. 22; i9 Kopp v. Reiter, 146 111. 437; and Nichols v. Opperman, 6 Wash. 37 Am. St. Rep. 156; 22 L. R. A. 618; 34 Pac. 162; on the ground 273; 34 N. E. 942. 1032 PAGE ON CONTKACTS. A will lias been held to be a sufficient memorandum, though, of course, ^not delivered.^** Where such an instrument contem- plates immediate possession of certain realty bv the promisee and his support of testatrix for her life, the contract is valid as a memorandum, though the propriety of calling it a will may be doubted."^ If a will is not held to be a sufficient memorandum, it is so held because it does not express the terms of the con- tracts^ IvTo objection seems to be made to corporate records as memoranda, on the ground that they are not delivered.^' Where insufficient as memoranda it is generally because they do not disclose a contract, but merely an intention to make one in the future. So a resolution to sell its property, adopted by a corporation, is insufficient as a memorandum of a contract of sale made in pursuance of such resolution."* §687. Form of memoranduin. If the memorandum sets forth the requisite facts, and is in writing and duly signed, its form is immaterial,^ A memoran- dum showing all the terms of the contract is sufficient, although the parties intended to execute a formally drafted contract there- after.- If the terms of the contract under which they are exe- cuted are sufficiently set forth therein, a deed,^ a will,* a re- 20Whiton V. Whiton, 179 111. 32; 65 Am. Dec. 661; Hurley v. Brown, 53 X. E. 722; affirming 76 111. App. 98 Mass. 545; 96 Am. Dec. 671; 553. (An obiter, as the contract to Singleton v. Hill, 91 Wis. 51; 51 bequeath personalty solely.) Brin- Am. St. Rep. 868; 64 X. W. 588. ker V. Brinker, 7 Pa. St. 53. 2 Gray v. Smith, L. R. 43 Ch. D. 21 Smith V. Tuit, 127 Pa. St. 341 ; 208. 14 Am. St. Rep. 851; 17 Atl. 995. 3 Folmar v. Carlisle, 117 Ala. 449; 22Champlin v. Champlin, 136 111. 23 So. 551. (In this case the deed 309; 29 Am. St. Rep. 323; 26 X. E. and note given therefor were read 526; Hale v. Hale, 90 Va. 728; 19 together.) Johnston v. Jones, 85 S. E. 739. Ala. 286; 4 So. 748; Prignon v. 23 See § 687. Da^ussat, 4 Wash. 199 ; 31 Am. St. 24 Cumberland, etc., Ry. v. Ry. Rep. 914; 29 Pac. 1046. (The deed — Ky. — ; 77 S. W. 690. recited that it was given in consid- 1 California Canneries Co. v. Sea- eration of the promise of the grantee tena, 117 Cal. 447; 49 Pac. 462; to marry the grantor.) McConnell v. Brillhart, 17 111. 354; 4 Shroyer v. Smith, 204 Pa. St. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1033 ceipt,^ an assignment,*' or a note/ as a bought and sold note/ or a draft/ or a sheriff's return," is a sufficient memorandum. A letter,^^ or a telegram,^^ addressed to the adversary party ; or a letter written and signed by the party to the contract to be charged therewith, addressed not to the adversary party to the contract, but to another person, may be a sufficient memoran- dum.^^ The records of a corporation if signed properly by an agent of the corporation and setting forth the terms of a con- tract sufficiently may be a sufficient memorandum.^* Exam- ples of this principle are found in the records of a council of a public corporation,^^ in the resolutions of a bridge committee," or the records of the board of directors of a private corporation, duly signed by the proper officers,^^ as by the president and the 310; 54 Atl. 24. (Devising realty to the same person to whom it had already been conveyed by parol.) 5 Tyler v. Onzts, 93 Ky. 331; 20 S. W. 256; Merson v. Merson, 101 Mich. 55; 59 N. W. 441; Gardels v. Kloke, 36 Neb. 493 ; 54 N. VV. 834. eMcClintock v. Oil Co., 146 Pa. St. 144; 23 Atl. 211. 7 Reynolds v. Kirk, 105 Ala. 446; 17 So. 95. 8 Bibb V; Allen, 149 U. S. 481. sNeaves v. Mining Co., 90 N. C. 412; 47 Am. Rep. 529. 10 Remington v. Linthiciim, 14 Pet. (U. S.) 84; Elfe v. Gadsden, 2 Rich. Law. (S. C.) 373. 11 Mizell v. Bennett, 4 Jones L. (N. C.) 249; 69 Am. Dec. 744; Gulf, etc., Ry. V. Settegast, 79 Tex. 256; 15 S. W. 228. 12 North V. Mendel, 73 Ga. 400; 54 Am. Rep. 879. 13 Miller v. R. R., 58. Kan. 189; 48 Pae. 853; Cunningham v. Wil- liams, 43 Mo. App. 629; Peay v. Seigler, 48 S. C. 496; 59 Am. St. Rep. 731; 26 S. E. 885; Singleton v. Hill, 91 Wis. 51; 51 Am. St. Rep. 868; 64 N. W. 588. 14 Greenville v. Waterworks Co., 125 Ala. 625; 27 So. 764; Lamkin V. Mfg. Co., 72 Conn. 57; 44 L. R. A. 786; 43 Atl. 593, 1042; Grimes V. Hamilton Co., 37 la. 290; Mc- Manus v. Boston, 171 Mass. 152; 50 N. E. 607 ; Argus Co. v, Albany, 55 N. Y. 495; 14 Am. Rep. 296; Mar- den V. Champlin, 17 R. I. 423; 22 Atl. 938. 15 Greenville v. Waterworks Co., 125 Ala. 625; 27 So. 764; Chase v. Lowell, 7 Gray (Mass.) 33; Curtis V. Portsmouth, 67 N. H. 506; 39 Atl. 439; Argus Co. v. Albany, 55 N. Y. 495 ; 14 Am. Rep. 296 ; Mar- den V. Champlin, 17 R. I. 423; 22 Atl. 938. !<■> Rollins Investment Co. v. George. 48 Fed. 776. 17 Jones V. Victoria, etc., Co., L. R. 2 Q. B. D. 314; Lamkin v. Mfg. Co., 72 Conn. 57; 44 L. R. A. 786; 43 Atl. 593, 1042; Tufts v. Ply- mouth, etc., Co., 14 All. (Mass.) 407. 1034 PAGE ON CONTKACTS. secretary.^® A pleading of fact, such as a bill in equity/^ or an answer,"" may set np the contract so as to constitute a suf- ficient memorandum thereof. A deposition which one party to an action on an oral contract is comj>elled to give at the instance of the adversary party is not a memorandum of the contract though in writing and signed by such jDarty."^ §688. Memorandum consisting of several writings. The written contract or memorandum required by the statute does not necessarily consist of one writing alone. It may as well consist of two or more writings.^ If the offer is made in one instrument and accept-ance is made in another the two instru- ments may be considered together." A letter written by one party to the other and an answer thereto by such other may constitute a sufficient memorandum, if signed by the respective party, and showing on their face that they refer to the same transaction, the terms of which are sufficiently set forth.^ Thus 18 Newport News, etc., Co. v. Ey. Co., 97 Va. 19; 32 S, E. 789; Cen- tral Land Co. v. Johnston, 95 Va, 223; 28 S. E. 175. 19 Sanders v. Bryer, 152 Mass. 141; 9 L. R. A. 255; 25 N. E. 86 Peevey v. Haughton, 72 Miss. 9J8 48 Am. St. Eep. 592; 18 So. 357 17 So. 378. Except when the bill seeks to avoid the contract on the ground of the statute of frauds. Da- vis V. Ross (Tenn. Ch. App.), 50 S. W. 650. zoGough V. Williamson, 62 N. J. Eq. 526; 50 Atl. 323; Peay v. Seig- ler, 48 S. C. 490; 59 Am. St. Rep. 731; 26 S. E. 885. Provided such answer does not plead the statute as a defense. 21 Cash V. Clark, 61 Mo. App. 636. iStrouse v. Elting, 110 Ala. 132; 20 So. 123; Turner v. Lorillard Co., 100 Ga. 645; 62 Am. St. Rep. 345; 28 S. E. 383; McBrayer v. Cohen, 92 Ky. 479; 18 S. \Y. 123; Freeland v. Ritz, 154 Mass. 257; 26 Am. St. Rep. 244; 12 L. R. A. 561; 28 N. E. 226; Olson v. Sharpless, 53 Minn. 91; 55 N. W. 125; Atlantic Phos- phate Co. V. Sullivan, 34 S. C. 301; 13 S. E. 539; Anderson v. Mfg. Co., 30 Wash. 147; 70 Pae. 247. 2Gerli v. Mfg. Co., 57 N. J. L. 432; 51 Am, St. Rep. 611; 30 L. R. A. 61; 31 Atl. 401. 3 Cooper v. Gas Co., 127 Fed. 482; Drovers' National Bank v. Baiolc, 44 Fed. 183; Alford v. Wilson, 20 F«d. 06; Thames Loan and Trust Co- v. Beville, 100 Ind. 309 ; Wills v. Ross. 77 Ind. 1; 40 Am. Rep. 279; Austin v. Davis, 128 Ind. 472; 25 Am. St. Rep. 456; 12 L. R. A. 120; 20 N. E. 890: Surface v. Leffingwell, 6 Kan. App. 319; 51 Pac. 73; Williams v. Smith, 161 Mass. 248; 37 N. E. 455; Corning v. Loomis, 111 Mich. 23; 69 N. W. 85; Fowler Elevator Co. v. Cottrell, 38 Neb. 512; 57 N. W. 19; Hickey v. Dole, 66 N. H. 336 n CONTRACTS WHICH MUST BE TKOVED BY WEITING. 1035 an order sent by A on a blank form furnished by B, showing in detail the goods ordered by A from B, and a letter from B to A acknowledging the receipt of the order and promising to ship at once, make a sufficient memorandum.* The same i-ule ap- plies to letters and telegrams/ or to telegrams interchanged be- tween the parties,'' whereby an agreement is reached. So a ref- erence in a memorandum to a deed/ or to a decree of a court and to tax deeds and receipts/ or to notes executed by a third per- son/ may be sufficient to incorporate such document in the mem- • orandum and thereby to supply deficiencies in the latter. Ex- press reference from one instrument to another is not necessary if the two instruments show on their face that they refer to the same transaction.^" So a memorandum and a receipt/^ or a power of attorney and a contract executed thereunder/^ or book entries and checks/^ or letters and a subsequent deed/* or a written lease signed by lessor and a subsequent written accejDt- 49 Am. St. Rep. 614; 31 Atl, 900; Peay v. Seigler, 48 S. C. 496; 59 Am. St. Rep. 731; 26 S. E. 885; Kearby v. Hopkins, 14 Tex. Civ. App. 106; 36 S. W. 506; Shrews- bury V. Tufts, 41 W. Va. 212; 23 S. E. 692; Singleton v. Hill, 91 Wis. 61; 51 Am. St. Rep. 868; 64 N. W. 588. 4 Wilkinson v. Mfg. Co., 67 Miss. 231; 7 So. 356. 5 Stevenson v. McLean, L. R. 5 Q. B. Div. 346; Bibb v. Allen, 149 U. S. 481 ; Ryan v. United States, 136 U. S. 68; Kleinhans v. Jones, 68 Fed. 742 ; 15 C. C. A. 644 ; Elbert v. Gas Co., 97 Cal. 244 ; 32 Pac. 9 ; Crystal, etc., Co. V. Butterfield, 15 Colo. App. 246; 61 Pac. 479; Smith v. Easton, 54 Md. 138; 39 Am. Rep. 355; Swal- low V. Strong, 83 Minn. 87; 85 N. W. 942; Trevor v. Wood, 36 N. Y. 307; 93 Am. Dec. 511; Eckert v. Schoch, 155 Pa. St. 530; 26 Atl. 654; Watson v. Baker, 71 Tex. 739; 9 S. W. 867; Underwood v. Stack, 15 Wash. 497; 46 Pac. 1031. 6 Utley v. Donaldson, 94 U. S. 29 ; Brewer v. Horst-Lachmund Co., 127 Cal. 643; 50 L. R. A. 240; 60 Pac. 418; Gaines v. McAdam, 79 111. App. 201. ■ " Hibbard v. Storage-Battery Co., 174 Mass. 296; 54 N. E. 658. sEverman v. Herndon (Miss.), 11 So. 652. Rowell v. Dunwoodie, 69 Vt. Ill; 37 Atl. 227. 10 White V. Breen, 106 Ala. 159; 32 L. R. A. 127; 19 So. 59. 11 Oliver v. Hunting, L. R. 44 Ch. D. 205; Peay v. Seigler, 48 S. C. 496; 59 Am. St. Rep. 731; 26 S. E. 885. 12 White V. Breen. 106 Ala. 159; 32 L. R. A. 127;. 19 So. 59. 13 Baldwin v. Trowbridge, 62 N. J. Eq. 468; 50 Atl. 494. 14 Leonard v. Woodruff, 23 Utah 494; 65 Pac. 199. 1036 PAGE ON CONTKACTS. ance signed by the lessee/^ or a letter, a telegram, and a deed,^^ or a memorandum and a pleading/^ may show on their face that thej refer to the same transaction, and hence may be read to- gether. So a petition describing the route of a sewer, a resolu- tion of the city council, and a bond, may show that they refer to a common subject matter, and be read together/^ It is not necessary that all the writings which constitute the memoran- dum should be signed by the party to be charged therewith. If one writing signed by such party so refers to another writing, which is either unsigned, or signed by some other party, as to connect the two, they may be read as one memorandum.^® Thus a reference in a signed memorandum to an unsigned contract,"" or to a lease to be executed thereafter,^^ or a reference in an order of the court binding on the county to a bid made by a contractor and signed by him alone,"" may connect such other instrument with the memorandum. So a letter signed by a vendee, and declining to perform the contract set forth in an unsigned memorandum, may be read in connection with such unsigned memorandum to prove such contract.'^ Physical con- nection of the signed memorandum with the instrument to which it refers may establish a connection in meaning. Thus an in- dorsement of assignment on the back of a deed,^* or a stock cer- tificate,"^ may be sufficient to supplement deficiencies of the assignment in description. So ^the deficiencies of a lease 15 Woodruff V. Butler, 75 Conn. 20 Swallow v. Strong, 83 Minn. 679; 55 Atl. 167. 87; 85 N. W. 942. 16 Underwood v. Stack, 15 Wash. 21 Freeland v. Ritz, 154 Mass. 257 ; 497; 46 Pac. 1031. 26 Am. St. Rep. 244; 12 L. R. A. 17 Sanders v. Bryer, 152 Mass. 561; 28 N. E. 226. (If in fact ex- 141; 9 L. R. A. 255; 25 N. E. 86. eeuted before the action is brought.) 18 Stevens v. Muskegon, 111 Mich. 22 Bryson v. Johnson County. 100 72; 36 L. R. A. 777: 67 N. W. 227. Mo. 76*; 13 S. W. 2.39. 19 See the cases cited § 1115. Wil- 23 Louisville Asphalt Varnish Co. kinson v. Mfg. Co., 67 Miss. 231 ; 7 v. Lorick, 29 S. C. 533 ; 2 L. R. A. So. 356; Fowler Elevator Co. v. Cot- 212; 8 S. E. 8. trell, 38 Neb. 512; 57 N. W. 19; 24 Tunstall v. Cobb, 109 N. C. Newton v. Bronson, 13 N. Y. 587; 316; 14 S. E. 28. 67 Am. Dee. 89. 25 Flowers v. Steiner, 108 Ala. 440; 19 So. 321. CONTEACTS WHICH MUST BE PEOVED BY WEITING. 1037 may be supplied from an annexed contract.^® So signing a bond, attached to the contract for the performance of which it is executed may be equivalent to signing the contract."^ While physical connection is helpful, it is not of itself sufficient to es- tablish connection in meaning. Thus a receipt for part pay- ment on a lot, the description of which is not given, is insuf- ficient though on the back of the receipt is indorsed " The lot No. 14 Eakin avenue."^^ Since the memorandum cannot be in part oral, however, it is necessary to constitute a sufficient mem- orandum that the several writings should, either by express ref- erence or by reference to the same subject matter, show on their face their connection one with the other. If oral evidence is necessary to connect them, they cannot be read together as one memorandum or contract under the statute.'^ So where the reference in the signed memorandum describes an instrument different from the unsigned instrument offered in evidence to supplement the signed memorandum, oral evidence is inad- missible to contradict the reference and to show that the un- signed instrument offered was the one intended by the parties. Thus where the signed memorandum referred to specifications " signed by the parties," oral evidence could not be received to show that certain unsigned specifications were intended.^*' 26 Thomas v. Drennen, 112 Ala. 835; 25 Pac. 570; Kingsley v. Sie- 670; 20 So. 848. (In this case the brecht, 92 Me. 23; 69 Am. St. Rep. contract was written on one side of 486; 42 Atl. 249; Third National the paper; the lease on the other.) Bank v. Stell, 129 Mich. 434; 88 27Busch V. Hart, 62 Ark. 330; 35 N. W. 1050; Swallow v. Strong, 83 S. W. 534. Minn. 87; 85 N. W. 942; Nibert v. 28Wilstach V. Heyd, 122 Ind. 574; Baghurst, 47 N. J. Eq. 201; 20 Atl. 23 N. E. 963. 252; Johnson v. Buck, 35 N. J. L. 29 Coombs V. Wilkes (1891), 3 Ch. 338; Ward v. Hasbrouck, 169 N. Y. 77; Potter v. Peters, 64 L. J. Ch. 407; 62 N. E. 434; Falls of Neuse N. S. 357; Strong v. Bent, 31 N. S. Mfg. Co. v. Hendricks, 106 N. C. 1; Duff V. Hopkins, 33 Fed. 599; 485; 11 S. E. 568; Moore v. Powell, Alba V. Strong, 94 Ala. 163; 10 So. 6 Tex. Civ. App. 43; 25 S. W. 472; 242; Devine v. Warner, 76 Conn. Darling v. Cuniming. 92 Va. 521; 229; 56 Atl. 562; Turner v. Loril- 23 S. E. 880. lard Co., 100 Ga. 645; 62 Am. St. so Donnelly v. Adams. 115 Cal. Rep. 345; 28 S. E. 383; Ross v. 129; 46 Pac. 916. Allen, 45 Kan. 231; 10 L. R. A. 1038 PAGE ON CONTRACTS. §689. Necessity and form of signature. Under the statute of frauds a written contract or a note or memorandum thereof is of no validity unless it is signed by the party to be charged therewith or by some one authorized by him.^ Hence a memorandum in a judgment entry showing an oral agreement of the parties in open court for the sale of land is insufficient." So if the statute provides that a lease not signed has only the force of a lease at will, an unsigned lease, prepared by one party but not signed by him, in insufficient.^ The fonn of the signature is unimportant. While the signature consists in most cases of the name of the party written by him- self, it may be a valid signature without any of these elements. It may consist of an abbreviation,* if intended as a means of authenticating the instrument. It may be printed instead of written if intended as an authentication.^ Thus a name printed in a letter head under which a contract was written has been held to be a sufficient signature.^ So is a name printed on the cover of an order book in which the memorandum is w^ntten.^ Unless, however, the party whose name is printed upon the contract writes the contract upon such printed paper or authorizes it to be written, intending to adopt the printing as his signature to such contract, the signature is not sufficient under the statute.® The name of the vendor stamped on the luemorandum, no evidence being offered to show how it came there, will not be assumed to 1 Robinson v. Driver, 132 Ala. * Such as initials. Salmon Falls 169; SI So. 495; Ross v. Allen, 45 Mfg. Co. v. Goddard, 14 How. (U. Kan. 231; 10 L. R. A. 835; 25 Pac. S.) 446. 570; Hazard V. Day, 14 All. (Mass.) 5 Name printed and also written 487; 92 Am. Dec. 790; McElroy v. in body of instrument. Anderson Seery, 61 Md. 389; 48 Am. Rep. v. Mfg. Co., 30 Wash. 147; 70 Pac. 110; Taft V. Dimond, 16 R. I. 584; 247. 18 Atl. 183. eDrury v. Young, 58 Md. 546; 2 Robinson v. Driver, 132 Ala. 42 Am. Rep. 343. So with a name 169; 31 So. 495. Contra, that this printed on a bill-head. Schneider v. is a contract of record to which the Norris, 2 M. & S. 286. statute of frauds does not apply. ^ .Jones v. Joyner, 82 L. T. 768. See § 5.54. 8 Hucklesby v. Hook (1900). W. 3 Charlton v. Real Estate Co., 64 N. 45. N. J. Eq. 631 ; 54 Atl. 444. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1039 be his signature.'' Under special circumstances a signature by mark has been held to be insufficient.^" §690. Place pf signature. The original statute required the contract note or memoran- dum to be " signed." Where the statute is so worded, the name of the party may appear at any part of the instrument if placed there with the intention of authenticating it.^ Thus it may ap- pear at the top," or as the address of the letter constituting the contract, when written by the agent of the addressee,^ or in the body of the memorandum.* A signature across the face of a written memorandum which covers one whole side of the paper and so leaves no room for a signature at the bottom has been held sufficient.^ The name of a party in the body of a mem- orandum in which there are no apt words to charge him is not a sufficient signature though the entire contract is in his hand- writing.*' If the statute requires the memorandum to be " sub- scribed " a different rule obtains. By derivation " subscribe " implies " writing beneath " and accordingly the signature must be substantially at the end of the memorandum.^ If the agree- ment or memorandum is drawn in duplicate and each of the » Boardman v. Spooner, 13 All. 4 Swim v. Amos, 33 N. B. 49 ; New (Mass.) 353; 90 Am, Dec. 196. England, etc., Co. v. Worsted Co., 10 Hubert v. Moreau, 2 Car. & P. 165 Mass. 328; 52 Am. St. Rep. 516; 528; Carlisle v. Campbell, 76 Ala. 43 N. E. 112; Hawkins v. Chace, 19 247. Pick. (Mass.) 502; Coddington v. 1 Johnson v. Dodgson, 2 M. & W. Goddard, 16 Gray( Mass.) 436; Mer- 653; New England, etc., Co. V. Wors- ritt v. Clason, 12 Johns. (N. Y.) ted Co., 165 Mass. 328; 52 Am. St. 102; 7 Am. Dec. 286; Clason v. Rep. 516; 43 N. E. 112; Merritt v. Bailey, 14 Johns. (N. Y.) 484; Ting- Clason, 12 Johns. (N. Y.) 102; 7 ley v. Boom Co., 5 Wash. 644; 32 Am. Dec. 286; Tingley v. Boom Co., Pac. 737; 33 Pac. 1055. 5 Wash. 644 ; 32 Pac. 737 ; 33 Pac. 5 California Canneries Co. v. Sca- 1055. tena, 117 Cal. 447; 49 Pac. 462. 2 Schneider v. Norris, 2 M. & S. ^ Guthrie v. Anderson, 49 Kan. 286; Drury v. Young, 58 Md. 546; 416; 30 Pac. 459; affirmed on re- 42 Am. Rep. 343 ; Anderson v. Mfg. hearing, 47 Kan. 383 ; 28 Pac. 164. Co., 30 Wash. 147; 70 Pac. 247. 7 James v. Patten, 6 N. Y. 9; 55 3 Evans v. Hoare (1892), 1 Q. Am. Dec. 376. B. 593. 1040 PAGE ON CONTRACTS. parties to the contract signs one copy and delivers it to the other, the contract has the same effect as if both had signed the same copy.^ §691. By which party memorandum must he signed. The statute does not require the contract, note or memoran- dum to be signed by both parties but only by the party to be charged therewith. This is usually the defendant in an actiou to enforce the contract; though it may be the plaintiff if the defendant sets up the contract either as a defense or as a ground for affirmative relief. Accordingly a contract, note or memoran- dum is sufficient if signed by the party to be charged therewith though not signed by the party seeking to enforce it.^ Thus a memorandum of a contract to convey land, sig-ned by the vendor- 8 Morris v. McKee, 96 Ga. 611; 24 S. E. 142; Bray v. Irrigation Co., 4 Ida. 685; 44 Pac. 432. 1 Bloom V. Hazzard, 104 Cal. 310; 37 Pac. 1037; Martin v. Ede, 103 Cal. 157; 37 Pac. 199; Cavanaugh v. Casselman, 88 Cal. 543; 26 Pac. 515; Hodges v. Kowing, 58 Conn. 12; 7 L. R. A. 87; 18 Atl. 979; Black V. Maddox, 104 Ga. 157; 30 S. E. 723; Gradle v. Warner, 140 111. 123; 29 N. E. 1118; Perkins V. Hadsell, 50 111. 216; Raphael v. Hartman, 87 111. App. 634; Burke V. Mead, 159 Ind. 252; 64 N. E. 880; Lloyd v. O'Rear (Ky.), 59 S. W. 483 ; Broassard v. Verret, 43 La. Ann. 929; 9 So. 905; Hunter v. Gid- dings, 97 Mass. 41; 93 Am. Dec. 54; Old Colony R. R. v. Evans, 6 Gray (Mass.) 25; 66 Am. Dec. 394; Bow- ers V. Whitney, 88 Minn. 168; 92 N. W. 540; Western Land Associa- tion V. Banks, 80 Minn. 317; 83 N. W. 192; Kessler v. Smith. 42 Minn. 494; 44 N. W. 794; Atkinson V. ^\^litney, 67 Miss. 655 ; 7 So. 644 ; Marqueze v. Caldwell, 48 Miss. 23; Mastin v. Grimes, 88 Mo. 478; Black V. Crowther, 74 Mo. App. 480; Cunningham v. Williams, 43 Mo. App. 629; Ballou v. Sherwood, 32 Neb. 666 ; 49 N. W. 790 ; 50 N. W. 1131;" Gartrell v. Stafford, 12 Neb. 545; 41 Am. Rep. 767; Sabre v. Smith, 62 N. H. 663; Thayer v.. Luce, 22 O. S. 62; Brodhead v. Reinbold, 200 Pa. St. 618; 86 Am. St. Rep. 735; 50 Atl. 229; Witman V. Reading, 191 Pa. St. 134; 43 Atl. 140; McPherson v. Fargo, 10 S. D. 611; 65 Am. St. Rep. 723; 74 N. W. 1057; Merchants' Coal Co. v. Bill- meyer, — W. Va. — ; 46 S. E. 121. 2 Ross V. Parks, 93 Ala. 153; 30 Am. St. Rep. 47; 11 L. R. A. 148; 8 So. 368; Black v. Maddox, 104 Ga. 157; 30 S. E. 723; Western Land Association v. Bank, 80 Minn. 317; 83 N. W. 192; Gardels v. Kloke, 36 Neb. 493; 54 N. W. 834; Sylvester v. Born, 132 Pa. St. 467; 19 Atl. 337; Monogah, etc.. Co. v. Fleming, 42 W. Va. 538; 26 S. E. 201. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1041 alone, or to devise realty, signed by the promisor,^ or a lease, signed by the lessor only and accepted by the lessee,* may be enforced by the promisee. On the other hand, a memorandum signed by a lessee,^ or by a vendee,^ renders the contract enforceable against the party signing it at the instance of the adversary party though he did not sign it. So a contract for the sale of chattels within the statute, signed by the buyer alone, who is sought to be charged may be enforced by the seller.'^ However, there must be evi- dence of acceptance by the party who does not sign.^ This is merely a general principle of contract law.^ There is a conflict of authority on this point, however, and some cases hold that unless both sign, neither is bound/" This seems to be adding by judicial legislation to the plain require- ments of the statute. It is a view most commonly expressed by such courts of equity as hold that in order to have specific per- formance, there must be mutuality of remedy as well as mutual- ity of obligation." Even where the view last expressed obtains, it is held that if the party who does not sign, accepts and acts imder the written memorandum, tlio party who signs is bound. ^^ This view, of course, prevails where it is held that only the party to be charged need sign. There are, however, jurisdictions where it is held that an oral acceptance is insufficient unless the 3 Howe V. Watson, 179 Mass. 30; 9 See § 41. 60 N. E. 415. loSykes v. Dixon, 9 Ad. & El. 4 Carnegie Natural Gas Co. v. 693; Krohn v. Bantz, 68 Ind. 277; Philadelphia Co., 158 Pa. St. 317; Wilkinson v. Heavenrich, 58 Mich. 27 Atl. 951. 574; 55 Am. Rep. 708; 26 N. W. 139. 5 Lagerfelt v. McKie, 100 Ala. (A case which observes that the con- 430; 14 So. 281 (a lease of realty); flict of authority on this point is Singer Mfg. Co. v. Converse, 23 Colo. " truly bewildering.") 247; 47 Pae. 264 (a lease of a sew- n See § 1615 et seq. ing machine). 12 Ross v. Parks. 93 Ala. 153; 30 6 Hodges V. Kowing, 58 Conn. 12; Am. St. Rep. 47: 11 L. R. A. 148; 7 L. R. A. 87; 18 Atl. 979. 8 So. 368; Harriman v. Tyndale, 7Kessler v. Smith, 42 Minn. 494; 184 Mass. 534; 69 N. E. 353; Mull 44 N. W. 794. v. Smith, — Mich. — ; 94 N. W. 8 Castro v. Gaffey, 96 Cal. 421; 183. 31 Pac. 363. 66 1042 PAGE ON" COIS'TRACTS. party who accepts pays money or otherwise alters his position in performance of such contract.^" A written contract or memorandum thereof within the statute signed by one party only cannot be enforced against the adver- sary party/'* So a contract signed by one co-tenant cannot be enforced against the other/" nor can a contract signed by a part- nership in the firm name be enforced against one who subse- quently becomes a member of such partnership and accepts such contract orally/*^ It has been held that a contract for the sale of realty cannot be enforced against a vendee who has not signed, even if he has gone into possession under such contract/^ Some statutes require the memorandum to be signed by the party by whom the sale is made. Under such statutes, a con- tract of sale sigiied by the vendor only may be enforced either against him,^* or against the vendee/'' Some statutes specifically provide that both parties must sign. Under such a statute sig- natures of a written contract by one and oral acceptance by the other is insufficient.^*' §692. Authority of agent to sign. — Form of authority. The statute allows the signature to be made " by the party to be charged therewith or some other person thereunto by him lawfully authorized." Under this wording, the contract, note or memorandum may be signed by an authorized agent. ^ 13 Warden v. Williams, 62 Mich. is Hughes v. Gross, 166 Mass. 61; 50; 4 Am. St. Rep. 814; 28 N. W. 55 Am. St. Rep. 375; 32 L. R. A. 796. 620; 43 N. E. 1031. 14 Guthrie v. Anderson, 47 Kan. i7 Love v. Atkinson, 131 N. C. 383; 28 Pac. 164; Ross v. Allen, 544; 42 S. E. 966. 45 Kan. 231; 10 L. R. A. 835; 25 is Wall v. Rv., 86 Wis. 48; 56 N. Pac. 570; Brown v. Snider, 126 W. 367. Mich. 198; 85 K W. 570; Yeager is Ide v. Leiser, 10 Mont. 5; 24 V. Kelsey, 46 Minn. 402; 49 N. W. Am. St. Rep. 17; 24 Pac. 695; Gar- 199; Zanderson V. Sullivan, 91 Tex. trell v. Stafford, 12 Neb. 545; 41 499; 44 S. W. 484; affirming (Tex. Am. Rep. 767; 11 N. W. 732; Hutch- Civ. App.), 42 S. W. 1027. inson v. Ry., 37 Wis. 582. 15 Zanderson v. Sullivan. 91 Tex. 20 Spence v. Apley (Neb.). 94 N. 499: 44 S. W. 484; affirming (Tex. W. 109. Civ. App.), 42 S. W. 1027. 1 New England, etc., Co. v. Wors- CONTRACTS WHICH MUST BE PROVED BY WRITING. 1043 Whether the authority of the agent who signs the memorandum provided for by statute on behalf of his principal, must be in writing and signed hy the principal in order to bind such prin- cipal, is a question which turns entirely on the wording of the particular statute. If the statute does not prescribe what form of authority is necessary, any form sufficient at common law will be sufficient under the statute. Accordingly if the statute provides that the memorandum is to be signed by the principal or by his agent thereunto " lawfully authorized," such authority need not be in writing," as the statute Avhen thus worded does not attempt to prescribe the form of the agent's authority ; Com- mon Law rules apply ; and any form of parol authority is suf- ficient in the execution of a parol instrument. So in contracts for the sale of an interest in realty, oral authority of an agent is sufficient.^ Thus even where indorsing a note in blank out of the chain of title does not operate in law as a guaranty, it authorizes the holder to write a guaranty over such blank signa- ture to conform to the oral contract.* If the statute provides that such memorandum must be signed by the principal or by his agent " authorized in writing " such authority must, of course, be in writing in the form prescribed by the statute.^ So ted Co., 1G5 Mass. 328; 52 Am. St. s Columbia, etc., Co. v. Tinsley Eep. 516; 43 N. E. 112; Heffron v. (Ky.), 60 S. W. 10; Lindley v. Armsby, 61 Mich. 505; 28 N. W. Keim, 54 N. J. Eq. 418; sub nom., 672; Gerli v. Mfg. Co., 57 N. J. L. O'Reilly v. Keim, 34 Atl. 1073; af- 432; 51 Am. St. Rep. 611; 30 L. firming (N. J. Eq.) 30 Atl. 1063; R. A. 61; 31 Atl. 401. Kennedy v. Ehlen, 31 W. Va. 540; 2 John Griffiths Cycle Corpora- 8 S. E. 398. tion V. Humber (1899), 2 Q. B. 414; 4 Peterson v. Russell, 62 Minn. Rutenberg v. Main, 47 Cal. 213; 220; .54 Am. St. Rep. 634; 29 L. R. McConnell v. Brillhart, 17 111. 354; A. 612; 64 N. W. 555. 65 Am. Dec. 661; Columbia, etc., Co. 5 Thompson v. Coal Co., 135 Ala. V. Tinsley (Ky.) ; 60 S. W. 10; Tal- 630; 93 Am. St. Rep. 49; 34 So. hot V. Bowen, 1 A. K. Mar. (Ky.) 31; Castner v. Richardson, 18 Colo. 436; 10 Am. Dec. 747; Peterson v. 496; 33 Pac. 163; Albertson v. Ash- Russell, 62 Minn. 220; 54 Am. St. ton, 102 111. 50; Sigmund' v. News- Rep. 634; 29 L. R. A. 612; 64 N. W. paper Co., 82 111. App. 178; Sam- 555; Kennedy v. Ehlen, 31 W. Va. uels v. Greenspan, 9 Kan. App. 140; 540; 8 S. E. 398; Conaway V. Swee- 58 Pac. 482; Dickson v. Luman, ney, 24 W. Va., 643; Ober v. Ste- 93 Ky. 614; 20 S. W. 1038; Newlin phens, — W. Va., — ; 46 S. E. 195. v. Hoyt. — Minn. — ; 98 N. W. 323; 1044 PAGE ON CONTRACTS. in contracts for the sale of realty under such a statute, oral authority of the agent is not sufficient.*^ Under some statutes, written authority of an agent is necessary only in certain classes of these contracts, as in contracts for the sale of some interest in realty,' or the statute may require written authority of an agent acting for the vendor or lessor of realty, but not of an agent acting for a vendee,** or lessee.** Since a signature by an agent in the presence of his principal is in law the immediate signature of the principal himself and not that of the principal by his agent,^° an agent who without written authority signs a contract under the statute of frauds in the presence of his principal binds the principal.^^ If the agent executes a conveyance, and not merely a contract for a convey- ance, in the presence of the principal and at his express request, the same rule applies, and oral authority is sufficient.^^ Pierce v. Clarke, 71 Minn. 114; 73 N. W. 522 (overruling on another point Hagelin v. Wacks, 61 Minn. 214; G3 N. W. 624). GBorderre v. Den, 106 Cal. 594; 39 Pac. 946; Meux v. Hogue, 91 Cal. 442; 27 Pac. 744; Castner v. Rich- ardson, 18 Colo. 496; 33 Pac. 163; Kozel V. Dearlove, 144 111. 23; 36 Am. St. Rep. 416; 32 N. E. 542; Baldwin v. Schiappacasse, 109 Mich. 170; 66 N. W. 1091; O'Shea v. Rice, 49 Neb. 893; 69 N. W. 308; Brand- rup V. Britten, 11 N, D. 376; 92 N. W. 453; Utah, etc., Co. v. Garbutt, 6 Utah 342; 23 Pac. 758. In Me- tosh V. Hodges, 110 Mich. 319; 68 N. W. 158, in deciding a case which the court held to be controlled by Illinois law, it was held that such authority need not under the Illinois statute then in force, be in writing; following Lake v. Campbell, 18 111. 106. On rehearing the court held that by reason of a change in the Illinois statute such authority had to be in writing, but the former judgment was adhered to on another point. See 110 Mich. 322; 70 N. W. 550, for opinion on rehearing. 7 Dickson v. Luman, 93 Ky. 614; 20 S. W, 1038; Pierce v. Clarke, 71 Minn. 114; 73 N. W. 522; Cockrell V. Mclntyre, 161 Mo. 59; 61 S. W. 648. 8 Rice-Dwyer Real Estate Co. v. Ruhlman, 68 Mo. App. 503. 9 Ehrmantraut v. Robinson, 52 Minn. 333; 54 N. W. 188. 10 See § 574. 11 Ball V. Dunsterville, 4 T. R. 313; Morton v. Murray, 176 111. 54; 43 L. R. A. 529; 51 N. E. 767; Meyer v. King, 29 La. Ann. 567; Bigler v. Baker, 40 Neb. 325 ; 24 L. R. A. 255; 58 N. W. 1026. Contra, Bramel v. Byron (Ky.), 43 S. W, 695. i2Videau v. Griffin, 21 Cal. 389; Bartlett v. Drake, 100 Mass. 174; 97 Am. Dec. 92; 1 Am. Rep. 101; Gardner v. Gardner, 5 Cush. (Mass.) 483; 52 Am. Rep. 740; Bigler v. Baker, 40 Neb. 325; 24 L. R. A. 255; 58 N. W. 1026; McMurtry v. Brown. 6 Neb. 368; Mutual Benefit CONTRACTS WHICH MUST BE PROVED BY WRITING. 1045 The writing relied on as authority of the agent must show such authority on its face. So a note from A to B stating that A cannot meet B on account of ilhiess, but that X will attend to the matter for A, is insufficient authority if it must be supple- mented by evidence of prior oral negotiations for the exchange of land for mining stock to show what authority X had.^^ Writ- ten authority to sell, however, shows authority to execute such memorandum as is necessary to make the sale binding." Writ- ten authority to sell need not fix the price at which the sale is to be made. Hence if the price is fixed in writing, a subsequent oral modification of such authority may be shown, fixing a lower price. ^^ §693. Nature of authority. Since the statute provides for a signature by an agent " law- fully authorized," a signature by one not authorized to act for another cannot, at least in the absence of ratification, bind such other. ^ The party seeking to enforce the contract is bound to show that the person, other than the adversary party, who signs the memorandum, is the agent of such adversary party." An agent may bind his principal by a written memorandum, such as a letter, written within the scope of his authority, recog- nizing an unsigned written contract made by his principal, without special authority from his principal to sign such mem- orandum, and without authority to make such contract origin- ally.^ If botJi parties to the contract assent thereto the same person may act as agent for both, and in such cases the signature of Life Ins. Co. v. Brown, 30 N. J. Eq. etc., Co. v. Barrett. 172 111. 610; 50 193. N. E. 325, but without discussion 13 Cockrell v. Melntyre, 161 Mo. of this point). 59; 61 S. W. 648. 2 Clark County v. Howell, 21 Ind. 14 Jones V. Wattles, — Neb. — ; App. 495; 52 N. E. 769. 92 N. W. 765. 3 John Griffiths Cycle Corpora- is Rank V. Garvey, — Neb. — ; 92 tion v. Humber (1899). 2 Q. B. 414: N. W. 1025. following Jones v. Dock Co., 2 Q. B. 1 Wheeler, etc., Co. v. Barrett, 70 Div. 314 : explaining Smith v. Web- Ill. App. 222 (affirmed in Wheeler, ster. 3 Ch. Div. 49. 1046 PAGE ON CONTRACTS. such common agent to a note or memorandum of the contrac* binds both parties thereto.* Thus oral authority given by a stockholder to the secretary of the corporation to put him down for a certain amount of new stock followed by the secretary's making such written subscription is a subscription in writing by the stockholder.^ However, a request by A to B's agent X to transmit a certain offer to B does not make X A's agent for the purpose of binding A by X's signature to such letter.* Still less can the agent of one party represent the other without any request from him.^ The chief application of the rule that the same person may be the agent of both parties is found in aution sales. The auctioneer is the agent of the vendor by vir- tue of his appointment, and on receiving the bid he becomes the agent of the vendee for the purpose of closing the contract. It is on implied authority from the vendee that the auctioneer's power to represent him rests and not on any peculiarity of auc- tion sales. Hence a memorandum made and signed not by the auctioneer but by the vendor's agent is not sufficient to bind the vendee.^ Accordingly the auctioneer's signature to a note or memorandum of the contract, made at the sale, is sufficient under the statute of frauds to bind both vendor and vendee.** If he delays signing until after the sale, the validity of his mem- orandum depends on the existence of his authority.^*' His 4 Gill V. Hewitt, 7 Bush (Ky.) 7 Moore v. Powell, 6 Tex. Civ. 10; White v. Mfg. Co., 179 Mass. App. 43; 25 S. W. 472. 427; 60 N. E. 791; Morton v. Dean, s Bamber v. Savage, 52 Wis. 110; 13 Met. (Mass.) 385; Springer v. 38 Am. Rep. 723; 8 N. W. 609. Kleinsorge, 83 Mo. 152; Proctor v. » Bird v. Boulter, 4 B. & Adol. Finley, 119 N. C. 536; 26 S. E. 128; 443; Burke v. Haley, 7 HI. 614; Mc- Reid V. Packing Association, 43 Or. Brayer v. Cohen, 92 Ky. 479; 18 S. 429; 73 Pac. 337; Perkiomen Brick W. 123; Gill v. Hewitt, 7 Bush. Co. V. Dyer, 187 Pa. St. 470; 41 (Ky.) 10; Morton v. Dean, 13 Met. Atl. 326; Christie v. Simpson, 1 (Mass.) 385; Gill v. Bicknell, 2 Rich. Law. (S. C.) 407. Cush. (Mass.) 358; Proctor v. Fin- 5 Perkiomen Brick Co. v. Dyer, ley, 119 N. C. 536; 26 S. E. 128; 187 Pa. St. 470; 41 Atl. 326. Johnson v. Buck, 35 N. J. L. 338; 6 Soward v. Moss, 59 Neb. 71; 80 10 Am. Rep. 243; Pugh v. Chessel- N. W. 268; reversing on rehearing dine, 11 Ohio 109; 37 Am. Dec. 414; 58 Neb. 119; 78 N. W. 373; Wilson Meadows v. Meadows, 3 McCord (S. V. Mill Co., 150 N. Y. 314; 55 Am. C.) 4.58; 15 Am. Dec. 645. St. Rep. 680; 44 N. E. 959. lo This is sometimes treated as an CONTRACTS WHICH MUST BK PROVED BY WRITING. 1047 authority as agent of the vendee terminates with the sale. A subsequent memorandum made by him cannot bind the ven- dee/^ especially if made after the vendee has repudiated the contract.^" The vendee may repudiate his bid at the sale if be- fore the auctioneer has made a proper memorandum.^^ Thus Avhere a sheriff was acting as trustee in foreclosing a deed of trust and the vendee withdrew his bid two hours after the sale and before the sheriff had made a memorandum thereof, the vendee was not bound. ^* His authority as agent of the vendor may exist for at least a reasonable time after the sale if not re- voked. A memorandum made by him within a reasonable time after the sale may accordingly bind the vendor ;^^ but his power to bind the vendor after the sale ceases if the vendor has re- voked his authority with the knowledge of the vendee.^^ One party to the contract cannot act as agent for the adver- sary party,^" even if he acts as auctioneer. Hence a trustee who acts as his own auctioneer cannot be an agent for the vendee/* as where a guardian sells his ward's property at auction.^^ §694. Ratification of unauthorized ag-ency. Whether an oral ratification of an unauthorized signature is sufficient depends, in part, upon the statutory requirements for exception to the general rule that 233. (The sheriff here was not act- a memorandum made after the con- ing officially.) tract is sufficient. It is not really is As where made on the follow- an exception, however, but is instead ing day. White v. Mfg. Co., 179 an application of the principle that Mass. 427; 60 N. E. 791. a signature by one who is then not le Schmidt v. Quinzel, 55 N. J. a duly authorized agent is not of Eq. 792 ; 38 Atl. 665. itself sufficient. n Shorman v. Brandt, L. R. 6 Q. 11 Bell V. Balls (1897) , 1 Ch. 663; B. 720; Dunham v. Hartman. 153 Horton v. McCarty, 53 Me. 394; Mo.. 625; 77 Am. St. Rep. 741; 55 Walker v. Herring, 21 Gratt. (Va.) S. W. 233; Smith v. Arnold, 5 Ma- 678; 8 Am. Rep. 616. son (U. S.) 414; Tull v. David, 45 12 Bell V. Balls (1897), 1 Ch. 663. Mo. 444; 100 Am. Dec. 385. 13 Pike V. Balch, 38 Me. 302; 61 is Dunham v. Hartman, 153 Mo. Am. Dec. 248; Gwathney v. Cason, 625; 77 Am. St. Rep. 741; 55 S. 74 N. C. 5; 21 Am. Rep. 484. W. 233; Tull v. David, 45 Mo. 444; 14 Dunham v. Hartman, 153 Mo. 100 Am. Dee. 385. 625; 77 Am. St. Rep. 741; 55 S. W. m Bent v. Cobb. 9 Gray (Mass.) 397; 69 Am. Dec. 295. 1048 PAGE ON CONTEACTS. the original authority of the agent. Putting aside questions of estoppel and performance, ratification requires the same degree of proof as original authority. Hence if the statute requires original authority to be proved by writing an oral ratification by the principal of an unauthorized contract for the sale of land made by his agent/ is within the statute ; even if the agent had ■written authority with the terms of which he did not comply.^ If original authority may be conferred orally, an oral ratifica- tion is sufficient either to enable the ratifying principal to hold the adversary party,^ or to enable the adversary party to hold the ratifying principal.* If, however, the benefit of the con- tract entered into by the authorized agent is reserved not to the principal but to another, it has been held that an attempted oral ratification is in effect a promise to pay the debt of another, and hence is unenforceable under the statute.^ §695. Form of signature by agent. — Adding party by extrinsic evidence. In written contracts except those which like negotiable in- struments must be entirely in writing,^ it is always possible to show that a written contract signed by X was signed by him as agent for A in order to hold A." The statute of frauds has usually no specific provisions on this subject. The ordinary rules of the Common Law are therefore in force. Hence a contract note or memorandum under the statute of frauds, signed by X, may be enforced against A on showing that X signed as the authorized agent of A.^ A signature, " A, agent 1 Sigmund v. Newspaper Co., 82 s Holmes v. McAllister, 123 Mich. 111. App. 178; Roth v. Goerger, 118 493; 48 L. E. A. 396; 82 N. W. Mo. 556; 24 S. W. 176; Hankins v. 220. Baker, 46 N. Y. 666. ^ See § 761. 2Kozel V. Dearlove, 144 111. 23; 2 See § 606. X cannot use such 36 Am. St. Rep. 416; 32 N. E. 542. evidence to show that he is not lia- 3 Soames v. Spencer, 1 Dowl. & ble. E. 32. 3 Nevada Bank v. Bank. 59 Fed. 4 Maclean v. Dunn. 4 Bing. 722; 338; Tobin v. Larkin. 183 Mass. Hammond v. Hannin, 21 Mich. 374; 389; 67 N. E. 340; White v. Mfg. 4 Am. Ren. 490. Co., 179 Mass. 427; 60 N. E 791; CONTRACTS WHICH MUST BE PROVED BY WRITING. 1049 for B," whatever the prima facie liability/ may be shown to be intended to bind B.^ On the other hand, a signature of the principal's name by the agent, without any words to show that it is written by the agent, is sufficient." ^696. Elements of memorandum in general.- randa. Incomplete memo- If the outward form of the memorandum is in compliance with law, its sufficiency then depends on its contents. By the provisions of the statute, the contract must be proved by writ- ing. No provision is made for oral evidence as proof of terms omitted from the written memorandum. Accordingly the mem- orandum must, in general, set forth with sufficient certainty the essentials of the agreement. This usually includes the fact that there is a contract, the parties, their relation to the contract, the subject-matter, the terms and, sometimes, the consideration.^ Phillips V. Cornelias (Miss.) , 28 So. 871; Haubelt v. Mill Co., 77 Mo. App. 672; Wheeler v. Walden, 17 Neb. 122; 22 N. W. 346; Dykers v, Townsend, 24 N. Y. 57 ; J. M. Hayes Woolen Co. v. McKinnon, 114 N. C. 061 ; 19 S. K 761 ; Hargrove v. Ad- cock, 111 N. C. 166; 16 S. E. 16; Brodhead v, Reinbold, 200 Pa. St, 618; 86 Am. St. Rep. 735; 50 Atl. 229; Hall v. W^hite, 123 Pa. St. 95; 16 Atl. 521; Tynan v. Oullnig (Tex. Civ. App.) , 25 S. W. 465, 818. 4 See § 1148. 5 Salmon Falls Mfg. Co. v. God- dard, 14 How. (U. S.) 446. G Evans v. Hare (1892), 1 Q. B. 593. 1 Turner v. Prevost, 17 Can. S. C. 283 ; Grafton v. Cummings, 99 U. S. 100; Williams v. Morris, 95 U. S. 444; Littell v. Jones, 56 Ark. 139; 19 S. W. 497 ; O'Donnell v. Leeman, 43 Me. 158; 69 Am. Dee. 54; Elliot V. Barrett, 144 Mass. 256; 10 N. E. 820; Atwood v. Cobb, 16 Pick. (Mass.) 227; 26 Am. Dec. 657; Gault V. Stormont, 51 Mich. 636; 17 N. W. 214; Clampet v. Bells, 39 Minn. 272; 39 N. W. 495; Sherburne V. Shaw, 1 N. H. 157; 8 Am. Dec. 47; Mentz v. Newwitter, 122 N. Y. 491; 19 Am. St. Rep. 514; 11 L. R. A. 97; 25 N. E. 1044; Drake v. Seaman, 97 N. Y. 230; Davidson v. Land Co., 126 N. C. 704; 36 S. E. 162; Hall v. Fisher, 126 N. C. 205; 35 S. E. 425; Corbitt v. Gas- light Co., 6 Or. 405; 25 Am. Rep. 541; Rineef v. Collins, 156 Pa. St. 342 ; 27 Atl. 28 ; Masterson v. Little, 75 Tex. 682; 13 S. W. 154 "It must contain the essential terms of the contract expressed with such a degree of certainty that it may be understood without recourse to parol evidence to show the intention of the parties. . . . Accordingly, it must show who are the contracting parties, intclligentlj^ identify the subject-matter involved, express the consideration, be signed by the party 1050 PAGE OJf CO^STTKACTS. ]f it contains these elements it is sufficient ;' but if any of them are lacking and must be supplied by parol, the memorandum is insufficient/ both at law/ and in equity.^ While an incom- plete memorandum in writing of a contract which need neither be in writing nor be proved by writing may be supplemented by oral evidence to show what the real contract is/ no such supple- mental evidence can be considered in case of a contract the terms of which must be proved by writing. So a written offer within the statute of frauds amended by telephone and accepted as amended is insufficient/ It may be here observed that a mem- orandum of an alleged contract under the statute of frauds may be defective for either of two reasons : the alleged contract be- tween the parties may be lacking in some essential element and this deficiency will, of course, appear on the memorandum / or the oral contract may be complete but its terms may not be car- ried into the memorandum with sufficient certainty to comply to be charged and disclose the terms and conditions of the agreement." Catterlin v. Bush, 39 Or. 496, 501 ; 65 Pac. 1064, 1065. 2Homan v. Stewart, 103 Ala. 644; 16 So. 35; Newton v. Lyon, 62 Kan. 306; 62 Pac. 1000; affirmed on re- hearing, 62 Kan. 651; 64 Pac. 592; Alford V. Wilson, 95 Ky. 506; 26 S. W. 539 ; ]\lcDonald v. Fernald, 68 N. H. 171; 38 Atl. 729; Jones v. Davis, 48 N. J. Eq. 493; 21 Atl. 1035; Peck v. Goflf, 18 R. I. 94; 25 Atl. 690; Abba v. Smyth, 21 Utah 109; 59 Pac. 756. 3 Peoria Grape Sugar Co. v. Bab- cock Co., 67 Fed. 892; Jackson v. Telephone Exchange, 108 Ga. 646; 34 S. E. 207; Xorth v. Mendel, 73 Ga. 400; 54 Am. Rep. 879; Wright V. Raftree, 181 111. 464; 54 X. E. 998; Watt v. Cranberry Co., 63 la. 730: 18 X. W 898; Proctor v. Plum- er, 112 Mich. 393; 70 X. W. 1028; Renz V. Stoll, 94 Mich. 377 ; 34 Am. St. Rep. 358; .54 X. W. 276; Ship- man V. Campbell, 79 Mich. 82; 44 X. W. 171; Messmore v. Cunning- ham, 78 Mich. 623; 44 X. W. 145; McElroy v. Buck, 35 Mich. 434; Pal- mer V. Rolling Mill Co., 32 Mich. 274; Brown \. Munger, 42 Minn. 482; 44 N. W. 519; Ringer v. Hollz- claw, 112 Mo. 519; 20 S. W. 800; Schenck v. Improvement Co., 47 N. J. Eq. 44; 19 Atl. 881; Mentz v. Xewwitter, 122 X. Y. 491; 19 Am. St. Rep. 514; 11 L. R. A. 97; 25 X. E. 1044. 4 Atwood V. Cobb, 16 Pick. (Mass.) 227; 26 Am. Dec. 657; Grafton v. Cummings, 99 U. S. 100; Patmore v. Haggard, 78 111. 607; Reid v. Ken- worthy, 25 Kan. 701 ; Riley v. Farnsworth, 116 Mass. 223. sMinturn v. Baylis, 33 Cal. 129; Fiy V. Piatt, 32 Kan. 62; 3 Pac. 781; Holmes v. Evans, 48 Miss. 247; 12 Am. Rep. 372. 6 See §§ 605, 1197. 1198. 7 Wiessner v. Ayer, 176 Mass. 425; 57 X. E. 672. 8 See §§ 27, 28, 45-47. CONTKACTS WHICH MUST BE PROVED BY WEITING. 1051 ■with the statute. As oral evidence is inadmissible to supply defects in such memoranda, it is often impossible to determine in specific cases which sort of defect is under consideration. The details of these elements must be discussed hereafter. §697. Memorandum must show existence of contract. First, the memorandum must show that the parties intend thereby to enter into a contract or that they have already en- tered into a contract.^ Among the illustrations of a written memorandum defective as not showing this on its face are the following: A memo- randum showing that the signer had given the refusal of certain realty to another ;' a written statement that the signer can " spare " a certain amount of corn f a promise to accept a writ- ten offer when corrected by describing the property correctly;* the expression of an intention to settle property on another to take effect on the death of the party making the disposition;* and an expression of a desire to adopt a given person, to destroy old wills and to make a new one f or a letter containing a prop- osition and a reply containing an invitation to " talk it over."^ So a letter which recognizes a liability for services and offers to convey a certain lot of land in payment thereof is not a suf- ficient memorandum of a contract under which such services were rendered and providing for payment therefor by the con- 1 Salomon v. McRae, 9 Colo. App. * Andrew v. Babcock, 63 Conn. 23; 47 Pac. 409; Andrew v. Babcock, 109; 26 Atl. 715. 63 Conn. 109; 26 Atl. 715; American s White v. Bigelow, 154 Mass. Oak Leather Co. v. Porter, 94 la. 593; 28 N. E. 904. 117; 62 N. W. 658; Leatherbee v. « Wright's Estate, 155 Pa. St. 64; Bernier, 182 Mass. 507; 65 N. E. 25 Atl. 877. But compare North 842 ; Kling v. Bordner, 65 0. S. 86 ; Platte, etc., Co. v. Price, 4 Wyom. 61 N. E. 148; Wright's Estate, 155 293; 33 Pac. 664, Avhere words but Pa. St. 64; 25 Atl. 877; Masterson slightly more definite were held to V. Little, 75 Tex. 682; 13 S. W. import a contract to convey certain 154 ; Munk v. Weidner, 9 Tex. Civ. land to a certain woman on her mar- App. 491 ; 29 S. W. 409. riage with promisor. 2 Williams v. Smith, 161 Mass. 7 Mathes v. Bell, 121 la. 722; 96 248; 37 N. E. 455. N. W. 1093. 3 Redus v. Holcomb (Miss.), 27 So. 524. 1052 PAGE ON CONTKACTS. veyance of such realty.* A letter admitting legal liability as- sumed to exist independent of any contract is not evidence of a contract creating such liability." A written communication by a principal to his agent authoriz- ing him to make a given contract is not a memorandum showing such contract.^" If, however, the written memorandum shows that a contract has been entered into and states the terms thereof, it may be the means of charging the signer with liability thereon even though it is written to repudiate the contract/^ §698. Memorandum must show parties to contract. Second, the memorandum must show who are the parties to the contract and their relation thereto ; " not only who is the promisor, but who is the promisee as well.'^ Thus a memoran- dum which does not in some way indicate the vendor, as where only the auctioneer is indicated,^ or the agent of the vendor,* is insufficient. So a memorandum which does not show who the vendee is, is insufficient.* So a deed by a trustee which 8 Koch V. Williams, 82 Wis. 186; 52 N. W. 257. 9 Russell V. Blair, 18 Wash. 339; 51 Pac. 477. 10 Kleinhans v. Jones, 68 Fed. 742 ; 15 C. C. A. 644; Carskaddon v. South Bend, 141 Ind. 596, 601; 39 N. E. 667 ; 41 N. E. 1 ; Hastings v. Weber, 142 Mass. 232; 56 Am. Rep. 671; 7 N. E. 846. 11 Martin v. Haubner, 26 Can. S. C. 142. 1 Oglesby Grocery Co. v. Mfg. Co., 112 Ga. 359; 37 S. E. 372. To the same eflfect are Grafton v. Cuni- mings, 99 U. S. 100; American Oak Leather Co. v. Porter, 94 la. 117; 62 X. W. 658; Lincoln v. Preserving Co., 132 Mass. 129; Coddington v Goddard. 16 Gray (Mass.) 436; Mc Keag V. Piednoir, 74 Mo. App. 593 Carrick v. Mincke, 60 Mo. App. 140 Brown v. Whipple, 58 N. H. 229 Mentz V. Xewwitter. 122 N. Y. 491 19 Am. St. Rep. 514; 11 L. R. A 97; 25 X. E. 1044. Salmon Falls Mfg. Co. V. Goddard, 14 How. (U. S.) 446, holds that the memoran- dum need not identify the parties. This case has been criticised in Graf- ton V. Cummings, 99 U. S. 100, and. disapproved in Mentz v. Xewwitter, 122 X. Y. 491; 19 Am. St. Rep. 514; 11 L. R. A. 97; 25 X. E. 1044. sMcGovern v. Hern, 153 Mass. 308; 25 Am. St. Rep. 632; 10 L. R. A. 815; 26 X. E. 861 ; Mentz v. Xew- witter, 122 X. Y. 491; 19 Am. St. Rep. 514; 11 L. R. A. 97; 25 X. E. 1044. 3 Coombs V. Wilkes (1891), 3 Ch. 77; Ross v. Allen. 45 Kan. 231; 10 L. R. A. 835; 25 Pac. 570. Contra, where only the agent of the vendor was indicated. Mantz v. Maguire, 52 Mo. App. 136. If the vendor is indi- cated, signature by the agent is, of course, sufficient. 4 Lewis V. Wood. 153 Mass. 321; 11 L. R. A. 143; 26 X. E. 802; Cat- CONTRACTS WHICH MUST BE PROVED BY WRITING. 1053 purports to discharge part of the laud from the operation of the trust deed is not sufficient as a contract where it does not show that the trustee was acting for the creditors nor does it show any particular person as grantee.^ It is not, however, necessary that either party be named. If indicated in any mannner with sufficient certainty, the mem- orandum is not on this account defective.® Thus a description of vendors of realty as " Phillips & Bro.,'" or a description of parties acting as vendors of personalty as agents of certain named principals,® is sufficient. So a grant of a " further lease " shows that the lessee is to be the former tenant though he is not named.® So an offer made to an agent, without naming his principal but accepted by the agent on behalf of his principal, naming him, sufficiently shows that such principal is a party to the contract.^*' §699. Subject matter. — Realty. Third, the memorandum must set forth the subject-matter with such certainty that it can be identified without resorting to oral evidence of the intention of the parties direct as to the sub- ject-matter to supplement the terms of the memorandum.^ This principle finds its most frequent application in contracts for the sale of some interest in land. While the memorandum need terlin v. Bush, 39 Or. 498; 65 Pac. » Carr v. Lynch (1900), 1 Ch. 1064; 59 Pac. 706; Harney v. Bur- 613. hans, 91 Wis. 348; 64 N. W. 1031. loFilby v. Hounsell (1896), 2 Ch. So of a sheriff's sale on execution, 737. where the statute of frauds applies. i Alabama Mineral Land Co. v. Tombs V. Basye, 65 Mo. App. 30. Jackson, 121 Ala. 172; 77 Am. St. 5 Woodcock V. Merrimon, 122 N. Rep. 46; 25 So. 709; Eidgway v. In- C. 731; 30 S. E. 321. gram, 50 Ind. 145; 19 Am. Rep, 6McLeod V. Adams, 102 Ga. 533; 706; Fiy v. Piatt, 32 Kan. 62; 3 27 S. E. 680. Pac. 781 ; Sherer v. Trowbridge, 135 7 Phillips V, Cornelius (Miss.), Mass. 500; Burgon v. Cabanne, 42 28 So. 871. Minn. 267; 44 N. W. 118; Lippin- 8 American, etc. Co. v. Steel Co., cott v. Bridgewater, 55 N. J. Eq. 101 Fed. 200. (The memorandum 208; 36 Atl. 672 : Kling v. Bordner, is sufficient to bind such principals.) 65 0. S. 86: 61 N. E. 148; Ferguson V. Stover, 33 Pa. St. 411. 1054 PAGE ON CONTKACTS. not give a technical description of the realty contracted for, it still must give sufficient facts to identify it.^ If it is necessary to resort to oral evidence of the intention of the parties direct as to the realty bargained for, the memorandum is insufficient.^ So a contract to mortgage realty including a right of way which is not appurtenant to the realty and which is not described, is not sufficient.* A memorandum showing that a specific tract was intended, but not describing it further, is insufficient.^ Thus a contract for " one of the lots set aside for sale,"^ for " that lot,'" or for " four lots of timber, more or less,"* are each insufficient. So a check showing that it is given as " part pay- ment on coal lands " is insufficient where the vendor owned much more coal land than that sold.^ So a sale of " a strip of land in front of Golden Rule Store and Stent Market " has been held insufficient where such strip is unenclosed and can be identified only by oral evidence.^'' So a description by acreage only as a memorandum in the form of a receipt for "' thirty acres,"" or a contract for the " sixty acres,"^^ or for " 115 acres,"^^ or " one third interest in five acres located near said works,"^* are each insufficient. If the memorandum shows that the location of the realty bargained for was left open for future agreement it is insufficient." Indeed, in cases of this 2Kopp V. Reiter, 146 111, 437; 37 8 Douglass v. Bunn, 110 Ga. 159; Am. St. Rep. 156; 22 L. R. A. 273; 35 S. E. 339. 34 N. E. 942; Edens v. Miller, 147 » Thompson v. Coal Co., 135 Ala. Ind. 208; 46 N. E. 526. 630; 93 Am. St. Rep. 49; 34 So. 31. 3 Alba V. Strong, 94 Ala. 163; 10 lo Craig v. Zelian, 137 Cal. 105; So. 242; Edens v. Miller, 147 Ind. 69 Pae. 853. 208 ; 46 N. E. 526 ; Voorheis v. Eit- n Humbert v. Brisbane, 25 S. C. ing (Ky.), 22 S. W. 80; Weil v. 506. Willard, 55 Mo. App. 376. 12 Cooley v. Lobdell, 153 N. Y. 4, John F. Fowkes Mfg. Co. v. Met- 596; 47 N. E. 783. calf, 169 Mass. 595; 48 K E. 848. " Wortham v. Smith (Ky.), 66 5 Lippincott v. Bridgewater, 55 N. S. W. 390. J. Eq. 208; 36 Atl. 672; Davis v, i* Hamilton v. Harvey, 121 111. Ross (Tenn. Ch. App.), 50 S. W. 469; 2 Am. St. Rep. 118; 13 N. E. 650. 210. 6 Williams v, Stritz (Miss.), 17 is Weil v. Willard, 55 Mo. App. So. 227. 376; Falls of Neuse Mfg. Co, v. 7 Ray V. Card, 21 R. I, 362; 43 Hendricks, 106 N. C, 485; 11 S. E. Atl. 846. 568. CONTRACTS WIIICII MUST BE PROVED BY WRITING. 1055 class there is no contract. The difficuhy is deeper than the means of proof. Thus where a tract is to be selected by both parties out of a larger tract, as where the parties were to agree on a tract of forty by one hundred twenty feet out of a certain eighty-acre tract to front on a street^*' the memorandum is in- sufficient. So a description showing a sale of lots out of a larger tract not yet subdivided is insufficient.^^ However, a contract to sell ten acres in a consecutive tract out of a tract of forty acres, to have the same average value and quality as the entire tract, has been held sufficient.^® If the tract is to be selected out of a larger tract by one of the parties, a different question arises on which there is a divergence of authority ; some courts holding the contract definite and the memorandum sufficient,^^ others taking the view that the description in the memorandum is insufficieoit since it must be supplemented by oral evidence.'" A memorandum which gives the length of the boundary lines without the means of locating them is insuffi- cient.^^ Examples of this are as follows: A contract to buy a certain number of feet front on a given avenue on the east side between two designated streets ;"" a contract to lease a tract twenty feet square, eight rods south and fifteen east of the northwest comer of a certain tract f^ or a contract to sell " six by ten rods deep to be taken either way " from a house on a tract of land twenty rods square fronting on two streets.^* So 16 Scanlon V. Oliver, 42 Minn. 538 ; 171; Hayes v. Burkham, 51 Ind. 44 N. W. 1031. 130; Smith v. Bowler, 2 Disney "Chellis V. Grimes, — N. H. — ; (Ohio) 153; Pulse v. Hamer, 8 Or. 56 Atl. 742. 252; Ledford v. Ferrell, 34 N. C. 18 Burgon v. Cabanne, 42 Minn. 285 ; disapproving Lingeman v. 267; 44 N. W. 118. Shirk, 15 Ind. App. 432; 43 N. E. 19 Lauder v. Peoria, etc.. Society, 33.) 71 111. App. 475; Lingeman V. Shirk, 21 geanlon v. Oliver, 42 Minn. 15 Ind. App. 432; 43 N. E. 33. 538; 44 N. W. 1031. 20 Alabama Mineral Land Co. v. 22 Fox v. Courtney, 111 Mo. 147; Jackson, 121 Ala. 172; 77 Am. St. 20 S. W. 20. Rep. 46; 25 So. 709. (Citing Am- 2.3 Diamond Plate-Glass Co. v. burger v. Marvin, 4 E. D. Smith 393; Tennell, 22 Ind. App. 132; 52 N. E. Warden v. Williams, 62 Mich. 50; 4 168. Am. St. Rep. 814; 28 N. W. 796; 24 Reed v. Lowe, 8 Utah 39; 29 Yates V. Martin, 2 Pinney (Wis.) Pac. 740. 1056 PAGE ON CONTRACTS. a memorandinn which gives the courses and distances hut does act give a starting point for the lines is insufficient."^ A memorandum which gives a part of one boundary, as by describ- ing the land bounded as adjoining a specified tract is insuffi- cient."" Whether the place at wdiich the contract is dated can be assumed to be the place where the land is located, to supple- ment what would otherwise be a deficiency in description, is a question on which courts differ, some holding that this assump- tion can be made"" and others that it cannot."^ It is not, however, necessary to give a technical description of the realty bargained for,^^ A description of realty by its popu- lar name, together with a sufficiently definite location,"" as in a given county,^^ or on a certain island,^^ or within a given dis- tance and in a certain direction from a specified city,^^ or in a certain range, township and section,"* have each been held sufficiently definite. A description giving section, range and township, and describing the tract as the " Merchant Farm,"^° or describing the land as " the Burns farm,'"'® have each been held sufficient. Merely giving its name without the state or county in which it is located, as calling it the " Baldwin Place " without otherwise identifying its owner,^^ is insufficient. 25Edens v. Miller, 147 Ind. 208; lis v. Burgess, 37 Kan. 487; 15 46 K E. 526. Pac. 536; Springer v. Kleinsorge, 83 26 Jones V. Tye, 93 Ky. 390; 20 Mo. 152; House v. Jackson, 24 Or. S. W. 388; Vickers v. Henry, 110 N. 89; 32 Pac. 1027. C. 371 ; 15 S. E. 115. si Cunyus v. Lumber Co., 20 Tex. 27 Ross V. Purse, 17 Colo. 24; 28 Civ. App. 290; 48 S. W. 1106. Pac. 473; Langert v. Ross, 1 Wash. 32 House v. Jackson, 24 Or. 89; 250; 24 Pac. 443. 32 Pac. 1027. 28 Ross V. Allen, 45 Kan. 231; 10 ss Sailor v. Gilfillan, 73 Mo. App. L. R. A. 835; 25 Pac. 570. (The 152. land was described by certain street 34 Hayes v. O'Brien, 149 111. 403; numbers on Delaware Street of " the 23 L. R. A. 555; 37 N. E. 73. (Tlie city proper." It was dated at part of a specified farm east of a. "Leavenworth," and did not other- right of way.) wise show where the land was.) 35 Hayes v. O'Brien, 149 111. 403; 29 Sheldon v. Carter. 90 Ala. 380; 23 L. R. A. 555; 37 N. E. 73. 8 So. 63; Baker v. Hall, 158 Mass 36 Mull v. Smith, — Mich, — ; 94 361; 33 N. E. 612. N. W. 183. 30 Hayes v. O'Brien. 149 111. 403; 3- Wood v. Zeigler, 99 Tenn. 515; 23 L. R. A. 555; 37 N. E. 73; Hoi- 42 S. W. 447. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1057 A description of realty as located at or near a given place and owned by a given person is sufficient if no other realty within the locality described is owned by such person.^* Thus a de- scription of land as vendor's " place in Stratford, Conn., con- taining 15 acres more or less,"^* or of " one one and a half stoiy frame dwelling house with bam and out buildings and all land now being used in connection therewith, being about seven acres more or less situated in Sagus Center, Essex County,"*'' each is sufficient. This rule has been carried so far in some juris- dictions that " twenty-four acres of land at T " has been held to imix>rt land owned by the promisor and hence sufficiently described.*^ If the vendor owns more than one tract in the locality speci- fied, a description of land as in that locality and of a specified area may be sufficiently definite.*^ Without additional aid from a description of area and the like, mere description by the owner and location is not sufficient where such owner owns more than one piece of property in such location.*^ However, if the vendor contracts to convey an undivided third of all his realty, no further description is necessary.** A description of land by reference to the title whereby it was acquired,*^ as land received by vendor from his father,*" or land bought from a 38 Described by the city in which 4i plant v. Bourne (1897), 2 Ch. it is located. Hodges v. Rowing, 58 281; so Hurley v. Brown, 98 Mass. Conn. 12; 7 L. R. A. 87; 18 Atl. 545; 96 Am. Dec. 671. 979; St. Paul Land Co. v. Dayton, 42 Gray v. Smith, 76 Fed. 525. 42 Minn. 73; 43 N. W. 782. De- 43 Doherty v. Hill, 144 Mass. 465; scribed by the city and the street 11 N. E. 581. therein on which the land is located. ** Moayon v. Moayon, — Ky. — ; White V. Breen, 106 Ala. 159; 32 60 L. R. A. 415; 72 S. W. 33. L. R. A. 127; 19 So. 59; Scanlon v. 45 Ewing v. Stanley (Ky.). 69 Geddes, 112 Mass. 15. Described as S. W. 724; Atwood v. Cobb, 16 a store lot on the corner of two Pick (Mass.) 227; 26 Am. Dec. given streets in a given city. White 657. V. Mooers, 86 Me. 62; 69 Atl. 936. 46 Ryder v. Loomis, 161 Mass. 39 Hodges V. Rowing, 58 Conn. 161; 36 N. E. 836; Parks v. Bank. 12; 7 L. R. A. 87; 18 Atl. 979. 97 Mo. 130; 10 Am. St. Rep. 295; 40 Sanders v. Boyer, 152 Mass. 11 S. W. 41; affirming 31 Mo. App. 141; 9 L. R. A. 255; 25 N. E. 86. 12. 67 103S PAGE ON CONTRACTS. given person,*^ is sufficient. So a description of land by its present ownership, as land in which the two contracting par- ties have a joint equitable estate/^ is sufficient. A description of land by the use to which it is put is sufficient. Thus a sale of vendor's " land where he now lives,"*** or of his " home place and storehouse,"^" complies with the statute. A contract for the sale of realty, describing its boundaries so that they may be located, ^^ or giving section numbers,^" or lot numbers,^^ not with technical accuracy, yet so that the land can be located from the description in view of the surrounding circumstances, is sufficient. A description giving the city, street and street number is sufficient.^* Thus a description of realty as " house and land No. 10 Howard Street," even if it erroneously adds '' belonging to A " when it in fact belongs to A and two others, is sufficient. ^^ If the number is omitted, being left blank, the description has been held to be sufficients^ If the street and etreet number are given, but not the city, the description is insufficient.^^ A description of land which gives one boundary, the direction of an adjoining side and the area of the tract con- veyed, is sufficient. s^ Abbreviations do not make a descrip- tion insufficient if they are such that one familiar with the land described would be able to identify the land by means of such description.^^ If, however, it is necessary to employ oral evi- 47 Newman v. Iron Co., 80 Fed. Scott, 76 Wis. 662; 45 N. W. 532. 228 ; 25 C. C. A. 382. ss St. Paul Land Co. v. Dayton, 48 Black V. Crowther, 74 Mo. App. 42 Minn. 73; 43 N. W. 782. 480. For somewhat similar facts 54 Claphan v. Barber, — N. J. Eq. see Easton v. Thatcher, 7 Utah 99; — ;"56 Atl. 370. 25 Pac. 728. 55 Tobin v. Larkin, 183 Mass. 389; 49 Falls of Neuse Mfg. Co. v. Hen- 67 N. E. 340. dricks, 106 N. C. 485; 11 S. E. 568. 56 Bulkley v. Devine, 127 111. 406; 50 Henderson v. Perkins, 94 Ky. 3 L. R. A. 330; 20 N. E. 16. (Pos- 207; 21 S. W. 1035. session having been taken under the 51 Kyle V. Rhodes, 71 Miss. 487; lease.) 15 So. 40; Sherman v. Simpson. 121 57 Ross v. Allen, 45 Kan. 231; 10 N. C. 129; 28 S. E. 186. L. R. A. 835; 25 Pac. 570. 52 Ryan V. United States, 136 U. 58 Felty v. Calhoon, 139 Pa. St. S. 68; Mann v. Higgins, 83 Cal. 66: 378; 21 Atl. 19. 23 Pac. 206; Wilson v. Emig, 44 so Melone v. Ruffino, 129 Cal. 514; Kan. 125; 24 Pac. 80; Combs v. 7!) Am. St. Rep. 127; 62 Pac. 93. CONTRACTS WHICH MUST BE PROVED BY WRITING. 105 U deuce of the intention direct to show the realty contracted for, the description is insufficient. Thus a description of realty as " the southeast of twenty-five, nine, Kingman, Kansas," is in- sufficient.*"" §700. Other types of subject-matter. While questions as to the sufficiency of the description of the subject-matter are raised most frequently in contracts for the sale of realty, they are not confined to that class. The same test applies to other kinds of subject-matter in contracts Avithin the statute of frauds as applies to contracts for the sale of an interest in realty. Technical accuracy of description is not necessary; but as the entire contract must be proved by writing, the description must be such as to specify the subject- matter so that one familiar with such subject-matter can iden- tify it, without further evidence of the intention of the parties direct. Thus in contracts to answer for the debt of another the debt may be described as incurred for the " house and bam completed for Mr. B,"^ or as the bill that A " owes your con- cern,"" or by reference to the " amount of debt and damage contained in a writ," giving the names of plaintiff, defendant and officer making the service, together with the date of the service.^ So a contract to sell goods in a territory not suffi- ciently defined* cannot be supplemented by oral evidence if not to be performed within a year from the date of the making thereof. If the memorandum refers to two or more kinds of chattels to be sold and does not show how much of each is bar- 60 Hartshorn v. Smart. 67 Kan. * Ralini v. Klerner, 99 Va. 10; 543; 73 Pac. 73. 37 S. E. 292. (It not appearing 1 Star Brewery v. Farnsworth, 172 whether the contract was to sell 111. 247; 50 N. E. 228; affirming 70 goods in all the Southern States 111. App. 150. or only in seven out of the eleven.) 2 Haskell v. Tukesbury. 92 Me. In Kaufman v. :\Ifg. Co., 78 la. 551; 69 Am. St. Rep. 529; 43 Atl. 679; 16 Am. St. Rep. 462; 43 N. W. 500. (The letter being addressed to 612. a contract to sell goods in a the creditor.) certain city "and the territory trib- 3 Savage v. Robinson, 93 Me. 262; utary thereto" was held sufficiently 44 Atl. 926. definite. 1060 PAGE ON CONTRACTS. gained for, it is insufficient.^ On the otLei- hard, u tT»e ve-^dor has the option of delivering which evet kind of chattel he pleases the memorandum is sufficient.® A contract for the sale of " the same cattle picked out by said Woods on Jan. 27, 1893," sufficiently describes them.'' Abbreviations shown to have a definite meaning in the trade, or business do not make the memorandum defective. Thus a memorandum : " Will de- liver S. R. & Co. best refined iron 50 tons within 90 days at 5 ct. p. lb. 4 of cash. Plates, to be 10 to 16 inches wide and 9 ft. to 11 long. This offer good till 2 o'clock Sept. 11, 1862. J. jN'. F. J. B. R." was held sufficient.^ So a telegram, " Bought 13 at 11%," and a telegram in reply, " We confirm purchase Wagner 11% like sample," is sufficient; the extrinsic evidence showing that the contract was, for the sale of hops made by the agent Wagner.^ If the contract provides for the delivery of a certain number of " bales " of cotton, and the evidence shows that this term iy ambiguous and denotes more than one weight, and that the> parties had a specified agreement as to what weight w^as meant, the memorandum is insufficient.^" If the consideration expressed is a promise to dig a well on certain specified lots, it is sufficiently definite without locating it more exactly or defining its character further." Terms of a contract fixed by law, such as the time of begin to teach, where the open- ing of the term is fixed by the rules of the district,^' need not be expressed in the memorandum. §701. Consideration. Fourth, whether the consideration must be set forth in the memorandum is a question on one branch of which there is a 5 Ellis V. R. R., 7 Colo. App. 350; » Brewer v. Horst and Lachmund 43 Pae. 457. Co., 127 Cal. 643; 50 L. R. A. 240; 6 American, etc., Mfg. Co. v. Steel 60 Pac. 418. Co., 101 Fed. 200; Burgess-Sul- lo Stewart v. Cook. 118 Ga. 541; phite Fibre Co. v. Broomfield, 180 45 S. E. 398. Mass. 283; 62 N. E. 367. n Ross v. Purse, 17 Colo. 24; 28 7 Woods V, Hart. 50 Neb. 497; 70 Pac. 473. N. W. 53. 12 Burkhead , v. School District, 8 Sanborn v. Flagler, 9 All, 107 la. 29; 77 K W. 491. (Mass.) 474. CONTKACTS WHICH MUST BE PROVED BY WEITING. 1061 hopeless conflict of authority. There are really two separate questions here involved which must be treated separately. The first question concerns the consideration alone and arises when the consideration for the promise is not an executory promise, but has been performed at or before the making of the promise for which it is a consideration. Whether in such cases the con- sideration must appear is the question upon which the conflict is hopeless, some courts holding that it must appear on the theory that the statute requires the substance of the entire contract of which the memorandum is offered in evidence, to appear therein, and that the consideration is an essential element of such con- tract,^ and other courts holding that it need not appear on the theory that it is only the executory promise which must be proved by a writing.^ In the cases here cited the statute under discussion required the " agreement " or some note or memo- randum thereof to be in writing. \Vhere the statute uses " agreement or promise " instead of " agreement " simply, the courts have held that the consideration need not appear,^ and in 1 Wain V. Warlters, 5 East 10 ; Saunders v. Wakefield, 4 B. & Ad. 595; James v. Williams, 5 B. & Ad. 1109; Bainbridge v. Wade, 16 Q. B. 89; Foster v. Napier, 74 Ala. 393; Hazeltine v. Larco, 7 Cal, 32; Ep- pich V. Clifford, 6 Colo. 493; Wel- din V. Porter, 4 Houst. (Del.) 236; Fry V. Piatt, 32 Kan. 62; 3 Pac. 781; Culbertson v. Smith, 52 Md. 628; 36 Am. Rep. 384; Messmore v. Cunningham, 78 Mich. 623; 44 N. W. 145; Parry v. Spikes, 49 Wis. 384; 35 Am. Rep. 782; 5 N. W. 794. The doctrine of Wain v. W^arlters, 5 East 10, was doubted in Phillips V. Bateman, 16 East 356, and de- nied in ex parte Gardom, 15 Ves. 286, but was finally established in the other English cases cited. 2 Ringgold V. Newkirk, 3 Ark. 96 ; Toomy v. Dunphy, 86 Cal. 639; 25 Pac. 130; Sage v. Wilcox, 6 Conn. 81; Davis v. Tift, 70 Ga. 52; Ames V. Moir, 130 111. 582; 22 N". E. 535; affirming, 27 111. App. 88; Memory V. Niepert, 33 111. App. 131 ; Strubbe V. Lewis (Ky.), 76 S. W. 150; Ew- ing V. Stanley (Ky.), 69 S. W. 724; Haskell v. Tukesbury, 92 Me. 551; 69 Am. St. Rep. 529; 43 Atl. 500; Williams v. Robinson, 73 Me. 186; 40 Am. Rep. 352; Packard v. Rich- ardson, 17 Mass. 122; 9 Am. Dec. 123; Little v. Nabb, 10 Mo. 3; Ruck- er V. Harrington, 52 Mo. App. 481; McWilliams v. Lawless, 15 Neb. 131; 17 IN. W. 349; Brown v. Fowler, 70 N. H. 634; 47 Atl. 412; Nibert v. Baghurst, 47 N. J. Eq. 201 ; 20 Atl. 252; Thornburg v. Masten, 88 N. C. 293; Reed v. Evans, 17 Ohio 128; Gregory v. Gleed, 33 Vt. 405. sRateliff v. Trout, 6 J. J. Mar. (Ky.) 605; Gilman v. Kibler, 5 Humph. (Tenn.) 19; Fulton v. Rob- inson, 55 Tex. 401; Colgin v. Hen- ley, 6 Leigh (Va.) 85. 1062 PAGE ON CONTRACTS. some cases have based their decisions on this difference in word- ing between their statute and the English statute. It is danger- ous, however, to base distinctions in construction upon the as-. sumption that the words " agreement," " promise " and " con- tract " are used with technical accuracy and with distinct mean- ings in so loosely drawn a statute. In many states this question is settled by statute ; but unfortunately some statutes provide that in some or all of the contracts included in the statute of frauds the consideration must appear,* while other statutes pro- vide that it need not appear,^ and so the conflict remains more hopeless than ever. §702. Price and Terms. The second question concerns the consideration when it con- sists of executory promises. In such cases the consideration is not only important because it makes the executory promise of the adversary party enforceable, but it is itself one of the prom- ises which with that of the adversary party complete the con- tract. Omitting to state a consideration which is an executory promise is therefore omittingMjne of the terms of the contract. Accordingly the Aveight of authority, even in states where an executed consideration need not be expressed in the memoran- dum, requires the memorandum to disclose the consideration when it consists of executory promises.^ The distinction be- ^Speer V. Crowder (Ala.), 32 So. 186; 40 Am. Rep. 352; White v. 658; Lindsay v. McRae, 116 Ala. Mfg. Co., 179 Mass. 427; 60 N. E. 542; 22 So. 868; White v. White, 791; Hayes v. Jackson, 159 Mass. 107 Ala. 417; 18 So. 3; Baltimore 451; 34 N. E. 683; MeWilliams v. Breweries Co. v. Callahan, 82 Md. Lawless, 15 Neb. 131; 17 N. W. 106; 33 Atl. 460; Siemers v. Siemers, 349. 65 Minn. 104; 60 Am. St. Rep. 430; i Taylor v. Smith (1893), 2 Q. B. 67 N. W. 802; Cooley v. Lobdell, 65; Arnold v. Garth, 106 Fed. 13; 153 N. Y. 596; 47 N. E. 783; Kuener Reid v. Plate-Glass Co., 85 Fed. 193; V. Smith, 108 Wis. 549; 84 N. W. 29 C. C. A. 110; Peoria Grape 850; Van Doren v. Roepke, 107 Sugar Co. v. Babcock Co., 67 Fed. Wis. 535; 83 N. W. 754; Twohy 892; Phillips v. Adams, 70 Ala. 373; Mercantile Co. v. Drug Co., 94 Wis. Turner v. Lorillard Co., 100 Ga. 319: 68 N. W. 963. 645; 62 Am. St. Rep. 345; 28 S. E. 5 Williams v. Robinson. 73 Me. 383 (citing. Wain v. Warlters, 5 CONTRACTS WHICH MUST BE PROVED BY WRITING. 1063 tween the necessity of stating the consideration and the necessity of stating the price is recognized in those jurisdictions in which the price must be stated if an executory promise, but if executed, it need not be stated.^ Thus a memorandum of a sale of realty in the form of a re- ceipt, which shows the price for one-third of which the receipt is given, and which provides that a title bond will be given on the execution of notes for the balance, is defective if it does not show how many notes are to be given, when they are due and what rate of interest they are to bear.^ The price may be sufficiently described by reference to other instruments, however. Thus a memorandum of a contract for the sale of realty at a given price with a clause providing for the payment of a certain part of the purchase price " by the assign- ment of a certain mortgage now held by X for that amount " describes the mortgage with sufficient certainty.* A memoran- dum which shows that certain terms of credit and of the pay- ment of the purchase price have been agreed upon, but which does not show what such terms are, is defective.^ A memoran- East 10; Elmore v. Kingscote, 5 Mo. 422; 45 S. W. 300; reversing in Barn. & C. 583; Acebal v. Levy, 10 banc, 37 S. W. 516, the court pointed Bing. 376; Ex-parte Gardom, 15 out that the "heresy" that oral Ves. Jr. 286; Goodman v. Griffiths, evidence was admissible to show the 1 Hurl. & N. 574; Ashcroft v. But- price, which had once been enter- terworth, 136 Mass. 511; Waterman tained by the Missouri court in V. Meigs, 4 Cush. (Mass.) 497; O'Neil v. Grain, 67 Mo. 250, and James v. Muir, 33 Mich. 223; Han- Ellis v. Bray, 79 Mo. 227, had been son V. Marsh, 40 Minn. 1 ; 40 N. W. corrected in Ringer v. Holtzslaw, 841; Stone v. Browning, 68 N. Y. 112 Mo. 519; 20 S. W. 800, and 598; Ide v. Stanton. 15 Vt. 685; 40 Boyd v. Paul, 125 Mo. 9; 28 S. W. Am. Dec. 698) ; Norris v. Blair, 39 171. Ind. 90; Fry v. Piatt, 32 Kan. 62; 2 Sayward v. Gardner, 5 Wash. Kay V. Curd, 6 B. Mon. (Ky.) 100; 247; 31 Pac. 761; 33 Pac. 289. Rector Provision Co. v. Sauer, 69 3 Nelson v. Improvement Co., 96 Miss. 235; 13 So. 623; Newberry v. Ala. 515; 38 Am. St. Rep. 116; 11 Wall, 65 N. Y. 484. This rule ob- So. 695. tains even where on revision the * Loveridge v. Shurtz. Ill Mich, clause in the statute requiring the 618; 70 N. W. 132. consideration to appear is intention- s Snow v. Nelson, 113 Fed. 353; ally omitted. Drake v. Seaman. 97 Nelson v. Improvement Co., 96 Ala. N.Y. 230. In Kelly v. Thuey, 143 .",1.5; 38 Am. St. Rep. 116; 11 So. 1064: PAGE ON CONTKACTS. diim so indefinite that it might show a contract to sell realty or a contract of agency is insufficient.^ §703. What is statement of consideration. In jurisdictions where the consideration must appear the question of what amounts to a statement of the consideration has often been presented for decision. If the consideration is ex- pressly stated, this rule is, of course, complied with, even if the consideration as expressed is a nominal one, such as one dollar/ If a sealed contract is enforceable without a consideration, the presence of a seal upon a written contract dispenses with any statement of the consideration since there need be none, and if the contract is enforceable without a consideration, the memo- randum need show only the actual terms of the contract.^ If the note or memorandum of the agreement shows on its face that the promise was made " for value received " no further state- ment of the consideration is necessary.^ Thus if a contract to answer for the debt of another purports to be for " value received," the consideration is sufficiently expressed.* The same rule applies to contracts for the sale of realty.^ It is not neces- sary, however, either that the consideration be stated expressly or that the contract should be sealed. An unsealed contract or memorandum may be sufficient if the consideration reasonably 695; Lester v. Heidt, 86 Ga. 226; Smith, 108 Wis. 549; 84 N. W. 850. 10 L. R. A. 108; 12 S. E. 214; Brun- This rule is sometimes distorted into dige V. Blair, 43 Kan. 364 ; 23 Pac. the form that the seal imports a con- 482; Parker's Heirs v. Bodley, 4 sideration. Bibb. (Ky.) 102; Schenck v. Im- See §§ 561-563. provement Co., 47 N. J. Eq. 44; 19 3 Flowers v. Steiner, 108 Ala. 440; Atl. 881; Edichal Bullion Co. v. 19 So. 321; McMahan v. Jacoway, Gold Mining Co., 87 Va. 641; 13 S. 105 Ala. 585; 17 So. 39; Whitney v. E. 100; Buck v. Pickwell, 27 Vt. Stearns, 16 Me. 394; Dahlman v. 157. Hammel, 45 Wis. 466; Day v. El- eCatterlin v. Bush, 39 Or. 496; more, 4 Wis. 190. 65 Pac. 1064. 4 Martin v. Powder Co., 2 Colo. 1 Boiling V. Munchus, 65 Ala. 558. 596; Osborne v. Baker, 34 Minn. 2 United States v. Linn, 15 Pet. 307; 57 Am. Rep. 55; 25 N. W. 606; (U. S.) 290; Edelen v. Gough. 5 Gill. Miller v. Cook, 23 N. Y. 495; Dahl- (Md.) 103; Johnston v. Wadsworth, man v. Hammel. 45 Wis. 466. 24 Or. 494; 34 Pac. 13; Kuener v. s Cheney v. Cook, 7 Wis. 413. CONTEACTS WHICH MUST BE PROVED BY WRITING. 1065 and fairly appears from the entire instrument, without being expressly stated.® As might be expected from so abstract a pro})- osition, the courts which agree upon this rule do not agree upon its application. The following are examples of memoranda of a contract to answer for the debt of another, in which it was held that the consideration could be inferred reasonably from, the writing itself: A letter written by A promising to pay B the amount due on certain lumber sold by B to C if B would deliver such lumber to C to enable C to perform his con- tracts \^ a letter by A promising that if B will release certain securities of A's employee C, A will guarantee performance by C of his promise to pay a certain sum annually on his debt to B, with a letter from C referring to A's letter and promising to pay such sum annually f a writing as follows : " I guarantee the payment of the contents of the within note to X, the one-half within six months and the other half within twelve months ;"" a promise to be responsible " for all such goods as B shall buy of X within one year from date " contemporaneously indorsed on a written contract of sale between X and B ;^° a written instru- ment addressed by A to B agreeing to extend A's guaranty of C's credit for a certain time to cover sales by B to C for such time ;^^ an instrument referring to future sales to be made by B to C in which A agrees to guarantee C's " account ;"^^ a written promise 6 Otis V. Hazeltine, 27 Cal. 81; v. Miller, 97 Wis. 300; 72 N. W. Weldin v. Porter, 4 Houst. (Del.) 869. 236; Baltimore Breweries Co. v. 7 Choate v. Hoogstraat (Wis.), Callahan, 82 Md. 106; 33 Atl. 460; 105 Fed. 713. Ordeman v. Lawson, 49 Md. 135; 8 Barney v. Forbes, 118 N. Y. 580; Straight v. Wight, GO Minn. 515; 63 23 N. E. 890; distinguishing Evans- N. W. 105; Church v. Brown, 21 ville National Bank v. Kauffman, 93 N. Y. 315; Reid v. Packing Assoeia- N. Y. 273; 45 Am. Rep. 204; as a lion, 43 Or. 429; 73 Pac. 337; Van case in which no consideration ap- Doren v. Roepke, 107 Wis. 535; 83 peared. N. W. 754. So in contracts to an- 9 Neelson v. Sanborne, 2 N. H. swer for the debt of another. 413; 9 Am. Dec. 108. Straight v. Wight, 60 Minn. 515; lo Church v. Brown, 21 N. Y. 315. 63 N. W. 105; Highland V. Dresser, n Coxe Bros. v. Milbrath. 110 35 Minn. 345; 29 N. W. 55; Church Wis. 499; 86 N. W. 174. V. Brown, 21 N. Y. 315; Waldheim isWahlheim v. Miller, 97 Wis. 300; 72 X. W. 869. 1066 PAGE ON CONTRACTS. as follows : "I will be responsible for tbe purchase of goods from X for B or by his order until I give them notice to the contrary" ;^^ a letter introducing a new customer to a wholesale dealer, which states " I hereby guarantee the collection of any amount which you credit him with not exceeding two thousand dollars."^* A contract of guaranty made contemporaneously Avith the original contract and referring to it, need not express a separate consideration, since the consideration of the original contract supports the contract of guaranty/^ So as an example of this rule applying to contracts not to be performed within the year : A contract signed by both parties whereby A recites that he has employed B for a certain time at a certain salary, though there is no express promise by B to serve for such time,^" so in contracts of sale, a memorandum that A agrees to sell the mer- chandise in certfiin store buildings situated on certain lots to B in consideration of B's purchase of such lots is sufficient/^ On the other hand, the following are examples of memoranda of a contract to answer for the debt of another, insufficient because the consideration is not expressed with sufficient clearness ; an agreement by A, the holder of a chattel mortgage given by C to pay C's debt to B if B would forbear suit,^® and an agreement by A to pay so much of C's note to B as is unpaid on a certain day, though the agreement is dated the same day as the note and recites that the note is given in satisfaction of a mortgage executed by C to B.^** A contract of guaranty executed after the principal obligation is incurred must express the considera- tion if this rule is in force."" Thus a mere indorsement of a note has been held an insufficient contract of ffuarantv."^ 13 Williams v. Ketchum, 19 Wis. lahan, 82 :\Id. 106; 33 Atl. 460. 231. -17 Van Doren v. Roepke, 107 Wis. 14 Eastman v. Bennett, 6 Wis. 535; 83 N. W. 754. 232; approved in Young v. Brown, isTwohy Mercantile Co. v. Drug 53 Wis. 333; 10 N. W. 394. Co., 94 Wis. 319; 68 X. W. 963. 15 Davis V. Tift. 70 Ga. 52 ; Xieh. i9 Lindsay v. McRae, 116 Ala. ols, etc., Co. V. Dedrick, 61 Minn. 542; 22 So. 868. 513; 63 N.W. 1110; Erie, etc., Bank' 20 Brewster v. Silence, 8 X. Y. V. Coit, 104 N. Y. 532; 11 N. E. 207; Hall v. Farmer, 2 N. Y. 553. 54. 21 Schafer v. Bank. 59 Pa. St. 144; 16 Baltimore Breweries Co. v. Cal- 98 Am. Dec. 323; Parry v. Spikes. 49 CONTRACTS WHICH MUST BE PROVED BY WRITING. 10G7 Among contracts in consideration of marriage a promise by A to pay B " on the wedding day when she shall become my wife the sum of one thousand dollars " has been held insufficient.^" Among contracts for the conveyance of realty a promise by A to B, his wife, who has left him, that if she will come back he will do as he has agreed and will give her a deed of sixty acres, has been held insufficient."^ §704. Memorandum showing all terms sufficient. If the memorandum shows all the terms of the transaction, it is clearly sufficient if the contract is one which is definite enough to be enforced if it were not for the statute of frauds, since this statute is not intended either to add to or to take from the pre- existing elenients of a valid contract.'" Thus, if the price is agreed upon with sufficient certainty by reference to some mode of ascertaining it in the future, the memorandum need not show anything further." Hence if the parties agree that the lessor may sell the premises on giving sixty days' notice to lessee, and on giving the lessee the privilege of buying the premises if he will pay as much as any other person, a memorandum to that ef- fect shows the price with sufficient certainty.^ So a memoran- dum showing a contract to pay what the vendor j^aid for the property,* or what he spent on it,^ or to settle the price by arbi- tration," is sufficient. So if the parties do not agree upon any price, so that the vender is entitled to recover a reasonable price, the memorandum need show nothing more than the terms of Wis. 384; 35 Am. Rep. 782; 5 N. W. Am. Rep. 173; Brown v. Bellows, 4 794; Taylor v. Pratt, 3 Wis. 674. Pick. (Mass.) 179. 22Siemers v. Siemers, 65 Minn. 3 Marske v. Willard. 169 111. 276; 104; 60 Am. St. Rep. 430; 67 N. 48 N. E. 290; affirming, 68 111. App. W. 802. 83. 23Cooley V. Lobdell, 153 N. Y. * Atwood v. Cobb, 16 Pick. 596; 47 N. E. 783. (Mass.) 227. 1 In re Robinson's Estate. 142 Cal. 5 Vindquest v. Perky, 16 Neb. 284; 152; 75 Pae. 777. 20 N. W. 301. 2Marske v. Willard, 169 111. 276; 6 Camp v. Moreman, 84 Ky. 635; 48 N. E. 290; affirming. 68 111. App. 2 S. W. 179. 83; Norton v. Gale, 95 111. 533; 35 1068 PAGE ON CONTRACTS. their agreement.' So if the contract is sufSciently definite, a memorandum is siifRcient if it shows tlie terms of such contract but is silent as to terms not agreed upon by the parties.^ Thus a memorandum omitting terms of performance, such as place and time of payment, which have not been agreed upon by the parties, is sufficient if the contract is valid.^ So, while the terms of the contract must appear in the memorandum, if cer- tain terms are left to the discretion of one party and so appear on the memorandum, the memorandum is sufficient if the oral contract is so definite that it would be enforced but for the stat- ute. Thus a memorandum showing that the remainder of the purchase price of certain realtj' sold is to run to suit the pur- chaser's convenience,^" or one showing that a contract of employ- ment for a year is to begin at some time in the future to be fixed by one party within a limit of two weeks agreed upon by both,^* or that a lease is to run for five years from the completion of the building,^^ or one showing that certain kinds of personalty are to be sold and delivered as long as the purchaser continues to take them,^^ have each been held sufficient. So a contract for the sale of realty not specifying the kind of deed that shall be exe- cuted," or a contract for a lease providing that it should be " in the usual form in use " in the city where the leased realty was TValpy V. Gibson, 4 C. B.'837; Ashcroft V. Morrin, 4 Man. & Gr. 450. 8 Kaufman v. Mfg. Co., 78 la. 679; 16 Am. St. Rep. 462; 43 N. W. 612; Miller v. Ry., 58 Kan. 189; 48 Pac. 853 ; Smith v. Shell, 82 Mo. 215; 52 Am. Rep. 365: Langart v. Ross. 1 Wash. 250; 24 Pac. 443. 9 Wilson V. Samuels, 100 Cal. 514; 35 Pac. 148; Miller v. R. R., 58 Kan. 189; 48 Pac. 853; Smith v. Shell. 82 Mo. 215; 52 Am. Rep. 365: Sayre v. Mohney. 35 Or. 141 : 56 Pac. 526 ; Langart v. Ross, 1 Wash. 250; 24 Pac. 443. 10 Langart v. Ross, 1 Wash. 250; 24 Pac. 443. (Such remainder of the purchase price being the amount of a mortgage on the premises which the purchaser was to pay when due. ) 11 Troy Fertilizing Co. v. Logan, 96 Ala. 619; 12 So. 712. 12 Hammond v. Barton, 93 Wis. 183; 67 N. W. 412. So Colclough v. Carpeles, 89 Wis. 239 ; 61 N. W. 836. 13 Kaufman v. Mfg. Co., 78 la. 679; 16 Am. St. Rep. 462; 43 N. W. 612. (In this case the contract gave the purchaser the exclusive right to sell a given brand of cigar in cer- tain territory as long as he contin- ued to order it.) . "Miller v. R. R., 58 Kan. 189; 48 Pac. 853. CONTRACTS WHICH MUST BE PEOVED BY WRITING. 1069 located,^^ are each sufficient. A memorandum of a sale of realty which fixes the place of payment at a certain city has been held sufficiently definite, and oral evidence has been received to show at what place in such city payment should be made.^° So the omission of tenns which may be supplied from the rest of the memorandum does not make it invalid.^'' Thus leaving blank the amount specified does not avoid such memorandum if it furnishes the means of ascertaining such amount, as the amount remaining due from the property-owner to the contractor.^® IX. Methods of Satisfying the Seventeenth Section OF the Statute of Frauds. §705. Methods of satisfying the seventeenth section. An important point of difference between the fourth section and the seventeenth section of the statute of frauds is this. The fourth section provides without alternative provision, that the contract or some note or memorandum thereof must be in writ- ing. The seventeenth section provides four courses: (1) a written contract or memorandum ; ( 2 ) acceptance and actual receipt of the property sold; (3) payment of part or all of the purchase price ; (4) payment of earnest. Any one of these four courses complies literally with the statute and makes the con- tract enforceable. Payment of the purchase price, payment of earnest, and acceptance and receipt, are none of them merely acts of part performance which justify equit}' in enforcing the contract in the absence of a written memorandum and in disre- gard of the statute.^ They or any of them constitute compli- ance with the statute as truly as the wintten memorandum. Pull performance by one^ or both^ of the parties, is a compliance isScholtz V. Ins. Co., 100 Fed. is Wilson v. Samuels, 100 Col. 673; 40 C. C. A. 556. 514; 35 Pac. 148. 16 Sayre v. Mohney, 35 Or. 141; i See § 717 et seq. 56 Pac. 526. 2 Fermont Carriage Mfg. Co. v. 17 Wilson V. Samuels, 100 Cal. Thomsen. 65 Neb. 370; 91 N. W. 376. 514; 35 Pac. 148; McLeod v. Adams, 3 Lathrop v. Humble, — Wis. — ; 102 Ga. 533; 27 S. E. 680. 97 N. W. 905. 1070 PAGE ON CONTRACTS. with the statute. Hence it is error to charge that there can be no sale of personalty without a memorandum in writing and refusal so to charge is not error.* If on the other hand a writr ten memorandum has been made as provided for by statute, no acts of performance are necessary.^ Furthermore, the seventeenth section specifically provides the methods of comj)lying with its requirements. Accordingly other acts intended as performance of the contract are insuf- ficient as compliance with the statute. Preparations by the vendee for receiving the goods,^ or for having them transported by vendor, as furnishing flour sacks in which vendor is to ship the flour sold,^ or trimming the sides of a hay rick, sold with others for delivery by vendor at another place,* do not prevent the statute from applying. Still less does conduct by the ven- dor, such as buying goods with which to perform the contract of sale^ prevent the statute from applying. This rule is modified in England by the present statute which provides that accept- ance exists within the meaning of the contract where the buyer does any act which recognizes a pre-existing contract of sale whether he accepts the goods in performance of the contract or not. Thus the statute does not apply where the vendee exam- ines the goods, takes a sample and rejects them on the ground that they are not equal to a sample previously given to him with which the goods were to correspond.^*^ The statute requires acts of the prescribed classes which clearly show the intention of the parties to make the contract which they seek to enforce. Mere words, no matter how clear, cannot satisfy the statute. ^^ Tl\e nature of the written mfimo- 4 Williams v. Andrew, 185 111. 98; sCorbett v. Wolford, 84 Md. 42G; 56 N. E. 1041; affirming, 84 111. 95 Atl. 1088. App. 289. 9 Bernhardt v. Walls, 29 Mo. App. 5 Warner v. Warner, 30 Ind. App. 206. 578; 66 N. E. 760; Wade v. Curtis, lo Abbott v. Wolsey (1895), 2 Q. 96 Me. 309; 52 Atl. 762. B. 97. 6 Harris v. Rounsevel, 61 N. H. ii It is said to be definitely set- 250. tied that " words are not enough, 7 Galbraith v. Holmes, 15 Ind. and that the statute can he satisfied App. 34; 43 N. E. 575. only by sometiiicg done subsequent CONTRACTS WHICH MUST BE PROVED BY WRITING. 1071 randum has been discussed elsewhere/^ The remaining acts specified by this section of the statute will be considered in de- tail. §706. Part payment. By the terms of the statute payment of part of the purchase money is sufficient.^ Payment implies that the vendor takes the thing given in payment with that understanding. Thus a ten- der of the purchase money,^ or of earnest,^ if unaccepted is not a compliance with the statute. Payment of part of the pur- chase price to the agent who is authorized to make the sale is sufficient.* So if several contracts of sale have been made a gen- eral payment on account is sufficient to comply with the statute.^ Payment need not be in money. Anything of value accepted and received in payment amounts to payment within the mean- ing of this section. Payment, within the statute, may be by check,^ or note,'^ as well as by cash. The transfer of a logging contract is payment of the purchase money within the statute.* An oral promise, however, while it is a valuable consideration for a promise in return, is not payment within the meaning of the statute.** Whether an agreement to purchase certain goods and to credit the price thereof upon a debt owed by the vendor to the vendee necessarily involves a part payment for such goods is a question on which there is some divergence of authority. The weight of authority holds that a mere oral agreement to credit the purchase price on the antecedent debt, without anything to the sale unequivocally indicating * Jones v. Wattles, — Xeb. — ; the mutual intentions of the par- 92 N. W. 765. ties." Alderton v. Buchoz, 3 Mich. 5 Berwin v. Bolles, 183 Mass. 340; 322, 329; cited in Gorman v. Bros- 67 N. E. 323. sard, 120 Mich. 611, 618; 79 N. W. 6 McLure v. Sherman, 70 Fed. 190. 903. 7 Baldwin v. Threlkeld, 8 Ind. 12 See §§ 696-704. App. 312; 34 N. E. 851; rehearing 1 Cooper V. Gas Co., 127 Fed. 482; denied, 35 N. E. 841. Contra, C. R. Shaw Lumber Co. v. Manville, Krohn v. Bantz, 68 Ind. 277. 4 Ida. 369; 39 Pac. 559. s Burton v. Gage, 85 Minn. 355; 2 Edgerton v. Hodge. 41 Vt. 676. 88 N. W. 997. 3 Hershey Lumber Co. v. Lumber 9 Edgerton v. Hodge, 41 Vt. 676. Co., 86 Minn. 449; 69 N. W. 215. 1072 PAGE ON CONTKACTS. further is not part payment within the meaning of the statnte/" It has been said that a written receipt must be given or an actual credit on the old debt made." Credit given on the notes of the vendor which were held by the vendee is part payment within the meaning of the statute/^ In some cases, even a written re- ceipt has been treated as a memorandum subject to the rules which control its form and essential elements, and not as part payment/^ Hence if the receipt does not show all the property bargained for, oral evidence is inadmissible to show that addi- tional property was included in the contract." Other courts hold that, assuming such a contract to be within the statute, the satisfaction of the antecedent debt is such part payment as to comply w^ith this section of the statute of frauds.^^ §707. Earnest. Earnest was originally a sum of money paid by the vendee to bind the vendor to his offer ; " a distinct payment for the seller's forbearance to sell or deliver a thing to any one else."^ As it bound the vendor and not the vendee it corresponded to offers at Modern Law, made under contract, supported by valuable con- 10 Norton v. Davison (1899), 1 Q. App. 34; 43 X. E. 575; Brabin v. B. 401 ; Gorman v. Brossard, 120 Hyde. 32 X. Y. 519. Mich. 611; 79 X. W. 903; Matthies- i2Dieckman v. Young, 87 Mo. sen, etc.. Refining Co. v. McMahon, App. 530. 38 N. J. L. 536; Brabin v. Hyde, 32 i3 Milos v. Covacevich, 40 Or. 239; N. Y. 519. " Where no written evi- 66 Pae. 914. dence of the contract is made and i4 Milos v. Covacevich, 40 Or. 239; payment is relied on as the compli- 66 Pac. 914. (This case, however, ance with the statute, mere words was decided under a statute provid- are not sufficient. Some act in part ing that payment must be made at performance or part execution of the the time of the sale, and the receipt contract such as the surrender or was given two days afterwards.) cancellation of the evidence of the is Johnson v. Buchanan. 29 X. S, debt, or a receipt or discharge of the 27. To this effect see the dictum in indebtedness is necessary to make Walker v. Xussey, 16 Mees. & W. the contract valid." Matthiessen. 302. See also Plow Co. v. Hanthorn, etc., Refining Co. v. McMahon, 38 71 Wis. 529; 37 X. W. 825. X J. L. 536, 540; quoted in Milos i Pollock and Maitland's History V. Covacevich, 40 Or. 239. 242; 66 of English Law (2nd Edition), Vol. Pac. 914. II., P- 206 (original paging). 11 Galbraith v. Holmes, 15 Ind. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1073 sideration, not to revoke, which are often called options. As the theory gradually prevailed and finally took statutory form,^ that earnest bound both vendor and vendee, earnest came to be considered a thing of value, transferred from vendee to ven- dor to bind the bargain, not a part of the purchase price nor to be deducted from it. In its present obsolescent form, earnest is often confused with purchase money and is treated as a pay- ment in advance of part of the purchase price.^ Earnest must be paid to the vendor. A deposit by vendee with a third person as forfeit in case of non-performance is not part payment or earnest within the statute,* nor is it a payment of earnest where *the vendee touched the vendor's hand with money, vendee re- taining possession of it.^ §708. Acceptance and receipt. — Necessity of both. By the terms of this section of the statute, acceptance and actual receipt of part or all of the personalty sold is sufficient to make the contract enforceable, without a written memorandum or a payment of part of the purchase price or earnest.^ Accord- ingly the statute does not apply where there has been either full performance,^ or receipt and acceptance of part of the person- 2 Pollock and Maitland's History Co., 165 Mass. 328; 52 Am. St. Rep. of English Law {2nd Edition), Vol. 516; 43 N. K 112; Sullivan v. Sul- II., p. 209. livan, 70 Mich. 583; 38 N. W. 472; 3 Howe V. Hayward, 108 Mass. Beyerstedt v. Mill Co., 49 Minn. 1 ; 54; 11 Am. Rep. 306. 51 N. W. 619; Long v. Martin, 71 4Noakes v. Morey, 30 Ind. 103; Mo. App. 569; Wyler v. Rothschild, Jennings v. Dunham, 60 Mo. App. 53 Neb. 566; 74 N. W. 41; Riley v. 635. Bancroft, 51 Neb. 864; 71 N. W. 5 Blenkinsop v. Clayton, 7 Taunt. 745; Roman v. Bressler, 32 Neb. 597. 240; 49 N. W. 368; Duzan v. Me- 1 Dinkier v. Baer, 92 Ga. 432; serve, 24 Or. .523 ; 34 Pae. 548 ; Ting- 17 S. E. 953; Coffin v. Bradbury, 3 ey v. Land Co., 9 Wash. 34; 36 Pac. Ida. 770; 95 Am. St. Rep. 37; 35 1098; Kimble v. Ford, 7 Wash. 603; Pac. 715; Leggett, etc., Co. v. Col- 35 Pac. 395; Gerndt v. Conrad, 117 lier, 89 la. 144; 56 N. W. 417; Wis. 15: 93 N. W. 804; Alexander Leonard v. Medford, 85 Md. 666; 37 v. Oneida Co., 76 Wis. 56; 45 N. W. L. R. A. 449; 37 Atl. 365; French v. 21. Bank, 179 Mass. 404; 60 N. E. 793; 2 Hinkle v. Fisher, 104 Ind. 84; 3 New England, etc., Co. v. Worsted N. E. 624; Edwards v. Brown, 98 68 1074 PAGE ON CONTEACTS. alty sold.^ In dealing with decisions as distinguished from dicia, it is difficult to deduce an accurate definition of receipt apart from acceptance, or acceptance apart from receipt, since if either is lacking the presence of the other is not enough to uphold the contract. Acceptance and actual receipt must co- exist. The statute uses the word " and," not " or," and one without the other is insufficient.* Accordingly^ mere delivery of Me. 165; 56 Atl. 654; Gray v. Peter- son, 64 Neb. 671; 90 N. W. 559; Brown v. Loan & Trust Co., 117 N. Y. 266; 22 N. E. 952; Walker v. Bamberger, 17 Utah 239; 54 Pac. 108. 3 Scott V. Ry., 12 M. & W. 33; Coffin V. Bradbury, 3 Ida. 770; 95 Am. St. Rep. 37; 35 Pac. 715; Weeks v. Crie, 94 Me. 458; 80 Am. St. Rep. 410; 48 Atl. 107; New Eng- land, etc., Co. V. Worsted Co., 165 Mass. 328; 52 Am. St. Rep. 516; 43 N. E. 112; Mississippi Cotton Oil Co. V. Smith, — Miss. — ; 33 So. 443; Badger Telephone Co. v. Tele- phone Co., — Wis. — ; 97 N. W. 907. 4 Devine v. Warner, 75 Conn. 375; 96 Am. St. Rep. 211; 53 Atl. 782; Corbett v. Wolford, 84 Md. 426; 35 Atl. 1088; Knight v. Mann. 118 Mass. 143; Powder River Live- stock Co. V. Lamb, 38 Neb. 339; 56 N. W. 1019; Wilcox Silver Plate Co. V. Green, 72 N. Y. 17; Curtis v. Lumber Co., 114 N. C. 530; 19 S. E. 374 ; Dinnie v. Johnson. 8 N. D. 153; 77 N. W. 612; Galvin v. Mae- Kenzie, 21 Or. 184; 27 Pac. 1039. " The question as to what is an ac- ceptance and actual receipt of goods within the purview of the statute is one on which the decisions are at variance. These propositions may be considered as settled by the great weight of authority in England, as well as in the courts of this coun- try, and the doctrines embraced in them accord with the reasons which gave rise to this important statute. First, the statute is not complied with unless two things concur — the buyer must accept and actually re* ceive part of the goods and the con- tract will not be good unless he does both. Second, tnere may be an ac- tual receipt without acceptance and an acceptance without a receipt — • an acceptance to be inferred from the assent of the buyer, meant by him to be final, that the goods are to be taken by him as his property un- der the contract. Third, it is imma- terial whether the buyer's refusal to take the goods be reasonable or not. If he refuses the goods, assigning grounds false or frivolovis or as- signing no reasons at all, it is clear that he does not accept the goods. The question is not whether he ought to accept, but whether he has ac- cepted them. Fourth, the question of acceptance or not is a question as to what was the intention of the buyer as signified by his outward acts. . . . Another proposition that is vouched for upon principle and by the weight of authority is that possession of itself is not evi- dence of an acceptance, and that a compliance with the statute would require an acceptance by the vendee as owner." Mechanical Boiler Cleaner Co. v. Kellner, 62 N. J. L. .544, 558; 43 Atl. 599. For similar views see Devine v. Warner, 76 CONTBACTS WHICH MUST BE PROVED BY WEITING. 1075 the goods sold, transferring possession, but not under such cir- cumstances as to show that the vendee has accepted them as full or part perfonnance of the contract of sale is not compliance with the statute.^ Thus if A sells hay standing in ricks to B, to be transported by A to a station to be selected by B, at which point B was to take charge of the hay and pay for it, acts of B's servants under his direction in taking some of the hay from one of the ricks and trimming down one of the sides, do not con- stitute receipt and acceptance as a matter of law, so that the ven- dor can recover where the hay was burned a few minutes after this work on it had begim.*' Receipt and acceptance need not occur at the same time. Receipt may precede acceptance,^ or acceptance may precede receipt.^ The definition of the one is not infrequently so framed as to imply the presence of the other. " Acceptance is the receipt of the thing with an intention to re- tain it, indicated by some act or words sufficient for that pur- pose."^ It is therefore safer to state in what cases they co-exist than to attempt to state in what cases they exist separately. As far as their meanings can be treated separately, these terms are discussed in the following sections. Whether receipt and ac- ceptance exist is a question of fact.^" §709. Receipt. Receipt within the meaning of the statute is the acquisition by the vendee, and the corresponding surrender by the vendor, of the right of possession of the property sold.^ The act of the Conn. 229; 56 Atl. 562. In Utah e Corbett v. Wolford, 84 Md. 426; the original statute of frauds pro- 35 Atl. 1088. vided for acceptance 'or receipt; but " Schmidt v. Thomas. 75 Wis. 529; this was held to be impliedly re- 44 N. W. 771. pealed by a later statute of evidence » Cusack v. Robinson. 1 B. & S. requiring acceptance and receipt. 299. Hudson Furniture Co. v. Carpet Co., » Schmidt v. Thomas, 75 Wis. 10 Utah 31; 36 Pac. 132. 529; 44 N. W. 771. 5 Oilman v.' Hill, 36 N. H. 311; lo Garfield v. Paris, 96 U. S. 557; Caulkins v. Hellman, 47 N. Y. 449; Corbett v. Wolford, 84 Md. 426; 35 7 Am. Rep. 461; Dinnie v. Johnson, Atl. 1088. 8 N. D. 153; 77 N. W. 612, i (In the following quotation "re- 1076 PAGE ON CONTRACTS. vendee in taking possesion with the vendor's consent, of the thing sold is a sufficient receipt where though incomplete, it ex- tends as far as circumstances permit.^ So, as has already been stated, taking possession of part only of the personalty sold is sufficient.^ If the statute prohibits making a contract on Sun- day, some courts treat receipt and acceptance as so far an essen- tial element of the contract that a receipt and acceptance on Sun- day does not make the contract valid.* Property received on Sunday may be accepted on a week-day. Thus where A bought an organ, book and stool by oral contract and the organ w^as de- livered on Sunday, and subsequently the book and stool were de- livered on a week-day, the vendee recognizing the organ as his, receipt and acceptance exist. ^ Greater difficulties are presented where there has been no actual transfer of possession from the vendor to the vendee. Constructive or symbolic delivery with the assent of the vendee may be a sufficient receipt.*' Thus the transfer of a bill of lading,^ or a delivery ticket,* or the indorse- ment and transfer of a stock certificate,® have all been held suf- ficient receipt and acceptance, if by their terms such instruments were made assignable. Even the indorsement of an undelivered stock certificate, retained by the vendor as security for a note of the vendee has been held to be sufficient receipt and acceptance.^" Constructive or symbolic receipt and aceptance of articles too ceipt" is termed "delivery.") 3 See § 708. "There must be a delivery of the * Ash v. Aldrich, 67 X. H. .581; 39 goods with intent to vest the right Atl. 442; Schmidt v. Thomas, 75 of possession in the vendee and there Wis. ,529; 44 X. W. 771. must be an actual acceptance by the 5 Schmidt v. Thomas, 75 Wis. 529 ; latter with intent to take as owner." 44 N. W. 771. Belt V. Marriott, 9 Gill (Md.) 331; e Gibson v. Stevens, 8 How. (U, quoted in Corbett v. Wolford, 84 S.) 384; Michigan, etc., R. R. v. Md. 426, 429; 35 Atl. 1088. It is Phillips, 60 111. 190. incorrect to use " delivery " as 7 Wadhams & Co. v. Balfour, 32 synonymous with "receipt." Good- Or. 313; 51 Pac. 642. wine V. Cadwallader, 158 Ind. 202; s Webster v. Granger, 78 111. 230. 61 N. E. 939. 9Meehan v. Sharp, 151 Mass. 564; 2Remick v. Sandford. 120 Mass. 24 N. E. 907. 309 ; Cunningham v. Ashbrook, 20 lo St. Paul, etc., Co. v. Howell, 59 Mo. 553 ; Somers v. McLaughlin, 57 Minn. 295 ; 61 N. W. 141. Wis. 358; 15 N. W. 442. CONTEACTS WHICH MUST BE PROVED BY WRITING. 1077 ponderous to be taken into actual custody have been held suf- ficient.^^ Some courts have refused to allow words alone to constitute a symbolic delivery of articles, however ponderous.^^ Since the vendee must acquire the right to the possession of the goods sold, conduct of the vendor showing a retention of a lien for the price, on the goods sold, prevents the transaction from amounting to receipt and acceptance.^^ So if the goods are left in the possession of the vendor pending an inventory to deter- mine their price, there is no receipt and acceptance, even though the vendor at the request of the vendee, makes announcement to others of the transfer, and sends them orders to be filled for the vendee in place of the vendor.^'* §710. Acceptance. Acceptance within the meaning of the statute consists of words or acts of the buyer sufficient to show his intention to assume exclusive dominion over the property purchased, thereby acquiring title thereto.^ It involves the intention on the part of the vendee to take the goods sold as the owner thereof." So where vendee, under a contract to buy vendor's accumulation of sawdust, received several loads of it and used it,^ or where a 11 Chaplin v. Rogers, 1 East 192. Thomas, 75 Wis. 529; 44 N. W. 771. Such as growing trees when treated Acceptance consists of " acts of such as personalty. Leonard v. Medford. character as to place the property 85 Md. 666; 37 L. R. A. 449; 37 Atl. unequivocally within the power and 3(55 under the exclusive dominion of the 12 Such as curb-stones. Gorman buyer as absolute owner, discharged V. Brossard, 120 Mich. 611; 79 N. of all lien for the price." Mechan- W. 903. ical Boiler Cleaner Co. v. Kellner, isDevine V. Warner. 75 Conn. 375: 62 N. J. L. 544, 5.59; 43 Atl. 599; 96 Am. St. Rep. 211; 53 Atl. 782. Hinchman v. Lincoln, 124 U. S. 38. 14 Brunswick Grocery Co. v. La- Acceptance consists of acts sufficient mar, 116 Ga. 1 ; 42 S. E. 366. " to pass title." Kerhhof v. Paper iRemick v. Sandford, 120 Mass. Co., 68 Wis. 674, 676; 32 N. W. 766. 309; Gilman v. Hill. 36 N. H. 311; 2 Curtis v. Lumber Co., 114 N. C. Mechanical Boiler Cleaner Co. v. 530; 19 S. E. 374; Galvin v. Mac- Kellner, 62 N. J. L. .544; 43 Atl. Kenzie. 21 Or. 184: 27 Pac. 1039. 599 ; Stone v. Browning. 68 N. Y. ^ Beyerstedt v. Mill Co., 49 Minn. 598; s. c, 51 N. Y. 211; Redington 1 ; 51 N. W. 619. v. Roberts, 25 Vt. 686; Schmidt v. 1078 PAGE ON CONTRACTS. vendee of a dress made to order tried it on, declared that it fitted and asked the maker to change part of the trimming which had been selected originally,* the statute was complied with. Ac- cordingly acceptance may be inferred from acts of the vendee which are rightful if he owns the goods, but wrongful if he does not.^ So where vendee of standing timber entered and cut down the trees, the contract being regarded as a contract for the sale of personalty,® acceptance may be inferred. Mere change of possession is not sufficient. While it may amount to receipt, there must be something further to constitute an acceptance.' Thus delivery to the vendee for the purpose of testing the chat- tel,^ or to enable him to determine whether it corresponds to the sample,** or delivery of a small quantity of the property sold to be used by vendee as a sample in effecting a resale,^" none of them amount to an acceptance, since no intention to take as owner apears. Aceptance by an agent of vendee is in the con- templation of the law acceptance by the vendee." Without ex- press authority, however, a carrier empowered to receive the goods does not thereby accept them.^" The acts of the agent re- lied on as acceptance must be unequivocal. Thus the act of the vendee's agent in marking the property sold, with the vendee's initials is not a receipt and acceptance within the statute/^ *Galvin v. MacKenzie, 21 Or. App. 577; 54 K E. 461; Remick v. 184; 27 Pac. 1039. Sandford, 120 Mass. 309; Dinnie v. 5 "If the vendee does any act to Johnson, 8 N. D. 153; 77 N. W. 612. the goods of wrong if he is not the « Mechanical Boiler-Cleaner Co. v. owner of the goods, and of right if Kellner, 62 N. J. L. 544; 43 Atl. he is the owner of the goods, the 599; Stone v. Browning, 68 N. Y. doing of that act is evidence that he 598; s. c, 51 N. Y. 211. has accepted them." Parker v. 9 Bacon v. Eceles, 43 Wis. 227. Wallis, 5 E. & B. 21, 27; quoted in loDierson v. Petersmeyer, 109 la. Leonard v. Medford, 85 Md. 666, 233 ; 80 N. W. 389. See also Moore 673; 37 L. P. A. 449; 37 Atl. 365. v. Love, 57 Miss. 765. 6 Leonard V. Medford, 85 Md. 666 ; "Schroder v. Hardware Co., 88 37 L. P. A. 449; 37 Atl. 365; Wilson Ga. 578; 15 S. E. 327; Meyer v. V. Fuller, 58 Minn. 149; 59 N. W. Thompson, 16 Or. 194; 18 Pac. 16. 988. 12 See § 711. 7 Sprankel v. Trulove, 22 Ind. " Hart v. Anderson, 24 N. S. 157. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1079 §711. Acts of vendor insufficient as receipt and acceptance. Acceptance and receipt must be acceptance and receipt by the purchaser. Acts of the seller alone, though in performance of the contract, cannot serve as compliance with the statute of frauds.^ If the vendor delivers to a common carrier whom ho selects, the goods sold by oral contract, such delivery does not amount to a receipt and acceptance within the meaning of the statute." If the vendee takes the goods from the carrier, and pays the freight, receipt and acceptance exist.^ Even if the ven- dee has selected the carrier, the weight of authority is that mere delivery by the vendor to the carrier is not receipt and accept- ance by the vendee, since the carrier is authorized only to trans- port the goods, and not to bind vendee by accepting them.* So acts in performance of the contract by the vendor not amounting to delivery, such as piling the property by the side of the road under the terms of the contract,^ or altering and painting wagon 1 " Xo act of the seller alone, in however strict conformity to the terms of the contract, will satisfy the statute. There must be acts of the buyer, of accepting and actually receiving the goods sold, beyond the mere fact of entering into the con- tract to bind the latter." Shepherd V. Pressey, 32 N. H. 49, 55; quoted in Dierson v. Peter smeyer, 109 la. 233, 235; 80 N. W. ■ 389. (Citing Maxwell v. Brown, 39 Me. 98; 63 Am. Dec. 605 ; Boardman v. Spooner, 13 All. (Mass.) 353; 90 Am. Dec. 196; Prescott v. Locke, 51 N. H. 94; 12 Am. Rep. 55. 2Denme-.d v. Glass, 30 Ga. 637; Hausman v. Nye, 62 Ind. 485; 30 Am. Rep. 199; Keiwert v. Meyer, 62 Ind. 587; 30 Am. Rep. 206; Ft. Worth Packing Co. v. Meat Co., 86 Md. 635 ; 39 Atl. 746 ; Gatiss v. Cyr, — Mich. — ; 96 N. W. 26; Kuppen- heimer v. Wertheimer, 107 Mich. 77; 61 Am. St. Rep. 317; 64 X. W. 952; Rindskopf v. De Ruyter, 39 Mich. 1 ; 33 Am. Rep. 340 ; Simmons Hard- ware Co. V. Mullen, 33 Minn. 195; 22 N. W. 294; Rogers v. Philips, 40 N. Y. 519; Hudson Furniture Co. V. Carpet Co., 10 Utah 31; 36 Pac. 132; Agnew v. Dumas, 64 Vt. 147; 23 Atl. 634; Williams-Hayward Shoe Co. V. Brooks, 9 Wyom. 424; 64 Pac. 342. sLeggett V. Collier, 89 la. 144; 56 N. W. 417. 4 Taylor v. Smith (1893), 2 Q. B. 05; Billin v. Henkel, 9 Colo. 394; 13 Pac. 420; Jones v. Bank, 29 Md. 287; 96 Am. Dec. 533; Johnson v. Cuttle, 105 Mass. 447; 7 Am. Rep. 545; Smith v. Brennan, 62 Mich. 349; 4 Am. St. Rep. 867; 28 N. W. 892; Waite v. McKelvy, 71 Minn. 167; 73 N. W. 727; Allard v. Grea- sert, 61 N. Y. 1. Contra, Strong v. Dodds, 47 Vt. 348; Spencer v. Hale, 30 Vt. 314; 73 Am. Dec. 309. 3 Finney v. Apgar, 31 X. J. L. 1080 PAGE ON CONTRACTS. trucks in accordance with the order/' do not satisfy the requi/^ luents of the statute/ A tender by the vendor or his agent on condition of receiving immediate payment is not receij»t and acceptance.* Thus sending stock to a bank with a draft at- tached for delivery to vendee on payment of the draft is not receipt and acceptance.® A transfer of possession in contempla- tion of immediate payment does not constitute receipt and ac- ceptance where possession was re-delivered by the prospective vendee because he had not the means of paying thei-efor.^° If the vendor retains possession as bailee of the vendor, this haO been held sufficient.^^ If the vendee had possession before the sale, and retains possession afterwards, sufficient re^-eipt and ac- ceptance exist.^^ If the proj^erty is in the possession of a third person as bailee of the vendor, and such third person agrees to hold them thenceforth for the vendee, sufficient r»»ceipt and ac- ceptance exist.^^ If the third person does not agree to hold the property as bailee of the vendee, but retains it in his original capacity as agent of the vendor, his rentention is 'tmot receipt and acceptance.^* We have already seen^^ that the transfer of a 266. But see, apparently contra, 12 It is " all the delivery that Daniel v, Hannah, 106 Ga. 91; 31 could be made." Jsnider v. Thrall, S. E. 734. 56 Wis. 674, 676; 14 N. W. 814. 6 Parvelski v. Hargreaves, 47 N. i3 King v. Jarman, 35 Ark. 190; J. L. 334. 37 Am. Rep. 11; Amson v. Dreher, 7 Hanson v. Roter, 64 Wis. 622; 35 Wis. 615. Conir**, Gunn v. Knoop, 25 N. W. 530. 73 Ga. 510; Sparrow v. Pate, 67 8 Spear v. Bach, 82 Wis. 192; 52 Ga. 352. These cases, however, are N. W. 97. controlled by § 1593 of the Georgia 9 Spear v. Bach, 82 Wis. 192; 52 code providing thav title does not N. W, 97. pass until the price is paid where 10 Spear v. Bach, 82 Wis. 192; 52 delivery and payment are by the N. W. 97. terms of the contract concurrent; 11 Green v. Merriman, 28 Vt. 801. hence the l6ss of the cotton in the (In this case A sold B certain sheep hands of the warehouseman fell which were then in a yard of A's. upon the vendor. A and B then drove them to an- 1* Farina v. Home, 16 M. & W. other yard of A's, where by agree- 119; Bentall v. Burn, 3 B. «fe C. 423; ment they were to be left two days, Boardman v. Spooner, 13 All. B to pay for keeping them. This (Mass.) 353; 90 Am. Dee. 196; Bas- was held a sufficient receipt and ac- sett v. Camp, 54 Vt. 232. ceptance.) is See § 709. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1081 warehouse receipt or bill of lading given to vendor " or order " or with other words of assignibility amounts to constructive de- livery. Such a form of order may be considered as a consent of the warehouse man or carrier, given in advance, to hold the goods for the assignee of the order.^*^ §712. Time at which receipt and acceptance, and part payment, must be made. Receipt and acceptance need not accompany the sale. If they occur subsequently in pursuance of the sale, the statute is com- plied with.^ In the absence of specific statutory provision part payment may be made after the contract of sale is made.^ In some juris- dictions, however, the statute provides that part payment must be made " at the time " that the contract of sale is made.^ Un- der such statute, if payment is made subsequent to the contract, " there must be a distinct renewal of, or assent to the terms of the original agreement, so as to make the payment applj^ on a present and not in a past agreement o:^ sale,"* in order to have the subsequent payment operate as a compliance with the stat- ute.^ Thus where A agreed to transfer his stock in a corpora- tion and to resign his position therein in consideration of certain goods, A's resignation presented some time thereafter was not part payment within the meaning of the statute unless there was 16 See as showing the necessity of (Mass.) 428; Dallavo v. Richard- words of assignability, Hallgarten v. son, — Mich. — ; 96 N. W. 20. Oldham, 135 Mass. 1; 46 Am. Rep. 3 Raymond v. Colton, 104 Fed. 433. 219; 43 C C. A. 501 ; Milos v. Cova- 1 Marsh v. Hyde, 3 Gray (Mass.) cevich, 40 Or. 239; 66 Pae. 914. 331; Ward v. Ward, 75 Minn. 269; 4 Crosby Hardwood Co. v. Tester, 77 N. W. 965; Ortloflf v. Klitzke, 90 Wis. 412, 413; 63 N. W. 1057; 43 Minn. 154; 44 K W. 1085; Aus- citing Kirkhof v. Paper Co., 68 Wis. tin V. Boyd, 23 Mo. App. 317; 674; 32 X. W. 766; Paine v. Ful- Towne v. Davis, 66 N. H. 396; 22 ton, 34 Wis. 83; Bates v. Chesebro, Atl, 450; Jackson v. Tupper, 101 32 Wis. 594; s. e., 36 Wis. 636. N. Y. 515; Schmidt v. Thomas. 75 5 Hunter v. Wetsell, 84 N. Y. 549; Wis. 529; 44 N. W. 771. 38 Am. Rep. 544; s. c, 57 N. Y. 2 Thompson v. Alger, 12 Met. 375; 15 Am. Rep. 508. 1082 PAGE ON CONTRACTS. such reaffirmance or restatement of the contract as to render the payment one made at the time.® Under the theory that an unenforceable offer is revocable until so accepted as to be enforced, receipt and acceptance/ or part payment^ by the vendee after the offer is revoked by the vendor is insufficient. X. Effect of Complete Performance of Contracts Within the Fourth Section of Frauds. §713. Complete performance on both sides. The section of the statute under discussion provides that " no action shall be brought vt^hereby to charge " parties to the classes of contracts therein specified. From this wording it is plain that the legislature was referring only to contracts which were in part at least executory and to enforce which a right of action was necessary. Accordingly if the contract is completely per- formed on both sides it is not within this section of the statute either in letter or in spirit.^ Thus an oral contract for the sale,- or lease^ of realty; or an oral contract for an easement, 6 Raymond v. Colton, 104 Fed. 219; 43 C. C. A. 501. (Merely presenting his resignation and stat- ing that it was in fulfillment of the agreement was not sufficient.) ' Smith V. Hudson, 6 B. & S. 431 ; 118 Eng. C. L. 429. 8 Edgerton v. Hodge, 41 Vt. 67G. iBibb V. Allen, 149 U. S. 481; Walsh V. Calcough, 56 Fed. 778; 6 C. C. A. 114; Merrell v. Witherby, 120 Ala. 418; 74 Am. St. Rep. 39; 23 So. 994; 26 So. 974; Bates v. Babcock, 95 Cal. 479; 29 Am. St. Rep. 133; 16 L. R. A. 745; 30 Pac. 605; Coffin v. Bradbury, 3 Ida. 770; 95 Am. St. Rep. 37; 35 Pac. 715; Anderson School Township v. Mil- roy Lodge, 130 Ind. 108; 30 Am. St. Rep. 206; 29 X. E. 411; Nicholson V. Schmucker, 81 Md. 459; 32 Atl. 182; Wetherbee v. Potter, 99 Mass. 354; Stone v. Dennison, 13 Pick. (Mass.) 1; 23 Am. Dec. 654; Me- Cue V. Smith, 9 Minn. 252; 86 Am. Dee. 100; Brown v. Trust Co., 117 X. Y. 266 ; 22 X. E. 952 ; Remington V. Palmer, 62 N. Y. 31; Gregg v. Willis, 71 Vt. 313; 45 Atl. 229; Howe V. Chesley, 56 Vt. 731; Pi- reaus v. Simon, 79 Wis. 392; 48 X. W. 674; Larsen v. Johnson, 78 Wis. 300; 23 Am. St. Rep. 404; 47 X. W. 61.5. 2 Grippen v. Benham, 5 Wash. 589; 32 Pac. 555; Larsen v. John- son, 78 Wis. 300; 23 Am. St. Rep. 404; 47 X. W. 615. Such as a re- lease of dower and homestead rights. Gerber v. Upton, 123 Mich. 605; 82 X. W. 363. 3 Stautz V. Protzman, 84 111. App. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1083 siicli as the right to construct a ditch over the land of another,* or an agreement to convey a right of way to a railway,^ or a con- tract to partition realty,*' cannot after full performance on both sides be avoided because within the statute. Thus where A agreed orally to convey certain realty to B in consideration of B's supporting A for life, such contract though verbal cannot be avoided where A has made such conveyance and B has furnished such support.'^ So an oral contract to pay the debt of another cannot be avoided after performance.^ So a subsequent oral modification of a written contract of a class included within the statute cannot be avoided when fully performed on both sides.^ After performance one party cannot ignore the contract and sue to recover a reasonable compensation for what he has parted with thereunder.^" §714. Complete performance on one side, leaving no act within the statute to be done. If the contract requires A to do an act which is one of those named in this section of the statute of frauds, and requires B to do an act which is not one of those named in this section, com- plete performance by one party may have a very different effect upon the contract from performance by the other. If A, the party who is required by the terms of the contract to perform an act which is one of those included within this section of the stat- 434; Harris v. Harper, 48 Kan. 418; 6 Bacon v. Fay, 63 N. J. Eq. 411; 29 Pac. 697. So with the surren- 51 Atl. 797. der of a lease. Tobener v. Miller, 7 Larsen v. Johnson, 78 Wis. 300; 68 Mo. App. 569. 23 Am. St. Rep. 404; 47 N. W. 615. 4Flickinger v. Shaw, 87 Cal. 126; sRling v. Tunstall, 124 Ala. 268; 22 Am. St. Rep. 234; 11 L. R. A. 27 So. 420; Webster v. Le Compte, 134; 25 Pac. 268; McLure v. Koen, 74 Md. 249; 22 Atl. 232; Milner 25 Colo. 284; 53 Pac. 1058; Bal- v. Harris, 1 Neb. tin. 584; 95 N. W. dock V. Atwood, 21 Or. 73; 26 Pac. 682. 1058. 9Doherty v. Doe, 18 Colo. 456; sMaupin v. Ry., 171 Mo. 187; 71 33 Pac. 165. S W. 334. For a similar case see lo St. Louis Hay, etc., Co. v. Michigan Central Ry. v. Ry., — United States. 191 U. S. 159; Stan- Mich. — ; 93 N. W. 882. att v. Mullen, 148 Mass. 570; 2 L. E. A. 697. 1084: PAGE ON CONTRACTS. ute, has fully performed the terms of the contract on his part to be performed, leaving B liable for an act which is not one of those named in this section, A's performance prevents the statute from applying to such contracts, since B's promise may be proved by oral evidence and A's performan^'e need be shown only as consideration for B's promise, no attempt to enforce A's promise being necessary.^ A may sue B at law on the contract itself, without either suing for a reasonablt compensation inde- pendent of the contract, or being compelled to resort to equity.^ Thus if A has agreed orally to convey realty to B in considera- tion of some recompense in value not within the statute and A has performed the terms of the contract on his part to be per- formed by executing and delivering a deed for such realty to B, A can enforce the contract against B.^ If A agrees to convey realty to B and performs the contract, a further oral contract between A and B with reference to the payment of the purchase price is not affected by this clause of the statute.* Thus an oral 1 McConnell v. Brayner, 63 Mo. 461; Marks v. Davis, 72 Mo. App. 5.57; Flower v. BarnekoflF, 20 Or. 132; 11 L. R. A. 149; 25 Pac. 370; Warwick, etc., Co. v. Allen (E. I.), 35 Atl. 579. 2 Marks v. Davis, 72 Mo. App. 557. 3 Wood V. Perkins, 57 Fed. 258; Merrell v. Witherby, 120 Ala. 418; 74 Am. St. Rep. 39; 23 So. 994; 26 So. 974; Dargin v. Hewlitt, 115 Ala. 510; 22 So. 128; Butler v. Lee, 11 Ala. 885; 46 Am. Dec. 230; Devalin- ger V. Maxwell, — Del. — ; 54 Atl. 684; Stringer v. Stringer, 93 Ga. 320; 20 S. E. 242; Ballard v. Camp- lin, 161 Ind. 16; 67 N. E. 505 [re- versing (Tnd. App.) 64 N. E. 931]; Lingeman v. Shirk, 15 Ind. App. 432; 43 N. E. 33; Bird v. Ja- cobus, 113 Ta. 194; 84 N. W. 1062; McKinley v. McKinley (Ky.). 66 S. W. 831; O'Grady v. O'Grady, 162 Mass. 290; 38 N. E. 196; Parker v. Tainter, 123 Mass. 185; Gardner v. Gardner. 106 Mich. 18; 63 N. W. 988; Hagelin v. Wacks, 61 Minn. 214; 63 N. W. 624; Smock v. Smock, 37 Mo. App. 56; Skow v. Locks (Neb.), 91 N. W. 204; Griffith v. Thompson, 50 Neb. 424; 69 N. W. 946; Bigler v, Baker, 40 Neb. 325; 24 L. R. A, 255; 58 N. W. 1026; Smith v. Ar thur, 110 N. C. 400; 15 S. E. 197 Maguire v. Heraty. 163 Pa. St. 381 43 Am. St. Rep. 800; 30 Atl. 151 Wilkins v. Totty (Tenn. Ch. App.) 64 S. W. 338 ; Showalter v. Macdon nell. 83 Tex. 158; 18 S. W. 491 Johnson v. Clarkson (Tex. Civ, App.), 29 S. W. 178; Davis v. Farr, 26 Vt. 596. ^Turpie v. Lowe. 114 Ind. 37; 15 N. E. 834; Cummings v. Arnold, 3 Met. (Mass.) 486; 37 Am. Dec. l."5: Brown v. Brown, 47 Mo., 130; 4 Am. Rep. 320; Negley v. Jeffors, 28 O. S. 90; Whiflfen v. Hollister, 12 CONTKACTS WHICH MUST BE PROVED BY WRITING. 1085 agreement by vendee to pay a debt of vendor's^ as a lien for the purchase money due from vendor to his grantor," or a mortgage given by vendor to secure his debt/ as part of the purchase price of such realty, is not within this clause of the statute.* So an oral contract by vendee to discharge certain assessments claimed to be liens on the realty conveyed is not within this clause." So a contract forfeiting an advance deposit of the purchase price if the written contract for the purchase of realty as extended by the oral contract in question is not com- plied with, is not within the statute.^*^ A contract by vendor to refund a part of the purchase price on tendering a deed of a lot less in area than that contracted for" is not within the statute. While an oral contract whereby A agrees with B that A shall buy land from X and resell it to B is within the statute, yet if A causes the deed to be made out to B and otherwise performs his part of the contract, B must compensate him in accordance with the contract on his part to be performed.^^ So where X oifered two tracts for sale, refusing to sell them separately, and A, who wished one of them, agreed to pay B $100 if B would buy the other tract at $900, which X asked for it, so that A could buy S. D. 68; 80 N, W. 156; Johnson « Nor is it within the clause eon- V. Clarkson (Tex. Civ. App.), 30 S. cerning contracts to answer for the W. 71 ; 29 S. W. 178. debt of another. See § 623. 5 McLaren v. Hutchinson, 22 Cal. 9 Heald v. Ross (N. J. Eq.), 47 187; 83 Am. Dec. 59. So with a Atl. 575. promise to pay a debt of vendor's lo Hurlburt v. Fitzpatrick, 176 husband. Brown v. Brown, 47 Mo. Mass. 287; 57 N. E. 464. 130; 4 Am. Rep. 320. n Haviland v. Saramis, 62 Conn. 6 Pickett V. Jackson (Tex. Civ.. 44; 36 Am. St. Rep. 330; 25 Atl. App.), 42 S. W. 568. 394. 7 Lowe V. Hamilton, 132 Ind. 406; 12 Baker v. Wainwright, 36 Md. 31 N. E. 1117; Neiswanger v. Me- 336; 11 Am. Rep. 495. (A pur- Clellan, 45 Kan. 599; 26 Pae. 18; chased at sheriff's sale in accordance Bennett v. Knowles, 111 Mich. 226; with B's instructions, and had the 69 N. W. 491; Negley v. Jeffers, 28 deed made out to B. B refused to O. S. 90. So where such mortgage pay the purchase price; and the is to secure vendor's debt to his property was resold in accordance grantor for the purchase price of with the terms of the sale and the the realty sold to vendee. Bedford loss charged to A. A was allowed Belt Ry. v. Winstandley, 16 Ind. to recover this loss from B.). App. 143; 44 N. E. 556. 1086 PAGE ON CONTKACTS. his tract at the same time, A's promise was not within the stat* ute/^ So if A by an oral contract agrees to sell realty to B and C, and subsequently at B's request, A conveys to C alone, B is liable in an action on the contract for the purchase money.^* So an oral sale of articles which are treated by the law as a part of the realty, such as rock,^^ growing timber,^'* or hay,^'' is not affected by the statute where the vendor has performed by per- mitting vendee to sever the articles sold from the realty and to appropriate them. Thus an oral contract for the assignment of a lease,^^ or for an easement, such as a party-wall,^", or a right of way,^" are not within this clause of the statute when completely performed by the party who is to convey the interest in realty. If A orally promises to pay B's debt to C, performance by A withdraws the contract from the operation of the statute.^^ \Yliether a contract which by its term,s is not to be performed within a year from the date of the making thereof is taken out of the operation of the statute by full performance on the side of the party whose part was not to be complete within the year, is a question upon which the decisions are in conflict. Some courts hold that in such cases the statute does not apply,^" others, that it 13 Ambrose v. Ambrose, 94 Ga. Rep. 61; 5 S. W. 887; it seems to 655; 19 S. E. 980; citing Little v. be regarded as an open question McCarter 89 N. C. 233. (though in that case, immaterial) 14 Randall v. Turner, 17 0. S. v/hether the contract itself could be 262. enforced or whether the party who 15 Rich V. Donovan, 81 Mo. App. had erected the wall could recover ou lg4^ a quantum meruit and use the oral 16 Oconto Co. V. Lundquist, 119 contract to show the amount of Mich. 264; 77 N. W. 950; Wilson v. damages. Fuller, 58 Minn. 149; 59 K W. 988. 20 Scott v. Ry., 94 Fed. 340; 36 iTMowrey v. Davis, 12 Ind. App. C C. A. 282; Texas, etc., Ry. v. 681; 40 K E. 1108. Scott, 77 Fed. 726; 37 L. R. A. 94; 18 Cleveland, etc., Ry. v. Wood, 23 C. C. A. 424. 189 111. 352; 59 X. E. 619. 21 Hasterlick v. Applebaum, 64 i9Rindge v. Baker, 57 N. Y. 209; 111. App. 433. 15 Am. Rep. 475; Hall v. Geyer, 14 22 Ives v. Gilbert, 1 Root (Conn.) Ohio C. C. 229; 7 Ohio C. D. 436; 89; 1 Am. Dec. 35; Louman v. Horr V, Hollis, 20 Wash. 424; 55 Sheets, 124 Ind. 416; 7 L. R. A. Pae. 565; Pireaux v. Simon, 79 Wis. 784; 24 K E. 351; Taylor v. Turn- 392; 48 N. W. 674. In Walker v. pike Co. (Ky.) , 34 S. W. 226; Win- Shackeford, 49 Ark. 503; 4 Am. St. ters v. Cherry, 78 Mo, 344. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1087 does.-^ In many states it is held that this clause of the statute does not applj to contracts to be performed on one side within the year and on the other not within the year.^* §715. What constitutes performance. The question of the applicability of the statute depends there- fore in many cases on whether the contract has been performed or not. Delivery of a deed by the vendor to his own agent sub- ject to his orders, is, of course, not performance.^ Delivery in escrow is held not to be full perfomiance by the vendor, and the statute of frauds applies.^ Whether a tender of a deed for the realty by the vendor, which tender is refused by the vendee, amounts to full performance in this sense is a question upon which the authorities are in conflict.^ Where such tender is held to constitute full performance a vendee cannot avoid liabil- ity for the purchase price if the vendor is ready and willing to deliver his deed in accordance with his oral contract.* Whether 23Towsley v. Moore, 30 O. S. 184; 27 Am. Rep. 434. In these cases the remedy is on quantum meruit. See §§ 749-751. 21 See § 669. 1 So wards v. Moss, .59 Neb. 71; 80 >sL \Y^ 268; reversing 58 Xeb. 119; 78 N. W. 373. 2 Swain v. Burnette, 89 Cal. 564 ; 26 Pac. 1093; Kopp v. Reiter, 146 111. 437; 37 Am. St. Rep. 156; 22 L. R. A. 273; 34 N. E. 942; Shultz V. Pinson, 63 Kan. 38 ; 64 Pac. 963 ; Ducett V. Wolf, 81 Mich. 311; 45 K W. 829; Cagger v. Lansing, 43 X. Y. 550; Cooper v. Thomason, 30 Or. 161; 45 Pac. 296; Campbell V. Thomas, 42 Wis. 437; 24 Am. Rep. 427. Under delivery in es- crow three questions are involved: ( 1 ) is such delivery full perform- ance; (2) if not, can an undelivered deed be a memorandum sufficient to comply with the statute, and (3) if an undelivered deed can comply with the requirements of the stat- ute, does the deed in the specific case contain enough to be a suffi- cient memorandum. See § 696 et seq. 3 That it is full performance, Scott V. Glenn, 98 Cal. 168; 32 Pac. 983; Stephens v. Harding, 48 Neb. 659; 67 N. W. 746; Hodges v. Green, 28 Vt. 358. That it is not full performance. Graham v. Theis, 47 Ga. 479; Sands v. Thompson, 43 Ind. 18; Kroll v. Match Co., 113 Mich. 196; 71 K W. 630; Moore v. Powell, 6 Tex. Civ. App. 43; 25 S. W. 472. 4 Washington Glass Co. v. Mos- baugh, 19 Ind, App. 105; 49 N. E. 178; Rowland v. Garman, 1 J. J. Mar. (Ky.) 76; 19 Am. Dec. 54; Barnes v. Wise_, 3 T. B, Mon. (Ky.) 167; McGowen v. West, 7 Mo. 569; 38 Am. Dec. 468; Green v. R. R., 1088 PAGE ON CONTRACTS. tender of a deed can amount to full performance or not, there can be no performance without at least a tender. Thus where a deed was executed by the grantor and left with the notary, no tender ever being made, it was held that an oral contract for the sale of realty was not taken out of the statute by these acts,^ §716. Complete performance on one side leaving act within the statute to be done. If, on the other hand, B, who by the terms of the contract is to do an act which is not within the statute, performs the contract fully on his part, while A, who by the terms of the contract was to perform an act which is one of those named in the statute, has not performed on his part, the contract is within the statute. Thus if A has agreed to convey realty to B for a valuable con- sideration and B has performed as by paying the purchase money,^ or by rendering the services agreed upon,^ and A has not conveyed the realty agreed upon, the contract is within the statute. 77 K C. 95; Crutchfield v. Dona- thon, 49 Tex. 691; 30 Am. Rep. 112. "He is at the wrong end of the contract to do this." Taylor v. Russell. 119 N. C. 30; 25 S. E. 710. sShultz V. Pinson, 63 Kan. 38; 64 Pac. 963. (The buildings on the realty sold were wrecked by a tor- nado and the vendee repudiated the contract.) iDuff V. Hopkins, 33 Fed. 599; Manning v. Pippen, 95 Ala. 537; 11 So. 56; Forrester v. Flores, 64 Cal. 24; 28 Pac. 107; Percifield v. Black, 132 Ind. 384; 31 N. E. 955; God- dard v. Donaha, 42 Kan. 754; 22 Pac. 708; Nay v. Mograin, 24 Kan. 80; Truski v. Streseveski, 60 Mich. 34; 26 N. W. 823; Peckham v. Balch, 49 Mich. 179; 13 N. W. 506; Townsend v. Fenton, 30 Minn. 528; 16 N. W. 421 ; Simmons v. Headlee, 94 Mo. 482; 7 S. W. 20; Baker v. Wiswell, 17 Xeb. 52; 22 X. W. Ill; Xibert v. Baghurst, 47 N. J. Eq. 201; 20 Atl. 252; Cooley v. Lobdell, 153 N. Y. 596; 47 N. E. 783; Arm- strong V. Kattenhorn, 11 Ohio 265; Pollard V. Kinner, 6 Ohio 528; Sites V. Keller, 6 Ohio 483; Boo- zer V. Teague, 27 S. C. 348; 3 S. E. 551; Humbert v. Brisbane, 25 S. C. 506; Wright v. Bearrow, 13 Tex. Civ. App. 146; 35 S. W. 190; Munk V. Weidner, 9 Tex. Civ. App. 491; 29 S. W. 409; Maxfield v. West, 6 Utah 327. 379; 23 Pac. 754; 24 Pac. 98; Miller v. Lorentz, 39 W. Va. 160; 19 S. E. 391; Gallagher V. Gallagher, 31 W. Va. 9; 5 S. E. 297; Jourdain v. Fox, 90 Wis. 99; 62 N. W. 936. This rule is modified by special statute in some states as in Iowa. See § 731. 2 Townsend v. Venderwerken. 9 Mackey (D. C.) 197; Crabill v. Marsh, 38 O. S. 321. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1089 This view is generally taken both in law and equity.^ So where A agrees to mortgage certain realty to B to secure a loan and B makes the loan, A's promise to make the mortgage cannot be enforced if oral.* Many of the cases which belong under this topic are treated for convenience under part performance.^ If A agrees to perform an act which by the terms of the contract cannot be performed within the year, and B in consideration thereof agrees to perform another act, performance by B still leaves the contract within the statute.^ Thus if A agrees not to sue on a note for two years in consideration of payment by B of part of the interest in advance payment by B, does not take • the case out of the statute.^ XI. Effect of Part Performance of Contracts Within THE Fourth Section of the Statute. §717. Part performance. In equity it is settled that certain acts in performance of an oral contract which without such acts would be within the stat- ute of frauds, will withdraw such contract from the operation of the statute and leave even the executory part thereof enforceable, though oral.^ In some jurisdictions, however, the doctrine of sTownsend v. Fenton, 32 Minn. Moore, 115 Ga. 327; 41 S. E. 609; 482; 21 N. W. 726; Brown v. Drew, Deeds v. Stephens, — Ida. — ; 69 67 N. H. 569; 42 Atl. 177. Pae. 534; Swazey v. Moore, 22 111. * Brown v. Drew, 67 N. H. 569; 63; 74 Am. Dec. 134; Bogle v. .Jar- 42 Atl. 177. vis, 58 Kan. 76; 48 Pac. 558; Pike 5 See § 717 et seq. v. Pike, 121 Mich. 170; 80 Am. St. eReinheimer v. Carter, 31 O. S. Rep. 488; 80 N. W. 5; Delavan 579. V. Wright, 110 Mich. 143; 67 N. W. TReinheimer v. Carter, 31 0. S. 1110; Borden v. Curtis, 48 N. J. 579. Eq. 120; 21 Atl. 472; 46 N. J. Eq. iRiggles V. Ermey, 154 U. S. 244; 468; 19 Atl. 127; Johnson v. Hub- St Louis, etc., Ry. v. Graham, 55 bell, 10 N. J. Eq. (2 Stockt. Ch.) Ark. 294; 18 S. W. 56; Calanehini 332; 66 Am. Dec. 773; Ryan v. V. Branstetter, 84 Cal. 249; 24 Pac. Dox, 34 N. Y. 307; 90 Am. Dec. 149; Grant v. Grant, 63 Conn. 530; 696; Butler v. Thompson, 45 W. 38 Am. St. Rep. 379; 29 Atl. 15; Va. 660; 72 Am. St. Rep. 838; 31 Chapman v. Allen, Kirby (Conn.) S. E. 960; McWhinne v. Martin, 77 399; 1 Am. Dec. 24; Collins v. Wis. 182; 46 N. W. 118. 69 1090 PAGE ON CONTRACTS. part performance is not recognized.^ This doctrine is known as the doctrine of part performance. The name, while possibly as convenient as any is inexact and liable to mislead. It is by no means every act of part performance which amounts to a technical part performance. Furthermore, the name " part performance " is not infrequently applied to acts which consti- tute full performance on one side.^ The very existence of this doctrine, while settled by precedent beyond controversy, would probably be challenged if the question were now open. It is often characterized as a judicial repeal of the statute. While the courts recognize it as applicable in cases where it is estab- lished by precedent, they are unwilling in most jurisdictions to t extend it further. Part performance, when operative, with- draws the entire contract from the statute of frauds and makes it enforceable. It must therefore be distinguished from the doc- trine, recognized in some jurisdictions that if a contract has been partly performed on one side, the rights of the parties as to what has been performed are fixed by the contract, though such acts may not amount to a technical part performance to withdraw the contract from the operation of the statute.* The doctrine of part performance is only a special application of a wider doctrine of equity, namely, that its power of granting re- lief against fraud is not limited by the statute of frauds. Thus while an oral contract in consideration of marriage is ordinarily uneforceable, both at law and in equity, yet if at the time of making such contract the promisor does not intend performance this is such fraud as calls for the interposition of a court of equity without interference from the statute of frauds.^ Some authorities have gone so far as to give relief for breach of such 2 Washington v. Soria, 73 Miss. 116 la. 61; 89 N. W. 100; Graves 665; 55 Am. St. Rep. 555; 19 So. County Water Co. v. Ligon, 112 Ky. 485; Box v. Stanford, 13 Sm. & M. 775; 66 S. W. 725; Sanger v. French.. (Miss.) 93; 51 Am. Dec. 142. 157 N. Y. 213; 51 N. E. 979. 3 See § 714 e* seg. s Peek v. Peek, 77 Cal. 106; 11 4 City of Greenville v. Water- Am. St. Rep. 244; 1 L. R. A. 185; works Co., 125 Ala. 625; 27 So. 19 Pac. 227; Green v. Green, 34 764; Lagerfelt v. McKie, 100 Ala. Kan. 740; 55 Am. Rep. 256; 10 Pac. 430; 14 So. 281 ; Murphy v. DeHaan, 156. CONTKACTS WHICH MUST BE PROVED BY WRITING. 1001 contract, where the marriage would not have been entered into but for such promise, even if it is not shown that intention not to perform existed when the contract was made, on the theory that such breach works a constructive fraud.*^ Part perform- ance, as such, does not, however, have any place in contracts in consideration of marriage. §718. Is part performance a doctrine of equity alone? The doctrine of part performance, so-called, is in most juris- dictions treated as a purely, equitable doctrine. Accordingly in such jurisdictions part performance of an oral contract which is within the statute does not withdraw it from the operation of the statute at law, and no action at law can be brought thereon.^ Thus an oral conract for the assignment of a lease by which the assignee agrees to pay to the lessor the rent stipulated in the lease does not, by part performance, cease to be within the stat- ute as far as concerns the right of lessor to sue the assignee at law upon the covenants of the lease." So a vendor cannot on part performance of an oral contract to convey an interest in 6 Moore V. Allen, 26 Colo. 197; 77 567; 81 N. W. 556; (modified on Am. St, Eep. 255; 57 Pac. 698; Cat- rehearing in 122 Mich. 573; 82 N. alini v. Catalini, 124 Ind. 54; 19 W. 827; because under the statute Am. St. Rep. 73; 24 N. E. 375; assumpsit would lie for the fraudu- Petty V. Petty. 4 B. Mon. (Ky. ) lent representations by defendant in 215; 39 Am. Dec. 501. this case to induce plaintiff to buy 1 Eaton V. Whitaker, 18 Conn. realty from defendant's principal) ; 222; 44 Am. Dec. 586; Chicago At- Nally v. Reading, 107 Mo. 350; L7 tachment Co. v. Machine Co., 142 S. W. 978;. Tiefenbrun v. Tiefen- 111. 171; 15 L. R. A. 754; 28 N. E. brun, 65 Mo. App. 253; Smith v. 959; reversed on rehearing 25 N. E. Phillips, 69 IN. H. 470; 43 Atl. 183; 669; affirmed 31 N. E. 438; Sigmund McElroy v. Ludlum, 32 N! J. Eq. V. Newspaper Co., 82 111. App. 178; 828; Kling v. Bordner, 65 O. S. Butler V. Sheehan, 61 111. App. 561; 86; 61 N. E. 148; Buck v. Pickwell, Hunt V. Coe, 15 la. 197; 81 Am. 27 Vt. 157; Hibbard v. Whitney, 13 Dec. 465; Hamilton v. Thirston, 93 Vt. 21. Md. 213; 48 Atl. 709; Thompson 2 Chicago Attachment Co. v. Ma- V. Gould, 20 Pick. (Mass.) 134; chine Co., 142 111. 171; 15 L. R. A. Kidder v. Hunt, 1 Pick. (Mass.) 754; 28 N. E. 959; reversing on 328; 11 Am. Dec. 183; Schultz v. rehearing, 25 N. E. 669; affirmed Huffman, 127 Mich. 276; 86 N. W. 31 N. E. 438; Nally v. Reading, 823; Hallett v. Go; Ion. 122 Mich. 107 ]\Io. 350; 17 S. W. 978. 1092 PAGE ON CONTRACTS. realty/ such as an easement,* maintain an action at law for breach of the contract. So in an oral contract to partition realty, taking possession of their respective shares, does not con- fer the legal title upon the parties.^ This view is not entertained in all jurisdictions. In some, part performance withdraws a contract from the operation of the statute even at law.® Thus in Nebraska taking possession of realty under an oral contract and making valuable improvements thereon even though coupled with a default in payment of the purchase price are such acts of part performance as to defeat an action of ejectment by the vendor against a vendee in possession."^ §719. What acts constitute part performance. Since part performance is a doctrine of equity only, ques- tions of part performance usually arise in suits for specific per- formance, and as in each case the ultimate question is whether specific performance should be given or not, the two doctrines are often involved, and re-act each upon the other. The doc- trine of part performance rests upon a combination of two distinct grounds : first, that where one party has performed the contract on his part so far that he cannot be restored to his 3 Kidder V. Hunt, 1 Pick. (Mass.) v. Griffin, 46 N. H. 2.31; Dow v. 328; 11 Am. Dec. 183; Smith v. Jewell, 18 N. H. 340; 45 Am. Dec. Phillips, 69 N. H. 470; 43 Atl. 183. 371; Medlen v. Steele, 75 N. C. 154; 4 Schujtz V. Huffman, 127 Mich. unless possession lasts for the period 276; 86 N. W. 823. of limitations; Johnson v. Goodwin, 5 Berry v. Seawell, 65 Fed. 742; 27 Vt. 288; Pope v. Henry, 24 Vt. 13 C. C. A. 101; Gates v. Salmon, 560; Booth v. Adams, 11 Vt. 156; 46 Cal. 362; McCall v. Reybold, 1 34 Am. Dec. 680; contra, that pos- Har. (Del.) 146; Duncan v. Dun- session under a contract for parti- can, 93 Ky. 37; 40 Am. St. Rep. 159; tion passes the legal title; McKnight 18 S. W. 1022; White v. O'Bannon, v. Bell, 135 Pa. St. 358; 19 Atl. 86 Ky. 93; 5 S. W. 346; Chenery v. 1036; Rountree v. Lane, 32 S. C. Dole, 39 Me. 162; Duncan v. Sylves- 160; 10 S. E. 941; Kennemore v. ter, 16 Me. 388; Mfg. Co. v. Healerformance by the surrender of the custody of the child and its adoption, whether formal or informal does not prevent the statute from operating.^" So a contract between two sisters to make mutual wills is not withdrawn from the operation of the statute by making such wills, where one of the wills is revoked by the subsequent marriage of the testatrix.^^ So performance of personal services as consideration for a promise to devise realty does not withdraw the contract from the operation of the statute.^" On the other hand in jurisdictions which recognize the quali- fication that if the party performing cannot be restored to his former condition even by money damages, he may have specific 9 Haussman V. Burnham, 59 Conn. Dicken v. McKinley, 163 111. 318; 117; 21 Am. St. Rep. 74; 22 Atl. 54 Am. St. Rep. 471; 45 N. E. 134; 1065. Such contract was said to be Pond v. Sheehan, 132 111. 312; 8 L. "fully perform-id by the other con- R. A. 414; 23 N. E. 1018; Austin tracting party to it and therefore v. Davis, 128 Ind. 472; 25 Am. St. taken out of its operation." This Rep. 456; 12 L. R. A. 120; 26 N. case is clearly contrary to the weight E. 890; Shahan v. Swan, 48 O. S. of authority; see § 731. It cannot 25; 29 Am. St. Rep. 517; 26 N. E. rest on any doctrine of fraud as the 222. wife had made a conveyance at her n Hale v. Hale, 90 Va, 728; 19 husband's request, which was defec- S. E. 739. tive because he did not join with her 12 Sturges v. Taylor (N. J. Eq.), in the deed, and accordingly the sole 20 Atl. , 369 ; Richardson v. Orth, 40 reason for non-performance on her Or. 252; 66 Pac. 925; 69 Pac. 455; part was his ignorance of the law of Kling v. Bordner, 65 O. S. 86; 61 conveyancing. N. E. 148; Ellis v. Gary, 74 Wis. 10 Grant v. Grant. 63 Conn. 530; 176: 17 Am. St. Rep. 125; 4 L. R. 38 Am. St. Rep. 379; 29 Atl. 15; A. 55; 42 N. W. 252. CONTKACTS WHICH MUST BE PEOVED BY WEITING. 1109 performance in equity even of an oral contract, a contract to devise realty has been held to be taken out of the statute by the performance by the adversary i>arty of his agreement to live with and care for testator, and render personal services to him," or by his performance of his promise to surrender the custody of a child,^* or by allowing the adversary party to name a child/^ On the same principle a contract between several brothers and sisters to whom land descended as tenants in com- mon that they would hold it as joint tenants, that on the death of each it should vest in the survivors and that on the death of the last survivor it should descend to the child of the only one of them who was married, was held to be withdrawn from the operation of the statute by the performance of the contract until invested in the last survivor/^ Many of the cases here given are cases of full performance on one side, leaving an act to be done on the other side, which is one of those named in this sec- tion of the statute. While in one sense they should be dis- cussed under another heading" they are discussed here partly because the general principles that control them are in cases like this the same in full performance on one side and in part performance ; and partly because the courts often refer to them as cases of part performance. 13 Owens V. McNally, 113 Cal. 31 L. R. A. 810; 34 S. W. 489; 444; 33 L. R. A. 369; 45 Pac. 710; Wright v. Wright, 99 Mich. 170; Svanburg V. Fosseen, 75 Minn. 350; 23 L. R. A. 196; 58 N. W. 54; 74 Am. St. Rep. 490; 43 L. R. A. Kofka v. Rosicky, 41 Neb. 328; 43 427; 78 N. W. 4; Hiatt v. Williams, Am. St. Rep. 685; 25 L. R. A. 207; 72 Mo. 214; 37 Am. Rep. 438; 59 N. W. 788. Teske v. Dittberner, — Neb. — ; 98 is Daily v. Minnick, 117 la. 563; N. W. 57; modifying, 65 Neb. 167; 60 L. R. A. 840; 91 N. W. 913. 91 N. W. 181; which reversed. 63 Under a statute making payment of Neb. 607; 88 N. W. 658; Brinton consideration part performance. V. Van Cott, 8 Utah 480; 33 Pac. le Murphy v. Whitney, 140 N. Y. 218. 541; 24 L. R. A. 123; 35 N. E. 930. 14 Jones V. Comer (Ky.), 77 S. Hence the child to whom the prop- W. 184; denying rehearing (Ky.). erty is to descend can enforce the 76 S. W. 392; Nowack v. Berger, contract against the last survivor. 133 M*? «4; 54 Am. St. Rep. 663; i' See § 714. 1110 PAGE ON CONTEACTS. §731. Payment of consideration. It has already been stated that full payment of the purchase price alone will not take the contract out of the statute.^ Still less will i^ayment of part of the purchase price take the case out of the statute." Thus, where A bought standing timber on B's land and paid part of the purchase price, such payment did not take the case out of the statute.^ Even under a contract to exchange realty, conveyance of one tract is not part perform- ance with reference to the contract to convey the other.* By special statute in some states as in Alabama the statute of frauds does not apply to contracts for the sale of realty where the vendee is in possession and has paid part or all of the purchase price.^ jSTeither possession nor payment of the purchase price will, without the other, prevent the application of the statute. "^ Under such statute, however, it is not neces- sary to take the case out of the statute that the purchaser take possession under the contract. If he is in possession before the contract of sale, as where he holds under a lease^ and pays part of the purchase price under the contract, the statute of frauds does not apply. It is not necessary that the purchase price be paid at the same time that possession is taken.* Performance by the vendee of the covenants on his part to be performed, such as conveying realty** or personalty," or giving notes," or per- 1 See § 716. So. 565; MeLure v. Tennille, 89 2 Thompson v. Coal Co., 135 Ala. Ala. 572; 8 So. 60. 630; 93 Am. St. Rep. 49; 34 So. s McKinnon v. Mixon, 128 Ala. 31; Nelson v. Mfg. Co., 96 Ala. 612; 29 So. 690; Nelson v. Mfg. 515; 38 Am. St. Rep. 116; 11 So. Co., 96 Ala. 515; 38 Am. St. Rep. 695; Temple v. Johnson, 71 111. 13; 116; 11 So. 695; Manning v. Pip- Felton V. Smith, 84 Ind. 485; Leis pen. 95 Ala. 537; 11 So. 56. V. Potter, — Kan. — ; 74 Pac. 622; 7 Franke v. Riggs, 93 Ala. 252; Nibert v. Baghurst. 47 N. J. Eq. 9 So. 359. 201; 20 Atl. 252; Bruley v. Garvin, s Louisville, etc.. Ry. v. Philyaw, 105 Wis. 625; 48 L. R. A. 8.39; 81 94 Ala. 463; 10 So. 83. N. W. 1038; Harney v. Burhans, 91 "Webb v. Ballard, 97 Ala. 584; Wis. 348; 64 N. W." 1031. 12 So. 106. 3 Bruley v. Garvin, 105 Wis. 625; lo Powell v. Higley, 90 Ala. 103; 48 L. R. A. 839; 81 N. W. 1038. 7 So. 440. 4Riddell v. Riddell (Xeb.), 97 n Logerfelt v. McKie, 100 Ala. N. W. 609. 430; 14 So. 281. 5 Price v. Bell, 91 Ala. 180; 8 CONTRACTS WHICH MUST BE PROVED BY WRITING. 1111 forming services^^ in consideration of the conveyance of the realty bargained for is such part performance as renders the contract enforceable. In other states, as in Iowa, the statute with reference to con- tracts for the sale of realty is substantially the same as that for sales of personalty^^ and by its terms the statute of frauds does not apply where there has been either possession of realty under the contract or payment of part or all of the " purchase money."^* In the meaning of the statute the " purchase money " may consist of money,^^ of notes, and a mortgage se- curing them,^'' of allowing the promisor to name a child,^^ of the rendition of services as of an attomey,^^ or furnishing board and care.^^ Grantee's payment of a debt of an intestate ances- tor of grantor, as the purchase price of realty sold under oral contract, which payment relieves land set apart to another heir of incumbrances thereon has been held to be part performance.^" A deposit of money in a bank, subject to the order of vendor when the title becomes perfect,^^ or an advance to vendor by his own agent under an arrangement with the vendee,^' do not con- stitute payment of the " purchase money " within the meaning of the statute. §732. Omission to act, as part performance. Mere omission to act cannot amount to part performance.'' Thus, where- a vendor who has reserved the right of taking 12 East Tennessee, etc., Ry. v. is Harlan v. Harlan, 102 la. 701; Davis, 91 Ala. 615; 8 So. 349. 72 N. W. 286. 13 See § 706. 20 Oliver v. Powell, 114 Ga. 592; i4Pressley v. Roe, 83 la. 545; 50 40 S. E. 826. N. W. 44. 21 Query v. Liston, 92 la. 288 ; 60 isNiles v. Welsh, 89 la. 491; 56 N. W. 524. So where such deposit N. W. 657; Pressley v. Roe, 83 la. was made without the knowledge 545; 50 N. W. 44. or assent of the vendor. Mathes v. 16 Devin v. Eagleson. 79 la. 269 44 N. W. 545. 17 Daily v. Minnick, 117 la. 563 60. L. R. A. 840; 91 N. W. 913. 18 Mitchell V. Colby. 95 la. 202 Bell, 121 la. 722; 96 N. W. 1093. 22 Benedict v. Bird, 103 la. 612; 72 N. W. 768. 1 Augusta Southern R. R. v. Smith, etc., Co., 106 Ga. 864; 33 S. 35 L. R. A. 379; 63 N. W. 769. E. 28. 1112 PAGE ON CONTKACTS. gro-s\4ng timber off the land sold for a certain time, subsequently makes an oral contract with his vendee for an extension of such time, his omission to take the timber off in the time specified in the original contract, though in reliance on the oral contract is not part performance.* If, however, omission to act amounts to a release of a property right, as where a widow refrains from claiming any interest in her deceased husband's estate under oral contract with the heirs,^ the contract price of such interest thus waived may be recovered. §733. Part performance as applied to contracts not to be per- formed within the year. The doctrine of part performance has been considered thus far solely with reference to contracts for an interest in realty. Whether the doctrine has any application to the other classes of contracts included in this section of the statute is a question upon which there is some diversity of opinion. The weight of authority is that part performance is a doctrine of equity which applies solely to contracts for the sale of some interest in realty.^ With reference to contracts which cannot be performed within a year from the date of the making thereof, we have already seen that some courts hold that this clause of the statute has no application to contracts which are to be performed on one side ^vithin the year while perfonnance on the other side is to last beyond the year.^ Thus, if A lends B money to be re-paid at 2 Clark V. Guest, 54 0. S. 298; v. Shultz, 92 111. App. 84; Smalley 43 N. E. 862. v. Greene, 52 la. 241; 35 Am. Rep. 3 Andrews v. Broughton, 84 Mo. 267; 3 N. W. 78; Atchison, etc., R. App. 640. But neither specific per- R. v. English, 38 Kan. 110; 16 Pac. formance nor damages for breach 82; Dant v. Head, 90 Ky. 255; 29 of such a contract could be had. Am. St. Rep. 369; 13 S. W. 1073; 78 Mo. App. 179. Kendall v. Garneau, 55 Neb. 403; 1 Maddison v. Alderson, 8 App. 75 N. W. 852 ; Perkins v. Clay. 54 Cas. 467. N. H. 518; Berry v. Dorenius. 30 2 ililes V. Estate Co., L. R. 32 X. J. L. 399 ; Towsley v. Moore, 30 Ch. Div. 266; Donellan v. Read, 3 0. S. 184; 27 Am. Rep. 434; Dur- Barn. & Ad. 899; McDonald v. fee v. O'Brien, 16 R. I. 213; 14 Atl. Crosby, 192 111. 283; 61 N. E. 505; 857; Seddon v. Rosenbaum, 85 Va. Curtis V. Sage, 35 111. 22; Hodgens 928; 3 L. R. A. 337; 9 S. E. 326; CONTRACTS WHICH MUST BE PROVED BY WRITING. 1113 an interval greater than a year, A is allowed to enforce the con- tract.^ While performance by one party within the year removes such contracts from the operation of the statute in jurisdictions where this theory obtains, and while such performance is some- times explained as if it were part performance,* it is jx3rhaps more accurate to say that these courts look on such contracts as not within the meaning of the statute. Performance within the year makes the executory part of the contract enforceable at law; an effect which technical part performance does not have. Thus, where A promises to give two thousand dollars to his granddaughter when she comes of age in consideration of her parents' relinquishing a defence to notes signed by them and held by A, performance by the parents within the year takes the case out of the statute.^ Even these courts hold that if the contract is not to be per- formed by either party w^ithin the year, part performance does not take the case out of the statute.^ Thus, an oral contract made on February 15, 1895, to issue a fire insurance policy for one year on the 24th of the next June and annually thereafter on the 24th of each June until otherAvise ordered by the insured is not taken out of the statute by issuance of such policy for two consecutive years.' It must be remembered that some courts hold that full per- formance on one side within the year does not withdraw the Grace v. Lynch, 80 Wis. 166; 49 N. Howell, 21 Ind. App. 495; 52 N. E. W. 751. 769; Powell v. Cranipton, 102 la. 3 McDonald v. Crosby, 192 111. 364; 71 N. W. 579; Burden v. 283; 61 N. E. 505. Knight, 82 la. 584; 48 N. W. 985; 4 Piper V. Fosher, 121 Ind. 407; Thorp v. Bradley, 75 la. 50; 39 X. 23 N. E. 269; Westfall v. Perry W. 177; Osborne v. Kimball, 41 (Tex. Civ. App.), 23 S. W. 740. Kan. 187; 21 Pac. 163; Thisler v. 5 Piper V. Fosher, 121 Ind. 407; Mackey, 5 Kan. App. 217; 47 Pac. 23 N. E. 269. 175; Klein v. Ins. Co. (Ky.), 57 S. 6 Shumate v. Farlow, 125 Ind. W. 250; Lally v. Lumber Co.. 85 359 ; 25 N. E. 432 ; Lowman v. Minn. 257 ; 88 K W. 846 ; Hillhouse Sheets, 124 Ind. 416; 7 L. R. A. v. Jennings. 60 S. C. 373; 38 S. E. 784; 24 N. E. 351: Wolke v. Flem- ,599. ing. 103 Ind. 105; 53 Am. Rep. t Klein v. Ins. Co. (Ky.), 57 S. 495; 2 N". E. 325; Clark County v. \Y. 250. 1114: PAGE ON CONTRACTS. contract from the operation of the statute where the other side has agreed to perform acts which cannot be performed within the jear.^ So an oral agreement by A, a guarantor, of an over- due note with B, the holder thereof, that if B w^ould bid the property in and hold it till the redemption period had expired (which would carry performance past the year) A would pay the amount due on the notes and the costs of foreclosure if the property were not then redeemed, is not taken out of the statute by performance by B.** If a contract is a contract for some interest in realty and also one which cannot be performed within the year, as a con- tract for a lease for more than one year, the courts are divided as to whether part performance can take it out of the statute. Some courts hold that part performance takes such contract out of the statute f'^ and others that it does not.^^ §734. Part performance as applied to contracts in consideration of marriage. A contract in consideration of marriage is not taken out of the statute, according to the weight of authority, by the marriage of the party to whom the promise is made in reliance on such promise.^ There are some cases, how- 8 Jackson Iron Co. v. Concentrat- i Caton v. Caton, L. R. 1 Ch. 137; ing Co., 65 Fed. 298; 12 C. C. A. Lloyd v. Fulton, 91 U. S. 479; Peek 636; De Bord v. Holcomb, 13 Colo. v. Peek, 77 Cal. 106; 11 Am. St. App. 161; 57 Pac. 548. Rep. 244; 1 L. R. A. 185; 19 Pae. aVeazie v. Morse, 67 Minn. 100; 227; Durham v. Taylor, 29 Ga. 166; 69 N. W. 637. Richardson v. Richardson, 148 111. 10 So held in an action for rent, 563; 26 L. R. A. 305; 36 X. E. 608: Eubank v. Hardware Co., 105 Ala. affirming, 45 111. App. 362; Keady 629; 17 So. 109. And in an action v. White, 168 111. 76; 48 N. E. 314; to recover the realty, Dahm v. Bar- affirming, 69 111. App. 405; McAn- low, 93 Ala. 120; 9 So. 598. nulty v. McAnnulty, 120 111. 26; 60 11 Powell V. Crampton, 102 la. Am. Rep. 552; 11 N. E. 397; Flen- 364; 71 N. W. 579; Burden v. ner v. Flenner, 29 Ind. 564; Man- Knight, 82 la. 584; 48 N. W. 985; ning v. Riley. 52 N. J. Eq. 39: 27 Thorp V. Bradley, 75 la. 50; 39 X. Atl. 810; Hunt v. Hunt, 171 X. Y. W. 177. 390; 59 L. R. A. 306; 64 X. E. 159; Henry v. Henry, 27 O. S. 121 ; CONTKACTS WHICH MUST BE PROVED BY WEITING. 1115 ever, in which the opposite view has been taken. ^ §735. Part performance as applied to contracts to answer for the debt of another. A promise to answer for the debt of another is not taken out of the statute by performance by the party to whom the prom- ise is made.^ While some cases are explained on the theory of part performance" they may as well be explained on the theory that promisor has made the debt his own. Thus, where A de- sired to get control of a soda-water fountain owned by B and leased to C, to prevent it from being used in competition, and to do this A agreed to pay to B the rent due him on the foun- tain from C, and B in consideration of A's promise to release C from the lease and from payment of arrears of rent, A's promise was held not within the statute.^ §736. Evidence of oral contract. If part performance is relied upon to take an oral con- tract out of the statute of frauds the evidence of the oral contract must be clear, unequivocal and definite.^ It is necessary to offer " unequivocal and satisfactory evidence of the particular agreement charged in the bill and answer."^ Under the Iowa statute it has been held sufficient to charge the jury that the plaintiff must " satisfy " them that there has been part per- Finoh V. Finch, 10 O. S. 501; Stan- 635; 34 S. E. 1002. The decision ley V. Madison, 11 Okla. 288; 66 was clearly correct though the the- Pac. 280; Adams v. Adams, 17 Or. ory of part performance was uh- 247; 20 Pac. 633. necessary. In Missouri marriage and cohabi- i Purcell v. Miner, 4 Wall. (U. tation are treated as part perform- S.) 513; Beall v. Clark, 71 Ga. 818; ance. Nowack v. Berger, 133 Mo. Sloniger v. Sloniger, 161 111. 270; 24; 54 Am. St. Rep. 663; 31 L. R, 43 N. E. 1111; Truman v. Truman, A. 810; 34 S. W. 489. 79 la. 506; 44 N. W. 721; Bennett iMcGauhey v. Latham, 63 Ga. v. Dyer, 89 Me. 17; 35 Atl. 1004; 67; rehearing denied, 147 Ind. 690; Woodbury v. Gardner, 77 Me. 68; 37 L. R. A. 245; 47 N. E. 150. Brown v. Brown, 47 Mich. 378; 11 2 English V. Richards Co., 109 N. W. 205. Ga. 635; 34 S. E. 1002. 2 Williams v. Morris, 95 U. S. 3 English V. Richards Co., 109 Ga. 444, 457 ; quoted in Buttz v. Col- IIIG PAGE ON CONTEACTS. foriiiauce before he can recover.^ Whatever the phraseology employed the courts usually required more than a mere pre- ponderance of the evidence to prove such contract. XII. Effect of iSTon-Compliance with Statute. §737. To what classes of contract the fourth section of the statute applies. The fourth section of the statute of frauds applies to certain types of " special promise," " agreement " and " contract or sale." The courts have in some cases considered to what classes of contract this language can apply. It is held not to apply to a contract of record.^ Thus, a recognizance to answer for the default of another is enforceable though unsigned." The statute of frauds clearly applies to express simple contracts. It does not apply to quasi-contract.^ The statute by its terms applies to a " special promise." Accordingly a liability inde- pendent of a special j)romise is not within the statute, such as an implied trust in realty,* or the liability of a party, receiving a benefit under an oral contract which by its terms cannot be performed within the year, to recompense the adversary party therefore.^ Thus, even in oral contracts within the statute, the party who has performed in whole or in part may often recover on a quantum meruit.^ On the same principle the statute of frauds has no applica- tion to estoppel in pais.'' So interests in realty may be affected by estoppel in pais restmg purely in oral evidence. The owner ton, 6 Dak. 306, 320; 43 N. W. 510; Doolittle v. Dininny, 31 N. Y. 717. 350. 3Hutton V. Doxsee, 116 la. 13; 4 Rayl v. Ravi, 58 Kan. 585; 50 89 N. W. 79. Pac. 501. 1 " No ease can be found where a s City of Greenville v. Water- contract of record has been held to works Co., 125 Ala. 625; 27 So. be within the statute of frauds." 764. Huston V. Ry., 21 0. S. 235. Con- See §§ 749-751. tra, Robinson v. Driver, 132 Ala. e See §§ 749-751. 169; 31 So. 495. t Foster v. Irrigation Co., 65 Fed. 2 See § 552. 836. 3 Goodwin v. Gilbert, 9 Mass. CONTRACTS WHICH MUST BE PEOVED BY WRITING. 1117 may be estopped to deny that the title 'to realty is in another where such other has been misled by the conduct of the true owner.^ So the true owner may be estopped to allege title as to third persons who have been misled by api^earances ; as where the holder of a mechanic's lieu,'' or the creditors of the owner's husband," seek to enforce their claims on the theory that the realty in question belongs to such other. So the owner of realty may be estopped to deny the existence of a lease,^^ or to allege the forfeiture of a lease.^^ So he may be estopped to deny the existence of an easement in his realty for the benefit of another,^^ as a right to make use of a ditch, ^* or a j'ight of way,^® as a right of way belonging to a railway.^'' All these sub- jects are outside of the operation of the statute of frauds. §738. Whether contract is void. While the courts not infrequently say that a contract within the statute of frauds and not complying with its requirements is void,^ this is simply another example of inaccuracy in the use 8 Wright V. McCord, 113 Ga. 881; 513; 86 Am. St. Eep. 209; 64 S. W. 39 S. E. 510; Cross v. Commission 277. Co., 153 111. 499; 46 Am. St. Rep. is Mattes v. Frankel, 157 N. Y. 902; 38 N. E. 1038; Schafer v. 603; 68 Am. St. Rep. 804; 52 N. E. Wilson, 113 la. 475; 85 N. W. 789; 585; De Herques v. Marti, 85 N. Y. Springle v. Morrison, 3 Litt. (Ky.) 609. 52; 14 Am. Dec. 41; Redmond v. i* Biggs v. Ditch Co., — Ariz. Loan Association, 194 Pa. St. 643; — ; 64 Pae. 494. 75 Am. St. Rep. 714; 45 Atl. 422; is Mattes v. Frankel, 157 N. Y. Wampol V. Kountz, 14 S. D. 334; 603; 68 Am. St. Rep. 804; 52 N. E. 86 Am. St. Rep. 765 ; 85 N. W. 595 ; 585 ; Grace v. Walker, 95 Tex. 39, Polk V. Gunther, 107 Tenn. 16; 64 43; 65 S. W. 482; affirming on re- S. W. 25; Murray Mining and Mill hearing, 95 Tex. 39; 64 S. W. 930. Co. V. Havener, 24 Utah 73; 66 is Hendrix v. Ry., 130 Ala. 205; Pac. 762. 89 Am. St. Rep. 27; 30 So. 596; sRadant v. Mfg. Co., 106 Wis. Louisville. etc._. Ry. v. Coal Co., Ill 600; 82 N. W. 562. Ky. 960; 55 L. R. A. 601; 64 S. loHauk V. Van Ingen. 196 111. W. 969. 20; 63 N. E. 705. i McKinnon v. Mixon, 128 Ala. 11 Brown v. Baruch, 24 Wash. 612; 29 So. 690; Bishop v. Martin 572; 64 Pac. 789. (Ky.), 65 S. W. 807; McDonald i2Conley v. Johnson, 69 Ark. v. Maltz, 78 Mich. 685; 44 N. W. 1118 PAGE ON CONTRACTS. of the word '^ void,"' " void " in this instance being confused with " unenforceable." Such contracts are not void in the proper use of the term.^ Accordingly, persons who are not parties to an oral contract and who do not represent such parties cannot attack the contract as invalid by reason of the statute of frauds.^ Thus, in con- tracts for the sale of some interest in realty,* third persons, such as adverse claimants of the property,^ gratuitous donees,® per- sons having subsequent written contracts with the same vendor for the same realty, where the vendor conveys to the vendee under the prior oral contract,^ creditors of the vendor,* even if they have obtained judgments which would be liens on the 337; Wardell v. Williams, 62 Mich, 50; 4 Am. St. Rep. 814; 28 N. W. 796; Raub v. Smith, 61 Mich. 543; 1 Am. St. Rep. 619; 28 N. W. 676; Cram v. Thompson, 87 Minn. 172; 91 N". W. 483; Taylor v. Von Schraeder, 107 Mo. 206; 16 S. W. 675; Bloomfield State Bank v. Mil- ler, 55 Neb. 243; 70 Am. St. Rep. 381; 44 L. R. A. 387; 75 N. W. 569. 2 Lowman v. Sheets, 124 Ind. 416; 7 L. R. A. 784; 24 N. E. 351 Cochran v. Ward, 5 Ind. App. 89 51 Am. St. Rep. 229; 29 N. E. 795 31 N. E. 581; Weber v. Weber (Ky.), 76 S. W. 507; McCampbell V. McCampbell, 5 Litt. (Ky.) 92; 15 Am. Dec. 48; Stone v. Dennison, 13 Pick. (Mass.) 1; 23 Am. Dec. 654; Gordon v. Collett, 104 N. C. 381; 10 S. E. 564. 3 Bullion, etc.. Bank v. Otto, 59 Fed. 256; Chicago Dock Co. v. Kin- zie, 49 III. 289; Wright v. Jones, 105 Ind. 17; 4 N. E. 281; Cowan v. Adams, 10 Me. 374; 25 Am. Dee. 242; Wood V. Lowney, 20 Mont. 273; 50 Pae. 794; Rickards v. Cun- ningham, 10 Neb. 417; 6 N. W. 475; Simmons v. More, 100 N. Y. 140; 2 N. E. 640; Durham, etc., Co. V. Guthrie, 116 N. C. 381; 21 S. E. 952. " No man is bound to set up the staute of frauds as a de- fense, for the benefit or even at the requirement of another, in a per- sonal action against him upon a claim, the obligation of which he recognizes as found in good faith and right." Bullard v. Smith, 139 Mass. 492, 498; citing, Ames v. Jackson, 115 Mass. 508; Cahill v. Bigelow, 18 Pick. (Mass.) 369. 4 As in a sale of water rights, Daum V. Conley, 27 Colo. 56; 59 Pac. 753. Mining claims. Book v. Mining Co., 58 Fed. 106; Murray Hill, etc.^ Co. V. Havenor, 24 Utah 73; 66 Pac. 762. .sMcManus v. Matthews (Tex. Civ. App.), 55 S. W. 589. 6 Hill V. Groesbeck, 29 Colo. 161; 67 Pac. 167. TMagriire v. Heraty, 163 Pa. St. 381; 43 Am. St. Rep. 800; 30 Atl. 151. 8 Bell V. Beazley, 18 Tex. Civ. App. 639; 45 S. W. 401. To the same effect see Kemp v. Bank, 109 Fed. 48; 48 C. C. A. 213. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1119 realty contracted for, but for the contract," an assignee for the benefit of creditors,^" or an insurer of the interest of the vendee under the oral contract," can none of them avail themselves of the fact that the contract did not comply with the requirements of the statute. So one who has made an oral promise to answer for the debt, default, or miscarriage of another and has per- formed such contract can compel exoneration from the principal debtor.^^ This is true even where such debtor has notified such guarantor not to perform/^ So where A has conveyed to B as trustee, A cannot avoid the deed because the trust was an oral one to secure a debt from A to C if B admits the liability to C/* So if C induces B to break a contract between B and A,^^ as a contract of employment,^'' C cannot avoid liability on the ground that the contract between A and B was an oral contract which was not to be performed within the year. Further proof that a contract within the statute of frauds and not complying with its terms is not void may be found in the fact that such contract is valid unless the defence of the statute is properly interposed,^^ and in the fact that if an action on such a contract is brought in a jurisdiction in which the statute is not in force, such contract can be enforced as well as any other. ^^ Some statutes provide that such contracts are void and some 9 Minns v. Morse, 15 Ohio 568; (Ky.) 200; Cahill v. Bigelow, 18 Butler V. Thompson, 45 W. Va. Pick. (Mass.) 369. 660; 72 Am. St. Rep. 838; 31 S. E. i5 Sneed v. Bradley, 4 Sneed 960. Contra, Gary v. Newton, 201 (Tenn.) 301. 111. 170; 66 N. E. 267. i6 Duckett v. Pool, 33 S. C. 238; 10 Walker's Assignee v. Walker 11 S. E. 689. (Ky.), 55 S. W. 726. i7 See § 752. iiCowell V. Ins. Co., 126 N. C. isLercux v. Brown, 12 C. B. 801; 684; 36 S. E. 184; German- Ameri- 74 E. C. L. 801; Pritchard v. Nor- can, etc., Co. v. Surety Co., 190 Pa. ton, 106 U. S. 124: Buhl v. Steph- St. 247; 42 Atl. 682. ens, 84 Fed. 922; Douver v. Chese- 12 Simpson v. Hall. 47 Conn. 417. brough, 36 Conn. 39; 4 Am. Rep. 13 Beal V. Brown, 13 All. (Mass.) 29; Kleeman v. Collins, 9 Bush. 114. (Ky.) 460; Emery v. Burbank, 163 i4Auten V. Ry. Co., 104 Fed. Mass. 326; 47 Am. St. Rep. 456; 395; Crawford v. Woods, 6 Bush. 28 L. R. A. 57; 39 N. E. 1026; 1120 PAGE ON CONTRACTS. courts construe such provisions literally.^" Whether an oral contract within the statute of frauds is of such validity that its release is a valuable consideration for a new promise, based thereon, which is not itself within the statute is a question on which authorities are in conflict. On the one hand, the re- lease of a voidable contract is a valuable consideration,^" and in analogy a release of rights under an oral contract within the statute of frauds has been held a valuable consideration for a new contract."^ So where an oral contract within the statute has been broken and a note has been given in payment of dam- ages caused by such breach the note has been held to be on val- uable consideration.^" On the other hand, if the consideration of the new contract is denied, it can be proved only by oral evi- dence of the original contract ; and thus the original contract would be indirectly enforced though resting in parol. Accord- ingly some courts hold that such release is not a valuable con- sideration, as of a contract to answer for the debt of another.^* If such new contract is fully performed and performance is ac cepted, the statute does not apply.^* §739. Whether contract is voidable. Such contracts are said by many courts to be voidable.^ This term is more nearly correct than " void," but it may be doubted whether it is the correct term to use, at least in many jurisdic' tions a contract is " voidable " in the proper sense from some Third National Bank v. Steel, 129 22 Anderson v. Best, 176 Pa. St. Mich. 434; 88 N. W. 1050; Heaton 498; 35 Atl. 194. V. Eldridge, 56 O. S. 87; 60 Am. 23 Hall v. Soule, 11 Mich. 494. St. Rep. 737; 36 L. R. A. 817; 46 (But in this state oral contracts N. E. 638. within the statute are held to be 19 Pierce V. Clarke, 71 Minn. 114; void.) Sale of goods, North v. 73 N. W. 522 (overruling, Hagelin Forest, 15 Conn. 400. V. Wacks, 61 Minn. 214; 63 N. W. 24 Detroit, etc., R. R. v. Forbes, 624). 30 Mich. 165. 20 See § 321. ^ Thus in Lowman v. Sheets. 124 21 Contract not to be performed Ind. 416; 7 L. R. A. 784; 24 N. E. within one year, Stout v. Ennis, 28 351, such a contract is said to be Kan. 706. " not void but merely voidable.'' CONTEACTS WHICH MUST BE PKOVED BY WKITING. 1121 defect in its formation, and as we shall see later/ the better view of the statute of frauds is that it has nothing to do with the formation of the contract, but merely with the evidence by which the contract is to be proved. §740. Contract unenforceable. If the statute of frauds is properly interposed as a defence to a contract which falls within its terms and does not compl^> with its requirements, such contract is unenforceable.^ No action at law can be maintained to recover damages for its breach,^ nor can a suit in equity be maintained for a breach of such contract.^ Thus, in ease of a breach of an oral contract for the sale of realty, the vendee cannot recover the value of the realty.* By the weight of authority an oral contract within the statute of frauds cannot be used as a defence, where the result of per- 2 See § 741. 1 Sivell V. Hogan, 119 Ga. 167; 46 6. E. 07; Lyons v. Bass, 108 Ga. 573 : 34 S. E. 721 ; Peck v. Harvest- ing Co., 196 111. 295; 63 N. E. 731; Jackson v. Myers, 120 Ind. 504; 22 N. E. 90; 23 N. E. 86; Leis v. Pot- ter, — Kan. — ; 74 Pac. 622; Town- send V. Hargreaves, 118 Mass. 325; Riddel! v. Piddell (Neb.), 97 N. W. 609; Vick v. Viek, 126 N. C. 123; 35 S. E. 257; Reed v. Adams, 172 Pa. St. 127; 33 Atl. 700; Bowen v. Sayles, 23 R. I. 34; 49 Atl. 103; Cleveland v. Evans, 5 S. D. 53; 58 N. W. 8; Lombard Investment Co. V. Carter, 7 Wash. 4; 38 Am. St. Rep. 864; 34 Pac. 209. The statute *' does not make an action void but prevents bringing an action for non-performance." Trowbridge v. Weatherbee, 11 All. (Mass.) 361. 2 Peck v. Machine Co., 94 111. App. 586; Bromley v. Broyles (Ky.), 58 S. W. 984; McCampbell V. McCampbell, 5 Litt. (Ky.) 92; n 15 Am. Dec. 48; Norton v. Preston, 15 Me. 14; 32 Am. Dec. 128; Ham- ilton V. Thirston, 93 Md. 213; 48 Atl. 709; Hallett v. Gordon, 122 Mich. 567; 81 N. W. 556; 82 N. W. 827; Lydick v. Holland, 83 Mo. 703; Smith v. Phillips, 69 N. H. 470; 43 Atl. 183; Rutan v. Hinch- man, 30 N. J. L. 255; Baltzen v. Nicolay, 53 N. Y. 467; Jordan v. Furnace Co., 126 N. C. 143; 78 Am. St. Rep. 644; 35 S. E. 247; McCracken v. McCracken, 88 N. C. 272; Hillhouse v. Jennings, 60 S. C. 373; 38 S. E. 599. sDunphy v. Ryan, 116 U. S. 491; Andrews Bros. Co. v. Coke Co., 39 Fed. 353; Green v. Groves, 109 Ind. 519; 10 N. E. 401; Bloomfield State Bank v. Miller, 55 Neb. 243; 70 Am. St. Rep. 381; 44 L. R. A. 387; 75 N. W. 569. 4]McDonald v. Maltz, 78 Mich. 685; 44 N. W. 337; Jordan v. Fur- nace Co., 126 N. C. 143; 78 Am. St. Rep. 644; 35 S. E. 247. 1122 PAGE ON CONTRACTS. mitting such defence will be to enforce such contract.^ Thus, where A sues B in equity to restrain him from practicing medi- cine in a certain town contrary to a written contract betweer A and B, made when B sold his practice and good-will to A, E cannot set up the breach of a contemporaneous oral contract between A and B whereby A agreed to buy B's house and lot.^ These rules apply, however, only where the oral contract is sought to be enforced and have no application where the con- tract is pleaded for some other purpose. Thus, where A let B take jx)ssession of certain realty under an oral contract of pur- chase which B subsequently refused to perform, A can show such contract and breach in an action of forcible entry and de- tainer to recover- such realty, for the possession of showing that B has no right of possession.'^ So an oral lease may be shoAvn in order to interrupt an adverse holding of realty by the claim- ant who accepts the lease.® §741. Statute of frauds a rule of evidence. The theory of the statute of frauds that best explains the greatest number of cases is that it is essentially a rule of evi- dence, and has no effect of any kind upon the formation of the contract, but solely on the means whereby it is to be proved.^ It is not strictly correct to call an oral contract within the stat- ute either void or voidable. It is, indeed, unenforceable, but only because proof is impossible for want of proper evidence; and this, only if the statute is taken advantage of at the trial ii a proper manner.^ The contracts enumerated in the fourth section of the statute of frauds are not required by the Common 5 Bernier v. Mfg. Co., 71 Me. 506; i Merchant v. O'Rourke, 111 la. 36 Am. Rep. 343; King v. Welcome, 351; 82 X. W. 759; Townsend v. 5 Gray (Mass.) 41; Lemon v. Ran- Hargieaves, 118 Mass. 325; Stone dall, 124 Mich. 687; 83 N. W. 994. v. Dennison, 13 Pick. (Mass.) 1; 6 Lemon v, Randall. 124 Mich. 23 Am. Dec. 654; Third National 687; 83 N. W. 994. Bank v. Steel, 129 Mich. 434; 88 7 Leach v. Ritzke,. 86 111. App. N. W. 1050; Heaton v. Eldridge, 483. 56 O. S. 87; 60 Am. St. Rep. 737; sCampau v. Laflferty, 43 Mich. 36 L. R. A. 817; 46 N. E. 638. 429 ; 5 N". W. 648. 2 See § 752. CONTRACTS WHICH MUST BE PEOVED BY WKITING. 1123 Law to be in writing or to he proved by writing. Accordingly, in jurisdictions where the statute is not in force, oral contra(;ts of these classes are enforceable,' such as oral contracts for the sale of realty.* Where this theory of the statute obtains an oral contract within the statute of frauds in force where such contract is made and is to be performed may be enforced in jinother jurisdiction where such statute is not in force.^ In some jurisdictions, however, the statute of frauds is said to affect the contract itself and not merely the means whereby it is to be proved.*' ^742. Effect of consideration for contract. Since the statute of frauds takes away no requisite of a valid contract but merely adds a requisite as to the means of proof,^ a contract on valuable consideration for the conveyance of real- ty,^ as in return for a contract to erect a party-wall,^ or for per- sonal services,* or for promisee's publishing a newspaper in the 3 Wilson V. Owens, 86 Fed. 371; 30 C. C. A. 257; Myers v. Mathis (Ind. 'l"er.) , 46 S. W. 178. * Maxwell Land Grant Co. v. Dawson. 7 N. M. 133; 34 Pae. 191 (not arfected on this point by its reversal in 151 U. S. 586); Me- Kennon v. Winn, 1 Okla. 327; 22 L. R. A, 501; 33 Pae. 582. 5 See ^ 752. 6 " The courts of England have declared tnat the substance of con- tracts within the statute is not af- fected by the statute, but that whetlier they are to be enforced or not is dependent upon the enforce- ment of a rule of evidence, and therefore it (s necessary in order to get the advantage of the statute, that it should be properly pleaded. Our court, however, holds that the statute affects the contract itself, and therefore whenever one is re- quired to prove the contract which he seeks to enforce (if it be one within the purview of the statute) he must show that it has been exe- cuted in contemplation of the stat- ute, and that by legal evidence." Jordan v. Furnace Co., 126 N. C. Am. St. Rep. 644; 143. 146: 78 35 S. E. 247. 1 See § 741. 2 Donahue's Appeal, 62 Conn. 370; 26 Atl. 399; Wallace v. Long, 105 Ind. 522; 55 Am. Rep. 222; 5 X. E. 666; Becker v. Mason. 30 Kan. 697; 2 Pae. 850; Dowling v. ]McKenney. 124 Mass. 478 ; Kelley v. Kelley. 54 Mich. 30; 19 N. W. 580; Woods v. Ward, 48 W. Va. 652; 37 S. E. 520; Koch v. Williams, 82 Wis. 186; 52 N. W. 257; Par- rish V. Williams (Tex. Civ. App.), 53 S. W. 79; Arnold v. Ellis, 20 Tex. Civ. App. 262: 48 S. W. 883. sTillis V. Treadwell, 117 Ala. 445; 22 So. 983. * Lesal services. Donahue's Ap- peal. 62 Conn. 370; 26 Atl. 399; 11:^4 PAGE ON CONTRACTS. town in which the land is situate,^ or becoming surety on an appeal bond, so that action involving title to the land in ques- tion may be api)ealed/ are all of them within the statute/ §743. Extrinsic evidence admissible to show informal memoran- dum incomplete. If the memorandum is so incomplete on its face that it does not purport to be a complete contract, extrinsic evidence may be received to show if there were other terms of the contract,^ and if there were such other terms the memorandum is insuffi- cient." Thus, a memorandum omitting terms of the verbal contract, as " to pay net cost and upon delivery " and that the goods sold should be " as per sample delivered or equal in qual- ity to sample delivered,"^ or omitting terms as to time and place of delivery,* are each insufficient. So a letter cannot ratify an unsigned contract,^ nor can an admission in the answer validate the oral contract set up in the petition® where the con- tract in the second instrument is substantially different from that in the first. So if a given contract is alleged, a written memorandum which does not set forth all the terms as alleged is insufficient to prove such contract.^ If the evidence of the party seeking to enforce the contract shows a contract substan- Masterson v. Little, 75 Tex. 682; 2 Meux v. Hogue, 91 Cal. 442; 27 13 S. W. 154. Services as architect, Pac. 744; Benedict v. Bird, 103 la. Koch V, Williams, 82 Wis. 186; 52 612; 72 N. W. 768; Fisher v. An- N. W. 257. Services as surveyor, drews, 94 Md. 46; 50 Atl. 407. Perifield v. Boreing (Ky.), 22 S. 3 Fisher v. Andrews, 94 Md. 46; \y. 440. 50 Atl. 407. 5 Sanborn v. Murphy. 86 Tex. 4 Smith v. Shell, 82 Mo. 215; 52 437; 25 S. W. 610; affirming, 5 Am. Rep. 365. Tex. Civ. App. 509; 25 S. W. 459. 5 Meux v. Hogue, 91 Cal. 442; 27 6 W^oods V. Ward, 48 W. Va. 652; Pac. 744. 37 S. E. 520. 6 Benedict v. Bird, 103 la. 612; 7 Indeed if no valuable considera- 72 N. W. 768. tion exists, the question of the ap- ^ Xesham v. Selby, L. R.. 7 Ch. plicability of the statute is imma- App. 406; Williams v. Morris, 95 terial as the agreement is unen- U. S. 444; Littell v. Jones, 56 Ark. forceable. 139: 19 S. W. 497; Whiting v. But- 1 See § 1197 et seq. ler, 29 Mich. 122. COJSfTKACTS WHICH MUST BE PROVED BY WRITING. 1125 tially different from that shown by the memorandum no recov- ery can be had.^ §744. Extrinsic evidence admissible if explanatory. The statute of frauds does not forbid the introduction of oral evidence. It merely requires a written note or memorandum of the contract. In certain cases where extrinsic evidence is admissible to explain an ordinary written contract, it may be introduced to explain a contract under the statute of frauds.^ Extrinsic evidence is admissible to show the facts and circum- stances surrounding the transaction, so as to put the court in the position of the parties thereto.^ Extrinsic evidence is admissible to show the meaning of ab- breviations used in the memorandum.^ Thus extrinsic evi- dence is admissible to show the meaning given by custom or usage to such expressions as " O. K.,"* " F. C. wool,"^ " bought thirteen at eleven five-eighths net you."® 8 Smith V, Shell, 82 Mo. 215; 52 Am. Rep. 365. 1 Brewer v. Horst and Lachmimd Co., 127 Cal. 643; 50 L. R. A. 240; 60 Pac. 418; Lee v. Butler, 167 Mass. 426; 57 Am. St. Rep. 466; 46 N. E. 52. aWylson v. Dimn, 34 Ch. Div. 569; Haigh v. Brooks, 10 Ad. & El. 309; Brewer v. Horst and Lachmund Co., 127 Cal. 643; 50 L. R. A. 240; 60 Pac. 418; Berry v. Kowalsky, 95 Cal. 134; 29 Am. St. Rep. 101; 30 Pac. 202; Mann v. Higgins, 83 Cal. 66; 23 Pac. 206; Callahan v. Stanley, 57 Cal. 476; Towle v. Car- melo, etc., Co., 99 Cal. 397; 33 Pac. 1126; Preble v. Abrahams, 88 Cal. 245; 26 Pac. 99; New England, etc., Co. y. Worsted Co., 165 Mass. .328; 52 Am. St. Rep. 516; 43 N. E. 112; Ellis V. Bray, 79 Mo. 227; Regan v. Milby, 21 Tex. Civ. App. 21 ; 50 S. W. 587. " Parol evidence may be introduced to show the sit- uation of the parties and the cir- cumstances attendant upon the transaction for the jDurpose of ap- plying the contract to the subject- matter and to show the connection of different writings constituting the memorandum with one another." Lee V. Butler, 167 Mass. 426, 428; 57 Am. St. Rep. 466; 46 N. E. 52. 3 Brewer v. Horst and Lachmund Co., 127 Cal. 643; 50 L. R. A. 240; 60 Pac. 418; New England, etc., Co. V. Worsted Co., 165 Mass. 328; 52 Am. St. Rep. 516; 43 N. E. 112; Maurin v. Lyon, 69 Minn. 257; 65 Am. St. Rep. 568; 72 N. W. 72. 4 Moore v. Eisaman, 201 Pa. St. 190; 50 Atl. 982. 5 New England, etc., Co. v. Worsted Co., 165 Mass. 328; 52 Am. St. Rep. 516; 43 N. E. 112. <5 Brewer v. Horst and Lachmund Co., 127 Cal. 643; 50 L. R. A. 240 j 00 Pac. 418. 1126 PAGE ON CONTRACTS. §745. Extrinsic evidence admissible to identify writing. If the signed memorandum refers to another written instru- ment, extrinsic evidence is admissible to identify such other instrument.^ If written contract provides for the division of " land purchased of " the other party without further descrip- tion, and a deed for the land is subsequently given without ref- erence to the written contract, oral evidence is admissible to show that no other land was contracted for than that conveyed." The reference to the other writing must, however, either he made expressly, or must apjjear from the terms of the two in- struments when compared.^ §746. Admissibility of extrinsic evidence for identification. If the subject-matter^ or parties" are identified by the con- tract with reasonable certainty, oral evidence is admissible to show the persons or things to which such description applies. So where certain wrecked steamboats were sold by description, location, and name, oral evidence is admissible to show that the names of two boats were reversed by mistake, and that the loca- tion and descriptions were correct.^ So if a person is described as one to whom a certain obligation is owing, oral evidence is admissible to show Avho such creditor is.* §747. Extrinsic evidence inadmissible to show collateral contract. Parol evidence cannot be received to add a new term to a written contract within the statute of frauds, even though such Term is collateral and proper thus to be* proved in the case of the ordinary written contract.^ iBeckwith v. Talbot, 95 U. S. 2 ^McLeod v. Adams, 102 Ga. 53.3; 289; Lee v. Butler, 167 Mass. 426; 27 S. E. 680. 57 Am. St. Eep. 466; 46 K E. 52; 3 Chouteau v. Goddin, 39 Mo. P.eck V. Vandemark, 99 N. Y. 29; 201. 1 N. E. 41. 4McLeod v. Adams, 102 Ga. 533; 2 White V. Core, 20 W. Va. 272. 27 S. E. 680. 3 See § 688. 1 McMullen v. Helberg. 6 L. R. 1 Chouteau v. Goddin. 39 Mo. Ir. 463. Contrart in consideration 201 ; McWhirter v. Allen. 1 Tex, of marriage. Russell v. Russell, 60 Civ. App. 649; 20 S. W. 1007. X. J. Eq. 282; 47 Atl. 37. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1127 §748. Oral modification of contract. A contract within the statute of frauds, complying with its requirements, cannot, according to the weight of authority, be modified subsequently by an executory oral agreement so as to make a new contract of such sort that it would itself be within the statute; since this would leave the contract part in writing and part oral.^ Thus an oral extension of the time of per- formance," as of a contract for the sale of realty,^ such as a con- tract for the sale of growing timber,* or an oral agreement in- <2luding a new subject-matter,^ or a modification providing for payment for realty by the conveyance of other realty instead of in money as required by the original contract,*' are none of them enforceable. But an oral agreement for the extension of time has been enforced so as to prevent a forfeiture for non- payment within the time originally limited.^ The original contract is enforceable disregarding the oral modifications.^ On the other hand if an oral modification of a contract within the statute is completely performed, this constitutes a discharge of the original contract.® Thus, an oral modification of a con- 1 Hickman v. Haynes, L. R. 10 Atlee v. Bartholomew, 69 Wis. 43; C. P. 598; Marshall v. Lynn, 6 5 Am. St. Rep. 103; 33 N. W. 110. Mees. & W. 109 ; Swain v. Seamans, - McConathy v. Lanham, — Ky. 9 Wall. (U. S.) 254; Snow v. Nel- — ; 76 S. W. 535; Bullis v. Mining son, 113 Fed. 353; Lawyer v. Post, Co., 75 Tex. 540; 12 S. W 397. 109 Fed. 512; 47 C. C. A. 491; s Lawyer v. Post, 109 Fed. 512; Piatt V. Butcher, 112 Cal. 634; 44 47 C. C. A. 491; Piatt v. Butcher, Pac. 1060; Smith v. Taylor, 82 Cal. 112 Cal. 634; 44 Pac. 1060. 533; 23 Pac. 217; Augusta South- 4 Clark v. Guest, 54 0. S. 298; ern R. R. Co. v. Kilby Co., 106 Ga. 43 N. E. 862. 864; 33 S. E. 28; Bradley v. Har- 5 Clark v. Fey, 121 N. Y. 470; ter, 156 Ind. 499; 60 N. E. 139; 24 N. E. 703; Saveland v. Ry., 118 Davis V. Parish, Litt. Sel. Cas. Wis. 267; 95 N. W. 130. (Ky.) 153; 12 Am. Dec. 287; Wal- 6 Bradley v. Harter, 156 Ind. ter V. Bloede Co., 94 Md. 80; 50 Atl. 499; 60 N. E. 139. 433; Whittier v. Dana, 10 All. 7 Scheerschmidt v. Smith, 74 (Mass.) 326; Abell v. Munson, 18 Minn. 224; 77 N. W. .34. Mich. 306; 100 Am. Dec. 165; War- « Sanderson v. Graves, L. R. 10 ren v. Mfg. Co., 161 Mo. 112; 61 S. Exch. 234. W. 644; Bullis v. IMining Co., 75 o Hickman v. Haynes, L. R. 10 Tex. 540; 12 S. W. 397 ; Saveland C. P. 598; Whittier v. Dana, 10 V. Ry., 118 Wis. 267; 95 N. W. 130. All. (Mass.) 326; Cummings v. Ar- 1128 PAGE ON CONTRACTS. tract concerning realty, with reference to the number of lots to be sold,^*' or the size of the mill to be constructed on the realtj,^^ if fully performed and performance is accepted, is it- self valid, and merges the prior contract. Some cases go still farther and, on the theory that the statute does not affect per- formance,^" allow an oral executory modification of that part of the contract wliich does not bring it within the statute of frauds, to have full validity itself and to ojDerate as a bar to that part of the original contract/^ Thus, an oral extension of the time of paying the purchase price of realty contracted for in writing has been held valid if made before the expiration of the time fixed by the original contract/^ This rule has been based on the doctrine of estoppel. §749. Right of party not in default to recover a reasonable com- pensation. Wliile in case of a breach of a contract which falls within the statute of frauds and does not comply with its requirements, no recovery can be had for damages for breach of the executory part thereof, diiferent considerations exist when property hag been delivered or services rendered under such a contract. As will be considered hereafter^ the party not in default has, in contracts not affected by the statute of frauds, the right to ig- nore the contract and sue for a reasonable compensation for property furnished or services rendered by him under such contract, whenever such facts arise as amount to a complete discharge thereof. Illegal contracts form an exception to this rule." ]^ow a contract is in no proper sense illegal because it falls within the terms of the statute of frauds and does not com- nold, 3 Met. (Mass.) 486; 37 Am. is Stearns v. Hall, 9 Cush. Dec. 15.5. (Mass.) 31. 10 Long V. Hartwell, 34 N. J. L. i* Brush-Swan Electric Light Co. 116. V. Electric Co., 41 Fed. 163; 11 Swain v. Seamens, 9 Wall. (U. Stearns v. Hall, 9 Cush. (Mass.) S.) 254. 31. 12 Cummings v. Arnold, 3 Met. i See Ch. LXXIV. (Mass.) 486; 37 Am. Dec. 155. 2 gee § 519. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1129 plj with its requirements.^ The statute of frauds was intended solely to prevent oral proof of contracts in actions based thereon ; not to enable a party to a contract to retain benefits received thereunder without liability therefor.* Accordingly, if A and B have entered into such a contract and A has delivered pro|> erty to B in performance of such contract^ as under a contract not to be performed within the year,® or has paid him money,^ as imder a contract not to be performed within the year,* or for the sale of realty,^ B must restore such property^" or make a reasonable compensation for such property^^ if B seeks to avoid the contract on the ground of the statute of frauds. The right to recover money thus paid exists even if the right to 3 See § 738 et seq. 4 Henderson v. Treadway, 69 111. App. 357; Milkr v. Roberts, 169 Mass. 134; 47 N. E. 585; Cadman V. Markle, 76 Mich. 448; 5 L. R. A. 707; 43 N. W. 315; Emery v. Smith, 46 N. H. 151; Abbott v. Draper, 4 Den. (X. Y.) 51; Pierce V. Paine, 28 Vt. 34. 5 Peabody v. Fellows, 177 Mass, 290; 58 N. E. 1019; Hawley v. Moody, 24 Vt. 603. Realty, Pea- body V. Fellows, 177 Mass. 290; 58 N, E. 1019; Andrews v. Broiighton, 78 Mo. App. 179. Personalty, Die- trich V. Hoefelmeir, 128 Mich, 145; 87 N. W. Ill, 6 Roberts v. Tennell, 3 T. B. Mon, (Ky.) 246. 7 Whyte V. Rosenerantz, 123 Cal. 634; 69 Am, St. Rep. 90; 56 Pac. 436; Walker v. Walker (Ky.), 55 S. W. 726; Jellison v. Jordan, 68 Me, 373; Root v, Burt, 118 Mass, 521; Scott V. Bush, 26 Mich. 418; 12 Am. Rep. 311; Moody v. Smith, 70 N. Y. 598; Gottschalk v. Witter, 25 0. S. 76; Love v. Burton (Tenn. Ch. App.), 61 S, W. 91; Taylor v. Deseve, 81 Tex. 246; 16 S. W. 1008; Moore v. Powell, 6 Tex. Civ. App. 43; 25 S. W. 472; Hawley v. Moody, 24 Vt. 603. 8 Montague v. Garnett, 3 Bush. (Ky.) 297; Weber v. Weber (Ky.), 7 S, W. 507, 9 Cook V. Doggett, 2 All. (Mass,) 439; Wright v. Dickinson, 67 Mich. 580: 11 Am, St. Rep. 602; 35 N. W. 164; Pressnell v. Lundin, 44 Minn. 551; 47 N. W. 161; Patter- son v. Hawley. 33 Neb. 440; 50 N. W. 324; Durham, etc., Co. v. Guth- rie, 116 X. C. 381; 21 S. E. 952; Bedell v. Tracy, 65 Vt, 494; 26 Atl. 1031; Harney v, Burhans, 91 Wis. 348; 64 X, W, 1031, 10 Dietrich v, Hoefelmeir. 128 Mich. 145; 87 X. W, 111, 11 Wolke V. Fleming, 103 Ind. 105; 53 Am. Rep. 495; 2 X, E. 325; Dowling V. McKenney, 124 Mass. 478; Dix v, Marcy, 116 Mass. 416; Williams v. Bemis, 108 Mass. 91; 11 Am. Rep. 318; Luey v. Bundy, 9 X. H. 298; 32 Am. Dec. 359; Smith V. Smith, 28 X. J. L. 208 ; 78 Am. Dec. 49; Lockwood v. Barnes, 3 Hill (X. Y.) 128; 38 Am. Dec. 620. 1130 PAGE ON CONTRACTS. specific performance exists/^ If specific personalty has been delivered under a contract to exchange such j^ersonalty for realty, and has been retained by the vendor, who refuses per- formance the vendee may maintain an action for its reason- able value even if the vendor has not converted it into money. He is not obliged to resort to replevin or trover. ^^ So if A has rendered services of which B has received the benefit/* as if services were rendered under a contract to convey realty in recompense therefor/^ or under a contract that cannot be per- formed within the year,^^ especially where the services are ren- dered by an infant/^ B must make compensation for such serv- ices.^* Thus, if A renders services to B in consideration of an oral agreement by B to devise certain realty to A, A can recover a reasonable compensation from B's estate for services thus ren- dered.^^ If A furnishes board to B under an oral contract whereby B agrees to devise property to A's child, and B does 12 Reynolds v. Reynolds, 74 Vt. 463; 52 Atl. 1036. 13 Booker v. Wolf, 195 111. 365; 63 N. E. 265 ; reversing, 97 111. App. 139. i4Bucki V. McKinnon, 37 Fla. 391; 20 So. 540; Hudson v. Hud- son, 87 Ga. 67&; 27 Am. St. Rep. 270; 13 S. E. 583; Schanzenbaeh v. Brough, 58 111. App. 526: Miller v. Eldridge, 126 Ind. 461; 27 N. K 132; Schoonover v. Vachon, 121 Ind. 3; 22 N. E. 777; Taggart v. Tevanny, 1 Ind. App. 339; 27 N. E. 511; Smith v. Lotton, 5 Ind. App. 177; 31 N. E. 816; Aiken v. Nogle, 47 Kan. 96; 27 Pac. 825; Myers v. Korb (Ky.), 50 S. W. 1108; Ham- bell V. Hamilton, 3 Dana (Ky.) 501; Hamilton v. Thirston, 93 Md. 213; 48 Atl. 709; Cadman v. Mar- kle, 76 Mich. 448; 5 L. R. A. 707; 43 N. W. 315; Clowe v. Pine Prod- uct Co., 114 N. C. 304; 19 S. E. 153; Roberts v. Wood Working Co., Ill X. C. 432: 16 S. E. 415: Treece V. Treece, 5 Lea (Tenn.) 317; Koch V. Williams, 82 Wis. 186; 52 N. W. 257; Tucker v. Grover, 60 Wis. 240; 19 N. W. 62; Cohen v. Stein, 61 Wis. 508; 21 N. W. 514. 15 Mills V. Joiner, 20 Fla. 479; Thomas v. McManus (Ky.) ; 64 S. W. 446; Tucker v. Grover, 60 Wis. 240; 19 N. W. 62. 16 Bethel v. Booth, — Ky. — ; 17 Meyers v. Korb (Ky.) , 50 S. 72 S. W. 803; Snyder v. Neal, 129 Mich. 692; 89 N. W. 588; Cadman V. Markle, 76 Mich. 448; 5 L. R. A. 707; 43 N. W. 315. W. 1108; Towsley v. Moore, 30 0. S. 184; 27 Am. Rep. 434. 18 Clark V. Davidson. 53 Wis. 317; 10 N. W'. 384. 19 Hudson V. Hudson, 87 Ga. 678; 27 Am. St. Rep. 270; 13 S. E. 583; Miller v. Eldridge, 126 Ind. 461; 27 X. E. 132; Schoonover v. Vachon, 121 Ind. 3; 22 X. E 777; Hamil- ton V. Thirston, 93 Md. 213: 48 Atl. 709; Estate of Kessler, 87 Wis. 600; 41 Am. St. Rep. 74; 59 N. W- 129. CONTRACTS WHICH MUST BK PROVED BY WRITING. 1131 not i3€rform such contract, A can recover a reasonable compen- sation for such board and lodging.-" So where B, the owner of realty, makes an oral contract with A for the sale thereof, and A takes possession and make? valuable improvements under cir- cumstances which make specific performance impracticable, A may have compensation for such improvements,^^ in equity in some jurisdictions,"- and in other jurisdictions even at law.^^ So compensation has been allowed at law for work in preparing ground and putting in a crop under an oral agreement for a lease. ^* §750. Right of party in default to recover a reasonable compen- sation. In case of a contract not affected by the statute of frauds, and not affected either by defects in offer and acceptance or by peculiarities, in the status of the parties thereto, the party who has broken the contract and is in default cannot, as a general rule, recover a reasonable compensation for what he has done under the contract.^ The question then to be considered is whether the statute of frauds affects the operation of this gen- eral rule. If A, the party who has furnished property or ren- dered services to B under an oral contract within the statute of frauds seeks to avoid the contract and recover for his services or property, a question is presented on which there is a conflict of authority. In some jurisdictions it is held that he cannot 20 Gay V. Mooney, 67 N. J. L. S.) 204; McNamee v. Withers. 37 27; 50 Atl. 596; affirmed in 67 N. Md. 171; Herring v. Pollard, 4 J. L. 687; 52 Atl. 1131, on reasons Humph. (Tenn.) 362; 40 Am. Dec. given in opinion below. 653. Even where such compensa- 21 Deischer v. Stein, 34 Kan. 39 ; tion could not be had at law. Math- 7 Pae. 608; Findley v. Wilson, 3 ews v. Davis, 6 Humph. (Tenn.) Litt. (Ky.) 390; 14 Am. Dec. 72; 324. Hannibal, etc.. P. P. v. Shortridge, 23 Luton v. Badham. 127 N. C. 86 Mo. 662; Smith v. Smith, 28 96; 80 Am. St. Rep. 783; 53 L. P. N. J. L. 208 ; 78 Am. Dec. 49 ; Har- A. 337 ; 37 S. E. 143 ; Thouvenin v. Tis V. Frink, 49 N. Y. 24; 10 Am. Lea, 26 Tex. 612. Rep. 318; Pass v. Brooks, 125 N. 24 Thomas v. McManus (Ky.), C. 129 ; 34 S. E. 228. 64 S. W. 446. 22 King v. Thompson, 9 Pet. (U. i See § 1603. 1132 PAGE ON CONTEACTS. recover since he is basing his cause of action upon his own ^e^ fusal to carry out his contract.^ Thus a vendee of realty under an oral contract, who refuses to perforin, cannot recover the purchase money paid in by himself,^ even in equity,* nor can he recover for improvements on such realty.^ A vendor who re- fuses performance cannot recover for use and occupation,® and en employee under an oral contract, not to be performed within the year cannot abandon the employment with cause and recover on a quantum meruit? In other cases the party refusing performance has been al- lowed to recover a reasonable compensation.* Thus, one who 2 Clark V. Terry, 25 Conn. 395; Day V. Wilson, 83 Ind. 463; Gray V. Gray, 2 J. J. Mar. (Ky.) 21; Bacon v. Parker, 137 Mass. 309; Kriger v. Leppel, 42 Minn. 6; 43 N. W. 484; Galvin v. Prentice, 45 N. Y. 162; 6 Am. Rep. 58; Durham, etc., Co. V. Guthrie, 116 N. C. 381; 21 S. E. 952; Mack v. Bragg, 30 Vt. 571. 3 Thomas v. Brown, 1 Q. B. D. 714; York v. Washburn, 118 Fed. 316; Venable v. Brown, 31 Ark. 564; Crabtree v. Welles, 19 111. 55; Day v. Wilson, 83 Ind. 463; 43 Am. Eep. 76; Duncan v. Baird, 8 Dana (Ky.) 101; 33 Am. Dec. 479; Gray v. Gray, 2 J. J. Mar. (Ky. ) 21; Plummer v. Bucknam, 55 Me. 105; Riley v. Williams, 123 Mass. 506; Kenniston v. Blakie, 121 Mass. 552; Coughlin v. Knowles, 7 Mete. (Mass.) 57; 39 Am. Dec. 759; McKinney v. Har- vie, 38 Minn. 18; 8 Am. St. Rep. 640; 35 N. W. 668; Sennett v. Sheehan, 27 Minn. 328; 7 N. W. 266; Lane v. Shackford. 5 X. H. 130; Long V. Hartwell. 34 N. J. L. 116; Durham, etc., Co. v. Guthrie, 116 X. C. 381; 21 S. E. 952; Synie V. Smith, 92 N. C. 338; Cobb v. Hall, 29 Vt. 510; 70 Am. Dec. 432; Johnson v. Mill Co., 28 Wash. 515; 68 Pac. 867. 4Foust V. Shoffner, Phil. Eq. (X. C.) 242. 5 Young V. Pate, 3 J. J. Mar. (Ky.) 100; Luckett v. Williamson, 37 Mo. 388. 6 Greton v. Smith. 33 X. Y. 245. 7 Swazey v. Moore, 22 111. 63 ; 74 Am. Dec. 134; Kriger v. Leppel, 42 Minn. 6; 43 N. \N. 484; Galvin v. Prentice, 45 X. Y. 162; 6 Am. Rep. 58; Abbott v. Inskip, 29 O. S. 59; Mack V. Bragg. 30 Vt. 571; Phil- brook V. Belknap, 6 Vt. 383. See as to other contracts not to be per- formed within the 'y^^^- Clark v. Terry, 25 Con. 395; Gottschalk v. Witter. 25 0. S. 76. s Swift V. Swift, 46 Cal. 266 ; Da- venport V. Gentry. 9 B. Mon. (Ky. ) 427; King v. Welcome, 5 Gray (Mass.) 41; Scott v. Bush, 26 Mich. 418; 12 Am. Rep. 311; s. c, 29 Mich. 523; Crawford v. Parsons. 18 X. H. 293; Mendelsohn v. Banov, 57 S. C. 147; 35 S. E. 499; Winters V. Elliott. 1 Lea (Tenn.) 676. "The principle (that no recovery can be had if the other party is willing to perform) has never prevailed in CONTRACTS WHICH MUST BE PKOVED BY WRITIXG. 1133 rendered services uiDon a contract not to be performed within the year," or has paid money under a contract for the purchase of realty/*^ has been allowed to recover a reasonable compensa- tion therefor, or if he has made improvements on realty benefit- ting the vendor he has been allowed to recover.^^ However, if services have been rendered under such a contract payable in full each week, and such payments have been made up to the time of discharge, no recovery can be had for a reasonable com- l^ensation therefor.^' Three separate grounds have been sug- gested for such holding: (1) that such contract is void,^^ (2) that such contract is voidable at the election of either party," and (3) that to allow the oral contract to be used as a defense in an action for reasonable comi^ensation would be to enforce indirectly a contract that could not be enforced directly/^ In Alabama the question as to the right of recovery seems to tiirn on the question of whether there has been part performance within the meaning of the statute, the right of recovery existing in all eases, irrespective of the question of who breaks the con- tract, until such part performance occurs/^ this state." Nelson v. Improvement \Yis. 631; Brandeis v. Neustadtl, 13 Co., 96 Ala. 515, 526; 38 Am. St. Wis. 142). Eep. 116; 11 So. 695. n Masson v. Swan, 6 Heisk. 9 Comes V. Lamos, 16 Conn. 246; (Tenn.) 450. Benier v. Mfg. Co., 71 Me. 506; 36 12 Cohen v. Stein, 61 Wis. 508; 21 Am. Eep. 343; King v. W^elcome, 5 N. W. 514. Gray (Mass.) 41; Freeman v. Foss, is Tucker v. Grover, 60 Wis. 233; 145 Mass. 361; 1 Am. St. Rep. 467; 19 N. W. 92. "If he has the im- 14 X. E. 141. qualified right to repudiate the con- 10 Nelson v. Improvement Co., 96 tract then there is no contract, and Ala. 515; 38 Am. St. Rep. 116; 11 no right upon which he can retain So. 695; Allen v. Booker, 2 Stew, the money." Flinn v. Barber, 64 (Ala.) 21; 19 Am. Dec. 33; Tucker Ala. 193, 198; quoted in Nelson v. V. Grover, 60 Wis. 233; 19 N. W. Improvement Co., 96 Ala. 515, 525; 92 (citing as showing the right of 38 Am. St. Rep. 116; 11 So. 695. one paying money under an oral i* Winters v. Elliott, 1 Lea contract to recover the same, though (Tenn.) 676. the other party is willing to per- is King v. Welcome, 5 Gray form. Clark v. Davidson, 53 Wis. (Mass.) 41. 317: 10 N. W. 384; North-Western. ic Nelson v. Improvement Co., 96 etc., Co. V. Shaw, 37 Wis. 655; 19 Ala. 515; 38 Am. St. Rep. 116; 11 Am. Rep. 781 ; Hooker v. Knab. 26 So. 695. Wis. 511; Thomas v. Sowards, 25 113i PAGE ON CONTRACTS. §751. Amount of recovery. This right of recovery is in the nature of quasi-contract.^ It is not an indirect means of enforcing the contract. It may be exercised even where an action on the contract has failed,^ The contract itself " falls out of view as a ground of legal rem- edy and appears only to give color to the conduct of the parties in furnishing and accepting the service rendered. It affords the means of determining that the service was not a gift but a sale.^ . . ." Accordingly the party not in default may re- cover without showing performance on his part.* So the meas- ure of recovery is the benefit which the defendant has received under the contract, and not the contract price, nor what plaintiff has parted with. A's right to recover for property furnished or services rendered under an oral contract which falls within the statute of frauds is usually limited to such property or services as enured to the benefit of B.^ Hence, if money is advanced to a corporation under a contract with the stockholders thereof, which is unenforceable by reason of the statute of frauds, such money cannot be recovered from such stockholders.*' The lia- bility of the party repudiating the contract to make compensa- tion to the adversary party for loss sustained by him is not always thus limited, however. So where B, the owner of realty, had entered into an oral contract with A for mining coal on B's realty, and B repudiates the contract after A has done some work thereunder, A can recover from B the actual loss sustained by A in mining for coal.'^ So where B agreed to convey to A certain realty not then owned by B, and A entered and made valuable improvements and B did not get title to such realty and hence was unable to convey, A was allowed to recover for iSee Ch. XXXVII. 4 Peabody v. Fellows, 181 Mass. 2 Action in quasi-contract success- 26; 62 N. E. 1053. ful. Wright V. Dickinson, 67 Mich 580; 11 Am. St. Rep. 602; 35 N. W 164. Action on contract failed Dickinson v. Wright, 56 Mich. 42; 5 Dovvling V. McKenney, 124 Mass. 478; Banker v. Henderson, 58 N. J. L. 26; 32 Atl. 700. 6 Gazzam v. Simpson, 114 Fed. 22 N. W. 312. 71 ; 52 C. C. A. 19. 3 Gay V. Mooney, 67 N. J. L. 27, " Heilman ▼. Weinman, 139 Pa. 29; 50 Atl. 596. St. 143; 21 Atl. 29. CONTEACTS WHICH MUST BE PROVED BY WKITING. 1135 such improvements/ In some jurisdictions the party who has furnished property or rendered services under an oral contract, subsequently repudiated by the adversary party as within the statute of frauds can not only recover a reasonable compensation for what he has done, but he can also introduce the oral con- tract in evidence for the purpose of showing what the parties had agreed upon as a reasonable compensation.'' Thus, where A and B have an oral contract of employment which cannot be performed within the year, and A renders services thereunder and B repudiates the contract, A can recover for services ren- dered at the contract rate/*' A reason often given for this holding is that the contract is not void, but simply unenforce- able, so that no action can be maintained for its breach, and valid for every other purpose. This principle is sometimes pushed so far that recovery for the work actually done may be had under the contract on the theory that the statute does not apply to the executed part of a contract but only to the executory part/^ This principle has been applied to a lease,^" and to a contract to furnish water supply to run for twenty-five years.^^ This view is repudiated in other jurisdictions on the ground that it amounts to a substantial repeal of the statute of frauds." In courts taking this last view, a reasonable compensation for property furnished or work done under an oral contract within the statute must be determined without reference to the terms of the oral contract. 8 Smith V. Smith, 28 N. J. L. n City of Greenville v. Water- 208; 78 Am, Dec. 49. works Co., 125 Ala. 625; 27 So. 9 Currier v. Barker, 2 Gray 7G4; Murphy v. De Haan, 116 la. (Mass.) 224; Lally v. Lumber Co., 61; 89 N. W. 100; Sanger v. 85 Minn. 257; 88 N. W. 846; Spin- French, 157 N. Y. 213; 51 N. E. ney v. Hill, 81 Minn. 316; 84 N. W. 979. 116; Kriger v., Leppel, 42 Minn. 6; i2Lagerfelt v. McKee, 100 Ala. 43 N. W. 484. 430; 14 So. 281. 10 Murphy V. De Haan, 116 la. 61; is Graves County Water Co. v. 89 N. W. 100; Lally v. Lumber Co., Ligon, 112 Ky. 775; 66 S. W. 725. 85 Minn. 257; 88 N. W. 846; Spin- Suit by property-owner for loss ney v. Hill, 81 Minn. 316; 84 N. W. caused by insufficient supply. 116; Kriger v. Leppel, 42 Minn. 6; " Riif v. Riibe, — Neb. — ; 94 N. 43 N. W. 484. W. 517. 1136 PAGE ON CONTRACTS. §752. Methods of taking advantage of statute. If, in an action on a contract within the statute of frauds and not complying with its requirements, the statute of frauds is not taken advantage of in a proper manner by raising the question, on the pleadings or on the admission of oral evidence, the de- fence of the statute is waived and the contract can be enforced though oral, and though proved by oral evidence only.^ If the pleading which sets up the oral contract does not show affirma- tively that it is oral, a demurrer to such pleading cannot be sustained because of the statute of frauds. If the contract is pleaded in a manner sufficient to satisfy the common law rules before the statute of frauds, and if it does not appear affirma- tively that it is an oral contract, it is pleaded in a manner suffi- cient to satisfy the statute and the adversary party must raise the question of the statute of frauds in some way other than by demurrer." While in most of these cases the contract is 1 Carter v. Fischer, 127 Ala. 52; 28 So. 376; St. Louis, etc., Ry. v. Hall — Ark.— ; 74 S. W. 293; Burt V. Wilson, 28 Cal. 632; 87 Am. Dec. 142; Tift V. Weslosky Co., 113 Ga. 681; 39 S. E. 503; Sanford v. Da- vis, 181 111. 570; 54 N. E. 977; Walters v. Walters, 132 111. 467; 23 N. E. 1120; Tarleton v. Vietes, 1 Gil. (111.) 470; 41 Am. Dec. 193; Bryant v. Everly (Ky.) , 57 S. W. 231; Iverson v. Cirkel, 56 Minn. 299; 57 N. W. 800; Missouri Real Estate Co. v. Sims — Mo.— ; 78 S. W. 1006; Maybee v. Moore, 90 Mo. 340; 2 S. W. 471; Davis v. Green- wood, 2 Neb. Unoff. 317; 96 N. W. 526; Connor v. Hingtgen, 19 Neb. 472; 27 N. W. 443; Gough V. Williamson, 62 N. J. Eq. 526; 50 Atl. 323; Fee v. Shar- key, 60 N. J. Eq. 446; 45 Atl. 1091; affirming .59 N. J. Eq. 284; 44 Atl. 673; Ashmore v. Evans, 11 N. J. Eq. 151; Hamer v. Sidway, 124 N. Y. 538; 21 Am. St. Rep. 693; 12 L. R. A. 463; 27 N. E. 256; Duffy v. O'Donovan, 46 N. Y. 223; Suber v. Richards, 61 S. C. 393; 39 S. E. 540; Gregory v. Farris (Tenn. Ch. App.) , 56 S. W. 1059; Smith v. Ruohg (Tenn. Ch. App.), 54 S. W. 161; Abba V. Smyth, 21 Utah 109; 59 Pac. 756 ; Sartwell v. Sowles, 72 Vt. 270; 82 Am. St. Rep. 943; 48 Atl. 11; Pike v. Pike, 69 Vt. 535; 38 Atl. 265; Battell v. Matot, 58 Vt. 271; 5 Atl. 479; Atkinson v. Wash- ington and Jefferson College — W^ Va.— ; 46 S. E. 263; Barrett v. Mc- Allister, 33 W. Va. 738; 11 S. E. 220. 2 Evans v. Ry., 133 Ala. 482; 32 So. 138; Gale v. Harp, 64 Ark. 462; 43 S. W. 144; Bradford Investment. Co. V. Joost, 117 Cal. 204; 48 Pac. 1083; Curtiss v. Ins. Co., 90 Cal. 245; 25 Am. St. Rep. 114; 27 Pac. 211 ; Baldwin v. Bank, 17 Colo. App. 7; 67 Pac. 179; Taliaferro v. Smiley, 112 Ga. 62; 37 S. E. 106; Draper v. Dry Goods Co., 103 Ga. CONTRACTS WHICH MUST BE PROVED BY WRITING. 1137 pleaded by the plaintiff the same rule applies where the de- fendant pleads it.^ But where by statute no reply is necessary to matter of defence set up in the answer, plaintiff may take advantage of the statute of frauds to avoid the contract alleged by defendant without further pleading.* If the pleading which sets up the oral contract shows affirmatively that it is oral, some authorities hold that such pleading is not demurrable, on the ground that a demurrer admits the existence of the contract while the defence of the statute of frauds is not expressly in- terposed.^ The weight of authority, however, holds that such pleading can be demurred to, on the ground that it shows affirm- atively the existence of a valid defence to the contract alleged.* 661; 68 Am. St. Rep. 136; 30 S. E. 566; Speyer v. Desjaidiiis, 144 111. 641; 36 Am. St. Rep. 473; 32 N. E. 283; Switzer v. Skiles, 8 111. 529; 44 Am. Dec. 723; Hamilton v. Thurston, 93 Md. 213; 48 Atl. 709; Mullaly V. Holden, 123 Mass. 583; Stearns v. Ry., 112 Mich. 651; 71 N. W. 148; Harris Photographic Co. V. Fisher, 81 Mich. 136; 45 N. W. 661 ; Benton v. Schulte, 31 Minn. 312; 17 N. W. 621; Stillwell v. Hamm, 97 Mo. 579; 11 S. W. 252; Sharkey v. McDermott, 91 Mo. 647; 60 Am. Rep. 270; 4 S. W. 107; Reed v. Crane, 89 Mo. App. 670; Whitehead v. Burgess, 61 N. J. L. 75; 38 Atl. 802; Hinehman v. Ru- tan, 31 N. J. L. 496; Marston v. Swett, 66 N. Y. 206; 23 Am. Rep. 43; Gladwell v. Hume, 18 Ohio C. C. 845; Cranston v. Smith, 6 R. I. 231; Carroway v. Anderson, 1 Humph. (Tenn.) 61; Horm v. Sham- blin, 57 Tex. 243; Murphy v. Stell, 43 Tex. 123; Robbins v. DeA-erill. 20 Wis. 142. Contra, in Kentucky, where it is said to be " well settled that a contract which is not alleged to be in writing must be hekl to be by parol." Morgan v. Wiokliffe, 110 Ky. 215; 61 S. W. 13; Hocker 72 V. Gentry, 3 Met. (Ky.) 463. Sa by statute in some jurisdictions, Horner v. McConnell, 158 Ind. 280; 63 N. E. 472; Windell v. Hudson, 102 Ind. 521; 2 N. E. 303; lee v. Ball, 102 Ind. 42; 1 N. E. 66; Pulse V. Miller, 81 Ind. 190; Wise- man V. Thompson, 94 la. 607; 63 N. W. 346. 3 Walker v. Edmundson, 111 Ga. 454; 36 S. E. 800; Hurt v. Ford, 142 Mo. 283; 41 L. R. A. 823; 44 S. W. 228. 4 Steed V. Harvey, 18 Utah 367; 72 Am. St. Rep. 789; 54 Pac. 1011. sHemings v. Doss, 125 N. C. 400; 34 S. E. 511; Williams v. Lumber Co., 118 N. C. 928; 24 S. E. 800; Loughran v. Giles, 110 N. C. 423; 14 S. E. 966. 6 Thompson v. Coal Co., 135 Ala. 630; 93 Am. St. Rep. 49; 34 So. 31; Gary v. Newton, 201 HI. 170; 66 N. E. 267; Dicken v. IMcKinley, 163 111. 318; 54 Am. St. Rep. 471; 45 N. E. 134; Speyer v. Desjar dins, 144 111. 641; 36 Am. St. Rep. 473; 32 N. E. 283; Burden v. Knight, 82 la. 584; 48 N. W. 985; Richards v. Richards, 9 Gray (Mass.) 313; Howard v. Brower, 37 0. S. 402. 1138 PAGE ON CONTRACTS. The question really turns on the local practice concerning plead- ings which are sufficient in themselves but which go farther and show a valid defence or reply thereto which the adversary part^ may or may not take advantage of. If the party against whon the contract is sought to be enforced pleads, denying the exist ence of such contract and, at the trial, objects to the introduc- tion of oral evidence to prove such contract the statute of frauds is properly invoked.^ Under such pleadings, the defence of the statute may also be raised by a motion to strike out oral evi- dence of the contract already introduced,^ or by a demurrer to the evidence.*^ If, however, no objection is made to the in- troduction of oral evidence tending to prove the contract, the defence of the statute is thereby waived.^** Thus an objection that there was no written memorandum of the contract cannot be made after the evidence is all in and the argument to the jury has begun,^^ nor can it be raised for the first time in error 7 May V. Sloan, 101 U. S. 231; Peeiiey v. Howard, 79 Cal. 525; 12 Am. St. Rep. 162; 4 L. R. A. 826; 21 Pac. 984; Adams & Westlake Co. V. Westlake, 92 111. App. 616; Su- man v. Springate, 67 Ind. 115; In- diana Trust Co. V. Finitzer, 160 Ind. 647; 67 N. E. 520; Thompson v. Frakes, 112 la. 585; 84 N. W. 703; Klein v. Ins. Co. (Ky.), 57 S. W. 250; Hamilton v. Thirston, 93 Md. 213; 48 Atl. 709; Third National Bank v. Steel, 129 Mich. 434; 88 N. W. 1050; Bean v. Lamprey, 82 Minn. 320; 84 N. W. 1016; Bam- brick V. Bambriek, 157 Mo. 423; 58 S. W. 8; Hackett v. Watts, 138 Mo. 502; 40 S. W. 113; Riif v. Riibe, — Neb.— ; 94 N. W. 517; Busick v. Van Ness, 44 N. J. Eq. 82; 12 Atl. 609; Browning v. Berry, 107 N. C. 231; 10 L. R. A. 726; 12 S. E. 195; Holler v. Richards, 102 N. C. 545; 9 S. E. 460; Birchell v. Neaster, 36 O. S. 331 ; Hillhouse v. Jennings, 60 S. C. 373; 38 S. E.. 599; Moody v. Jones (Tex.), 37 S. W. 379; Williams-Hayward Shoe Co. V. Brooks, 9 Wyom. 424; 64 Pac. 342. 8 Hillhouse v. Jennings, 60 S. C. 373; 38 S. E. 599. (The court say- ing that such a motion might be treated as a demurrer to the *ivi- dence.) 9 Bambriek v. Bambriek, 157 >lo. 423; 58 S. W. 8. (In this case a peremptory instruction to the jury was held proper.) Apparently con- tra, Neuvirth v. Engler, 83 Mo. App. 420; Miller v. Harper, 63 Mo. App. 293; Scharff v. Klein, 29 Mo. App. 549. 10 Cosand v. Bunker, 2 S. D. 294 ; 50 N. W. 84 ; Sartwell v. Sowles, 72 Vt. 270; 82 Am. St. Rep. 943; 48 Atl. 11; Pike v. Pike, 69 Vt. 535; 38 Atl. 265; Battell v. Matot, 58 Vt. 271; 5 Atl. 479. 11 Montgomery v. Edwards, 46 Vt. 151; 14 Am. Rep. 618. CONTRACTS WHICH MUST BE PKOVED BY WKITING. 1139 proceedings/^ An answer whicli does not specifically deny the existence of the contract alleged but does so in effect by alleging another and a different contract, is such a denial of the contract as to invoke the statute of frauds. ^^ However, if the contract alleged by the defendant is that alleged by the plaintiff except that it does not cover so wide a subject-matter, plaintiff may have the contract, though oral, enforced as far as admitted by defendant/* Some authorities, however, hold that a general denial is not a proper method of invoking, the defence of the statute/^ In Iowa this question must be raised by demurrer if it appears on the face of the pleading, and is waived other- wise/® If the existence of the contract is not denied, the statute of frauds may be invoked by a pleading denying that the contract alleged or any note or memorandum thereof was in writing and claiming the benefit of the statute/^ A pleading which alleges that the contract alleged by the adversary party was not in writing and is " contrary to the statute in such cases made and provided," contains sufficient allegations to interpose the statute of frauds as a defence/* A pleading which merely alleges as a conclusion that defendant is not equitably or mor- ally bound to carry out the agreement,^^ or that the contract is i2Marr v. Ey., 121 la. 117; 96 Am. St. Eep. 693; 12 L. R. A. 463; N. W. 716; Hart v. Garcia (Tex. 27 N. E. 256; Barnes v. Coal Co., Civ. App.), 63 S. W. 921. 101 Tenn. 354; 47 S. W. 498; Citty 13 Barrett v. McAllister, 33 W. v. Mfg. Co., 93 Tenn. 276; 42 Am. Va. 738; 11 S. E. 220. St. Rep. 919; 24 S. W. 121. 1* Gough V. Williamson, 62 N. J. is Wiseman v. Thompson, 94 la. Eq. 526; 50 Atl. 323. 607; 63 N. W. 346; Marr v. Ry., 15 Martin v. Blanchett, 77 Ala. 121 la. 117; 96 N. W. 716. 288; Guynn v. McCauley, 32 Ark. i7 Burt v. Wilson, 28 Cal. 632; 97; McLure v. Koen, 25 Colo. 284; 87 Am. Dec. 142; Wright v. Raftree, 53 Pac. 1058; Wickham v. Associa- 181 111. 464; 54 N. E. 998; Thomas tion, 80 111. App. 523; Lawrence v. v. Churchill, 48 Neb. 266; 67 X. W. Chase, 54 Me. 196; Graffam v. 182; Ashmore v. Evans, 11 N. J. Pierce, 143 Mass. 386; 9 N. E. 8J9; Eq. 151. Matthews v. Matthews, 154 N. Y. is Wright v. Raftree, 181 111. 464; 288 ; 48 N. E. 531 ; Crane v. Powell, 54 N. E. 998. 139 N. Y. 379;. 34 N. E. 911; Ha- i9 Battell v. Matot, 58 Vt. 271; mer v. Sidway, 124 N. Y. 538; 21 5 Atl. 479. 1140 PAGE ON CONTKACTS. barred by the statute, "° without alleging the fact that neither the contract nor any note or memorandum thereof was in writ^ ing is insufficient.^ XIII. Pkomises Consisting of Moke than One Covenant. §753. Severable and inseverable contracts. The enforceability of a contract for the sale of chattels when affected by the statute of frauds often depends on whether it is several or inseverable. This question may arise in two ways. First, the separate chattels may each sell at a price below the limit fixed by statute, but the sum total of the price of all the chattels. sold may exceed such limit. In this case, if the sales are separate, each sale for a price below the statutory limit is not affected by the statute.^ If, however, the transaction is one entire sale and the price exceeds the statutory limit the statute applies, though separate chattels are sold,^ and though delivery is to be made in installments,^ and though the price of each chattel is estimated separately.'* This is not the rule for test- ing the severability of contracts for other purposes, such as illegality.^ Second, part of one lot of chattels sold may be re- ceived and accepted, or they may be paid for in part. Does this satisfy the statute as to other chattels sold between the same parties ? The answer depends on whether the sales amount to one transaction or not. If separate chattels are sold under one contract, any act of receipt and acceptance or part payment which satisfies the statute as to one chattel, satisfies it as to all.*' This is true even though by the terms of the con- 20Dinkel v. Gimdelfinger, 35 Mo. 6 Garfield v. Paris, 96 U. S. 557; 172. Kaufman Bros. v. Mfg. Co., 78 la. i.Tolinson v. Buchanan, 29 X. S. 679; 16 Am. St. Eep. 462; 43 27. X. W. 612; Weeks v. Crie, 94 Me. sJenness v. Wendell, 51 N. H. 458; 80 Am. St. Rep. 410; 48 Atl. 63; 12 Am. Rep. 48. 107; French v. Bank, 179 Mass. 3 Standard Wall Paper Co. v. 404 ; 00 X. E. 793 ; C4ilbert v. Lich- Towns, — X. H. — ; 56 Atl. 744. tenberg, 98 Mich. 417; 57 X. W. 4Allard v. Greasert, 61 N. Y. 1. 259; Earl Fruit Co. v. McKinney, 5 See § 509. 65 ]Mo. App. 220 ; Farmer v. Gray, CONTEACTS WHICH MUST BE PROVED BY WEITING. 1141 tract delivery is to be made in installments/ Thus, where A agreed to sell goods to B in a given district as long as B orders such goods and has a sale for them, one order under such a contract if received and accepted takes the entire contract out ')f the statute.^ If there are separate contracts of sale, acts of receipt and acceptance or of part payment which satisfy the statute as to one contract, do not satisfy it as to the others.^ So a contract to sell stock owned by several persons, made by one purporting, without authority, to act on their behalf, and performed by jome of the owners, is not taken out of the statute as to an owner who ratified the sale orally but did nothing further/*' Contracts, as to the effect of receipt and acceptance or part payment, may be separate though entered into at the same time/^ On the other hand, successive negotiations for the sale of different chattels may result at one contract of sale/" The question whether there is one contract or more than one is a question for the jury/^ Thus a finding by the jury that where orders were given at the same time on two separate lists, the contracts were separate, was not disturbed, though it appeared that th(^ orders were placed on two lists instead of one, chiefly for convenience in writing the order/* 16 Neb 401; 20 N. W. 276. n Brown v. Snider, 126 Mich. 198; 7 Gilbert V. Lichtenberg, 98 Mich. 85 N, W. 570. 417; 57 N. W. 259; Beyerstedt v. 12 Weeks v. Crie, 94 Me. 458; 80 Mill Co.. 49 Minn. 1; 51 N. W. 619. Am. St. Rep. 410; 48 Atl. 107. 8 " Eacii order was not a new con- i3 Weeks v. Crie, 94 Me. 458 ; 80 tract, but in fulfillment of the old Am. St. Rep. 410; 48 Atl. 107; one." Kaufman Bros. v. Mfg. Co., Brown v. Snider, 126 Mich. 198; 85 78 la. 679, 686; 16 Am. St. Rep. N. W^ 570. "Whether negotiations 462; 43 N. W. 612. for separate articles result in one 9 Browu V. Snider, 126 Mich. 198 ; entire contract for the whole, or 85 N. W. 570; McCormick Harvest- whether the contract for each re- ing Machine Co. v. Cusack, 116 mains separate and distinct, may Mich. 647; 74 N. W. 1005; Hershey depend upon many circumstances. Lumber Co. v. Lumber Co., 66 Minn. It raises a question of fact, properly 449; 69 N. W. 215; Tompkins v. to be passed upon by a jury." Weeks Sheehan, 158 N. Y. 617; 53 N. E. v. Crie, 94 Me. 458. 464; 8a Am. St. 502. Rep. 410; 48 Atl. 107. 10 Tompkins V. Sheehan, 158 N. Y. i* Brown v. Snider, 126 Mich. 617; 53 N. E. 502. 198; 85 N. W. 570 (one order in 1142 PAGE ON CONTKACTS. If A and B enter into an oral contract for the sale of distinct parcels of realty, at separate prices for each, and the purchaser takes possession of one parcel, such possession takes the contract out of the statute as to the realty taken possession of, but not as to the remaining parcels.^^ Still less is a contract taken out of the statute by possession of other parcels of realty taken by other vendees under separate contracts Avith the same vendor/* On the other hand, a contract for conveying several parcels at one time for a gross consideration is taken out ef the statute by a delivery of the possession of one parcel.^^ §754. Conjunctive promises. If A and B make an oral contract whereby A agrees to do two things, one of which is within the statute of frauds and the other of which is not, B's right to enforce such oral con- tract if A interposes the statute of frauds as a defense, de- pends on whether the two promises are severable or not. If they are unseverable, B cannot recover for breach of either covenant.^ Thus an oral contract to dispose of both real and personal property by will is unenforceable as to either.^ So an oral contract to reconvey realty and to pay interest on a prior mortgage thereon is inseverable, and an action cannot be main- this case was not signed by ven- Rep. 40; Becker v. Mason, 30 Kan. dee). 697; 2 Pac. 850; Bowling v. Mc- 15 Cochran v. Ward, 5 Ind. App. Kenney, 124 Mass. 478; Martin v. 89, 97; 51 Am. St. Rep. 229; 29 Martin's Estate, 108 Wis. 284; 81 N. E. 795; 31 N. E. 581; Myers Am. St. Rep. 895; 84 N. W. 439; V. Croswell, 45 O. S. 543; 15 N. E. Ellis v. Gary, 74 Wis. 176; 17 Am. 866. St. Rep. 125; 4 L. R. A. 55; 42 N. 16 Graves v. Goldthwait, 153 Mass. W. 252. 268: 10 L. R. A. 763; 26 N. E. 860. 2 Dicken v. McKinley, 163 111. IT Miller v. Ball, 64 N. Y. 286; 318; 54 Am. St. Rep. 471; 45 N. E. Smith V. Underdunek, 1 Sandf. Ch. 134; Pond v. Sheean, 132 111. 312; (N. Y.) 579. 8 L. R. A. 414; 23 N. E. 1018; 1 Haviland v. Sammis, 62 Conn. Kling v. Bordner, 65 O. S. 86 ; 61 44; 36 Am. St. Rep. 330; 25 Atl. N. E. 148; Shahan v. Swan, 48 O. S. 394; Dicken v. McKinley, 163 111. 25; 29 Am. St. Rep. 517; 26 N. E. 318; 54 Am. St. Rep. 471: 45 N. E. 222; Martin v. Martin's Estate, 108 134; Pond v. Sheean. 132 Til. 312; 8 Wis. 284: 81 Am. St. Rep. 895; 84 L. R. A. 414; 23 N. E. 1018: Rain- N. W. 439. bolt V. East, 56 Ind. 538; 26 Am. COJS'TKACTS WHICH MUST BE PKOVED BY WRITING. 11-13 tained for failure to pay interest.^ However, an entire prom- ise to pay in part one's own debt and in part the debt of another has been held enforceable as to the first part of the contract though not as to the second.* If, on the other hand, the promises are severable, an action can be maintained for breach of the promise not within the statute of frauds, but not for breach of the promise within the statute.^ Thus an oral contract to buy real and personal prop- erty can be enforced as to the personal proj)erty, not falling within the statute of frauds as to such property where separate prices were fixed on the two kinds of property and they were treated in the contract as separate subjects of sale.^ So a ver- bal contract for the sale of personalty is not made invalid be- cause a leasehold was surrendered as part of the same trans- action.^ So A's promise to B to pay C's debt to B for board already incurred and to be thereafter incurred is severable.^ §755. Alternative promises. If A and B enter into an oral contract by the terms of which A agrees either to perform an act which is not within the stat- ute of frauds or at his election to perform a different act which is within the statute, and A interposes the statute of frauds to B's action on such contract, B cannot recover since he cannot show a breach of the contract without establishing by oral evi- dence a contract within the statute of frauds and showing a breach thereof. '^ Thus an oral contract to pay money or con- 8 Hurley v. Donovan, 182 Mass. 351; Haynes v. Nice, 100 Mass. 327; 64; 64 N. E. 685. 1 Am. Rep. 109; Rand v. Mather, 11 4 A promise 'to a contractor by a Cush. (Mass.) 1; 59 Am. Dec. 131; third person to pay the entire con- Wooten v. Walters, 110 N. C. 251; tract price if he completed his con- 14 S. E. 734, 736. tract after default by the adversary 6 Wooten v. Walters. 110 N. C. party. Rand v. Mather, 11 Cush. 251; 14 S. E. 734. 736. (Mass.) 1; 59 Am. Dec. 131; over- ^ Adams v. Weaver, 117 Cal. 42; ruling Loomis v. Newhall. 15 Pick. 48 Pac. 972. (Mass.) 159. 8 Haynes v. Nice, 100 Mass. 327; 5 Adams v. Weaver, 117 Cal. 42; 1 Am. Rep. 100. 48 Pac. 972 ; Lowman v. Sheets, 124 i Patterson v. Cunningham. 12 Ind. 416; 7 L. R. A. 784; 24 N. E. Me. 506; Andrews v. Broughton, 79- 1144 PAGE ON CONTRACTS. vey realty is unenforceable,^ as a contract to devise land or be- queath personalty.^ XIV. Special Statutes. §756. Types of special statutes. Local statutes have required other classes of contracts to be in writing or to be proved by writing. Thus contracts of cor- porations exceeding a certain amount/ or contracts of a married woman affecting the body of her estate/ come within the pro- visions of some statutes. Part performance of such a contract does not make it enforceable against a married woman, since she has no capacity in these jurisdictions to bind herself except as indicated by statute/ but under some statutes the married woman may enforce an oral contract though it cannot be en- forced against her.'* Other contracts are required to be in writing only where the interests of third persons are concerned. Thus a contract whereby a vendor reserves title to the property sold and delivered to the vendee until the purchase price is paid is required by some statutes to be in writing when the interests of a third person is to be affected thereby.^ The statutes of the United States require assignments of patents to be in writing^ Mo. App. 179; Russell v. Briggs, apply to foreign corporations. Rum- 165 N. Y. 500; 53 L. R. A. 556; 59 bough v. Improvement Co., 106 N. C. X. E. 303; Howard v. Brower, 37 461; 11 S. E. 528. O. S. 402. 2Sydnor v. Boyd, 119 N. C. 481; 2 Dyer v. Graves, 37 Vt. 369; 37 L. R. A. 734; 26 S. E. 92. (In- Clark V. Davidson, 53 Wis. 317; 10 eluding her interest in a life insur- N. W. 384; Patterson v. Cunning- ance policy, taken out on her hus- ham, 12 Me. 506; Andrews v. band's life for her benefit.) Broughton, 78 Mo. App. 179; Rus- 3 Percifield v. Black, 132 Ind. 384; sell V. Briggs, 165 N. Y. 500; 53 31 N. E. 955. L. R. A. 556; 59 N. E. 30.3. 4 Lister v. Vowell, 122 Ala. 264; 3 Howard v. Brower, 37 O. S. 402. 25 So. 564. 1 Curtis V. Mining Co., 113 N. C. s Harp v. Guano Co., 99 Ga. 752; 417; 18 S. E. 705. A contract in 27 S. E. 181; Mann v. Thompson, excess of such amount is void in toto 86 Ga. 347; 12 S. E. 746. and not merely as to the excess. « Gates Iron Works v. Eraser, 153 Citizens' Savings Bank v. Vaughan, U. S. 332 ; Baldwin v. Sibley, 1 Cliff. 115 Mich. 156; 73 N. W. 143. Such (U. S.) 150. statute in North Carolina does not CONTEACTS WHICH MUST BE PROVED BY WKITING. 1145 and signed by the assignor/ Such assignment need not be recorded as between the parties,^ though it must be recorded as against a subsequent bona fide assignee from the same assignor.® An oral contract to convey a patent right has been enforced in equity/" This statute does not include contracts for the sale of the right to secure a patent not yet issued/^ nor to a contract to share in the proceeds of the sale of a patented art- icle,^^ nor to a license to make use of a patent/^ A Federal statute^* requires contracts with the United States to be " reduced to writing and signed by the contracting parties with their names at the end thereof." Such contract not thus executed is unenforceable.^^ The scope of these statutes is often different from the statute of frauds, as they affect the capacity of the parties or the form of the contract. Logically they do not belong here, but rather in the following chapter. Their general similarity to the statute of frauds has caused mention of them in this connection. Another class of statutes concerns contracts of public corporations. This is probably the class most frequently met with in litigation. From its connection with the subject of the capacity of public corpora- tions to make contracts, a discussion of it is postponed.^® 7 Gordon v. Anthony, 16 Blatch. nolds, 120 N. Y. 213; 24 N. E. 279. (U.S.) 234. i2Blakeney v. Goode, 30 O. S. 8 Case V. Redfield, 4 McLean (U. 351. S.) 526; Hildreth v. Turner, 17 111. i3 Jones v. Berger, 58 Fed. 1006; 184; McKernan v. Hite, 6 Ind. 428. Nichols v. Marsh, 61 Mich. 509; 28 9 Perry v. Corning, 7 Blatchf. (U. N. W. 699. S.) 195; Harrison v. Ingersoll, 50 i*R. S. of U. S., § 3744. Mich. 36 ; 22 N. W. 268. is St. Louis Hay, etc., Co. v. United 10 Burke v. Partridge, 58 N. H. States, 191 U. S. 159; Monroe v. 349. United States, 184 U. S. 524; South "Dalzell V. Mfg. Co., 149 U. S. Boston Iron Co. v. United States, 315; Harrigan v. Smith, 57 N". 118 U. S. 37 ; Clark v. United States J. Eq. 635; 42 Atl. 579; revers- 95 U. S. 539. ing 40 Atl, 13; Jones v. Key- is See § 692. 1146 PAGE ON CONTitACTS. CHAPTER XXXVI. CONTRACTS WHICH MUST BE IN WRITING. §757. General scope of this class. In considering the contracts which must be in writing as dis- tinguished from those which merely must be proved by writing and which were considered in the preceding chapter/ it must be noted that these contracts are of two general classes. One class consists of those contracts which are required by statute to be in writing. For the most part these are contracts of persons of abnormal status, including, in some states, contracts of married women ; in others contracts of private corporations and in many states contracts of public corporations. This class of contracts was referred to in the preceding chapter f and since it is closely connected with questions of status, further discussion is deferred until the subject of parties has been considered.^ The other class of contracts which must be in writing consists of those con- tracts in which writing was required by the law-merchant. This part of the law-merchant has been thoroughly incorporated into Common Law and Equity. The negotiable contract has two aspects : first, the elements which such contracts must pos- sess in order to be negotiable, including the extent to which the oral contract under which such negotiable contract is given is to be regarded as a part thereof : and second, the effect of negotia- bility as distinguished from assigiiability. While it may seem to break one subject in two, the first of these aspects will be con- sidered here, leaving the second to be discussed under the gen- eral division of operation in connection with assignability.* 1 See Ch. XXXV. 3 See Ch. XLVIII. 2 See § 756. 4 See Ch. LIX. CONTKACTS WHICH MUST BE IN WRITING. 1147 §758. Elements of negotiable contracts — must be in writing. In order to be negotiable a contract must possess certain ele- ments.^ It must be in writing. If in writing, lead- pencil is sufficient though not to be commended.^ Since a negotiable contract must pass either by delivery or by indorsement and delivery, an oral negotiable contract is an impossibility.^ As will be shown in the following sections, no part of a negotiable contract can be oral. Whatever validity an incomplete written contract may have, it is impossible that it be negotiable.* How- ever, it has been held that where a bill or note does not show where it is to be paid, an oral agreement fixing the place of pay- ment may be shown for the purpose of proving such demand as will bind the drawer and the indorser.^ The surrounding cir- cumstances may, however, serve to explain words which would otherwise be indefinite. Thus where a note is made payable " twenty five after date," the surrounding circumstances may be resorted to in order to show that " days " is the word omitted.^ §759. Execution. The requisites of a valid execution of a contract which by law must be in writing are in some respects like those of or- dinary written contracts and in some respects quite different. A contract which is required by law to be in writing, such as a negotiable instrument, must be signed by the promisor.^ Ex- 1 A negotiable instrument is one 3 Accordingly, in such contracts " which runs to order or bearer, is extrinsic evidence is inadmissible payable in money, for a certain, which would be admissible under definite sum, on demand, at sight, or ordinary contracts in writing. See in a certain time, or upon the hap- § 1197. pening of an event which must oc- 4 gee §§ 761 1107. Other cur. and payable absolutely and not branches of this 'subject are best on a contingency. ' Hatch v. Bank, . , , . . . .^, ., 94 Me. 348; 80 Am. St. Rep. 401; considered m connection with the 47 Atl. 908. (Citing Roads v. parol evidence rule. Webb, 91 Me. 406, 410; 64 Am. 5 Pearson v. Bank, 1 Pet. (U. S.) St. Rep 246; 40 Atl. 128) ; Sivils §9; Mever v. Hibsher, 47 N. Y. 265. V. Taylor, 12 Okla. 47; 69 Pac. ^ -n, \ • x. i ^o ai na.-y gg-r 6 Boykm v. Bank. 72 Ala. 262. 2 Reed v. Roark, 14 Tex. 329; 65 ^ May v. Miller. 27 Ala. 515; Te- Am. Dec. 127, vis v. Young, 1 Met. (Ky.) 197; 71 Am. Dec. 474; Lewis v. Bank, 1 1148 PAGE ON CONTRiVCTS. trinsic evidence is inadmissible to show the assent to an instru^ nient of this character of a party who has not signed his naniG thereto." Xo special form of signature is required, however. On this point the law of the negotiable contract seems to be the same as that of the ordinary written contract.' It seems that a signature by mark/ or by initials,^ or by printed signature in fac-simile,® are each sufficient if intended as signatures. De- livery is essential to the validity of a negotiable instrument,' If taken from the custody of the maker, without his assent, it has no validity even in the hands of a bona fide holder in the ab- sence of negligence on the part of the maker or circumstances creating an estoppel.* Delivery does not, however, require physical transfer to the f»ayee. Leaving a note with the father of the payee is a sufficient delivery.^ §760. Definite parties. The parties to the contract must be clearly described therein.^ Thus a promise to an alternative payee is not negotiable.^ How- ever, if the alternative payees are united in interest so that a payment to one is in legal effect a payment to the other, the in- strument may be negotiable ; as where it is payable to certain Neb. (Un.) 177; 95 X. W. 355. i Tevis v. Young, 1 Mete. (Ky.) 2 See § 761. 197; 71 Am. Dec. 474; Mcintosh v. 3 See §§ 571-575. Lytle, 26 Minn. 336; 37 Am. Rep. 4Handyside v. Cameron, 21 111. 410; 3 N. W. 983; Randolph v. Hud- 588; 74 Am. Dee. 119; Shank v. son. 12 Okl. 516; 74 Pac. 946; Seay Butsch, 28 Ind. 19 ; Lyons V. Holmes, v. Bank, 3 Sneed (Tenn.) 558; 67 11 S. C. 429; 32 Am. Rep. 483. Am. Dec. 579. 5 Weston V. Myers, 33 111. 424. - Carpenter v. Farnsworth, 106 6 Pennington v, Baehr, 48 Cal. Mass. 561 ; 8 Am. Rep. 360. Con- 565. tra, on the theory that " or " means 7 Lally V. Terrell, 95 Me. 553 ; " and " in such connection. Quinby 85 Am. St. Rep. 433; 55 L. R. A. v. Merritt, 11 Humph. (Tenn.) 439. 730; 50 Atl. 896; Harnett v. Hoi- So a note to " Chas. R. Whitesell drege (Neb.), 97 N. W. 443. See et al. or order" is non-negotiable. § 577, et seq. Gordon v. Anderson, 83 la. 224; 32 8 See § 1297. • Am. St. Rep. 302; 12 L. R. A. 483; sEnneking v. Woebkenberg. — 49 N. W. 86. Wis. — ; 92 N. W. 932. CONTKACTS WHICH MUST BE IN WEITING. 1149 trustees or their treasurer/ or where, at Common Law, it was payable to a man or his wife.* It is sufficient if the payee be jx)inted out by the instrument without being named. A note payable " to the estate of " A is negotiable.^ The addition of the word " trustee," to the name of the payee, does not make the payee uncertain.*^ A note pay- able to " bearer " is negotiable.'^ A blank for the name of the payee may be filled by a bona fide holder with his own name,* or the instrument may be enforced without filling the blank, as payable to the order of the person for whom it was delivered." Other courts treat a negotiable instrument having the name of the payee blank as payable to bearer.^" If, however, the name of a specific payee has been inserted in a check and then crossed out, such check is non-negotiable.^^ §761. Adding party to negotiable instrument by extrinsic evi- dence. A contract may be signed by A with his own name, but en- tered into by him on behalf of his real principal X, with the ad- versary party B. If the contract is one which the law requires to be in writing, B cannot use extrinsic evidence to show that X is the real principal and to hold him liable on the contract. The chief example under this rule is the negotiable instrument.'- This is not because of the parol evidence rule, but because such 3 Holmes v. Jacques, L. R. 1 Q. Institution v. Bank, 170 N. Y. 58; B. 376. 88 Am. St. Rep. 640; 62 N. E. i Young V. Ward, 21 111. 223. 1079. 5 Stern v. Eichberg, 83 111. App. o Rich v. Starbuck, 51 Ind. 87. 442; Shaw v. Smith, 150 Mass. 166; lo Manhattan Savings Institution 6 L. R. A. 348; 22 N. E. 887. v. Bank, 170 N. Y. 58; 88 Am. St. 6 Central State Bank v. Spurlin, Rep. 640; 62 N. E. 1079. Ill la, 187; 82 Am. St. Rep. 511; n Gordon v. Bank, — Mich. — ; 49 N. W. 661; 82 N. W. 493; Pox 94 N. W. 741. V. Trust Co. (Tenn. Ch. App.), 35 i Cragin v. Lovell, 109 U. S. 194; L. R. A. 678; 37 S. W. 1102. Merrell v. Witherby, 120 Ala. 418; 7 New V. Walker, 108 Ind. 365; 74 Am. St. Rep. 39; 23 So. 994; 26 5.8 Am. Rep. 40; 9 N. E. 386. So. 974; Heaton v. Myers, 4 Colo. 8 Cox V. Alexander, 30 Or. 438; 50; Pease v. Pease, 35 Conn. 131; 46 Pac. 794; Manhattan Savings 95 Am. Dec. 225; Bickford v. Bank, 1150 PAGE ON CONTEACTS. contracts must consist entirely of the writing, and parties cannot be added by parol. Thus if a check is signed " A, agent/' the real j^rincipal cannot be held liable on the check." The same rule applies to a note signed by " A, agent,"^ The principal, if unknown when the note was given, may be held liable on the original debt ;* but if the principal is known, taking such note is an election to hold the agent.^ Holding the principal on such debt is in the nature of quasi-contract.*' Even in negotiable in- struments, however, one who does business in the name of an- other or in a fictitious name and signs negotiable instruments by that name may be held liable thereon.'^ Thus where A did business under the name " Pompton Iron Works," and signed notes by such name, he may be held liable thereon.^ However, 42 111. 238; 89 Am. Dec. 436; Wing V. Glick, 56 la. 473; 41 Am. Rep. 118; Kansas National Bank v. Bay, 62 Kan. 692; 84 Am. St. Rep. 417; 54 L. R. A. 408; 64 Pac. 596; Trask v. Roberts, 1 B. Mon. (Ky.) 201 ; Bedford Commercial Ins. Co. V. Covell, 8 Met. (Mass.) 442; Wil- liams V. Bobbins, 16 Gray (Mass.) 77; 77 Am. Dec. 396; Stackpole v. V. Arnold, 11 Mass. 27; 6 Am. Dee. 150; Lewis v. Bank, 1 Neb. (Un.) 177; 95 N. W. 355; Webster v, Wray, 19 Neb. 558; 56 Am. Rep. 754; 27 N. W. 644; Bank v. Cook, 38 O. S. 442; Anderton v. Shoup, 17 O. S. 125; Manufacturers', etc., Bank v. Follett, 11 R. I. 92; 23 Am. Rep. 418; Tarver v. Garlington, 27 S. C. 107; 13 Am. St. Rep. 628; 2 S. E. 846; Arnold v. Sprague, 34 Vt. 402. " It is well settled that any person taking a negotiable promissory note contracts with those only whose names are signed to it as parties, and cannot, therefore, maintain an action upon the note against any other person." Bartlett v. Tucker, 104 Mass. 336, 339; 6 Am. Rep. 240; quoted in Kansas National Bank v. Bay, 62 Kan. 692, 695; 84 Am. St. Rep. 417; 54 L. R. A. 408; 64 Pac. 596. Contra, Mechanics' Bank v. Bank, 5 Wheat. (U. S.) 326; Hancock Bank v. Joy, 41 Me, 568; Sharpe v. Bellis, 61 Pa. St. 69; 100 Am. Dec. 618. 2 Anderton v. Shoup, 17 0. S., 125. 3Shuey v. Adair, 18 Wash. 188; 39 L. R. A. 473 ; 51 Pac. 388. Coti- tra, Kenyon v. Williams, 19 Ind. 44, 4 Chemical National Bank v. Bank, 156 111. 149; 40 N. E. 328; Lovell V. Williams, 125 Mass. 439; Harper v. Bank. 54 0. S. 425 ; 44 N. E. 97. sMerrell v. Witherby, 120 Ala. 418; 74 Am. St. Rep. 39; 23 So. 994; 26 So. 974; Bank v. Hooper, 5 Gray (Mass.) 567; 66 Am. Dee. 390. c See § 789 et seq. 7 Pease v. Pease, 35 Conn. 131; 95 Am. Dec. 225; Melledge v. Iron Co., 5 Cush. (Mass.) 158; 51 Am. Dec. 59; Tarver v. Garlington, 27 S. C. 107; 13 Am. St. Rep. 628; 2 S. E. 846. See obiter in Chandler V. Coe, 54 N. H. 561. 8 Fuller V. Hooper, 3 Gray (Mass.) 334. CONTEACTS WHICH MUST BE IN WEITING. 1151 where a note was signed " H. R. Sloan by C. M. Bay, Attorney in Fact," and the payee knew that Bay had no authority to sign Sloan's name, it was held that Bay was not liable on the note even if he did business under Sloan's name.® In the absence of estoppel, one who signs an assumed name to a contract re- quired by law to be in writing is liable on the contract only when such assumed name is used by him as his trade name under which he does business/*' Otherwise his liability is in tort. If A signs a name not his own to a note, either a fictitious name or the name of a real person which he has no right to use, and does not hold such name out as his own, and it is not the name under which he does business, he cannot be held on such note.^^ If the instrument is executed in such a way as to show affirma- tively that B is making the contract through his agent A, ex- trinsic evidence that A was really acting for himself is inad- missible,^^ as where A signs a non-negotiable contract " X per A,"^^ or where A signs a promissory note " X by A, Atty. in Fact."^* A warehouse receipt, even if made negotiable by stat- ute,^^ is not a negotiable instrument within the meaning of this rule, A party cannot be added to a negotiable contract by oral evidence, even where no liability is sought to be enforced against him. Thus in an action by indorsee against indorser on non- payment of the note, such evidence cannot be used to show that one who signed as agent was in fact principal, and hence that as no demand had been made on him the indorser was dis- charged.^® 9 Kansas National Bank v. Bay, 62 Kan. 692; 84 Am. St. Rep. 417; 62 Kan. 692; 84 Am. St. Eep. 417; 54 L. R. A. 408, 64 Pac. 596. To 54 L. R. A. 408; 64 Pac. 596. the same effect, see Liebscher v, loBartlett v. Tucker, 104 Mass. Kraus, 74 Wis. 387; 17 Am. St. 336; 6 Am. Rep. 240. Rep. 171; 5 L. R. A. 496; 43 N. W. 11 Bartlett v. Tucker, 104 Mass. 166. 336; 6 Am. Rep. 240. is Anderson v. Flouring Mills. 37 i2Heffron v. Pollard, 73 Tex. 96; Or. 483; 82 Am. St. Rep. 771; 50 15 Am. St. Rep. 764; 11 S. W. 165. L. R. A. 235; 60 Pac. 839. isHeffron v. Pollard, 73 Tex. 96; le Reeve v. Bank, 54 N. J. L. 208; 15 Am. St. Rep. 764; 11 S. W. 165. 33 Am. St. Rep. 675; 16 L. R. A. 14 Kansas National Bank v. Bay, 143; 23 Atl. 853. 1152 PAGE ON COivTKACTS. §762. Discharging party to negotiable instrument by extrinsic evidence. If a party to a negotiable instrument who has signed in such a way as to assume a personal liability, attempts to show that the oral understanding of the parties was that he was signing merely as agent on behalf and thus to relieve himself from lia- bility on the instrument, such attempt violates two rules at once — the rule requiring a negotiable instrument to consist entirely of writing, and the parol evidence rule which forbids the contradiction of any complete written contract by a prior or contemporaneous oral contract.'' Accordingly, such oral agreements are without effect and the party bound by the terms of the instrument cannot relieve himself from liability thereon by this means.^ This rule applies even though the agent thus executing the instrument adds the word " agent " or some word of equivalent import to his signature, as long as the form of the signature is such that the word thus added is regarded as a mere descriptio personae and does not affect the nature of the liability assumed.^ The conflict that exists as to the nature of personal liability arises out of a difference in judicial opinion as to what is a mere descriptio personae and what shows an intent not to as- sume personal liability.* Even if the maker describes himself in the body of the negotiable instrument as an agent, but signs his individual name without the addition of any designation. of agency, such contract is held in many jurisdictions to impose an individual liability upon the agent, and to be so free from am- biguity that oral evidence is inadmissible to discharge the agent.^ Thus a note whereby " We or either of us as directors " of a certain corporation promise to pay, signed by individual names, cannot be shown to be the note of the corporation for the pur- 1 See Ch. LVI. scher v. Kraus. 74 Wis. 387; 17 Am. 2 Nash V. Towne, 5 Wall. (U. S.) St. Rep. 171; 5 L. R. A. 496; 43 689; Hypes v. Griffin, 89 111. 134; N. W. 166. 31 Am. Rep. 71 ; Alathews v. Mat- 3 See § 1233 et seq. tress Co., 8/ la. 246; sub nomine, * See Ch. LIII. Matthews v. Mattress Co., 19 L. R. s Nash v. Towne, 5 Wall. (U. S.) A. 676; 54 N. W. 225; Morell v. 689; Hypei? v. Griffin, 89 111. 135; Codding, 4 All. (Mass.) 403; Lieh- 31 Am. Rep. 71. CONTKACTS WHICH MUST BE IIS" WRITING. 1153 pose of relieving the makers from liability.^ In some jurisdic- tions the addition of some word denoting agency to the names of the promisors in a negotiable instrument in the body of the instrument, and to their signatures still leaves them liable indi- vidually and extrinsic evidence is inadmissible to relieve them from liability. Thus a note whereby " We, the Trustees," of a certain cemetery association promise to pay, signed by their indi- vidual names, with the addition of the word " Trustee," im- poses personal liability so clearly that oral evidence is inad- missible to disprove it.^ In some jurisdictions it is held that when the form of signature is ambiguous the real understanding of the parties may be shown for the purpose of determining the character of the liability assumed.* §763. Promise or order. The contract must be either a promise to pay or an order com- manding another to pay.^ The former is a promissory note or bond : the latter a bill of exchange or check. So a promise by A to B to accept an order from C, with C's name indorsed thereon, is not a bill of exchange, the order not having been drawn. ^ Ac- cordingly a mere acknowledgment of a debt,^ such as an I. O. U.,* is not negotiable. The difficulty and cause of disagreement among the courts is to determine when such an instrument amounts to a promise to pay. If a receipt contains an express promise to repay it may be a promissory note, as a receipt containing the words, " Which we promise to replace ... on de- 6 Titus V. Kyle, 10 0. S. 444. 68 N. E. 223; Hitchcock v. Cloutier^ TReiff V. Mulholland, 65 0. S. 7 Vt. 22. 178; 62 N. E. 124. (In this ease 2 Allen v. Leavens, 26 Or. 164; 4f. reformation had lieen sought in Am. St. Eep. 613; 26 L. R. A. 620; equity and refused. On trial at law 37 Pac. 488. oral evidence was admitted and 3 Currier v. Lockwood, 40 Conn judgment rendered for defendants. 349; 16 Am. Rep. 40; Gay v. P jake, The Supreme Court reversed this 151 Mass. 115; 21 Am. St. Rep, judgment and entered judgment for 434; 7 L. R. A. 392; 2S W. E 835; plaintiff on the conceded facts.) Brenzter v. Wightman, V V,'. & S. 8 Kean V. Davis, 21 N. J. L. 683. (Pa.) 264. iTorpey v. Tebo, 184 Mass. 307; * Gay v. Roake, 151 Ww, 115; 73 1154 PAGE ON CONTRACTS. maiid."^ If a receipt provides for repayment, it is a promissor;^ note, though it contains no express promise to pay." Thus the words "payable,"^ or "to be paid,"* make the instrument in which they are contained a note instead of a mere receipt. So a statement of time at which the debt is due,** as " due ... on demand," ^'^ may import a promise. Some authorities, how- ever, go farther and treat all due-bills as promissory not'^3, on the theory that they contain an implied promise to pay.^^ An acknowledgment of a debt evidenced by a lost note and a re- newal of such note is in effect a promise to pay such debt, and may itself be negotiable.^^ §764. For money only. * The contract must be one for the payment ol montdy only. Accordingly, a promise to pay in work, as a railroad ticket,^ or in property other than money," even if such other property is itself negotiable as bills of exchange,^ checks,"* notes/ or United States bonds," is not negotiable. But a promise to pay in " cur- rent funds " has been held to mean current money, and hence to be negotiable f and so of " current funds of the state of 21 Am. St. Rep. 434; 7 L. R. A. 12 WoodLridge v. D/Might, 118 Ga. 392; 23 N. E. 835. 671; 45 S. E. 266. 5 Moore v. Gano, 12 Ohio 300. 1 Frank v. Ingalls, 41 O. S. 560. 6 Messmore v. Morrison, 172 Pa. 2 May v. Lansdovvn^ 6 J J. Mar. St. 300; 34 Atl. 45. (Ky.) 165; Gushee v. Eddy, 11 Gray 7. Johnson School Township v. (Mass.) 502; 71 Am. Dee. 728; Bank, 81 Ind. 515; Kimball v. Rhodes ^ Lindly, 3 Ohio 51; 17 Huntington, 10 Wend. (N. Y.) 675; Am. Dec. 580; Hyland v. Blodgett. 25 Am. Dec. 590. 9 Or. 166; 42 Am. "Rep. 799. 8 Ubsdell V. Cunningham, 22 Mo. 3 First National Bank v. Slette. 124. 67 Minn. 425; 64 Am. St. Rep. 9 Cowan V. Halleck, 9 Colo. 572; 429; 69 N. W. 1148. 13 Pac. 700. * National Bank of Farmersville 10 Smith V. Allen, 5 Day (Conn.) v. Bank, 84 Tex. 40; 19 S. "W. 334. 337. Contra, Brown v. Oilman, 13 s Williams v. Sims, 22 Ala. 512. Mass. 158. c Easton v. Hyde, 13 Minn. 90. 11 Stewart v. Smith, 28 111. 397; ^ Bull v. Bank, 123 U. S. 105; Longv. Straus, 107 Ind. 94; 57 Am. Telford v. Patton, 144 111. 611; 33 Rep. 87; 6 N. E. 123; 7 N. E. 763; N. E. 1119; Hatch v. Bank, 94 Cummings v. Freeman, 2 Humph. Me. 348; 80 Am. St. Rep. 401; (Tenn.) 143. 47 Atl 908; Kirkwood v. Bank, CONTKACTS WHICH MUST BE IX WKITIXG. 1155 Ohio/'® or " currency."" A note payable in notes of a specific bank/" or in bank-notes generally," is not negotiable. A prom- ise to pay foreign money is negotiable.^" A reference to col- lateral security does not destroy negotiability.^^ A power of attorney to confess judgment is held in some jurisdictions to de- stroy negotiability /* in others not to do so.^^ However, a power to confess judgment at any time after its date, whether it is due or not, makes the date of its maturity in effect uncer- tain, and for that reason destroys negotiability.^^ §765. For a sum certain. The promise or order must be for a sum certain. li the amount to be paid cannot be determined from the face of the contract itself, the contract is not negotiable.^ A note ex- pressing the amount in figures in one corner, the ainL/unt 40 Neb. 484; 42 Am. St. Rep. 683; 24 L. R. A. 444; 58 N. W. 1016; Citizens' National Bank v. Brown, 45 O. S. 39; 4 Am. St. Rep. 526; 11 N. E. 799. Contra, Johnson v. Hen- derson, 76 N. C. 227 J Texas, etc. Co. V. Carroll, 63 Tex. 48. 8 White V. Richmond, 16 Ohio 5. So Ehle V. Bank, 24 N. Y. 548. Contra, Chambers v. George, 5 Litt. (Ky.) 335. 9 Howe V. Hartness, 11 0. S. 449; 78 Am. Dec. 312. 10 Irvine v. Lowry, 14 Pet. (U. S.) 293; Shamokin Bank v. Street, 16 O. S. 1. 11 Kirkpatrick v. McCulIough, 3 Humph. (Ti; 55 N. W. 968; Haslack v. 633; Hope v. Barker. 112 Mo. 338; Wolt — Neb. — ; 60 L. R. A. 434; 34 Am. St. Rep. 387; 20 S. W. 567. 9?- N. W. 574. CONTRACTS WHICH MUST BE IN WRITING. liryj sion for a reduction in the rate of interest if paid at inaturitv makes the contract non-negotiable."" A provision for increasing the rate of interest in the event of certain specified defaults is held to be void and hence not to destroy negotiability.^" A con- tract to pay costs of collection does not destroy negotiability, since if it adds any legal liability it is for attorney's fees only.'^^ §766. Contract must be absolute. The payment must be unconditional. If some event which may or may not happen is a condition precedent to the pay- ment, the contract is not negotiable.^ Thus payment out of a particular fund," when certain work is done,^ within a year after certain work is done,^ if the maker enjoyed the use of certain premises under his lease,^ or six months after date " if elected county commissioner,"^ or if the payee satisfies a certain mort- 29Hegeler v. Comstock. 1 S. D. 138; 8 L. R. A. 393; 45 N. W. 331. So of a provision " This note to be discounted at 12 per cent., if paid before maturity." National Bank v. Feeney, 9 S. D. 550; 46 L. E. A. 732; 70 N. W. 874; affirmed on re- hearing, 11 S. D. 109; 75 N. W. 896 ; affirmed on sect)nd rehearing, 12 S. D. 156; 76 Am. St. Rep. 594; 80 N. W. 186. 30 Kendall v. Selby, — Neb. — ; 92 N. W. 178. 31 Nicely v. Bank^ 15 Ind. App. 563; 57 Am. St. Rep. 245; 44 N. E. 572. Where held to mean attorney's fees. Montgomery v. Crossthwait, 90 Ala. 553; 24 Am. St. Rep. 832; 12 L. R. A. 140; 8 So. 498. Contra, of a provision for the payment of " other costs " in addition to attor- ney's fees. Johnson v. Sehar, 9 S. D. 536; 70 N. W. 838; Baird v. Vines. — S. D. — ; 99 N. W. 89. 1 National Savings Bank v. Cable, 73 Conn. 568: 48 Atl. 428; White v. Smith. 77 111. 351; 20 Am. Rep. 251: Jackman v. Bowker, 4 Met, (Mass.) 235; Shaver v. Telegraph Co., 57 N. Y. 459; Iron City Na- tional Bank v. McCord, 139 Pa. St. 52; 23 Am. St. Rep. 166; 11 L. R. A. 559; 21 Atl. 143. 2 National Savings Bank v. Cable, 73 Conn. 568; 48 Atl. 428; Hoag- land V. Erck, 11 Neb. 580; 10 N. W. 498; Harriman v. Sanborn, 43 N. H. 128; Munger v. Shannon, 61 N. Y. 251; Woodward v. Smith, 104 Wis. 365; 80 N. W. 440; Thompson V. Mercantile Co., 10 Wyom. 86; 66 Pac. 595. 3 Chandler v. Carey, 64 Mich. 237; 8 Am. St. Rep. 814; 31 N. W. 309; Fletcher v. Thompson, 55 N. H. 308; Home Bank v. Drumgoole, 109 N. Y. 63 ; 15 N. E. 747. 4 Chicago, etc., Bank v. Trust Co., 190 111. 404; 83 Am. St. Rep. 138; 60 N. E. 586. 5 Jennings v. Bank. 13 Colo. 417; 16 Am. St. Rep. 210; 22 Pac. 777. 6 Specht V. Beindorf. 56 Neb. 553 ; 42 L. R. A. 429: 76 N. W. 1059. (This is also illegal. See § 410.) 1160 PAGE ON CONTRACTS. gage,^ or in case a given contract is not performed,^ is in eacli case conditional and the instrument is non-negotiable. A pro- vision for payment on return of the instrument properly en- dorsed requires nothing more than the law imposes and does not destroy negotiability.^ §767. Time of Payment. Closely connected with the last element is the rule that a cer- tain time of payment must be fixed. This does not mean that the exact date of payment is ascertainable from the contract itself. An instrument payable on some event which is bound to come to pass is negotiable even if the exact date cannot be de- termined in advance. Thus a note payable on demand/ or at the death of a given person,^ is negotiable. If no time of payment is given in the note, it is in legal effect payable on demand and is negotiable.^ So a clause providing that default in the in- terest may, at the option of the payee, make the principal fall due at a time earlier than that fixed by the instrument, does not prevent the contract from being negotiable.* A note due on or 7 Hayes v. Gwin, 19 Ind. 19. 24 Am. St. Rep. 424; 12 L. R. A. sCostelo V. Crowell, 127 Mass. 845; 27 N. E. 835. 293; 34 Am. Rep. 367. 3 Swatts v. Bowen, 141 Ind. 322; 9 Miller v. Austen, 13 How. (U. 40 N. E, 1057; Palmer v. Palmer, S.) 218; Drake v. Markle, 21 Ind. 36 Mich. 487; 24 Am. Rep. 605; 433; 83 Am. Dec. 358; Hatch v. Jones v. Brown, 11 O. S. 601. Bank, 94 Me. 348 ; 80 Am. St. Rep. 4 De Hass v. Dibert, 70 Fed. 227 ; 401; 47 Atl. 908; Kirkwood v. Bank, 30 L. R. A. 189; Hunter v. Clarke, 40 Neb. 484; 42 Am. St. Rep. 683; 184 111. 158; 75 Am. St. Rep. 160; 24 L. R. A. 444; 58 N. W. 1016; 56 N. E. 297; Clark v. Skeen, 61 Frank v. Wessels, 64 N. Y. 155. Kan. 526; 78 Am. St. Rep. 337; Contra, Hubbard v. Mosely, 11 Gray 49 L. R. A. 190; 60 Pac. 327; Mar- (Mass.) 170; 71 Am. Dec. 698. key v. Corey, 108 Mich. 184; 62 1 White V. Smith, 77 111. 351; 20 Am. St. Rep. 698; 36 L. R. A. 117; Am. Rep. 251. 66 N. W. 493; Hollinshead v. Stuart, 2Crider v. Shelby, 95 Fed. 212; 8 N. D. 35; 42 L. R. A. 659; 77 Bristol V. Warner, 19 Conn. 7; Beat- N. W. 89; United States National ty V. College, 177 HI. 280; 69 Am. Bank v. Floss, 38 Or. 68; 84 Am. St. Rep. 242; 42 L. R. A. 797; 52 St. Rep. 752; 62 Pac. 751; Merrill N. E. 432; Price v. Jones. 105 Ind. v. Hurley, 6 S. D. 592; 55 Am. St. 543; 55 Am. Rep. 230; 5 N. E. 683; Rep. 859; 62 N. W. 958. So with Carnwright v. Gray, 127 N. Y. 92; a contract that if the mortgagor CONTKACTS WHICH MUST BE IN WRITING. 1161 before a certain date/ or within a certain period/ or in a certain time, tlie payee to have the option of paying in a shorter period/ is negotiable. In all these cases the time of payment, though not ascertainable when the instrument is given, is bound to arrive eventually. Some authorities, however, treat contracts for the payment of money on or before a certain date as non-negotiable.* A clause in a mortgage, referred to in a note, making the note due on failure to pay taxes and assessments for thirty days after they were due, was held to make the note non-negotiable.'* A similar clause giving the holder of the note the option of de- claring it due on default in paying taxes and assessments does not destroy negotiability.^" A clause in a mortgage not referred to in the note giving the mortgagee the option of declaring the whole debt due on any default was held not to affect the note and hence to leave it negotiable.^^ An instrument payable on the happening of an event which may not happen is conditional and therefore non-negotiable, as a note payable when a certain suit is settled,^" or an estate is settled,^^ or when a canal is com- does not pay insurance premiums. First National Bank of Port Huron the mortgagee may declare the debt v. Carson^ 60 Mich. 432; 27 N. W. due. Consterdine v. Moore, 65 Neb. 589. 291; 91 N. W. 399. 6 Leader v. Plante, 95 Me. 339; 85 5 Hunter v. Clarke, 184 HI. 158; Am. St. Rep. 415; 50 Atl. 54. 75 Am. St. Rep. 160; 56 N. E. 207; 7 American National Bank v. Pa- First National Bank v. Skeen, 101 per Co., 19 R. I. 149; 61 Am. St. Mo. 683; 11 L. R. A. 748; 14 S. W. Rep. 746; 29 L. R. A. 103; 32 Atl. 732; Jordan v. Tate, 19 O. S. 586; 305. AlbeTtson v. Laughlin, 173 Pa. St. 8 Mahoney v. Fitzpatrick, 133 525; 51 Am. St. Rep. 777; 34 Atl. Mass. 151; 43 Am. Rep. 502. 216. So a clause making a note » Brooke v. Struthers, 110 Mich, due in four years payable on sale or 562 ; 35 L. R. A. 536 ; 68 N. W. 272. removal of timber on the land for lo Wilson v. Campbell, 110 Mich, which such note was given, before 580; 35 L. R. A. 544; 68 N. W. 278. the end of such time does not de- n White v. Miller, 52 Minn. 367; Stroy negotiability. Joergenson v. 19 L. R. A. 673; 54 N. W. 736. Joergenson, 28 Wash. 477; 92 Am. 12 Burgess v. Fairbanks, 83 Cal. St. Rep. 888; 68 Pac. 913. See to 215; 17 Am. St. Rep. 230; 23 Pac. the same effect, Charlton v. Reed, 292; Shelton v. Bruce, 9 Yerg. 61 la. 166; 47 Am. Rep. 808; 16 (Tenn.) 24. N. W. 64; Walker v. Woollen, 54 is Husband v. Epling, 81 111. 172 j Ind. 164; 23 Am. Rep. 639. Contra, 25 Am. Rep. 273. 1162 PAGE ON CONTRACTS. pleted/* A clause providing for an extension of time for a definite period at the ojDtion of the maker does not make the con- tract non-negotiable.^^ A provision making the right to renewal contingent on some specific event has been held to make the con- tract non-negotiable.^® A general provision for renewal, not for a specific time/^ or a clause giving a majority of bond-holders the right to waive default in payment/* makes the time of pay- ment uncertain and destroys negotiability. §768. Words of negotiability. A negotiable contract must contain words of negotiability.^ The customary words of negotiability are : " or order/' or " or bearer," but other Avords showing an intent that the contract might be transferred, such as " or assigns,"" are sufficient. §769. Recital of consideration unnecessary. It is customary for a negotiable instrument containing a re- cital of a consideration, as by the use of the words " for value received." This, however, is not essential.^ Thus a check is i4Weidler v. Kauflfman, 14 Ohio 963; Citizens' National Bank v. 455. Piollet, 126 Pa. St. 194; 12 Am. 15 Anniston Loan and Trust Co. V. St. Rep. 860; 4 L. E. A. 190; 17 Stickney, 108 Ala. 146; 31 L. R. A. Atl. 603. Contra, Witty v. Ins. 234; 19 So. 63. Co., 123 Ind. 411; 18 Am. St. Rep. 16 Miller v. Poage, 56 la. 96; 41 327; 8 L, R. A. 365; 24 N. E. 141. Am. Rep. 82; 8 K W. 799. Contra, is McClelland v. R. R., 110 N. Y. Capron V. Capron, 44 Vt. 410. 469; 6 Am. St. Rep. 397; 1 L. R. 17 Glidden v. Henry, 104 Ind. 278; A. 299; 18 N. E. 237. 54 Am. Rep. 316; 1 N. E. 369; i Graves v. Mining Co., 81 Cal. Matehett V. Machine Works, 29 Ind. 303; 22 Pae. 665; Carnwright v. App. 207; 94 Am. St. Rep. 272; 64 Gray, 127 N. Y. 92; 24 Am. St. Rep. N. E. 229; Rosenthal v. Rambo. 28 424; 12 L. R. A. 845; 27 N. E. Ind. App. 265; 62 N. E. 637; Mer- 835; Smurr v. Forman, 1 Ohio 272. chants', etc.. Bank v. Fraze, 9 Ind. Contra, under Mississippi statute, App. 161 ; 53 Am. St. Rep. 341 ; 36 where a contract containing restric- N. E. 378; Oyler v. McMurray. 7 tions on assignability was held nego- Ind. App. 645; 34 N. E. 1004; tiable. Greenwood Lodge v. Prie- Woodbury v. Roberts, 59 la. 348; 44 batsch. — Miss. — ; 35 So. 427. Am, Rep. 685; 13 N. W. 312; Sec- 2 Murphy v. Improvement Co., 97 ond National Bank of Richmond v. Fed. 723. Wheeler, 75 Mich. 546; 42 N. W. i Bristol v. Warner, 19 Conn. 7; CONTKACTS WHICH MUST BE i:\^ WRITING. 1103 negotiable without the words "value received," though by statute such words are necessary in a note.^ So a recital of any valuable consideration is sufficient.^ On the other hand, the re- cital of a consideration does not operate, as notice to the indorsee of failure of consideration, or other defense arising thereon which might operate as a defense against the payee.* A provi- sion in a note that title to the property for which it is given shall revest in the vendor if the note is not paid at maturity destroys its negotiability,^ while a provision that title shall not pass until the note is paid does not.^ §770. Contracts under seal. The law of negotiable instruments is derived from the Law Merchant. The Seal is derived from the common law. Accord- ingly, at common law a sealed instrument could not be nego- tiable.^ Thus if two guarantors sign, and A adds a seal while B does not, the note is negotiable as to B but not as to A.^ This rule, however, is no longer in force in many jurisdictions.^ A corporate seal does not destroy negotiability since it is merely the common-law form whereby the corporation indicates its assent. To hold that it destroyed negotiability would be to hold that a corporation could not issue negotiable paper.* " The at- Archer v. Claflin, 31 111. 306; Dean 386; 3 L. R. A. 414; 11 S. W. 93. V. Carruth, 108 Mass. 242; Clarke 5 Wright v. Taver, 73 Mich. 493; V. Marlow; 20 Mont. 249; 50 Pac. 3 L. R. A. 50; 41 N. W. 517. 713; Hubbell v. Fogartie, 3 Rich. 6 Choate v. Stevens, 116 Mich. 28; L. (S. C.) 413; 45 Am. Dec. 775. 43 L. R. A. 277; 74 N. W. 289. 2 Famous Shoe Co. v. Crosswhite, i Conine v. Ry., 3 Houst. (Del.) 124 Mo. 34; 46 Am. St. Rep. 424; 288; 89 Am. Dec. 230; Brown v. 26 L. R. A. 568; 27 S. W. 397. Jordhal, 32 Minn. 135; 50 Am. Rep. 3Garrigus v. Missionary Society, 560; 19 N. W. 650; Osborn v. Kist- 3 Ind. App. 91; 50 Am. St. Rep. ler, 35 O. S. 99; McLaughlin v. 262; 28 N. E. 1009. (A note "to Braddy, 63 S. C. 433; 90 Am. St. advance the cause of missions and Rep. 681; 41 S. E. 523. to induce others to contribute.") 2 McLaughlin v. Braddy, 63 S. C. 4Siegel V. Bank, 131 111. 569; 19 433; 90 Am. St. Rep. 681; 41 S. E. Am. St. Rep. 51; 7 L. R. A. 537; 23 523. N. E. 417; Clanin v. Machine Co., 3 Porter v. McCollum, 15 Ga. 528. 118 Ind. 372; 3 L. R. A. 863; 21 * Kneeland v. Lawrence, 140 U. S. N. E. 35; Ferris v. Tavel, 87 Tenn. 209; Chicago, etc., Co. v. Bank, 136 116-i PAGE ON CONTRACTS. tacbing of a corporate seal bears a strong analogy to tbe signa- ture of a natural person and is its substantial equivalent."'^ A seal wbicb may be treated as surplusage does not destroy nego- tiability. ** Some authorities, however, hold that a corporation seal makes the instrument a specialty and destroys negotiability.^ U. S. 268 ; Mercer County v. Hacket, 1 Wall. (U. S.) 83; Reid v. Bank, 70 Ala. 199; Chase National Bank V, Faurat, 149 N. Y. 532; 35 L. R. A. 605; 44 N. E. 164; Pittsburgh, etc., Ry. V. Lynde, 55 O. S. 23; 44 N. E. 596; American National Bank V. Paper Co., 19 R, I. 149; 61 Am. St. Rep. 746; 29 L. R. A. 103; 32 Atl. 305; Laudauer v. Improvement Co., 10 S. D. 205; 72 N. W. 467. 5 Pittsburgh, etc., Ry. v. Lynde, 55 0. S. 23, 49; 44 N. E. 596. 6 Stevens v. Ball Club, 142 Pa. St. 52; 11 L. R. A. 860; 21 Atl. 797; Maekay v. Church, 15 R. I. 121; 2 Am. St. Rep. 881; 23 Atl. 108. 7Coe V. Ry., 8 Fed. 534; Frevall v. Fitch, 5 Whart. (Pa.) 325; 34 Am. Dec. 558. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1165 CHAPTER XXXVII. IMPLIED CONTRACTS AND QUASI-CONTRACTS. I. General Nature. §771. Nature of implied contract. As has been said before,^ the tenn " contract " as used at Common Law included all rights which could be enforced by one of the actions ex contractu. By the Common-Law classification every contract was either express or implied, as these two classes exhausted the entire general class of contracts. If from all the rights of action which at Common Law could be enforced by actions ex contractu we subtract the rights arising out of express contract we have left a miscellaneous group of rights which the Common Law in its later and classic form grouped under the head of implied contracts. With the abolition of Common-Law forms of action in many jurisdictions, and its reconstruction on a rational basis in others, the necessity of defining such legal ideas as contract and tort without reference to the rigid form of action by which only it once was enforceable, has become appar- ent. Substantive law has been arranged and classified as the main division of the law, to which, in theory at least, the ad- jective law of pleading, practice, evidence, remedies, and pro- cedure, is supplemental, whereas under the Common Law ideas substantive law was in reality a mere appendix and supplement to the law of procedure. The modern law, as has been said before,- has treated the term " contract " as including all agree- ments which are enforceable at law. When we analyze the com- mon law class of implied contracts and apply to it the modern test of what a contract is, we find that the Common Law class of iSee § 11. 2 See §§ 10-12, 14. 11G6 PAGE ON CONTRACTS. implied contracts is made up of two distinct classes of rights. One class consists of rights arising out of an agreement enforce- able at law, and therefore just as truly a contract at modern modern law as the express contract. It differs from the express contract only in this : that while in express contract the parties arrive at their agreement by words, whether oral or written, sealed or unsealed, in implied contracts of this type they have arrived at their agreement by their acts and conduct. This type of contract is known as the genuine implied contract, the con- tract implied as of fact, or simply, the implied contract. The other class of rights includes all the classes of rights in the Com- mon Law class of implied contracts left after deducting all the rights which originate in a genuine .agreement between the parties. To state the same fact in another way, it consists of all rights which the common law enforced by an action ex con- tractu., but which do not originate in a genuine agreement of the parties. This last class has been called contract implied in law, a contract created by law,^ constructive contract or quasi-con- tract. This type of liability is merely " an implication of law that arises from the facts and circumstances indejiendent of agreement or presumed intention." * The term quasi-contract, 3 Bishop on Contracts, Ch. VIII. fraud. Here it is said the law im- 4Pracht V. Daniels, 20 Colo. 100, plies a promise to repay the money, 103 ; 36 Pac. 845. '" There is some when it was well understood that confusion in the statement of the the promise was a mere fiction, and law applicable to what are fre-- in most cases without any founda- quently called implied contracts, tion whatever in fact. The same arising from the fact that obliga- practice was adopted where neces- tions generally different have been saries had been furnished an insane classed as such, not because of any person or a neglected wife or child, real analogy, but because where the In all these cases no true contract procedure of the Common Law pre- exists. They are, by many authors, vails, by the adoption of a fiction in termed quasi contracts, a term bor- pleading — that of a promise where rowed from the civil law. In all none in fact exists or can in reason these cases no more is meant than be supposed to exist — the favorite that the law imposes a civil obliga- remedy of implied assumpsit could tion on the defendant to restore be adopted. This was so in that money so obtained, or to compensate large class of cases, where suit is one who has furnished necessaries to brought to recover money paid by his wife or child, where he has mistake or has been obtained by neglected his duty to provide for IMPLIED CONTEACTS AND QUASI-C0:NTEACTS. 1167 while but little used in law is a term of considerable antiquity in English law. The term ''quasi ex contractu " is used in Bracton" to include " agency, wardship, the division of a com- mon property, the distribution of an inheritance, an action aris- ing out of a testament, a suit to recover a sum paid and not due, them, or, by reason of mental in- firmity, is unable to obtain them for himself. But contracts that are true contracts are frequently termed im- plied contracts, as^ where from the facts and circumstances, a court or jury may fairly infer, as a matter of fact, that a contract existed be- tween the parties, explanatory of the relation existing between them. Such implied contracts are not generically diflFerent from express contracts; the difference exists sim- ply in the mode of proof. Express contracts are proved by showing that the terms were expressly agreed on by the parties, whilst in the other case the terms are inferred as a matter of fact from the evidence of- fered of the circumstances surround- ing the parties, making it reasonable that a contract existed between them by tacit understanding. In such cases no fictions are, or can be, in- dulged. The evidence must satisfy the court and jury, that the parties understood that each sustained to the other a contractual relation; and that by reason of this relation the defendant is indebted to the plaintiff for services performed or for goods sold and delivered. In the leading case of Hertzog v. Hertzog, 29 Pa. St. 465, the distinction is clearly stated by Judge Lowrie. After quoting from Blackstone, and observing that his language is open to criticism, he says : ' There is some looseness of thought in suppos- ing that reason and justice ever dic- tate any contracts between parties, or impose such upon them. All true contracts grow out of the intentions of parties to transactions, and are dictated only by their natural and accordant wills. When the inten- tion is expressed, we call the con- tract an express one. When it 13 not expressed, it may be inferred, implied, or presumed, from circum- stances really existing, and then the contract thus ascertained, is called an implied one. . . . It is quite apparent, therefore, that radically dffTerent relations are classified un- der the same term, and this often gives rise to indistinctness of thought. And this was not at all necessary; for we have another well authorized technical term exactly adapted to the office of making the true distinction. The latter class are merely constructive contracts, while the former are only implied ones. In one case the contract is a mere fiction, a form imposed in or- der to adapt the case to a given remedy; in the other it is a fact legitimately inferred. In one the in- tention is disregarded; in the other it is ascertained and enforced. In one the duty defines the contract; in the other the contract defines the duty,' " Columbus, etc, Ry. v. Gaff- ney, 65 0. S. 104, 113; 61 N. E. 152; quoting Hertzog v. Hertzog, 29 Pa. St. 468. 5 Bracton f. 100b, Twiss's edition. Vol. II., 118. 1168 PAGE ON CONTRACTS. and such like." We thus see that Bracton's classes of quasi-con- tract were much the same as those of modern law. It is classed with contract for the historical reasons already given even if the facts show affirmatively that there was no real agreement be- tween the i^arties.*' There is still confusion of thought as to what implied contracts are-. Thus it has been suggested that a genuine agreement, reached not by means of express words but by means of acts and conduct, is an express contract and not an imiDlied contract.^ In discussing genuine implied contracts, the questions usually presented are what presumptions of law arise on the facts in evidence, or what inferences of fact will the law permit to be drawn therefrom. In constructive contracts the questions usually presented are, (1) under the facts does any liability of the defendant to the plaintiff exist; and further, (2) if there is a liability, can it be enforced in an action ea; contractu. The latter question is of little importance to-day in jurisdictions where the Common Law forms of actions have been abolished. If facts appear giving a right to recover for money had and received, a fictitious promise need not be alleged.* 6 " It must be remembered, that courts adopt the doctrine that such the promise upon which the action contracts are created by law, rather rests, is not the direct act of the than implied by it." Siems v. Bank, parties, but a promise which the law 7 S. D. 338, 342; 64 N. W. 167. implies from the facts, on the theory 7 " Express contracts which are that a party is willing and under- proved by the declarations and con- takes to do what he ought to do. duct of the parties and other circum- It does not militate against the stances, all of which are explainable promise which the law implies that only upon the theory of a mutual the facts are inconsistent with the agreement, are often called, although intent or promise to pay over. . . . not with entire accuracy, implied While it may seem illogical for the contracts; and this distinction will law to imply a promise on the part explain the ambiguity of some au- of one whose conduct and declara- thorities and the apparent eontra- tions clearly disprove any intention riety of others." Hinkle v. Sage, 67 to promise, still it is constantly 0. S. 2.56, 263 ; 6-5 X. E. 999. done. It is one of the fictions of « Waite v. Willis, 42 Or. 288; 7C the law which it seems convenient, Pac. 1034- if not necessary, to retain until the IMPLIED CONTRACTS AND QUASI-CONTRACTS. 116& II. Work and Labor. §772. Work and labor done at request. If one person performs work and labor for another of a sort for which compensation is customary, intending to charge there- for, and the person for whom the work is done either has re- quested expressly or impliedly, before the doing of such work, that it should be done, or after it was done, has voluntarily ac- cepted the benefits arising therefrom, the person for whom the work is done, is liable to the person who does it.^ If there is an express contract for doing the work, the rights of the parties are controlled by the rules on the subject of express contracts already discussed. If there is no express contract since this liability exists by reason of a genuine though not an express agreement, it is a genuine implied contract." If the services are rendered at the request of the person for whom they are rendered, an implied promise on his part to make reasonable compensation therefor exists if no express contract has been made.^ So, where a board of health directs one of its members to inspect a case of diphtheria, and such services are not within the official 1 Lafayette Ry. Co. v. Tucker, 124 327 ; citing Hood v. League, 102 Ala. Ala. 514; 27 So. 447; Nichols v. 228; 14 So. 572; Wood v. Brewer, Vinson, 9 Houst. (Del.) 274; 32 66 Ala. 570. Atl. 225; Palmer v. Miller, 19 Ind. 3 Spearman v. Texarcana, 58 Ark. App. 624; 49 N. E. 975; Baxter v. 348; 22 L. R. A. 855; 24 S. W. Knox (Ky.), 44 S. W. 972; Day v. 883; Clark v. Clark, 46 Conn. 586; Caton, 119 Mass. 513; 20 Am. Rep. Lockwood v. Robbing, 125 Ind. 398; 347; Eggleston v. Boardman, 37 25 N. E. 455; Wadleigh v. McDow- Mich. 14; Courier, etc., Co. v. Wil- ell, 102 la. 480; 71 N. W. 336; son (Neb.), 90 N. W. 1120; Gnich- Coleman v. Simpson, 2 Dana (Ky.) tel V. Jewell, 59 N. J. Eq. 651; 44 166; Blaisdell v. Gladwin, 4 Cush. Atl. 1099; affirming 41 Atl. 227; (Mass.) 373; Ten Eyck v. R. R., 74 Bonynge v. Field, 81 N. Y. 159. Mich. 226; 16 Am. St. Rep. 633; 3 2 "Where, in the absence of an L. R. A. 378; 41 N. W. 905; Ryans express contract, valuable services v. Haspes, 167 Mo. 342; 67 S. W. are rendered by one person to an- 285; Emeiy v. Cobbey, 27 Neb. 621; other which are knowingly accepted, 43 N. W. 410; Masterson v. Mas- the law will imply a promise to pay terson, 121 Pa. St. 605; 15 Atl. a fair and reasonable compensation 652; Miller v. Tracy, 86 Wis. 330; for such services." McFarland v. 56 N. W. 866. Dawson, 125 Ala. 428, 432; 29 So. 'J'4 11 TO PAGE OiSr CONTRACTS. duty of the member of such board, the person rendering such services may recover a reasonable compensation therefor.* Where a director of a corporation, at the request of the board of directors, attends to obtaining a right of way, and in doing so does work outside of his official duty as director, the corporation is liable to him for reasonable compensation.^ So, where A acted as body servant and nurse for B for several years, and B without making any express contract for paying A any certain amount of wages, had promised to provide for him handsomely, A was allowed to recover a reasonable compensation for work done by him for B.** If an attorney renders services without any express agreement as to the amount of compensation there- for, he is entitled to recover a reasonable compensation for the work done.^ A previous request made by A to B, to perform services for A makes A liable therefor even though he does not make an express promise to pay B therefor.* Thus where a managing editor is requested by the editor in chief to do the work of the latter a promise on the part of the editor in chief to pay him is implied.^ A request for work so made as to show that the party making it does not intend compensation therefor creates no implied liability. Thus A owned a building which 4 Spearman v. Texarcana, 58 Ark. 8 Weeks v. North Sidney, 26 N. S. 348; 22 L. R. A. 855; 24 S. W. 883. 396; Spearman v. Texarcana, 58 5 Ten Eyck v. R. R., 74 Mich. 226; Ark. 348; 22 L. R. A. 855; 24 S. W. 16 Am. St. Rep. 633 ; 3 L. R. A. 883 ; Sonoma County v. Santa Rosa, 378; 41 N. W. 905. A subsequent 102 Cal. 426; 36 Pac. 810; Ten Eyck fair and reasonable agreement be- v. R. R._, 74 Mich. 226; 16 Am. St. tween such director and the board of Rep. 633; 3 L. R. A. 378; 41 N. W. directors, fixing the amount of such 905; Blaisdell v. Gladwin, 4 Cush. compensation, is therefore enforce- (Mass.) 373; Schwab v. Pierro, 43 able. Minn. 520; 46 N. W. 71; Pangborn GRyans v. Haspes, 167 Mo. 342 > v. Phelps, 63 N. J. L. 346; 43 Atl. 67 S. W. 285. In such action, sums 977; Fuller v. Mowry, 18 R. I. 424; of money given by B to A as gratui- 28 Atl. 606; Bonner v. Bradley, 14 ties cannot be deducted from the Tex. Civ. App. 234; 36 S. W. 1014; amount which A should recover. Isham v. Parker, 3 Wash. 755; 29 7 Miller v. Tracy, 86 Wis. 330 ; 56 Pac. 835. N. W. 866. If he is retained by an o Pangborn v. Phelps, 63 N. J. L. administrator to do work for the es- 346 ; 43 Atl. 977. tate he may recover from the ad- ministrator personally. IMPLIED CONTRACTS AND QUASI-CON TKACTS. 1171 was being erected for him by B, the chief contractor. X, a sub- contractor, was doing the plastering under his contract with B. X plastered one room which he claimed that B was not bound by his contract with A to have plastered. A knew that he was plastering such room and demanded that he plaster it, claiming that B was bound by his contract with A to have it plastered. Even if A was wrong in his contention, he was not liable to X on an implied contract.^** §773. Public officers. Eeasons of public policy make the case of the public officer an exception to the general rule that a request for the rendition of services implies a promise to pay therefor. If the law fixes a specified compensation for certain services to be rendered by a public officer, he cannot recover extra compensation for such services even if they are reasonably worth it.^ So after having performed the services he has no right of action for additional compensation on the ground that the compensation was less than the services were worth.^ If the law makes no provision for compensation for any or all of the official duties of a publio officer he can make no charge therefor. ^ If he is not willing to perform such work for nothing, he should resign. If he collects compensation from the municipality for which he acts, which is loHartnett v. Christopher, 61 Mo. 119 Cal. 686; 52 Pae. 35; Ex parte App. 64. Harrison, 112 Ind. 329; 14 N. E. 1 Brown v. United States, 9 How. 225; Hamil v. Carroll County, 106 (U. S.) 487; Kreitz v. Behrensmey- la. 523; 69 N. W. 1122; 71 *N. W. er, 149 111. 496; 24 L. R. A. 59; 36 425: Gardner v. Newaygo County, N. E. 983; Moore v. Independent 110 Mich. 94; 67 N. W. 1091. District, 55 la. 654; 8 N. W. 631; 3 Torbert v. Hale County, 131 Rogers v. Simmons, 155 Mass. 259; Ala. 143; 30 So. 453; Marshall 29 N. E. 580; O'Shea V. Kavanaugh, County v. Johnson, 127 Ind. 238; 65 Neb. 639; 91 N. W. 578; State v. 26 N. E. 821; Tippecanoe County v. Meserve, 58 Neb. 451; 78 N. W. Barnes, 123 Tnd. 403; 24 N. E. 137; 721; Clark v. Lucas County, 58 O. Twinam v. Lucas County. 104 la. S. 107; 50 N. E. 356. 2.31; 73 N. W. 473; State v. Brown, 2Mullett V. United States. 150 146 Mo. 401; 47 S. W. .504; Crock- U. S. 566; Irwin v. Yuba County, er v. Brown County, 35 Wis. 284. 1172 PAGE ON CONTRACTS. not authorized by law, he may be compelled to refund.* Thus a statute authorized the appointment of a commissioner to re- vise the statutes, but made no provision for his compensation- He has no right of action for the reasonable value of his ser- vices.^ However, it has been held that an attorney is not a pub-- lic officer in this sense. Hence if the statute authorizes the county to employ an attorney in disbarment proceedings and does not provide for compensation, he may nevertheless recover a reasonable compensation.^ §774. Elements of implied request. If the person for whom services of a kind usually made the subject of charge are rendered knows of their rendition, he is liable therefor though he has made no express request, in the absence of special circumstances negativing his liability.^ If the person for whom the work is done knows that it is being done and that the person doing expects compensation from the person for whom it is done, and believes that such compensation will be made, and the latter does nothing to correct such impression, he is liable for the work thus done.^ In the absence of an express previous request it is necessary that the person for whom the work is done should know that it is being done and further that it is being done for his benefit and also upon his liability. If A employs B to do certain work, and B employs C to aid him therein, no implied contract between A and C exists, even if A knows that C is doing the work and that A will ultimately re- ceive the benefit thereof, since A is liable over to B on his con- tract for the work thus done.^ Thus where a railroad lets a con- tract for grading to B and B employs C to work thereon, these 4 St. Croix County v. Webster, i Lewis v. Meginniss, 30 Fla. Ill Wis. 270; 87 N. W. 302. 419; 12 So. 19. 5 Harris v. State, 9 S. D, 453; 69 2 Riser v. Holladay, 29 Or. 338; N. W. 825. 45 Pac. 759. 6 Hyatt V. Hamilton County, 121 s Petterson v. Ry., 134 Cal. 244; la. 292; 63 L. E. A. 614; 96 N. W. 66 Pac. 304. 855. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1173 facts do not give C a right of action against the railroad.* Hence the fact that C believed that A was employing him is im- material as affecting A's liability if A did not know of such be- lief and did not so act as to justify such belief.^ §775. Acceptance of work and labor. If the services are accepted voluntarily, a previous request is not necessary to the creation of liability.^ Thus if a litigant knows that a stenographer is taking and transcribing testimony during a trial for the use of the attorney of the litigant, the lat- ter, on accepting the benefit of such services is liable therefor." So if A nurses and cares for B, and B accepts such services he is liable therefor.^ If A renders services on a farm owned in part by B and in part by C, and such services are rendered for the benefit of both, and A expects to be paid by both, B and C are jointly liable for such services if they accept them knowing of A's belief.* So if water is furnished to a village, and the authorities accepting it were authorized to contract therefor, and were not required by law to make contracts in a specified form, the village is liable for a reasonable comj)ensatioii there- for." The principle that voluntary acceptance of services creates a liability to pay therefor often takes us into cases of constructive contract, since there is often no enforceable contract in fact be- tween the parties. 4Petterson v. Ry., 134 Cal. 244; Works Co. v. Port Jervis. 151 N. Y. 66 Pac. 304. Ill; 45 N. E. 388; Moffitt v. Glass, sPetterson v. Ry., 134 Cal. 244; 117 N. C. 142; 23 S. E. 104; Riser 66 Pac. 304. v. Holladay, 29 Or. 338; 45 Pac. 1 Nichols V. Vinson, 9 Houst. ' 759; Wheeler v. Hall, 41 Wis. 447. (Del.) 274; 32 Atl. 225; Rockford, 2 Palmer v. Miller, 19 Ind. App. etc., Ry. V. Wilcox, 66 111. 417; Pal- 624; 49 N. E. 975. mer v. Miller, 19 Ind. App. 624; 49 3 Baxter v. Knox (Ky.), 44 S. N. E. 975; Shoemaker v. Roberts, W. 972. 103 la. 681; 72 N. W. 776; Viley v. * Snyder v. Neal, 129 Mich. 692; Pettit, 96 Ky. 576; 29 S. W. 438; 89 N. W. 588. Baxter v. Knox (Ky.), 44 S. W. 5 Port Jervis Water Works Co. v. 972; Snyder v. Neal, 129 Mich. 692; Port Jervis, 151 N. Y. Ill; 45 N. 89 N. W. 588; Port Jervis Water E. 388. 1174 PAGE ON CONTRACTS. §776. Acceptance of benefits not optional. This rule, however, applies only where the party for whom the services are rendered is free to take their benefit or to reject it. If the services are of such nature that he has no choice but to accept them, he cannot be said to accept them voluntarily. Such acceptance, therefore, creates no liability.^ Thus if an attorney is retained by unauthorized agents of a church to pre- fer charges against a clergyman, and he prefers such charges and prosecutes the case and procures the suspension of such clergyman from the ministry by reason of such charges, his services are not so accepted by the church as to make it liable to him, by a resolution that by reason of such suspension, such clergyman should be required to leave the parsonage owned by the church.^ So one who voluntarily acts as janitor cannot re- cover though the occupant of the building is benefited thereby.' So if work is done in putting a heating plant in a building under a special contract, and the contract is not performed and what has been done cannot be removed without injury to the building, no recovery can be had for such work.* So if a building has been repaired,^ or painted,^ or if a stone base has been built under an iron fence, and the fence has been painted,'^ or a bridge has been constructed,^ or a street laid down,^ and the contract under which the services have been rendered is either unenforce- able," or has not been performed," the owner of such real prop- iParshley v. Church, 147 N. Y. e Qinther v. Shultz, 40 O. S. 104. 583; 30 L. E. A. 574; 42 N. E. 15; 7 Zottman v. San Francisco, 20 Riddell V. Ventilating Co., 27 Mont. Cal. 96; 81 Am. Dec. 96. 44; 69 Pae. 241 (decided under a « Buchanan Bridge Co. v. Camp- statute which substantially re- bell. 60 0. S. 406 ; 54 N. E. 372. enacts the Common Law rule as far » Detroit v. Paving Co.. 36 ilich. as the particular case is concerned). 335. 2 Parshley v. Church, 147 N. Y. lo Zottman v. San Francisco, 20 583; 30 L. R. A. 574; 42 N. E. 15. Cal. 96; 81 Am. Dec. 96; Buchanan 3 Cleveland County v. Seawell, 3 Bridge Co. v. Campbell, 60 O. S. Okla. 281; 41 Pac. 592. 406; 54 N. E. 372. 4 Riddell V. Ventilating Co., 27 u Ginther v. Shultz, 40 0. S. Mont. 44; 09 Pac. 241. 104. 5 Davis V. School District, 24 Me. 349. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1175 erty has no choice but to make use of the property upon which such work has been done, and therefore his making use of such property is not an acceptance of such services so as to create a liability to pay therefor. Some cases, however, do not seem to enforce this distinction. Thus where A placed a bath-tub, wash- bowl and other plumbing in B's house under a contract with whose terms he did not comply, and A makes use of the house with such plumbing in it, A is liable for such plumbing in quan- tum meruit.^' So where A constructs a system of waterworks for a city under a contract to furnish one with a capacity of two hundred and fifty thousand gallons a day and the system actually furnished has a capacity of only fifty thousand gallons a day, and the city makes use of the system actually constructed, it is liable therefor.^^ But in these last cases it may be that under the particular facts, the party accepting the services may be held to have had the option to accept or not. So if A renders services in saving B's property without B's knowledge or assent, A cannot recover therefor ; and the fact that B retains and uses the property thus saved is not such an acceptance of A's services as to make B liable therefor.^* Thus where A voluntarily re- paired a broken levee on B's land without B's request, A cannot recover from B for such work.^^ So in a leading case, A was about to burn over some stubble, and he notified B, whose wheat was stacked near the field to be burned over, to remove such wheat. B promised to do so, but neglected it. While the stub- ble was burning the wind changed, and B's wheat was threatened with destruction. A saved it, B knowing nothing of the matter until afterAvards. It was held that A could not recover from B for his services.^" 12 Gross V. Creyts. 130 Mich. 672; is Xew Orleans, etc.. Ry. v. Tur- 90 N. W. 689. can. 46 La. Ann. 155; 15 So. 187. 13 Sherman V. Connor. 88 Tex. 35 ; ib Bartholomew v. Jackson, 20 29 S. W. 1053. Johns. (K Y.) 28; 11 Am. Dec. 14 Watson V. Ledoux. 8 La. Ann. 237. 68. 1176 PAGE ON CONTEACTS. §777. Services rendered as gratuity. If A renders services for B, and A does not intend at the time of their rendition to make any charge therefor, and B knows of such intention, A cannot subsequently, upon changing his mind, recover for such services as upon an implied contract, even if such work was done with B's knowledge or at B's request.^ The operation of this principle is clearest where the services are ren- dered Tinder an express agreement that no charge shall be made therefor. If A performs services for B under an express agree- ment tha* they are to be gratuitous, he cannot subsequently re- cover therfefor.^ The principle is by no means limited to cases of express agreement that no compensation shall be made, but extends to cases where from the acts of the parties and the sur- rounding circumstances it is apparent that the party by whom the services were rendered did not intend to charge therefor and the party for whom they were rendered accepted them in re- liance upon such intention. Thus where services are rendered solely because of friendship and mutual accommodation,^ as where a real estate broker and an attorney interchange services for accommodation,* or one renders services as attorney in fact, both parties knowing that the services are to be gratuitous,^ or iLevy V. Gillis, 1 Penn. (Del.) 221; Potter v. Carpenter, 71 N. Y. 119; 39 Atl. 785; Evans v. Henry, 74; Forbis v. Inman, 23 Or. 68; 31 66 111. App. 144; Hill v. Hill, 121 Pac. 204; Hoffeditz v. Iron Co., 141 Ind. 255; 23 N. E. 87; McFadden v. Pa. St. 58; 21 Atl. 764; Crampton Ferris, 6 Ind. App. 454; 32 N. E. v. Seymour, 67 Vt. 393; 31 Atl. 107; Tank v. Rohweder, 98 la. 154; 889; State v. St. Johnsbury, 59 Vt. 67 N. W. 106; Cole v. Clark, 85 Me. 332; 10 Atl. 531; Gross v. Cadwell, 336; 21 L. R. A. 714; 27 Atl. 186; 4 Wash. 670; 30 Pac. 1052. Allen V. Allen, 60 Mich. 635; 27 N. 2 Sidway v. Live Stock Co., 163 W. 702 ; Cicotte v. Church, 60 Mich. Mo. 342 ; 63 S. W. 705. 552; 27 N. W. 682; Woods v. Ayres, 3 Tank v. Rohweder, 98 la. 154; 39 Mich. 345; 33 Am. Rep. 396; 67 X. W. 106; Rabasse's Succession, Buelterman v. Meyer, 132 Mo. 474; 49 La. Ann. 1405; 22 So. 767. 34 S. W. 67; Woods v. Land, 30 Mo. * Gross v. Cadwell, 4 Wash. 670; App. 176; Disbrow v, Durand, 54 30 Pac. 1052. N. J. L. 343; 33 Am. St. Rep. 678; s Royston v. McCully (Tenn.), 24 Atl. 545; Doyle v. Trinity 52 L. R. A. 899; 59 S. W. 725. Church, 133 N. Y. 372; 31 N. E. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1177 one renders political services for a friend in a campaign/ or one friend indorses a note for another, the note being ultimately paid out of the maker's property and no loss resulting to the in- dorser by reason thereof/ no recovery can be had. If services are rendered without the intent of making a charge therefor, or of creating a legal liability thereby, the fact that the person ren- dering them did so in the hope that the party receiving them would be grateful therefor, and would manifest such gratitude, in some substantial form, such as a gift or legacy, does not give to the party rendering such services a right to recover a reason- able compensation therefor if such hopes are disappointed.® So services rendered for each other by persons who are under con- tract to intermarry,'' as where one party furnishes board to the other,^** cannot be recovered for upon breach of the contract to marry, as on an implied contract. The remedy, if any, is by an action for breach of the express promise to marry, and not by an, action in quantum meruit. So if a woman believes a man to be single, and marries him and keeps house for him, she cannot re- cover for services thus rendered, when she discovers that he is already married.^^ Where a man marries a woman believing her single, and she was already married, he cannot recover on an implied contract for furnishing her with board, lodging, medical attendance and the like. His damages of this sort are insepar- able from his claim for damages for deceit ; and accordingly will not survive against her estate.^^ Where no such liability exists 6Le%y V. Gillis, 1 Penn. (Del.) 388; 56 Am. St. Rep. 4.30; 36 Atl. 119; 39 Atl. 785. 623. 7Hagar v. Whitmore, 82 Me. lo Clary v. Clary, 93 Me. 220; 44 248; 19 Atl. 444. (The indorser Atl, 921. subsequently sought to recover com- n Cooper v. Cooper, 147 Mass. pensation for ever having incurred 370; 9 Am. St. Rep. 721; 17 N. E. liability.) 892. Contra, Fox v. Dawson, 8 sOsbourn v. Governors, etc., 2 Mart. (0. S. ) (La.) 94; Higgins v. Stra. 728; Guenther v. Birkicht's Breen, 9 Mo. 497. Administrator, 22 Mo. 439; Castle See § 533. V. Edwards, 63 Mo. App. 564; 12 Payne's Appeal, 65 Conn. 397; Swires v. Parsons, 6 Watts. & S. 48 Am. St. Rep. 215; 33 L. R. A. (Pa.) 357. 418; 32 Atl. 948. 9 La Fontain v. Hayhurst, 89 Me. 11Y8 PAGE ON CONTRACTS. a subsequent note payable to the order of the maker, not indorsed by him, but delivered to the person performing such services creates no liability/^ Board and lodging furnished to one who comes on invitation as a guest are understood to be gratuitous and no recovery can be had therefor.^* By statute in Kentucky no recovery can be had for board and lodging unless furnished by the keeper of a tavern or house of private entertainment or unless under a contract therefor/'^ So where A does work on land which he claims in good faith as his own, recovery therefor from the real owner, after the claimant is defeated by the real owner in an action for the possession of the real property, cannot be had.^^ He may, however, set off the increase in the value of the property resulting from his improvements against the amount due from him for rents and profits." This right of set- off is founded on " broad and growing principles of equity,"^* and was originally an innovation at Common Law. The Civil Law allowed compensation for the value of the improvements less the use of the land." This rule of the Civil Law was adopted by equity. Equity required the real owner to do equity if he was obliged to ask aid of equity to recover his prop- erty, and to make compensation for the increase in value due to i3Rabasse's Succession, 49 La. Jones v. Merrill, 113 Mich. 433; 67 Ann. 1405; 22 So. 767. Am. St. Rep. 475; 71 N. W. 838; 14 Action by husband: invitation Tice v. Fleming, 173 Mo. 49; 96 given by his wife to her sister, Har- .Am. St. Rep. 479; 72 S. W. 689; rison v. McMillan, 169 Tenn. 77; Jackson v. Loomis, 4 Cow. (N. Y.) 69 S. W. 973. 168; 15 Am. Dec. 347; Estate of 15 Hancock v. Hancock's Adminis- Gleeson, 192 Pa. St. 279; 73 Am. trator (Ky.), 69 S. W. 757. St. Rep. 808; 43 Atl. 1032; Putnam 16 Dudley v. Johnson, 102 Ga. 1; v. Tyler. 117 Pa. St. 570; 12 Atl. 29 S. E. 50; Lunquest v. Ten Eyck, 43; Dawson v. Grow, 29 W. Va. 40 la. 213; Pharr v. Broussard, 106 333; 1 S. E. 564; Davis v. Louk, La. 59; 30 So. 296; Russell v. 30 Wis. 308. Blake, 2 Pick. (Mass.) 505; Bon- is Tice v. Fleming, 173 Mo. 49, ner v. Wiggins. 52 Tex. 125; Moore 56; 96 Am. St. Rep. 479. 483; 72 V. Ligon, 30 W. Va. 146; 3 S. E. S, W. 689. See also Barton v. 672. Land Co., 27 Kan. 634. "Potts V. Cullum, 68 111. 217; la Putnam v. Ritchie, 6 Paige (N. Petit V. R. R., 119 Mich. 492; 75 Y.) 390. Am. St. Rep. 417; 78 N. W. 554; IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1179 the improvements placed thereon by the innocent claimant.^ According to the weight of authority, equity could give no further relief, than by way of set-off. Affirmative compensa- tion could not be had."^ In other cases, however, equity has ig- nored the restriction to set-off and allowed compensation for im- provements to the extent of the increase in value due thereto, even if they exceed the amount of rents and profits. ^'"^ Modern statutes known as occupying claimant acts, or betterment acts, have extended these principles in specific classes of cases, ^o discussion of these statutes will, however, be undertaken here. So one who by mistake erects a house on the land of another can- not have compensation therefor. ^^ The right of recovery exists only in favor of one who in good faith believes himself to be the owner. Thus a tenant for life,^* or for years,^^ cannot, in any form of action, have compensation for increase in value due to improvements made by him. One who performs work and labor upon his own property cannot hold others liable therefor upon an implied Contract. He must be taken as having done the work for his own benefit, whatever his secret intention may have been. Thus where A's cattle were sold at auction, and the title thereto did not pass until possession was delivered and the money paid or security given, A cannot recover from the purchaser for keep- ing such cattle between the time of the auction and the time of 20 Green v. Biddle, 8 Wheat. (U. 34 S. E. 674; Effinger v. Kenney, 92 S.) 1; Williams v. Vanderbilt, 145 Va. 245; 23 S. E. 742. 111. 238; 36 Am. St. Rep. 486; 21 23 Dutton v. Ensley, 21 Ind. App. L. R. A. 489; 34 N. E. 476; Parsons 46; 69 Am. St. Rep. 340; 51 N. E. V. Moses, 16 la. 440; Sale v. Crutch- 380. field, 8 Bush. (Ky.) 636; Miner v, 24 Springfield v. Bethel, 90 Ky. Beekman, 50 N. Y. 337. 593; 14 S. W. 592; Moore v. Si- 2iMcCloy V. Arnett, 47 Ark. 445; monson, 27 Or. 117; 39 Pac. 1105. 2 S. W. 71; Byers v. Fowler, 12 25 Jones v. Hoard, 59 Ark. 42; 43 Ark. 218; 54 Am. Dec. 271; Dudley Am. St. Rep. 17; 26 S. W. 193; V. Johnson, 102 Ga. 1; 29 S. E. Windon v. Stewart, 43 W. Va. 711; 50; Jackson v. Loorais, 4 Cow. (N. 28 S. E. 776; Willoughby v. Fur- Y.) 168; 15 Am. Dec. 347; Jones v. nishing Co.^ 93 Me. 185; 44 Atl. Perry, 10 Yerg. (Tenn.) 59; 30 Am. 612; Wolf v. Holton, 92 Mich. 136; Dec. 430. 52 N. W. 459. 22 Taylor v. James, 109 Ga. 327; 1180 PAGE ON CONTEACTS. giving security. ^^ A cotenant in possession cannot recover com- pensation from his cotenants for v^^ork done in taking care of the common property as in collecting the rents."^ The principle that no recovery can be had for services rendered by A, whereby B is benefited if A does not intend to make a charge against B therefor, applies even in cases where A believed when he per- formed the services, that he was bound by a contract with X,^* or by some positive rule of law"^ to render such services. Thus Avhere A believing that he is doing work under his contract with X does work which B is under contract to do, A cannot recover from B.^" So, where A is employed by the government to trans^ ix)rt mail, and he does not only the work which is required by his contract with the government, but also work which the rail- road which hauls the mail is bound to do by reason of its con- tract with the government, he cannot recover from the railroad where he does this work, thinking that he is bound by his con- tract with the government to do it.^^ So, a county auditor can- not recover from the treasurer where the auditor has made cer- tain tax apportionments and statements which it was the legal duty of the treasurer to make, where both auditor and treasurer are under the impression that it is the auditor's duty to make such apportionment and statements.^" Whether a public cor- poration or an individual furnished support to a pauper can recover therefor from such pauper if he proves to have property, or subsequently acquires property, depends in the absence of statute on whether the pauper has been guilty of any fraud in inducing such person to furnish such support. If he has not been guilty of fraud, he is not liable in the absence of statute.^* 26 Chalmers v. McAuley, 68 Vt. si Columbus, etc., Ry. v. Gaffney, 44; 33 Atl. 767. 65 O. S. 104; 61 N. E. 152; Johnson 27Switzer v. Switzer, 57 N. J. v. Ey., 69 Vt. 521; 38 Atl. 267. Eq. 421; 41 Atl. 486. Contra, McClaiy v. R. R., 102 Mich. 28 Columbus, etc., Ry. v. GaflFney, 312; 60 N. W. 695. 65 0. S. 104; 61 N. E. 152; John- 32Keough v. Wendelschafer, 73 son V. Ry., 69 Vt. 521; 38 Atl. 267. Minn. 352; 76 N. W. 46. 29 Keough V. Wendelschafer. 73 33 Kennebunkport v. Smith, 22 Minn. 352; 76 K W. 46. Me. 445; Deer Isle v. Eaton. 12 soRohr V. Baker, 13 Or. 350; 10 Mass. 327; Charleston v. Hubbard, Pac. 627. 9 N. H. 195; Albany v. McNamara, IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1181 Thus, if a pauper subsequently acquired property, he is not liable for support furnished to him by a public corporation.^* If, however, the pauper has received such support through fraudulent representations as to his financial condition, the per- son furnishing such support has been allowed to recover. Thus, where a voluntary charitable association, thinking A a pauper through A's misrepresentations, supported A, and A promised to make a will in favor of such association, when it began to sus- pect that A was not in need of support, and A subsequently re- voked the will made in jjerformance of this contract and made another will, it was held that equity could not give specific per- formance of a promise to make a will, as the consideration was a past consideration, but that the voluntary association could re- cover for the support furnished. ^^ In some jurisdictions the statute specifically provides for a recovery against a pauper for support furnished, if such pauper has or subsequently acquires, property.^^ A right of action against one to whom support has been furnished as a pauper is limited by the statute giving such right. Thus a statute giving a right of action against certain relatives who were primarily liable for the support of a pauper does not give a right of action against such pauper.^^ Under a constitutional provision that no special legislation shall be made with reference to the estates of persons under disability, an in- sane pauper can not be required, on acquiring property, to pay a greater sum for support than one who is not a pauper would have been obliged to pay.^* Thus, in the absence of statute, the estate of an insane person is not liable for support furnished if there is no special contract therefor.^^ In some cases, already 117 N. Y. 168; 6 L. R. A. 212; 22 se Cutler v. Maker, 41 Me. 594; N. E. 931 ; Montgomery County v. East Sudbury v. Belknap, 1 Pick. Nyce, 161 Pa. St. 82; 28 Atl. 999; (Mass.) 512; Directors v. Nyce, 161 Fairbanks v. Benjamin, 50 Vt. 99. Pa. St. 82; 28 Atl. 999. 34 Deer Isle v. Eaton, 12 Mass. 37 Bremer County v. Curtis, 54 la. 327; Charleston v. Hubbard, 9 N. 72; 6 N. W. 135. H. 195. ssSchroer v. Asylum, — Ky. — ; 35 Eggers V. Anderson, 63 N. J. 68 S. W. 150. Eq. 264; 55 L. R. A. 570; 49 Atl. 39 Montgomery County v. Gupton, 578. 139 Mo. 303; 39 S. W. 447; 40 S. W. 1094. 1182 PAGE ON CONTEACTS. cited, language is used which seems to support the broad prin- ciple that one who performs services with another without in- tending to charge therefor, cannot recover even if the services are of a sort for which charges are usually made, and the party for whom the services are rendered does not know that the other party does not intend to make a charge. While this principle is supported by occasional dicta, the cases in which the point is actually presented for decision, do not go so far. The secret uncommunicated intention of one party to a contract is gen- erally of no importance, and as it cannot be invoked to confer legal rights u]X)n him, it ought not to be invoked to defeat legal rights. The true rule seems to be that one who performs ser- vices, such as are usually the subject of charge, at the request of the party for whom they are performed, whether express or im- plied, is entitled to recover therefor, even if at the time he ren- der the services his own secret intention was to make no charge for such services.*" Thus, where A performed work for a shoot- ing club at the request of the officers thereof in obtaining leases of land for the use of such club, he can recover a reasonable com- pensation for such work, even though he did not intend to make any charge if the club would buy his house, which they did, and employ him as steward at a salary, which they did not do." So, a physician who performed services which he intended at the time of performing them to be gratuitous, can recover therefor irrespective of his intention, if the other party was not induced by such intention to accept the services.*^ Thus, where A has rendered services for B, not intending to charge therefor, an in- struction by a court to the jury, in an action by A to recover a reasonable compensation to the effect that A's intention to make no charge will not prevent recovery unless A's " conduct and course of dealing was such as to justify B in believing and un- 40 Thomas v. Shooting Club. 121 there should be nothing paid, the N. C. 238; 28 S. E. 293; Moore v. plaintiff is entitled to recover." Ellis, 89 Wis. 108; 61 N. W. 291. Thomas v. Shooting Club, 121 N. 41 "Here as the implied promise C. 238, 240; 28 S. E. 293. is not met by any agreement that 42 Prince v. McRae, 84 N. C. 674. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1183 derstanding that no charge was intended," was held correct.*' Tn some cases the rights of the parties who have rendered mu- tual services, which are intended by the parties to be reciprocal and gratuitous, have been worked out on a somewhat different theory. Thus, where A was B's ward and lived in B's family, and rendered services for B and his family, not expecting to be paid for such services, but expecting such services would offset her board, A can recover a reasonable compensation for such services when B has as a matter of fact made a charge against her for her board, and settled his accounts by applying her estate^ in his hands to the payment of such account for board.** From one point of view, strict logic might hold that A should have re- sisted B's charge for board by showing the circumstances under which the board was furnished. A seems, however, to have learned of the facts too late to resist the settlement of B's ac- counts, and her rights were decided on the theory that she had performed the services either under a mistake of fact or by rea- son of B's fraud and concealment. §778. Services between members of the same family. — General principles. Services rendered between members of the same family form a common example of services rendered as a gratuity. Persons who live together as members of the same family, and render personal services each to the other, generally do so from motives of affection and not because of the expectation of a financial re- ward therefor. Accordingly, the mere rendition of personal services between persons so situated, does not establish a liabil- ity on the part of the person receiving such services to make com- pensation to the person rendering them, even though the services may be performed at the express request of the person receiving the benefit thereof or may be voluntarily accepted by him.* 43 Moore v. Ellis, 89 Wis. 108 ; 61 i Morris v. Simpson. 3 Houst. N. W. 291. (Del.) 568; Poole v. Bap:gett, 110 44Boardman v. Ward, 40 Minn. Ga. 822; .36 S. E. 86; Collar v. Pat- 399; 12 Am. St. Rep. 749; 42 N. terson, 137 111. 403; 27 N. E. 604; W. 202. Stock V. Stoltz, 137 111. 349; 27 N". 118-i PAGE ON CONTRACTS. Conversely, no recovery can be had by the party to such rela- tionship who furnishes board and lodging." This principle is sometimes spoken of as an exception to the general rule that lia- bility exists where services for which compensation is usually made, are rendered by one person to another at the previous re- quest of such other, or are voluntarily accepted by him. It is not, however, properly si^eaking, an exception to that rule, be- cause such services as are here described, are not ordinarily the subject of compensation. It is rather an illustration of the principle that services rendered for which the party rendering them does not expect to make a charge, and accepted by the per- son for whom they are rendered with that understanding, do not create a legal liability. §779. Who are members of family. — Husband and wife. As between husband and wife, there is not only a presump- tion that mutual services are gratuitous,^ but in many jurisdic- tions an express promise to make compensation therefor is unen- forceable as against public policy.^ Thus a contract whereby a husband agrees to pay his wife for services,^ even if not per- E. 604; Hill v. Hill, 121 Ind. 255; 404; 17 Atl. 617; Newell v. Lawton, 23 N. E. 87; McGarvey v. Roods, 20 R. I. 307; 38 Atl. 946; Murphy 73 la. 363; 35 N. W. 488; Cowan v. v. Murphy, 1 S. D. 316; 9 L. R. A. Musgrave, 73 la. 384; 35 K W. 820; 47 N. W. 142; Beale v. Hall, 496; Spitzmiller v. Fisher, 77 la. 97 Va. 383; 34 S. E. 53; Riley v. 289; 42 N. W. 197; Coleman v. Riley, 38 W. Va. 283; 18 S. E. Simpson, 2 Dana (Ky.) 166; Bix- 569; Ellis v. Cary, 74 Wis. 176; ler V. Sellman, 77 Md. 494; 27 Atl. 17 Am. St. Rep. 125; 4 L. R. A. 55; 137; Harris v. Harris, 106 Mich. 42 N. W. 252. 246; 64 N. W. 15; Harris v. Smith, 2 Tank v. Rohweder, 98 la. 154; 79 Mich. 54; 6 L. R. A. 702; 44 N. 67 N". W. 106. W. 169; Allen v. Allen, 60 Mich. i Lapworth v. Leach, 79 Mich. 635; 27 N. W. 702; Baxter v. Gale, 16; 44 X. W. 338. 74 Minn. 36; 76 N. W. 954; Louder 2 See § 426. V. Hart, 52 Mo. App. 377; Callahan 3 Kedey v. Petty, 153 Ind. 179; V. Riggins. 43 Mo. App. 130; Woods 54 N. E. 798; Michigan Trust Co. V. Land, 30 Mo. App. 176; Moore v. v. Chapin, 106 Mich. 384; 58 Am. Moore, 58 Neb. 268; 78 N. W. 495; St. Rep. 490; 64 N. W. 334; Cole- Clark V. Sanborn, 68 N. H. 411; 36 man v. Burr, 93 N. Y. 17; 45 Am. Atl. 14; Barhites' Appeal, 126 Pa. Rep. 160; In re Collister, 153 N. Y. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1185 formed at their home, but in business,* or a contract whereby a wife agrees to support her husband^ are void. §780. Persons related by consanguinity. Where parents and children are living together as members of a family, services rendered by one for the other, come within this rule, and do not of themselves establish any implied con- tract to make compensation therefor.^ Thus, if a parent ren- ders services for a child,^ as where a father takes care of a horse for his son,^ there is no implied promise to pay therefor. The same principle applies where a parent furnishes provisions to her daughter as a gift. The husband of the daughter cannot be held liable to make compensation therefor, as on an implied con- tract.* So, if a child renders services to a parent,^ as where 294; GO Am. St. Rep. 620; 47 N. E. 268. 4 Whitaker v. Whitaker, 52 N. Y. 368; 11 Am. Rep. 711. Contra, Nuding V. Urich, 169 Pa. St. 289; 32 Atl. 409. 5 Corcoran v. Corcoran, 119 Ind. 138; 12 Am. St. Rep. 390; 4 L. R. A. 782; 21 N. E. 468. iBorum v. Bell, 132 Ala. 85; 31 So. 454; Poole v. Raggett, 110 Ga, 822 ; 36 S. E. 86 ; O'Kelly v. Faulk- ner, 92 Ga. 521; 17 S. E. 847; Hud- son V. Hudson, 90 Ga. 581 ; 16 S. E. 349; Stock v. Stoltz, 137 111. 349; 27 N. E. 604; Robnett v. Robnett, 43 111. App. 191; King v. Kelly. 28 Ind. 89; Niehaus v. Cooper, 22 Ind. App. 610; 52 N. E. 761; Weir v. Weir, 3 B. Mon. (Ky.) 645; 39 Am. Dec. 487; Wright v. Senn, 85 Mich. 191; 48 N. W. 545; Penter v. Rob- erts. 51 Mo. App. 222; Garcia v. Candelaria, 9 N. M. 374; 54 Pae. 342; Ulrich v. Ulrich. 136 N. Y. 120; 18 L. R. A. 37; 32 N. E. 606; Wilkes V. Cornelius, 21 Or. 348; 28 75 Pac. 135; Zimmerman v, Zimmer- man, 129 Pa. 229; 15 Am. St. Rep. 720; 18 Atl. 129; Butler v. Slam, 50 Pa. St. 456; Hatch v. Hatch, 60 Vt. 160; 13 Atl. 791; Harshberger V. Alger, 31 Gratt. (Va.) 53; Riley v. Riley, 38 W. Va. 283; 18 S. E. 569; Pritchard v. Pritchard, 69 Wis. 373; 34 N. W. 506; Leary V. Leary, 68 Wis. 662; 32 N. W. 623; Hall v. Finch, 29 Wis. 278; 9 Am. Rep. 559; 32 N. W. 623. 2Larsen V. Hansen, 74 Cal. 320; 16 Pac. 5; Stoneburner v. Motley, 95 Va. 784; 30 S. E. 364; Bost- wick V. Bostwick, 71 Wis. 273; 37 N. W. 405. 3 Stoneburner v. Motley, 95 Va. 784; 30 S. E. 364. 4 Anderson v. Baird (Ky.), 40 S. W. 923. 5 Perry v. Perry, 2 Duv. (Ky.) 312; Kostuba v. Miller, 137 Mo. 161; 38 S. W. 946; Ulrich v. Ul- rich. 1.36 K Y. 120; 18 L. R. A. 37; 32 N. E. 606. 1186 PAGE ON CONTEACTS. board, care and lodging are furnished to a parent by a child,* there is no implied liability on the part of the parent to make compensation therefor. This principle is not confined to cases where a child is a minor, and is therefor not to be referred solely to the fact that the earnings of the minor are the property of his parents. The principle is the same where an adult child lives with his parents as a member of the family, and receives his board and renders services. Even in such a case, there is, on the one hand, no implied liability of the child to pay for his board ; and, on the other hand, there is no implied liability of the parents to pay for the services of the child.^ So, where an uncle. A, requested a minor child, B, who had been emancipated by his father, C, to work for C, and had expressed his approval of his conduct in so doing, no implied contract exists on the part of A to pay B for such services.* The same principle applies to services rendered by brothers and sisters, each for the other, where they are living together in one family. No liability to make compensation is created by the mere fact of the rendition of the services in the absence of anything to show some under- standing that compensation should be made.^ Accordingly the courts commits no error in refusing to allow a question to be answered, which was intended to call forth evidence that the sister had rendered the services at the request of her brothel'.^'* The same principle applies as between grandparents and grand- children.^^ If they are living together in one family, a grand- child cannot recover for personal services rendered to his grand- 6 Niehaus v. Cooper, 22 Ind. App. 9 Fuller v. Fuller, 21 Ind. App. 610; 52 N. E. 761; Turner v, Tur- 42; 51 N. E. 373; Ayres v. Hull, 5 ner, 100 Ky. 373; 38 S. W. 506; Kan. 419; Martin v. Sheridan, 46 Gor'rell v. Taylor, 107 Tenn. 568; Mich. 93; 8 N". W. 722; Hayes v 64 S. W. 888; Nicholas v. Nicholas, Cheatham, 6 Lea (Tenn.) 1; Tay 100 Va. 660; 42 S. E. 669, 866. lor v. Lincumfelter. 1 Lea (Tenn.) 7 Wall V. Wall, 69 111. App. 389; 83; Morrissey v. Faucett, 29 Schwachto^en v. Schwachtgen. 65 Wash. 52; 68 Pac. 352. 111. App. 127; Donovan v. Driscoll, lo Morrissey v. Faucett, 28 Wash. 116 la. 339; 90 N. W. 60. 52: 68 Pac. 352. 8 Bristol V. Sutton, 115 Mich. nDodson v. McAdams, 96 N. C. 365; 73 N. W. 424. 149; 60 Am. Rep. 408. IMPLIED CONTEACTS AND QUASI-CONTRACTS. 1187 parents.^^ Similar considerations apply to services rendered between persons more remotely related, living together as one family, as between cousins.^^ §781. Persons related by affinity. This principle is not limited, however, to blood relationship. If a son-in-law or daughter-in-law renders services for parents- in law, while members of the same family,^ as by furnishing board and lodging,^ no implied contract exists by reason of such facts alone. The same principle applies to mutual services rendered between step-parents and ste}>children.^ Thus, if a st€i>father voluntarily supports his stejD-children,* or a step- child voluntarily renders services for a step-father,^ no implied contract exists. Accordingly, if a stej)-daughter renders ser- vices to the family, in reliance upon a promise made by her mother that she should receive compensation for such services, she cannot recover from the estate of her step-father for such services unless it can be shown that he not only knew that the promise had been made, but that he also knew that she continued to render such services upon such promise.^ The principle that a contract for compensation is not implied between a step-father and step-daughter, has been carried so far that an attorney who procured a divorce for his stei>daughter, who at that time was living in his family and rendering domestic services, could not recover therefor four years after. In the meantime, however, 12 Castle V. Edwards. 63 Mo. App. 3 Kirchgassuer v. Rodick, 170 564; Murphy v. Murphy. 1 S. D. Mass. 543; 49 N. E. 1015; Williams 316; 9 L. R. A. 820; 47 N. W. 142; v. Hutchinson. 3 N. Y. 312; 53 Am. Jackson v. Jackson. 96 Va. 16.5; Dee. 301; Ellis v. Gary, 74 Wis. 31 S. E. 78, 176; 17 Am. St. Rep. 125; 4 L. R. i3Neal V. Gilmore, 79 Pa. St. A. 55; 42 X. W. 252. 421. 4 Livingston v. Hammond, 162 iHinkle v. Sage, 67 0. S. 256; Mass. 375; 38 N. E. 968; Haggerty 65 N. E. 999. v. McCanna, 25 N. J. Eq. 48. 2 Mariner v. Collins, 5 Harr. s Harris v. Smith, 79 Mich. 54; (Del.) 290; Thoinpson v. Halstead, 6 L. R. A. 702; 44 N. W. 169. 44 W. Va. 390; 29 S. E. 991; c Harris v. Smith. 79 Mich. 54; Schmidt's Estate, 93 Wis. 120; 67 6 L. R. A. 702; 44 N. W. 169. N. W. 37. 1188 PAGE ON CONTEACTS. he had set up claims for certain disbursements made by him in a foreclosure suit brought by her, but had not made any claim for such legal services.^ However, a step-father who supports his step-children on his wife's land undertakes their support only by his labor as applied to their property. Hence in an ac- tion by them against him to recover railroad ties, made from timber growing on such land, he may counter-claim for their support.^ Similar principles apply where services are rendered between brothers-ifi-law, sisters-in-law and the like, while members of one family.^ §782. De facto ntembership of same family. The principle under discussion is not limited to cases of rela- tionship by blood or affinity, ^ut it applies also to persons who are de facto members of the same family, even if there is no re- lationship of any kind between thew.^ Thus, if a child has been taken into a family as a member thereof by persons in no way related to it, there is on the one hand r»d implied contract that the child, or the parents of the child, should inake compen- sation for its board f nor, on the other hand, that ^he persons who take such child into their family, are to make compe:risation for the services performed by such child. ^ This rule applies even where an " adopted " child remains a member of the fam- ily after becoming of age.* §783. Limitations of doctrine. Some jurisdictions limit this doctrine to cases where the ser- vices rendered are purely personal in their nature, and such as 7 Baxter v. Gale, 74 Minn. 36; 177 Mass. 321; 58 X. E. 102.3. 76 N. W. 954. sCroxton v. Foreman, 13 Tnd. sKempson v. Goss, 69 Ark. 235; App. 442; 41 N, E. 838. 62 S. W. 582. 3 Walker v. Taylor, 28 Colo. 233 ; 9 Hill V. Hill, 121 Ind. 255; 23 64 Pae. 192; Graliam v. Stanto<«, N. E. 87. 177 Mass. 321 ; 58 N". E. 1023. 1 Walker v. Taylor, 28 Colo. 233 ; * Lang v. Dietz, 191 111. 161 ; 60 64 Pae. 192; Graliam v. Stanton, X. E. 841. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1189 would ordinarily be inspired by affection or the sense of duty.^ Thus, it has been held that there is an implied contraqt to pay for such services as washing, or making and mending clothing rendered between persons living together." This doctrine is by its terms limited to services rendered between members of the same family. If the persons are related, but not living together, this doctrine has no application.^ Thus, if a woman who does washing and housecleaning for a living does work of the same sort for her daughter and her daughter's husband, and is not a member of the latter's household, there is an implied agi'eement on his part to pay therefor.* So if A, a middle-aged man, works a year for his brother, B, in superintending the building of certain houses for B, and during such period A lives with his own family in one of B's houses, B is liable to pay A a reason- able compensation, even though A had been a guest at B's home for six weeks at the time of the beginning of such work, before his family had rejoined him.^ On the other hand, the mere fact that the persons between whom the services are rendered are living in the same house, is not conclusive that they are members of the same family.^ If the persons who reside in the same house are not so related that one of them is bound in law to support the other, it is, in case of a dispute, a question of fact in what capacity the person who renders the serivces is residing in that house. Thus a nephew who lives with his uncle and renders services in connection with his uncle's business may recover if it can be shown that the board furnished him was in part compensation for the services rendered by him.' So where a wealthy man supported his second cousin at his house, it was a question of fact for the jury, whether she lived there 1 Hurst V. Lane, 105 Ga. 506; 31 5 Williams v. Williams. 114 Wis, S. E. 135; Frailey v. Tliompson 79; 89 N. W. 835. (Ky.), 49 S. W. 13. « Gill v. Staylor, 93 Md. 453; 49 2 Frailey v. Thompson (Ky.), 49 AU. 650; Spragiie v. Sea, 152 Mo. S. W. 13. 327; 53 S. W. 1074. 3 Williams v. Williams, 114 Wis, 7 Gill v. Staylor, 93 Md. 453; 49 79; 89 N. W. 835. At\. 650. 4 Winter v. Greiling, 114 Wis. 378 ; 90 N. W. 425, 1190 PAGE ON CONTRACTS. merely as a member of his family, or whether she was living there as housekeeper; in the latter case there would be an im- plied contract on his part to pay for her services without any express contract.^ So a nephew may recover for board fur- nished his aunt, Avhere he shows that she came to his house on a temporary visit, was taken ill while there, and remained there on account of ill health seven months, until her death. ^ So, where a person is shown to be living in another's house as a boarder, under an express contract for a compensation, he is liable for services rendered not included in the express agree- ment, such as nursing in sickness.^" It has, however, been held that where a devise is given A on the condition that she furnish a home for her uncle, B, on the property devised to her, as long as he lives, and she accepts such devise, and her uncle lives with her, a family relation is thereby created between uncle and niece, so that she cannot recover for services in caring for him in the absence of an express contract on his part.^^ §784. When services not gratuitous. The rule that there is no implied agreement for a compen- sation for services between persons in domestic relations living together as members of a family, is merely a prima facie rule. In the absence of any evidence there is a presumption that such services are gratuitous.^ This presumption is rebuttable," and it has' been held error when evidence has been introduced to show that there was an understanding for compensation to charge that there was a presumption of law against such claim.^ sSprague v. Sea, 152 Mo. 327; Bixler v. Sellman, 77 Md. 494, 496; 53 S. W. 1074. 27 All. 137. 9 Glenn v. Gerald, 64 S. C. 236; 2 pitts v. Pitts, 21 Ind. 309; 42 S. E. 155. Resso v. Lehan, 96 la. 45: 64 N. W. lopfeiffer v. Michelsen, 112 Mich. 689; Bixler v. Sellman, 77 Md. 494; 614; 71 N. W. 156; Gates v. Gilmer 27 Atl. 137; Ulrieh v. Ulrich, 136 (Tenn. Ch. App.), 48 S. W. 280. X. Y. 120; 18 L. E. A. 37; 32 N. E. "Lackey's Estate, 181 Pa. St. 606; Gorrell v. Taylor. 107 Tenn. 638; 37 Atl. 813. 568; 64 S. W. 888. i"A presumption of law arises 3 Ulrich v. Ulrich, 136 X. Y. 120; that such service is gratuitous." 18 L. R. A. 37; 32 X. E. 606. IMPLIED CONTKACTS AND QUASI-CONTKACTS. 1191 The force of the presumption has been held to depend upon the relationship of the parties, the presumption becoming " weaker and therefore more easily rebutted as the relationship recedes."* It is for the person alleging that such mutual services were not gratuitous to prove that fact.^ An express contract to make compensation between the persons between whom such services are rendered is sufficient to create a liability on the part of the person receiving such services to make compensation therefor,® as where a father promises to make compensation to his son for furnishing board and lodging/ Thus where a brother-in-law induces his sister-in-law, who was a member of the family and worked in her brother-in-law's store as well as in the family, to believe that she would receive pay for such services, he is liable to her therefor, even if he did not intend to make such compen- sation, and was jesting when he made the statement on which she relied/ It is not necessary, however, that the express con- tract between the parties should be enforceable. Even though for some reason it may be unenforceable as a contract, it may, nevertheless, suffice to show that the services were not rendered gratuitously.^ Thus, where a step-daughter rendered services for her step-father under an oral agi'eement which is unenforceable by reason of the statute of frauds, she may recover a reasonable compensation for the services thus rendered.^** So where a mother makes an agreement with the guardians of her insane son when he comes to live at her house that she shall be paid for caring for him out of his estate, such agreement is sufficient to show that such services were not rendered gratuitously even 4Gorrell v. Taylor, 107 Tenn. W. Va. 261; 76 Am. St. Eep. 815; 568; 64 S. W. 888. 33 S. E. 257. 5 Enger v. Lofland, 100 la. 303 ; 7 Harris v. Orr, 46 W. Va. 261 ; 69 N. W. 526; Bixler v. Sellman, 76 Am. St. Rep. 815; 33 S. E. 257. 77 Md. 494; 27 Atl. 137. 8 Piatt v. Durst, 42 W. Va. 63; sFrailey v. Thompson (Ky.), .32 L. R. A. 404 ; 24 S. E. 580. 49 S. W. 13; O'Connor v. Beckwitli, s Ellis v. Gary. 74 Wis. 176; 17 41 Mich. 657; 3 N. W. 166; Johanke Am. St. Rop. 125; 4 L. R. A. 55; V. Schmidt, 79 Minn. 261 ; 82 N". 42 N. W. 252. W. 582; Jackson v. .Tackson. 96 Va. lo Ellis v. Gary, 74 Wis. 176; 17 165; 31 S. E. 78; Harris v. Orr, 46 Am. St. Rep. 125; 4 L. R. A. 55; 42 N. W. 252. 1192 PAGE ON CONTRACTS. though the contract was unenforceable because the apix)intnient of the guardians was void/^ So it has been held that recovery can be had for services rendered upon the understanding that the party for whom they were rendered would make com- pensation by will, where he dies without making any such pro- vision in his will, even though there was no agreement as to the amount of such compensation/^ So, if there has been an ex- press enforceable contract, the person rendering such services may, in case of a breach of such contract for any reason, recover a reasonable compensation for such services.^^ Thus, where a son supported his father for life, under a contract by which the father was to devise to the son certain realty, and the father by reason of subsequent insanity, was unable to perform such con- tract, the son may recover a reasonable compensation for such services, not exceeding the value of the land to be devised to him/* So recovery may be had for services rendered by a son to a father under a contract which has since been rescinded, in which case the son is obliged to account for personalty re- ceived by him under such contract and not surrendered when the contract was terminated/^ Whiile an express contract is the most satisfactory and safe method of showing that the services were not intended to be gratuitous, it is not, however, necessary. If the facts and circumstances of the case show that there is in fact an understanding between the person rendering the ser- vices and the person for whom they were rendered, that a com- pensation should be made therefor, the person rendering the services may recover a reasonable compensation.*^ Such under- iiJessup V. Jessup, 17 Tnd. App. leMurrell v. Studstill, 104 Ga. 177; 46 N. E. 550. G04; 30 S. E. 750; Neish v. Gan- 12 Schwab V. Pierro, 43 Minn, non, 198 111. 219; 64 N. E. 1000; 520; 46 N. W. 71. Warren v. Warren, 105 111. 568; i3Johanke v. Schmidt, 79 Minn. Morton v. Rainey, 82 111. 215; 25 261; 82 N. W. 582. Am. Rep. 311; Jones v. Adams. 81 1* Hudson V. Hudson, 90 Ga. 581; 111. App. 183; Collins v. Williams, 16 S. E. 349; s. c, 87 Ga. 678: 27 21 Ind. App. 227: .52 N. E. 92; Rid- Am. St. Rep. 270; 13 S. E. 583. ler v. Ridler, 103 la. 470; 72 N. W. 15 Walker v. Walker, 100 la. 99; 671; Gorrell v. Taylor, 107 Tenn. 69 N. W. 517; reversing on rehear- 568; 64 S. W. 888; Westcott v. ing, 63 N. W. 331. Westcott, 69 Vt. 234; 39 Atl. 199; IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1193 «ianding, however, must be clearly proven/^ or as some courts have held, there must be an express contract or its equivalent/* Some courts have gone further than this. They have declared that such a contract can be proven only by direct and positive evidence, and that it is erroneous to charge the jury that such a contract may be proved by clear and satisfactory evidence ;^^ or have si>oken as if an express contract were indispensable."*' This statement, however, carries the rule too far. The true rule is, that the rendition of such services is not by itself any evidence that there was an agreement between the parties for compensation, and does not of itself impose any liability upon the party for whom they were rendered. 'No liability exists, unless there is proof of a contract, implied or expressed for compensation ; and the rendition of such services is not such evi- dence. It has even been held not to be necessary to have in fact a mutual understanding that the services rendered between rela- tives are for compensation in order to create a liability therefor. If the person rendering such services expects to be compensated and the circumstances under which they are rendered are such that the person for whom they are rendered must, as a reason- able man, know that they are rendered for compensation, he is liable therefor even if he did not in fact know of such expecta- tion.^^ Declarations to third persons, made by the person for whom services are rendered by a member of his family, to the effect that such services are valuable and will be paid for are not sufficient to show the existence of a contract to pay there- for.^^ §785. Extra work. If A has agreed with B to perform a certain definite and specific contract for B, without giving his entire time to B's Broderick v. Broderick, 28 W. Va, 20 Murphy v. IMurphy, 1 S. D. 385. 316; 9 L. R. A. 820; 47 N. W. 142. 17 Price V. Price, 101 Ky. 28; 39 21 Spencer v. Spencer, 181 Mass. S. W. 429. 471; 63 N. E. 947. 18 Jackson v. Jackson, 96 Va. 22 Donovan v. Driscoll, 116 la. 165; 31 S. E. 78. 339; 90 N. W. 60. 19 Bash V. Bash, 9 Pa. St. 260. 1194 PAGE ON CONTRACTS. employment, A may recover for services rendered by him in ad dition to those specified in the contract if B either requests A tu render such extra services or vohmtarily accepts the benefit of them, when B knows, or should know, that A expects compensa- tion therefor/ Extra work done while performing a building contract is a common illustration of this principle." One who performs such extra work at the request of the owner may re- cover, even though such request is oral and the contract provides that extra work must be done only on a written order ; or though such extra work is done on written and oral orders of an author- ized agent, while the contract provides that it can be done only on written orders signed by the owner of the building.^ So A, who has an express contract to act as a salesman for B within a specified territory, may recover his necessary expenses and a reas- onable compensation for sales made outside of the territory specified, if made at B's request.* So if A has a contract to furn- ish B with board, A may recover a reasonable compensation for services rendered to B as a nurse during illness.^ So where A has contracted to furnish B with power to operate a certain derrick, A may recover for extra power furnished after B has put in a new derrick requiring greater power.® If on the other hand, B has entered into a contract of employment with A, whereby B is to give to A his time, for a compensation fixed by the week, month and the like; the question whether B is entitled to any compensation for extra work depends, in the absence of an agreement for compensation therefor, on whether the extra work done is of the same general character as that for which B was 1 Fulton County v. Gibson, 158 2 Fulton County v. Gibson, 158 Ind. 471; 63 N. E. 982; Evans v. Ind. 471; (33 N. E. 982. McConnell, 99 la. 326; 63 N. W. 3 Norwood v. Lathrop, 178 Mass. 570; 68 N. W. 790; Escott v. \\niite, 208; 59 N. K 650. 10 Bush. (Ky.) 169; Norwood v. *McEwen v. Loucheim, II5 N. C. Lathrop. 178 Mass. 208; 59 N. E. 348; 20 S. E. 519. 650; Pfeiffer v. Michelsen, 112 5 Pfeiffer v. Michelsen, 112 Mich. Mich. 614; 71 N. W. 156; McEwen 614; 71 N. W. 156; Gates v. Gil- V. Loucheim, 115 N. C. 348; 20 S. mer (Tenn. Ch. App.), 48 S. W. E. 519; Trow v. Forsyth, 70 Vt. 280. 498; 41 Atl. 501; Isham v. Parker, e Trow v. Forsyth, 70 Vt. 498; 3 Wash. 755; 29 Pac. 835. 41 Atl. 501. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1195 employed, or not. If it is of the same general character B can- not recover/ So where A employs B to collect rents at two hun- dred and fifty dollars a month, B cannot recover for extra ser- vices in preventing squatters from settling on A's land, in ex- pelling them therefrom and in retaining exclusive possession for A.^ So if A hires B as a domestic servant at a certain com- pensation per week, B cannot recover for extra work because A became sick after B had entered on her employment, and A's work was thereby greatly increased.'' Thus if B is to work for A for a certain sum per month, B cannot recover for work done on Sunday,^" especially if he knew in advance that Sunday work was expected, and if he had received the stipulated wages without objection.^^ So if a statute limits the number of hours of a day's work,^" or provides that in the absence of agreement to the contrary a certain number of hours shall constitute a day's work,^^ an employee who is hired at a certain sum by the week, month and the like cannot recover for extra work in the absence of express contract or of facts from which an agreement to pay for extra work may be inferred. This is true especially if the employee knows in advance that the work for which he is em- ployed will necessitate some work overtime,^'* or if the employee is notified that if he wishes to keep his position he must do the extra work,^^ especially as before the action here decided he had applied for and received an allowance for extra work. So where A is hired by B to work for him at a certain rate per month, which amount A receives regularly without objection, 7 United States v. Martin, 94 U. Tnd. App. 251; 36 N. E. 452; Mc- S. 400; Guthrie v. Merrill, 4 Kan. Carthy v. New York, 96 N. Y. 1; 187; Sehiirr v. Savigny, 85 Mich, 48 Am. Rep. 601. 144; 48 N. W. 547. i3 Luske v. Hotchkiss^ 37 Conn. 8 Cany V. Halleck, 9 Cal. 198. 219; 9 Am. Eep. 314; Schurr v. 9Voorhees v. Coombs, 33 N. J. Savigny, 85 Mich. 144; 48 N. W. ■L. 494. 547. 10 Guthrie v. Merrill, 4 Kan. 187. i4 Luske v. Hotchkiss, 37 Conn. "Lowe V. Marlowe, 4 111. App. 219; 9 Am. Rep. 314; Lowe v. Mar- 420. low. 4 111. App. 420. 12 United States v. Martin, 94 is United States v. Martin, 94 U. U. S. 400; Grisell v. Feed Co., 9 S. 400. lli)6 PAGE ON CONTRACTS. giving a receipt in full therefor, A cannot thereafter claim com- jjensation for extra time.^® So, even if the statute provides that extra compensation shall be made for extra work unless tliere is a provision in the contract to the contrary, it has been held that an expert photographer who accepts employment for a year at twenty dollars a week must know that the nature of his work must require some extra work, and therefore it is an implied term of such contract that no compensation is to be made for extra work.^'' Conversely, under a statute providing that ten hours shall constitute a day's work unless there is a provision in the contract to the contrary, an employer cannot insist that his employee who is hired at two dollars and a half a day, must esti- mate his time where he has worked less than ten hours on some days by counting the number of hours worked and dividing by ten/^ Some courts have used language intimating that only an express contract to pay for extra work could create liability in such cases,^** though the same authority concedes that such a proposition, while not containing prejudicial error under the facts of the particular case, is too broad for the statement of the rule in a legal treatise. "° The true rule is that a contract to pay for extra work may be either express, or implied from the surrounding facts,"^ but that the mere rendition of such extra services with the knowledge of the person for whom they are rendered, or voluntary acceptance by him does not constitute such a contract. Some authorities, however, hold that a re- quest for work, in addition to the number of hours fixed by statute as a day's work, creates an implied liability to pay therefor. Thus, where A had agi'eed to work for B at eight shillings a day, payable weekly, and the statute provided that ten hours should constitute a day's labor unless there was some provision in the contract to the contrary, it was held that if B lePorster v. Green, 111 Mich. 20 Cany v. Halleck, 9 Cal. 198. 264 ; 69 N. W. 647. -^ Luske v. Hotchkiss, 37 Conn. i7Sehurr v. Savigny, 85 INIicli. 219; 9 Am. Eep. 314; Grisell v. 144: 48 N. W. 547. Feed Co., 9 Ind. App. 251; 36 N. E. 18 Brooks V. Cotton. 48 N. H. 50. 452 ; McCarthy v. Xew York, 96 N. 19 Cany v. Halleck, 9 Cal. 198. Y. 1 ; 48 Am. Rep. 601. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1197 requested A to work at niglit, B could recover for the number of hours in excess of ten per day which he had worked. The fact that he received his weekly pay for day labor, was held to be no bar for a subsequent recovery for his work at night, nor was the fact that he waited five years after his employment ter- minated before making his claim, held to bar him.^^ If the extra work done is of a character different from the general nature of that for which the employee was hired, a pre- vious request by his employer to do such work,^^ or a subsequent voluntary acceptance thereof,-* will of itself create an implied agreement to pay therefor."^ Thus if an agent of the United States to sell lands belonging to the United States is hired to sell other lands belonging to Indians a contract to pay a reason- able compensation is implied."'' So an agent of a corporation at a monthly salary who does extra work in getting subscriptions to the corporation's stock under the offer of the corporation to pay two per cent commission for obtaining such subscriptions can recover such commission."' So where A who is the mayor of a city and a member of its council is employed by the council to act as attorney for the city in a pending case, he may re- cover. ^^ If the adversary party to the contract requests a depar- ture therefrom which necessitates additional labor and material, the contractor may recover a reasonable compensation for such extra labor and material if no express contract is made there- for."^ Thus extra recovery may be had by a railroad contractor for putting in a temporary track in order to enable the company to secure subscriptions which were conditioned on the comple- 22Bachelder v. Biekford, 62 Me. 27 Cincinnati, etc., R. R. v. Clark- 527. son, 7 Ind. 595. 23 United States v. Brindle, 110 ssNiles v. Muzzy, 33 Mich. 61; U. S. 688; Niles v. Muzzy, 33 Mich. 20 Am. Rep. 670. 61 ; 20 Am. Rep. 670. 29 Henderson Bridge Co. v. Mc- 24 Cincinnati, etc., R. R. v. Clark- Grath, 134 U. S. 260; Smith v. Salt son, 7 Ind. 595. Lake City, 83 Fed. 784; Cook 25 Converse v. United States, 21 County v. Harms, 108 111. 151; How. (U. S.) 463. Evans v. McConnell. 99 la. 326; 63 26 United States v, Brindle, 110 X. W. 570; Isaacs v. Reeve (N. J. U. S. 688. Eq. ) , 44 Atl. 1 ; Delafield v. West- 1198 PAGE ON COISTTKACTS. tioii oi the road by a certain date.'^*' On the other hand one who does no more than he agreed to do cannot recover more than the contract price because the performance is less profitable than he had anticipated.^^ No recovery can be had as for extra work for work necessary in the performance of the contract though not sj>ecifically mentioned therein,^^ as for blasting rock when necessary for the excavation of drains required by the specifications f^ digging to an extra depth,^* or driving piling^^ to obtain a secure foundation required by the contract, or under- pinning an adjoining building to make an excavation and put in a foundation required by the contract.^^ One who does more work or furnishes more material than is required by the terms of the contract without the consent of the adversary party can- not recover therefor. Thus a contractor who has agreed to rub down brick work cannot recover as for extra work though he uses acid in cleaning the walls.^^ So one who has agreed to put in glass for three elevations of a building, and without the knowl- edge of the owner, and in spite of. the fact that the owner has warned him not to put in more than the contract calls for, puts glass in on the fourth elevation also, cannot recover extra com- pensation.^^ 'Ro recovery can be had oy a contractor for extra work made necessary by the failure of the contractor or his em-i ployees to comply with the specifications.^" ISTo recovery can be had for extra work if the party claiming to have done such work knows before he does it that the adversary party claims that such work is required by the provisions of the contract.*" field, 77 Hun 124; Lee v. Brayton, ss Stewart v. Cambridge, 125 18 R. I. 232; 26 Atl. 256; Rhodes Mass. 102. V. Cliite, 17 Utah 137; 53 Pae. 990. 36 Ashley v. Henahan, 56 O. S. 30 Central Trust Co. v. Condon, 559 ; 47 N. E. 573. 67 Fed. 84. 37 Chamberlain v. Hibbard, 26 Or. 31 Contracts for excavating under 428; 38 Pac. 437. directions of the owner's engineer. 38 Pittsburgh Plate Glass Co. v. Huckestein v. Inclined Plane Co., MacDonald, 182 Mass. 593; 66 N. 173 Pa. St. 169; 33 Atl. 1108. E. 415. 32Brigham v. Martin, 103 Mich. 39 O'Brien v. New York. 139 N". 150; 61 N. W. 276. Y. 543; 35 N. E. 323. 33 Lee V. Brayton, 18 R. I. 232; 4o O'Brien v. New York, 139 N. 26 Atl. 2.56. Y. 543; 35 N. E. 323. 34Ruecking v. McMahon, 81 Mo. App. 422. IMPLIED CONTRACTS AKD QUASI-CONTRACTS. 119& In such case, if the contractor is willing to take the chances of the correctness of his interpretation of the contract, he should perform the contract as he understands it, and enforce his con- tract rights against the adversary party.*^ Even if an archi- tect's certificate is by the contract necessary to recovery, he may recover without it if his interpretation of the contract is correct, since it is in such case witliheld unreasonably.*^ If the con- tract requires a written order from the architect for extra work no recovery can be had for extra work done without such order if the owner or his authorized agent have neither of them waived such provision.*' The architect has no authority in such cases to bind the agent by an oral order, by virtue alone of his employment as architect with power to order alterations in writing. The owner may waive such provision, however, and thus bind himself by oral modifications of the contract.** §786. Work and labor done under a contract void for mistake as to an essential element. If A and B attempt to make a contract, and by reason of some mistake in the formation no contract is made, A, who has per- formed work and labor under such supposed contract,^ may re- cover a. reasonable compensation therefor. Thus A cut timber on B's land and made it into lumber, believing that he had a special contract with B for payment therefor. In fact, owing to a mutual misunderstanding as to the time when payment was to be made there really was no contract between A and B. It was held that A could recover a reasonable comj^ensation for his services.^ A superintended the construction of a building for 41 O'Brien v. New York, 139 N. ** Perry v. Potashinski, 169 Mass. Y. 543; 35 N. K 323. 351; 47 N. E. 1022. 42 O'Brien v. New York, 139 N. Y. i Collins v. Stove Co., 63 Conn. 543; 35 N. E. 323. 356; 28 Atl. 534; Rowland v. R. R., 43 0'Keefe v. Church, 59 Conn. 61 Conn. 103; 29 Am. St. Rep. 175; 551; 22 Atl. 325; Stewart v. Cam- 23 Atl. 755; Russell v. Clough, 71 bridge, 125 Mass. 102; Ashley v. N. H. 177; 93 Am. St. Rep. 507; 51 Henahan, 56 0. S. 559; 47 N. E. Atl. 632; Burton v. Mfg. Co., 132 573; Vanderwerker v. R. R., 27 N. C. 17; 43 S. E. 480. Vt. 130. 2 Russell V. Clough, 71 N. H. 177; 1200 PAGE ON CONTRACTS. B, believing that he was working under a special contract. In fact by mistake as to an essential fact there was no meeting of the mind. An instruction to the jury that under such facts, A could recover a reasonable compensation for his services was held proper.^ §787. Work done for one at request of another. If A requests B to perform services for C, the mere fact of the request does not create an implied contract on the part of A to pay B for such services. The same rule applies to delivering goods.^ Thus if a bystander calls in a physician to act for an injured j)erson who cannot act for himself,^ or a father calls in a physician to attend to an adult child who is sick at his father's house, and for whose support the father is not liable,^ or A re- quests a physician to care for A's insane brother B, who is not a member of A's family,* the person summoning the physician is not liable to him for his services. A different result was reached where A, who had been brought up in B's family, had gone away to work, but had returned to B and was then living' m B's house and doing domestic work without any specific con- tract for compensation, became sick and B called in X, a physi- cian to attend to A. It was held a question of fact whether the understanding between X and B was that B was personally liable to X for X's seiwices to A.^ If A requests B to furnish board and lodging to C and others, employees of A, A is not liable to B unless he has promised to pay therefor.^ If, how- ever, A agrees with a hospital that A will pay for the care of 93 Am. St. Rep. 507; 51 Atl. 632. 658; Meisenbach v. Cooperage Co., 3 Burton v. Mfg. Co., 132 N. C. 45 Mo. App. 232. 17; 43 S. E. 480. 3 Rankin v. Beale, 68 Mo. App. 1 " Furnishing or delivering to a 325; Boyd v. Sappington, 4 Watts, third party, though upon defend- (Pa.) 247. ant's request, does not as a matter •* Smith v. Watson, 14 Vt. 332. of law imply an undertaking by s Clark v. Waterman, 7 Vt. 76; defendant to pay." Conrad Na- 29 Am. Dec. 150. tional Bank v. Ey., 24 Mont. 178, c Conrad National Bank v. Ry., 183; 61 Pac. 1. 24 Mont. 178; 61 Pae. 1. 2 Starett v. Miley, 79 111. App. IMPLIED CONTKACTS AND QUASI-CONTKACTS. 1201 B till further notice, A cannot end his liability by giving such notice unless B has so far recovered as to be capable of being moved.^ §788. Goods sold and delivered. An action for goods sold and delivered can be maintained wherever goods have been sold and delivered by one person to another under an express agreement which is incomplete in that the contract price had not been fixed.^ Under some circum- stances this action will not lie for goods delivered under a con- tract void for mistake as to an essential element. A sold and delivered coal to B under what both parties believed to be a special contract. The contract was, however, void for mistake : A understanding that the transaction was a cash sale while B understood that the price of the coal was to be credited on A's account. A did not, on learning of the mistake, demand return of coal; but insisted that B should keep it under the contract as claimed by A. B used it. It was held that B was not liable to A for a reasonable compensation for the coal in the absence of estoppel.^ This action also lies where property has been taken by one person with the consent of the owner, the parties intending the title to pass although no express agreement has been made.^ Thus, a mortgagee of chattels, holding under a mortgage which provides that the mortgagor may sell the prop- erty in the name of the mortgagee, may recover under common counts in assumpsit against one who has bought such property from the mortgagor ;* even though under an ordinary mortgage, 7 St. Barnabas Hospital v. Elec- 3 Carney v. Cook, 80 la. 747; 45 trie Co., G8 Minn. 254; 40 L. R. A. X. W. 919; Rumford Falls Power 388; 70 N. W. 1120. Co. v. Paper Co., 95 Me. 186; 49 iMcEwen v. Morey, 60 111. 32; Atl. 876; Krey v. Hussman, 21 Mo. James v. Muir, 33 Mich. 223 ; Smith App. 343 ; Indiana Mfg. Co. v. V. Summerfield. 108 N. C. 284; 12 Hayes, 155 Pa. St. 160; 26 Atl. 6; S. E. 997; Graflf v. Callahan, 158 Goodland v. Le Clair, 78 Wis. 176; Pa. St. 380; 27 Atl. 1009. 47 N. W. 268. 2 Concord Coal Co. v. Ferrin, 71 * Flood v. Bntzbach. 114 Mich, N. H. 331; 93 Am. St. Rep. 496; 613; 68 Am. St. Rep. 501; 72 N. 51 Atl. 283. W. 603. 76 1202 PAGE ON CONTRACTS. the mortgagee could not recover ou the common counts from a third person who bought mortgaged property.^ A builder who uses goods and materials belonging to another is liable to such other for their value in this form of action.^ Thus, A had a contract to erect a building for B. A got the iron work for such building from X. The contract between A and B pro- vided that no material should be estimated or paid for until used in the permanent construction of the building. X delivered certain beams under his contract with A, but before they were used in the building, A forfeited his contract, B let a new con- tract to C, and C used this iron. It was held that X could re- cover from C for such iron.'^ A, a car-wheel company, shipped to B, the receiver of a railroad, a number of car-wheels in excess of his order. B refused to accept the entire number thus ship- ped, but A asked B to unload the wheels, and hold them subject to A's order, and to be paid for by B only in case he actually used them. Subsequently, at a receiver's sale, X, who knew all these facts, bought these wheels among other property. X was held liable to A for the value of such wheels in implied contract.^ Goods sold and delivered to one person may constitute a liabil- ity against another, at whose request and in reliance upon whose promise to pay, such goods were sold and delivered.® Thus, a lumber company drew orders for money upon itself in favor of its employees. A storekeeper, at the request of the lumber company, received these orders in payment of goods sold to such employees. It was held that the storekeeper could recover from the lumber company for the goods sold and delivered.^" One person is not liable for goods sold to another, though he may have received the proceeds thereof. Thus A, a creditor of B's, agreed that B could continue in business if A's bookkeeper could take charge of the cash and the drawing of checks. A tempo- sTate V. Torcoutt, 100 Mich. 308; « jSTorthwestern, etc., Co. v. Ry, 58 N. W. 993; Warner v. Beebe, 47 94 Wis. 603; 69 N. W. 371. Mich. 435; 11 N. W. 258. » Cox v. Peltier, 159 Ind. 355; 6 Clare v. Johnson (Ky.). 56 S. 65 N. E. 6; East, etc., Co. v. Barn- W. 5. well. 78 Tex. 328; 14 S. W. 782. T Bavley v. Anderson, 71 Wis. i^Enst. etc., Co. v. Barnwell, 78 417; 36 N. W. 863. Tex. 328; 14 S. W. 782. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1203 rarv arrangement of that sort was entered into, which either party could avoid at will. Under such arrangement, A was not liable for goods sold and delivered to B." If goods are sold to A upon A's credit, the fact that they are delivered to B, and that B received the benefit of them, does not make B liable there- for.^^ Thus a railroad company is not liable for material fur- nished to its main contractor for use upon its road,^^ nor is the owner of property liable for material furnished to the main contractor, and used by such contractor in building a house upon such proi>erty.^* The right of one whose property has been wrongfully taken by the tort of another, to maintain an action in assumpsit against such other is discussed elsewhere. IV. Money Had and Received. §789. General nature of rig-ht. If A receives money which belongs to B, under circumstances which give A no right thereto, but which bind A on principles of justice and fairness to repay such money to B, the Common Law allowed B to sue as on contract, although there was no express contract, and no real implied contract.^ This principle has sur- vived in our law, and an action as upon contract will lie for money had and received wherever one person has received money which belongs to another, and which in justice and right should be returned." Since the contract alleged in the plaintiff's com- 11 Wood-Dryer Grocery Co. v. debt and gives tliis action, founded Bank, 110 Ala. 311; 20 So. 311. in the equity of the pUiintiff's case 12 Peirce v. Closterhouse, 96 as it were upon a contract." Mich. 124; 55 N. W. 663. Moses v. Macferlan, 2 Burr. 1005, 13 Alabama, etc., Ry. v. Moore, 1008; quoted in Bates-Farley Sav- 109 Ala. 393; 19 So. 804. So with ings Bank v. Dismukes, 107 Ga, work and labor. Woodruff v. 212, 217; 33 S. E. 175. Rochester, etc., R. R. Co., 108 N. Y. 2 Gaines v. Miller, 111 U. S. 395j 39; 14 N. E. 832. Pauly v. Pauly. 107 Cal. 8; 48 Am. i4Limer v. Traders' Co., 44 W. St. Rep. 98; 40 Pac. 29; Brown V. Va. 175; 28 S. E. 730. Woodward. 75 Conn. 2.54; 53 AtL 1 " If the defendant be under an 112; Bates-Farley Savings Bank v. obligation from the ties of natural Dismukes, 107 Ga. 212; 33 S. E. justice to refund, the law implies a 175; Wilson v. Turner, 164 111. 398; 1204 PAGE ON CONTRACTS. plaint is often purely fictitioiiSj the plaintiff's right to recover in a contract does not depend upon any principles of privity of con- tract between the plaintiff and the defendant, and no privity is necessary.^ The plaintiff's right to recover is governed by prin- ciples of equity, although the action is one at law.* The plaintiff may, in most cases, recover at law in assumpsit where he could have compelled an accounting for the money received by the de- fendant, had the action been in equity.^ If A has in his posses- 45 N. E. 820; Long v. Straus, 107 Ind. 94; 57 Am. Rep. 87; 6 N. E. 123; 7 N. E. 763; Comer v. Hay- worth, 30 Ind. App. 144 ; 96 Am. St. Eep. 335; 65 N. E. 595; Garrott v. Jaffrey, 10 Bush. (Ky.) 418; Pease V. Bamford^ 96 Me. 23; 51 Atl. 234; Spencer v. Towles, 18 Mich. 9; School District v. Thompson, 51 Neb. 857; 71 N. W. 728; Gangwer V. Fry, 17 Pa. St. 491; 55 Am. Dec. 578; Matthies v. Herth, 31 Wash. 665; 72 Pac. 480. 3 Moses V. Macferlan, 2 Burr 1005; Rapalje v. Emory, 2 Dall. (U. S.) 51; Bank of the Metropolis V. Bank, 19 Fed. 301; Levinshon v. Edwards, 79 Ala. 293; Kreutz v. Livingston, 15 Cal. 344; Brown v. Woodward, 75 Conn. 254; 53 Atl. 112; Eagle Bank v. Smith, 5 Conn. 71; 13 Am. Dee. 37; Bates-Farley Savings Bank v. Dismukes, 107 Ga. 212; 33 S. E. 175; Allen v. Stenger, 74 111. 119; Glascock v. Lyons, 20 Ind. 1 ; 83 Am. Dec. 299 ; Calais v. Whidden, 64 Me. 249; Howe v. Clancey, 53 Me. 130; Lewis v. Saw- yer, 44 Me. 332 ; Mills v. Bailey, 88 Md. 320; 41 Atl. 780; Mason v. Waite. 17 Mass. 560; Walker v. Conant, 65 Mich. 194; 31 N. W. 786. (Decided on demurrer to pe- tion. On hearing on the merits no liability to make compensation was found to exist. Walker v. Conant, 69 Mich. 321; 13 Am. St. Rep. 391; 37 N. W. 292; Richardson v. Drug Co., 92 Mo. App. 515; 69 S. W. 398; Fogg V. Worster, 49 N. H. 503 ; Rob. erts v.- Ely, 113 N. Y. 128; 20 N. E. 606; Salem v. Marion County, 25 Or. 449; 36 Pac. 163; Madden v. Watts, 59 S. C. 81; 37 S. E. 209; Finch V. Park, 12 S. D. 63; 76 Am. St. Rep. 588; 80 K W. 155; Siems v. Bank, 7 S. D. 338; 64 N. W. 167; Colgrove v. Fill- more, 1 Aik. (Vt.) 347; Soder- berg v. King County, 15 Wash. 194; 55 Am. St. Rep. 878; 33 L. R. A. 670; 45 Pac. 785; Ela v. Express Co., 29 Wis. 611; 9 Am. Rep. 619. 4Rushton v. Davis, 127 Ala. 279; 28 So. 476; Brainard v. Colchester, 31 Conn. 407; Jackson v. Hough, 38 W. Va. 2.36; 18 S. E. 575. "An action of assumpsit for money had and received is a remedy equitable in its nature existing in favor of one person against another when that other person has received money either from the plaintiff or a third person under such circum- stances that in equity and good conscience he ought not to retain the same and which ex aequo et bono belongs to plaintiff." Mer- chants', etc., Bank v. Barnes, 18 Mont. 335, 337; 56 Am. St. Rep. 586; 47 L. R. A. 737: 45 Pac. 218. 5 Jackson v. Hough, 38 W. Va. 236; 18 S. E. 575. IMPLIED CONTKACTS AND QUASI-CONTRACTS. 1205 sion a fund the equitable title to which is in B, and A's only duty in connection therewith is to pay it over to B, B may sue at law for money had and received." Two general classes of questions are presented under the topic of money had and re- ceived. The first concerns the rights of the parties. It is, whether, under the facts the plaintiff has a right of recovery from the defendant. The second concerns the form of the ac- tion. It is, whether an action in contract can be brought if upon the facts the plaintiff has a right to recover in some form of action. The answer to the latter question, however, decides whether the right in question can be classed with contract rights or not. Recovery cannot ordinarily be had in this form of ac- tion if there is a' special contract between the parties. Thus if a note is given for the loan the right of the lender to recover is on the note alone.^ However if X obtains a loan from A through X's agent B, and B's note is given therefor, X may ignore the note and sue A on the contract of loan. §790. Elements of right to recover in this action. — Money or equivalent must be received. In order to support an action for money had and received, a person against whom the action is brought must be shown to have received, either money, ^ or something which is taken as the 6 Rushton V. Davis, 127 Ala. persons sought to be charged have 279; 28 So. 476. received money belonging to him or 7 Pettyjohn V. Bank, 101 Va. Ill; to which he is entitled. That is 43 S. E. 203. the fundamental fact upon which 1 St. Louis, etc., Co. v. McPeters, the right of action depends. The 124 Ala. 451; 27 So. 518; Palmer purpose of such action is not to re- V. vSoott, 68 Ala. 380; National cover damages but to make the Trust Co. V. Gleason, 77 N". Y. 400; party disgorge, and the recovery 33 Am. Rep. 632; Huganir v. Cot- must necessarily be limited by the ter, 102 Wis. 323; 72 Am. St. Rep. party's enrichment from the alleged 884; 78 N. W. 423. "The rule is transaction." Limited Investment quite elementary that to enable a Association v. Investment Associa- person to maintain an action for tion, 99 Wis. 54, 58; 74 N. W. 633; money had and received it is neees- quoted in .Tohnson v. Abresch Co., sary for him to establish that the 109 Wis. 182; 85 N. W. 348. 1206 PAGE ox CONTKACTS. equivalent of money," belonging to the person by whom the a*^' tion is brought or for his use. On the one hand, an action can not be had for money had and received where it is not skown that the person against whom it was brought, received either the money or property belonging to or for the use of the plaintiff.^ This is simply an application of the general principle, that an action on an implied contract cannot be made the means of en- forcing damages for breach of an express contract.* One ex- ception to this principle is the case where the only thing re- maining for the party in default to do was to pay the money.® Assumpsit for money had and received cannot be made the means for recovering damages for breach of a contract to erect improvements for plaintiff's use, upon a right of way conveyed by plaintiff to defendant,*' nor damages for a bailee's selling lum- consigned to him at less than the price agreed upon.' If B sues one to whom B alleges that insurance money has been paid to the use of B,^ B cannot recover if the evidence discloses that no money was had and received, but that B's action is really for a breach of a contract to effect the insurance. Thus an action for money had and received will not lie in favor of B against A where X has done work for A, which should have inured in whole or in part to B.^ To allow recovery in this form of action the money paid must have come to the possession of the person against whom the action is brought, or have been paid to his use. B had given his wife, X, some money which she claimed to have invested. Subsequently X forged B's name to a note 2 Snapp V. Stamvood, 65 Ark. 222; N. M. 601; 62 Pac. 1101; Royalton 45 S. W. 546; Buckeye (Township v. Turnpike Co., 14 Vt. 311. of) V. Clark, 90 Mich. 432; 51 N. s Stewart Mfg. Co. v. Mfg. Co., W. 528; Matthewson v. Powder 67 K J. L. 577; 52 Atl. 391. Works, 44 N. H. 289. e Labadie v. Ry., 125 Mich. 419; 3 St. Louis, etc., Co. v. McPeters, 84 N. W. 622. 124 Ala. 451; 27 So. 518; National 7 Anderson v. Corcoran, 92 Mich. Trust Co. V. Gleason, 77 N. Y. 400; 628; 52 N. W. 1025. 33 Am. Dec. 632. ^ Johnston v. Abresch Co., 109 4 P. Dougherty Co. v. Gring, 89 Wis. 182; 85 N. W. 348. Md. 535; 43 Atl. 912; Stewart Mfg. » Craig v. Matheson, 32 N. S. Co. V. Mfg. Co., 67 N. J. L. 577; 52 452; Hassard v. Tomkins, 108 Wis. Atl. 391; Bushnell v. Coggshall, 10 186; 84 N. W. 174. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1207 which X discounted. Subsequently an action was brought against B and X on this note. X then forged B's name to an- other note, which X discounted. A part of the proceeds of this note she applied to paying off the note sued upon in the first action, and part she aj)plied to paying certain bills for which her husband was primarily liable. X told B that the money thus received came from the former investment of B's money. It was held that A, who had furnished the money on the second forged note, could recover from B that part. of the money ap- plied to the payment of the bills mentioned, but could not re- cover that part applied to the payment of the first forged note, since B was not liable thereon, and the money did not come into his hands, nor was it paid for his use.^" So if an action is brought against a merchant for money had and received, on the ground that goods bought by his agent without his authority were delivered at his store and sold by him, the evidence must show that he sold such goods and received the money therefor.^* A and B agreed to buy land on their joint interest, and A was to negotiate the purchase ; B furnished part of the purchase money, and subsequently, on learning that A's representations that the price agreed upon was the lowest possible price and did not in- clude any commissions to A for making the purchase, were false, and that A had an agreement with the vendee whereby A was to receive a certain amount of the last payment to be made as his commission, refused to pay the rest of the purchase price due from him. B was not allowed to recover for money had and received, where A subsequently completed the contract and re- sold the land at a loss/" A had a contract for the performance of certain work and labor, and X was a subcontractor. The man whom X employed boarded with B, and when A paid X's em- ployes A retained in his possession the amount owing by each 10 Mechanics' Bank v. Woodward, 12 Blewitt v. MoRae. 100 Wis. 74 Conn. 689; 51 Atl. 1084; and see 153; 75 K W. 1003. The court Brown v. Woodward, 75 Conn. 254; held that there had been no reseis- 53 Atl. 112. sion in this case, and that B's rem- 11 Lesher v. Loudon, 85 Mich. 52 ; edy was by action against A for 48 N. W. 278. fraud. 1208 PAGE ON CONTRACTS. for board fnrnislied by B. B bad a contract with X to operate a boarding bouse for tbe men at certain sum per week, but B bad no contract witb A binding A to retain tbe amount due for such board. A paid tbe men and retained sucb amounts; but when sucb men were paid, X owed A for supplies to an amount in excess of tbe amount so retained by A. It was beld that B bad no right of action against A for money bad and re- ceived, since A had received nothing from any person to the use of B.^^ A, B and C took part in a forgery, by means of which X was induced to pay to A a sum of money. It was held that X might recover from A, B and C for money had and received, if the understanding of the wrongdoers was that A was collect- ing it for their common interests. X's right of recovery was not affected by the fact that A had appropriated all the frauds of this crime, and that B and C bad in fact received no part there- of from A.^* A, X's agent, forged A's name on certain stock certificates, sold them to B, deposited the money in A's name and then embezzled it. It was held that this was not such re- ceipt by A that B, on being obliged to return the stock certifi- cates, could maintain an action against A for such money had rind received.^^ On tbe other band, it is not necessary that the person against whom an action for money had and received is brought, should have received money belonging to, or to the use ofj the plaintiff. If be has taken something as the equivalent of the money, he is liable in this action.^® Thus, where he laEriekson v. Construction Co., ing to establish his interest in the 107 Wis. 49; 82 N. W. 694; dis- proceeds." National Trust Co. v. tinguishing, Sterling v. Ryan, 72 Gleason, 77 N. Y. 400, 408; 33 Am. Wis. 36; 7 Am. St. Rep. 818; 37 Rep. 632. N. W. 572, as a case where A had is Fay v. Slaughter, 194 111. 157; agreed with B to retain such money, 88 Am. St. Rep. 148; 56 L. R. A. 14 National Trust Co. v. Gleason, 564; 62 N. E, 592; reversing, 94 77 N. Y. 400; 33 Am. Rep. 6.32. 111. App. 111. " To charge a party in an action of is Snapp v. Stanwood, 65 Ark. that character the receipt of money 222; 45 S. W. 546. (Qualifying by him directly or indirectly must Hutchinson v. Phillips, 11 Ark. be established. His complicity in 270, on this point, the syllabus of the crime is not the cause of action, which restricts such action to. cases but only an item of evidence tend- where money only has been rpcejved.) IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1209 takes a note belonging to another as cash, he may be liable to the real owner thereof for money had and received/^ So, where A, B's agent, accepts from X, from whom he is collecting money for B, a note signed by B and endorsed by X, as part payment of such sum, A is liable to B for money had and received.^* So when he receives an order as the equivalent of cash, and converts it, or its proceeds, to his own use, he is liable for money had and received/® If X, a debtor, conveys to his creditor. A, his stock of goods, and A agrees to pay debts owing by X to B, and othe^ creditors of X, in consideration of such conveyance, A may be liable to B and such other creditors for money had and received, where he takes such goods, treats them as the equiva- lent of money, and converts them into money.^** If A agrees to pay B a certain sum of money out of the proceeds of the sale of certain agricultural produce, B may, after a reasonable time, maintain an action against A for money had and received for B's use in the absence of a showing by A that he has not yet sold such produce, since, after a reasonable time has elapsed, it will be presumed that such sale has been made.^^ Xo recovery can he had in an action for money had and received through mis- take, unless either the money or something equivalent thereto has been in fact received."" Thus A believed that he owed B one hundred and fifty dollars. B knew that the amount was only fifty dollars. In settlement of such claim, A delivered to B a horse which A valued at one hundred and fifty dollars, and Seavey V. Dana, 61 N. H. 339; Mat- is Snapp v. Stanwood, 65 Ark. thewson v. Powder Works. 44 N. H. 222; 45 S. W. 546. 2s9. "To maintain assumpsit for i9 Bavins v. Bank (1900), 1 Q. money had and received it must B. 270; Buckeye (Township of) v. appear that the defendant received Clark, 90 Mich. 432; 51 N. W. 528; the money due the plaintiff or some- Bowen v. School District, 36 Mich, thing which he had received as and 149. insL^ad of it, or which he had ac- 20 Potts v. Bank, 102 Ala. 286; tually or presumptively converted 14 So. 663. intt/ money before suit." Peay v. 21 Barfield v. IMcCombs, 89 Ga, Ri.igo, 22 Ark. 68, 71; quoted in 799; 15 S. E. 666. Swapp V. Stanwood, 65 Ark. 222 ; 22 Hendricks v. Goodrich, 15 Wis. >iJ S. W. 546. 679. IT Seavey v. Dana, 61 N. H. 339. 1210 PAGE ON CONTRACTS. Avliicli was worth about that sum. It was held that A could not recover from B one hundred dollars as money had and recieved by mistake."^ This case involved the principle that A could not affirm in part and rescind in part. He could not affirm the payment so as to treat his original liability as discharged and vet avoid it as to the terms upon which the payment was made. In the settlement of a claim between A and a village, an illegal assessment imposed by the village was credited on A's account, the village refusing to pay A unless such credit was made. It was held that this did not amount to a payment by A of the illegal assessment, but that it was merely a case of A's failing to collect all that he was entitled to under his original cause of action. Accordingly, limitations ran from the time A's original claim against the village for work accrued, and not from the date when this settlement was made."* Recovery may be had, however, if something is delivered which is taken as money. Thus, where a payment is made in small notes, which were not money and which Avere illegally issued, but which were in fact used as money, recovery can be had in such an action.^^ So where an agent discharges a principal's debt by applying thereon a debt of the agent's, this is treated as the equivalent of money."® A, by mistake, gave a negotiable note to B in'^ settlement of an account which had already been paid. It was held that this might be treated as a payment of such account, the note being taken as money, and might justify a recovery."^ A subsequently, after learning the facts, paid the note voluntarily. It was held that he had no right of action to recover the amount thus paid by him, although under proper pleadings he might recover the amount of the note for the over payment made by giving it. This action lies only in favor of the person who is the owner of the money which is the subject of the action. If A receives B's money, X cannot maintain an 23 Hendricks v. Goodrich, 15 Wis. 6 Gill (Md.) 68; 46 Am. Dec. 655. 679. 20 Beardsley v. Eoot, 11 Johns. 24Brundage v. Port Chester, 102 (X. Y.) 464; 6 Am. Dec. 386. X. Y. 404 ; 7 X. E. 398. 27 Gooding v. Morgan, 37 Me. 25 Baltimore, etc., Rv. v. Faunce, 419. IMPLIED CONTRACTS AND QUASI-CQNTRACTS. 1211 action against A therefor. Thus, where X drew a draft which was subsequently altered, the amount being raised, and the drawee bank accepted and paid such raised draft, and charged X in its account for the amount of the draft as raised, X cannnot recover against A for money had and received, since A has not received any of X's money.^^ An action for money had and received cannot be maintained against one who is known to the lender to be merely a surety, receiving none of the money advanced. ^^ §791. Person receiving money must not be entitled in good con- science to retain it. The right of one person to recover money which belongs to him, and which is paid to another person, depends not on whether the person to whom such payment was made could have compelled it by law if it had not been made voluntarily,, but upon whether the person to whom the money is paid is entitled in equity and good conscience to retain it.^ Examples of payments which the payee could not have compelled by law, but which when made the payor cannot recover, are to be found in gifts and voluntary payments.^ This principle is not lim- ited, however, to cases of payment which are technically volun- tary. AA-liere a widow pays the just debt of the estate of her husband out of the assets of such estate which are in her pos- session, and subsequently she is appointed administratrix, she cannot recover on behalf of the estate the money thus paid by her without authority where there are no other creditors whose rights are interfered with, since the party to whom the money is paid is entitled in good conscience to retain it; and 28 National Bank v. Bank, 122 N. defiance if he has the best right to Y. 367 ; 25 N. E 355. it." Goddard v. Seymour, 30 Conn. 29 Arbuekle v. Templeton, 65 Vt. 394, 401 ; Lime Rock Bank v. Plirap- 205; 25 Atl. 1095. ton, 17 Pick. (Mass.) 159; 28 Am. 1" However tortiously it (the Dec. 286; Le Breton V. Pierce, 2 money) may have come into his All. (Mass.) 8. hands, the defendant can in this - See § 797. form of action set the plaintiff at 1212 PAGE ON CONTKACTS. if such payment had not been made, he would have had a right to enforce payment from the administratrix in her official ca- pacity.^ If A received money from X for the use of B, A is liable to B therefor, even if A could not have enforced the pay- ment to himself of such money from X, or if he was not bound to B to receive such money when paid in. Thus, A, a factor, took out insurance on butter which was consigned to him, and received the premiums therefor from his principal, B. Subse- quently A claimed that loss was sustained upon B's butter, among other lots of butter ; and the insurance money was paid to A, in part upon such loss. A was held liable to B for the amount of such insurance money representing the loss upon B's butter, although such butter w^as not in fact damaged ; and A was not bound by a contract with B to procure such insur- ance.* An application of this principle is often found in cases of payment by mistake of fact. Thus, A owed B, but B's right of action was barred by the statute of limitations. A subsequently paid B under mistake as to the existence of such defence. It was held that A could not recover.^ So where A loaned two hundred eighty dollars to B and by mistake the note was drawn for two hundred thirty dollars, and B re- paid two hundred eighty dollars to A, B cannot recover the fifty dollars ?rom A as paid under a mistake of fact.*' So where a retired army officer on half pay accepted a position in the diplomatic service, which by statute deprived him of his rank and pay in the army, and after his diplomatic service was ended he performed military duties for which he received pay, the United States cannot recover such pay, since even if he was not an officer de jure he was de facto, and as such entitled to compensation.' A, a grantee of a mortgagor X, and B, a mort- gagee, both believed that certain land owned by A was covered by a mortgage to B. A made a payment to B to procure the 3 Rainwater v. Harris. 51 Ark. ^ Hubbard v. Hickman, 4 Bush. 401; 3 L. E. A. 845; 11 S. W. 583. (Ky.) 204. 4 Fish V. Seeberger, 154 111. 30; "Foster v. Kirby. 31 Mo. 496. 39 N. E. 982. '' Badeau v. United States, 130 U. S. 439. IMFX.IED CONTRACTS AND QUASI-CONTRACTS. 1213 release of such land from the lien of such mortgage. Subse- quently, in a foreclosure suit between B and X, such payment was credited upon the amount of the mortgage debt. A ma- jority of the court held that inasmuch as B had changed his position in veliance upon such payment, and his rights had been fixed by the decree, and A, who had opened the negotiations, and had asked B to receive the payment, was the more negli- gent of the two, A could not recover such payment.® Another application of this principle is found in payments made by duress or compulsion of law.^ Where A had erected buildings upon the land of B, a minor, under a contract with B's father, whereby A was to erect certain buildings, collecting rents there- from as payment, it has been held that after A has erected such buildings and collected rents to apply on the cost thereof, he is not liable to the minor for such rents received, as it would not be just to give the minor the benefit of such material and labor without any compensation therefor, even though the contract is unenforcible." Taxes which have been paid, cannot be recovered because of technical irregularity in the proceed- ings affecting the substantial rights of the parties, even though such irregularity might have been a ground of resisting the pay- ment in the first instance.^^ The same principle applies to money paid on street assessments, which are technically, but not substantially, invalid.^^ §792. Party from whom recovery is sought must be placed in statu quo. In order to recover in an action for money had and received the person from whom recovery is sought must be placed in f)tatu quo, unless he is a wrongdoer. A common illustration of this rule exists when money paid to an agent to be paid over sRichey v. Clark, 11 Utah 467; 394; Wiesmann v. Brighton, 83 40 Pac. 717. Wis. 550; 53 N. W. 911. 9 See §§ 256, 799 et seq. 12 Newcomb v. Davenport, 86 la. 10 McKee V. Preston, 66 Cal. 522; 291; 53 N. W. 2.32; Hopkins v. 6 Pac. 379. Butte, 16 Mont. 103; 40 Pac. 171. 11 Goddard v. Seymour, 30 Conn. 1214 PAGE ON CONTKACTS. to his principal and by him so paid over is sought to be recovered from the agent. If B pays money to A as agent for X, and A pays that money over to X, B cannot recover such money from A if A's agency was disclosed when the payment was made, and A himself has committed no wrongful act in inducing or com- pelling B to pay him the money/ Thus, where a purchase price of a ward's land was paid to the guardian, and the guar- dian remitted the money to his ward, the guardian is not liable in an action for money had and received, to a broker suing for commissions for the sale of such property.^ So, selectmen of a town, who in good faith determine the value of a pauper's support furnished him by the town, which amount under the law he must refund to the town before he is put on the voting list, are not liable to him for money had and received, where in good faith they fix an excessive amount which he pays them and they pay into the town treasury.^ Where property, is sold for a sidewalk assessment, and the proceeds of such sale are by law to be paid over to the contractor entitled thereto, a pur- chaser at such sale cannot recover from the city to which the money is paid, and he pays it over to the contractor though the assessment proves to be illegal, and the purchaser takes nothing by reason of his purchase.* If, however, the fact of agency is not disclosed to the person making the payment, at the time of such payment, the person making the payment may recover from the agent of whom he pays the money, if the facts are such that he could have recovered from the principal had the payment been made direct to the principal. Thus, where A, an investment company, made a loan for its principal, C, to B, and B supposed that she was dealing with A alone, and B 1 Elliott V. Swartwout, 10 Pet. N. H. 143, where the selectmen were (U. S.) 137; Wilson v. Wold, 21 liable for taxes, the payment of Wash. 398; 75 Am. St. Rep. 846; 58 which had been wrongfully exacted Pac. 223. fis a condition precedent to allow- 2 Hudson V. Scott, 125 Ala. 172; ing the person so paying them to 2G So. 91. vote. 3 Brown v. Harden, 61 N. H. 15; * Richardson v. Denver, 17 Colo, distinguishing. Ford v. Holden, 39 398 ; 30 Pac. 333. • IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1215 makes over-payments to A, by way of usury, which B is permitted to recover, B may recover from A, though A has forwarded such payments to C.^ If payment is made under protest, this is sufficient notice to the person receiving it to make him liable therefor if, under the circumstances, he would have been liable to refund a payment for his own benefit, even if he has paid over to his principal the money thus received.* §793. Action does not enlarge substantive rights. In allo^jving an action for money had and received, the law intended to allow a simple remedy for a recognized right, and did not intend to create a right where there was none already. B had been dealing with X, a stock-broker, and the result of the transaction showed a balance in B's favor. B requested A, X's agent, for a settlement of that balance, and asked A to pay it. A finally made such payment, expecting X to remit the amount to him at once. X was insolvent, and such amount was never remitted. It was held, that A could not recover such amount from B.^ A, the publisher of a newspaper, made a subscription to a fund for the relief of the families of certain firemen who had lost their lives in the discharge of their duty, and published an appeal in his newspaper for other subscrip- tions. A number of subscriptions were made, and the money was paid to A. It was held that the only child and heir of one of the firemen had no right of action against A to recover his part of the money so paid in as money had and received, since, under the terms of A's request the disposition of the fund thus paid in was left to his discretion and judgment.^ While it did not affect the legal rights of the parties, the dispute arose in this way: plaintiff was a minor, the only son and heir of one of the firemen for the benefit of whose families the money was collected. A consulted a legal adviser, and decided to 5 Thompson v. Investment Co., i Clippinger v. Starr, 130 Mich. 114 la. 481; 87 N. W. 438. 463; 90 N. W. 280. 6 Elliott V. Swartwout, 10 Pet. 2 Hallinan v. Hearst (Cal.), 62 (U. S.) 137. Pac 1063. 1216 PAGE ON CONTRACTS. deposit the plaintiff's share of the fund with a trust company until the plaintiff came of age. The lower court made certain orders as to the disi^osition of the income of that fund for the benefit of the plaintiff during his minority, and to which orders A did not except. In the Supreme Court, the plaintiff was the party complaining of error in the proceedings of the court below, in refusing to turn over the entire fund to himself or his guardian. Where an officer is holding over as de facto treasurer, his successor, not having been elected legally, a school district cannot compel him to pay over funds lawfully in his possession by an action for money had and received.^ If A obtains money from B, under circumstances which make him liable to refund, and uses the money in whole or in part to discharge a valid debt which A owes X, and X takes without collusion or fraud, B cannot recover in an action against X for money had and received.* Thus, where A borrowed money of X, and to secure the same he gave a forged note and mort- gage apparently signed by third j^ersons, and subsequently A borrows money from B and gives another forged mortgage, and with a part of the money thus borrowed pays the first mortgage to X, B cannot recover from X.^ So, where A gets money from B by giving a note to which A sigTis the name of his principal without authority, and A uses the money thus obtained to pay debts of his principal, which A should have paid out of those of X, which should have been in A's hands but which A in fact had embezzled, it was held that B could not recover from X for the money thus used.® So, where B, a vendee of land, has a right to rescind the sale, he cannot recover in an action for money had and received from one who has received no part of the purchase price, except what was paid to him by the vendor, A, as commission for bringing about the 3 School District v. Smith, 67 Vt. Am. St. Rep. 391 ; 37 X. W. 292. 566 ; 32 Atl. 484. 5 Walker v. Conant, 69 Mich. 321 ; 4 Craft V. R. R., 150 Mass. 207; 13 Am. St. Rep. 391; 37 N. W. 292. 5 L. R. A. 641; 22 N. E. 920; 6 Craft v. R. R., 150 Mass. 207-; Walker v. Conant, 69 Mich. 321 ; 13 5 L. R. A. 641 ; 22 N. E. 920. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1217 sale/ So, where A gets money from B by a forged draft, and "witii part of the proceeds thereof he discharges a debt which he owes X, who knows nothing of the forgery, and who surrenders to A a note endorsed by a third j>erson, B cannot recover from X.^ So, where A, who is shipping hogs under an arrangement with B, a firm of commission brokers, whereby he agreed to consign the hogs to B, and draw upon B with each consignment, and to use the money thus obtained in paying for the hogs, it was held that where A took part of this money and paid a debt owing by him to a bank, X, B cannot recover such money from X, although X knew of the arrangement under which the money was received, since the relation of A to B was that of mere debtor and creditor.'' So, Avhere X, the cashier of a bank, who was also county treasurer, owes certain taxes to the state as county treasurer, and draws a draft which he signs as cashier of his bank, on another bank in which his bank has deposited funds, and forwards such draft to the state in pay- ment of the taxes due him, which draft is accepted and paid, the bank of which X is cashier cannot recover from the state, although the cashier never paid the bank for such draft.^° The court held that the fact that the cashier had signed the draft, was no notice to the state that he was using the bank's funds for his individual debt.^^ If facts exist which discharge the plaintiff's right of action upon an express contract, the same facts will prevent him from waiving the express contract, and suing on an implied contract. ^^ Thus, where A, had deposited money with B to invest, and subsequently A and B had an 7 Limited Investment Association 25 N. Y. 293, where one who took V. Investment Association, 99 Wis. the president's individual check cer- 54; 74 N. W. 633. tified to by him as president was 8 Alabama National Bank v. Riv- charged with notice that the presi- ers, 116 Ala. 1; 67 Am. St. Rep. dent had no authority to accept his 95; 22 So. 580. individual check on behalf of the sHurlburt v. Palmer, 39 Neb. bank. 158; 57 N. W. 1019. 12 Hammer v. Downing, 39 Or. 10 Goshen National Bank v. State, 504; 64 Pac. 651; 65 Pac. 17, 990; 141 N. Y. 379; 36 N. E. 316. 67 Pac. 30. 11 Distinguishing, Claflin v. Bank, 77 1218 PAGE ON CONTEACTS. accounting and made a settlement, this accounting will not onlv bar an action upon the express contract between A and B, but also will bar an action for money had and received/^ If A has paid money to B under such circumstances that he cannot re- cover it from B, and such payment has discharged a debt due from C to B, A's right to recover from C cannot be litigated in an action brought by A against B, even if C is made a part;' thereto/^ §794. Classes of rights. — Receipt of money from third pwson. In determining the right of one whose money has been placed in the hands of another to recover the same, we must distin- guish between two general classes of cases. In the first cls>,ss, the party who receives the money of another, receives it from a third person in whose hands it is, without the consent of the real owner thereof. In the second class of cases, the person receiving the money receives it from the real owner, or from a third person, with the consent of the real owner. The chief distinction in legal effect, between these two classes of cases, is this : In the first class, we are not embarrassed by the question whether the payment was a voluntary one. In the second cla?s, in addition to the question of ownership of the original fund and the right to recover the same, presented in the first cla?«!, we have the further complicating question whether the payment was not a voluntary one, since if the payment was voluntary no recovery can be had although all the other facts might be such as to entitle the original owner to recover. If A receives money from X which belongs to B, without B's consent, the general rule is, that in the absence of special circumstances B may recover such money from A.^ A public officer, as a sheriff who has retained money which he claims to be due him as 13 Hammer v. Downing, 39 Or. i United States v. Bank, 96 U. S. 504; 64 Pae. 651; 65 Pac. 17, 990; 30; Bayne v. United States, 93 U. 67 Pac. 30. S. 642; Brand v. Williams, 29 Minn. 14 Holt V. Thomas, 105 Cal. 273; 238; 13 N. W. 42; Knapp v. Hobbs, 38 Pac. 891 ; Langevin v. St. Paul, 50 N. H. 476 ; Haeblef v. Myers, 132 49 :Minn. 189; 51 X. W. 817. N. Y. 363; 28 Am. St. Rep. 589; 15 IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1219 commissions, but which belongs to a board of education, is liable in an action for money had and received.^ A public quasi corporation, as a county which receives taxes and applies them all to its own use when it should pay bonds issued by a town out of such taxes, is liable to such town therefor.^ So, if a county receives money belonging to other persons without au- thority, it must refund to such persons.* Thus, where taxes are paid in to a county by a sheriff, when they should have been paid to a city, the city may recover.^ So, where a county is divided, and the original county is legally entitled to taxes which were due when the division was made, but which had not then been paid, but the state officials through whose hands such taxes passed, pay a part thereof to the new county, the original county may recover such taxes from the new county.® A stockholder who receives dividends when the corporation is insolvent, and the dividends are paid out of the capital of the corporation, knowing of such condition, may be compelled to repay such dividends in an action brought by the receiver of the company.^ Where a school trustee expends money for the actual use and benefit of township schools, which by law he is required to pay over to another school corporation, such town- ship is liable to such corporation for the amount of money thus expended.^ If a wife has taken money belonging to her husband and paid premiums on an insurance policy, taken out by her upon his life without his authority, the husband may recover the premiums, thus paid from the insurance company.^ L. Ic, A. 588; 30 N. E. 963; State 6 Colusa County v. Glenn County, V. fet. Johnsbuiy, 59 Vt. 332; 10 117 Cal. 434; 49 Pac. 457. At/. 631. 7 Warren v. King, 108 U. S. 389; 2 Socorro Board of Education v. Davenport v. Lines, 72 Conn. 118; Kobinson, 7 N. M. 231 ; 34 Pac. 44 Atl. 17. 2?5. 8 Center School Township v. 3 Strough V. .Jefferson County, School Commissioners, 150 Ind. 168; 119 N. Y. 212; 23 X. E. 552. 49 N. E. 961 (citing Argenti v. San 4 Chapman v. County of Doug- Francisco, 16 Cal. 255; Merrill v. lass, 107 U. S. 348. Marshall County, 74 la. 24; 36 N". 5 Salem r. Marion County, 25 Or. W. 778). 449; 36 Pac. 163. fl Metropolitan Life Tns. Co. V Trende (Ky.), 53 S. W. 412. 1220 PAGE ON CONTKACTS. Wliere the statute provided that property to the value of one thousand dollars is exempt from administration for the benefit of the widow and minor children, and such property is delivered to the widow, a minor child may recover its share from the widow in an action for money had and received, where the widow refuses to pay to such child its share of such amount.^* A village incorporated under an unconstitutional act, borrowed money from the state for school purposes. The county, as the agent of the state, collected from the village, and the township in which it was situated, the entire amount thus borrowed, and paid it to the state, and then collected another and additional sum as a part of such loan. It was held that the township could collect from the county the amount thus collected by the county in excess of the actual loan, the county having retained such excess of amount, and not having paid it over to the state.^^ If X is indebted to B, and A collects from X the amount of this indebtedness under such circumstances that X is still liable to B, and cannot plead the payment to A as discharge of his liability to B, the question is presented whether B can recover from A for money had and received. Where A gave B a note, w^hich B indorses before maturity to C, and X broiight suit against B and garnisheed A, and A disclosed his indebtedness to B, and paid the amount of the indebtedness to the sheriff, who forwarded it to X, it has been held that C has no right of action against X on the theory that he had no claim to the spe- cific fund, his right of action being against A.^^ If X is indebted to B under circumstances which give B a property right in a specific fund, and A collects that fund from X under circumstances which leave X still liable to B, it has been held that B has an election to sue A or X at his option. If he sues A, A cannot defend on the theory that B has a right of action against X.^^ On the loLanforcl v. Lee, 119 Ala. 248; 53 N. W. 982; Merchants', etc., 72 Am. St. Rep. 914; 24 So. 578. Bank v. Barnes, 18 Mont. 3.35; 56 11 Milwaukee v. Milwaukee Coun- Am. St. Rep. 586; 47 L. R. A. 737; ty, 114 Wis. 374; 90 N. W. 447. 45 Pac. 218. 12 Corey V. Webber, 96 ]\Iich. 357; i3 Bates-Farley Savings Bank v. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1221 other hand, it has heen held that if B sues X, and obtains a judgment, this amounts to an election, and B cannot afterwards maintain an action against A." Thus, where A had deposited money in a savings bank, in trust for his wife, B, and the bank had given a pass-book for such money, and after the death of A and B, B's executor had demanded payment, but had been refused because he did not have the pass-book, and A's executor produced the pass-book and was paid by the bankj, dn(i B's exec- utor sued A's executor and obtained a judgment, execution upon which was returned because no property could be found, and B's executor then sued the bank, it was held that the first action and judgment amounted to an election, and operated as a bar to the second action/^ If B has in some way obtained a lien upon a fund or property belonging to X, and this fund or property is delivered to A, he takes with full knowlecjge of B's lien, B can enforce the amount of his lien in an action against A for money had and received. Thus, where B seizes a certain property belonging to X on a judgment, and A with knowledge of the judgment induces the sheriff to sell the attached property and pay the proceeds to him, X can maintain an action against A for money had and received.^^ So, where the sheriff wrong- fully pays to A money in his hands which he should have paid to B, B has an election to sue the sheriff or A.^^ So, where B Dismukes, 107 Ga. 212; 33 S. E. was entitled to receive it." Bates- 175. "He chose the latter alterna- Farley Savings Bank v. Dismukes, live; he saw fit to ratify the un- 107 Ga. 212, 218; 33 S. E 175. authorized collection by the defend- i4 Fowler v. Savings Bank, 113 ant and the unauthorized payment N. Y. 450; 10 Am. St. Rep. 479; by the association, and it does not 4 L. R. A. 145; 21 X. E. 172. now lie in the mouth of the de- is Fowler v. Savings Bank, 113 fendant to say, when called upon to N. Y. 450; 10 Am. St. Rep. 479; 4 pay over to him the money which it L. R. A. 145; 21 N. E. 172. The unlawfully collected upon his and court said that a different result his assignor's claims against the would have been reached had this building and loan association that been a special deposit, his only remedy is against the asso- 1 6 Finch v. Park. 12 S. D. 63; eiation. . . . Under such cir- 76 Am. St. Rep. 588; 80 N. W. 155. cumstances the law implies a prom- n Brand v. Williams, 29 Minn, ise on the part of the defendant to 238; 13 N. W. 42. pay the money over to the one who 1222 . PAGE ox CONTRACTS. obtained a judgment in an action against X, and A claiming a lien on the property, intervenes, and has the attachment vacated, and A then induces the sheriff to pay him the money made on such attachment, and on appeal the attachment is held valid, and B takes judgment against X, and shows an execution which is returned unsatisfied, X can maintain an action against A for money had and received/* Where a de facto officer re- ceives his fees and retains them the liability of the public cor- poration to the officer de jure is discharged ; but the de jure officer may recover such fees from the de facto officer as money had and received/^ A legal right to a definite sum must be sho^\Ti to enable the plaintiff to recover. A and B, each owning stock in a corporation, agreed jointly to sell their interests to X. By a secret agTeement between X and A, A was to receive additional compensation. B sued A to recover his share of such amount. It was held that whatever B's rights might be in an action of deceit, or in a suit in equity for an accounting, he could not maintain this action.^ If A holds money in his hands which is claimed by B and X, and A voluntarily pays such money over to X, A is liable to B for money had and received if B proves to be the real owner thereof."^ Thus, where X stole B's money and deposited it with A, w^ho took it in good faith, but before payment A was notified that the money was really that of B, A is liable to B for money had and received if after such notice he pays it to X on X's order.^^ Since com- pensation fixed by law for members of a board is not to be dis- isHaebler v. Myers, 132 N. Y. 84. This case impliedly holds that 363; 28 Am. St. Rep. 589; 15 L. R. a right to money in equity does not A. 588; 30 N. E. 963. The court always give a right to this action said that such action could be main- at law. tained by "those who would have 21 McDuffee v. Collins, 117 Ala. been entitled to the money on the 487; 23 So. 45; Osborn v. Bell. 5 reversal of the order, provided it Den. (N. Y.) 370; 49 Am. Dec. had not been paid to the defend- 275; Hindmarch v. Hoffman, 127 ants." Pa. St. 284; 14 Am. St. Rep. 842; isCoughlin v. McElroy, 74 Conn. 4 L. R. A. 368; 18 Atl. 14. 397; 92 Am. St. Rep. 224; 50 Atl. 22 Hindmarch v. Hoffman, 127 Pa. 1025. St. 284; 14 Am. St. Rep. 842; 4 L. 20Cummings v. Synnott, 120 Fed. R. A. 368; 18 Atl. 14. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1223 tributed among them in proportion to the work actually done bj each, one member may recover from another for money had and received where such member has collected the salary due the board but retained a disproportionate amount under the claim that he had performed more work than the other mem- ber. ^^ Where, contrary to law, attorneys' fees are included in the amount for which property is advertised on foreclosure of a mortgage, and the amount of the mortgage and such attorneys' fees is bid therefor, the mortgagor may recover from the party to whom such excess amount is paid.^* Thus, if the mortgagee bids in the property for the amount of the mortgage debt, costs, and such fees, the mortgagor may recover such surplus from him.^^ If costs are included by the sheriff, which he has no right to include, as where the mortgagee buys the land in, and such costs are paid over by the sheriff to the county, the mortgagor may recover such amount from the county.^*^ If an excessive judgment is rendered, and the judgment creditor bids in the land for the full amount of such judgment and costs, and such judg- ment is subsequently corrected, the judgment debtor may re- cover such difference as surplus from the judgment creditor. ^^ If a check payable to B is forwarded to him, but stolen by X before B receives it, and X deposits such check with a bank, A, which collects the check and pays the proceeds to X, B may recover from such bank in an action for money had and re- ceived.^® §795. Receipt of money to discharge specific obligation due another. If X is in some way liable to B, and places money in A's hands with which A is to pay B'& debt, B may enforce such 23 stone V. Towne, 67 N. H. 113; Wash. 194; 55 Am. St. Rep. 878; 29 Atl. 6.37. 33 L. R. A. 670; 45 Pac. 785. 24 Wilkinson v. Baxter's Estate, 27 Mitchell v. Weaver, 118 Ind. 97 Mich. 536; 56 N. W. 931. 55; 10 Am. St. Rep. 104; 20 N. E. 25Eliason v. Sidle, 61 Minn. 285; 525. 63 N. W. 730. 28 Buckley v. Bank. 35 N. J. L. 26 Soderberg v. King County, 15 400; 10 Am. Rep. 249; Shaffer v. 1224 PAGE OlSr CONTRACTS. liability against A if A is not holding such money solely as X's agent/ Thus, if X puts in A's hands money to pay A's debt to B for goods furnished, B may recover from A." An arrangement was made between A, B and X, by which it was agreed that A was to discount a certain note which X owned, and out of the proceeds was to pay to B one thousand dollars ; in reliance upon which arrangement, B was to extend credit to X in the sum of one thousand dollars. B extended such credit, and A refused to perform the contract on his part, but dis- counted the note for his own benefit. A was held liable to B for money had and received.^ B held a mortgage on certain personal property belonging to X. X agreed to cause the pro- ceeds of such property to be paid to B if B would refrain from foreclosure proceedings. X made an arrangement whereby the purchase price was paid to A under a contract whereby A was to pay X's debt to B out of such funds. It was held that B could recover from A.* If A holds money as X's agent, under instructions to pay B, A is not liable to B as where he subse- quently delivers such money to X on X's demand.^ Where an agent has made an unauthorized contract on behalf of his prin- cipal, the fact that the agent turns over personal property other than money to his principal, and reimburses him for any possible loss by reason of such contract, does not make the principal liable to the adversary contracting party in an action for money had and received. Thus, B held a bill of lading issued by X, an agent of A, a steam-ship company, without any authority, and before the goods were received. X subsequently transferred his property to A, to protect A against any loss on account of such bill of lading. B could not recover from A in an action for money had and received.^ If money is McKee, 19 O. S. 526; Farmer v, 3 Ehrman v. Rosenthal, 117 Cal. Bank, 100 Tenn. '187; 47 S. W. 491 ; 49 Pac. 460. 234. 4Coppage v. Gregg, 127 Ind. 359; 1 Logan V. Talbott, 59 Cal. 652. 26 N. E. 903. 2Benner v. Weeks, 159 Pa. St. 5 Lewis v. Sawyer, 44 Me. 332. 504; 28 Atl. 355. e Lazard v. Transportation Co., 78 Md. 1; 26 Atl. 897. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1225 delivered to A by B for a specific purpose, and he refuses to perform the agreement under which it is received, but under- takes to apply the money to a liability owing to him by B, A is liable for such money in an action for money had and received to the person for whose benefit it was so deposited. Thus, where A received from C, the agent of B, money, to be applied upon the purchase price of stock bought by C for B, and such money was furnished by B, A cannot apply such money to a debt due to him from C, even if A does not know when the money is received that it is B's money.^ B, as sheriff, had incurred certain expenses in caring for a property seized by him in his official capacity, and such expenses were included in a bill of costs, and were collected as a part of the judgment. The entire amount of the judgment was paid to A, the attorney for C, the successful party. A credited the entire amount upon his account with C. It was held that B could maintain an action against A for such expenses, even if B could not prove that A had received this money under an express agreement to pay B out of such proceeds.* If money belonging to B, or on which B has a lien, is paid by X to A, A cannot retain such money and apply it to the discharge of the debt due to him from X.^ Thus, where X owns certain cattle, upon which he had given a lien to a bank, B, of which John D. Myers was president, and X's agent, under an arrangement with B, was to sell the cattle and forward the money to a bank. A, of which John Q. Myers was president, the bank A could not retain the money and apply it to an indebtedness from that bank to X, but was liable over to B for such amount. ^° B held certain receivership certificates which, by an arrangement between him- TBearce v. Fahrnow, 109 Mich. 73 N. W. 667; Cady v. Bank, 46 315; 67 N. W. 318. Neb. 756; 65 N. W. 906; Bank v. 8 Knott V. Kirby, 10 S. D. 30; King, 57 Pa. St. 202; 98 Am. Dec. 71 N. W. 138. 215; Rock Springs Nat. Bank v. 9 Union Stock Yards Bank v. Liiman, 6 Wyom. 123, 167; 42 Pac. Gillespie, 137 U. S. 411; Central 874; 43 Pac. 514; reversing. 5 National Bank v. Ins. Co., 104 U. Wyom. 159; 38 Pac. 678. S. 54; Burtnett v. Bank, 38 Mich. lo People's National Bank v. My- €30; Alter v. Bank, 53 Neb. 223; ers, 65 Kan. 122; 69 Pac. 164. 1226 PAGE ON CONTRACTS. self and A, were to have priority over those held by A. It was held that if A received payment of his certificates to the exclu- sion of B, B could maintain an action against A therefor/'^ So where B, a beneficiary of a life insurance policy taken out by A, had agreed with A to pay a debt owing by A to X out of such policy, it has been held that B's executor may maintain an action against A for the amount of such debt.^^ §796. Payment by one not beneficial owner. If one person who has in his hands money of which another person is the beneficial owner, a payment by the holder of such money to a third person is not such a voluntary payment by the real owner thereof as to prevent him from recovering it if it is made without his authority and if not in payment of a claim justly due from him. The principle of voluntary payments does' not apply where the recovery is sought by one having a beneficial interest in the money paid, and the payment was not made by him but by some one acting as his trustee, agent, and the like, and. the person receiving the money knew that the person paying it was acting in such capacity. Thus, where an assignee for the benefit of creditors pays debts out of prior- ity, the creditor who receives the money and notes out of the trust estate, is liable to the creditors to whom such money should have been paid.^ Money of a principal, paid by his agent without authority, may be recovered by his principal from the person to whom it was paid.^ Thus if a bank cashier pays his own debt by entering the amount thereof as a credit on the pass-book of his creditor, and such creditor draws cheeks against such credits and the checks are paid, the bank may re- cover the amount of such checks from such creditor f so if the cashier of a bank gives the draft of the bank in payment of his 11 Fletcher v. Waring, 137 Ind. S.) 221; Dob v. Halsey, 16 Johns. 159; 36 N. E. 896. (N. Y.) 34; 8 Am. Dec. 293; Mt. i2Maybury v. Berkeiy, 102 ]\Iich. Verd Mills Co. v. McElwee (Tenn. 126; 60 N. W. 699. Ch. App.), 42 S. W. 465. 1 Dickie V. Northup, 24 N. S. 121. 3 Hier v. Miller, — Kan. — ; 63 2 Rogers v. Batchelor, 12 Pet. (U. L. R. A. 952; 75 Pac. 77. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1227 own debt, the receiver of the bank may recover from such cred- itor.* Accordingly, payments of public money form an excep- tion to the ordinary rules as to voluntary payments and pay- ments under mistake of law, since the payments are always made by public officers, and not by the public, which is really beneficially interested in such money. Thus, money which is paid out by public officers in violation of the law, may be re- covered from the person to whom it is paid.^ The fact that the payment was voluntary on the part of the officer, does not pre- vent the public from recovering.'^ A government may recover money paid by a public officer under an erroneous construc- tion of the law, and without any legal authority therefor.^ So if money is paid out by a public officer upon a contract, which the corporation represented by him had no power whatever to make,^ or upon a claim which the corporation had no power under any circumstances to allow," such payment may be recov- ered. Accordingly, if a public officer draws money from the public treasury,^'' as his compensation,^^ such as his salary,^^ 4 Campbell v. Bank, 67 N, J. L. United States, 102 U. S. 426; 301; 91 Am. St. Rep. 438; 51 Atl. United States v. Bank, 15 Pet. (U. 497. S.) 377. 5 Weeks v, Texarkana, 50 Ark. « Griffin v. Shakopee, 53 Minn. 81; 6 S. W. 504; McLean v. Mont- 528; 55 N. W. 738; Chaska v. Hed- gomery County, 32 111. App. 131; man, 53 Minn. 525; 55 N. W. 737. Snelson v. State, 16 Ind. 29 ; Heath 9 Ward v. Barnum, 10 Colo. App. V. Albrook, — la. — ; 98 N. W. 496; 52 Pac. 412. 619; Adams v. Power Co., 78 Miss. loAda County v. Gess, 4 Ida. 887; 30 So. 58; Demarest v. New 611; 43 Pac. 71; Huntington Coun- Barbadoes, 40 N. J. L. 604; People ty v. Heaston, 144 Ind. 583; 55 V. Fields, 58 N. Y. 491 ; (Board, etc., Am. St. Rep. 192; 41 N. E. 457; of) Richmond County v. Ellis, 59 N. 43 N. E. 651; St. Croix County v. Y. 620; Commonwealth v. Field, 84 Webster, 111 Wis. 270; 87 N. W. Va. 26; 3 S. E. 882; Tacoma v. 302. Lillis, 4 Wash. 797; 18 L. R. A. "Weeks v. texarkana, 50 Ark. 372; 31 Pac. 321; Frederick v. 81 ; 6 S. W. 504; Council BluflFs v. Douglas County, 96 Wis. 411; 71 Waterman, 86 la. 688; 53 N. W. N. W. 798. 289; Union County v, Hyde, 26 Or. 6 Ft. Edward v. Fish, 156 N. Y. 24; 37 Pac. 76. 363; 50 N. E. 973. 12 Ellis v. Board, etc., 107 Mich. 7 Wisconsin, etc., R. R. v. United 528; 65 N. W. 577; Allegheny States, 164 U. S. 190; McElrath v. County v. Grier, 179 Pa. St. 639; I 1228 PAGE ON CONTRACTS. or fees collected by him from the public treasury without authority of law," such payments may be recovered in an action for money had and received. The fact that money paid to a state officer as compensation for services was paid upon the ad- vice of the attorney general, does not prevent the recovery thereof, if unauthorized by law;^* nor does the fact that the payment was made voluntarily, with full knowledge of the facts and without fraud,^^ or under a mistake of law,^*' even if such mistake is shared by the officer to whom payment is made, who takes in good faith.^^ The right to recover public money is especially clear where the officers who have ordered payment of the claim, have done so fraudulently, and in order to convert the money to their own benefit,^* or have otherwise acted fraud- ulently.^^ Even an order of court authorizing the payment of such illegal fees is no defense to an action to recover them if made in a proceeding to which the public corporation is not a party.^" If a public officer renders services to the corporation which he represents, outside of those appropriate to his official position, and which could have been rendered as well by a pri- vate individual, money paid him for such services cannot be recovered in the absence of a statute, provided the transaction is free from fraud.^^ The right to recover public money is es- pecially clear in eases where payment is made under a mistake of fact.^^ Thus, where an excessive bill is presented for public printing, and printers appointed pursuant to the statute to examine the account, certify to its correctness under a mistake 36 Atl, 353; Tacoma v. Lillis, 4 i7 Allegheny County v, Grier, 179 Wash. 797; 18 L. R. A. 372; 31 Pa. St. 639; 36 Atl. 353, Pac. 321. 18 Land, etc., Co. v. Mclntyre, 13 Camden v. Varney, 63 N. J. L. 100 Wis. 245; 69 Am. St. Rep. 915; 325; 43 Atl. 889; Union County v. 75 N. W. 964. Hyde, 26 Or. 24 ; 37 Pac. 76. is Frederick v. Douglas County, 14 Commonwealth v. Norman 96 Wis. 411 ; 71 N. W. 798. (Ky.), 50 S. W. 225. 20 Union County v. Hyde, 26 Or. 15 Camden v. Varney, 63 N. J. L. 24 ; 37 Pac. 76. 325; 43 Atl. 889. 21 Tacoma v. Lillis, 4 Wash. 797; 16 Ellis V. Board, etc., 107 Mich. 18 L. R. A. 372; 31 Pac. 321, 528- 65 N. W. 577. 22 Haralson County v. Golden, 104 Ga. 19; 30 S. E. 380. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1229 of fact, such payment may be recovered.^^ Public money, however, can be recovered only from one to whom it was paid, or for whose benefit it was paid. Thus, a county cannot recover from one who holds county bonds which constitute an over- issue, interest paid upon such bonds to a prior holder thereof."* So where town officers acting for the public at large and not for the town alone, collected school taxes and paid them dispro- portionately the school district which was entitled to a part of such taxes cannot maintain assumpsit against the town.*^ In some jurisdictions, however, it is held that payments of public money to public officers made under a mutual mistake of law cannot be recovered.^® §797. Receipt of money from real owner. — Voluntary payments. If A, a person of full legal capacity, pays money to B with the intent that it should become B's property, and no operative facts such as mistake, misrepresentation, fraud, non-disclosure, duress, or undue influence exist, which might make the trans- action voidable, A cannot recover such payment from B. An- other and more common form of stating the same principle is that a voluntary payment made with full knowledge of the facts cannot be recovered.^ The same principle applies where 23 Worth V. Stewart, 122 N. C. 528; The Xicanor, 40 Fed. 361; 258; 29 S. E. 579. Prichard v. Sweeney, 109 Ala. 651; 24 Taylor v. Daviess County 19 So. 730; Crenshaw v. Collier, 70 (Ky.), 32 S. W. 416. Ark. 5; 65 S. W. 709; Harralson v. 25Weybridge School District v. Barrett, 99 Cal. 607; 34 Pac. 342; Bridgeport, 63 Vt. 383; 22 Atl. 570. Bncknall v. Story, 46 Cal. 589; 13 570. Am. Rep. 220; Skelly v. Bank, 63 26 Painter v. Polk County, 81 la. Conn. 83; 38 Am. St. Rep. 340; 19 242; 25 Am. St. Rep. 489; 47 N. W. L. R. A. 599; 26 Atl. 474; Jefferson 65. A similar view seems to be County v. Hawkins, 23 Fla. 223; guardedly entertained in Lasalle 2 So. 362; Macon County v. Foster, County V. Milligan, 34 111. App. 23 N. E. 615; Burlock v. Cook, 20 346, decided partly on a question of 111. App. 154; Connecticut, etc., fact and partly with the expectation Ins. Co. v. Stewart, 95 Ind. 588; of review by the Supreme Court. Manning v. Poling, 114 la. 20; 83 1 United States v. Edmondston, N. W. 895; 86 N. W. 30; Bailey v. 181 U. S. 500; Little v. Bowers. 134 Paullina, 69 la. 463; 29 N. W. 418; V. S. 547; The Agathe, 71 Fed. Cumming Harvester Co. v. Sigerson, 1230 PAGE ON CONTKACTS. money is paid by X to B for A, and in A's presence.^ The fact that a formal protest is made when the pay- ment is made does not prevent it from being voluntary.^ If A, with full knowledge of all the facts, pays excessive assess- ments to an insurance company, he cannot recover such assess- ments.* An insurance company which pays the amount of in- surance after loss with full knowledge of all the material facts, cannot recover the money thus paid, as on the ground that the loss was on property not covered by the policy;^ nor can they 63 Kan. 340; 65 Pac. 639; Williams V. Shelbounie, 102 Ky, 579; t^t S. W. 110; Tyler v. Smith, 18 B. Mon. (Ky.) 793; New Orleans, etc., Co. V. Improvement Co., 109 La, 13; 94 Am. St. Rep. 395; 33 So, 51; Regan v. Baldwin, 126 Mass. 485; 30 Am. Rep. 689; Francis v, Hurd, 113 Mich. 250; 71 N, W. 582; Tompkins v, HoUister, 60 Mich, 485; 34 N, W. 551; Carson v, Coch- ran, 52 Minn. 67; 53 N, W, 1130; Morley v, Carlson, 27 Mo, App. 5; Nebraska, etc., Ins. Co. v, Segard, 29 Neb. 354; 45 N. W, 681; Red- mond V. New York, 125 N, Y, 632; 26 N. E. 727; Flynn v, Hurd, 118 N. Y. 19; 22 N. E. 1109; Howard V. Life Association, 125 N. C. 49; 45 L. R. A. 853; 34 S. E. 199; Brumbaugh v. Chapman, 45 O. S. 368; 13 N. E. 584; Oil Well Sup- ply Co. V. Bank, 131 Pa, St. 100; 18 Atl. 935; Hubbard v, Martin, 8 Yerg. (Tenn.) 498; Ladd v. Mfg, Co., 53 Tex. 172; Gibson v. Bing- ham, 43 Vt. 410; 5 Am. Rep. 289; Beard v. Beard, 25 W. Va. 486; 52 Am. Rep. 219; Gage v. Allen, 89 Wis. 98; 61 N. W. 361, "The ul- timate fact to be reached in this case is the state of mind under which the payments were made. If they were made voluntarily, with a full knowlcdce of all the facts and without fraud or imposition, they are beyond reclamation. If, on the other hand, the money was ex- torted from the appellee ... or if fraud or imposition was prac- ticed upon him, he is entitled to recover his money back for the plain reason that the payment was involuntary." Ligonier (Town of) v. Ackerman, 46 Ind. 552, 558; 15 Am, Rep. 323; quoted, Hollings- worth V. Stone, 90 Ind. 244. 2 Rogers v. Garland, 8 Mackey (D. C.) 24, 3 Little V. Bowers, 134 U. S. 547; McMillan v. Richards, 9 Cal, 365; 70 Am, Dee, 655; Patterson v. Cox, 25 Ind, 261; Anderson v. Cameron, — la.— ; 97 N. W. 1085; (Commis- sioners of) Wabaunsee County v. Walker, 8 Kan. 431; Detroit v, Martin, 34 Mich. 170; 22 Am. Rep. 512; McBride v. Lathrop, 24 Neb. 93; 38 N, W. 32; Wessel v. Mort- gage Co., 3 N. D. 160; 44 Am. St. Rep. 529; 54 N. W. 922; Marietta V. Slocomb, 6 O. S. 471; De La Cuesta V. Ins. Co., 136 Pa. St. 62, 658; 9 L. R. A. 631; 20 Atl. 505. 4 Howard v. Ins. Association, 125 N. C. 49; 45 L, R. A, 853; 34 S. E. 199. 5 Nebraska, etc., Ins. Co. v. Se- gard, 29 Neb. 354; 45 N. W. 681. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1231 maintain an action against a vessel on which the cargo insured "was carried, for damages, on the theory that the loss was due to the negligence of those in charge, after paying the amount apportioned as the insurance company's share due for salvage.* A was a stockliolder in a corporation which was about to in- crease its capital stock, and had a legal right to subscribe for a certain amount of such new stock at par. The corporation re- fused to receive his subscription unless he paid a bonus for the right to subscribe. It was held that he could not recover the amount thus paid in, since he had an adequate remedy.^ He could have tendered the true value of th*e stock, and on refusal of the corporation to deliver the stock to him, he could main- tain the action against the corporation for the difference be- tween the par value and the market value of such stock. Where the statute provides for arbitration to estimate the value of im- provements made upon realty, to be paid for by one who is re- deeming the land from an execution sale, the voluntary payment of an excessive amount of improvements by such redemptioner without arbitration, cannot be recovered.^ If a wife pays a debt of her husband's after his death out of money which she re- ceives on an insurance policy on his life, payable to her, she cannot recover such payment.^ An inmate of a Soldiers' and Sailors' Home, who agrees to pay over a part of his pension to such home, and does pay it over, cannot subsequently recover, though the Home could not have compelled such payment.^* ' A owes B a note on which the interest is payable in advance, and A pays such interest in advance; and subsequently A vol- untarily pays the note before maturity. A cannot recover the proportionate part of such interest paid by him.^^ So where B has executed a mortgage which contains a provision that the 6 The Nicanor, 40 Fed. 361. lo Brooks v. Hastings, 192 Pa. 7De La Cuesta v. Ins. Co., 136 St. 378; 43 Atl. 1075; Bryson V. Pa. St. 62, 658; 9 L. R. A. 631; 20 Home, etc., 168 Pa. St. 352; 31 Atl. Atl. 505. 1008. sPrichard v. Sweeney, 109 Ala. n Skelly v. Bank, 63 Conn. 83; 651; 19 So. 730. 38 Am. St. Rep. 340; 19 L. R. A. 9 Tompkins v. Hollister, 60 Mich. 599; 26 Atl. 474. 485 ; 34 N. W. 551. 1232 PAGE ON CONTRACTS. mortgagor shall pay the tax on the mortgage debt, and under the law he is thereby relieved from liability to pay interest upon such mortgage debt he cannot recover the amount of in- terest from the mortgagee after paying it voluntarily/^ If taxes unlawfully assessed are paid with full knowledge of the facts, and without duress, or legal compulsion, the money thus paid cannot be recovered,^^ unless there is a statutory provision therefor.^* If a public officer voluntarily pays over to the pub- lic treasurer, fees which he has a legal right to retain for his personal benefit, he can not recover such payments.^^ If A is the agent of B to sell stock, and A as such agent makes a sale to X, and takes the check of X in payment, and sends B his personal check, A cannot recover from B, although the check which A receives from X proves to be worthless.^® §798. Payments not voluntary. The general doctrine forbidding recovery of voluntary pay- ments has of course no application to payments which are not voluntary. The general rule is, that if A receives mone}* be- longing to B, which is not paid voluntarily by B, A is bound in law to repay it.^ Thus, where A was arrested upon a charge of stealing, and brought before B, a trial justice, and B took from A the money which A had upon his person and which was alleged to be the stolen money, and A is discharged upon a preliminary hearing, A can recover such money from B.^ So, if an agent of an express company induces a bank to send money by express to a fictitious firm, which money the agent receives as agent for the express company, and which he embezzles, the i2Harralson v. Barrett, 99 Cal. St. 519; 63 Am. St. Rep. 769; 39 607; 34 Pac. 342. L. R. A. 529; 38 Atl. 1030. 13 Indianapolis v, Vajen, 111 Ind. i Pemberton v. Williams, 87 111. 240; 12 N. E. 311; Durham v, 15; Carter v. Riggs, 112 la. 245; Board, 95 Ind. 182. 83 N. W. 905; Mason v. Prender- i4Donch V. Lake County, 4 Ind. gast, 120 N. Y. 536; 24 N. E. 806; App, 374; 30 N. E. 204. Motz v. Mitchell, 91 Pa. St. 114. isSelby v. United States, 47 Fed. 2 Welch v. Gleason, 28 S. C. 247; 800. 5 S. E. 599. le Pepperday v. Bank, 183 Pa. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1233 bank can recover from the express company in an action for money had and received.^ The classes of payments which are not voluntary may for the most part be grouped under tvv^o gen- eral heads : payment by mistake, and payment by duress or com- pulsion of law. These topics will be discussed in the following sections. V. Payment Under Duress and Compulsion. §799. Payment under duress and undue influence. The nature of duress as affecting the validity of contracts entered into by reason thereof has already been discussed.'^ The nature of duress as determining the right of a party making payments to recover them is largely governed by the same rules as those by which the right to avoid contracts is determined. If payments are made under what the law regards as duress, they are not within the doctrine of voluntary payments, and may be recovered in the absence of special circumstances.^ In some respects, however, as we shall see later, the right to re- cover payments was broader at Common Law than the right to avoid contracts and by some authorities the right to recover pay- ments made under compulsion of law has been treated as a ground of recovery distinct from any form of duress. They will be discussed together here as applications of the same 3 Southern Express Co. v. Bank, Silsbee v. Webber, 171 Mass. 378; 108 Ala. 517; 54 Am. St. Rep. 191; 50 N. E. 555; Sweet v. Kimball, 166 18 So. 664. In order to recover, it Mass. 332; 55 Am. St. Rep. 406; 44 is not necessary that the bank sur- N. E. 243 ; Cribbs v. Sovvle, 87 Mich, render a draft which purports to be 340; 24 Am. St. Rep. 166; 49 N. W. signed by such fictitious and non- 587; Joannin v. Ogilvie, 49 Minn, existent firm with a bill of lading 564; 32 Am. St. Rep. 581; 16 L. R. attached thereto. A. 376; 52 N. W. 217; Briggs v. 1 See Ch. XIII. Boyd, 56 N. Y. 289 ; Adams v. 2 Swift Co. V. United States, 111 Reeves, 68 N. C. 134; 12 Am. Rep. U.S. 22; Adams V. Schiffer, 11 Colo. 627; Reinhard v. Columbus, 49 O. 15; 7 Am. St. Rep. 202; 17 Pac. 21 ; S. 257; 31 N. E. 35; Fillman v. Stanley v. Dunn, 143 Ind. 495; 42 Ryon, 168 Pa. St. 484; 32 Atl. 89; N. E. 908; Anderson v. Cameron, Guetzkow Bros. v. Breese, 96 Wis. _ la. — ; 97 N. W. 1085; Carter v. 591; 65 Am. St. Rep, 83; 72 N. W. Riggs, 112 la. 245; 83 N. W. 905; 45. 78 1234 PAGE ON CONTRACTS. general doctrines. No single definition of duress wbicli en- titles a party making payments by reason thereof to recover^ can be given in such form as to include all cases in which the doctrine is applied, and to exclude those in which the doctrine is not ajoplied. But to constitute duress there must in general be at least apparent liability of jJerson or property to seizure,^ and in the absence thereof mere protest against paying cannot make it payment under duress.'* A payment made under un- due influence may be recovered,^ even though the circumstances fall short of technical duress or compulsion. Thus payment made under threat of a civil action may be recovered where the person making the payment is aged, illiterate and Aveak-minded, and his mind is in fact overpowered by such threats.^ The spe- cial classes of cases involving the question of what is and what is not such duress as to permit of recovery of payments will be discussed in the following sections. §800. Payment extorted by imprisonment. The elements of duress of imprisonment are substantially the same for purposes of recovering payments as for avoiding contracts.^ Money unlawfully extorted by imprisonment, used as a means of extortion whether such imprisonment^ was law- 3Lamson v. Boyden, 57 111. App. 257; 31 N. E. 35; Fillman v. Ryon. 232; Minneapolis, etc., Co. v. Cun- 168 Pa. St. 484; 32 AU. 89; Reck- ningham, 59 Minn. 325; 61 N. W. man v. Swartz, 64 Wis. 48; 24 N. 329; De la Cuesta v. Ins. Co., 136 W. 473. And see Houtz v. Uinta Pa. St. 62, 658; 9 L. E. A. 631; 20 County, — Wyom. — ; 70 Pac. 840; Atl. 505. where the right to recover a fine 4 See § 812. imposed by a justice who had no 5 Ingalls V. Miller, 121 Ind. 188; final jurisdiction was held to de- 22 N. E. 995. pend on that question whether such 6 Ingalls V. Miller, 121 Ind. 188; payment was made to procure re- 22 N, E. 995. lease from imprisonment it could 1 See Ch. XIII. be recovered ; but if merely to avoid 2 Schommer v. Farwell, 56 III. inconvenience in the district e£>urt 542; Voiers v. Stout, 4 Bush. (Ky.) to which an appeal ha4 been al- 572; Richardson v. Duncan, 3 N. H. lowed, it could not. 508 ; Reinhard v. Columbus, 49 O. S. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1235 ful or not, or by threats of immediate imprisonment,^ may he recovered. Thus money paid by one wrongfully arrested to -secure his release,* or where an officer without authority of law takes a cash deposit to secure the appearance of a prisoner,^ may be recovered. So property surrendered by one under threat of imprisonment if such property is not surrendered may be recovered." Even if the arrest or threatened arrest is itself lawful, money paid thereunder may be recovered if such arrest was used as a means of extorting such payment.*^ If, however, the imprisonme;at is lawful and is not made the means of ex- tortion, it does not of itself constitute duress, and does not af- ford a basis for recovery of payments.^ A threat of imprison- ment not immediate is ordinarily not duress f and money paid thereunder cannot ordinarily be recovered as paid under du- ress 'y^^ but under special circumstances, as where the person to whom the threat is made and against whom it is directed is old, weak and infirm, a payment extorted by such threats may be recovered.^^ Since duress may exist where the arrest of a third person in certain relations to the promisor or payor is made or threatened,^^ such payment may be recovered.^* Thns, money extorted from a wife by a threatened imprison- ment of her husband, as under circumstances which W'<;\ild in- 3 Baldwin v. Hutchison, 8 Ind. s pillman v. Ryon, 168 Pa. St. App. 454; 35 N. E. 711; Foss v, 484; 32 Atl. 89; Meaeliem v. New- Whitehoiise, 94 Me. 491; 48 Atl. port, 70 Vt. 67; 39 Atl. 631. 109; Deshong v. New York, 176 N. 9 See § 251. Y. 475; 68 N. E. 880. lo St. Louis, etc., R. R. v. Thomas, 4 Sweet V. Kimball, 166 Mass, 85 111. 464; Hines v. Board, etc., 332 ; 55 Am. St. Rep. 406 ; 44 N. E. 93 Ind. 266 ; Hilborn v, Bucknam, 243. 78 Me. 482; 57 Am. Rep. 816; 7 sReinhard v. Columbus, 49 O. S. Atl. 272; Claflin v. McDonough, 35 257; 31 N. E. 35. Mo. 412; 84 Am. Dec. 54. 6 Pryor v. Morgan, 170 Pa. St. n Cribbs v. Sowle, 87 Mich. 340; 568; 33 Atl. 98. 24 Am. St. Rep. 166; 49 N. W. 587. 7 Morse v. Woodworth, 155 Mass. 12 See § 259. 233; 27 N. E. 1010; 29 N. E. 525; is Gorringe v. Reed, 23 Utah 120; Richardson v. Duncan, 3 N. H. 508; 90 Am. St. Rep. 692; 63 Pac. 902; Heckman v. Swartz, 64 Wis. 48; Schultz v. Culbertson, '49 Wis. 122; 24 N. W. 473. 4 N. W. 1070; 46 Wis. 313; 1 N. W, 19. 1236 PAGE ON CONTRACTS. jure Lis health/* may be recovered. Thus where a husband was threatened with lawful arrest when in broken health and about to go to EurojDe with his wife in the hoj)e of regaining health, and arrest and detention would produce a serious effect npon his physical condition, a payment made by his wife to prevent such arrest is made under duress and may be re- covered.^^ The mere fear of future imprisonment without any threat thereof is not such duress as to enable the party who has made the payment to recover it.^° §801. Payment extorted by wrongful detention of goods. The original Common Law rules of duress did not allow a contract to be avoided if the person entering into it was induced to do so by a wrongful detention of goods.^ It was more just in allowing recovery of payments extorted by such detention. If A's personal property is unlawfully detained by B, a pay- ment made by A to obtain possession of such property is not a voluntary payment and may be recovered." Thus where goods are illegally seized under apparent authority of a writ of seques- tration,^ or logs are seized under an illegal claim for toll,* or a ship is detained for an illegal demand for tonnage,^ or a cargo is detained for an illegal demand for demurrage, ® or payment 14 Adams v. Bank, 116 N. Y. 606; Mumford, 60 X. Y. 498; Briggs v. 15 Am. St. :Rep. 447; 6 L. R. A. Boyd, 56 N. Y. 289; Riggs v. Wil- 491; 23 N. E. 7. son, 30 S. C. 172; 8 S. E. 848; Tay- 15 Adams v. Bank, 116 N. Y. 606; lor v. Hall, 71 Tex. 213; 9 S. W. 15 Am. St. Rep. 447; 6 L. R. A. 141; Bufoid v. Lonergan, 6 Utah 491; 23 N. E. 7. 301; 22 Pac. 164; affirmed in 148 16 Felton V. Gregory, 130 Mass. U. S. 581. 176. 3 Clark v. Pearce, 80 Tex. 146; 15 iSee § 248. S. W. 787. 2 Atlee V. Backhouse, 3 M. & W. 4 Carson, etc., Co. v. Patterson, 33 633; Maxwell v. Griswold, 10 How. Cal. 334; Chase v. Dwinal, 7 Greenl. (U. S.) 242; Lafayette, etc., Ry. v. (Me.) 134; 20 Am. Dee. 352. Pattison, 41 Ind. 312; Chamber- 5 pipley v. Gelston. 9 Johns. (N. lain V. Reed, 13 Me. 357; 29 Am. Y.) 201; 6 Am. Dec. 271. Dec. 506 : Weber v. Kirkendall, 44 6 Fargusson v. Winslow, 34 Minn. Neb. 766; 63 K W. 35; Scholey v. 384; 25 N. W. 942. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1237 illegally exacted as tariff is paid to get possession of goods im- ported into this country/ as where the customs officials threaten to add a penalty if the tariff demanded is not paid,^ or goods are seized on an unfounded claim and a lien is asserted there- on," payments made to obtain possession of such goods may be recovered. Such a payment is made under " moral compul- sion."^" So where A has delivered a printing press to B under a contract of sale by the terms of which it is to remain A's prop- erty until B pays the entire purchase price, and B's landlord X takes possession thereof, a payment by A to X to get possession of such machine may be recovered.^^ In some opinions, esj)ecial stress is laid on the fact that great hardship or serious incon- venience will result to the person whose property is detained un- less he can get possession of it, and his right to recover pay- ments made by him to get possession of such goods.^^ Thus where property perishable in its nature and liable to deteriora- tion is withheld, payment to obtain possession thereof and to avoid damage has been held to be made under duress, as where cattle are withheld from the owner,^^ or where oysters have been taken on a writ of attachment wrongfully obtained.^* So where A, an officer had attached B's bank notes and refused to redeliver them unless B allowed him to keep some as an al- leged reward, and X, another officer, was about to attach them, and B allows A to keep some of them as he had demanded, B may recover such amount from A as paid under duress.^^ So where a cargo of grain is withheld on an unjust claim for demurrage, and the consignee will be put to serious inconven- ience if the cargo is not delivered, a payment of such demurrage -' Elliott V. Swartwout, 10 Pet. n Whitlock Machine Co. v. Hol- (U. S.) 137; Erhardt v. Winter, 92 way, 92 Me. 414; 42 Atl. 799. Fed. 918. i2Fargusson v. Winslow, 34 8 Robertson v. Frank Bros. Co., Minn. 384 ; 25 X. W. 942. 132 U. S. 17. isBuford v. Lonergan, 6 Utah 9 Chamberlain v. Reed, 13 Me. 301; 22 Pac. 1G4; affirmed in 148 357; 29 Am. Dec. 506. U. S. 581. 10 Chamberlain v. Reed, 13 Me. i* Spaids v. Barrett, 57 111. 289; 357; 29 Am. Dec. 506. 11 Am. Rep. 10. 15 Lovejoy v. Lee, 35 Vt. 430. 1238 PAGE ON CONTKACTS. may be recovered ;^^ on similar grounds the right to recover money paid to liberate one's tools of trade has been placed.^^ Elimination of these cases, however, leaves a respectable num- ber of authorities in support of the proposition that money paid to regain possession of goods which have been unlawfully taken from the owner, without his having opportunity to be heard in court, may be recovered. §802. Payments extorted by threatened wrongful detention of goods. The weight of authority is that payments made to prevent a threatened wrongful seizure of personalty are made under duress and may be recovered.^ Thus, if a justice renders a void judgment, the case not being within his jurisdiction, and subse- quently execution issues and the judgment debtor, being sick and in mental distress on account of the recent death of mem- bers of her family, paid such execution to avoid a threatened levy, it was held that she might recover from the judgment creditor who received the money.^ So money paid to avoid a threatened wrongful distraint of personalty may be recovred.* So where a sheriff holding an execution threatened to levy un- less an excessive amount were paid by the debtor, and the debtor paid the amount demanded, he may recover such excess from the sheriff.^ Duress by threatened seizure of goods has been limited very sharply by some authorities to cases where the danger of seizure was imminent. In case of payments to an officer the test of the right to recover them if not justly due has been held to be whether or not the officer has apparent power to seize or levy on the property which he is threatening to 16 Fargusson v. Winslow, 34 2 Hollingsworth v. Stone, 90 Ind. Minn. 384; 25 N. W. 942. 244. 17 Cobb V. Charter. 32 Conn. 358 ; 3 Hills v. Street, 5 Bing, 37. Con- 87 Am. Dec. 178. ira, Colwell v. Peden, 3 Watts 1 Hills V. Street, 5 Bing. 37; Cox (Pa.) 327, where a hona fide dis- V. Welcher, 68 Mich. 263; 13 Am. tress was held not to be duress. St. Rep. 339 ; 36 N. W. 69 ; Taylor * Snell v. State, 43 Ind. 359. V. Hall, 71 Tex. 213; 9 S. W. 141. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1239 take.^ To constitute duress of goods, something more than a jXDSsible deprivation of property in the future is necessary, where this limitation on the doctrine of duress of goods pre- vails. Thus where a chattel mortgage with power of sale had been given to secure payment of the price of corn sold by the mortgagee to the mortgagor, a payment of the full amount of the purchase price, though some of the corn is never delivered, cannot be recovered, though made because of a threat of the mortgagee to sell the mortgaged property under the power of sale.^ §803. Payment to remove cloud from title to realty. Duress of property need not always involve detention of per- sonalty, however. If the unlawful acts of one person cast a cloud on the title of another to realty, a payment made to re- move such cloud may be made under duress.^ Thus a payment made to prevent a threatened sale for taxes which would cast a cloud on the title to realty,^ or a payment made to clear title to realty from a pretended mechanic's lien, so as to raise a new loan to take up an overdue mortgage and other pressing claims,^ where the party making such payment had no other means of raising money than by mortgaging such realty, or payment ex- torted by threatening to sell realty under a power of sale con- tained in a mortgage,* or payment of an amount over and above the true amount of a mortgage debt,^ or an unlawful payment of attorney fees exacted as a condition precedent to redemption,^ 5 Taylor v. Hall, 71 Tex. 213; 9 gomery v. Cowlitz, 14 Wash. 230; S. W. 141. 44 Pac. 259. eVick V. Shinn, 49 Ark. 70; 4 2 See § 811. Am. St. Rep. 26; 4 S. W. 60. sJoannin v. Ogilvie, 49 Minn. 1 American Baptist Missionary 564; 32 Am. St. Rep. 581; 16 L. Union v. Hastings, 67 Minn. 303; 69 R. A. 376; 52 N. W. 217. N. W. 1078; Joannin v. Ogilvie, 49 4 Close v. Phipps, 7 Man. & G. Minn. 564; 32 Am. St. Rep. 581; 16 586; McMurtrie v. Keenan, 109 L. R. A. 376; 52 N. W. 217; Shane Mass. 185. V. St. Paul, 26 Minn. 543 ; 6 N. W. s Cazenove v. Cutler, 4 Met. 349; Poth v. New York, 151 N. Y. (Mass.) 246. 16; 45 N. E. 372; Bowns v. May. e Klein v. Bayer. 81 Mich. 233; 120 N, Y, 357; 24 N. E. 947; Mont- 45 N. W. 991. Contra, where the 1240 PAGE ON CONTRACTS. may be recovered. But payment of a judgment while pro- ceedings in error were pending because the judgment was a lien on the realty of the judgment debtor, who was in finan- cial distress and could not raise money except by a loan on such realty and such loan could be obtained only by paying such judgment has been held to be a voluntary payment."^ So where A gave B a mortgage in the form of a deed to secure his debt to B and B then refused to recognize A'a rights or consent to A's selling his rights in such realty unless paid a large sum of money over and above A's indebtedness to B, and threatened prolonged litigation if A did not make such payment, and A had no other way of paying his debt except by the sale of such realty, it was held that A paid such additional sum under duress and could recover it.^ In all these cases no opportunity for a judi- cial hearing was given before the title was apparently encum- bered. Wrongful acts which do not cast a cloud on the title to realty do not amount to duress of realty.® Thus a threatened sale for illegal taxes, where the purchaser has the burden of proving every step necessary to make out a valid sale," or a threatened sale of the land of one person on an execution is- sued against another,^^ do not cast a cloud on the title and hence payment by reason thereof is not made under duress. §804. Lawful act not duress. Outside of questions of abuse of legal process in seizing per- son or property, a lawful act does not amount to duress, al- though by such act a person is induced to make a payment which he is not willing to make. Thus to constitute duress of goods the detention must be unlawful. The party making pay- mortgage had been discharged by a « First National Bank v. Sargeant, tender of the full amount of the 65 Neb. 594; 91 N. W. 595. mortgage debt. Wessel v. Mort- "Stover v. Bowman, 45 111. 213; gage Co., 3 X. D. 160; 44 Am. St. Davies v. Galveston. 16 Tex. Civ. Rep. 529; 54 N. W. 922. App. 13; 41 S. W. 145. 7 Hipp V. Crenshaw, 64 la. 404; lo Davies v. Galveston, 16 Tex. 20 N. W. 492. (Hence the pro- Civ. App. 13; 41 S. W. 145. eeedings in error were dismissed.) n Stover v. Mitchell, 45 111. 213. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1241 ment must do everything necessary to entitle him to the prop- erty detained if he wishes to recover excess payments. This principle has been carried so far that a payment of excessive freight charges to obtain possession of goods cannot be recovered where the consignee did not tender the amount actually due, which amount he knew, and demand the property.* In this case payment was made to an agent on his statement that the com- pany would refund any excessive charges. Such agent did not, however, have authority to bind his principal by a contract to refund. Thus where A moved his office to B's stockyards, as tenant at will, B agreeing to charge ^lo rent, and B then charged rent, which A paid because all the offices at such yards belonged to B, no duress exists.^ §805. Threat of civil actioiic The principle that a lawful act does not constitute duress in the absence of special circumstances find illustration in the commencement of a civil action. The mere threat of a civil action is not duress or legal compulsion ; and a payment made by reason of such threat cannot be recovered.^ The same prin- ciple applies where a civil action has been instituted f accord- ingly payment of money on service of summons is not payment iGulf City Construction Co. v. 7 Cush. (Mass.) 125; -54 Am. Dec. Ky., 121 Ala. 621; 25 So. 579. 716; Morse v. Woodworth. 155 2 Minneapolis, etc., Co. v. Cun- Mass. 233; 27 K E. 1010; 29 N. ningham, 59 Minn. 325; 61 N. W. E. 525; Peebles v. Pittsburgh, 101 329. (Ending such tenancy at will Pa, St. 304; 47 Am. Eep. 714. "To was " nothing more than defendant pursue or threaten to pursue the would have had a legal right to usual legal steps for the collection do.") of a debt in the manner provided 1 Burke v. Gould. 105 Cal. 277; by law does not constitute duress 38 Pae. 733; Ligonier (Town of) of property." Burke v. Gould, 105 V. Ackerman, 46 Ind. 552; 15 Am. Cal. 277, 283; 38 Pac. 733. Rep. 323; Muscatine v. Packet Co., 2 Dawson v. Mann, 49 la. 596; 45 la. 185; New Orleans, etc., R. R. Benson v. Monroe, 7 Cush. (Mass.) V. Improvement Co.. 109 La. 13; 125; 54 Am. Dec. 716; Brummitt v. 94 Am. St. Rep. 395; 33 So. 51; McGuire, 107 N. C. 351; 12 S. E. Parker V. Lancaster, 84 Me. 512; 24 191; Beard v. Beard. 25 W. Va. Atl. 952; Preston v. Boston. 12 486; 52 Am. Rep. 219. Pick. (Mass.) 7; Benson v. Monroe, 1242 PAGE ON CONTEACTS. under duress and cannot be recovered.^ Indeed if any defense to such cause of action exists, the threatened action is the very means provided for by law for determining its validity. Thus if an action in replevin,* or attachment,^ or a seizure in admir- alty for non-payment of an alleged claim for wharfage,® or an action against a corporation for the appointment of a receiver,' or an action by a receiver to enforce a stock liability,* or a fore- closure suit,** is either begun or threatened it does not of itself amount to duress. Thus where an overdue note given by A to B bore interest at ten per cent, but B had agreed in writing that it should bear only eight per cent after maturity, and B subsequently sues in foreclosure and demands ten per cent in- terest, A should set up such agreement as a defense. If he pays the full amount, including interest at ten per cent, he cannot re- cover the difference.^" §806. Payment compelled by legal process. If the property of one is seized on legal process procured by another in good faith and " in pursuit of the ordinary remedy afforded by law "^ a payment made to procure the release of such property is not made under duress and cannot be recovered if the right of recovery rests on that ground alone.^ Thus if a 3 Hamlet v. Richardson, 9 Bing. 7 Dustin v. Farrelly, 81 Mo. App. 644; Marriot v. Hampton, 7 T. R. 380. 269. "Money paid under pressure s Holt v, Thomas, 105 Cal. 273; of- legal process cannot be recov- 38 Pae. 891. ered." Moore v. Fulham (1895), 1 9 Burke v. Gould, 105 Cal. 277; 38 Q. B. 399. Pac. 733 ; Savannah Savings Bank 4Brummitt v. McGuire, 107 N. C. v. Logan, 99 Ga. 291; 25 S. E. 692; 351; 12 S. E. 191. Vereycken v. Vanden-Brooks, 102 5 Benson v. Monroe. 7 Cush. Mich. 119; 60 N. W. 687; Shuck v. (Mass.) 125; 54 Am. Dec. 716. Loan Association, 63 S. C. 134; 41 6 New Orleans, etc., R. R. v. Im- S. E. 28. provement Co., 109 La. 13; 94 Am. lo Vereycken v. Vanden-Brooks, St. Rep. 395; 33 So. 51. The 102 Mich. 119; 60 N. W. 687. ■wharfage fees were held legal in i Kohler v. Wells, 26 Cal. 606. New Orleans, etc., R. R. v. Im- 2 " it will not do to hold that a provement Co., 75 Fed. 309; 21 C. C. payment secured by none but the A. 364. means provided by the law itself is IJ^IPLIED CONTRACTS AND QUASI-CONTEACTS, 1243 resides in one State and his property is duly attached by B in another on a claim which B in good faith believes to be a just one, a payment by A to B to settle such claim and to procure the release of such attachment cannot be recovered.^ So if property is taken in good faith upon an attachment which is not issued simply to hold the property until another attachment can be levied, but is intended as a regular means of securing a just debt, and the first attachment is dismissed because the de- fendant is misnamed, and a second attachment issues under which the officer continues to hold the attached property, he is not liable in assumpsit because he did not return the attached projjerty to the owner before levying the second attachment.* A fraudulent use of legal process may amount to duress, how- ever.^ Thus if an attachment is levied not in good faith, but on a claim known to be unfounded for the purpose of extorting a payment, such payment if made to procure the release of such, goods is " by compulsion " ^ and may be recovered, especially if made by one who is unable with reasonable diligence to leam the facts/ §807. Breach of contract as duress. A payment made to induce the adversary party to perform his contract is not made under duress and cannot be recovered. Thus excessive payments made to induce an irrigation company to continue to furnish water ;^ or payments made to induce a vendor to deliver future installments of coal according to his contract, the payments being the contract price for the coal already delivered which was held not to be of the quality re- a compulsory or coerced one, there s Pitt v. Coomes. 2 Ad. & El. 459; being no element of fraud or other Cadaval (Duke of) v. Collins, 4 Ad. ingredient of oppression in the & El. 858; Colwell v. Peden, 3 case." Dickerman v. Lord, 21 la. Watts (Pa.) 327. 338, 343; 89 Am. Dec. 579. e Chandler v. Sanger, 114 Mass. sKohler y. Wells, 26 Cal. 606; 364; 19 Am. Rep. 367. Dickerman v. Lord, 21 la. 338; 89 7 Adams v. Reeves, 68 N. C. 134; Am. Dec. 579. 12 Am. Rep. 627. * Brady v. Royce, 180 Mass. 553; i Steck v. Irrigation Co., 4 Colo. 62 N. E. 960. App. 323; 35 Pac. 919. 12J:4 PAGE ON CONTKACTS. quired by the contract ;" or payments made to an agent of what he claimed to be the balance due him from his principal to in- duce him to deliver butter which was not the principal's until it was delivered/ can none of them be recovered. So a contractor cannot recover a payment made by him as due on a forfeiture for failure to complete the work in accordance with the terms of the contract on the theory that it was made under duress, although the board of public works, to whom it was made, would not notify the council that the work had been ac- cepted until this payment had been made, and until such notice the council would not appropriate the amount due the contrac- to.* Under some circumstances, however, a refusal to perform, a contract may have so disastrous an effect upon the business of the adversary party, that a payment made by him to induce performance of such contract, may be held to be made under compulsion. Thus, where a theatrical performance had been advertised, and a short time before it was to begin the actor refused to go unless he was paid the full amount of an item in dispute between himself and the manager, it was held that a payment of such amount by the manager was made under " a species of constraint," and could be recovered.^ B, a building contractor, who was constructing a church in Boston, sent some stone to iSTew York to be cut. For this he was fined five hundred dollars by an association of stone masons. B refused to make such payment, and the association threatened to cause a strike among B's workmen unless such amount was paid. On B's con- tinued refusal, the association caused a strike, which lasted for some time. B was unable to procure laborers competent to complete such job, and he finally paid this amount in order to have the strike declared off. Subsequently, he brought suit against the association and those who had handled the check by 2 Armstrong v. Latimer, 165 Pa. been held to constitute duress. See St. 398; 30 Atl. 990. § 255. 3 Hubbard V. Mills, 46 Vt. 243. s Dana v. Kemble, 17 Pick. 4Laidlaw v. Detroit, 110 Mich. 1; (Mass.) 545. In this case the judg- 67 N. W. 967. But similar facts ment in favor of the manager was in the formation of a contract have reversed on the ground of failure IMPLIED CONTKACTS AND QUASI-CONTRACTS. 1245 which such payment was made and received the money therefor. The lower court held that B had no right of action, Por this, the Supreme Court reversed the judgment of the lower court, holding that B had a right of action, although they were un- decided whether it was in tort or in assumpsit." So payment of illegal charges for water, '^ or gas,^ made under threat of cut- ting off the supply if such illegal charge is not paid, or payment of an illegal water license charge,** or an illegal charge for rent of a gas meter^" made under like circumstances may be recovered. §808. Other forms of duress. Duress or legal compulsion is not invariably confined to du- ress of person or property although these are the common cases. Thus payment made by force of a statute afterward held un- constitutional, requiring a certain payment as a condition prece- dent to the jurisdiction of the Probate Court in administering an estate,^ may be recovered. §809. Dilemma not duress. The mere fact that one makes a payment when in doubt as to his legal rights and afraid of imperiling them if he refuses payment does not constitute duress.^ This is merely an illustra- tion of a mistake of law. The party paying does not know whether he is bound by law to pay or not, and to save his rights he makes payment. In such case, if he was not bound by law to of proof, and a new trial or- 8 Indiana, etc., Co. v. Anthony, 26 dered. Ind. App. 307 ; 58 N. E. 868. 6 Carew v. Rutherford, 106 Mass. » Westlake v. St. Louis, 77 Mo. 1; 8 Am. Rep. 287. This case was 47; 46 Am. Rep. 4. subsequently settled, and was not lo Capital, etc., Co. v. Gaines- tried a second time. (Ky.), 49 S. W. 462. 7 Panton v. Duluth, etc., Co., 50 i Mearkle v. Hennepin Co., 44 Minn. 175; 36 Am. St. Rep. 635; Minn. 546; 47 N. W. 165. 52 N. W. 527; St. Louis Brewing i De La Cuesta v. Ins. Co., 136 Association v. St. Louis (Mo.), Pa. St. 62, 658; 9 L. R. A. 631; 20 37 S. W. 525. Atl. 505. 1246 PAGE ON CONTRACTS. pay, he has paid under a mistake of law, and cannot recover. If he was bound by law to pay, he has done only what he should have done and cannot recover. §810. Unfair advantage as duress. Payments made by one who is not on terms of practical equality with the person to whom such payments are made are looked upon, not as voluntary payments but as payments made under compulsion. Where A demands from B payment of tolls which are not legally due under threat of drawing off water from a dam used by B, a step which would interefere with B's business seriously, and to avoid such action B pays such tolls he may recover such payment.^ A, a section foreman of a rail- road, extorted money from B, one of the section hands, by show- ing B a written order from A's superior, X, directing A to dis- charge every man who would not pay over ten dollars. In order to keep from being discharged, B paid such amount. It was held that B could recover from A.^ The fact that A had trans- mitted such money to X, did not relieve him from the liability to account to B therefor. A pension attorney who charges and collects a fee in excess of that fixed by Federal Statute for obtaining a pension is liable for such excess to the person by whom such payment is made.^ Where insurance was effected in the names of lessor and lessee jointly and on loss, proof of loss must be made by both, and the lessor takes advantage of the financial necessities of the lessee to exact a payment out of the lessee's share of the insurance of an amount which is not due to the lessee, such payment may be recovered as made un- der duress.* A refusal of a vendee to accept a deed unless revenue stamps are affixed thereto is not duress ; and the vendor who buys such stamps from the revenue collector without pro- test and without notifying him of their intended use cannot 1 Lehigh, etc., Co. v. Brown, 100 3 Hall v. Kimmer, 61 Mich. 269; Pa. St. 338. 1 Am. St. Rep. 575; 28 N. W. 96. 2 Bocchino v. Cook, 67 N. J. L. 4 Guetzkow Bros. Co. v. Breese, 96 467; 51 All. 487. Wis. 591; 65 Am. St. Rep. 83; 72 X. W. 45. IMPLIED CONTKACTS AND QUASI-CONTEACTS. 1247 recover from him.'' In some jurisdictions, it is held that pay- ments of usurious interest are necessarily made under compul- sion, and hence may be recovered, even though the contract has been fully performed, and there is no statute specifically pro- viding for recovery.® A common carrier and a shipper do not stand upon terms of equality. The shipper is usually under a practical compulsion to have his property transported at once. He does not know, and he has no means of communicat- ing with the officers of the road whose business it is to fix the charges for transportation. Accordingly, payment by a shipper of an unreasonable charge, or one in excess of the amount fixed by law is not looked upon as one of voluntary payment, and the shipper may recover,'^ even if no protest is made at the time of the over-payment.^ Thus where by law charges must be uni- form, a shipper who has been obliged to pay regular rates while other shippers have received rebates may recover the differ- ence between the rates paid by him -and what he would have been obliged to pay had he received the same rebate.^ So if the carrier has paid to one shipper a jDroportion of the freight charges paid by another shipper, a competitor of the former, the latter may recover such amount from the former.^" But it has been held that under a statute permitting the refunding of excessive charges for freight an action cannot be brought to com- pel such refunding." A private individual and a public officer do not ordinarily stand upon an equal footing.^^ Accordingly, 5 Chesebrough v. United States, Frisbie, 32 Vt. 559 ; West Virginia, 192 U. S. 253. etc., Co. v. Sweetzer, 25 W. Va. 434. 6 Bexar, etc., Co. v. Robinson, 78 ^ Louisville, etc., Ry. v. Wilson, Tex. 163; 22 Am. St. Rep. 36; 9 132 Ind. 517; 18 L. R. A. 105; 32 L. R. A. 292; 14 S. W. 227. See N. E. 311. § 521. 9 Cook V. Ry., 81 la. 551 ; 25 Am. 7 Mobile, etc., Ry. v. Steiner, 61 St. Rep. 512; 9 L. R. A. 764; 46 Ala. 559; Chicago, etc.. R. R. v. N. W. 1080. Coal Co., 79 111. 121; Chicago, etc., »oBrundred v. Rice, 49 O. S. 640; Ry. V. Wolcott, 141 Ind. 267; 50 34 Am. St. Rep. 589; 32 N. E. 169. Am. St. Rep. 320; 39 N. E. 451; n Randle v. Abeel. 88 Fed. 719. Lafayette, etc.. R. R. V. Pattison, 41 12 American Steamship Co. v. Ind. 312; Peters v. R. R.. 42 0. S. Young, 89 Pa. St. 186; 33 Am. Rep. 275; 51 Am. Rep. 814; Beckwith v. 748; Marcotte v. Allen, 91 Me. 1248 PAGE ON CONTKACTS. a payment demanded and received of a public officer, under color of office, may be recovered by the private person makino such payment, even if he makes it under a mistake of law. Thus where A lived in a county attached for certain purposes to another at the time that certain taxes were levied, but sub- sequently reorganized as a separate county before such taxes were paid, and A pays his taxes to the treasurer of such other county, A may recover such taxes from such county/^ So a postmaster who exacts an unauthorized fee for delivering let- ters may be made to refund such payment in an action for money had and received/* If the public officer receives fees to which he is not entitled, and he know^s that the person pay- ing them is ignorant of the law and makes such payments be- cause he thinks he is bound by law to pay them, his act in re- ceiving such payment without informing the other person of his rights, is looked upon as a fi'aud, and the party making such payments may recover them/^ Whenever a payment made in ignorance of the law^ is induced by the fraud or imposition of the other party and especially if the parties are not on an equal footing, an action to recover it back is maintainable/'' Payment made to a public officer by a private citizen, for services which the officer was not required to render as a part of his public duty, cannot be recovered. Thus, if an auditor makes a special charge for services in preparing a bond which he is not re- quired by his office to do, a payment therefor cannot be re- covered.^^ The legislature has power to change the Common Law rule that money paid under mistake of law cannot be recovered, and may give a right of action against a public officer who col- lects, from a private person, fees to which he is not entitled by law.^^ If legal and illegal charges are so blended by the officer 74; 40 L. R. A. 185; 39 Atl. 346. 40 L. E. A. 185; 39 Ail. 346; Bank 13 Fremont, etc., Ry. v. Holt Coun- v. Daniel, 12 Pet. (U. S.) 32. ty, 28 Neb. 742; 45 N. W. 163. " Eley v. Miller, 7 Ind. App. 529; 14 Barnes v. Foley, 5 Burr. 2711. 34 N. E. 836. iGMarcotte v. Allen, 91 Me. 74; is Benson v. Christian, 129 Ind. 40 L. R. A. 185; 39 Atl. 346. 535; 29 N. E. 26. leMarcotte v. Allen, 91 Me. 74; IMPLIED CONTKACTS AND QUASI-CONTRACTS. 1249 making them, that the legal cannot he separated from the illegal, be may be liable to pay all fees thus received.^" A borrowed money from a school fund. The county auditor made an illegal demand for a payment as a penalty as delinquent inter- est. A paid such amount into the county treasury. The county attorney was paid for his services in obtaining such payment out of the county revenue funds. It was held that A could not recover from any of these officers ; since the auditor, who had demanded the payment, did not receive it, the treas- urer who received it did not exact it; and the county attorney was not paid out of such funds. ^** §811. Application of foregoing principles to taxes. Payments unlawfully coerced as taxes may be recovered.* On the other hand, if a tax is paid voluntarily its illegality is no ground for an action to recover it.^ While there is practical unanimity of opinion upon these general propositions, there is a decided lack of harmony in the adjudications upon the ques- tion of what degree of compulsion amounts to a coercion so that the tax may be recovered if it proves to be illegal. This lack of harmony is in part due to a difference in the powers granted by the various states to their taxing officers in making summary collection of taxes. After eliminating these reasons for divergence, however, there remains a clear conflict of author- ity as to what amounts to coercion of payment of taxes. Pay- ment of taxes has been held to be made under duress where 19 Benson v. Christian, 129 Ind. v. Goodale, 66 N. H. 424; 30 Atl. 535; 29 N. E. 26. 1121; Raleigh v. Salt Lake City, 17 20 Coleman v. Goben, 16 Ind. App. Utah 130; 53 Pac. 974; Wyckoff v. 346; 45 N. E. 194. King County, 18 Wash. 256; 51 Pac. 1 Eyerly v. Jasper County, 72 la. 379. 149; 33 N. W. 609; Connelly v. 2 Dear v. Varnum, 80 Cal. 86; 22 Board, 64 Kan. 168; 67 Pac. 453; Pac, 76; Board, etc., v. Springs Newport v. Eingo, 87 Ky. 635; 10 Co., 15 Colo. App. 274; 62 Pac. S. W. 2; National Bank v. New 336 ; Johnson v. Atkins, — Fla. — ; Bedford, 155 Mass. 313; 29 N. E. 32 So. 879; Jeem v. Ellijay, 89 Ga. 532; Wheeler v. Board, etc., 87 L54; 15 S. E. 33; Odendahl v. Rich, Minn. 243; 91 N. W. 890; Benton 112 la. 182; 83 N. W. 886; Monti- 79 1250 PAGE ON CONTRACTS. arrest was threatened;'' or criminal proceedings;* or where the omission to pay an excise tax was made a crime f or where property is withheld f or seizure' or sale thereof is threatened f such as will cast a cloud upon the owner's title/ or terminate the owner's rights ;^° as where the collector threatens to sell lands on a tax warrant, or the holder of a tax title threatens to claim a tax deed unless the land is redeemed/^ If a tax sale casts a cloud on the title, money paid to redeem property from such sale is not paid voluntarily and may be recovered/^ Thus, while as a general rule, a mortgagor or one claiming under him who buys at a tax sale, cannot assert any claim by reason thereof as against a mortgagee, yet if the purchaser at a tax sale is the equitable owner holding under an assignee of a second mortgagee and his interest does not appear of cello, etc., Co. v. Baltimore, 90 Md. 416; 45 Atl. 210; Foley v. Haver- hill, 144 Mass. 352; il N. E. 554; Falvey v. Board, etc., 76 Minn. 257 ; 79 N. W. 302; State v. R. R., 165 Mo. 597; 65 S. W. 989; Hopkins v. Butte, 16 Mont. 103; 40 Pac. 171; Baker v. Fairbury, 33 Neb. 674; 50 N. W. 950; Bates v. York County, 15 Neb. 284; 18 N. W. 81; Foster V. Pierce County, 15 Neb. 48; 17 N. W. 261 ; State v. Commissioners, 56 0. S. 718; suh nomine, State v. Bader, 47 N. E. 564; Sowles v. Soule, 59 Vt. 131; 7 Atl. 715; Bab- cock V. Fond du Lac, 58 Wis. 230; 16 N. W. 625. 3 Swift Co. V. United States, 111 U. S. 22; Douglas v. Kansas City, 147 Mo. 428; 48 S. W. 851. 4 Hoefling v. San Antonio, 85 Tex. 228; 16 L. R. A. 608; 20 S. W. 85. 5 Ratterman v. Express Co., 49 O. S. 608 ; 32 N. E. 754. So an inter- nal revenue tax paid under protest may be recovered. Spreckels Sugar Refining Co. v. McClain, 192 U. S. 397. 6 Erhardt v. Winter. 92 Fed. 918. 7 Hennel v. Board, etc., 132 Ind. 32; 31 N. E. 462; Minor Lumber Co. v. Alpena, 97 Midi. 499; 56 N. W. 926; St. Anthony, etc., Co. v. Bottineau, 9 N. D. 346; 50 L. R. A. 262; 83 N. W. 212. 8 Sale of realty. Thompson v. Detroit, 114 Mich. 502; 72 N. W. 320; Whitney v. Port Huron, 88 Mich. 268; 26 Am. St. Rep. 291; 50 N. W. 316; Bowns v. May, 120 N, Y. 357; 24 N. E. 947; Stephan v. Daniels. 27 O. S. 527; Whittaker v. Deadwood, 12 S. D. 608; 82 N. W. 202. Personalty. Hennel v. Board, 132 Ind. 32; 31 N. E. 462; Lyon V. Receiver, etc., 62 Mich. 271; 17 N. W. 839; Kelley v. Rhoads, 7 Wyom. 237; 75 Am. St. Rep. 904; 39 L. R. A. 594; 51 Pac. 593. 9 Montgomery v. Cowlitz County, 14 Wash. 230; 44 Pac. 259. 10 Gill V. Oakland, 124 Cal. 335; 57 Pac. 150. 11 Bowns V. May, 120 N. Y. 357; 24 N. E. 947. 12 American, etc., Union v. Hast- ings, 67 Minn. 303; 69 N. W. 1078. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1251 record, money paid to redeem from such sale may be recov- ered/^ So if a levy on property^* or seizure of property is threatened/^ or by statute the tax is made a lien upon specific personalty, such as bank stock/*' payment is held to be made under compulsion. So where land cannot be conveyed until the tax is paid,^^ or redemption from a tax sale is necessary,^* recovery has been allowed. Where the tax collecting officers have power to collect a tax by summary process without giving to the alleged delinquent a right to be heard in court upon the question of the illegality of the tax, he should not be obliged in order to protect his rights to wait until his property has been actually seized before making payment. When the cir- cumstances are such that unless he pays, his property is liable to summary process in the ordinary routine of collection there is, in justice, no reason for further delay to protect his rights. Accordingly it has been held that under such circumstances payment is under compulsion,^^ even if a considerable time must elapse before the collectors are bound to collect sum- 13 American, etc., Union v. Hast- eovery of taxes illegally exacted if ings, 67 Minn. 303; 69 N. W. 1078. paid under protest, recovery of such 14 Cox V. Welcher, 68 Mich. 263 ; a payment was allowed in Gage v. 13 Am St. Rep. 339; 36 N. W. 69; Saginaw, 128 Mich. 682; 87 N. W. Lindsay v. Allen^ 19 R. I. 721; 36 1027. Hence the treasurer cannot Atl. 840. be compelled by mandamus to issue 15 Powder River Cattle Co. v. a receipt, illegal taxes being un- Custer County, 45 Fed. 323; Hennel paid, as the owner may pay them V. Vanderburgh Co., 132 Ind. 32; under protest to get his deed and 31 N. E. 462; Atchison, etc., Ry. recover them. State v. Nelson, 41 Co. V. Atchison County, 47 Kan. Minn. 25;. 4 L. R. A. 300; 42 N. W. 722 ; 28 Pac. 999 ; Kelley v. Rhoads, 548. 7 Wyom. 237; 75 Am. St. Rep. 904; is Keehn v. McGillicuddy, 19 Ind. 39 L. R. A. 594; 51 Pac. 593. App. 427; 49 N. E. 609; American 16 Aetna Ins. Co. v. New York, Baptist Missionary Union v. Hast- 153 N. Y. 331; 47 N. E. 593. ings, 67 Minn. 303; 69 N. W. 1078. Instate V. Nelson, 41 Minn. 25; is Howard v. Augusta, 74 Me. 79; 4 L. R. A. 300; 42 N. W. 548. A Vaughn v. Port Chester, 135 N.' Y. contrary view is taken in Weston v. 460; 32 N. E. 137; Grim v. School Luce County, 102 Mich. 528; 61 District, 57 Pa. St. 433; 98 Am. N. W. 15, but subsequently in view Dec. 237; Allen v. Burlington, 45 of the Michigan statute allowing re- Vt. 202. 1252 PAGE ON CONTEACTS. inarily,"" and even if the warrant lias not yet issued.^^ In some jurisdictions the courts are far less liberal in allovving recovery of payment of taxes. Payment of customs without objection or protest is held to be voluntary."" Payment of illegal taxes under protest, before the collector has made any demand therefor,"^ or before any process has issued for its collection,"* or before any legal steps have been taken to compel payment,"^ or before the collector has any power to collect taxes by legal proceedings or summary process"*' is voluntary. Pub- lication of a delinquent tax-list, under the method of collecting taxes in force in some states does not constitute compulsion."^ Where such publication is one of the steps leading up to a sale, this rule could not apply except where the sale itself would be held not to amount to compulsion. Payment to avoid a money penalty for non-payment is held to be voluntary,^^ though in some jurisdictions such payment is held to be voluntary."* , The reductio ad ahsurdum of the former view is found in those decisions which hold that payment made to prevent the sale of realty for a void tax is voluntary and cannot be re- covered.^" This holding is based on the theory that the owner's method of testing the validity of the tax is to allow the sale to proceed and then to attack it whenever the attempt is made to deprive of his realty under it. A jurisprudence which can devise no fairer means than this of attacking the validity cf a soRumford Chemical Works v. Newell, 15 R. I. 233; 2 Atl. 766. Ray, 19 R. I. 456; 34 Atl. 814. 26 Peninsular Iron Co. v. Crystal 21 Board, etc., v. R. R., 4 Kan. Falls, 60 Mich. 79; 26 N. W. 840. App. 772; 46 Pac. 1013. 27 Dear v. Varnum, 80 Cal. 86; 22 Flint, etc., Co. v. Bidwell, 123 22 Pac. 76. Fed. 200. 28 Decker v. Perry (Cal.), 35 23ConkIingv. Springfield, 132 111. Pac. 1017; Peninsular Iron Co. v. 420; 24 N. E. 67. Crystal Falls, 60 Mich. 79; 26 N. 24 Decker v. Perry (Cal.), 35 W. 840; Bowman v. Boyd, 21 Xev. Pac. 1017; Wilson v. Pelton, 40 O. 281; 30 Pac. 823. S. 306; Houston v. Feeser, 76 Tex. 29 Stowe v. Stowe^ 70 Vt. 609; 365; 13 S. W. 266. 41 Atl. 1024. 25 Conkling v. Springfield, 132 111. so Phelan v. San Francisco. 120 420; 24 N. E. 67; Gould v. Board, Cal. 1; 52 Pac. 38; Otis v. People, etc., 76 Minn. 279; 79 N. W. 196 111. 542; 63 N. E. 1053. 303, 530; Bunnell Mfg. Co. v. IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1253 tax, and which has grown up in a country where not all taxes are valid by divine right, is indeed inadequate. One who pays for revenue stamps without notifying the collector of their intended use and without making protest cannot recover such payment, ^^ It is always possible for the government to do justice and to order voluntarily the payment of taxes illegally exacted.^^ Statutes authorizing repayment of illegal taxes are for the benefit of the parties making such payments, and hence even if permissive in their terms are construed as mandatory,^^ Moved by the injustice of the rules in force in many jurisdic- tions, some legislatures have made more or less liberal provision for the recovery of payments of illegal taxes. ^* The effect of such statutes often is to eliminate the question of duress en- drely, and to allow recovery of payments of illegal taxes even if made voluntarily.^^ Thus a statute may provide for re- 20very of illegal taxes paid voluntarily, if a proper ground of objection to such tax is contained in the protest made at the time of such payment.^® The provisions of such statute must be complied to enable recovery thereunder. If the statute re- quires a specific protest, voluntary payment under a general protest cannot be recovered. ^^ A payment extorted by com- pulsion may, however, be recovered without complying with these statutes.^* The general rules as to recovering taxes paid under duress are always subject to this qualification. If the legislature has SI Chesebrongh v. United States, Day v. Pelican, 94 Wis. 503 ; 69 N. 192 U. S. 253. W. 368. 32 Farmers', etc., Bank v. Vanda- 35 Pacific Coast Co. v. Wells, 134 lia, 57 111. App. 681; Lange v. Sof- Cal. 471; 66 Pac. 657; Matter of fell, 33 111. App. 624. Adams v. Board, etc., 154 N. Y. 33 De Pauw Plate-Glass Co. v. 619; 49 N. E. 144; Centennial, etc., Alexandria, 152 Ind. 443; 52 N. E. Co. v. Juab County, 22 Utah 395; 608. 62 Pac. 1024. 34 White V. Smith, 117 Ala. 232; 36 \Miite v. Millbrook Township, 23 So. 525; Topeka, etc., Co. v. 60 Mich. 532; 27 N. W. 674. Board, etc., 63 Kan. 351; 65 Pac. 37 Peninsular Iron Co. v. Crystal 660; Western Ranches v. Custer Falls. 60 ]\Iich. 79; 26 N. W. 840. County, 28 Mont. 278; 72 Pac. 659; ss Pere Marquette R. R. v. Luding- ton, — Mich. — ; 95 N. W. 417. 1254 PAGE ON" CONTRACTS. provided means for testing the legality of a tax, without risking loss of property, imprisonment, and the like, such method must be resorted to. Payment made without seeking such remedy will be deemed voluntary.^® Thus where an application for abatement may be made, payment under protest without making such application cannot be recovered.**" If an injunction to restrain the collection of an illegal tax is granted, and subse- quently the treasurer threatens a sale of property for such tax the remedy of the property owners is by proceedings in contempt of court. Subsequent payment of such tax under such threat is voluntary and cannot be recovered.*^ However, recovery has been allowed where in addition the treasurer makes the false statement that such tax has been held by ihe Supreme Court to be lawful.*' §812. Local assessments. Payment of illegal local assessments, made under duress, may be recovered.^ If such payment is made voluntarily it cannot be recovered.^ As in the case of taxes, the conflict of authority appears when we attempt to pass from such general statements to a discussion of what constitutes payment under duress. The difference between payment of assessments and payment of 39 De Graflf v. Ramsey County, Am. St. Rep. 508; 43 L. R. A. 584; 46 Minn. 319; 48 N. W. 1135; Brad- 77 N. W. 993; Poth v. New York, ley V. Laconia, 66 N. H. 269; 20 151 N. Y. 16; 45 N. E. 372. Atl. 331; Jamaica, etc., Road Co. 2 Richardson v. Denver, 17 Colo. V. Brooklyn. 123 N. Y. 375; 25 X. 398; 30 Pac. 333; Hoke v, Atlanta, E. 476; Pooley V. Buffalo, 122 N. Y. 107 Ga. 416; 33 S. E. 412; New- 592; 26 N. E. 16, 624. comb v. Davenport. 86 la, 291; 53 40 All Saints Parish v. Brooldine, N. W. 232; Louisville v. Anderson, 178 Mass.- 404; 52 L. R. A. 778; 59 79 Ky. 334; 42 Am. Rep. 220; Hop- N. E. 1003. ' kins v. Butte, 16 Mont. 103; 40 Pac. 41 Trustees v. Thoman, 51 0. S. 171; Fuller v. Elizabeth, 42 N. J. 285; 37 N.'e. 523. L. 427; United States Trust Co. v. 42 Greenbaum v. King, 4 Kan. New York, 144 N. Y. 488 ; 39 N. E. 332; 96 Am. Dec. 172. 383; Redmond v. New l^ork, 125 1 Magnolia (Town of) v. Shar- X. Y. 632; 26 N. E. 727; Whitbeck man, 46 Ark. 358; Gill v. Oakland, v. Minch, 48 O. S. 210; 31 N. E. 124 Cal. 335: 57 Pac. 150; McCon- 743; Bank v. Memphis, 107 Tenn. ville V. St. Paul, 75 Minn. 383; 74 66; 64 S. W. 13. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1255 taxes is that while the tax is usually a personal debt enforceable out of property generally and sometimes against the person, an assessment rarely is a personal debt. Payment of assessments has been held to be under duress where realty subject to the lien thereof has been^ or is about to be sold^ in proceedings to enforce the lien of such assessments. Thus where proper authorities have begim active proceedings to collect such assess- ments^ or have ordered that such proceedings be begun,® pay- ment thereof is not voluntary. On the other hand, payment to avoid the addition of interest^ or of a penalty in money* is not made under duress. Even the sale for a void assessment, if it is void and casts no cloud on the title,^ as where the purchaser at the sale has the burden of proving the validity of the sale,^° has been held not to be compulsion ; and a payment compelled by threat of such a sale is in the law a voluntary payment. As in the case of taxes it must be observed that a method of testing the validity of a tax which requires a sale of property thereunder is most unfair and inadequate. Pay- ment under protest is not necessarily under duress.^^ If a means is given by law for testing the validity of the assessment without awaiting the seizure and sale of one's property,^" as by an injunction suit,^^ or if the levy may be resisted as illegal,^* such means must be resorted to: and a failure so to do shows that in law the payment is voluntary. It has been held that sKeehn v. McGillicuddy, 19 Ind. loDavies v. Galveston, 16 Tex. App. 427; 49 N. E. 609. Civ. App. 13; 41 S. W. 145. 4Poth V. New York, 151 N. Y. 16; n First National Bank v. Ameri- 45 N. E. 372; Vaughn v. Port Ches- cus, 68 Ga. 119; 45 Am. Rep. 476; ter, 135 N. Y. 460; 32 N. E. 137. Hawkeye, etc., Co. v. Marion, 110 sPoth V. New York, 151 N. Y. la. 468; 81 N. W. 718; Whitbeck 16; 45 N. E. 372. v. Mineh, 48 O. S. 210; 31 N. E. 6 Vaughn v. Port Chester, 135 N. 743; Peebles v. Pittsburgh, 101 Pa. Y. 460; 32 N. E. 137. St. 304; 47 Am. Rep. 714. 7Vanderbeck v. Rochester, 122 N. 12 Hoke v. Atlanta, 107 Ga. 416; Y. 285; 25 N. E. 408. 33 S. E. 412. 8 Decker v. Perry (Cal.), 35 Pac. i3 \Yhitbeck v. Minch. 48 0. S. 1017. 210; 31 N. E. 743. 9 Phelan v. San Francisco, 120 i* Union Pacific Ry. v. (Commis- Cal. 1; 52 Pac. 38. sioners of) Dodge County. 98 U. S. 541; Hoke v. A'lanta, 107 Ga. 416; 33 S. E. 412. 1256 PAGE ON CONTRACTS. money paid on an assessment, illegal but not void on its face, cannot be recovered until the assessment has been set aside in a proceeding brought for that purpose.^^ §813. License fees. Payment of an illegal license fee made under duress may be recovered.^ A voluntary payment of an illegal license fee cannot be recovered." Here again under harmony in general propositions we find marked divergence of authority in apply- ing these general propositions to specific cases. Where arrest is threatened for conducting a business and the like without paying such license fee,^ or according to some authorities, where the statute or ordinance imposing such license makes non- payment a crime, though no immediate arrest is threatened,* or where non-payment will result in exclusion from the right to do business in the state and no mode of redress or opportun- 15 state V. Elizabeth, 51 N. J. L. 485; 18 Atl. 302; Fuller v. Eliza- beth, 42 N. J. L. 427; Elizabeth v. Hill, 39 N. J. L. 555; Trimmer v. Rochester, 130 N. Y. 401; 29 N. E. 746. Contra, that it is not neces- sary that such assessment be first set aside if valid on its face, but levied by assessors who had no jurisdiction to make such levy. Bruecher v. Port Chester, 101 N. Y. 240; 4 N. E. 272. 1 Walsh V. Denver, 1 1 Colo. App. 523; 53 Pac. 458; Harrodsburg v. Renfro (Ky.), 51 L. R. A. 897; 58 S. W. 795; Bruner v. Clay City, 100 Ky. 567; 38 S. W. 1062; Catoir V. Watterson, 38 O. S. 319; Marshall v. Snediker, 25 Tex. 460; 78 Am. Dec. 534; Newmann v. La Crosse, 94 Wis. 103; 68 N. W. 654. 2 Helena v. Dwyer, 65 Ark. 155; 45 S. W. 349; Maxwell v. San Luis Obispo. 71 Cal. 466; 12 Pac. 484; Wilmington v. Wicks, 2 Marv. (Del.) 297; 43 Atl. 173; Tatum v. Trenton, 85 Ga. 468; 11 S. E. 705; (Town of) Ligonier v. Ackerman, 46 Ind. 552; 15 Am. Rep. 323; Providence v. Shackelford, 106 Ky. 378; 50 S. W. 542; Maysville V. Melton, 102 Ky. 72; 42 S. W. 754; Fuselier v. St. Landry Parish, 107 La. 221; 31 So. 678; Baker v. Fairbury, 33 Neb. 674; 50 N. W. 950; People v. Wil- merding, 136 N. Y. 363; 32 N. E. 1099; Shelton v. Silverfield, 104 Tenn. 67; 56 S. W. 1023; Noyes v. State, 46 Wis. 250; 32 Am. Rep. 710; 1 N. W. 1; Van Buren v. Downing, 41 Wis. 122. 3 Toledo V. Buechle, 21 Ohio C. C. 429; Douglas v. Kansas City, 147 Mo. 428; 48 S. W. 851; Newmann V. La Crosse, 94 Wis. 103; 68 N. W. 654. * Chicago v. Sperbeck, 69 111. App. 562. Contra, Helena v. Dwyer, 65 Ark. 155; 45 S. W. 349; Betts v. Reading, 93 Mich. 77; 52 N. W. 940. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1257 ity for a hearing is given/' such payment is held to be made under duress. So the expense of abating a nuisance on demand of health authorities may be recovered by a property owner where the duty of abating such nuisance really rests on the sanitary authorities and a refusal to comply with the demand Avould render the property owner prima facie liable to a pen- alty.*' In some of the cases denying the right to recover, the voluntary character of the payment is quite clear. Thus pay- ment of a license voluntarily made to a board which has no legal authority to issue such licenses cannot be recovered.^ So a voluntary payment of a license fee by one who subsequently abandons the business because he is unable or unwilling to file a bond as required by law cannot be recovered.* In other cases a right to recover is denied under circumstances which seem to show what to the ordinary mind looks very like com- pulsion. Thus payment made on receipt of a circular threat- ening to enforce the law/ or under threat of criminal prosecu- tion/" has been held not to be made under duress. §814. Recovery of payments made on judgments. — Judgment unreversed. The question whether payments made on a judgment can be recovered depends in the first instance upon the further question whether such judgment has been reversed, set aside, and the like, or whether it has not. If the judgment is not reversed, set aside, or modified in a proper proceeding for that purpose directly attacking the judgment, it is binding between the par- ties if rendered by a court having jurisdiction of the parties and 5 Scottish, etc., Ins. Co. v. Her- <5 Andrew v. St. Olave's, etc. riott, 109 la. 606; 77 Am. St. Rep. (1898), 1 Q. B. 775. 548 ; 80 N. W. 665 ; Douglas v. Kan- 7 Tatum v. Trenton, 85 Ga. 468 ; sas City, 147 Mo. 428; 48 S. W. 11 S. E. 705. 851; Western Union Telegraph Co. s Curry v. Tawas Township, 81 V. Mayer, 28 O. S. 521. Contra, Mich. 355; 45 N. W. 831. Jackson v. Newman, 59 Miss. 385; 9 Yates v. Ins. Co., 200 111. 202; 42 Am. Rep. 367; Austin v. Vir- 65 N. E. 726. oqua, 67 Wis. 314; 30 N. W. 515. lo Belts v. Reading, 93 Mich. 77; 52 N. W. 940. 1258 PAGE ON CONTRACTS. the subject-matter. Since matters concluded by such judg- ment cannot be relitigated it follows that money paid by reason of such judgment cannot be recovered, even if the judgment is erroneous, or should have been rendered for the defeated party on the real merits of the case. The enforcement of such judgment is clearly a resort t6 'the means provided by law for enforcing liabilities, and such payments cannot be said to be made under duress.^ Thus, if money forfeited as bail has been decreed by order of court to the county in wdiich the cause of action was brought, instead of to the county to which the trial was transferred, the latter county, the party who has been prejudiced by such order should appeal from the order : and cannot sue the former county for the money thus paid in, while the order stands unmodified." Thus in a condemnation suit, A the owmer of an undivided interest in realty was awarded a certain sum of money as damages for his interest in the realty appropriated. A partition suit was then pending betw^een A and the other co-owners. Subsequently the tract out of ^vhich the land had been appropriated was awarded to another co-owner, B. It was held that the county which had made the payment in the condemnation proceedings could not recover from A.^ Thus where A, who had at one time been a commissioner of insolvents, assumed to act as such, and required B to give bond with sureties, which B did, and after the bond was forfeited A sued B and such surety, and obtained a judgment which was paid by one of the sureties, such surety cannot recover from A.* So, after a judgment which includes usurious interest, recovery of such usury can 1 Carter v. Society, 3 Conn. 455; Ian v. Brown. 4 Humph. (Tenn.) Warren County v. Polk County, 89 174; 40 Am. Dec. 635. la. 44; 56 N. W. 281; Williams v. 2 Warren County v. Polk County, Shelbourne, 102 Ky. 579; 44 S. W. 89 la. 44; 56 N. W. 281. 110; Footman v. Stetson, 32 Me. 3 Xew Madrid County v. Phillips, 17; 52 Am. Dec. 634; New Madrid 125 Mo. 61; 28 S. W. 321. In this County V. Phillips, 125 Mo. 61; 28 case A was B's guardian. No fraud, S. W. 321; Gerecke v. Campbell, however, was found to exist. 24 Neb. 306; 38 N. W. 847; Kirk- * Job v. Collier, 11 Ohio 422. IMPLIED CONTKACTS AND QUASI-CONTEACTS. 1259 not be bad wbile tbe judgment is unreversed.^ So wbere A was sued as surety on a bail bond, and judgment rendered, and after such judgment be filed a remission of the penalty executed by the governor of the state, but such judgment was not set aside or modified, it was held that A could not recover the amount paid in by him on such judgment.^ Equity has allowed recovery of money paid upon a Common Law judgment which was obtained by fraud, though such judgment is not reversed, set aside or modified/ Thus A held a note signed by the firm B and C, per C. A represented to B that the money for which this note was given was loaned to the firm, and B allowed A to take a judgment on such note. Subsequently B enjoined the collection of such judgment on the ground that it was not a firm debt ; but on A's answer that it was a firm debt, and that the judgment was not obtained by fraud, the injunction was dissolved. B paid such judgment. After payment B found evidence that the money was loaned to C, and used by him to discharge an individual debt. It was held that on these facts B could recover from A in equity.* At law, however, payments on a judgment obtained by fraud cannot be recovered until such judgment is reversed or set aside.** A judgment is not con- clusive as to matters arising after its rendition. Thus, if A is compelled by judicial proceedings to pay assessments for a street improvement and such improvement is thereafter aban- doned, A can recover the money thus paid in.^" §815. Judgment reversed. A different question arises where the judgment has been reversed, set aside, modified, and the like. In such cases a B Footman v. Stetson, 32 Me. 17; 9 Ogle v. Baker, 137 Pa. St. 378; 52 Am. Dec. 634; Thatcher v. Gam- 21 Am. St. Rep. 886; 20 Atl. 998. men, 12 Mass. 268. (Where the judgment was entered 6 Williams v. Shelbourne, 102 Ky. on a warrant of attorney contained 579; 44 S. W. 110. in a -forged note.) 7 West V. Kerby, 4 J. J. Mar. loMcConville v. St. Paul, 75 (Ky.) 55. Minn. 383; 74 Am. St. Rep. 508; 8 Ellis V. Kelly, 8 Bush. (Ky.) 43 L. R. A. 584; 77 N. W. 993. 621. 12G0 , PAGE ON CONTRACTS. payment made upon such judgment can be recovered (1) if made under duress and not voluntarily, and if the judgment is re- versed upon the merits, or (2) if the judgment of reversal con- tains an order of restitution/ If the property of the judgment- debtor is seized and sold on execution and the proceeds paid over to the judgment-creditor, the judgment-debtor may recover such amount from the judgment-creditor." The same principle applies where money in the hands of an officer of the court is distributed by such officer under an erroneous order or decree. Upon reversal, the party who was entitled to such fund may recover from the person to whom it is paid.^ If the law permits execution to issue on a judgment while appeal or pro- ceedings in error are pending, money paid by reason of such execution may be recovered if the judgment is reversed there- after.* Thus if the execution is levied, and payment is made to stop the sale,^ or if an execution has issued but has not been levied and payment is made to prevent a levy,^ such pay- ment is under compulsion and may be recovered. So recovery has been allowed where the execution was forwarded by mail to the debtor, and the amount for which it issued was paid in by him.'^ On the same principle a payment made after a creditor's bill has been filed in equity to enforce the lien of the judgment on certain realty may be recovered after reversal, the court finding as a fact that such payment was compelled by the action, and was not made voluntarily in settlement of the claim.* The same relief has been given, though in another 1 Green v. Stone, 1 Har. & J. s Stevens v. Fitch, 11 Met. (Md.) 405. (Mass.) 248. Contra, Gould v. 2 Crane v. Rimey, 26 Fed. 15; McFall, 118 Pa. St. 455; 4 Am. St. Field V. Anderson^ 103 111. 403; Rep. 606; 12 Atl. 336. (In this Smith V. Zent, 83 Ind. 86; 43 Am. case the jiidofment was reversed for Rep. 61; Sturm v. Fleming, 31 W. technical reasons.) Va. 701; 8 S. E. 263. 6 Lewis v. Hull, 39 Conn. 116; sMetzner v. Bauer, 98 Ind. 425; Travelers' Ins. Co. v. Heath, 95 Pa. In re Home Provident, etc., Associa- St. 333, tion, 129 X. Y. 288 ; 29 N. E. 323. 7 United States Bank v. Bank, 6 4 United States Bank v. Bank. 6 Pet. (U. S.) 8. Pet. (U. S.) 8; Wright v. Nos- « Chapman v. Sutton, 68 Wis. 657; trand. 100 N. Y. 616; 3 N. E. 78; 32 N. W. 683. Travelers' Ins. Co. v. Heath, 95 Pa. St. 333. IMPLIED CONTKACTS AXD QUASI-CONTKACTS. 1261 form, where payments have been made upon a decree in equity, ■which fixes the amount of the debt and orders a sale of the realty. Where such decree has been reversed because the amount of the debt was ascertained erroneously by the trial court, payments on the original decree should be credited upon the subsequent decree.® In some cases the court does not think it necessary to indicate more than that money was paid on a writ of execution without indicating whether a levy was made or not, on the ground that in either case payrnent was made by duress." If execution has not issued, but may issue at the option of the judgment-creditor, there is some conflict of author- ity on the question whether payment of the judgment is volun- tary. In some jurisdictions it is held that if the judgment- debtor pays such judgment before execution issues he does not do so voluntarily.^^ Where this view obtains, such pay- ments may be recovered,^^ even if the surety who pays the judgment against himself and his principal takes a formal assignment of the judgment to keep it alive against the prin- cipal.^^ Eelief is also given in such cases on a rule by the court to which such cause is sent on reversal to show cause why restitution should not be made.^* In other jurisdictions pay- ment of a judgment on which execution has not issued is not under duress,^^ even if execution is threatened,^^ and such pay- 9 Effinger v. Kenney, 92 Va. 245; ment should have been coerced by 23 S. E. 742. execution." Scholey v. Halsey, 72 10 As where the return " money N. Y. 578. made: paid by John Heath," left 1 3 Gates v, Brinkley, 4 Lea it in doubt whether a levy had been (Tenn.) 710. made or not. Travelers' Ins. Co. v. i* Gregory v. Litsey, 9 B. Mon. Heath, 95 Pa. St. 333. (Ky.) 43; 48 Am. Dee. 415. 11 " He may as well pay the is Groves v. Sentell, 66 Fed. 179; amount at one time as at another Cohen v. Laundry Co., 99 Ga. 289; and save the expense of delay." Pey- 25 S. E. 689 ; Estes v. Thompson, ser v. Mayor, 70 N. Y. 497, 501; 26 90 Ga. 698; 17 S. E. 98; Lowis v. Am. Rep. 624; quoted in Chapman Brewing Co., 63 111. App. 345; Gould V. Sutton, 68 Wis. 657; 32 N. W. v. McFall, 118 Pa. St. 455; 4 Am. 683. St. Pep. 606; 12 Atl. 336. 12 Scholey v. Halsey, 72 N. Y. lo Perryman v. Pope, 94 Ga. 672; 578. "It is not necessary in order 21 S. E. 715. to maintain the action that the pay- 1262 PAGE ON CONTKACTS. ment, therefore, cannot be recovered. Hence a payment of a judgment in which excessive attorney's fees have been awarded, made in order to clear the title to realty so that a new loan could be effected, cannot be recovered.^' So if a judgment is jDaid voluntarily while appeal or error proceedings are pending, such payment cannot be recovered even thougji the decree ap- pealed from is modified or reversed.^^ When Ivalmbach v. Foote first came before the Supreme Court" it was held that a payment under a threatened levy made to the attorney of the plaintiff and retained by him for his own use could be recovered from him. The judgment below was reversed and the cause remanded. When it came before the Supreme Court a second time the evidence showed that no threat of levy was made, that the party making the payment, a surety of the principal debtor made the payment voluntarily and took an assignment of the judgment against his principal, which was afterwards reversed, and that the attorney who collected the money paid it over to his client, not even retaining his fees. It was then held that such payment could not be recovered."" Thus, where A's land is sold as the property of B, and while an appeal is pending A voluntarily pays the amount necessary to redeem such realty, A cannot recover such payment when the decree under Avhich the realty was sold is reversed.'^ But where no opportunity to make a defense is given to the judg- ment-debtor, as where a cognovit judgment is taken, payment or giving a new security may be considered as made under duress.^^ Where the officer who is about to serve the execution has an agreement with the judgment-creditor to receive half the proceeds collected, and such agreements are illegal, it has been held that because of such interest, a payment or security given "Estes V. Thompson, 90 Ga. 698; i9 79 Mich. 236; 44 N. W. 603. 17 S. E. 98. 2oKalmbach v. Foote, 86 Mich. 18 Weaver v. Stacy, 93 la. 683; 62 240; 49 N. W. 132. N. W. 22; Kalmbach v. Foote, 86 21 Weaver v. Stacy, 93 la. 683; 62 Mich. 240; 49 N. W. 132; Ditman v. N. W. 22. Raule, 134 Pa. St. 480; 19 All. 22 Knox County Bank v. Doty, 9 676. O. S. 506; 75 Am. Dec. 479. IMPLIED CONTRACTS AND QUASI-CONTBACTS. 1263 to avoid such unlawful levy is given under duress.^^ Whether the judgiuent-debtor's right of action for involuntary payments always accrues on reversal is a question on which there is a divergence of authority. In some cases the right of the debtor to recover is denied if the money belongs in good conscience to the creditor.'* Money which is paid in satisfaction of a judg- ment cannot be recovered where the judgment is reversed, not upon the merits, but upon mere technicalities, as where the judgment was reversed because the judgment-creditor who took a default judgment had omitted to make proof in proper form,"^ or because it was held that the judgment creditor had tech- nically waived his right to recover."® On reversal of a judg- ment in foreclosure, as being excessive in amount,^^ the trial court attempted to evade the reversal by the Supreme Court, by reducing and modifying its original judgment nunc pro tunc; while this innovation in procedure was held erroneous,"^ it was held that the defendant could not recover from the plaintiff for the rents during the time that plaintiff was in possession as purchaser under the erroneous order of sale, since " his only remedy is to have them applied on the mortgage debt."^^ In other cases the court has ordered restitution as a matter of course, and has declined to prejudge the result of a new trial following reversal in a proceeding to recover. ^'^ A suit in assumpsit has been held to lie where an action by an insurance company against its agent for premiums collected by him had 23 Van Dusen v. King, 106 Mich. W. 873. In these cases, however, 133; 64 N. W. 9. This is "fraud the payment is looked upon as, to and coercion." It is " not so much some extent, a voluntary payment. a question of individual right as of 27 For judgment of reversal see public policy." London, etc.. Bank v. Bandmann, 24Cowdery v. Bank, 139 Cal. 120 Cal. 220; 65 Am. St. Rep. 179; 298; 96 Am. St. Rep. 115; 73 Pac, 52 Pac. 583. 196; Teasdale v. Stoller, 133 Mo. 28 Cowdery v. Bank, 139 Cal. 298; 645; 54 Am. St. Rep. 703; 34 S. 96 Am. St. Rep. 115; 73 Pac. 196. W. 873. 29 Cowdery v. Bank, swpra (quota- 25 Gould V. McFall, 118 Pa. St. tion: 139 Cal. 309; 96 Am. St. Rep. 455; 4 Am. St. Rep. 606; 12 Atl. 124; 73 Pac. 196). 336. 30 £'^ parte Walter, 89 Ala. 237; 26 Teasdale v. Stoller, 133 Mo. 18 Am. St. Rep. 103; 7 So. 400. 645; 54 Am. St. Rep. 703; 34 S. (In this case the trial court was 126-i PAGE ON CONTRACTS. resulted in judgment whicli lie had been compelled to pay: and this judgment had subsequently been reversed, not because the premiums did not belong to the company, but because the company, not having complied with the statute authorizing it to do business in that state, was not allowed to enforce rights growing out of such business.^^ Under the former practice recovery of what a judgment-debtor had lost by reason of the judgment was effected by a writ of restitution, if the record disclosed what he had lost or by an action in scire facias if it did not.^' Under modern practice the reversing court may order restitution,^^ even if the judgment is reversed because the trial court lacked jurisdiction.^* Even where a judgment has been reversed on the ground that the trial court had no juris- diction,^^ the trial court may retain the case for the purpose of enforcing restitution.^® If the judgment of reversal contains an order of restitution the judgment-debtor may recover in- dependent of any question whether payment by him was volun- tary or involuntary.^" Such question of voluntary payment should be raised as a ground for refusing to reverse. The judg- ment of reversal and restitution " establishes beyond further question the right of plaintiff in error to be restored to all things which he has lost by reason of the erroneous judgment. Its justice cannot be rejudged in any collateral proceeding."^* compelled by mandamus to order as Brook v. Fuel Co., 139 U, S.- restitution after reversal without 216. (Since, except in case of nego- reference to the probable result of tiable instruments and the like, an a new trial.) Murray v. Berdell, assignee could not bring an action 98 N. Y. 480. in the United States courts on the 31 Travelers' Ins. Co. v. Heath, 95 ground of being a citizen of another Pa. St, 333. state from that in which the de- 32 Anonymous, 2 Salk, 588; fendant was domiciled unless his United States Bank v. Bank, 6 Pet. assignor could have so brought an (U. S.) 8. action.) ssEx parte Morris, 9 Wall. (U. se Xorthwestern Fuel Co. v. S.) 605; Morris's Cotton, 8 Wall. Brock. 139 U. S. 216. (U.S.) 507 ; Market National Bank s- Hiler v. Hiler. 35 O. S. 645; V. Bank, 102 N. Y. 464; 7 X. E. Breading v. Blocher, 29 Pa. St. 347. 302. 38 Breading v. Blocher, 29 Pa. St. 34 O'Reilly v. Henson, 97 Mo. App. 347, 349 ; quoted in Hiler v. Hiler^ 491; 71 S. W. 109. 35 0. S. 645. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1265 An action in scire facias or a writ of restitution are neither indispensable at modern practice. A direct action for money had and received may be maintained.^* This right, however, has been limited in some states to cases where no order of restitution was made on reversal.^^ The fact that restitution is asked and refused in the proceedings which result in reversal does not prevent a separate action in assumpsit.*^ The statu- tory method of restitution is not exclusive and does not prevent an action in assumpsit.^^ Trespass, however, will not lie if the judgment upon which the execution issued under which the judgment debtor's property was taken and sold was merely erroneous and not void. The debtor's remedy is in assumpsit.*^ The right of action for money paid exists in favor of the real party in interest whose money has been paid to the judgment creditor, even if he is not a party of record.** It lies against the judgment creditor to whom or on whose behalf money has been paid. Thus if money of a judgment debtor is applied to paying witness fees which should have been paid by the judgment creditor, the debtor's action on reversal is against the sheriff and he cannot recover from the witness.*^ In an action for money had the debtor may recover the amount of the pro- ceeds of his property, if it has been sold on execution, paid over to or on behalf of the judgment creditor.*^ If the property sells for less than its value, or its seizure has caused other dam- age to the judgment debtor, it is evident that this right of re- covery is inadequate. Accordingly in some jurisdictions the 39 Eaun V. Reynolds, 18 Cal. 275; 43 Field v. Anderson, 103 111. Haebler v. Myers, 132 N. Y. 363; 403. 28 Am. St. Pep. 589; 15 L. R. A. 44 Stevens v. Fitch, 11 Met. 588; 30 N. E. 963; Clark v. Pin- (Mass.) 248. ney, 6 Cow. (N. Y.) 298. 45 Gray v. Alexander, 7 Humph. 40 Duncan v. Kirkpatrick, 13 S. & (Tenn.) 16. P. (Pa.) 292. 46 Thompson V. Reasoner, 122 Ind. 41 Travelers' Ins. Co. v. Heath, 95 454; 7 L. P. A. 495; 24 N. E. 223; Pa. St. 333. Martin v. Woodruff, 2 Ind. 237; 42 Haebler v. Myers, 132 N. Y. Peck v. McLean, 36 Minn. 228; 1 363; 28 Am. St. Pep. 589; 15 L. P. Am. St. Pep._^ 665; 30 N. W. 759; A. 588 ; 30 N. E. 963. Lewis v. Ry., 97 Wis. 368 ; 72 N. W. 976. 80 1266 PAGE ON CONTRACTS. judgment debtor is not limited to this measure of damages, but may recover the value of his property so seized on execution.*' VI. Payment Obtained by Fraud. §816. Payment obtained by fraud. As has already been stated^ one who has been induced to enter into a contract by the fraud of the adversary party, has an election of remedies, one of which is to avoid the contract and recover what he has parted with or a reasonable compensa- tion therefor. Where fraud exists, we have few of the com- plications that limit recovery of payments made by mistake. The chief question that makes this branch of the subject difficult is the extent of the right to waive tort and sue in contract. If money has been paid under such contract, the right of the party defrauded to waive the tort and recover such payment on the theory of an implied contract, in general assumpsit, is very generally recognized.^ Thus one who pays money, deceived by fraudulent representations of the adversary party with reference to the mortgage which the latter is selling to the former, may recover such payment in assumpsit.^ So if a vendor is induced by fraudulent representations to accept securities in payment for his goods, he may credit the value of such securities on the purchase price of such goods and sue in assumpsit to recover the difference.* So money paid by drawee on a draft accepted 47 Reynolds v. Hosmer, 45 Cal. Va. 385; 22 S. E. 73; Burke v, Ry., 616; Gould v. Sternberg, 128 111. 83 Wis. 410; 53 N. W. 692. 510; 15 Am. St. Rep. 138; 21 N. E. 3 Cornell v. Crane, 113 Mich. 460; 628; McJilton v. Love, 13 111. 486; 71 N. W. 878; Robinson v. Welty, Smith V. Zent, 83 Ind. 86; 43 Am. 40 W. Va. 385; 22 S. E. 73. So of Rep. 61. ^ purchase of a bond. Ripley v. iSee § 131. Chase, 78 Mich. 126; 18 Am. St. 2Hanrahan v. Provident Associa- Rep. 428; 43 N. W. 1097. tion, 67 N. J. L. 526; 51 Atl. 480; * Blalock v. Phillips, 38 Ga. 216; affirming 66 N. J. L. 80; 48 Atl. Hidey v. Swan, 111 Mich. 161; 69 517; Jackson v. Hough, 38 W. Va. N. W. 225; Willson v. Foree, 6 236; 18 S. E. 575; Weis v. Ahren- Johns. (N. Y.) 110; 5 Am. Dec. beck, 5 Tex. Civ. App. 542; 24 S. 195. W. 356; Robinson v. Welty, 40 W. IMPLIED CONTEACTS AND QUASI-CONTRACTS. 1267 " against indorsed bills of lading " attached to the draft, may be recovered when these bills of lading were in fact fictitious.^ Money paid by shippers to a carrier of goods in excess of charges made to other shipj)ers of similar goods by such carrier, in- duced by the statement of such carrier that it gave no lower rates, may be recovered.** Recovery exists in cases of fraud though the party guilty of fraud is thus securing from the party who seeks recovery, the payment of a debt due from a third party. Thus A had embezzled money from a railway company B. B's agent represented to X that payment of a certain sum would make good such shortage and enable A to retain his position. In fact the shortage was much greater, and A was discharged. It was held that X could recover such payment from B.^ Money paid for realty, under a contract voidable for fraud may be recovered if a reconveyance is tendered.^ If payment is obtained by fraudulent representation of fact as to the existence of liability, such payment may be recovered, even though no contract existed between the parties.** Thus, if an agent obtains money as commissions from his principal by fraudulently representing that certain parties to whom he had sold on credit were solvent, such payment may be recovered.^** So if A obtains money from B under a contract to use it in making a joint purchase, which contract A has no intention of performing ;^^ or if A obtains money from B by falsely claim- ing to be the holder of B's note, which he has in fact transferred, and on which he then declines to pay such money,^' such pay- ments may be recoverd. A volunteer cannot recover on this 5 Guaranty Trust Co. v. Grotrian, 23 N. E. 615; Ingalls v. Miller, 121 114 Fed. 433; 57 L. R. A. 689; 52 Ind. 188; 22 N. E. 995; Frick v. C. C. A. 235. Larned, 50 Kan. 776; 32 Pac. 383; 6 Cook V. Ry., 81 la. 551 ; 25 Holland v. Bishop, 60 Minn. 23 ; 61 Am. St. Rep. 512; 9 L. R. A. 764; N. W. 681; Gillespie v. Evans, 10 46 N. W. 1080. S. D. 234; 72 N. W. 576. 7 Burke v. Ry., 83 Wis. 410; 53 lo Frick v. Larned, 50 Kan. 776; N. W. 692. 32 Pac. 383. 8 McKinnon v. Vollmar, 75 Wis. n Holland v. Bishop, 60 Minn. 82; 17 Am. St. Rep. 178; 6 L. R. 23; 61 N. W. 681. A. 121; 43 N. W. 800. 12 Gillespie v. Evans, 10 S. D. 9 People V. Foster, 133 111. 496; 234; 72 X. W. 576. 1268 PAGE ON CONTKACTS. theory, however. The right of recovery is limited to the party making the payment or his legal representatives. A obtained a loan of money from B through B's agent X, by fraud. B was thereafter dissatisfied, and X, being under no legal liability, repaid him the amount advanced and took -A's security. It was held that X could not recover from A in quasi-contract.^^ This right of recovery cannot be made a means of collecting damages in tort. Only the person who receives the payment is liable. Thus A, agent of X, by fraudulent representations, induced B to enter into a contract with X and to pay money thereunder to X. B cannot recover from A for money had and received.^* By statute in some states assumpsit may be brought against the person guilty of deceit, even if no money was paid to him or for his benefit under such transaction.^^ Recovery may be had where payments are induced by constructive fraud.^® Thus where bonds of a corporation are in effect, though under a disguise in outward form, sold to its directors at a discount, the amount of such discount may be recovered from such purchasers.^^ If goods are sold under a contract induced by fraud, we have, by reason of the divergent theories concerning the right to waive tort and sue in assumpsit, ^^ two views: one that the vendor may waive the tort and sue in assumpsit,^^ and one that he cannot sue in assumpsit, but must sue either in replevin or trover.^* A constructed for B an apparatus for making gas. Soon afterwards it was destroyed by fire. On B's fraudulent statement that this was the fault of the gas apparatus, A agreed to do certain repairing, without charge. After making such repairs, A learned of B's fraud and brought suit in assumpsit for a reasonable compensation. isSteiner v. CHsby, 103 Ala. 181; i7 Fitzgerald v. Construction Co., 15 So. 612. 41 Neb. 374; 59 N. W. 838. 14 Minor v. Baldridge, 123 Cal. is See § 840 et seq. 187; 55 Pac. 783. i» Where credit is obtained by 15 Hallett V. Gordon, 122 Mich. fraud the vendor may sue in as- 573; 82 N. W. 827; modifying on sumpsit at once. Crown Cycle Co. rehearing 122 Mich. 567; 81 N. W. v. Brown, 39 Or. 285; 64 Pac. 451. 556. 20 Jones v. Brown, 167 Pa. St. 16 See Ch. XI. 395; 31 Atl. 647. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1269 It was held that he could recover."^ The right to recover in assumpsit assumes that on discovering the fraud the party de- frauded elects to disaffirm the express contract. If he elects to affirm, he cannot sue in general assumpsit. Thus a de frauded vendor who affirms the contract, cannot thereafter sue the vendee for the amount realized by him on a resale.^^ VII. Payment by Misrepresentation. §817. Payment by misrepresentation. Payment made under misrepresentation presents fewer diffi- culties than payment by mistake. In cases of mistake both parties are innocent, though one may be negligent. In pay- ment by misrepresentation, the party receiving the payment has by his false statement caused such payment to be made. Though he is innocent of intentional wrong-doing, and is not guilty of a tort, such payment may be recovered.^ Thus, where A in- duced B to pay money a second time, by stating that B had not delivered it the first time," or if a creditor induces an illiterate debtor to make an overpayment by stating that an amount was due on a debt on which part payments had been made larger than was in fact due f or if A induces B to pay him a thousand dollars by claiming an interest in B's land, when in fact A had none ;* or if A obtains money from B for certain realty by an innocent misrepresentation as to the identity of such realty;^ or if an administrator obtains payment of 21 Citizens', etc., Co. v. Granger, dollars for A, which A claimed not 118 111. 266; 8 N. E. 770. to have received. 22 Bedier V. Fuller, 116 Mich. 126; 3 steere v. Oakley, 186 Pa. St. 74 N. W. 506. 582; 40 Atl. 815. 1 Putnam v. Dungan, 89 Cal. 231; « Putnam v. Dungan, 89 Cal. 231; 26 Pac. 904; Blue v. Smith, 46 111. 26 Pac. 904. App. 166; Fisher v. During, 53 Mo. 5 Thwing v. Lumber Co., 40 Minn. App. 548; Montgomery County v. 184; 41 N. W. 815; Buckley v. Pat» Fry, 127 N. C. 258; 37 S. E. 259. terson, 39 Minn. 250; 39 N. W. 2Houser v. McGinnas, 108 N. C. 490; McKinnon v. Vollmar, 75 Wis. 631; 13 S. E. 139. B was acting 82; 17 Am. St. Rep. 178; 6 L. R. as express messenger and had A. 121 ; 43 N. W. 800. charge of a package of five hundred 1270 PAGE O^r CONTRACTS. excessive fees by misrepresenting the amount thereof f such pay- ments may be recovered even though no fraud is found to exist. If fraud exists, the right to recover in some form of action is still clearer. As fraud is a tort, however, the question becomes one of the right to waive a tort and sue in quasi-contract.'' VIII. Payment under mistake of fact. §818. Payment under mistake of fact. A person who, under a mistake of material fact, makes a payment which he is not under legal liability to make, can recover the money thus paid, if the other elements necessary in an action to recover payments are present.^ In other words. 6 Blue V. Smith, 46 111. App. 166. 7 See § 840 et seq. 1 Kelly V. Solari, 9 M. & W. 54; Adams v. Henderson, 168 U. S. 573; United States v. Barlow, 132 U. S. 271; Espy v. Bank, 18 Wall. (U. S.) 604; Hardigree v. Mitchimi. 51 Ala. 151; Lutz V. Rothschild (Cal.) ; 38 Pae. 360; Putnam v. Dungan, 89 Cal. 231; 26 Pae. 904; Corson v. Berson, 86 Cal. 433; 25 Pae. 7; Hogben v. Ins. Co., 69 Conn. 503; 61 Am. St. Rep. 53; 38 Atl. 214; Mansfield v. Lynch, 59 Conn. 320; 12 L. R. A. 285; 22 Atl. 313; Peo- ple V. Foster, 133 111. 496; 23 N. E. 615; Tuller v. Fox, 46 111. App. 97; Blue v. Smith, 46 111. App. 166; Stotsenburg v. Fordice, 142 Ind. 400: 41 N. E. 313, 810; Stokes v. Goodykoontz, 126 Ind. 535; 26 N. E. 391; Cross v. Herr, 96 Ind. 96; Tarplee v. Capp, 25 Ind. App, 56; 56 N. E. 270; Chickasaw, etc., Ins. Co. V. Weller, 98 la. 731 ; 68 N. W. 443; Cook V. Ry., 81 la. 551; 25 Am. St. Rep. 512; 9 L. R. A. 764; 46 N. W. 1080; Rhodes v. Lambert (Ky.), 58 S. W. 60S; Lyon v. Ma- son, etc., Co., 102 Ky. 594; 44 S. W. 135; Gould v. Emerson, 160 Mass. 438; 39 Am. St. Rep. 501; 35 N. E. 1065; Garland v. Bank, 9 Mass. 408; 6 Am. Dec. 86; Con- nell V. Hudson, 53 Mo. App. 418; Jordan v. Harrison, 46 ]\Io. App. 172; Wood V. Sheldon, 42 N. J. L. 421; 36 Am. Rep. 523; Martin V. Bank, 160 N. Y. 190; 54 N. E. 717; Sharkey v. Mansfield, 90 N. Y. 227; 43 Am. Rep. 161; Kingston Bank v. Eltinge, 40 N. Y. 391 ; 100 Am. Dec. 516; Ward v. Ward, 12 Ohio C. D. 59; McKibben v. Doyle, 173 Pa. St. 579; 51 Am. St. Rep. 785; 34 Atl. 455; Boaz v. Upde- grove, 5 Pa. St. 516; 47 Am. Dec. 425; Phetteplace v. Bucklin, 18 R. I. 297; 27 Atl. 211; Glenn v. Shan- non, 12 S. C. 570; Caldwell v. Maxfleld, 7 S. D. 361; 64 N. W. 166; Dickens v. Jones, 6 Yerg. (Tenn.) 483; 27 Am. Dec. 488; Guild V. Baldridge, 2 Swan (Tenn.) 295; Neal v. Read. 7 Baxt. (Tenn.) 333 ; Cleveland School Furniture Co, V. Hotchkiss, 89 Tex. 117; 33 S. W. 855 ; Alston v. Richardson. 51 Tex. 1; Peterson v. Bank, 78 Wis. 113; 47 N. W. 368; BuflFalo v. O'Malley, IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1271 such pajments are not looked on as voluntary payments.^ The right of recovering payments made under a mistake of fact is especially clear where government funds have thus been ex- pended/ though the right to recover such funds does not rest solely on the ground of mistake.* §819. Illustrations of mistake of fact. The term " mistake of fact " has been held in cases involving the right to recover payments to include mistakes as to the title to realty/ the existence of a lien thereon/ the solvency of an estate/ as where such insolvency is producd by the subsequent presentation and allowance of claims whose existence was not known to the executor when he overpaid the legatee from whom he is now seeking to recover the excess/ the amount of the assets of a firm/ the release of an indorser by omission of the holder of a check to present it for payment/ and the validity of 61 Wis. 255; 50 Am. Rep. 137; 20 N. W. 913. " Where money is paid upon the supposition that a specific fact, which it . is supposed would entitle the other to maintain an ac- tion, is true, which fact is not true, an action will lie to recover the money back, ' upon the ground that the plaintiff has paid money which he was under no obligation to pay, and which the party to whom it was paid had no right either to re- ceive or retain, and which, had the true state of facts been present in his mind, at the time, he would not have paid.'" Ingalls v. Miller; 121 Ind. 188, 190; 22 N. E. 995; quoted in Stotsenburg v. Fordice, 142 Ind. 490, 494; 41 N. E. 313, 810. 2 See § 798. 3 Kelly V. Solari, 9 Mees. & W. 54; United States v. Barlow, 132 U. S. 271. 4 See § 796. 1 Adams v. Henderson. 1G8 U. S. 573 ; Shaw v. Mussey. 48 Me. 247. - Hardigree v. Mitchum, 51 Ala. 151, Rhodes v. Lambert (Ky.), 68 S. W. 608. 3 Mansfield v. Lynch, 59 Conn. 320; 12 L. R. A. 285; 22 Atl. 313; Wolf V. Beaird, 123 111. 585; 5 Am. St. Rep. 565; 15 N. E. 161; Blue v. Smith, 46 111. App. 166; Tarplee v. Capp, 25 Ind. App. 56; 56 N. E. 270; Bliss v. Lee, 17 Pick. (Mass.) 83; Rogers v. Weaver, 5 Ohio 536. But such payment can- not be recovered until after a ju- dicial determination that the estate is insolvent. Union, etc.. Bank v. Jefferson. 101 Wis. 452; 77 N. W. 889. 4 Wolf v. Beaird, 123 111. 585; 5 Am. St. Rep. 565; 15 N. E: 161. 5 Stokes V. Goodykoontz, 126 Ind 535; 26 N. E. 391. 6 Martin v. Bank, 160 N. Y. 190; 54 N. E. 717. 1272 PAGE ON CONTKACTS. sales of furniture on which commissions were paid under the belief that such sales were valid. ^ Payment of illegal street assessments made in ignorance of the facts making them illegal may he recovered.* If A pays money to B, in performance of a contract between them, under the mistaken belief on A's part that B has performed such contract fully, A may recover such payment.® Thus, where B had agreed to plaster a house for A, and A paid him, believing that such work had been done, he may recover the money thus paid, where the contract is of such inferior quality as to be valueless.^** A agreed to sell fish for B, at ten per cent commission, and to guarantee the pur- chase price on sales made by him. Before making such con- tract with A, B had sold some of the fish to X. Memoranda of the amounts delivered to the different vendees were turned in to A, and A paid to B the amount due thereon, less his ten per cent commission. In this way A paid B for the fish which B had sold to X. On X's refusal to pay A, A sued B for such amount. It was held that A could recover.^^ X's will provided that A should have control of X's estate until B reached the age of eighteen, when A was to pay B a certain part of the estate ; and if B died before reaching such age, the entire estate was to fall to A. A voluntarily paid B B's share before B reached the age of eighteen. Subsequently B died before reaching such age of eighteen. A was allowed to recover on the ground that the payment was made under a mistake of fact» in that B did not know that A would die before the age of eighteen.^^ Wliere a city engineer by mistake estimated the are? paved at about three thousand square yards more than it reallj was, and in reliance upon such estimate, the city paid the con* 7 Cleveland, etc., Co. v. Hotehkiss, " Xollman v. Evenson, 5 N. D. 89 Tex. 117; 33 S. W. 855. 344; 65 N. W. 686. 8 ]\Iutual Life Ins. Co. v. New i" Xollman v. Evenson, 5 N. D. York, 144 N. y. 494; 39 N. E. 386; 344; 65 N. W. 686. Tripler v. New York, 139 N. Y. 1; n Blanchard v. Low, 164 Mass. 34 N. E. 729; same case, 125 N. 118; 41 N. E. 118. Y. 617; 26 N. E. 721; Redmond v. 12 Semmig v. Merrihew, 67 Vt. New York, 125 N. Y. 632; 26 N, E. 38; 30 All. 691. 727. IMPLIED COXTRACTS AND QUASI-CONTEACTS. 1273 tractor for the entire amount of the engineer's estimate, at the rate of one dollar a square yard, it was held that the city could recover from the contractor on learning of the mistake.^^ So if A pays a note to B under the mistaken belief that A has executed such note, A may recover.^* §820. Mistakes in computation. A mistake as to the amount due on a debt,^ even where the facts as to the amount of principal and payments are known, but the amount due can be ascertained only by a long arith- metical calculation,^ is a mistake of fact, and a payment made by reason thereof may be recovered. Thus, where the parties make a mistake in computing the price to be paid for property, in accordance with a contract of sale,^ or make a mistake in computing the amount due on a mortgage,* or by mistake com- pute at eight per cent interest on a note which by its terms bears interest at six per cent,^ or otherwise erroneously com- pute the interest due f or where a principal and agent make a mistake in computing their mutual accounts f or where by mistake the same item is paid twice ;^ or where a payment is made under mistake in computing the weight of the articles sold, on which weight the payment is based,^ money paid under such mistakes may be recovered. A and B, tenants in common in land, were arranging a voluntary partition, and A was to take that half of the land upon which improvements were i3Dulutli V. McDonnell, 61 Minn. 3 Norton v. Bohart, 105 Mo. 615; 288; 63 N. W. 727. 16 S. W. 598. i*Lewellen v. Garrett, 58 Ind. 4 Klein v. Bayer, 81 Mich. 233; 442; 26 Am. Rep. 74. 45 N. W. 991. 1 Gould V. Emerson, 160 Mass. 5 Stotsenburg v. Fordice, 142 Ind. 438; 39 Am. St. Eep. 501; 35 N. E. 490; 41 N. E. 313, 810. 1065; Peterson v. Bank, 78 Wis. « Montgomery County v. Fry, 127 113; 47 N. W. 368. N. C. 258; 37 S. E. 259. 2Worley v. Moore, 97 Ind. 15; 7 Spencer v. Goddard, 62 X. H. Montgomery County v. Fry, 127 N. 702. C. 258; 37 S. E. 259; Steere v. 8 Johnson v. Saum, — la. — : 98 Oakley, 180 Pa. St. 582.; 40 Atl. N. W. 599. 815. 9Mc.Rae, etc., Co. v. Stone, 119 Ga. 516; 46 S. E. 668. 1274 PAGE ON CONTRACTS. • erected, and pay to B the amount necessary to equalize his share. By a mistake in the computation, A paid to B the entire value of the buildings upon this tract, instead of one- half their value. It was held that A could recover the amount thus paid in by him in excess of the amount necessary to equal- ize his share with B's." §821. Recovery of payment on forged instrument. Whether recovery of payment on a forged instrument can be had from one who has taken such instrument for value and in good faith is a question which arises not infrequently, and on which there is an unfortunate conflict of authority. Under one theory a bank is bound to know the signatures of its de- positors; and if it pays a forged check, signed by the name of a depositor it cannot recover the money thus paid, if the payee has acted with reasonable prudence and in good faith.^ Thus, where A indorsed a forged check of which he was the innocent holder, to B, and B presented it at the bank and received payment, and the bank on discovering the fact of the forgery demanded repayment of B, and B complied with the demand, it was held that B had made such payment voluntarily and that he could not recover from A." This rule is not always placed on the ground that the bank was negligent. Sometimes 10 Reed v. Horn, 143 Pa. St. 323; 348; First National Bank v. Bank, 22 Atl. 877. 151 Mass. 280; 21 Am. St. Rep. 1 United States Bank v. Bank, 10 450: 24 N. E. 44; Germania Bank Wheat. (U. S.) 333; Levy v. Bank, v. Boutell, 60 Minn. 189; 51 Am. 4 Dall. (Pa.) 234; s. c, 1 Binn. St. Rep. 519; 27 L. R. A. 635; 62 (Pa.) 27; Chicago First National N. W. 327; Bank v. Bank, 58 0. S. Bank v. Bank, 152 HI. 296; 43 Am. 207; 65 Am. St. Rep. 748: 41 L. R. St. Rep. 247; 26 L. R. A. 289; 38 A. 584; 50 N. E. 723. (Distinguish- N. E. 739; First National Bank v. ing Ellis v. Trust Co., 4 0. S. 628; Bank, 107 la. 327; 44 L. R. A. 64 Am. Dec. 610, as decided under 131; 77 N. W. 1045; Deposit Bank a local custom.) Moody v. Bank, V. Bank. 90 Ky. 10; 7 L. R. A. 849; 19 Tex. Civ. App. 278; 46 S. W. 13 S. W. 339; Commercial, etc., 660; Bank v. Bank, 10 Vt. 141; 33 Bank v. Bank, 30 Md. 11; 96 Am. Am. Dec. 188. Dec. 5.54; Neal v. Coburn, 92 Me. 2 Xeal v. Coburn, 92 Me. 139; 139; 69 Am. St. Rep. 495: 42 Atl. 69 Am. St. Rep. 495: 42 Atl. 348. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1275 the reason assigned is that between two equally innocent parties the loss must lie where it falls. Another line of cases holds that if the drawee bank is free from all negligence except that of paying the check in reliance on the indorsement of the holder, it may recover such payment.^ The right to recover is very materially affected by the negligence of either party. If the bank which forwards the forged check was negligent and could by the use of due diligence have discovered the forgery, the bank which pays such forged check may recover from the bank which forwards it.* If, on the other hand, the drawee bank omits to give reasonably prompt notice of the fact of the forgery it cannot recover the pa^Tuent even if such recovery would have been permitted otherwise.^ In jurisdictions in which the payee bank is ordinarily allowed to recover, only reasonably prompt notice is necessary.^ The right of recovery has been recognized under special circumstances. A sent a check to B on a bank, X. C, a person of almost the same name as B, obtained the check, endorsed it with his own name and deposited it with the bank Y, which forwarded it to X, but did not show that it was collecting it as agent merely. X paid Y and Y paid C. A then sued the bank X in Minnesota to recover the amount of his deposit without deducting this check. X gave notice to Y, which was located in Massachusetts, of the pendency of this action. Y did not defend and judgment was rendered against X. X then sued Y and recovered the pay- ment. The ground of recovery was based on the theory that the judgment was conclusive against Y.'^ As the bank, even if bound to know the signature of the depositor, is not charged 3 First National Bank v. Bank, s United States v. Bank, 6 Fed. 4 Ind. App. 355; 51 Am. St. Eep. 134. 221; 30 N. E. 808; Corn Exchange 6 Schroeder v. Harvey. 75 111.638. Bank v. Bank, 91 N. Y. 73; 43 Am. 7 First National Bank v. Bank, Rep. 655; People's Bank v. Bank, 182 Mass. 130; 94 Am. St. Rep. 637; 88 Tenn. 299; 17 Am. St. Rep. 884; 65 N. E. 24 (citing on the proposi- 6 L. R. A. 724; 12 S. W. 716. tion that the judgment was binding 4 Canadian Bank v. Bingham, 30 on the other bank : Knickerbocker v. Wash. 484; 60 L. R. A. 955; 71 Wilcox, 83 Mich. 200; 21 Am. St. Pac. 43. Rep. 595; 47 N. W. 123; and Kon- itsky V. Meyer, 49 N. Y. 571). 1276 PAGE ON CONTKAC'TS. with knowledge of the contents of all instruments executed by him, money paid out on an altered check may be recovered.^ Accordingly jjayment of a genuine check on a forged indorse- ment may be recovered." So if a bank, in reliance upon the representations of a person as to his identity, delivers a check to him which he indorses with the name of the person whom he represents himself to be, and delivers to A, to whom the bank pays it, the bank making the payment cannot recover from A if the representations as to the identity of the indorser are false and the indorsement is forged.^*' A altered a check on the drawee bank, X% raising the amount and deposited it with a bank, Y, which sent it to X through the clearing house. X paid Y and Y paid A. On learning of the alteration X sued Y. It was held that no recovery could be had.^^ Under any theory, no recovery can be had unless the bank making the payment can show that it has suffered a loss. If it has the means of charging such checks against the account of its de- positor, it cannot maintain an action to recover such payment.^^ §822. Recovery of payment causing overdraft. If a bank pays a check which overdraws a depositor's account, some authorities hold that the bank cannot recover from payee if he does not know that such check will make an overdraft. The 8 Espy V. Bank, 18 Wall. (U.S.) Rep. 349; Hensel v. Ey., 37 Minn. 614; Parke v. Roser, 67 Ind. 500; 87; 33 N. W. 329; First National 33 Am. Rep. 102; National Bank v. Bank v. Bank, 56 Xeb. 149; 76 N. Bank, 122 N. Y. 367; 25 N. E. W. 430; Shaffer v. McKee, 19 0. S. 355. 526; Rouvant v. Bank, 63 Tex. 610. 9 First National Bank v. Bank, lo Land Title and Trust Co. v. 152 111. 296; 43 Am. St. Rep. 247; Bank, 196 Pa. St. 230; 79 Am. St.. 26 L. R. A. 289; 38 N. E. 739; af- Rep. 717; 50 L. R. A. 75; 46 Atl. firming 40 111. App. 640; First Na- 420. tional Bank v. Bank, 4 Ind. App. n Crocker-Woolworth National 355; 51 Am. St. Rep. 221; 30 N. E. Bank v. Bank, 139 Cal. 564; 96 Am. 808; First National Bank v. Bank, St. Rep. 169; 63 L. R. A. 245; 73 182 Mass. 130; 94 Am. St. Rep. Pae. 456. 637; 65 N. E. 24; Carpenter v. 12 Land, etc., Co. v. Bank, 196 Pa. Bank, 123 Mass. 66; National Bank St. 230; 79 Am. St. Rep. 717; 50 V. Bangs, 106 Mass. 441; 8 Am. L. R. A. 75; 46 Atl. 420. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1277 reasons given for such holding are different in different juris- dictions. In some recovery is denied because the bank is chargeable with knowledge of the amount of depositors' funds in its hands.^ " The bank always has the means of knowing the state of the account of the drawer, and if it elects to pay the paper, it voluntarily takes upon itself the risk of securing it out of the drawer's account or otherwise. If there has ever been any doubt upon this point there should be none hereafter ;"^ in others because the mistake is as to a collateral matter.^ Under this rule, where A gave B a check on a bank which B deposited in the same bank, receiving credit therefor on his pass-book, the bank cannot on the same day return the check and cancel the credit to B because A's account was overdrawn.* Such a deposit is treated as a payment. Accordingly where a difterent theory obtains and such a deposit is held to be for collection only, not amounting to a payment by the bank of the check thus deposited, the bank may erase the credit given for a check on discovering that the drawer has no funds.^ In Massachusetts a payment of a check without the bank's examin- ing the drawer's account, which had not been reduced during the preceding month, was held to be made with such negligence as to preclude recovery.® Under different circumstances a recov- ery has been allowed. B, an agent of a bank, Y, sold goods which had been pledged to Y, and put the proceeds in the bank, Y, in his own name. B then drew a check payable to A upon the bank Y. A deposited this in the bank X, and X paid it to Y. Under the rules of the clearing house, checks which were not good could be returned if not retained after one P. M. 1 Manufacturers' National Bank trust funds which he could not re- V. Swift, 70 Md. 515; 14 Am. St. tain, and the facts of such deposit Rep. 381; 17 Atl. 336; Oddie v. were all known to the bank. Bank, 45 N. Y. 735; 6 Am. Eep. s Chambers v. Miller, 13 C. B. N. 160. S. 125. 2 Oddie V. Bank, 45 N. Y. 735, 4 Oddie v. Bank, 45 N. Y. 735 ; 6 742; 6 Am. Rep. 160. In Merchants' Am. Rep. 160. National Bank v. Swift, supra, the 5 National, etc., Co. v. McDonald, depositor's account proved insuffi- 51 Cal. 64; 21 Am. Rep. 697. cient because a deposit made by 6 Boylston National Bank v. Rich- him and put to his credit was of ardson, 101 Mass. 287. 1278 PAGE ON CONTEACTS. Before the bank X had paid B, but after it had given B credit for the amount of this check upon his book, Y demanded repayment of this amount from X. On X's refusal Y sued. It was held that Y could recover the amount of such check less the amount of B's deposit in the bank actually belonging to B.^ If the payee knows that the check makes an overdraft and the bank pays in ignorance of such fact, the bank has been allowed to recover from the payee/ §823. No recovery for mistake as to collateral matter. In order to permit recovery of a payment, however, the mis- take of fact must not be as to some collateral matter, but must affect the very existence of the liability which the payment was intended to discharge.^ If a liability of any sort exists payment thereof cannot be recovered on account of some mistake in the inducement." Thus, where A owes B, and C takes A's check, thinking it good, and pays B personally, C cannot recover such payment from B if A's check proves worthless.^ So where A is indebted to B and by mistake as to some other liabil- ity pays B on a different non-existent claim, A cannot recover 7 Merchants' National Bank v. ing a fact which, even if it were as Bank, 139 Mass. 513; 2 N. E. 89. it is supposed to be, would create 8 Martin v. Morgan, 3 Moore (C. no legal obligation, but merely op- P. & Ex.) 635; Peterson v. Bank, erate as an inducement upon the 52 Pa. St. 206 ; 91 Am. Dec. 146. mind of the party paying the money, 1 Aiken v. Short, 1 Hurl. & N. the other party being without fault, 210; Garretson v. Joseph, 100 Ala. would not justify a recovery as for 279; 13 So. 948; Langevin v. St. money had and received." Langevin Paul, 49 Minn. 189; 15 L. R. A. v. St. Paul, 49 Minn. 189, 196; 15 766; 51 N. W. 817; Southwick v. L. R. A. 766; 51 N. W. 817. Bank, 84 N. Y. 420; Pepperday v. 2 Pensacola, etc., R. R. v. Braxton, Bank! 183 Pa. St. 519; 63 Am. St. 34 Fla. 471; 16 So. 317. "The mis- Rep. 769; 39 L. R. A. 529; 38 Atl. take must be to such an extent as 1030; Buffalo v. O'Malley, 61 Wis. will amount to destruction of the 255; 50 Am. Rep. 137; 20 N. W. consideration." Ashley v. Jennings, 913. " A mistake where that is the 48 Mo. App. 142, 147. foundation of the action must re- ^ Garretson v. Joseph. 100 Ala. late to a fact which is material, 279;' 13 So. 948; Pepperday v. essential to the transaction between Bank, 183 Pa. St. 519; 63 Am. St. the parties. A payment made under Rep. 769; 39 L. R. A. 529; 38 Atl. the influence of a mistake concern- 1030. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1279 such payment from B until A's indebtedness to B is satisfied.* Thus where A had a claim against a railroad for killing cattle, and after he had presented his claim he received a voucher, which the railroad paid, he is not obliged to repay such sum until his claim is settled, even though such order was intended for another man of the same name and was paid under mistake as to the identity of the person asking payment.^ So if A owns two lots and B a third adjoining A's, and the city brings suit to enforce an assessment on such lots and takes a decree for the assessment against the three lots jointly, A cannot redeem his lots alone, but must redeem B's as well. Hence if A redeems all three, thinking that B's lot belongs to A, this is a mere matter of inducement and A cannot recover from the city the amount due on B's lot alone. This is true especially after the city has paid over the money received at the tax-sale, from which sa,le A was redeeming his land, to the contractors,® A endorsed several instruments for B, thinking them in effect promissory notes. As they fell due, and were not paid by B, A paid those first maturing to C, the holder thereof, under the belief that A was liable as endorser. A resisted payment of the last instruments of the series and established his non-liability.'^ A then sued C to recover the payment made by him to C on the first instrument of the series. It was held that he could not recover, even though he had been mistaken in his belief that upon paying such instruments he would be subrogated to the security held therefor.* By mistake of fact, is meant mis- take as to the fact creating or relieving from liability, and not mistake as to the evidence by which such fact was to be proven. 4 Pensacola, etc., E. R. V. Braxton, s Alton v. Bank, 157 Mass. 341; 34 Fla. 471; 16 So. 317; Ashley v. 34 Am. St. Rep. 285; 18 L. R. A. Jennings, 48 Mo. App. 142. 144; 32 N. E. 228. The court said 5 Pensacola, etc.. R. R. v. Braxton, that the right of subrogation was 34 Fla. 471; 16 So. 317. "A collateral matter and no part 6 Langevin v. St. Paul, 49 Minn, of his principal contract by which 189; 15 L. R. A. 766; 51 N. W. he makes himself surety. The ex- 817. istence of that right is not the im- 7 First National Bank v. Alton, plied foundation of the principal 60 Conn. 402; 22 Atl. 1010. contract." 1280 PAGE ON CONTKACTS. Thus where A paid a debt and subsequently lost the receipt, and on demand of his creditor paid the debt again, it was held that A could not recover such payment after he had found his receipt, and was thus able to prove that he had paid it before.'* Payment of a judgment not a lien on the homestead, made be- cause the judgment debtor, by reason of a mistake in his ab- stract of title thinks it is a lien thereon and that he cannot borrow money on his homestead unless such debt is paid, is not under mistake.^** §824. Negligence of party making payment. — Held not to bar recovery. Where payment is made by one who is under no legal liabil- ity, under mistake of fact as to the existence of such liability, the weight of authority is that such payment may be recovered, even if the party making it could have discovered his mistake if he had used proper diligence.^ The mere fact that the party making the payment had the means of knowing the facts does not prevent him from recovering.^ It is not the means of knowledge possessed by the party making the payment, but his actual knowledge or ignorance of material facts that de- termines his right to recover.^ So, where A paid money for 9 Marriott v. Hampton, 7 T. R. Doyle, 173 Pa. St. 579; 51 Am. St. 269. Rep. 785; 34 Atl. 455; Hummel v. loLathrope v. McBride, 31 Neb. Flores (Tex. Civ. App.). 39 S. W. 289; 47 N. W. 922. Nor is such 309; City National Bank v. Peed payment imder duress. (Va.), 32 S. E. 34. 1 Union National Bank v. McKey, 2 Indianapolis v. McAvoy, 86 Ind. 102 Fed. 662; Brown v. Tillinghast, 587; McKibben v. Doyle. 173 Pa. St. 84 Fed. 71; Merrill v. Brantley, 579; 51 Am. St. Rep. 785; 34 Atl. 133 Ala. 537; 31 So. 847; Ruther- 455. ford V. Mclvor, 21 Ala. 750; In- s " The possession of the means dianapolis v. McAvoy, 86 Ind. 587 ; of knowledge by the party who paid Metropolitan Life Ins. Co. v. Bow- the money can be regarded as af- ser, 20 Ind. App. 557; 50 N. E. fording a strong observation to the 86; Douglas County v. Keller, 43 jury to induce them to believe that Neb. 635; 62 N. W. 60; Mayer he had an actual knowledge of the V. New York, 63 N. Y. 455; circumstances; but . . . there is Houser v. McGinnas, 108 N. C. no conclusive rule of law that be- 631; 13 S. E. 139; McKibben v. cause a party has the means of IMPLIED CONTRACTS AND QUASI-CONTKACTS. 1281 a party-wall, relying on B's claim of ownership, A may recover, though A had the means of learning of B's want of title.* So A, a mortgagee of a cotton crop, whose mortgage secures a debt greater than the value of the crop, who knows that B holds a second mortgage on the same crop, and who buys from B such crop and pays for it, may recover from B the money thus paid where he did not know that it was the same crop, even if he could have learned such fact by due diligence.^ Thus where a sheriff made a levy upon property which had been taken on a prior attachment, and hearing nothing from such prior at- taching officer or creditor, sold such property and paid the proceeds over to the party whose execution the sheriff was serving, and the latter was aftei'wards obliged to pay over the amount for which the prior attachment was issued, it was held that he might recover the amount of such payment from the execution creditor to whom he had paid the entire amount.*' Accordingly one who has known a fact but has forgotten it, and under such forgetfulness makes a payment, may recover such payment.^ Thus where A, acting as clerk for B, an express messenger, delivered a package of money to C and forgot to make a note or take a receipt of it, and C, after A had forgot- ten the facts, claimed that he had not received the money, and thereupon A and B contributed to make up the amount and paid the express company, which paid C, A was allowed on learning of his mistake to recover the amount from C* §825. Negligence held to bar recovery. There is, however, some authority for the proposition that one paying under mistake of fact, which he could have dis- knowledge he has the knowledge it- s Merrill v. Brantley, 133 Ala. self." 2 Chitty Cont. (11 Am. Ed.) 537; 31 So. 847. 930; quoted in Brown v. College 6 Glenn v. Shannon, 12 S. C. 570. Corner, etc., Co., 56 Ind. 110; which 7 Kelly v. Solari, 9 M. & W. 54; in turn is quoted in Stotsenburg v. Houser v. McGinnas, 108 N". C. 631 ; Fordice, 142 Ind. 490; 41 N. E. 13 S. E. 139; Guild v. Baldridge, 313, 810. 2 Swan. (Tenn.) 295. 4McKibben v. Doyle. 173 Pa. St. « Houser v. McGinnns, 108 N. C. 579; 51 Am. St. Rep. 785; 34 Atl. 631; 13 S. E, 139. 455. 81 1282 PAGE ON CONTRACTS. covered by due diligence cannot recover such payment/ So a debtor who makes a payment under a mistake of a fact v^^hich he would have known had he used ordinary diligence in exam- ining his receipts, cannot recover." So it has been held that as an executor has the means of knowing the solvency of the estate, he cannot recover a payment made under a mistake of fact as to such solvency.* So an administrator who believing that the estate of his principal is solvent pays a note of such principal cannot recover a payment in excess of the dividend which such estate pays from a surety on such note, although the surety would have been obliged to pay the note had the administrator not done so, and though the loss will fall on the administrator personally.* 'No relief can be had for mistake of a fact which knowledge of which the party making the mis- take was specially charged.^ Thus where A and B, wdio were to furnish timber to X agree that it should all be furnished in A's name, and he should draw the money and pay B, and A drew some of the money, giving credit for the rest, and paid B a greater proportion of the cash paid in than corresponded to the share of timber furnished by B, though less than was due B for the timber, it was held that A was bound to know how much timber B had furnished as compared with A, and hence that A could not recover an excess of payment, even assuming that B was entitled only to his proportionate share of the cash paid in.*' Where it was the sheriff's duty to look up municipal liens and assessments upon property which he has sold before distributing the funds, a sheriff who overlooks a lien, and pays money to the mortgagee, cannot recover from such mortgagee 1 Alton V. Bank, 157 Mass. 341; 400; Carson v. McFarland, 2 Rawle 34 Am. St. Rep. 285; 18 L. R. A. (Pa.) 118; 19 Am. Dec. 627; Shri- 144; 32 N. E. 228. Bnimmitt v. ver v. Garrison, 30 W. Va. 456; 4 McGuire, 107 N. C. 351; 12 S. E. S. E. 660. 191; Stevens v. Head, 9 Vt. 174; 4 Proudfoot v. Clevenger, 33 W. 31 Am. Dee. 617; Proudfoot v. Clev- Va. 267; 10 S. E. 394. enger, 33 W. Va. 267; 10 S. E. 394. s gimmons v. Looney, 41 W. Va. 2 Brummitt v. MoGnire, 107 N. C. 738: 24 S. E. 677. 351; 12 S. E. 191. « Simmons v. Looney, 41 W. Va. 3 Paine v. Drnry, 19 Pick. (Mass.) 738; 24 S. E. 677. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1283 the amount which the sheriff is afterwards compelled to pay to the city/ A payment by a mistake of fact, of which fact the party making the payment has constructive notice cannot be recovered. Thus where a city elected to take part of the land under lease for public use, and by the statute such elec- tion conveyed the legal title in such part to the city, a lessee, who after such election has paid the entire rent to his lessor, cannot recover from him an amount proportioned to the value of the property thus taken by the city; since, even if he has no actual notice of such election he is, as a party to the pro- ceeding, bound to take notice.^ §826. Innocent payee must be placed in statu quo. If the person to whom the money is paid by mistake receives it in good faith and without knowledge of the mistake under which it is paid, he cannot be compelled to repay it unless he can be placed in statu quo} If he has paid the money over to those who, as far as he is concerned are entitled to it' he cannot be compelled to refund. If he has otherwise altered his posi- tion in reliance on such payment he is not liable therefor.^ Thus where A, a mortgagor, believes that certain realty which A and B, the mortgagee, intended to include under the mort- -gage, is covered thereby, and in that belief A pays money to B TKrumbhaar v. Yevvdall, 153 Pa. Paul, 49 Minn. 189; 15 L. R. A. St. 476; 26 Atl. 219. In this case 766; 51 N. W. 817; Behring v. Som- the mortgagee had subsequently al- erville. 63 N. J. L. 568; 49 L. E. tered his position, on the assump- A. 578 ; 44 Atl. 641 ; Krumbhaar v. tion that there were no assessment Yewdall. 153 Pa. St. 476; 26 Atl. liens upon such property, and he 219; Richley \. Clark. 11 Utah 467; could not be placed in statu quo. 40 Pac. 717. The court, however, rest their opin- sLangevin v. St. Paul. 49 Minn, ion on the ground that the mort- 189; 15 L. R. A. 766; 51 N. W. gagee took the payment in good 817. faith, and had done nothing to mis- 3 Krumbhaar v. Yewdall. 153 Pa. lead the sheriff. St. 476; 26 Atl. 219. (In this case 8 McCardell v. Miller. 22 R. I. 96 ; defendant was held not liable, 46 Atl. 184. though his immunity was placed on 1 Welch V. Goodwin, 123 Mass. other grounds.) 71 ; 25 Am. Rep. 24 ; Langevin v. St. 1284 PAGE ON CONTRACTS. to secure a release of such realty from such mortgage, and subsequently in a foreclosure suit such payment is credited on the debt and B's rights are fixed by decree, A cannot there- after recover from B.* The opinion of the majority was based on the theory that in such cases the more negligent of the two should suffer. One judge dissented for the reason that B knew of such mistake before the decree was rendered, but still al- lowed such payment to be credited on his debt. Thus A, the owner of a note and mortgage assigned it to B by assignment of record, but kept the mortgage. Subsequently A assigned it again to C, who had no actual notice of the assignment to B. X, the mortgagor, paid C's interest in the mortgage to C. Sub- sequently X was obliged to pay the entire debt to B. X then sued C to recover the amount paid to C, but it was held that X could not recover.^ The rule that a party who is guilty of negligence in not ascertaining facts and so makes a payment under a mistake of fact cannot recover^ applies with the greatest force where he has by his negligence misled the adversary party, who has altered his position and cannot be placed in statu quo.'' Thus A was the agent of B, the railroad company. X was A's cashier, and had worked in that capacity for A's predecessor. The rules of the railroad required prompt settle- ment each month of all money received for freight. X was an embezzler when A entered on his employment ; but A allowed. X to neglect the rule requiring prompt payment and to transmit money, really received as cash on recent freight accounts, as payments on older accounts. X's defalcation was thus con- cealed for a time. When it was discovered, the railroad com- pany claimed that the shortage had arisen since A's employ- ment began ; and A, believing such claim, paid X's shortage. The delay in discovering the shortage caused the release of a 4Ricliley v. Clark, 11 Utah 467; mortgage which he was holding aa 40 Pac. 717. collateral.) 5 Behring v. Somerville, 6.3 N. J. 6 See § 825. L. 568; 49 L. R. A. 578; 44 Atl. 7 Fegan v. Ry., 9 N. D. 30; 81 641. (C in reliance on X's pay- X. W. 39. tnent had released the note and IMPLIED COXTRACTS AiXD QUASI-CONTRACTS. 1285 surety on X's bond, by lapse of time. It was held that A, on learning that X's shortage was created before A's employment began, could not recover the payment from the railroad.® §827. Mistake need not be mutual. While the mistake under which payments whose recovery are allowed are made may be mutual,^ it is not necessary to recovery that it should be mutual.^ The doctrine of mutuality of mis- take applies primarily to mistakes in expression,^ and has no application to payment by mistake. The cases occasionally cited to show its necessity in the law of payments are cases in which a bona fide payee has so altered his position that he can- not be placed in statu quo. IX. Payment by mistake of law. I§828. Payment by mistake of law. Money paid with full knowledge of all material facts, imder mistake of law, cannot be recovered in the absence of other reasons for allowing such recovery.^ The sanie principles ap- ply where there is full knowledge of facts but one party subse- sFegan v. Ry., 9 N. D. 30; 81 K kins Co., 87 Ky. 605; 9 S. W. W. 39. 497; Coburn v. Neal, 94 Me. 541; 1 Worley v. ]\Ioore, 97 Ind. 15. 48 Atl. 178; Bragdon v. Freedom, 2 Stotsenburg. V. Fordice, 142 Ind. 84 Me. 431; 24 Atl. 895; Freeman v. 490; 41 N. E. 313, 810. Curtis, 51 Me. 140; 81 Am. Dec. 3 See § 84. 564 ; Baltimore v. Lefferman, 4 Gill iBilbie v. Liimley, 2 East. 469; 425; 45 Am. Dec. 145; Taber v. New Holt V. Thomas, 105 Cal. 273; 38 Bedford, 177 Mass. 197; 58 N. E. Pae. 891; Brumagin v. Tillinghast, 640; Alton v. Bank, 157 Mass. 341; 18 Cal. 265; 79 Am. Dec. 176; Mor- 34 Am. St. Rep. 285; 18 L. R. A. gan Park (Village of) v. Knopf, 144; 32 N. E. 228; Forbes v. Ap- 199 111. 444; 65 N. E. 322; Mc- pleton. 5 Cush. 115; Lamb v. Rath- Whinney v. Logansport, 132 Ind. 9; burn, 118 Mich. 666; 77 N. W. 268; 31 N. E. 449; Painter v. Polk Co., Erkens v. Nicolin, 39 Minn. 461; 40 81 la. 242; 25 Am. St. Rep. 489; X. W. 567; Needles v. Burk. 81 Mo. 47 N. W. 65; Cherokee County v. 569; 51 Am. Rep. 251; Kane v. Hubbard, 8 Kan. App. 500; 55 Pac. Dauernheim, 60 Mo. App. 64; Straf- 557; Louisville, etc., Ry. v. Hop- ford Savings Bank v. Church, 69 N. 1286 PAGE ON CONTKACTS. quently wishes to avoid the transaction.' Payments of this sort are merely examples, and the most common kind, of volun- tary payments, and fall within the rule that voluntary pay- ments cannot be recovered. §829. Illustrations. — Total failure of consideration. The principle that payments made under a mistake of law cannot be recovered applies to payments made by one who was under no legal liability to make them, and who receives nothing in return therefor, although by reason of his mistake of law he believes that by such payments he is discharging a legal liabil- ity.^ Thus one who pays under an erroneous construction of the contract,^ as a misconstruction as to the rate of interest after maturity,^ or mistaking the liability of indorsers,* or believing that he is legally liable for his minor child's tort,^ cannot recover such payment. So if the holder of the legal title of stock pays an assessment thereon after insolvency,*' or if an executor, mis- taking the law as to lapsed legacies, pays to an adopted child of H. 582; 44 Atl. 105; Camden v. 244, 580; 52 N. W. 1062; 54 N. W. Green, 54 N. J. L. 591; 33 Am. St. 603; Hubbard v. Martin, 8 Yerg. Rep. 686; 25 Atl. 357; Newburgh (Tenn.) 498; Sbriver v. Garrison, Savings Bank v. Woodbury, 173 N. 30 W. Va. 456; 4 S. E. 660; Beard Y. 55; 65 N. E. 858; Vanderbeck v. Beard, 25 W. Va. 486; 52 Am. V. Rochester, 122 N. Y. 285; 10 L. Rep. 219; Birkhauser v. Schmitt, 45 R. A. 178; 25 N. E. 408; Flynn v. \Yis. 316; 30 Am. Rep. 740. Hurd, 118 N. Y. 19; 22 N. E. 1109; 2 Buckley v. Redmond, 95 Mich. Devereux v. Ins. Co., 98 N. C. 6; 3 282; 54 N. W. 771; Haeg v. Haeg. S. E. 639; Commissioners v. Com- 53 Minn. 33; 55 N. W. 1114. missioners, 75 N. C. 240; Matthews 1 Strafford Savings Bank v. V. Smith, 67 N. C. 374; First Na- Church, 69 X. H. 582; 44 Atl. 105. tional Bank v. Taylor, 122 N. C. 2 Cincinnati v. Coke Co., 53 O. S. 569; 29 S. E. 831; Phillips v. Mc- 278; 41 N. E. 239. Conica, 59 O. S. 1 ; 69 Am. St. Rep. s Rector v. Collins, 46 Ark. 167: 753; 51 N. E. 445; Cincinnati v. 55 Am. Rep. 571. Coke Co., 53 O. S. 278; 41 N. E. 4 First National Bank v. Taylor, 239; Railroad Co. v. Iron Co., 46 122 N. C. 569; 29 S. E. 831. O. S. 44; 1 L. R. A. 412; 18 N. E. 5 Xeedles v. Burk, 81 Mo. 569; 51 486; Mays v. Cincinnati. 1 O. S. Am. Rep. 251. 269; Robinson V. Charleston, 2 Rich. 6 Holt v. Thomas, 105 Cal. 273; L. (S. C.) 317; 45 Am. Dec. 739; 38 Pac. 891. Evans v. Hughes County, 3 S. D. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1287 testator's deceased daughter a legacy wLicli had lapsed by the death of such daughter before testator/ such payments cauiiot be recovered. Thus A believed that he was liable as indorser on a check, whereas under the facts known to him he was not liable as a matter of law. He made a payment on such supposed lia- bility and agreed to pay the rest. Subsequently he resisted lia- bility on this promise successfully,^ and then sued to recover the payment already made. As such payment was made under a pure mistake of law, no recovery could be had.** So a husband who as administrator of his deceased wife delivers certain se- curities to her son as his distributive share cannot afterwards assert an interest in them as husband.^*' So in the absence of duress, one who pays a license fee in excess of the amount fixed by law,^^ or pays an unauthorized tax, no duress existing,^" can- not recover the amount so paid. So a public officer who pays into the treasury fees which he is entitled to retain cannot re- cover them.^^ §830. Doctrine that payments by mistake of law may be recov- ered. In some jurisdictions recovery of money paid under a mis- take of law may be recovered where the party to whom it is paid is in no way entitled thereto.^ Thus an executor who pays a T Phillips V. McConica, 59 O. S. Yates v. Ins. Co., 200 111. 202; 65 1; 69 Am. St. Rep. 753; 51 N. E. N. E. 726; Manistee Lumber Co. v. 445. Springfield Township, 92 Mich. 277; sNeal V. Coburn, 92 Me. 139; 69 52 N. W. 468. Am. St. Rep. 495; 42 Atl. 348. is Wesson v. Collins, 72 Miss. 9 Coburn v. Neal, 94 Me. .541; 844, 850; 18 So. 360, 917. 48 Atl. 178. 1 Mansfield v. Lynch, 59 Conn. 10 Hughes V. Pealer, 80 Mich. 540; 320; 12 L. R. A. 285; 22 Atl. 313; 45 N. W. 589. In this case the Lyon v. Mason & Foard Co., 102 Ky. court found as a fact that the hus- 594; 44 S. W. 135; Bruner v. Stan- band knew his rights. ton, 102 Ky. 459; 43 S. W. 411. 11 Camden v. Green, 54 N. J. L. " We mean distinctly to assert that 591; 33 Am. St. Rep. 686; 25 Atl. when money is paid by one under a 357. mistake of his rights and his duty, 12 Louisville, etc., Ry. v. Marion and which he was under no moral or County, 89 Ky. 531; 12 S. W. 1064; legal obligation to pay, and which 1288 PAGE ON CONTKACTS. legacy under an erroneous construction of the will,' or who pays debts in full under a mistaken belief that certain other debts of whose existence he knows are not legally enforceable because not proved by writing signed by decedent/ may recover such payments, or the amount thereof in excess of what should have been paid. So where one pays a license fee under the mistaken belief that the ordinance imposing it is valid may recover such payment.* Where a public officer permits one in ignorance of the law to pay license fees for burial permits, which fees were not authorized by law it has been held that such payments may be recovered as made by fraud. ^ If A attempts to effect insur- ance, and without any fraud on A's part the insurance never takes effect,*' as where a mortgagee by mistake of law takes out insurance on the mortgaged property believing that it protects his interest,'^ or without fraud the insured makes a warranty broken when made, such as one concerning his occupation,* or the location of the property insured, ** A may recover the pre- miums paid. If the agent of the insurance company has misled both the insurance company and the insured, the right of the insured to recover the premiums paid in is clear.^" To keep them " would be an act of bad faith and of the grossest injustice the recipient has no right in good live departments of the government conscience to retain, it may be re- under which he lives." Louisville covered back in an action of in- v. Anderson,- 79 Ky. 334, 340; 42 debitattis assumpsit, whether the Am. Rep. 220; quoted in Bruner v. mistake be one of law or fact; and Stanton, 102 Ky. 459, 461; 43 S. this we insist may be done both W. 411. upon the principles of Christian mo- 5 Marcotte v. Allen, 91 Me. 74; rals and the Common Law." North- 40 L. R. A. 185; 39 Atl. 346. rop V. Graves, 19 Conn. 548, 554; s Metropolitan Life Ins. Co. v. 50 Am. Dec. 264; quoted in Mans- Bowser, 20 Ind. App. 557; 50 N. E. field V. Lynch, 59 Conn. 320, 327 ; 12 86. L. R. A. 285; 22 Atl. 313. 7 Waller v. Assurance Co., 64 la. 2 Northrop v. Graves, 19 Conn. 101; 19 N. W. 865. 548; 50 Am. Dec. 264. « McDonald v. Ins. Co., 68 N. H. 3 Mansfield v. Lynch, 59 Conn. 4 ; 73 Am. St. Rep. 548 ; 38 Atl. 500. 320; 12 L. R. A. 285; 22 Atl. 313. 9 Jones v. Ins. Co., 90 Tenn. 604; 4 Bruner v. Stanton, 102 Ky. 459; 25 Am. St. Rep. 706; 18 S. W. 260. 43 S. W. 411. "He is not pre- loNew York Life Ins. Co. v. sumed to know more than those who Fletcher, 117 U. S. 519. constitute the legislative and execu- IMPLIED CONTEACTS AND QUASI-CONTRACTS. 1289 and disbonestv."" This right of recovery of payment made under mistake of law is limited to eases where such payment should not have been made in morals and in good conscience. The mere non-existence of legal liability is not enough to justify recovery. Thus a husband conveyed land to his wife, B, and she agreed as part of the consideration to assume a debt of his. By reason of her coverture such agreement had no validity. Subsequently she paid such debt. It was held that she could not thereafter recover it, even though such payment could not have been compelled. ^^ §831. Mistake of law coupled with other operative facts. Other reasons may, however, enable the party who has paid money under mistake of law to recover it. Thus where the pay- ment is obtained by B's knowing A's mistake and taking ad- vantage of it;^ or by actively causing A to make such mistake,^ or by B's using A's mistake as a means of exerting undue in- fluence over A,^ A may recover the money so paid. So where the probate judge rendered services in settling a will contest, contrary to a statute which forbade a probate judge to practice law, payment made to him by his client in ignorance of the law and under his influence may be recovered.* The principle that a payment made by one person under a mistake of law, and re- ceived by one who knows that the other party is paying by rea- son of such mistake, may be recovered, is not limited to cases of payment to a public officer. Payment under such facts may be recovered from a private person to whom such payment is made.^ In case of a known mistake of law mere silence may be fraud.^ 11 Ins. Co. V. Wilkinson, 13 Wall. N. E. 230; Baehr v. Wolf, 59 111. (U. S.) 222, 233; quoted in McDon- 470. aid V. Ins. Co., 68 N. H. 4, 6; 73 4 E\'ans v. Funk, 151 111. 650; 38 Am, St. Rep. 548; 38 Atl. 500. N. E. 230. i2Ruppell V. Kissel (Ky.), 74 S. 5 Freeman v. Curtis, 51 Me. 140; W. 220. 81 Am. Dec. 564; Jordan v. Stevens, iToland v. Corey, 6 Utah 392; 24 51 Me. 78; 81 Am. Dec. 556. Pac. 190. 6 Downing v. Deaborn, 77 Me. 2 Kinney v. Dodge, 101 Ind. 573. 457: 1 Atl. 407. 3 Evans v. Funk, 151 111. 650; 38 1290 PAGE ON CONTRACTS. Under the civil code of California § 1578, payment under a mis- take of law, which is shared substantially by all the parties, may be recovered/ So where the mortgagee's attorney advises the mortgagor that as the mortgage covers the rents and profits, the mortgagee is entitled to the proceeds of the crops, and the mort- gagor accordingly pays over the proceeds of the crop, such pay- ment is made under a mistake of law shared by all parties and may be recovered.^ X. Money Laid out and Expended. §832. Money paid for use of another. — Voluntary payment. Money paid to the use of another cannot be recovered unless there is a promise, either express or implied, to repay it.^ If A voluntarily pays B's debt to C, with full knowledge of the facts, under no compulsion, and without B's previous request or sub- sequent ratification, A cannot recover the money thus paid from C as money paid to C's use.^ Thus, if an agent pays a note of his principals out of his own money, without their authority, he cannot collect from one of the makers who does not assent to such payment.^ So if, without any compulsion of law, A has paid taxes on B's property, A cannot recover from B. Thus a lessee who has paid taxes on the leased property which the lessor should have paid, but has not done so at lessor's request nor be- cause lessor has refused to pay such taxes, cannot recover for such taxes from lessor where he has for years paid the full 'Gregory v. Clabrough's Execu- provement Co., 38 W. Va. 390; 45 tors, 129 Cal. 475; 62 Pac. 72. Am. St. Rep. 872; 23 L. R. A. 120; 8 Gregory v. Clabrough's Execu- 18 S. E. 456. tors, 129 Cal. 475; 62 Pac. 72. 2 Flynn v. Hurd, 118 K Y. 19; 1 Kenan v. Holloway, 16 Ala. 53; 22 N. E. 1109; Kershaw County v. 50 Am. Dec. 162; Helm v. Smith Camden, 33 S. C. 140; 11 S. E. 635; Fee Co., 76 Minn. 328; 79 N. W. Crumlish v. Improvement Co., 38 313; Contoocook Fire Precinct v. W. Va. 390; 45 Am. St. Rep. 872; Hopkinton, 71 N. H. 574; 53 Atl. 23 L. R. A. 120; 18 S. E. 456. 797; Flynn v. Hurd, 118 N. Y. 19; 3 Peoples', etc., Bank v. Craig, 63 22 N. E. 1109; Peoples', etc., Bank O. S. 374; 52 L. R. A. 872; 59 N, V. Craig. 63 O. S. 374; 52 L. R. A. E. 102. 872; 59 N. E. 102; Crumlish v. Im- IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1291 amount of the rent without demanding repayment for such taxes, or deducting the amount thus paid from the rent.* So a remainder-man who has the property assessed to him instead of to the life tenant and has paid taxes thereon with the knowledge of the life tenant but not at his request, cannot recover from him the amounts thus paid.^ One having no interest in realty which could be affected by a tax is a volunteer as to taxes paid by him and cannot recover.'' If taxes on B's land are paid by A under mistake of fact, A may recover from B. Thus where B had acquired title by adverse possession, and A, the original owner, not knowing of such adverse possession continues to pay taxes on such realty, B may recover from A the amount thus paid.^ So if A is legally liable for taxes which as between B and A it is B's duty to pay, A may recover from B the amounts so paid.^ If the claim which A pays to C is not one which should have been enforced against B legally, it is still clearer that A has no right to recover from B in the absence of previous request or subsequent ratification. Thus B had ordered cab- bages to be shipped to A by C, a common carrier, in a ventilated fruit car not to be iced. The car was not iced when forwarded from the place of shipment; but at some time in the transit it was iced, probably by C's agents, without authority from B. A paid to C the charges for icing the car. It was held that A could not recover from B for such payment.'' B had agreed to deliver four hundred cords of wood to A, to be transported by A to Milwaukee. When B came to deliver such wood to be loaded, he found that about sixty cords of wood, of such grade that it did not comply with the terms of the contract, was piled in front of the wood which he intended to ship under his contract. In order to save the cost of handling this sixty cord load twice, B agreed with C, the captain of the vessel, to transport this load 4 Western, etc., Ry. v. State 7 Merrill v. Tobin, 82 la. 529; 48 (Ga.), 14 L. R. A. 438. N. W. 1044. sHuddleson v. Washington, 136 s See § 838. Cal. 514; 69 Pac. 146. 9 Earl v. Commission Co., 70 Ark. 6 Rushton V. Burke, 6 Dak. 478; 61; 66 S. W. 148. 43 N. W. 815. 1292 PAGE ON CONTEACTS. of wood at B's dock at Milwaukee. C, however, instead of doing this, delivered this sixty cord load of other wood to A at A's yard. A refused to accept this load of wood under the contract, but paid to C the freight for such transportation. It was held that A could not recover such amount from B.^° If A voluntarily pays B's debt to C, and B refuses to reimburse A, A cannot recover such payment from C," Thus, where a married woman voluntarily delivers notes which belong to her separate estate in payment of her husband's debt, she cannot subsequently recover the notes or the proceeds thereof from the person to whom they are delivered in payment,^^ The rule, that when he voluntarily pays the debt of another, cannot re- cover from such other, has no application where, instead of pay- ing the debt, the person who advances the money takes the as- signment of the claim. A trust company, B, had arranged with a packing company, C, that C should keep a certain deposit with B, and that B should pay tickets which were issued for the pay- ment of live stock bought by C. C's deposit with B was not to be used in payment of such advances, but B was to forward to C a statement of the money thus advanced, and C was to remit the amount thereof to B. Subsequently, the trust company asked A, a bank, to advance money to pay these tickets. A did so, taking the assignment of the tickets. B subsequently be- came insolvent. It was held, as between A and C, that A had a right to recover from C the amount advanced by A upon such tickets which were assigned over to A." §833. Exceptions to doctrine of voluntary services and payments. — Funeral expenses. Certain duties imposed by law are of such character as to be easily evaded contrary to the policy of the law, if the general principles forbidding recovery in cases of voluntary payments, 10 Sanderson v. Brick Co., 110 12 Gillespie v. Simpson (Ark.), Wis. 618; 86 N. W. 169. 18 S. W. 1050. 11 Boyer v. Richardson, 52 Neb. is Sioux National Bank v. Packing 156; 71 N. W. 981. Co., 63 Fed. 805. IMPLIED CONTKACTS AND QUASI-CONTRACTS. 1293 services or furnishing goods are applied. These cases form an exception to these general principles. The common feature of these exceptional cases is that from their nature, strong reasons of public policy demand prompt action, and to secure this action in cases of the neglect or omission of the person primarily liable, any other person taking such action may recover therefor from the person or fund primarily liable. In cases of the latter class the person to whom support is furnished would perish or hold his existence only on the precarious tenure of charity if obliged to await the result of a direct action to compel the person legally liable for such support to perform his legal duty even if an ap- propriate action existed in every case. Hence a right of action in implied assumpsit is given to the person furnishing such sup- port. Since the Common Law remedy in such cases was an action in general assumpsit, these rights of action are classed with implied contract, though there is usually no genuine agree- ment. Funeral expenses form a prominent class of cases illus- trating this general principle. In the absence of an executor or administrator, or his omission to act, a third person who pays for funeral expenses or renders them because of the necessities of the particular case and not as an officious intermeddler may recover from the decedent's estate a reasonable compensation therefor.^ Thus the widow may recover the amount expended by her for grave clothes and undertaker's expenses for the burial of her husband.^ So a son of the deceased, who not knowing that the latter had any property, bought a cemetery lot which was larger than necessary, but there was nothing to show that a smaller lot could have been bought, may be reimbursed out of his parent's estate.^ So one who furnishes a reasonable amount of flowers at decedent's funeral, at the request of decedent's iFogg V. Holbrook, 88 Me. 169; 510; 26 S. E. 127; O'Reilly v. Kelly, 33 L. R. A. 660; 33 Atl. 792; Mar- 22 R. I. 151; 50 L. R. A. 483; 46 pie V. Morse, 180 Mass. 508; 62 Atl. 681. N. E. 966; Booth v. Radford, 57 2 France's Estate, 75 Pa. St. 220. Mich. 357; 24 N. W. 102; Sullivan v. 3 Marple v. Morse, 180 Mass. 508; Horner, 41 N. J. Eq. 299; 7 Atl. 62 N. E. 906. 411; Ray v. Honeycutt, 119 N. C. 1294 PAGE ON CONTRACTS. sister-in-law who had been acting as his housekeeper may re- cover therefor out of decedent's estate.* Funeral expenses paid by one before appointment of an administrator should be cred- ited upon his debt due to decedent, and may be set-off against such debt in a subsequent suit by the administrator.^ So if A, an executor of B's will, pays the funeral expenses of C, a legatee under C's will, who dies in poverty, A may credit such payment on C's legacy.*' A different question arises where a husband pays his wife's funeral expenses and seeks reimbursement out of her estate. At Common Law the husband was liable for these expenses, and in paying them he was discharging his own legal obligation. Accordingly, he could not be reimbursed out of his wife's estate ;^ and if her executor has paid such expenses he may deduct them from the husband's share of his wife's estate, as money paid out to the husband's use.^ In -some states stat- utes have made funeral expenses a debt of the decedent's estate, and have provided for their payment. Under such statutes some courts have held that a husband who pays the funeral ex- penses of his wife is entitled to reimbursement out of her estate.^ Without deciding this question, it has been held that a son who pays his mother's funeral expenses and who is afterwards ap- pointed her executor, may credit himself with such expenses in his account as against the objection of his sister that such ex- penses should have been paid by the husband of the decedent.^** The estate of the deceased wife is liable by such statute even if the ultimate liability rests upon her husband.^^ If the corj^se were to remain unburied until the person primarily liable for 4 O'Reilly v. Kelly, 22 R. I. 151; » Morrissey v. Mulhern, 168 Mass. 50 L. R. A. 483; 46 Atl. 681. 412; 47 N. E. 407; Constantinides v. 5 Phillips V. Phillips, 87 Me. 324; Walsh, 146 Mass. 281; 4 Am. St. 32 Atl. 963. Rep. 311; 15 N. E. 631; Moulton v. 6 Wilson V. Staats, 33 N. J. Eq. Smith, 16 R. I. 126; 27 Am. St. Rep, 524. 728; 12 Atl. 891. 7 Matter of Weringer, 100 Cal. lo McClelland v. Filson, 44 O. S, 345; 34 Pac. 825; Staple's Appeal, 184; 58 Am. Rep. 814; 5 N. E. 861. 52 Conn. 425; Waesch's Estate, 166 n Gould v. Moulahan, 53 N. J. Eq. Pa. St. 204; 30 Atl. 1124. 341; 33 Atl. 483. 8 Brand's Executor v. Brand, 109 Ky. 721; 60 S. W. 704. IMPLIED CONTKACTS AND QUASI-CONTEACTS. 1295 funeral expenses were compelled to do his duty, it would be an outrage to public decency even if an appropriate action for that purpose existed. Hence a right of action in assumpsit is given -^0 the person who buries the corpse or pays for the funeral ex- ()enses. This right of action is accordingly limited to cases where the person primarily liable either omits to act voluntarily or is so situated that he has no opportunity to act. One who intermeddles officiously cannot recover. Thus where a stranger took possession of money of the decedent and out of that fund paid the funeral expenses, he cannot set off such expenses as a credit in an action against him by the executor of the decedent. ^^ §834. Liability of husband for wife's necessaries. Another class of cases illustrating this general principle exists where one who furnishes necessaries to a wife whose husband re- fuses or omits to supply them may recover from him.^ While this liability is often explained on the theory of the wife's im- plied agency as if it were a genuine implied contract, it is wider than that. If the husband does not supply his wife with neces- saries he is liable even if the circumstances negative his assent, as where he deserts her," or drives her away. So he is liable even if she is incapable of acting as agent, as where she is in- sane.^ So the husband is liable where the circumstances show that the party furnishing the necessaries had no intention of contracting with the husband, as where he does not know that the woman is married,* as long as he does not furnish necessaries on the exclusive credit of the woman. The fact that the mar- ried woman has property of her own does not defeat her hus- band's liability for her necessaries as long as such necessaries 12 Shaw V. Hallihan. 46 Vt. 389; 2 Prescott v. Webster, 175 Mass. 14 Am. Rep. 628. 316; 56 X. E. 577; East v. King, iSt. Vincent's Hospital v. Davis, 77 Miss. 738; 27 So. 608. 129 Cal. 20; 61 Pac. 477; St. John's 3 St. Vincent's Institution v. Da- Parish V. Bronson, 40 Conn. 75; 16 vis, 129 Cal. 20; 61 Pac. 477. Am. Rep. 17; Rariden v. Mason, 30 4 St. Vincent's Institution v. Da- fnd. App. 425; 65 N. E. 554; Thorpe vis, 129 Cal. 20; 61 Pac. 477. V. Shapleigh, 67 Me. 235; Eames v. Sweetser, 101 Mass. 78. 1296 PAGE ON CONTEACTS. are not fiirnishe^^ on her credit alone.'^ The liiisband is not lia- ble uniest. he has refused to furnish his wife with necessaries,* and to make provision therefor. Even if the husband and wife have separated, he is not liable to third persons for her support as long as he has made a reasonable provision therefor.^ So if a husband is willing to support an insane wife, and demands her custody in good faith, the authorities of an asylum who re- fuse to surrender her cannot thereafter recover from him.* However, if the husband refuses to allow his wife to live with him, she is not bound to receive support at a place indicated by him, but may select any reasonable place where the expense of her support is not disproportionate to her husband's income and he is bound to support her there.^ If the separation is due to the wife's aggression her husband is not liable for her support.^" The husband is not liable unless the goods furnished are neces- saries.^^ What are necessaries is in many cases a relative term, depending on the social standing, financial condition and style of living of the parties. It imdoubtedly includes board, lodging and necessary clothing,^^ medical attendance of a regular physi- cian,^^ services of a dentist,^* and in proper cases, services of an attorney where necessary for her protection, especially where her husband prefers unfounded charges against her.^^ Legal services in a divorce suit, however, are in many jurisdictions fixed by the court before which the divorce is pending and a?e sOtt V. Hentall, 70 N. H. 231; 51 9 Kirk v. Chinstrand, 85 Minn. - L. R. A. 226; 47 Atl. 80. 108; 56 L. R. A. 333; 88 N. W. 422. 6 S. E. Olson Co. V. Youngquist, lo Peaks v. Mayhew, 94 Me. 571 ; 76 Minn. 26; 78 N. W. 870; Bergh 48 Atl. 172. V. Warner, 47 Minn. 250; 28 Am. St. n S. E. Olson Co. v. Youngquist, Rep. 362; 50 N. W. 77. 72 Minn. 432; 75 N. W. 727; af. 7 Crittenden v. Schermerhorn. 39 firmed. 76 Minn. 26; 78 N. W. 870. Mich. 661; 33 Am. Rep. 440; Har- 12 Oltman v. Yost, 62 Minn. 26U shaw V. Merryman, 18 Mo. 106; Cory 64 N. W. 564. V. Cook, 24 R. I. 421; 53 Atl. 315; is Bevier v. Galloway, 71 111. 517; Hunt V. Hayes, 64 Vt. 89; 33 Am. Tebbetts v. Hapgood, 34 K H, 420. St. Rep. 917; 15 L. R. A. 661; 23 "Freeman v. Holmes, 62 Ga. 556. Atl. 920. 15 Conant v. Burnham, 133 Mass. 8 St. Vincent's Institution v. Da- 503; 43 Am, Rep. 532. vis, 129 Cal. 17; 61 Pac. 476. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1297 provided for by an allowance of alimony/*' Reasonable funeral services for burying the body of a married woman are neces- saries chargeable against her husband/^ Where alimony has been allowed and j^aid a husband is not liable to persons who thereafter furnish his wife with necessaries.^^ Money loaned to a married woman and by her expended for necessaries is not treated as a necessary at Common Law and her husband is not liable therefor.^^ But in equity one who has loaned money to a married woman may recover from her husband so much thereof as has been actually expended by her for necessaries at a reason- able price, if the circumstances are such that he could have re- covered for the necessaries had he furnished them directly to her.^" But this rule has been held not to apply where the hus- band has by reason of sickness been unable to furnish neces- saries to his wife ;"^ and has been denied altogether."" The prin- ciple here involved is analogous to that controlling in loans to an infant. ^^ §835. Liability of parent for necessaries of minor child. Another class of cases exists where one who supplies neces- saries to a minor child whose parent refuses or omits to supply them, may recover from such parent. If the child is living with his parent, such parent has a wide discretion as to the style of living io be adopted by his family. He is, therefore, liable only in a very clear case of omission to supply necessaries, unless he 16 Williawis V. Monroe, 18 B. Mon. i9 Knox v. Biishnell, 3 C. B. N. S. (Ky.) 514; Wolcott v. Patterson, 334; Zeigler v. David, 23 Ala. 127; 100 Mich. 227; 43 Am. St. Rep. 456; Marshall v. Perkins, 20 R. I. 34; 24 L. R. A. 629; 58 N. W. 1006; 78 Am. St. Rep. 841; 37 Atl. 301. Weseott V. Hinckley, 56 N. J. L. 20 Harris v. Lee, 1 P. Wms. 482; 343; 29 Atl. 154. Kenyon v. Farris, 47 Conn. 510; 17 Sears v. Giddey, 41 Mich. 590; 36 Am. Rep. 86. 32 Am. Rep. 168; 2 N. W. 917; Glea- 21 Leuppie v. Osborn, 52 N. J. son V. Warner, 78 Minn. 405; 81 Eq. 637; 29 Atl. 433. li. W. 206. 22 Skinner v. Tirrell, 159 Mass. 18 Bennett v. O'Fallon, 2 Mo. 69; 474; 38 Am. St. Rep. 447; 21 L. R. '12 Am. Dec. 440; Hare v. Gibson, A. 673; 34 N. E. 692. 32 0. S. 33; 30 Am. Rep. 568. 23 See § 871. 83 1298 PAGE ON CONTRACTS. > has authorized his child to buy the goods for which suit ie- brought or has expressly or impliedly agreed to pay therefor/ If the child has left this parent's home with the consent of such jDarent, necessaries furnished such child constitute a liability against the parent if the child is not in fact provided with them.^ Thus A's minor daughter, B, was by A's permission living apart from A and supporting herself. She fell sick and X attended her as a physician. B did not know of her illness and the circumstances were such as to make it impracticable to notify him. It was held that X could recover from B.^ If the child has left his father's home, without the consent of the father, the question of the latter's liability turns on whether the father's wrongful act caused the child to leave, or whether such child left without legal excuse. If a minor abandons his father's home without his father's being at fault, the father is not liable to third persons who furnish such child with neces- saries.* If the child is compelled to leave home by the wrong- ful act of the parent, the latter is liable to third persons who furnish such child with necessaries.^ What are necessaries de- pends on the financial ability, social standing and style of living assumed by the parents of the child. In clear cases it may be a matter of law that certain things are or are not necessaries. Thus a father was held not liable for services rendered without his knowledge in tutoring his son during vacation, the son living at home.® If dependent on surrounding facts it is for the jury to determine, as whether a commercial education furnished to a child whose father had abandoned his family without cause'^ iConboy v. Howe, 59 Conn. 112; ^Hunt v. Tliompson, 4 111. 179; 22 Atl. 35; Gotts v. Clark, 78 111. 36 Am. Dec. 538; Glynn v. Glynn, 229; Farmington v. Jones, 36 N. H. 94 Me. 465; 48 Atl. 105; Angel v. 271; Van Valkinburgh v. Watson, McLellan, 16 Mass. 28; 8 Am. Dec. 13 Johns. (N. Y.) 480; 7 Am. Dec. 118. 395; McLaughlin V. Mctaughlin, 159 5 Stanton v. Willson, 3 Day. Pa. St. 489; 28 Atl. 302. (Conn.) 37; 3 Am. Dee. 255. 2 Cooper V. MeNamara, 92 la. 243; " Peacock v. Linton, 22 P. I. 328; 60 N. W. 522. 53 L. R. A. 192; 47 Atl. 887. 3 Porter v. Powell. 79 la. 151; 7 Cory v. Cook, 24 R. L 421; 53 18 Am. St. Rep. 353; 7 L. R. A. 176; Atl. 315. 44 N. W. 295. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1299 was a necessary. A parent is liable for reasonable funeral ex- penses of his child, even if such child leaves an estate.® In some cases the liability of a father to third persons for the sup- port of his minor children has been said not to exist in any case in the absence of statutory provision therefor.^ In all jurisdic- tions the liability of the parent is limited in the absence of con- tract on his part, express or implied, or some statutory provision, to the support of his minor children, and he is not liable for necessaries furnished to his adult children." Where slavery existed a master was liable for necessaries furnished to a slave whom suck master "had not furnished with necessaries. Thus a master who drives his slave away is liable to a physician who cares for such slave while sick, even if the master forbids him to care for such slave. ^^ §836. Support of paupers. The duty of supporting paupers which rests upon public cor- porations and quasi-corporations is a creature of statute. In passing such statutes the legislature intended to set forth fully and completely the duty and liability of such public organiza- tions. Accordingly in the absence of statutory provision there- for, no recovery can be had from the public corporation which is liable for such support but neglects to furnish it, by any per- son furnishing such support,^ whether a natural person,^ or an- 8 Rowe V. Raper, 23 Ind. App. 27 ; 242 ; 88 N. W. 477 ; Patrick v. Bald- 77 Am. St. Rep. 411; 54 N. E. 770. win, 109 Wis. 342; 53 L. R. A. 9 Murphy v. Ottenheimer, 84 111. 613; 85 N. W. 274; overruling in 39; 25 Am. Rep. 424; Holt v. Bald- effect Mappes v. Iowa County, 47 win, 46 Mo. 265; 2 Am. Rep. 515; Wis. 31; IN. W. 359. Freeman v. Robinson, 38 N. J. L. 2 Morgan County v. Seaton, 122 383; 20 Am. Rep. 399; Jackson v. Ind. 521; 24 N. E. 213; O'Keefe v. Mull, 6 Wyom. 55; 42 Pac. 603. Northampton, 145 Mass. 115; 13 10 White V. Mann, 110 Ind. 74; N. E. 382; Caswell v. Hazard, 10 10 N. E. 629; Blachley v. Laba, 63 R. I. 490; Macoon v. Berlin, 49 Vt. la. 22; 50 Am. Rep. 724; 18 N. W, 13; Patrick v. Baldwin. 109 Wis. 658. 342; 53 L. R. A. 613; 85 N. W. 274; 11 Fairehild v. Bell. 2 Brev. (S. overruling in effect Mappes v. Iowa C.) 129; 3 Am. Dec. 702. County, 47 W^is, 31; IN. W. 359. iGilligan v. Grattan, 63 Neb. 1300 PAGE ON CONTRACTS. Other public corporation.^ While many statutes give such right of recovery, either to a private person,* or to a public corpora- tion,""^ such right of action is limited by the terms of the statute giving it, and does not exist unless such terms are complied with.^ Thus where the remedy given by statute is an action for money laid out and expended, this means an action in assumpsit, not in case, and a pleading will be construed to be in assumpsit if it states facts sufficient to show such liability, even if no ex- press promise is alleged/ Where a town is given a right to re- cover for support which it furnishes, no recovery can be had for support furnished through the voluntary subscription of private individuals.* In some few states, however, it seems to be held that a statute providing that a pauper is to be supported at the expense of a public corporation, imposes a liability on such cor- poration in favor of persons furnishing necessaries to a pauper at least after the public corporation has notice of the needs of such pauper and thereafter omits to furnish such necessaries.* §837. Payment on request. If A pays B's debt upon B's request, either express or implied, A may recover from B.^ Thus, where the president and gen- 3 Bristol V. New Britain, 71 Conn. ton v. Limenburgh, 23 Vt. 525; 201; 41 Atl. 548; Marlborough v. Portage County v. Neshkoro, 109 Framingham, 13 Met. (Mass.) 328; Wis. 520; 85 N. W. 414. Strafford County v. Rockingham 6 Palmer v. Hampden, 182 Mass. County, 71 N. H. 37; 51 Atl. 677; 511; 65 N. E. 817; Loudon v. Mer- Millcreek Township v. Miami, 10 rimack County, 71 N. H. 573; 53 Ohio 375. Atl. 906; Rutland v. Chittenden, 4 Wile V. Southbury, 43 Conn. 53; 74 Vt. 219; 52 Atl. 426; Danville v. Wing V. Chesterfield, 116 Mass. Hartford, 73 Vt. 300; 50 Atl. 1082; 353; Blodgett v. Lowell, 33 Vt. 174. Topham v. Waterbury, 73 Vt. 185; 5 Bristol V. Fox, 159 111. 500; 42 50 Atl. 860. N. E 887 ; Clay County v. Palo Al- 7 Woodstock v. Hancock, 62 Vt. to County, 82 la. 626; 48 N. W. 348; 19 Atl. 991. 1053; Auburn v. Lewiston, 85 Me. s Orland v. Penobscot, 97 Me. 29; 282; 27 Atl. 159; Reading v. Mai- 53 Atl. 830. den. 141 Mass. 580; 7 N. E. 21; 9 Eckman v. Brady Township, 81 Taylor Township v. Shenango Mich. 70; 45 X. W. 502. To the Township, 114 Pa. St. 394; 6 same effect see Perry County v. Du Atl. 475 ; Chittenden v. Stockbridge, Quoin, 99 111. 479. 63 Vt. 308; 21 Atl. 1102; Charles- 1 Littleton Savings Bank v. Land IMPLIED COr^TRACTS AXD QUASI-CONTEACTS. 1301 eral manager of a corporation takes up a debt of the corporation, in part with his individual funds, and in part with funds fur- nished bj a stockholder, they may join in an action against the corporation for money thus furnished." If A, the agent of a railroad company, delivers freight to B upon B's promise to pay the freight charges thereon, and B does not make such payment, and as a result thereof A is obligea to pay such amount to the company, it being contrary to the rules of the company to de- liver the freight until the charges were paid, A may recover from B.^ A carrier of imports may pay the duties thereon and claim a lien on the property therefor.* A payment to a third person made on request may be recovered even if made under a special contract which proves unenforceable. Thus the direc- tors and a majority of the stockholders in a corporation agreed with A, a stockholder, that A should spend a certain amount of money in developing a mine belonging to the corporation and re- ceive compensation in stock. The contract was set aside by the court ; but as the performance was beneficial to the corporation it was held that A could recover from the corporation the money thus expended.^ If A expends money on B's account at X's re- quest, A has no right to recover from B unless X was authorized by B to make such request.*' §838. Payment of another's debt to protect one's interests. If A is obliged to pay B's debt in order to protect A's prop- erty interests, A's payment is not voluntary and he may recover from B.^ If the debt which B owes, and upon which B is pri- Co., 76 la. 660; 39 N. W. 201; Arm- 3 Grand Island Mercantile Co. v, strong V. Keith, 3 J. J. Mar. (Ky.) McMeans, 60 Neb. 373; 83 N. W, 153; 20 Am. Dec. 131; Wheeler v. 172. Young, 143 Mass. 143; 9 N. E. 531; 4 Wabash R. R. v. Pearce, 192 U. Rosemond v. Register Co., 62 Minn. S. 179. 374; 64 N. W. 925; Grand Island 5 Jones v. Green, 129 Mich. 203; Mercantile Co. v. McMeans, 60 Neb. 95 Am. St. Rep. 433; 88 N. W. 1047. 373 ; 83 N. W. 172 ; Albany v. Mc- 6 Little Bros. v. Phosphate Co.. — Namara, 117 N. Y. 168; 6 L. R. A. Fla. — ; 32 So. 808; Allen v. Bobo, 212; 22 N. E. 931. 81 Miss. 443; 33 So. 288. 2 Rosemond v. Register Co., 62 i Exall v. Partridge, 8 T. R. 308 ; Minn. 374 ; 64 N. W. 925. Post v. Gilbert, 44 Conn. 9 ; Gleason 1302 PAGE ON CONTRACTS. marily liable, is a lien upon A's property, and A is obliged to pay such lien to protect his interest in the property, he may re- cover from B.^ Thus, where property subject to an assess- ment was conveyed, and the grantor had promised as a part of the consideration to pay the assessments due thereon, and he does not make such payments, and by reason thereof the grantee is obliged to pay such assessments, he may recover from the grantor, on the theory of an implied contract in an action for money paid, and need not sue on the express contract to pay the assessment.^ So, if a court has by decree found that A is hold- ing stock for B, subject to a lien in favor of A for advances which he has made to B, on account of such stock, A may recover from B for assessments made upon the stock by the corporation and paid by A to the corporation to preserve his interest in it, and his right to recover from B is not defeated by his taking an appeal from such decree.* So if a lessee to protect his interest is obliged to pay taxes on the leased realty he may recover from his lessor.^ So if a lessee covenants in the lease to pay taxes on the leased realty, and does not do so, the lessor may pay such taxes and recover from the lessee or his assignee, even after the lessor has conveyed his interest by a deed containing a covenant against encumbrances.*' The party paying such liens cannot re- cover unless the payment is necessary to protect his interests. So a mortgagee who pays taxes on the realty mortgaged to en- able him to negotiate his mortgage, and who subsequently trans- fers the mortgage to the mortgagors, releasing the mortgage debt, cannot recover from them the amount thus expended as taxes.' The tax thus paid must be on the property in which the person paying it owns an interest or he cannot recover. So where a first mortgagee foreclosed and made the assignee of a second V. Dyke, 22 Pick. (Mass.) 390. s Vermont, etc., Ry. v. Ry., 63 Vt. 2Gleason v. Dyke, 22 Pick. 1; 10 L. R. A. 562; 21 Atl. 262; (Mass.) 390; Hunt v. Amidon, 4 731. Hill (N. Y.) 345; 40 Am. Dec. 283. 6 Wills v. Summers, 45 Minn. 90; 3 Post V. Gilbert, 44 Conn. 9. 47 N. W. 463. 4 Irvine v. Angus, 93 Fed. 629 ; 35 7 Kersenbrock v. Muff, 29 Neb. C. C. A. 501. 530; 45 N. W. 778. IMPLIED CONTEACTS AND QUASI-CONTEACTS. 1303 mortgagee a party to the suit, but the iutercst of the second mort- gagee had been sold for taxes and had been bought in by the state, the first mortgagee cannot after buying in the realty and paying to the state the amount for which such second mortgage had been sold with costs, recover such amount from such assignee.^ In order to enable A to recover from B for paying a debt of B's, which was a lien upon A's property, the lien must be a valid debt of B's, and must also be a lien upon A's prop- erty. Thus, if a grantee takes by a warranty deed, with a covenant against incumbrances, he cannot recover from his grantor for payment of a void tax assessed against such prop- erty.^ So, A held the legal title to realty, and A, B and C each had a third of the beneficial interest therein. C bought in the property at a tax sale, taking a deed thereto in his wife's name. X, a judgment creditor of A, redeemed the land to protect his interest. X cannot recover from B, since one co-owner cannot acquire interests as against another at a tax sale, and C's right to recover from B for his share of the taxes thus paid was re- stricted to the balance, if any, due on the accounts of each as to the property owned in common.^" If A induces B to enter into a contract for the sale of land by false representations as to the identity of A, B being induced to believe that he is dealing with X. and B avoids such contract, A cannot recover the amount which he has paid to redeem such land from a tax sale.^^ A con- veyed realty to B, who took possession and paid taxes. Subse- quently the conveyance w\as set aside on the theory that it was intended as a will. It was held that equity and good conscience required payment of such taxes, and that slight circumstances were sufficient from which to infer a promise to pay,^^ implying a promise to pay recovery could be had. 8 Canadian, etc.. Co. v. Boas, 136 141; 16 Am. St. Rep. 425; 42 N. W. Cal. 419; 69 Pac. 18. 629. 9 Balfour v. Whitman, 89 Mich. 12 Smith v. Roundtree. 185 III. 202; 50 N. W. 744. 219; 56 N. E. 1130; affirming 85 111. loLindley v. Snell, 80 la. 103; 45 App. 161. (This case, however, NT. W. 726. falls short of holding that in the 11 Ellsworth V. Randall, 78 la. absence of some circumstances im- 1304 PAGE ON CONTRACTS. §839. Payment by party secondarily liable. If A has, at B's request, incurred a liability by reason of which A is subsequently bound to pay a debt to C upon which B was primarily liable, A may recover from B for such payment although B did not expressly request A to make such payment. Thus, if A has become surety for B, at B's request, and A is obliged to pay the debt, A may recover such payment from B.^ This right of recovery does not, however, rest on express con- tract of any sort between the parties. One surety who has paid more than his proportionate share of the debt may recover from his co-sureties.^ If A is bound by law to pay a debt for which B is primarily liable, such payment is not voluntary, and A can recover. Thus, where certain damages for opening streets must by law be paid out of a county treasury, although the liability therefor is against the city in the first instance, such payments are not voluntary, and the county may recover therefor from the city.^ So if a county agrees to pay for certain fire plugs which by order of the fiscal court are to be entered on the contract of the water-works company with the city, and the city is thus obliged to pay for them, it may recover from the county.* If B has executed and delivered a negotiable instrument to A, in whose hands it is unenforceable, and A sells such negotiable in- strument to X, a bona fide holder, who enforces the instrument against B, B may recover from A. Thus where a city issues bonds to a corporation, in payment of an ultra vires subscription by the city to the capital stock of such corporation, and the cor- poration delivers the bonds to a bona fide purchaser in whose plying a j>romise to pay, recovery Rep. 499; 45 L. E. A, 285; 57 Pac. could be had.) 445. iHall V. Smith, 5 How. (U. S.) 2 Berlin v. New Britain School 96; Curtia v. Parks, 55 Cal. 106; Society, 9 Conn. 175; Rushworth v. Chamberlain v. Lesley, 39 Fla. 452; Moore, 36 N. H. 188; Aldrich v. 22 So. 7-36; Kennedy v. Gaddie Aldrich, 56 Vt. 324; 48 Am. Rep. (Ky.), 32 S. W. 408; Gibbs v. 791. Bryant, 1 Pick. (Mass.) 118; Mer- 3 Lancaster County v. Lancaster, chants' Hational Bank v. Opera 160 Pa. St. 411; 28 Atl. 854. House Co., 23 Mont. 33; 75 Am. St. 4 Stanford (City of) v. Lincoln County (Ky.), 61 S. W. 463. IMPLIED CONTRACTS AND QUASI-CONTEACTS. 1305 iiaiids they are enforceable against the city, the city may main- tain an action against the corporation for the proceeds of such bonds.^ A entered into a contract with B for the sale of real property, by the terms of which contract A reserved as his own a building thereon. Subsequently, at B's request, A made to X a warranty deed for such property with full covenants of war- ranty, X having purchased B's rights in such contract. X claimed the building by force of the deed, and B was obliged to pay X the value of such improvements for the privilege of re- moving them. It was held that A could recover from B the amount thus paid, since B got the benefit thereof in the addi- tional price received by him on sale of his interests in such property. ** XI. Waiver of Tort. §840. Waiver of tort. — Nature and theory of doctrine. At the original English Common Law, an injured person who brought suit in contract, was not allowed to show an injury which really amounted to a tort as a means of proving the alle- gations of his complaint.^ In the early part of the eighteenth century the English courts began to hold that in some cases it was possible for the injured party to maintain an action in im- plied contract on an injury which really amounted to a tort^ This principle has been extended and developed at Modern Law.^ This doctrine, of course, carries us beyond the limits of real contracts. The doctrine is really not one of substantive law at all, but one of adjective law. It determines the right of an injured party to elect between the remedies given by the actions in tort and in contract. The exact limits of the extent of this doctrine at Modern Law, are very indefinite. ' Different 5 Geneseo v. Natural Gas Co., 55 = Lamine v. Dorrell. 2 L, Ray. Kan. 358; 40 Pac. 655. 1216; decided 1705 A. D. 6 Edmunds v. Depper. 97 Ky. 661 ; s Seavey v. Dana, 61 N. H, 339j 31 S. W. 468. Smith v. Smith, 43 N. H. 536. 1 Phillips V. Thompson, 3 Lev. 191. 1306 PAGE ON CONTRACTS. jurisdictions have very different views on the question of what cases fall within it. In discussing the various classes of cases brought under this doctrine, we will therefore begin with those on which there is the least divergence of authority. Since the doctrine of suing in implied contract upon a tort, is really a case of election of remedies, the election of one remedy when com- plete bars the other. Thus where several persons detach machin- ery, and carry it away, and an action is subsequently brought against two of such persons in assumpsit, and judgment is ob- tained, the injured party cannot subsequently sue the remaining wrongdoers in tort.* The action against a wrongdoer on an im- plied contract, lies to recover the value of property taken wrong- fully from the real owner and received by the wrongdoer. One of several joint wrongdoers is liable in tort, and cannot be held in implied contract if he did not receive the property converted, or the proceeds thereof.^ So the amount of recovery is limited to the value of the property appropriated by the wrongdoer and not by the damage done to the owner of the property. If A re- moved sand from B's land with B's acquiescence, both parties, however, laboring under a mistake of fact and thinking that the land came within the limits of the property sold by A to B, B may recover from A in assumpsit for the value of the sand thus converted.® §841. Taking money or personal property converted into money. If B converts A's money to his own use, A may sue B therefor in an action for money had and received.^ This is true, even if B's conversion amounted to larceny." If B has converted A's 4 Terry v. Munger, 121 N. Y. property; but the value of the sand 161; 18 Am. St. Rep. 803; 8 L. R. A. taken. 216: 24 N. E. 272. i See § 789. 5 Ward V. Hood. 124 Ala. 570; 2 Guernsey v. Davis. 67 Kan. 378; 82 Am. St. Rep. 205; 27 So. 245; 73 Pac. 101; Howe v. Clancey, 53 Bates-Farley Sav. Bank v. Dismukes, Me. 130. Contra, Drury v. Douglas, 107 Ga. 212; 33 S. E. 175. 35 Vt. 474. In this case B delivered B Merriwether v. Bell (Ky.). 58 money to A to carry to X. A ap- S. W. 987. The measure of damages propriated it. It was held that as- will not be the injury done to the sumpsit would not lie. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1307 chattels, other than money, to his own use, and B has sold them and received the money therefor, A may maintain an action against him for money had and received.^ Thus, where X de- livers to A, as his agent, to sell upon commission, certain tobacco which really belongs to B, and A sells this tobacco at auction, delivers it to the purchaser, collects the money, and pays it to X, with full knowledge of B's rights in such tobacco, B may maintain an action against A for money had and received.* So, if A, a treasurer of a corporation, B, fraudulently is- sues certificates of B's stock in excess of his authority, and such certificates are so intermingled with the genuine stock that they cannot be distinguished from it, and A appropriates the money thus received for his own use, B may recover from A in an action for money had and received.^ So, if B cuts timber from A's land and sells it, B may recover from A for money had and received, if the question of the title to the realty is not in- volved.^ B, a creditor of Y, secured an attachment and seized certain property as Y's. X, claiming as vendee from Y,' main- tained an action against B in trespass for the value of the prop- erty, and recovered a judgment against him, which B satisfied. A, a subsequent attaching creditor, had the property sold under the attachments, and received the money therefor. B may re- cover such amount from A." If A sells B's property on credit, it has been held that B may recover from him for money had sGriel v. Pollak, 105 Ala. 249; Hughlett, 11 Lea (Tenn.) 549; 16 So. 704; Halleck v. Mixer, 16 Hutchinson v. Ford, 62 Vt. 97; 18 Cal. 574; Cushman v. Hayes, 46 111. Atl. 1044. 145; Moses v. Arnold, 43 la. 187; * White v. Boyd, 124 N. C. 177; 22 Am. Rep. 239 ; Robinson v. Bird, 32 S. E. 495. 158 Mass. 357; 35 Am. St. Rep. 5 Rutland Ry. Co. v. Haven, 62 495; 33 K E. 391; Nelson v. Kil- Vt. 39; 19 Atl. 769. bride, 113 Mich. 637; 71 N. W. s Guarantee, etc., Co. v. Invest- 1089; Tolan v. Hodgeboom, 38 Mich, ment Co., 107 La. 251; 31 So. 736. 625; Koch v. Branch, 44 Mo. 542; Nelson v. Kilbride, 113 Mich. 637; 100 Am. Dec. 324; White v. Boyd, 71 N. W. 1089. 124 N. C. 177; 32 S. E. 499; Scot- 7 Griel v. Pollak, 105 Ala. 249; tish, etc., Co. v. Brooks. 109 N. C. 16 So. 704. 698; 14 S. E. 315; Huffman v. 1308 PAGE ON CONTRACTS. and received after the term of credit has expired.^ If one who has received the property of another and has held it for so long a time that a presumption may arise that he has sold it, he may be liable in an action for money had and received ; but within a shorter period of time the action will not lie.'^ §842. Taking personal property not converted into money. — Theory that assumpsit will not lie. If A has converted B's property to his own use, but has kept the property in his possession, and has not sold it, there is a divergence of authority upon the question of whether he can re- cover from A upon an implied contract. Some authorities hold that B cannot maintain an action for money had and received.^ This view is probably correct enough if we consider the nature of averments in an action for money had and received, and the total failure of proof that must follow in such cases. When we consider, however, that the entire action is brought upon a fic- tion, there seems no good reason for restricting the fiction arbi- trarily in cases of this sort. In some jurisdictions this distinc- tion seems to be recognized, and while an action for money had and received will not lie where the party converting the property to its own use still retains it, an action in account will lie.^ " The owner of goods in the possession of another party, who without legal excuse, refuses to deliver them to the owner on de- mand, may sue in tort for a conversion, or he may waive the tort^ and treat the wrongdoer as a purchaser and sue and recover upon account for their value."^ In these cases, however, possession of the property in question passed with the consent of the owner ; a fact which in many jurisdictions gives a right to maintain assumpsit. In many jurisdictions, however, it is held that the real owner 8 Burton Lumber Co. v. Wilder, 2 Bradfield v. Patterson. 106 Ala. 108 Ala. 669; 18 So. 552. 397; 17 So. 536; Pharr v. Bachelor, 9 Moody V. Walker. 89 Ala. 619; 3 Ala. 237. 7. So. 246. ^ Bradfield v. Patterson, 106 Ala. iSnodgrass v. Coulson, 90 Ala. 397, 401; 17 So. 536. 347; 7 So. 736. IMPLIED CONTRACTS ANJ) QUASI-CONTRACTS. 1309 of the property converted carmot recover from the wrongdoer in any form of action in implied contract, if the wrongdoer has not sold the property and received the proceeds thereof, and the original taking is unlawful.* Thus if the wrongdoer has the property in his possession, as where he converted both to his own use and made a fence out of it,^ or if he has bartered it for other personal property,*' assumpsit will not lie. On this theory, in an action for money had and received, the real owner can- not recover if he cannot show the amount received by the wrong- doer on such sale.^ It has been said that to allow assumpsit in such cases would abolish all distinctions between actions ex con- tractu and those ex delicto.^ But even where this theory ob- tains it is not necessary that payment should be actually received in money. If the property converted has been sold at a value estimated in money, he is liable in an action for money had and received even if he subsequently receives something other than money in discharge of the obligation due to him by reason of such sale.^ A different rule prevails in some states where the original taking is lawful, and with the consent of the real owner, and there is a subsequent unlawful conversion. If B delivers property to A voluntarily, and A subsequently refuses to return * Miller v. King, 67 Ala. 575 ; Co. v. Bassett, 2 Nev. 249 ; Smith v. Smith V. Jernigan, 83 Ala. 256; 3 Smith, 43 N. H. 536; Allen v. Wood- So. 515; Chamblee v. McKenzie. 31 ward, 22 N. H. 544; Bethlehem v. Ark. 155; Barlow v. Stalworth. 27 Perseverance Fire Co., 81 Pa. St. Ga. 517; Kellogg v. Turpie, 93 111. 445; Willett v. Willett, 3 Watts 265; 34 Am. Rep. 163; Johnston v. (Pa.) 277; Kidney v. Persons, 41 Salisbury, 61 111. 316; Moses v. Ar- Vt. 386; 98 Am. Dec. 595. nold, 43 la. 187; 22 Am. Rep. 239; 5 Folsom v. Cornell, 150 Mass. Quimby v. Lowell, 89 Me. 547; 36 115; 22 N. E. 705. Atl. 902; Androscoggin Water Pow- e Kidney v. Persons, 41 Vt. 386; er Co. V. Metcalf, 65 Me. 40 ; Allen 98 Am, Dec. 595. V. Ford, 19 Pick. (Mass.) 217; Mc- 7 Glasscock v. Hazell, 109 N, C. Cormick Harvesting Machine Co. v. 145; 13 S. E. 789. Waldo, 128 Mich. 135; 87 N. W. 55; « Kidney v. Persons, 41 Vt. 386; St. John v. Iron Co., 122 Mich. 68; 98 Am. Dec. 595. 80 N. W. 998; Tolan v. Hodgeboom. » Fuller v. Duren, 36 Ala. 73; 76 38 Mich. 624; Tuttle v. Campbell, Am. Dec. 318; Miller v. Miller, 7 74 Mich. 652; 16 Am. St. Rep. 652; Pick. (Mass.) 133; 19 Am. Dec. 42 N. W. 384 ; Carson River Lumber 264, 1310 PAGE ON CONTEACTS. it, or pay for it, B may maintain assumpsit.^" Thus, if a bailee converts property to his own use, the bailor may waive tort, and sue in assumpsit.^^ If A's property is sold with A's consent, and the price therefor is paid to B, B must account therefor to A in an action for money had and received. Thus, where cer- tain stock was sold and the money was received by B, it was held a question of fact for the jury whose stock it was ; and if the stock belonged to A, B would have to account to A for such money/" So, where A forwarded butter to certain commission merchants, B, in the regular course of business, and B sold the same and received payment therefor, A may compel B to pay over such money to him after deducting commissions.^^ So, if A, the owner of one-half of a patent right, has sold the entire patent right to a stranger, and received the money therefor, B, the owner of the other half, may maintain an action against A for one-half of such proceeds.^* So, a tenant in common who collects more than his share of the rents and profits of the realty owned in common, is liable to the other tenant in common in assumpsit.^^ So, if one tenant in common mines and sells coal, and there is no dispute as to his right to do so, as to the amount of the coal mined, or as to his right to sell it at that price, but the only dispute is as to the amount which the other co-tenant is en- titled to receive, the latter may maintain an action against the former.^^ If A quarries stone on B's land, and takes it away, and either sells it or uses it, A is liable to B in assumpsit, not for the amount of the damage done to B's property, but for the value of the property thus converted by A.*^ If a railroad company 10 Grinnell v. Anderson, 122 Mich. is Tucker v. Utley, 168 Mass. 533; 81 N. W. 329; Newman v. 01- 415; 47 N. E. 198. ney, 118 Mich. .545; 77 N. W. 9; "Currier v. Hallowell, 158 Mass. Tuttle V. Campbell, 74 Mich. 652; 254; 33 N. E. 497. 16 Am. St. Rep. 652; 42 N. W. 384; is Hudson v. Coe, 79 Me. 83; 1 Ginsburg v. Lumber Co., 85 Mich. Am. St. Rep. 288; 8 Atl. 249. 439; 48 N. W. 952. le Winton Coal Co. v. Coal Co., "Newman v. Olney, 118 Mich. 170 Pa. St. 437; 33 Atl. 110. .545; 77 N. W. 9. it Downs v. Finnegan, 58 Minn. i2Shouldice v. McLeod's Estate, 112: 49 Am. St. Rep. 488; 59 N. 130 Mich. 444; 90 N. W. 288. W. 981. IMPLIED CONTEACTS AND QUASI-CONTEACTS. 1311 enters upon B's land and permanently appropriates it as a part of its right of way, and B acquiesces therein, B may recover against the railroad company indebitatus assumpsit/® §843. Theory that assumpsit will lie. Another line of authorities, greater numerically, and treating the fiction of implied contract more rationally, allow the real owner to recover from the wrongdoer, even where the wrongdoer has not sold the property.^ Where this theory obtains it is, of course, immaterial whether the property has been bartered or sold on credit, since the liability on the common counts in assumpsit exists even if the property converted has not been sold at all. Under this theory assumpsit will lie where the wrongful act consists in making use of property, and not in attempting to deprive the owner of it permanently. Thus A was to work for B for a year, giving B his entire time. Instead A used B's team on A's business. It was held that B could recover a reasonable compensation for such use from A, on the theory of an implied promise, even if A in fact did not intend to pay therefor.^ §844. Wrongful occupancy of real property. If the tort complained of consisted in adverse possession of real property, or any form of possession thereof without the consent of the true owner, the Common Law did not allow such tort to be waived and an action in assumpsit for use and occupa- tion to be brought. Assumpsit could not be made the means of trying the title to land.^ Accordingly, an action in assumpsit 18 Chattanooga, etc., Ry. v. Town Terry v. Hunger, 121 N. Y. 161 ; 18 Co., 89 Ga. 732; 16 S. E. 308. Am. St. Rep. 803; 8 L. R. A. 216; 24 N. E. 272; Barker v, Cory, 15 Ohio 9; McCombs v. Guild. 9 Lea (Tenn.) 81; Kirknian v. Philips, 7 Heisk. (Tenn.) 222; Maloney v. Barr, 27 W. Va. 381; Walker v. Duncan, 68 Wis. 624 ; 32 N. W. 689. 2 Stebbins v. Waterhouse, 58 Conn. 1 Roberts v. Evans, 43 Cal. 380 Toledo, etc., Ry. v. Chew, 67 111 378; Morford v. White, 53 Ind. 547 Jones V. Gregg, 17 Ind. 84; Ever sole V. Moore, 3 Bush. (Ky.) 49 Gordon v. Bruner, 49 Mo. 570: Moore v. Richardson, 68 N. J. L 305; 53 Atl. 1032; Galvin v. Mill 370; 20 Atl. 480. Co, 14 Mont. 508; 37 Pac. 366; i Burdin v. Ordway, 88 Me. 375; 1312 PAGE ON CONTRACTS. could not be brought unless there was either an express or an implied contract between the owner and the possessor creating the relation of landlord and tenant.^ Where decedent's widow occupies the homestead after the period fixed bj statute for her occupancy had expired, the heir cannot recover from her in an action for the rent thereof.^ One who holds wrongful posses- sion, adverse to that of the real owner, cannot be held liable in an action for use and occupation.* Where the person in wrongful adverse possession collects rents of the property, it has been held that he is not liable to the real owner for money had and re- ceived. Thus, one in possession under an invalid tax deed has been held not to be liable in this form of action.^ A railroad company took some of A's land for a right of way. Subse- quently, A sold his property to B. It was held that B could not maintain an action against the railroad company for use and occupation.® Xeither could B in this case sue as A's assignee in trespass, since such a claim could not be assigned. A vendee in possession under a contract of sale is not, on breach of such con- 34 Atl. 175; Boston v. Binney, 11 Pick. (Mass.) 1; 22 Am. Dec. 353. 2 Grady v. Ibach, 94 Ala. 152 ; 10 So. 287; O'Conner v. Corbitt, 3 Cal. 370; Atlanta, etc., Ry. v. McHan, 110 Ga. 543; 35 S. E. 634; Waller V. Morgan, 18 B. Mon. (Ky.) 136; Emery v. Emery, 87 Me. 281; 32 Atl. 900; Janouch v. Pence (Neb.), 93 N. W. 217; Phoenix Ins. Co. v. Hoyt (Neb.), 91 N. W. 186; CoII- yer v. Collyer, 113 N. Y. 442; 21 N. E. 114; Faulcon v. Jobnston, 102 N. C. 264; 11 Am. St. Rep. 737; 9 S. E. 394; Cincinnati v. Walls, 1 0. S. 222 ; Richey v. Hinde, 6 Ohio 371; Butler v. Cowles, 4 Ohio 205; 19 Am. Dec. 612; Blake V. Preston, 67 Vt. 613; 32 Atl. 491; Ackerman v. Lyman, 20 Wis. 454. 3 Emery v. Emery, 87 Me. 281 ; 32 Atl. 900. 4 Atlanta, etc., Ry. v. McHan, 110 Ga. 543; 35 S. E. 634; Williams v. Hollis, 19 Ga. 313; Richardson v. Richardson, 72 Me. 403 ; Bigelow v. Jones, 10 Pick. (Mass.) 161; Henderson v. Detroit, 61 Mich. 378; 28 N. W. 133; Hart- man v. Weiland, 36 Minn. 223; 30 N. W. 815; Barron v. Marsh, 63 N. H. 107; Stockwell v. Phelps, 34 N. Y. 363; 90 Am. Dec. 710; Faulcon V. Johnston, 102 N. C. 264; 11 Am. St. Rep. 737; 9 S. E. 394; Watson V. Brainard, 33 Vt. 88. "The dis- seizor is a trespasser and cannot be treated as a tenant. The tort can- not be waived for the purpose of trying the title to lands in an ac- tion of assumpsit." Richardson v. Richardson, 72 Me. 403, 408; quot- ed in Phoenix Ins. Co. v. Hoyt (Neb.), 91 N. W. 186. 5 Phoenix Ins. Co. v. Hoyt (Neb.), 91 N. W. 186. 6 Allen V. R. R., 107 Ga. 838; 33 S. E. 696, IMPLIED CONTKACTS AND QUASI-COK^TKACTS. 1313 tract, liable for use and occupation/ even if the contract is sub- sequently rescinded/ If a person in possession, who has made a contract to purchase the land, did not enter into possession under such contract of purchase, this principle does not apply. Thus A, the owner and mortgagor of a piece of land, and B, A's son, were living together on the mortgaged premises. C, the owner of the mortgage, agreed with B that C should foreclose the mortgage, buy the property in, and convey it to B. C per- formed the contract as far as foreclosure and buying in were concerned. B remained in possession, but did not perform the contract on his part and it was subsequently rescinded. It was held that B was liable to C in an action for use and occupation.* So if the person in possession under a contract of sale has agreed to pay rent in case of rescission, this principle has no applica- tion. A transferred property to B under an agreement made between their respective husbands, by which A was to take the property back or obtain a purchaser therefor if B was dissatis- fied with the purchase ; and in such case B was to pay for the use and occupation of the land. B, after accepting the deed, became dissatisfied, and reconveyed the property to A. It was held that B could not take advantage of the contract made on her behalf by her husband for reconveyance, and avoid liability for use and occupation.^'* If the vendor under a contract of sale retains possession, the vendee cannot recover from him in an ac- tion for use and occupation.^^ By statute in some jurisdictions an action for use and occupation may be brought where the premises are wrongfully occupied, even though there is no agree- ment, express or implied, for the payment of rent.^" Under the code of civil procedure, the court sometimes does not at- 7 Nance V. Alexander, 49 Ind. 516; 9 Lynch v. Pearson, 125 Cal. 21; Jones V. Tipton, 2 Dana (Ky.) 295; 57 Pac. 676. Bishop V. Clark, 82 Me. 532; 20 Atl. loVan Brunt v. Calder, 167 N. 88; Little v. Pearson, 7 Pick, Y. 458; 60 N. E. 755. (Mass.) 301; 19 Am. Dec. 289; n Greenup v. Vernor, 16 111. 26. Hough V. Birge, 11 Vt, 190; 34 Am. 12 Parkinson v. Shew, 12 S. D. Dec. 682. 171; SON. W. 189. sBelger v. Sanchez, 137 Cal. 614; 70 Pac. 738. 83 1314 PAGE ON CONTRACTS. *:erapt to say whether the actiou in which relief is given would have been at Common Law an action for rent or for use and oc- cupation." Where possession is taken under a contract other than one for the sale of such realty, an action for use and occupa- tion will lie.^* A mortgagee, who purchases at foreclosure sale, and enters into rightful possession, and who upon redemption by the mortgagor within a year from the date of such sale, is lia- ble for rents during the period of his occupation, is liable to the mortgagee for such rents collected in an action for money had and received.^^ Thus where a railroad construction company took possession of the working plant of certain contractors, claiming the right so to do under the contract on the ground of contractor's default, and asserting such right by means of an injunction, it was held that after it was adjudged that the con- struction company did not possess such right, it was liable to the contractor it:,r a reasonable compensation for the use of such plant." . §845. liability of trespasser in assumpsit. One who enters upon land, not as an adverse claimant thereof but as a mere trespasser, and who severs something of value from the realty and converts it into personalty, may be held liable in assumpsit wherever he could have been held in assump- sit had the property thus converted been personalty originally.* The title to land is in no way involved in such form of action. But if the acts of such trespasser amount to adverse possession, the question of title is involved and assumpsit will not lie.^ One whose property has been occupied by another, may recover therefor, even after conveying such property to a third person.^ 13 Van Brunt v. Calder, 167 N. Y. 40 C. C. A. 72; Downs v. Finnegan, 458; 60 N. E. 755. 58 Minn. 112; 49 Am. St. Rep, 488; 14 P. P. Emory Mfg. Co. v. Rood, 59 N. W. 981. 182 Mass. 166; 65 N. E. 58. 2 Downs v. Finnegan, 58 Minn. 15 Siems v. Bank, 7 S. D. 338; 64 112; 49 Am. St. Rep. 488; 59 N. W. N. W. 167. 981. ifi Champlain Construction Co. v. 3 Bowie v. Herring, 116 la. 209; O'Brien, 117 Fed. 271. 89 X. W. 976. 1 Phelps V. Church, 99 Fed. 683; IMPLIED CONTKACTS AND QUASI-CONTEACTS. 1315 g846. Assumpsit for occupation of realty under a formal lease. An action for use and occupation would not lie at Common Law, if the occupant was holding by a formal lease under seal/ At Modern Law the same principle applies, where the occupant holds by a formal lease which is enforceable and contains an ex- press covenant to pay rent. An occupant who enters under a formal lease, may be liable for use and occupation, if for any reason the lease itself proves unenforceable. Thus, where a tenant was partially evicted by his landlord, and his landlord had sued in debt and failed to recover because of such partial eviction," it was held that he might sue the tenant on a quan- tum meruit account in assumpsit for the beneficial use which the tenant had." If a lease under seal has been subsequently modi- fied or varied in legal effect, in any other w'ay whatever than by another instrument under seal, the resulting obligation is treated in law as a simple obligation, and not a specialty. Accordingly, an action in assumpsit can be brought upon such an obligation in a proper case, and the fact that the original lease was under seal does not prevent this form of action. Thus, where by stat- ute the election of a city to take for public use part of any land under lease, discharges such lease as to the part taken, but leaves it valid as to the residue, and upon such election the city acquires legal title in the part taken, a tenant holding under a sealed lease is liable after such election in an action for the use and occupa- tion of the residue.* If A holds property under a perpetual lease from B, and A sells to X, subject to the annual rent re- served, and X recognizes B's rights in such property, the law implies a promise by X to B to pay the rent ; and accordingly, assumpsit will lie.^ A statute allowing assumpsit on sealed 1 Codman v. Jenkins, 14 Mass. 03; Drill Co.. 67 N. H. 450; 39 Atl. 330. 2 Meredith Association v. Twist- 4McCardell v. Miller, 22 R. I. Drill Co., 66 N. H. 539; .30 Atl. 96; 46 Atl. 184. 1119. 5 Derrick v. Liiddy. 64 Vt. 462; 3 Meredith Association v. Twist- 24 Atl. 1050. 1316 PAGE ON CONTRACTS. contracts makes it possible to maintain assumpsit on a written lease under seal.® §847. Other forms of occupancy excluding liability in contract. One who is in possession under a contract by which he is to have the use of the premises in question gratuitously, cannot be held liable in an action for use and occupation.^ An action of assumpsit for use and occupation will not lie against one who does not sustain the relation of tenant, even though such person may have lived upon such real property in a subordinate relation to the tenant. Thus, where A had made a lease to B, and B's granddaughter, X, lived with B on the premises, not paying rent or board, it was held that A could not recover from X in an action for use and occupation.^ Under a statute providing that the expenses of the family shall be chargeable on the prop- erty of the husband or wife, or either of them, and permitting either joint or several actions to be brought against them, it has been held that where a lease is made to the husband a joint ac- tion for use and occupation may be brought against husband and wife.^ §848. Torts not affecting property. The right to waive tort and sue in assumpsit is limited in some jurisdictions to torts affecting property, whereby one is en- riched by receiving property or its proceeds which in good con- science belong to another. It has there no application to other forms of tort. If A has by duress compelled B to work for him, B cannot recover from A on an implied contract. Thus a con- vict who has been compelled to work on Sundays and holidays for the person hiring him has been denied the right to recover from such person on an implied contract, even though the statute 6 Beecher v. DufReld, 97 Mich. App. 651. (Even if such contract is 423; 56 N. W. 777; Conkling v. invalid.) Tuttle. 52 Mich. 630; 18 N. W. 391; 2 Austin v. Whipple. 178 Mass, Dalton V. Laudahn. 30 Mich. 349. 155; 59 N. E. 636. 1 Chicago V. IMillinc Co.. 196 111. 3 Walker v. Houghteling, 107 Fed. 580; 63 N. E. 1043; affirming 97 111. 619; 46 C. C. A. 512. IMPLIED CONTRACTS AND QUASI-CONTRACTS. 1317 ^specifically provided that a convict should not be compelled to work on Sundays and holidays.^ A represented to B that he had adopted her as his daughter, and thus he induced her to ren- der domestic services for him. It was held that she could not recover for work and labor.^ If a man represents himself as single and thus induces a woman to marry him, live with him, and perform domestic services for him, it has been held that she cannot recover in assumpsit for such services, and that her rem- edy is in tort.^ A consideration of these cases will show that if it is ever in accordance with principles of justice to waive tort and sue in quasi-contract, cases like these are the very ones where such right should be recognized. Accordingly in some states a juster view permits such recovery, as in the case of a woman who renders domestic services to a man, being induced by his fraud to believe that they were married.* 1 SIoss, etc., Co. V. Harvey, 116 * Schmitt v. Schneider, 109 Ga. Ala. 656; 22 So. 994. 628; 35 S. E. 145; Fox v. Dawson, 8 2 Graham v. Stanton, 177 Mass. Mart. (La.) 94; Higgins v. Breen, 9 321; 58 N. E. 1023. Mo. 497; Knott v. Knott (N. J. 3 Cooper V. Cooper, 147 Mass. Eq.), 51 Atl. 15. 370; 9 Am. St. Rep. 721; 17 N. E. 892. PART IV. PARTIES. CONTKACTS OF INFANTS. 1321 CHAPTER XXXVIII. CONTRACTS OF INFANTS. §849. Abnormal status as affecting contractual capacity. In the discussion of contracts up to this point we have assumed that both parties to the contract were of normal status. Many of the propositions of contract law have no application in cases in which one party or the other is of abnormal status. A dis- cussion of the contracts of persons of abnormal status involves questions both of contract and of quasi-contract. The com- moner types of abnormal status of natural persons will first be considered, then questions of partnership, agency, and of liabil- ity as trustees and the like which are often confused with agency; and then the contracts of artificial persons, that is, of the government and of public and private corporations. §850. Theory underlying doctrine of infancy. A child lacks the judgment and discretion necessary to make ordinary contracts. If his contracts were binding on him in all cases, extravagance in personal expenditures and recklessness in business ventures would often burden him before his majority with debts which he could never pay. The policy of our law deprives him in many cases of the control of his own property and transfers it to his guardian ; and as a corollary the law is unwilling to allow him to bind himself by contracts concerning the management of his estate, since these are matters to which his guardian should attend. On the other hand the law imposes certain obligations upon him, and these obligations are in no way weakened if the infant voluntarily promises to discharge them. The wise policy of the law, therefore, must hold that certain contracts are not binding upon the infant, at least if he 1322 PAGE ON CONTRACTS. wishes to escape liability; while others are binding, at least to the extent of the pre-existing liability of the infant. As the object of the law is not solely the protection of the infant, but rather an adjustment of his rights and duties in such way as will promote the general well-being, a complicated set of questions is left for solution in cases where the infant has re- ceived something of value under the contract and his right to avoid his liability limits the right of the other party to recover his property. With these questions the following sections are concerned. §851. The termination of minority at Common Law. The Common Law fixed the age of majority at twenty-one for both males and females. Persons under that age were in- fants or minors.^ This rule is, of course, an arbitrary one. There is but little difference in the discretion of one on the day before and on the day after majority.^ " A minor who has nearly attained his majority may be as able to protect his inter- ests in a contract as one who has passed that period. But the law must necessarily fix some precise age at which persons shall be held siii juris. It cannot measure the individual capacity in each case as it arises."^ Unless some arbitrary point of time is fixed by law, the capacity of the infant would necessarily be a question of fact in each case; and from the uncertainty and practical difficulty that would be tlius caused the courts have always shrunk. The exact moment at which the age of twenty- one was reached and minority ended was settled at Common 1 Anon.. 1 Salk. 44 ; 1 Black. Com. 55 ; 95 Am. Dec. 572. " Whenever 463; Rowland v. McGure. 64 Ark. he arrives at majority, a time fixed 412; 42 S. W. 1068. "An infant or by an arbitrary rule, which in the minor (whom we call any that is nature of things cannot aflPect the \inder the age of 21 years . . .)" personal capabilities of its subject, Coke Litt.. 2 b. the law presumes that he has ac- sMcCarty v. Carter, 49 111. 53; quired all the wisdom and prudence 95 Am. Dec. 572; Baker v. Lovett, necessary for the proper manage- 6 Mass. 78; 4 Am. Dec. 88; Harner ment of its affairs; hence the law V. Dipple, 31 O. S. 72; 27 Am. Rep. imposes on him full responsibility 496. for all his acts and contracts." sMeCarty v. Carter, 49 111. 53, Harner v. Dipple, 31 0. S. 72, 74. CONTKACTS OF INFANTS. 1323 Law as the first moment of the day preceding the twenty-first anniversary of birth.* " On the day before the twenty-first an- niversary he is held to be twenty-one years of age."^ Thus lim- itations against an infant begins to run the day before his twenty-first birthday.*^ This rule is said to rest upon the prin- ciple that the law does not recognize fractions of a day. It does not, however, follow from that principle at all ; but it really rests on nothing but precedent. It is impossible to show why the rule ignoring fractions of a day is not complied with by making majority begin at the first moment of the twenty-first anniver- sary of birth. Still although some authorities quoted in its favor are really not all clear on the point/ though it has been ably and logically criticised, it is probably too well fortified to be shaken and is, though illogical, as convenient a rule as any. §852. Effect of emancipation. While the emancipation of an infant from parental control gives him a property in his own earnings from that time,^ it does not relate back so as to permit him to recover for services previously rendered," and it does not in any way enlarge the con- tractual capacity of the infant.^ It often is, however, of prac- tical importance in determining with whom the contract was 4 Swinburne, pt. 2, § 2, pi. 7; ^ in the earlier cases this rule is 2 Kent Com. 233; Met. Cont. 38; stated apparently as a mere dictum. 7 Wait Act. & Def. 129; Fitzhugh Anon. 1 Salk. 44; Fitzhugh v. Den- V. Bennington. 6 Mod. 259; Anon. 1 nington, 6 Mod. 259. The rule as Salk. 44; Roe v. Hersey, 3 Wils. given in the later cases is often 274; Wells v. Wells. 6 Ind. 447; based on Blackstone; but that au- Hamlin v. Stevenson, 4 Dana (Ky.) thor merely said, I Com. 463, " So 597; Bardwell v. Purrington, 107 that full age in male or female is Mass. 419; Phelan v. Douglass, 11 twenty-one years, which age is com- How. Pr. 193 ; Ross v. Morrow, 85 pleted on the day preceding the anni- Tex. 172; 16 L. R. A. 542; 19 S. versary of a person's birth. . . ." W. 1090. iClay v. Shirley, 65 N. H. 644; 5 Ross V. Morrow, 85 Tex. 172, 23 Atl. 521. 175 ; 16 L. R. A. 542 ; 19 S. W. '2 Kreider v. Fanning. 74 111. App. 1090. 237. 6 Ross V. Morrow. 85 Tex. 172; 3 Burns v. Smith. 29 Ind. App. 16 L. R. A. 542; 19 S. W. 1090. 181; 64 N. E. 94; Tandy v. Master- 1324 PAGE ON CONTRACTS. made; and also in deciding many questions under the law of necessaries. §853. Statutes affecting capacity of minors. The legislature, under most American constitutions, has full power to modify the Common Law rules of the capacity of in- fants as far as concerns transactions after the passage of the statute. Where special legislation is forbidden, special statutes affecting capacity are, of course, unconstitutional.^ Without a clause in the constitution forbidding special legislation, an in- fant's disabilities may be removed by special statute.^ The statutes affecting the Common Law rules as to the incapacity of minors are of several kinds, three of which will be noticed here. First, in many states the age at which majority is reached has been changed, the most common modification being the reduction of the age of majority in females to eighteen.^ In North Da- kota a contract of an infant over eighteen is subject to his right to disaffirm within one year. If not so disaffirmed is as valid as if he were an adult.* Second, certain statutes provide that by a proceeding in a designated court the disabilities of a minor may be removed.^ The general effect of these statutes is the same, though there is some variance in the details. The record must son's Admr., 1 Bibb. 330; Mason v. 2 Collins v. Park. 93 Ky. 6; 18 Wright. 13 Met. (Mass.) 306; Tyler S. W. 1013. V. Gallop. 68 Mich. 185; 13 Am. 3 Rowland v. McGuire, 64 Ark. St. Rep. 336; 35 N. W. 902; Gene- 412; 42 S. W. 1068; Stevenson v. reux V. Sibley, 18 R. I. 43; 25 Atl. Westfall. 18 111. 209; Cogel v. Ralph, 345; Person v. Chase, 37 Vt. 647; 24 Minn. 194; Sparhawk v. Buell, 88 Am. Dec. 630. The effect of 9 Vt. 41. emancipation is "to enable him to * Luce v. Jestrab, — N. D. — ; make contracts for his own services 97 N. W. 848. and to apply his wages to the sup- s Wilkinson v. Buster, 124 Ala. port of his family, otherwise it does 574; 26 So. 940; Cox v. Johnson. 80 not enlarge his power to contract, Ala. 22; Hindman v. O'Connor. 54 so that he is bound by his contracts Ark. 627; 13 L. R. A. 490: 16 S. W. except for actual necessities." Burns 1052; Cooper v. Rhodes. 30 La. Ann. v. Smith, 29 Ind. App. 181, 184; 533; Brown v. Wheelock, 75 Tei 64 N. E. 94. 385; 12 S. W. Ill, 841. 1 State ex rel. Lamson v. Baker, 25 Fla. 598; 6 So. 445. CONTRACTS OF INFANTS. 1325 show that the minor resides in the county where the application is made or the decree removing the disabilities is void.*' After the decree is made, it is valid in the county where made, and in other counties where a certified copy of the decree is filed/ Since the statute authorizing the removal of the disabilities of a minor applies to those who are capable of managing their own business, an order of court removing the disabilities of a minor of fourteen is void.^ Since an infant over eighteen whose dis- abilities have thus been removed may bind himself by his under- takings, he may take the bar examination.^ While these stat- utes need not provide for notice of the application,^" yet such formalities as they require must be complied with.^^ Third, other statutes remove the disability of the infant as to certain kinds of contracts. Thus in Georgia an infant who engages in business with the consent of his guardian may bind himself by contract for his business debts,^" even if such contract is made with such guardian after he is discharged from his trust.^^ In Texas the marriage settlements of minors are binding, but this does not operate to make other contracts binding.^* In Iowa an infant who by reason of his engaging in business causes the other party to believe that he is an adult is liable on his con- tracts. This statute, however, does not apply to an infant who purchases realty while working as a farm-hand, such acts not constituting an " engaging in business."^^ §854. Infant married women. The disabilities of married women are elsewhere discussed.^ 6 Hindman v. O'Connor, 64 Ark. 627; 13 L. R. A. 490; 16 S. W. 1052. 627; 13 L. R. A. 490; 16 S. W. 1052. n Cox v. Johnson. 80 Ala. 22. 7 Wilkinson v. Buster, 124 Ala. 12 MeKamy v. Cooper, 81 Ga. 679; 574; 26 So. 940. 8 S. E. 312. So where his parents 8 Doles V. Hilton. 48 Ark. 305; 3 consent. Jimmerson v. Lawrence, S. W. 193; to the same eflfeet is 112 Ga. 340; 37 S. E. 371. Pochelu's Emancipation. 41 La. Ann. i3 Ullmer v. Fitzgerald, 106 Ga. 331; 6 So. 541. 815; 32 S. E. 869. 9 State ex rel. Lamson v. Baker, i* Burr v. Wilson. 18 Tex. 367. 25 Fla. 598; 6 So. 445. is Beickler v. Guenther, 121 la. 10 Hindman v. O'Connor, 54 Ark. 419: 96 N. W. 895. iSee Ch. XLL 1326 PAGE ON CONTRACTS. The statutes which modify the Common Law rules of coverture in some states specifically apply to infants and remove together the disabilities of infancy and coverture.^ Thus in Nebraska the statute removes the disabilities of a married woman over sixteen years of age/ while in Alabama the limit is eighteen years, and the statute applies to married women of that age even if married before they were eighteen/ In states in which the statute removing the disabilities of a married woman does not specifically apply to infants, it is held that notwithstanding the statute, the disability of infancy remains.^ " Where the party is an infant as well as feme covert, the disability arising from infancy remains, although she execute and acknowledge a deed in the form prescribed by statute."^ A proviso in a deed to a married woman that " nothing herein shall prevent her selling said land ... by her husband uniting with her " does not remove the disability of infancy.^ §855. Original rule concerning the eifect of an infant's contract. The Common Law rule as to the effect and validity of an infant's contracts was that if the court could, as a matter of 2 Knight V. Colman, 117 Ala. 266; mings v. Everett, 82 Me. 260; 19 22 So. 974; Daley v. Minnesota, etc., Atl. 456; Webb v. Hall, 35 Me. 336 Co., 43 Minn. 517; 45 N. W. 1100; Walsh v. Young, 110 Mass. 396 Ward V. Laverty, 19 Neb. 429; 27 Craig v. Van Bebber, 100 Mo. 584 N. W. 393; Chubb v. Johnson, 11 18 Am. St. Rep. 569; 13 S. W. 906 Tex. 469. Sanford v. McLean, 3 Paige (N. Y.) 3 Ward V. Laverty, 19 Neb. 429; 117; 23 Am. Dec. 773; Bool v. Mix, 27 N. W. 393. 17 Wend. (N. Y.) 119; 31 Am. Dec. 4 Knight V. Colman, 117 Ala. 266; 285; Epps. v. Flowers, 101 N. C. 22 So. 974. 158; 7 S. E. 680; Hughes v. Watson, 5 Confederation, etc.. Association 10 Ohio 127; McMorris v. Webb, 17 V. Kinnear, 23 Ont. App. 497; Sar- S. C. 558; 43 Am. Rep. 629; rod V. Myers, 21 Ark. 592; 76 Am. Bradshaw v. Van Valkenburg, 97 Dec. 409; Watson v. Billings, 38 Tenn. 316; 37 S. W. 88; Walton v. Ark. 278; 42 Am. Rep. 1; Magee v. Gaines, 94 Tenn. 420; 29 S. W. 458. Welsh. 18 Cal. 155; Law v. Long, 6 Syllabus of Bool v. Mix, 17 41 Ind. 586; Losey v. Bond, 94 Ind. Wend. (N. Y.) 119; 31 Am. Dec. 67; Hoyt v. Swar, 53 111. 134; Phil- 285; quoted in Hughes v. Watson, lips V. Green, 3 A. K. Marsh. (Ky.) 10 Ohio 127, 134. 7; 13 Am. Dec. 124; Prewit v. t Sewell v. Sewell, 92 Ky. 500; Graves, 5 J. J. Marsh. 114; Cum- 36 Am. St. Rep. 606; 18 S. W. 162. CONTEACTS OF INFANTS. 1327 law, determine that the contract was prejudicial to the infant, it was void ; if beneficial, as for necessaries, it was valid ; and if it was doubtful whether it was beneficial or prejudicial it was voidable/ Thus a contract clearly beneficial to the infant was held binding.^ An apparent modification of this rule, though not always recognized as such by the courts, restricts void con- tracts to such as are clearly, certainly or necessarily to the prej- udice of the infant.^ In Robinson v. Weeks,* a somewhat different classification from that given in the text was set forth at length and the contracts of infants were divided into three classes: binding, if for necessaries at fair and just rates; void, if manifestly and necessarily prejudicial, as of suretyship, gift, naked release, appointment of agents, confession of judgment or the like ; and voidable, at the election of the minor, either during his minority or within a reasonable time after he becomes of age ; including all the agreements of a minor which may be beneficial and are not for necessaries until fully executed on both sides, and all executed contracts of this sort where the other party can be placed substantially in statu quo. An examination of the authorities cited will show that this rule was based on a line of dicta ; and that the real decisions in almost all of the cases did not require the statement of the rule in the form given. The questions decided are generally pre- sented where the infant has taken steps sufficient to avoid tlie contract, and it has thereby become unimportant whether the contract was originally void or merely voidable. Wherever 1 Harvey v. Ashley, 3 Atk. 607 Zouch V. Parsons, 3 Burr. 1794 Keane v. Boycott, 2 H. Black. 512 Bay lis v. Dinely, 3 Maiile & S. 477 Tucker v. Moreland, 10 Pet. 58 Waugh V. Emerson, 79 Ala. 295 Dec. 251. Of these cases Keane v. Boycott, 2 H. Bla. 511. while not the earliest is perhaps the one most often quoted. 2 Waugh V. Emerson, 79 Ala. 295 ; Nickerson v. Easton, 12 Pick. Green v. Wilding, 59 la. 679; 44 (Mass.) 110; Stone v. Dennison, 13 Am. Rep. 696; 13 N. W. 761; Sue- Pick. (Mass.) 1; 23 Am. Dec. 654; cession of Wilder, 22 La. Ann. 219; Breed v. Judd, 1 Gray (Mass.) 455. 2 Am. Rep. 721; Lawson v. Love- 3 Hastings v. Dollarhide, 24 Cal. joy, 8 Me. 405; 23 Am. Dec! 526; 195; Bradford v. French, 110 Mass. Williams v. Hutchinson, 3 N. Y. 365; Oliver v. Houdlet, 13 Mass. 312; 53 Am. Dec. 301; Wheaton v. 237; 7 Am. Dee. 134. East, 5 Yerg. (Tenn.) 41; 26 Am. ^oQ Me. 102. 1328 PAGE ON CONTRACTS. questions of the possibility of ratification by the infant or the riffht of the adult to avoid have been raised the conclusion reached is consistent only with the view that the contract called " void " is really voidable. §856. Present standing of original rule. Before discussing the modern rule, it must be noticed that the old rule just given is not obsolete everywhere. It still per- sists in obiters.^ The English courts still apply the test regu- larly in contracts for work and labor.^ Thus, a contract by which an infant, in consideration of a special rate of fare agrees not to hold the railroad for its negligence is so manifestly prej- udicial as to be not binding f and an apprenticeship deed con- taining a provision that the master was not to pay wages to the apprentice or to instruct him or teach him while his business was interrupted by " turn-outs " including lock-outs, was so much TO the detriment of the infant as to be unenforceable.* On the other hand, an agreement by an infant employee to accept a certain sum from a mutual insurance society in lieu of damages,^ and a promise by an infant that in consideration of employment he will not compete in business with the employer within a dis- tance of five miles, and for a period of two years after the ter- mination of the employment, are both for the benefit of the infant and enforceable.^ The English courts have intimated that this rule is not limited to labor contracts.'^ Some American 1 Askey v. Williams, 74 Tex. 294; it was for his advantage it was not a 5 L. R. A. 176; 11 S. W. 1101. voidable contract but one binding 2 Reg. V. Lord, 12 Q. B. 757; on him, which he had no right to Fellows V. Wood, 50 L. T. (N. S.) repudiate." Clements v. Ry. Co. 513; Meakin v. Morris, 12 Q. B. D. (1894), 2 Q. B. 482, 489. 352; Evans v. Ware (1892), 3 Ch. 3 Flower v. Ry. Co. (1894), 2 Q. 502; Corn v. Matthews (1893), 1 B. 65. Q. B. 310; Flower V. Ry. Co. (1894), 4 Corn v. Matthews (1893), 1 Q. 2 Q. B. 65; Clements v. Ry. Co. B. 310. ( 1894) , 2 Q. B. 482. The test of the s Clements v. Ry. Co. (1894) , 2 Q. validity of such a contract is said to B. 482. be "whether on the true construe- e Evans v. Ware (1892), 3 Ch. tion of the contract as a whole it 502. was for his advantage. ... If ^ " j ^yiH not attempt to say how CONTKACTS OF INFANTS. 1320 states still hold to the original rule, in its literal application.^ Thus a deed from an infant without consideration was held void as being prejudicial ; and so a covenant of seizin in a deed by the infant's grantee to another was broken as soon as made.^ So a gratuitous release by an infant to a witness to restore his com- petency was held void, and of no eifect on such competency.^** §857. Modern rule concerning the effect of an infant's contracts. The modern rule, in force in a great majority of the different jurisdictions, also divides the contracts of infants into void, voidable and valid contracts ; but the lines of distinction between the different classes of contracts are very different from those laid down by the Common La^v rule. Void contracts consist in many states of formal powers of attorney ; in fewer still, of gen- eral appointments of agents; and in a very few of gratuitous gifts. Valid contracts consist. of certain executed contracts of status and all promises by an infant to perform some legal obligation already imposed upon him ; and all other contracts are voidable. These different classes of contracts will be discussed in detail in the following sections. The modern English Statute makes an infant's contracts, except for necessaries, void and in- capable of ratification. Thus, acceptances given by an infant debtor who is sued with others after majority are void.^ far the rule extends but that it necessaries — they are valid ; if of does apply to some contracts that an uncertain character as to bene- are not contracts of labor is clear fit or prejudice, they are voidable from many decided cases." Clem- only, . . ." ents V. Ry. Co. (1894) , 2 Q. B. 482, 9 Robinson v. Coulter. 00 Tenn. 492. 705; 25 Am. St. Rep. 708; IS S. W. 8 Robinson v. Coulter. 90 Tenn. 250. 705; 25 Am. St. Rep. 708; 18 S. W. lo Langford v. Frey, 8 Humph. 250. \^niere the rule is reiterated as (Tenn.) 443. See also on the same follows: "The rule governing the point Swaflford v. Ferguson, 3 Lea contracts of minors long established, 202; 31 Am. Rep. 639; Scobey v. is, that they are either void, voidable Waters. 10 Lea 551. or valid, according as they shall ap- i Smith v. King (1892), 2 Q, B, pear prejudicial, uncertain, or bene- D. 543. ticial. If to his benefit — as for 84 1330 PAGE ON CONTEACTS. ^858. Void contracts. — Powers of attorney. A supplement to the original Common Law rule already given was the rule originally laid down in conveyancing that granta made by an infant which did not take effect by delivery by his hand were void.^ This rule survives in modified form and in many, perhaps the majority of jurisdictions, a power of attor- ney for the conveyance of real estate executed by an infant is said to be absolutely void.^ The true meaning of this rule is of course that no rights of any sort pass under a deed delivered aa an execution of such power. Many of these decisions would have resulted the same way if the power had been merely void- able. In others, it is purely obiter, not being called for in the least by the facts of the case.^ In the rest, however, the point is clearly and necessarily involved in the decision. The more rational view of an infant's power of attorney is that it is void- able and not void. Under our theory of the transfer of estates in realty there can be no logical distinction between delivery by the hand of the infant and by the hand of his agent. Accord- ingly some courts have held that a power of attorney given by an infant was merely voidable, and might be ratified by him on arriving at majority.* The validity of a power coupled with an interest, as one inserted in a mortgage, is also an unsettled ques- tion.^ Powers of attorney other than those for the convey- 1 Perkins on Conveyancing, § 12; v. Cravens, 4 Litt. (Ky.) 18; Law- Zoucli V. Parsons, 3 Burr. 1794; AI- rence v. McArter, 10 Ohio 37; Knox len V. Allen, 2 Dru. & War. 307; v. Flack, 22 Pa. St. 337. Doe V. Roberts, 16 M. & W. 778; s Cole v. Pennoyer, 14 111. 158 Phillips V. Green, 3 A. K. Marsh. Fairbanks v. Snow, 145 Mass. 153 (Ky.) 7; 13 Am. Dec. 124; Breck- 1 Am. St. Rep. 446; 13 N. E. 596 enridge's Heirs v. Ormsby, 1 J. J. Mustard v. Wohlford's Heirs, 15 Marsh. (Ky.) 236; 19 Am. Dec. Grattan (Va.) 329; 76 Am. Dec. 71; Dana v. Coombs, 6 Me. 89; 19 209. Am. Dec. 194; Conroe v. Birdsall, * Conrsolle v. Weyerhauser, 69 1 Johns. Cas. (N. Y.) 127; 1 Am. Minn. 328; 72 N. W. 697; Ferguson Dec. 105. V. Ry. Co., 73 Tex. 344; 11 S. W. 2Zouch V. Parsons, 3 Burr. 1794; 347. Flexner v. Dickerson, 72 Ala. 318; sin Askey v. Williams, 74 Tex. Philpot V. Bingham, 55 Ala. 435; 294; 5 L. R. A. 176; 11 S. W. 1101, Waplos V. Hastings, 3 Harr. (Del.) such a power was held voidable. In 403; Hiestand v. Kuns, 8 Blackf. Rocks v. Cornell, 21 R. I. 532; 45 Ind. 345; 46 Am. Dec. 481; Pyle Atl. 552, it was said to be void. CONTRACTS OF INFANTS. 1331 ance of real estate have been said to be void.^ Thus an infant cannot appoint an attorney to make affidavit for him in replevin/ The more rational view is to look upon the power and the acts thereunder as being merely voidable.® §859. Void contracts. — Appointments of agents. The rule given in the preceding section that powers of attor- ney are held void in many jurisdictions has been applied In some jurisdictions to all appointments of agents.^ Such an ap- pointment is said to be " absolutely void."^ While in some of these cases, this rule is obiter, in others it is specifically decided. Thus it has been held that the infant could not ratify the con- tract made by the agent, on reaching majority;^ and also, that no title passed by a sale made by the agent for the infant,* or by an assignment of a note.^ It was also said that an infant can- not adopt the act of an agent.^ The clear weight of modern authority, however, seems to be that an appointment of an agent is voidable only, and not void.^ Thus an appointment of an 6 Fetrow v. Wiseman, 40 Ind. 148; Hustand v. Kuns, 8 Blackf. (Ind.) 345; 46 Am. Dec. 481; Mustard v. Wohl ford's Heirs, 15 Grattan (Va.) 329; 76 Am. Dec. 209. 7 Turner v. Bondalier, 31 Mo. App. 582. 8 Karcher v. Green, 8 Houst. (Del.) 163; 32 Atl. 225. In this case a judgment on power of attor- ney signed by a minor was set aside. iCole V. Pennoyer, 14 111. 158; Tr.ueblood v. Triieblood, 8 Ind. 195; 65 Am. Dec. 756; Seraple V. Morri- son, 7 T. B. Mon. (Ky.) 298; Armi- tage V, Widoe, 36 Mich. 124; Bool V. Mix, 17 Wend. (N. Y.) 119; 31 Am. Dee. 285; Fonda v. Van Home, 15 Wend. (N. Y.) 631; 30 Am. Dee. 77; Burns v. Smith, 29 Ind. App. 181; 94 Am. St. Rep. 268; 64 N. E. 94 ; Poston v. Williams, 99 Mo. App. 513; 73 S. W. 1099. 2 Burns v. Smith, 29 Ind. App. 181; 94 Am. St. Rep. 268; 64 N. E. 94. 3 Doe V. Roberts, 16 Mee. & W. 777; Trueblood v. Trueblood, 8 Ind. 195; 65 Am. Dec. 756. 4 Fonda v. Van Home, 15 Wend. (N. Y.) 631; 30 Am. Dec. 77. 5 Semple v. Morrison, 7 T. B. Mon. (Ky.) 298. 6 Armitage v. Widoe, 36 Mich. 124. Contra, Ward v. Steamboat Little Red, 8 Mo. 358. 7 Hastings v. Dollarhide, 24 Cal. 195; Hardy v. Waters, 38 Me. 450; Whitney v. Dutch, 14 Mass. 457; 7 Am. Dec. 229; Welch v. Welch, 103 Mass. 562; Simpson v. Ins. Co., 184 Mass. 348; 68 N. E. 673; Stiff v. Keith, 143 Mass. 224; 9 N. E. 577; Patterson v. Lippincott, 47 N. J. L. 457; 54 Am. Rep. 178; 1 Atl. 506; Cummings v. Powell, 8 Tex. 80; Voglesang v. Null. 67 Tex. 465 ; 3 S. W. 451; Ferguson v. Ry. Co., 73 1332 PAGE ON CONTKACTS. agent, by an infant, to execute a j)romissory note,^ or to indorse one,'' even if non-negotiable,^** or to rescind a contract,^^ is mere- ly voidable. Tlie agent cannot be sued on an implied breach of warranty of authority ;^^ nor can the adversary party avoid a contract made through an agent with an undisclosed principal who proves to be a minor/^ Hence also an infant can bind him- self for necessaries by an agent/* §860. Other contracts held void. An infant's contract to arbitrate has been said to be absolutely void.^ AMiile not strictly contracts, gratuitous transfers of prop- erty are in some jurisdictions held absolutely void and incapable of ratification.^ §861. Valid contracts. — Marriage. The validity of certain contracts of minors depends in part on the legal effect of certain statutes, — though this effect is not always expressed in the exact wording of the statutes, — and in part upon Common Law rules. At Common Law a male could contract a valid and binding marriage at the age of fourteen ; a female at the age of twelve.^ While this age is changed by statute in many states, persons under the age of infancy are by statute in almost all jurisdictions allowed to contract valid mar- riages.^ From the Common Law rule just given and from the Tex. 344; 11 S. W. 347; Askey v. i* Fruehey v. Eagleson, 15 Ind. Williams, 74 Tex. 294; 5 L. R. A. App. 88; 43 N. E. 146; see § 865 176; 11 S. W. 1101. et seq. sWhitneyv. Dutch, 14 Mass. 457; i Millsaps v. Estes, 134 K C. 7 Am. Dee. 229. 486; 46 S. E. 988. 9 Hardy v. Waters, 38 Me. 450. 2 Robinson v. Coulter. 90 Tenn. 10 Hastings v. Dollarhide, 24 Cal. 705; 25 Am. St. Rep. 708; 18 S. W. 195. 250. 11 Towle V. Dresser, 73 Me. 252. i 1 Black Com. 436 : Fisher v. Ber- 12 Patterson v. Lippincott, 47 N. nard. 65 Vt. 663; 27 Atl. 316. J. L. 457; 54 Am. Eep. 178; 1 Atl. 2 Such a statute prevents a person 506. above the Common Law age and un- 13 Stiff V. Keith, 143 Mass. 224; der the statutory age from binding 9 N. E. 577; Cummings v. Powell, himself by a valid marriage, even if 8 Tex. 80. it does not specifically abolish the CONTKACTS OF INFANTS. 1333 various local statutes, it follows that an executed contract of marriage entered into by one below the age of full majority but above the age so fixed by law is absolutely valid.^ While such statutes generally require the consent of a parent or guardian if the party to be married is under the full age of majority, a marriage witiiout such consent is perfectly valid,* even if it is a misdemeanor to enter into such a marriage.^ By statute, a mar- riage under the ordinary age of consent may in certain cases be valid if all the requirements of the statute are complied with, and otherwise, void.^ An infant's executory contract of mar- riage, however, as it does not cause any change in status is not binding upon him but like his contracts in general, is void- able.'^ While Develin v. Riggsbee,^ is often cited as contrary to the principle laid down, it merely holds that a minor female may give a valid release from a promise to marry. Common Law rile. Eliot v. Eliot, 77 Wis. 634; 10 L. R. A. 568; 46 N. W. 806. 3 Hunter v. Milam (Cal.), 41 Pac. 332; Parton v. Hei'vey, 1 Gray (Mass.) 119; Governor v. Rector, 10 Humph. (Tenn.) 57; Pool v. Pratt, 1 Chip. (Vt.) 252. 4LaCoste v. Guidroz, 47 La. Ann. 295; 16 So. 836; Commonwealth v. Graham, 157 Mass. 73; 34 Am. St. Rep. 255; 16 L. R. A. 578; 31 N. E. 706; Holland v. Beard. 59 Miss. 161 ; 42 Am. Rep. 360; Wilkinson v. Del- linger, 126 N. C. 462; 35 S. E. 819; apparently to this effect is Western, etc., Co. v. Proctor, 6 Tex. Civ. App. 300; 25 S. W. 811; where damages were allowed for fail- ure to deliver a telegram forbidding the clerk to issue a license to the plaintiff's daughter. Apparently contra Eliot v. Eliot. 81 Wis. 295; 15 L. R. A. 259; 51 N. W. 81; where the boy who was under eigh- teen, the age of consent, represented that he was nineteen and it was held, first, that no estoppel could arise; and, second, that if there could be an estoppel, it could only have arisen from his misrepresenta- tion that his parents had given their consent as required by statute. 5 Hunter v. Milam (Cal.), 41 Pac. 332. 6 People v. Schoonmaker, 119 Mich. 242 ; 77 N. W. 934. The stat- ute involved in this case allowed a, marriage under the age of consent, where the girl was seduced, the par- ents consented, and the parties lived together after the age of consent. 7 McConkey v. Barnes, 42 111. App. 511; Frost v. Vought, 37 Mich. 65; Hunt V. Peake. 5 Cow. (N. Y.) 475; 15 Dec. 475; Rush v. Wick, 31 O. S. 521 ; 27 Am. Rep. 523 ; Warwick v. Cooper, 5 Sneed. (Tenn.) 659; Wells V. Hardy, 21 Tex. Civ. App. 454; 51 S. W. 503; Pool v. Pratt. 1 Chip. (Vt.) 252. 8 4 Ind. 464. 1834 PAGE ON CONTRACTS. §862. Valid contracts. — Enlistment. The statutes of the United States allow minors over sixteen to enlist in the army if the parent or guardian consents to such enlistment. This clearly recognizes the capacity of the minor to bind himself by a contract of enlistment.^ The practical ques- tion arising most often under these statutes is whether in cases of enlistment without such ^vritten consent the infant can him- self avoid the contract. The better line of authorities holds that he cannot, and that the privilege of avoiding the contract be- longs to the parent or guardian ; accordingly if he deserts, this does not avoid the contract apd he may be punished therefor.^ Other authorities hold that the minor may avoid such contract without being punished for desertion,^ and that he may avoid it either before or after he arrives at majority.* In any event, one appointed guardian after the enlistment of a minor cannot give the written consent required by statute,^ while the delay of a father who does not by habeas corpus procure the discharge of his son who was enlisted in the navy under the age of eighteen, before that age, does not validate the enlistment,® Whether the same rules on this point apply to the volunteer service as to the regular army is in dispute.^ It has been held, under differ- ent statutes, that in the navy, a minor over eighteen, enlisting iMorrissey v. Perry, 137 U. S. wealth v. Gamble, 11 Serg. & R. 157; In re Dowd, 90 Fed. 718; Sol- (Pa.) 93; United States v. Blak- omon V. Davenport, 87 Fed. 318; eney, 3 Gratt. (Va.) 405. Lanahan v. Birge, 30 Conn. 438; 3 United States v. Hanchett, 18 Ex parte Anderson, 16 la. 595; In Fed. 26; In re Davison, 21 Fed. 618; re Graham, 8 Jones (N. C.) 416; In re Baker, 23 Fed. 30; In r< Commonwealth v. Gamble, 11 Serg. Chapman, 37 Fed. 327; 2 L. R. A. & R. (Pa.) 93; In re Tarble, 25 332; In re Von Dieselskie, 5 Mack. Wis. 390; 3 Am. Rep. 85. (D. C.) 485; Commonwealth v. Fox, 2Morrissey v. Perry, 137 U. S. 7 Pa. St. 336. 157; In re Dowd, 90 Fed. 718; Sol- ^ In re Chapman, 37 Fed. 327; 2 omon V. Davenport, 87 Fed. 318; In L. R. A. 332. re Kaufman, 41 Fed. 876; In re ^ In re Perrone, 89 Fed. 150. Cosenow, 37 Fed. 668: In re Zim- ^ In re Falconer, 91 Fed. 649. merman, 30 Fed. 176; Ex parte An- 7 That they do, In re Burns, 87 derson, 16 la. 595; In re Graham, 8 Fed. 796. Contra, Lanahan v. Jones L. (N. C.) 416; Common- Birge, 30 Conn. 438. CONTKACTS OF INFAISTTS. 1335 without consent of parent or guardian cannot be discharged on habeas corpus on suit of the parent.* §863. Valid contracts. — Apprenticeship. Under the old theory of an infant's contracts, a reasonable contract for teaching him a trade was for his benefit;^ under the modern theory it is held to be a necessary.^ For one or the other of these reasons, many authorities have held that a contract of apprenticeship executed by an infant is binding upon him at Common Law.^ In these cases, however, there were either statutes making such a contract valid, or the infant had not taken proper steps to avoid the contract. Other authorities have held that at Common Law in the ab- sence of statute or local custom an infant's contract of appren- ticeship is voidable and not valid.* Under some statutes an in- fant is empowered to bind himself by a contract of apprentice- ship.^ In England an apprenticeship deed executed by an in- fant apprentice is not enforceable against him if the covenants are detrimental to him f but otherwise it is enforceable.^ Under some of these statutes, a master may recover from an infant ap- 8/» re Norton, 98 Fed. 606; In dey v. Ship Windlass Co., 20 R. I. re Doyle, 18 Fed. 369; United States 147; 78 Am. St. Rep. 844; 37 Atl. V. Bainbridge, 1 Mason (U. S.) 71; 706; Frazier v. Rowan, 2 Brev. (S. Commonwealth v. Downes, 24 Pick. C.) 47. So by local custom, Horn (Mass.) 227. {Contra, In re Me- v. Chandler, 1 Mod. 271. Nulty, 2 Low. (U. S.) 270; In re 4 Clark v. Goddard, 39 Ala. 164; McLave, 8 Blatch. (U. S.) 67, dis- 84 Am. Dee. 777; Harney v. Owen, approved in In re Norton, 98 Fed. 4 Blackf. (Ind.) 337; 30 Am. Dec. 606.) 662. 1 Rex V. Wigston, 3 B. & C. 484. s Whitmore v. Whitcomb. 43 Me. 2 Walter v. Everard (1891), 2 Q. 458; Harper v. Gilbert, 5 Cush. B. 369; Pardey v. American Ship (Mass.) 417; Fisher v. Lunger, 33 Windlass Co., 20 R. I. 147; 78 Am. N. J. L. 100; State v. ReufT, 29 W. St. Rep. 844; 37 Atl. 706. Va. 751; 6 Am. St. Rep. 676; 2 S. 3 Rex V. Arundel, 5 M. & S. 257; E. 801. Rex V. Wigston, 3 B. & C. 484; 5 6 Corn v. Matthews (1893), 1 Q. Dowl. & R. 339; Cooper v. Sim- B. 310. mons, 7 Ex. 707; 7 H. & N. 707; 7 Green v. Thompson (1899), 2 Q. Bratzman v. Bunnell, 5 Whart. B. 1. (Pa.) 128; 34 Am. Dec. 537; Par- 1336 PAGE 0]Sr CONTBACTS. preutice for damages for breach of his covenants,^ or for de- ferred premiums.'' Under other statutes no such action can be maintained against an infant who pleads infancy/" If the in- fant does not sign the articles of apprenticeship it is void as to him." §864. Valid contracts. — Performance of legal duty. If a liability is imposed upon an infant by Common Law, equity or statute, a fair and reasonable contract entered into for the purpose of discharging the liability is valid.^ Thus, if an infant holds the legal title to property in trust and agrees to and does execute the trust he cannot thereafter avoid such executed agreement.^ So where a mortgage debt is discharged, an infant mortgagee is bound by his release f and an infant to whom the legal title is conveyed in order to defraud his father's creditors is bound by his conveyance at his father's direction,* especially where he conveys for the benefit of the defrauded creditors.^ So an infant who by agreement with the executor 8 Woodruff V. Logan, 6 Ark. 276 ; 42 Am. Dec. 695. 9 Walter v. Everard (1891), 2 Q. B. .369. This ease distinguishes Gyl- bert V. Fletcher, Crc, Car. 179, on the ground that in the latter ease ample remedies for enforcing good behavior existed in the master's right of punishment, or if appealing to a justice of the peace; reasons which " do not apply to a covenant by an infant to pay a premium." loGylbert v. Fletcher, Cro. Car. 179; Lylly's Case, 7 Mod. 15; Moses V. Stevens, 2 Pick. (Mass.) 332. Ordinary contracts for work and labor present different questions from contracts of apprenticeship ■which involve instruction, and are separately discussed. 11 Anderson v. Young, 54 S. Car. 388 ; 44 L. R. A. 277 ; 32 S. E. 448. 1 Elliott v. Horn, 10 Ala. 348: 44 Am. Dec. 488 ; Xordholt v. Xordholt, 87 Cal. .552; 22 Am. St. Rep. 268; 26 Pac. 599; Stowers v. Hollis, 83 Ky. 544; Starr v. Wright, 20 O. S. 97; Williams v. Ivory, 173 Pa. St. 536; 34 Atl. 291; Kearby v. Hop- kins. 14 Tex. Civ. App. 166; 36 S. W. 506. 2 Elliott v. Horn, 10 Ala. .348; 44 Am. Dec. 488 ; Xordholt v. Xordholt, 87 Cal. 552; 22 Am. St. Rep. 268; 26 Pac. 599 ; Prouty v. Edgar, 6 la. 353 (where the minor conveyed the legal title ) ; Bridges v. Bidwell, 20 Xeb. 185; 29 X. W. 302 (where the minor mortgaged the legal title) ; Trader v. Jarvis. 23 W. Va. 100 (where the minor assigned his in- terest in an indemnity bond on being protected against loss ) . 3 ^ouch v. Parsons. 3 Burr. 1794. 4 Elliott v. Horn, 10 Ala. .348; 44 Am. Dec. 488. 5 Starr v. Wright, 20 0. S. 97. CONTBACTS OF INFANTS. 1337 buys land in his own name at the executor's sale and at once conveys it to the executor, cannot afterward avoid such convey- ance.*' Since an infant as well as an adult is subject to Criminal Law, it follows that bonds and other undertakings entered into pursuant to such laws are valid. Of this class are recognizances,' bonds to pay fines,® and assignments to avoid arrest." Thus a minor who had fraudulently obtained . goods by representing himself to be of full age, and who was lawfully arrested therefor on a civil suit, which arrest he avoided by making an assignment under the statute, cannot avoid such assignment.^*' Further an infant is subject to the statutes concerning bastardy as well as an adult; and therefore his undertakings under such statutes such as bonds to the public, to support the child,^^ or agreements with the mother, by way of compromise, for its support.^^ Other examples of valid contracts are dissolving bonds or re-delivery bonds, given by an infant to obtain possession of his property previously attached, or the proceeds thereof.^'' So agreements for the discharge of valid liens are binding.^* So a male infant who marries is bound at Common Law for his wife's ante-nuptial debts.^^ 6 Sheldon's Lessee v. Newton, 3 O. S. 494. 7 State V. Weatherwax, 12 Kan. 463; McCall v. Parker, 13 Met. (Mass.) 372; 46 Am. Dee. 735. 8 Dial V. Wood, 9 Baxt. (Tenn.) 296. 9 People V. Mullin, 25 Wend. (N. Y.) 698; Williams v. Ivory, 173 Pa. St. 536; 34 Atl. 291. 10 Williams v. Ivory, 173 Pa. St. 536; 34 Atl. 291, in which ease the court said, citing and quoting Peo- ple V. Mullin. 25 Wend. (N. Y.) 698, " an infant as well as an adult was entitled to the benefit of the act which is general in its terms, viz., * every person may at any time pe- tition,' etc. Besides the relief from imprisonment being so highly bene- ficial to the petitioner his act in making an assignment must in law be regarded as valid notwithstanding his nonage." 11 Bordentown v. Wallace, 50 N. J. L. 13; 11 Atl. 267; People v. Moores, 4 Denio (N. Y.) 518; 47 Am. Dec. 272. 12 Gavin v. Burton, 8 Ind. 69; Stowers v. Hollis, 83 Ky. 544. 13 Sanger v. Hibbard, 2 Ind. Ter. 547 ; 53 S. W. 300. 14 Where there was a mortgage on land given to a minor by her father, and subsequently the father agreed with the mortgagee for an extension of time, the minor not ob- jecting and the mortgage was then assigned, it was held that the as- signee had a valid lien. Kearby v. Hopkins. 14 Tex. Civ. App. 166; 36 S. W. 506. 15 Butler v. Breck, 7 Met. (Mass.) 164; 39 Am. Dec. 768; Roach v. 1338 PAGE ON CONTRACTS. §865. Valid contracts. — Necessaries. — Nature of liability. In some cases the courts have said that an infant's contract for necessaries is absolutely valid and binding;^ and in others, they have gone to the opposite extreme and held that an infant could not be held on his contract for necessaries at all, but only on his legal liability to pay for them.^ Both of these forms of expression are largely obiter and the true rule which is sup- ported by the great "weight of authority is that an infant's con- tract for necessaries received by him may be the foundation of an action but that it differs from a valid contract of the ordi- nary type in that only the reasonable value of the necessaries furnished and not the price contracted for, may be recovered.^ Thus, an agreement by a minor employee that his employer shall pay all his wages to dealers who supplied the family with which such minor boarded, is enforceable only to the extent of a rea- sonable support for such minor ; and he can recover the excess of his wages above such support.* Thus, while a minor may re- pudiate a contract with his attorneys to pay half the sum re- Quick, 9 Wend. (N. Y.) 238; Cole v. 541; Epperson v. Nugent, 57 Miss. Seeley, 25 Vt. 220; 60 Am. Dec. 258. 45; 34 Am. Rep. 434; Locke v. 1 Fridge v. State, 3 Gill & J. Smith, 41 N. H. 346; Pardey v. (Md.) 103; 20 Am. Dec. 463, Windlass Co., 20 R. I. 147; 78 Am. 2/n re Soltykoff (1891) 1 Q. B. St. Rep. 844; 37 Atl. 706; Genereux 413; Bliss v. Periyman, 1 Scam. v. Sibley, 18 R. I. 43; 25 Atl. 345; (2 111.) 484; Ayers v. Burns, 87 Rainwater v. Durham,* 2 Nott. «fc Ind. 245; 44 Am. Rep. 759; Beeler McC. (S. C.) 524; 10 Am. Dec. V. Young, 1 Bibb. (Ky.) 519. 637; Askey v. Williams, 74 Tex. 3 Walter v. Everard (1891), 2 Q. 294; 5 L. R. A. 176; 11 S. W. 1101; B. 369; Barnes v. Barnes, 50 Conn. Smith v. Crohn (Tex. Civ. App.), 572; Burton v. Willin, 6 Houst. 37 S. W. 469. "An infant may (Del.) 522; 22 Am. St. Rep. 363; make an express written contract Hunt V. Thompson, 4 111. 179; 36 for necessaries upon which he may Am. Dec. 538; Price v. Sanders, 60 be sued, but ... by showing Ind. 310; Kilgore v. Rich, 83 Me. the price agreed to be paid was un- 305; 23 Am. St. Rep. 780; 12 L. R. reasonable, he can reduce the recov- A. 859; 22 Atl. 176; Trainer v. ery to a just compensation for the Trumbull. 141 Mass. 527 ; 6 N. E. necessaries received by him." Askey 761; Earle v. Reed, 10 Met. (Mass.) v. Williams, 74 Tex. 294. 297; 5 L. 387; Stone v. Dennison, 13 Pick. R. A. 176; 11 S. W. 1101. (Mass.) 1; 23 Am. Dec. 654; Welch * Genereux v. Sibley, 18 R. I. 43; V. Olmstead, 90 Mich. 492; 51 N. W. 25 Atl. 345. CONTRACTS OF INFANTS. 1339 covered, he cannot refuse a reasonable compensation.^ The right of a minor to refuse to pay an unreasonable contract price is especially true where an unfair advantage was taken of him by false repreieiitations as to the value of the goods.^ The liability of the minor, furthermore " does not seem to arise out of a contract in the legal sense of that term, but out of a transaction of a quasi-contractual nature ; for it may be imposed upon an infant too young to understand the nature of a contract at all ;"^ and accordingly an infant may be held for necessaries in the ab- sence of any express contract.® As a corollary, it follows that an executory contract for necessaries — that is for necessaries not yet received by the infant — has none of the peculiarities of an executed contract for necessaries, but is voidable like the ordi- nary contract of an infant.^ The liability of an infant for necessaries is one created by the law for the good of the infant ; since if he could not bind himself in any way for necessaries, a minor though owning property would be left to the charities of those who would, in reliance solely on his honor, provide him with the means of living.^" 5 Hanlon v. Wheeler (Tex. Civ. of a lunatic." Trainer v. Trurabull, App.), 45 S. W. 821 (provided their 141 Mass. 527, 530; 6 N. E. 761. services are necessaries, or are bene- 9 Gregory v. Lee, 64 Conn. 407; ficial). 25 L. R. A. 618; 30 Atl. 53. In this See § 867. case an infant while attending col- 6 Welch V. Olmstead, 90 Mich. lege hired a room for ten months. 492; 51 N. W. 541. He occupied it for four months and 7 Gregory v, Lee, 64 Conn. 407; then left, after paying rent in full 25 L. R. A. 618; 30 Atl. 53; Trainer to the time of leaving. It was held V. Trumbull, 141 Mass. 527; 6 N. E. that he was not liable for the rent 761; Epperson v. Nugent, 57 Miss, beyond the time that he occupied the 45 ; 34 Am. Rep. 434 ; Gay v. Bal- room. So of a lease of a house by a lou, 4 Wend. (N. Y.) 403; 21 Am. married infant; Peck v. Cain, 27 Dee. 158; Hyman v. Cain, 3 Jones Tex. Civ. App. 38; 63 S. W. 177. (N. C.) 111. In Pool v. Pratt, 1 Chip. (Vt.) 252, 8 " The question whether or not 254, the court said, " if he contract the infant made an express promise to purchase articles ever so neces- to pay is not important. He is sary, he is not holden by his con- held on a promise implied by law, tract to receive and pay for the arti- and not, strictly speaking, on his cles." actual promise. The law implies a lo Trainer v. Trumbull, 141 Mass. promise to pay, from the necessities 527: 6 N. E. 761; Squier v. Hydlifl, of his situation; just as in the case 9 Mich. 274. "The liability of an 1340 PAGE ON CONTRACTS. §866. What are necessaries. Whether the goods furnished to the infant may be necessaries, and whether there is any evidence- tending to show that the goods were necessaries, is a question for the court to decide, and is usually treated as a question of law ; whether under the cir- cumstances of each particular case, the goods furnished were necessaries is a question of fact, and in jury cases is to be de- cided by the jury under x)roper instructions from the court.^ Therefore precedents cannot be followed rigidly, but full regard must be paid to the attending circumstances of the case under discussion, and of the case relied upon as a precedent. The gen- eral rule as to what may be necessaries is that they are " those things that are conducive and fairly proper for his comfortable support and education according to his fortune and rank. So that what would be considered necessary in one case would not be so regarded in another. The rule is entirely relative in its operation."^ While not a definite and exact rule, it cannot safely be stated more exactly, and has been repeated often.^ It follows that the infant's station in life must be regarded in de- termining what are necessaries.* infant for necessaries is based on 40 Am. Dec. 542; Grace v. Hale, 2 the necessity of his situation. As Humph. (Tenn.) 27; 36 Am. Dee. he must live, the law allows to any- 296. one supplying his wants a reasonable - Rivers v. Gregg, 5 Rich. Eq. ( S. compensation. The law implies the C.) 274, 278. promise to pay from the necessity of 3 Hanas v. Slaney 8 Term. R. his situation." Epperson v. Nugent, 578 ; Braj-shaw v. Eaton, 7 Scott 57 Miss. 45, 47; 34 Am. Rep. 434. 183; 5 Ring. (N. C.) 231; Peters v. 1 Peters v. Fleming, 6 M. & W. Fleming, 6 Mees. & W. 43; Smith- 43 ; Ryder v. Wombell, L. R. 4 Ex. peters v. Griffin's Admr., 10 B. Mon. 32; McKanna v. Merry, 61 HI. 177; (Ky.) 259; Tupper v. Caldwell 12 Garr V. Haskett, 86 Ind. 373; Davis Met. (Mass.) 559; 46 Am. Dec. V. Caldwell, 12 Cush. (Mass.) 512; 704; Epperson v. Nugent, 57 Miss. Tupper V. Caldwell, 12 Met. (Mass.) 45; 34 Am. Rep. 434. 559; 46 Am. Dee. 704; Decell v. * Hanas v. Slaney, 8 T. R. 578; Lewenthal, 57 Miss. 331; 34 Am. Strong v. Foote, 42 Conn. 203; Eep. 449; Englebert v. Troxell, 40 Davis v. Caldwell, 12 Cush. (Mass.) Neb. 195; 42 Am. St. Rep. 665; 26 512; Rivers v. Gregg, 5 Rich. Eq, L. R. A. 177 ; 58 N. W. 852 ; Jordan ( S. C. ) 274 ; Middlebury College V. Coffield, 70 N. C. 110; Johnson v. Chandler, 16 Vt. 683; 42 Am. Dec. V. Lines, 6 Watts & S. (Pa.) 80; 537. CONTRACTS OF INFANTS. 1341 §867. Examples of necessaries. Lord Coke said, in a rule much quoted since, " an infant may bind himself to pay for his necessary meat, drink, apparel, neces- sary pliysick, and such other necessaries, and likewise for his good teaching or instruction whereby he may profit himself afterwards."^ Much of the subsequent law of necessaries is merely an amf)lification of this short rule. Thus food," lodging,^ suitable clothing,* medical attendance,^ and. nursing in time of sickness,*^ and services rendered by a dentist,'^ may all be neces- saries. A trade education,® and a common school education,^ have been held to be necessaries; but not a collegiate,^*' or a professional education.^^ The propriety of denying that a col- legiate or a professional education may be a necessary for one not possessed of wealth, considerable social standing, or marked ability, is very doubtful in this country. It places preparation for teaching or for other learned professions on a less favored footing than preparation for a trade or for business life. In this 1 Co. Litt. 172a. 2 Barnes v. Barnes, 50 Conn. 572; Price V. Sanders, 60 Ind. 310; Kil- gore V. Rich, 83 Me. 305; 23 Am. St. Rep. 780; 12 L. R. A. 859; 22 Atl. 176; Trainer v. Trumbull, 141 Mass. 527; 6 N. E. 761; Stone v. Dennison, 13 Pick. (Mass.) 1; 23 Am. Dec. 654; Saunders v. Ott, 1 McCord. (S. C.) 572; Rivers v. Gregg, 5 Rich. Eq. (S. C.) 274; Bradley v. Pratt, 23 Vt. 378. 3 Gregory v. Lee, 64 Conn. 407 ; 25 L. R. A. 618; 30 Atl. 53; Price V. Sanders, 60 Ind. 310; Kilgore v. Rich, 83 Me. 305; 23 Am. St. Rep. 780; 12 L. R. A. 859; 22 Atl. 176; Trainer v. Trumbull, 141 Mass. 527; 6 N, E. 761; Rivers v. Gregg, 5 Rich. Eq. (S. C.) 274. 4 Price V. Sanders, 60 Ind. 310; Stone V. Denison. 13 Pick. (Mass.) 1 ; 23 Am. Dec. 654 ; Lynch v. John- son, 109 Mich. 640; 67 N. W, 908; Saunders v, Ott, 1 McCord. (S. C.) 572; Rivers v. Gregg, 5 Rich. Eq. (S. C.) 274. 5 Price V. Sanders, 60 Ind. 310; Saunders v. Ott, 1 McCord. (S. C.) 572. 6 Werner's Appeal, 91 Pa. St. 222. 7 Strong V, Foote, 42 Conn. 203. 8 Walter v. Everard (1891), 2 Q. B. 369; Pardey v. American Ship- Windlass Co., 20 R. L 147; 78 Am. St. Rep. 844; 37 Atl. 706. 9 Peters v. Fleming. 6 Mees. & W. 42; Saunders v. Ott, 1 McCord. (S. C.) 572; Rivers v. Gregg, 5 Rich. Eq. (S. C.) 274. See the obiter to this effect in Middlebury College V. Chandler, 16 Vt. 683; 42 Am. Dec. 537. 10 Middlebury College v. Chandler, 16 Vt. 683; 42 Am. Dec. 537. 11 Turner v. Gaither. 83 N. C. 357; 35 Am. Rep. 574; Bouchell v. Clary, 3 Brev. (S. C.) 194. 1342 PAGE ON CONTEACTS. country, at least, all honest occupations should be equally honor- able and equally favored by the law. Attorney's services ren- dered in defending an infant in a criminal action,^^ or in a bastardy suit, where imprisonment may result," or in any pro- ceeding involving personal liberty,^* or in bringing suit for a female infant for an indecent assault,^^ are necessaries. So, in an extreme case, are legal services in prosecuting a suit for breach of promise, where seduction was an aggravation of damages/® But attorney's fees in defending a foreclosure suit," or in searching records and advising the infant of his rights,^* or in recovering land,^^ are not necessaries, the law preferring to compel parties to contract with the infant's guardian in mat- ters pertaining to his property. Contrary to the views just expressed, and in accordance with a principle hereafter dis- cussed,'" it has been held that any beneficial legal services which result in advantage to the infant's estate, are necessaries.^^ Kecognizances,^" and other contracts to procure release from law- ful imprisonment^^ are treated as necessaries. Since the law discourages an infant from incurring business debts, purchases izAskey V. Williams, 74 Tex. 294; a contract by an infant to pay her 5 L. R. A. 176; 11 S. W. 1101. attorney half the amount recovered 13 Barker v. Hibbard, 54 N. H. for her in a breach of promise suit 539; 20 Am. Rep. IGO. was not enforceable beyond a reason- 14 McCrillis v. Bartlett, 8 N, H. able fee. 569. 1^ Englebert v. Troxwell, 40 Neb. 15 Crafts V. Carr. 24 R. I. 397; 195; 42 Am. St. Rep. 665; 26 L. R. 96 Am. St. Rep. 721; 60 L. R. A. A. 177; 58 N. W. 852, including ser- 128; 53 Atl. 275. (The action hav- vices as guardian ad litem. ing resulted successfully.) isCobbey v. Buchanan, 48 Neb. 16 Munson v. Washband, 31 Conn. 391 ; 67 N. W. 176. 303; 83 Am. Dec. 151. In this case i9 Phelps v. Worcester, 11 N. H. the minor was pregnant and desti- 51. tute. Her attorney instituted 20 See § 891. breach of promise proceedings, which 21 Epperson v. Nugent, 57 Miss. were compromised by her marriage 45; 34 Am. Rep. 434; Searcy v. with the defendant. The attorney Himter, 81 Tex. 644; 26 Am. St. then brought suit against her and Rep. 837; 17 S. W. 372. her husband for reasonable attorney 22 State v. Weatherwax, 12 Kan. fees. It was held that he could 463. recover. In Petrie v. Williams, 68 23 Buckinghamshire v. Drurv. 2 Hun (N. Y.) 589, it was held that Eden. 60; Clark v. Leslie, 5 Esp. 28. CONTEACTS OF INFANTS. 1343 for purposes of business such as a barber shop and furnishings/* a horse,"^ or food for horses,^*^ or a wagon to be used in farm- ing,"^ or supplies for a plantation,"^ are not necessaries. Articles purchased for business are, however, necessaries as far as actual- ly applied to the support of the minor.-'' So, as his property is best managed by his guardian, an infant's contracts for the preservation of his property, as for repairs,^" even if required to preserve a dwelling house,^^ though occupied by the infant,^^ are not necessaries ; nor are materials for the construction of a house,^^ nor fire insurance.^* But while material used in erect- ing improvements upon an infant's realty is not looked upon at Common Law as a necessary, equity will subrogate the party who makes the improvements to the increased value of the premises due to such improvement,^^ or to the increase in the rental value 24j?yan v. Smith, 165 Mass. 303; 43 N. E. 109. 25 House V. Alexander, 105 Ind. 109; 55 Am. Rep. 189; 4 N. E. 891; Wood V. Losey, 50 Mich. 475; 15 N. W. 557; Eainwater v. Durham, 2 Nott. & McCord. (S. C.) 524; 10 Am. Dec. 637; Grace v. Hale, 2 Humph. (Tenn.) 27; 36 Am. Dec. 296. Contra, Mohney v. Evans, 51 Pa. St. 80. 26 Merriam v. Cunningham, 11 Cush. (Mass.) 40; Mason v. Wright, 13 Met. (Mass.) 306. 27 Paul V. Smith, 41 Mo. App. 275. 28Decell V. Lewenthal, 57 Miss. 331 ; 34 Am. Rep. 449. 29 Turberville v. Whitehouse, 1 Car. & P. 94; 12 Price 693. soTupper v. Caldwell, 12 Met. (Mass.) 559; 46 Am. Dee. 704; Horstmeyer v. Connors, 56 Mo. App. 115; Allen v. Lardner, 78 Hun (N. Y.) 603; Phillips v. Lloyd, 18 R. I. 99; 25 All. 909. siWallis V. Bardwell, 126 Mass. 366; Tupper v. Caldwell, 12 Met. (Mass.) 559; 46 Am. Dec. 704. 32 Horstmeyer v. Connors, 56 Mo. App. 115. 33 Price V. Jennings, 62 Ind. Ill; Price V. Sanders, 60 Ind. 310; War- nock V. Loar (Ky.), 11 S. W. 43, 88; Freeman v. Bridger, 4 Jones L. (N. C.) 1; 67 Am. Dec. 258; Shu- mate V. Harbin, 35 S. C. 521; 15 S. E. 270. If the improvement is not authorized by infants who have a homestead interest only, it cannot be charged against their interest. Morris v. Mitchell (Ky.), 39 S. W. 250. Some cases seem to hold the infant liable for reasonable re- pairs made by his orders. Chap- man v. Hughes, 61 Miss. 339. 34 New Hampshire, etc., Co. v. Noyes, 32 N. H. 345. But the in- surer cannot avoid the contract. Monaghan v. Ins. Co., 53 Mich. 238; 18 N. W. 797. 35 In McGreal v. Taylor, 167 U. S. 688, money was loaned to pay off prior liens and to erect a building. The court held that the property should be sold and the proceeds ap- plied ( 1 ) to reimburse the lender 1344 PAGE ON CONTRACTS. due thereto/^ Articles which are used as a means of diversion, such as a horse and buggy bought by a clerk and not shown to be used in his business,"^ or a bicycle/^ as where bought by a female servant/^ or by a girl of seventeen/" have been held in each case not to be necessaries. But where the use of bi- cycles was common among persons of the infant's station in life in the surrounding neighborhood, it was held not error to find affirmatively that it was a necessary.'*^ Life insurance is not a necessary.*" Articles which are mere ornaments or luxur- ies, as betting books,*^ expensive dinners,** expensive jewelry,*^ an expensive chronometer,*® or " liquor, pistols, powder, saddles. for the amounts advanced for liens; (2) to pay to the infant the value of the realty less the amount of the liens and the value of the building; (3) to pay to the lender the residue which would represent the present value of the building. This modi- fied, Utermehle v. McGreal, 1 App. D. C 359^ in which the entire loan was ordered repaid first, out of the proceeds of the sale. For a some- what similar result, though with less clear reasoning, see Rundle v. Spencer, 67 Mich. 189; 34 N. W. 548. In Langdon v. Clayson, 75 Mich. 204; 42 N. W. 805, a similar result was obtained, where the minor had bought land, subject to liens, and afterwards had borrowed money on a mortgage and thereby dis- charged the liens, by treating the sale of the land by the minor after majority as a ratification of the en- tire transaction, including the mort- gage. 3c In Shumate v. Harbin, 35 S. C. 521; 15 S. E. 270, the party furnishing materials was, however, subrogated to the increased rents due to the improvement to be ap- plied on his debt. The contract, further, was made by the infant's guardian by nature. 37 Rice V. Boyer, 108 Ind. 472; 58 Am. Rep. 53; 7 West. 68; 9 N. E. 420. So as to a buggy, Howard v. Simpkins, 70 Ga. 322. 38Gillis V. Goodwin, 180 Mass. 140; 91 Am. St. Rep. 265; 61 N. E. 813. 39Pyne V. Wood, 145 Mass. 558; 14 N. E. 775. . 40 Rice V. Butler, 160 N. Y. 578; 73 Am. St. Rep. 703; 47 L. R. A. 303 ; 55 N. E. 275. In this case the court of appeals assumed, without expressly deciding, that the bicycle was not a necessary. 41 Clyde Cycle Co. v. Hargreaves (Q. B.), 78 Law T. N. S. 296. In this case a minor earning 21 shill- ings a week bought a racing bicycle for £12 lOs.^ with which he won some racing prizes and which he used on the road somewhat. A road wheel would have cost a little more. 42 Simpson v. Ins. Co., 184 Mass. 348; 68 N. E. 673. 43 Jenner v. Walker, 19 L. T. 398. 44 Brooker v. Scott, 11 Mees. & W. 67. 45 Ryder v. Wombell, L. R. 4 Ex. 32. 46 Berolles v. Ramsey, Holt N. P. 77. CONTKACTS OF INFANTS. 13i5 bridles, whii^s, fiddles, fiddlestrings, etc., amouiitiug to $111.53^^^,"^^ are not necessaries. In general, whatever would be necessaries if for the infant himself, are necessaries if sup- plied to his wife and children if he is married,*** or even to his illegitimate children if he is not.*'' §868. Effect of special circumstances. The examples given in the preceding section illustrate prima facie rules only. Special circumstances may bring within the class of necessaries, articles which ordinarily do not belong to it. Thus the direction of a physician to take horse-back exercise may make a horse a necessary.^ Sickness may make expensive fruits necessary.^ Expensive jewelry may be necessary as an engagement present f and expensive goods furnished at a wed- ding may be necessaries, though they would not ordinarily be so classed.* §869. Effect of excessive supply of articles. To allow a recovery against an infant, the articles furnished must not only be such as may be necessaries, but they must also be in fact necessary for the infant under the actual circum- stances. Accordingly goods which would be necessaries if fur- nished in reasonable quantity, may be furnished in such excess as not to be necessaries, at least as to the excess over a reason- able amount f while if the infant is in fact furnished with the articles sold, the vendor cannot recover for the additional sup- ply ks for necessaries." The better view of the infant's liability 47 Saunders v. Ott (S. C), 1 *3 Jenner v. Walker, 19 L. T. 308. McCord 572. * Garr v. Haskett, 86 Ind. 373; 48Cantine v. Phillips' Admr., 5 Sams v. Stockton, 14 B. Mon. (Ky.) Harr. (Del.) 428; Price v. Sanders, 232; Jordan v. Coffield, 70 N. C. 110. 60 Ind. 310; Chapman v. Hughes, i Johnson v. Lines, 6 Watts & S. 61 Miss. 339. (Pa.) 80; 40 Am. Dec. 542. 40 Stowers v. Hollis, 83 Ky. 544, 2 Bainbridge v. Pickering. 2 W. iHart V. Prater, 1 Jur. 623. Bla. 1325; Cook v. Deaton, 3 Car. & 2 Wharton v. Mackenzie, 5 Q. B. P. 114; Barnes v. Toye, L. R. 13 Q. 606. B. D. 410; McKanna v. Merry, 61 85 1346 PAGE ON CONTKACTS. in the latter case is that it depends upon the fact that he is not supplied with the articles furnished; and not upon the good faith or the careful inquiry into the facts made by the party sup- plying the goods.^ While it is sometimes said that one furnish- ing goods to an infant should inquire into his circumstances,* this is merely good business advice and not a rule of law. If the goods are in fact necessaries the party can recover without show- ing any previous inquiry f while if they are not necessaries, no amount of careful inquiry will aid the vendor in recovering, for necessaries. If the infant is supplied with sufficient money for necessaries, but instead purchases on credit, the vendor can- not recover as for necessaries.^ 111. 177; Angel v. McLellan, 16 Mass. 28; 8 Am. Dec. 118; Swift v. Bennett, 10 Cush. (Mass.) 436j Davis V. Caldwell, 12 Cush. (Mass.) 512; Hoyt v. Casey, 114 Mass. 397; 19 Am. Rep. 371; Decell v. Lewen- thal, 57 Miss. 331; 34 Am. Rep. 449; Kline v. L'Amoureux, 2 Paige (N. Y.) 419; 22 Am. Dec. 652; Guthrie v. Murphy, 4 Watts (Pa.) 80; 28 Am. Dec. 681; Elrod v. My- ers, 2 Head. (Tenn.) 33; Nichol v. Steger, 2 Tenn. Ch. 328, affirmed, 6 Lea 393. " If a tradesman trusts an infant he does it at his peril and he cannot recover if it turns out that the party has been properly supplied by his friends," per Tenterden, C. J., in Story v. Perry, 4 C. & P. 526, 527; 19 E. C. L. 508. 3 Story V. Perry, 4 Car. & P. 526 ; Barnes v. Toye, L. R. 13 Q. B. D. 410; McKanna v. Merry. 61 111. 180; Hoyt V. Casey, 114 Mass. 397; 19 Am. Rep. 371; Perrin v. Wilson, 10 Mo. 451. 4 "The plaintiff ought to have made inquiry." Cook v. Deaton. 3 C. & P. 114; 14 E. C. L. 232. sDalton v. Gibb, 7 Scott 117; 5 Bing. N. C. 198. It has been said, " whether inquiry were made or not, the question for the jury would still be the same," Brayshaw v. Eaton, 7 Scott 183, 186; 5 Bing. N. C. 231. In a ease of a husband's liability for goods furnished to his wife, the court, in discussing the necessity of inquiry, said : " The report states that the plaintiffs had no knowledge of the circumstances of the husband or the necessities of the wife. That is immaterial. The burden of proof is upon them to show facts which create the defendant's liability. If they sold goods upon his credit with- out his express authority, they took the risk of being able to prove an authority by implication of law." Eames v. Sweetser, 101 Mass. 78, 80. 6 Nicholson v. Wilborn, 13 Ga. 467; Nicholson v. Spencer. 11 Ga. 607; Brent v. Williams, 79 Miss, 355; 30 So. 713; Rivers v. Gregg, 5 Rich. Eq. (S. C.) 274. , Contra, in England, Burghart v. Hall, 4 Mees. & W. 727. CONTKACTS OF INFANTS. 1347 §870. Effect of existence of parent or guardian. The existence of a parent or guardian complicates the liability of the infant for necessaries. If credit is extended to the parent, the infant cannot afterwards be held liable.^ If the parent or guardian actually supplies the infant with necessaries, addi- tional goods are not necessaries." Where the infant lives with his parents, there is a 'prima facie presumption that he is sup plied with necessaries.^ "It seems to be generally held that a minor living with his parents, who is actually in want by reason of their inability to supply his needs, may be held liable for necessaries furnished.* However, it has been held that where the father was poor and unable to procure medical attendance, the infant was not liable therefor ;^ but in the same state, where the infant's father was in a soldiers' home, his mother in a re- formatory and he himself in an almshouse, the infant is liable to one who furnishes him with support and education.^ So an infant may be personally liable for attorney's fees in a damage suit for an indecent assault, as it is not the parent's duty in law to pay for such attorney's services.'' §871. Money as a necessary. Money expended for necessaries for an infant,'^ or advanced to 1 Thorp V. Connelly, 48 Mo. App. an infant under the care and con- 59. trol of a parent or guardian, able 2 See § 869. and willing to furnish him with 3 Perrin v. Wilson, 10 Mo. 451 ; necessaries cannot bind himself State V. Cook, 12 Ired. L. (N. C.) therefor without the consent of such 67; Freeman v. Bridger, 4 Jones L. parent or guardian. (N. Car.); 67 Am. Dec. 258; Con- s Hoyt v. Casey. 114 Mass. 397; nolly V. Assignees of Hull, 3 Mc- 19 Am. R. 371. This case cannot Cord. (S. C.) 6; 15 Am. Dec. 612. be reconciled with the general prim Contra, that such presumption does ciples of this doctrine, not exist. Parsons v. Keys, 43 Tex. e Trainer v. Trumbull, 141 Mass. 557. 527; 6 N. e. 761. 4 See preceding note. Goodman v. 7 Crafts v. Carr, 24 R. I. 397; 96 Alexander, 165 N. Y. 289; 55 L. R. Am. St. Rep. 721; 60 L. R. A. 128; A. 781; 59 N. E. 145. In Kline v. 53 Atl. 275. L'Amoreux, 2 Paige (N. Y.) 419; i Randall v. Sweet, 1 Denio (IST. 22 Am. Dec. 652, it was said that Y.) 460. 1348 PAGE ON CONTRACTS. pay off a pre-existing debt for necessaries," is itself a necessary. So is money advanced for a discharge from jail.^ Money, itself, contrary to ordinary experience is not regarded by the Common Law as a necessary, even if tlie infant actually expends it for necessaries.^ The reason generally given for this absurd, but well-settled rule is that the liability of the infant is fixed at the moment of the loan ; and since the fund is not a necessary or expended for necessaries at that moment, his subsequent invest- ment of it in necessaries does not increase his liability. In equity, however, a more rational rule is adopted, and the party lending the money is subrogated as to so much thereof as is ex- pended by the infant for necessaries, to the rights of the party furnishing the same.^ A loan of money to discharge prior valid liens on realty owned by the minor is not a necessary at law ; that is, no personal judgment can be rendered against the minor for such indebtedness f but in equity the lender is subrogated to the rights of the holder of the prior valid liens, which have been paid off by the money advanced.'' This right does not exist where it is not shown that the lien thus discharged was valid as to the infant.^ Money loaned to an infant and not ex- 2 Hedgeley v. Holt, 4 Car. & P. the request of the guardian, not of 104 (obiter as in this case the arti- the infant.) cles were not necessaries); Swift v. '^ MacGreal v. Taylor, 167 U. S. Bennett, 10 Cush. (Mass.) 436; 688; Charles v. Hastedt, 51 N. J. Kilgore v. Rich. 83 Me. 305; 23 Am. Eq. 171; 26 Atl. 564; Folts v. Fer- St. Rep. 780; 12 L. R. A. 859; 22 guson, 77 Tex. 301; 13 S. W. 1037. Atl. 176. " These debts having been paid by 3 In ease of a civil claim, at least Mrs. U., the appellees are entitled if the claim is for necessaries, Clark in equity to be subrogated to the V. Leslie, 5 Esp. 28. rights of the persons who held them, * Earle v. Peale. 1 Salk. 386; 10 and who were about to foreclose the Mod. 67; Darly v. Boucher, 1 Salk. liens therefor when the application 279; Price v. Sanders. 60 Ind. 310; was made to Mrs. U. for the loan of Bent v. Manning. 10 Vt. 225. $8,000 to be used in meeting those 5 Marlow v. Pitfield. 1 P. Wms. debts and improving the lot in ques- 558; ^Yatson v. Cross. 2 Dur. (Ky.) tion." MacGreal v. Taylor, 167 U. 147 ; Hickman v. Hall's Admrs. 5 S. 688. 701 ; reversing in part on Litt. (Ky.) 338. another point, Utermehle v. Mac- 6Magee v. Welsh. 18 Cal. 155; Greal, 1 App. D. C. 359. Bicknell v. Bicknell. Ill Mass. 265. s Thormaehlen v. Kaeppel, «6 (In this case the loan was made at Wis. 378; 56 N. W. 1089. COJJJTEACTS OF INFANTS. 1349 ponded by him for necessaries is, of course, not a necessary.® §872. Voidable contracts. The remaining contracts of an infant are neither valid nor void but are voidable.^ This implies that they may be dis- affirmed or ratified by the infant ; the methods and legal conse- 9 Root V. Stevenson's Admr., 24 Ind, 115; Kennedy v. Doyle, 10 All. (Mass.) 161; Turner v. Gaither, 83 N. C. 357; 35 Am. Eep. 574. iMcGreal v. Taylor, 167 U. S. 688; Shropshire v. Burns, 46 Ala. 108; Savage v. Lichlyter, 59 Ark. 1; 26 S. W. 12; Barlow v. Robinson, 174 111. 317; 51 N. E. 1045; Cole v. Pennoyer, 14 111. 158; Alvey v. Reed, 115 Ind. 148; 7 Am. St. Rep. 418; 17 N. E. 265; Phipps v. Phipps, 39 Kan. 495; 18 Pac. 707; Breckinridge v. Ormsby, 1 J. J. Mar. (Ky.) 236; 19 Am. Dec. 71; McDonald v. Sargent, 171 Mass. 492; 51 N. E. 17; Dube v. Beaudry, 150 Mass. 448; 15 Am. St. Rep. 228; 6 L. R. A. 146; 23 N. E. 222; Owen V. Long, 112 Mass. 403; Reed V. Batchelder, 1 Met. (Mass.) 559; Whitney v. Dutch, 14 Mass. 457; 7 Am. Dec. 229 ; Bloomingdale v. Chit- tenden, 74 Mich. 698; 42 N. W. 166; Tyler v. Gallop, 68 Mich. 185; 13 Am. St. Rep. 336; 35 N. W. 902; Johnson v. Insurance Co., 56 Minn. 365; 43 Am. St. Rep. 473; 26 L. R. A. 187; 59 N. W. 992; 57 N. W. 934; Englebert v. Troxell. 40 Neb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852; Danville v. Mfg. Co., 62 N. H. 133; Patterson V. Lippincott, 47 N. J. L. 457; 54 Am. Rep. 178; 1 Atl. 506; Willard V. Stone, 7 Cow. (N. Y.) 22; 17 Am. Dec. 496; Campbell v. Stokes, 2 Wend. (N. Y.) 137; 19 Am. Dec. 561; Fonda v. Van Home, 15 Wend. (N. Y.) 631; 30 Am. Dec. 77; Ear- ner v. Dipple, 31 O. S. 72; 27 Am. Rep. 496; Rush v. Wick, 31 O. S. 521; 27 Am. Rep. 523; Dolph v. Hand, 156 Pa. St. 91; 36 Am. St. Rep. 25; 27 Atl. 114; Curtin v. Pat- ton, 11 Serg. & R. (Pa.) 305; Scott V. Buchanan, 11 Humph. (Tenn. ) 468; Bonner v. Bryant, 79 Tex. 540; 23 Am. St. Rep. 361; 15 S. W. 49; Cummings v. Powell, 8 Tex. 80; Patchin v. Cromach, 13 Vt. 330; Mustard v. Wohlford, 15 Gratt. (Va.) 329; 76 Am. Dec. 209. " i\Iany text-writers state the propo- sition that the contract of an in- fant is void, but upon a careful ex- amination of the cases cited by them we are of the opinion that they do not support such a doctrine. To hold the executory contract of a minor void would unsettle the law in many of its branches. It would ne- cessitate the holding that the prom- ise of a minor cannot furnish a con- sideration for the promise of an adult, and the latter's promise would be void, both for want of con- sideration and for lack of mutual- ity, whereas the contrary is the set- tled law based upon the proposition that the infant's contract is only voidable." Brown v. Bank, 88 Tex. 265, 274; 33 L. R. A. 359; 31 S. W. 285. 1350 PAGE ON CONTRACTS. quences of whicli will be discussed subsequently.^ By the great weight of authority not only executory contracts,^ but also con- tracts fully performed by one or both of the parties thereto,* are voidable. So an infant's assignment of an insurance policy is voidable only, and not void.^ It will be seen from the spe- cial classes of contracts hereafter discussed that these contracts are voidable even if advantageous to the infant,® as where he sold the goods, purchased by him, without loss,'' or profited by the services of an attorney in defending a foreclosure suit;^ or if the avoidance of such contracts is disastrous to the adversary party ; as where he relied on the infant's contract and by delay lost his claim against the estate of the infant's father.^ The dis- senting view which holds certain fair, reasonable and executed contracts of a minor to be valid is hereafter discussed." On 2 See § 881 et seq. 3 Savage v. Lichlyter, 59 Ark. 1 ; 26 S. W. 12', Gregory v. Lee, 64 Conn. 407; 25 L. R. A. 618; 30 Atl. 53; Barlow v. Robinson, 174 III. 317; 51 N. E. 1045; Des Moines Ins. Co. V. Mclntire, 99 la. 50; 68 N. W. 565; Danville v. Mfg. Co., 62 N. H. 133; Harner v. Dipple, 31 O. S. 72; 27 Am. Rep. 496; Rush v. Wick, 31 0. S. 521; 27 Am. Rep. 523. 4 Walker v. Pope, 101 Ga. 665 ; 29 S. E. 8; Hoffert v. Miller, 86 Ky. 572; 6 S. W. 447; Morse v. Ely, 154 Mass. 458; 26 Am. St. Rep. 263 ; 28 N. E. 577 ; Dube v. Beaudry, 150 Mass. 448; 15 Am. St. Rep. 228; 6 L. R. A. 146; 23 N. E. 222; Barney v. Rutledge, 104 Mich. 289; 62 N. W. 369 ; Bloomingdale v. Chit- tenden, 74 Mich. 698; 42 N. W. 166; Nichols, etc., Co. v. Snyder, 78 Minn. 502; 81 N. W. 516; Engle- bert V. Troxell, 40 Neb. 195 ; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852; Dolph v. Hand, 156 Pa. St. 91; 36 Am. St. Rep. 25; 27 Atl. 114; Grace v. Hale, 2 Humph. (Tenn.) 27; 36 Am. Dec. 296; Askey v. Williams, 74 Tex. 294; 5 L. R. A. 176; 11 S. W. 1101; Dar- raugh V. Blackford, 84 Va. 509; 5 S. E. 542. " It is wholly immaterial whether the contract of an infant is executed or executory. He has the right to avoid it." Leaeox v. Grif- fith, 76 la. 89, 94 ; 40 N. W. 109. 5 Union, etc., Ins. Co. v. Hilliard, 63 0. S. 478; 81 Am. St. Rep. 644; 53 L. R. A. 462; 59 N. E. 230. cMagee v. Welsh, 18 Cal. 155; Price V. Jennings, 62 Ind. Ill; Warnock v. Loar (Ky.), 11 S. W. 438; Morse v. Ely, 154 Mass. 458; 26 Am. St. Rep. 263 ; 28 N. E. 577 ; Tupper V. Caldwell, 12 Met. (Mass.) 559; 46 Am. Dec. 704; Phelps v. Worcester, 11 N. H. 51. 7 Morse v. Ely, 154 Mass. 458 ; 26 Am. St. Rep. 263 ; 28 N. E. 577. sEnglebert v. Troxell, 40 Neb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852. 9 Dube V. Beaudry, 150 Mass. 448; 15 Am. St. Rep. 228; 6 L. R. A. 146 ; 23 N. E. 222. 10 See § 891. CONTBACTS OF INFANTS. 1351 sound legal principle and by the better reasoning, an infant's contract whether executed or executory is to be treated as bind- ing until it is disaffirmed by him or some one authorized by law to act for him/^ This is on the theory that disaffirmance is a privilege which may be exercised by the infant at his discretion, but that subject to this right, a voidable contract of an infant stands on the same footing as any valid contract. The courts have said, however, in many cases, that an executory contract of an infant is not valid until it is ratified.^^ An examination of these cases will, however, show that in every case this proposition is a mere dictum, as the contract in each case has been avoided by the infant in a proper manner. It may be doubted if even these courts really mean all that they say. If the infant's execu- tory contract were of no validity until he affirmed, there would be no consideration for the promise of the adversary party, and he would be able to defeat any action against him by the infant — a conclusion to which no court has come. What is probably meant by this form of statement is that: An executory con- tract, unless ratified, is subject to the defense of infancy until the right of disaffirmance is barred by lapse of time.^^ This right exists therefore either for a reasonable time or for the period prescribed by the statute of limitations. In the latter case, the right to plead infancy will not be extinguished until the right to sue on the contract is extinguished. In the former case, it might be possible that the right to disaffirm would cease before the right of action on the contract would be lost. The doc- trine of a reasonable time is generally applied only to executed conveyances. If two infants contract with each other, either iiViditz V. O'Hagan (1899), 2 12 Morton v. Steward, 5 111. App Ch. 569; 68 L. J. Ch, N. S. 553; 533; Tyler v. Gallop, 68 Mich. 185 American, etc., Co. v. Dykes, 111 13 Am. St. Rep. 336; 35 N. W. 902 Ala. 178; 56 Am. St. Rep. 38; 18 Minock v. Shortridge, 21 Mich. 304 So. 292; Amey v. Cockey. 73 Md. State v. Plaisted. 43 N. H. 413; Ed 297; 20 Atl. 1071; Englebert v. gerly v. Shaw, 25 N. H. 514; 57 Troxell, 40 Neb. 195; 42 Am. St. Am. Dee. 349: Beardsley v. Hotch- Rep. 665; 26 L. R. A. 177; 58 N. kiss. 96 N. Y. 201. W. 852; Logan v. Gardner, 136 Pa. is See § 885. St. 588; 20 Am. St. Rep. 939; 20 Atl. 625. 1352 PAGE ON CONTKACTS. has the same right to disaffirm that he has in contracting with an adult/* §873. Examples of voidable contracts. — Transfers of property. An infant's executory contract to convey realty/ or to pur- chase it;^ a lease by him/ or to him;* and his deed passing realty/ are all voidable. His right to avoid is not affected by the fact that adult grantors joined with him as being co-owners/ or by the fact that the property sold has passed into the hands of iiDrude v. Curtis, 183 Mass. 317; 62 L. R. A. 755; 67 N. E. 317. 1 Barlow v. Robinson, 174 111. 317; 51 N. E. 1045; Yeager v. Knight, 60 Miss. 730; Shurtleff v. Millard, 12 R. I. 272; 34 Am. Rep. 640; Mustard v. Wohlford, 15 Gratt. (Va.) 329; 76 Am. Dec. 209. 2Lynde v. Budd, 2 Paige (N. Y.) 191; 21 Am. Dec. 84. sSlator V. Trimble, 14 Ir. C. L. 342; Slator v. Brady, 14 Ir. C. L. 61. 4 Flexner v. Dickerson, 72 Ala. 318; Gregory v. Lee, 64 Conn. 407; 25 L, R. A. 618; 30 Atl. 53; Baxter V. Bush, 29 Vt. 465; 70 Am. Dec. 429. 5 McDonald v. Salmon Club, 33 N. B. 472; Tucker v. Moreland, 10 Pet. (U. S.) 59; Manning v. John- son, 26 Ala. 446; 62 Am. Dec. 732; Hastings v. Dollarhide, 24 Cal. 195; Walker v. Pope, 101 Ga. 665; 29 S. E. 8; Tunison v. Chamblin, 88 111. 378; Keil v. Healy, 84 111. 104; 25 Am. Rep. 434; Gillenwaters v. Campbell, 142 Ind. 529; 41 N. E. 1041; Green v. Wilding, 59 la. 679; 44 Am. Rep. 696; 13 N. W. 761; Hoffert V. Miller, 86 Ky. 572 ; 6 S. W. 447; Vallandingham v. Johnson, 85 Ky. 288; 3 S. W. 173; Davis v. Dudley. 70 Me. 236; 35 Am. Rep. 318; Kendall v. Lawrence, 22 Pick. (Mass.) 540; Ridgeway v. Herbert, 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040; Craig v. Van Beb- ber, 100 Mo. 584; 18 Am. St. Rep. 569; 13 S. W. 906; Englebert v. Troxell, 40 Neb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852 ; Roberts v. Wiggin, 1 N. H. 73; 8 Am. Dec. 38; Green v. Green, 69 N. Y. 553; 25 Am. Rep. 233; Eagle Fire Co. v. Lent, 6 Paige (N. Y.) 635; affirming, 1 Edw. Ch. (N. Y.) 301; Cresinger v. Welch, 15 Ohio 156; 45 Am. Dec. 565; Drake's Lessee v. Ramsey, 5 Ohio 251 ; Dolph v. Hand, 156 Pa. St. 91 ; 36 Am. St. Rep. 25; 27 Atl. 114; Ihley v. Pad- gett, 27 S. C. 300; 3 S. E. 468; Wheaton v. Easton, 5 Yerg. (Tenn.) 41; 26 Am. Dec. 251; Scott v. Bu- chanan, 11 Humph. (Tenn.) 468; Bullock V. Sprowl, 93 Tex. 188; 77 Am. St. Rep. 849; 47 L. R. A. 326; 54 S. W. 661; Askey v. Williams, 74 Tex. 294; 5 L. R. A. 176; 11 S. W. 1101; Bigelow v. Kinney, 3 Vt. 353; 21 Am. Dec. 589; Darraugh v. Blackford, 84 Va. 509 ; 5 S. E. 542 ; Gillespie v. Bailey, 12 W. Va. 70; 29 Am. Rep. 445. 6 Dunn V. Wheeler, 86 Me. 238 ; 29 Atl. 985; Clapp v. Byrnes, 155 N. Y. 535; 50 N. E. 277. CONTKACTS OF INFANTS. 1353 a horm fide purchaser for value/ Thus, an infant remainder- man assented to a sale of the realty and payment of the pro- ceeds to the life-tenant. It was held that he could repudiate this agreement at the death of the life-tenant, even if the title had passed to an innocent purchaser.^ Where, however, the rights of the infant and of the co-owners are inseparable, as where they were the heirs to certain realty which was subject to a conditional oil lease, and the adult owner on behalf of all sought to forfeit the lease for a breach of con- dition, it was held that the minor heirs could repudiate the acts of an adult co-heir in forfeiting such oil-lease if it is in fraud of their rights or by mistake but not if for their advantage.^ So an infant's mortgage of his realty is voidable,^*^ even if for necessaries.^^ If an infant agrees to buy certain realty from A, and thereafter while still a minor surrenders his interest in such realty for a team of horses, this is a sale of his equity and not a rescission of his original contract to buy the realty ; and on coming of age he may repudiate the contract by which he surrendered such interest in realty.^" His executory contracts to sell personalty,^^ executed sales by him^* even if the property 7 Walker v. Pope, 101 Ga. 665; 29 8 Am. Dec. 38; McGan v. Marshall, S. E. 8; Vallandingham v. Johnson, 7 Humph. (Tenn.) 121. 85 Ky. 288; 3 S. W. 173; Searcy v. n McGan v. Marshall, 7 Humph. Hunter, 81 Tex. 644; 26 Am. St. (Tenn.) 121 ; Askey v. Williams, 74 Rep. 837; 17 S. W\ 372. Tex. 294; 5 L. R. A. 176; 11 S. W. 8 Walker v. Pope, 101 Ga. 665; 29 1101. S. E. 8. i2Beickler v. Guenther, 121 la. 9 Wilson V. Goldstein, 152 Pa. St. 419; 96 N. W. 895. 524; 25 Atl. 493. (Hence the i3 Petrie v. Williams, 68 Hun (N. minors could not on reaching ma- Y.) 589. jority sue on the lease.) In Spring- i* White v. Branch, 51 Ind. 210; er V. Gas Co., 145 Pa. St. 430; 22 Williams v. Brown, 34 Me. 594; Atl. 986, it was held that if a guar- Kingman v. Perkins, 105 Mass. Ill; dian could forfeit an oil-lease on Holmes v. Rice, 45 Mich. 142; behalf of his wards, he could not Downing v. Stone. 47 Mo. App. 144; bind adult co-owners. Rainwater v. Durham, 2 Nott. & 10 Hubbard v. Cummings, 1 Me. McCord. (S. C.) 524; 10 Am. Doc. 11; Monumental, etc.. Association 637; Grace v. Hale, 2 Humph. V. Herman, 33 Md. 128; Mansfield (Tenn.) 27; 36 Am. Dec. 296; V. Gordon, 144 Mass. 168; 10 N. E. Price v. Furman, 27 Vt. 268; 65 773; Roberts v. Wiggin, 1 N. H. 73; Am. Dec. 194. 1354 PAGE ON CONTRACTS. has passed into the hands of a bona fide purchaser/^ executed purchases hy him other than necessaries/*^ and chattel mortgages made by him," are alike voidable. The proposition that an in- fant's purchases are voidable has been qualified by one of our ablest text-book writers. " If an infant goes upon the streets of a city, shopping, he cannot afterward retrace his steps and get back the money he paid, even though he tenders the goods in re- turn ; for to permit it would render shopkeeping impossible."^* But no authorities are given for this proposition and none ap- pear on investigation. If the goods are necessaries and the price is reasonable, the contract is binding; and, in other cases, shop- keej)ing is perfectly possible without the patronage of minors. §874. Contracts for work and labor. By the weight of authority a minor may avoid a contract of service entered into by him after performing it in whole or in part and recover the reasonable value of his services.^ Thus a 15 Downing v. Stone, 47 Mo. App. 144. There is " no such thing as an innocent purchaser of a minor's property." Englebert v. Troxell, 40 Neb. 195, 212; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852. 16 Riley V. Mallory, 3.3 Conn. 201 ; House V. Alexander. 105 Ind. 109; 55 Am. Rep. 189; 4 N. E. 891; Rice V. Boyer, 108 Ind. 472; 58 Am. Rep. 53; 9 N. E. 420; Butler v. Stark (Ky.), 79 S. W. 204; Robinson v. Weeks, 56 Me. 102; McCarthy v. Henderson, 138 Mass. 310; Barney V. Rutledge, 104 Mich. 289; 62 N. W. S69; Nichols, etc., Co. v. Snyder, 78 Minn. 502; 81 N. W. 516; \\h\t- comb V. Joslyn, 51 Vt. 79; 31 Am. Rep. 678. 1" Barney v. Rutledge, 104 Mich, 289 ; 62 N. W. 369 ; Miller v. Smith. 26 Minn. 248; 37 Am. Rep. 407; 2 N. \Y. 942; Cogley v. Cushman. 16 :\Iinn. 397; Chapin v. Shafer, 49 N. Y. 407. 18 Bishop on Contracts, Enlarged Edition, § 921- 1 Ray V. Haines, 52 111. 485 ; Van Pelt V. Corwine, 6 Ind. 363; Dallas V. Hollingsworth, 3 Ind. 537; Haugh, etc., Works v. Duncan. 2 Ind. App. 264; 28 N. E. 334; De- rocher v. Mills. 58 Me. 217; 4 Am. Rep. 286; Judkins v. Walker, 17 Me. 38; 35 Am. Dec. 229; Morse v, Ely, 154 Mass. 458; 26 Am. St. Rep. 263 ; 28 N. E. 577 ; Dube v. Beaudry, 150 Mass. 448; 15 Am. St. Rep. 228; 6 L. R. A. 146; 23 N. E. 222; Gaffney v. Hayden, 110 Mass. 137; 14 Am. Rep. 580; Spicer v. Earl, 41 Mich. 191; 32 Am. Rep. 152; 1 N. W. 923; Danville v. Mfg. Co., 62 N, H. 133; Hagerty v. Lock Co., 62 N. H. 576 ; Voorhees v. Wait, 15 N. J. L. 343 ; Thompson v. Marshall, 50 Mo. App. 145; Dearden v. Adams, 19 R. I. 217: 36 Atl. 3; Taft V. Pike, 14 Vt. 405; 39 Am. Dec 228. CONTRACTS OF INFANTS. 1355 minor may avoid a contract to forfeit two weeks wages unless two weeks notice of leaving is given ;^ or a contract requiring him to work for six months or to give two weeks' notice if he quit, to enable him to recover anything,^ and if he contracts to accept goods for his wages he may avoid this contract and de- mand money.* The contrary view has been expressed that if an infant receives what he agreed to take for his services he cannot recover more.^ Of course in any event the amount already paid to the infant should be credited as a part payment.® In Massa- chusetts a different view is entertained. Thus where A, a minor employee agreed with his employer that articles not necessaries purchased by him should be deducted from A's wages, A afterwards disposed of such articles advantageously. On reaching majority A could repudiate the agreement and recover full wages.' So where a minor worked under a contract that his wages were to be applied to paying off a debt due to his em- ployer from his father's estate, it was held that on his failure to receive anything from his father's estate he could repudiate the contract and recover full wages.® While some courts have practically nullified the right of a minor to avoid such a contract by holding that the employer can also set off against the value of thei infant's services, all damages caused by his repudiating his contract,^ the better reasoning is that such damages cannot be so set off, as the infant has the right to avoid his contract 2 Danville v. Mfg. Co., 62 N. H. himself by a contract of employ- 133. ment and his employer will be re- 3 Deroeher v. Continental Mills, leased to the extent of the money 58 Me. 217; 4 Am. Rep. 286. and goods furnished the infant in 4Abell V. Warren, 4 Vt. 149. part payment. Waugh v. Emerson, sWilhelm v. Hardman, 13 Md. 79 Ala. 295. 140. So by statute, Murphy v. 7 Morse v. Ely, 154 Mass. 458; 26 Johnson, 45 la. 57. Am. St. Rep. 263; 28 N. E. 577. 6 Waugh V. Emerson. 79 Ala. 295; « Dube v. Beaudry. 150 Mass. 448; Spicer v. Earl, 41 Mich. 191; 32 15 Am. St. Rep. 228; 6 L. R. A. Am. Rep. 152; 1 N. W. 923; Hager- 146; 23 N. E. 222. ty V. Lock Co., 62 N. H. 576. A » Judkins v. Walker, 17 Me. 38; minor of nineteen whose father is 35 Am. Dec. 229; Hoxie v. Lincoln, dead, whose' mother is married again 25 Vt. 206; Thomas v. Dike, 11 "Vt. and who has no guardian may bind 273; 34 Am. Dec. 690. 1356 PAGE ON co2;tkacts. without being liable to any penalty.^" The entire value of his services for the entire time worked is recoverable ; and this state- ment of course implies that any misconduct or negligence of the infant by which his services are less valuable than they other- Avise would be must be allowed for.^^ A generally recognized exception to the rule that a minor's contract of service is void- able, is that a contract to work for necessaries, if fair and rea- sonable, cannot be avoided as far as it has been executed ;^- and this principle has been applied to a contract for necessaries and raoney,^^ or necessaries and other property f* but if his services are reasonably worth more than his board he may recover a reasonable value for his services less board furnished.^^ §875. Contracts of suretyship. Some of the cases which followed the early rule as to the validity of an infant's contracts,^ took a contract of suretyship as the clearest example of a contract prejudicial to an infant, and declared it void ; and this rule has been repeated in later cases in dicta." In most of these cases the result would have been the same if the contract had been held to be merely voidable ; as where a mortgage was given by an infant married woman to secure a partnership,^ or an individual debt."^ So a court after saying that a contract of suretyship of a minor was " absolute- ly void " recognized it as capable of ratification.^ The weight 10 Derocher v. Mills, 58 Me. 217 ; i See § 855. 4 Am. Rep. 286; Danville v. ]\Ifg. 2 Hastings v. Dollarhide. 24 Cal. Co., 62 jSr. H. 133; Shurtleff v. Mil- 195; Chandler v. McKinney, 6 Mich, lard, 12 R. I. 272; 34 Am. Rep. 640. 217; 74 Am. Dee. 686; Cronise v. 11 Vehue v. Pinkham, 60 ]Me. 142. 'ciark, 4 Md. Ch. 403 ; Wheaton v. i2Squier v. Hydliff, 9 :Mich. 274; East, 5 Yerg. (Tenn.) 41; 26 Am. Stone V. Dennison, 13 Pick. (Mass.) Dec. 251. So vmder the early Con- 1 ; 23 Am. Dee. 654 ; Mountain v. necticut statute. Maples v. Wight- Fisher, 22 Wis. 93. man. 4 Conn. 376: 10 Am. Dee. 149. 13 Spicer v. Earl, 41 Mich. 191 ; 3 Cronise v. Clark. 4 Md. Ch. 403. 32 Am. Rep. 152; 1 N. W. 923. 4 Chandler v. McKinney, 6 Mich. i4Wilhelm v. Hardman. 13 Md. 217; 74 Am. Dec. 686. , 140. '5 Curtin v. Patton, 11 Serg. & R. 15 Locke V. Smith. 41 N. H. 346. (Pa.) 305. CONTKACTS OF INFANTS. 1357 of modern authority is that an infant's contract of suretyship is not void, but voidable.** Thus, becoming surety in a civil action for the appearance of the defendant," or for stay of execution,* or on a note,** are all voidable. §876. Compromise and arbitration. An infant's contract in compromise of a claim due to him, whether contract,^ or tort,^ is voidable. On his avoiding such contract whatever he has received under the compromise is to be credited upon his claim.^ So a contract by an infant to allow a note given by her to a deceased testator to be deducted from a legacy given to her by the will of such testator is voidable.* It has even been held that the return of the property received under the compromise is a condition precedent to avoiding it.^ Moreover, although an infant is liable for his torts, his contract in compromise of a claim against him for his tort is voidable, and upon his avoiding it he may recover whatever he has parted with thereunder, leaving the other party to his original right of action. ** A release given by an infant to her guardian on taking his note by way of settlement of her claim against him has been eFetrow v. Wiseman, 40 Ind. 148; N. E. 920 (settlement made by next Wills V. Evans (Ky.)» 38 S. VV. friend without leave of court); 1090; Owens v. Long, 112 Mass. Baker v. Lovell, 6 Mass. 78; 4 Am. 403; Johnson v. Storie, 32 Neb. 610; Dec. 88; Bonner v. Bryant, 79 Tex. 49 N. W. 371; Harner v. Dipple, 31 540; 23 Am. St. Rep. 361; 15 S. W. O. S. 72; 27 Am. Rep. 496; Reed v. 491. Lane, 61 Vt. 481; 17 Atl. 796. 3 See cases cited in two preceding 7 Reed v. Lane, 61 Vt. 481; 17 notes. Atl, 796. 4 7h re Cummings' Estate, 120 la. 8 Harner v. Dipple, 31 0. S. 72; 421; 94 N. W. 1117. 27 Am. Rep. 496. 5 Lane v. Coal Co., 101 Tenn. 581; 9 Fetrow v. Wiseman, 40 Ind. 148 ; 48 S. W. 1094. Owens V. Long, 112 Mass. 403; See § 888. Johnson v. Storie, 32 Neb. 610; 49 c Ware v. Cartledge. 24 Ala. 622; N. W. 371. 60 Am. Dec. 489; Shaw v. Coffin, 58 1 Commonwealth ea? reZ. Strayer v. Me. 254; 4 Am. Rep. 290. In oppo- Hantz, 2 Pen. & W. (Pa.) 333. sition to this view, Ray v. Tubbs, 50 2Mattei v. Vautro (Q. B.), 78 L. Vt. 688; 28 Am. Rep. 519, holds that T. Rep. 682; St. Louis, etc.. Ry. v. an infant's note given in a fair com- Higgins, 44 Ark. 293; Pittsburg, promise of a tort commuted by him etc., Ry. V. Haley, 170 111. 610; 48 is valid. 1358 PAGE ox CONTKACTS. said to be void, and hence not to release the sureties on his bond/ Since even an executed contract of compromise is void- able, a contract to arbitrate is also voidable;^ and some authori- ties have even said that it is void.** §877. Instruments negotiable in form. While not always clearly expressed, the early view of an in- fant's negotiable contracts seems to have been that if valid at all, they must be strictly negotiable and subject to no defense in the hands of a bona fide holder for value before maturity. Since under this theory, it was impossible for such contracts to be void- able, as they must be either absolutely void or strictly valid, the courts held them void,^ at least if in the hands of an indorsee.^ In these cases, however, the only question involved was whether the infant could not avoid his contract.^ The modern view of such contracts is that while negotiable in form they are not negotiable in law. Minority may always be set up as a defense, even as against a bona fide holder. Accordingly, such contracts are voidable, unless for necessaries.* Thus, an infant's promise to pay loan from a bank is not void ; hence the promise of his 7 Fridge v. State^ 3 Gill & J. 533. ( In this case the considera- (Md.) 103; 20 Am. Dec. 463. In tion was necessaries furnished.) this case the decision was placed on 3 Except Burgess v. Merrill. 4 the ground that the release as dis- Taunt. 468, where it was held that tinguished from a mere receipt was the holder of a bill accepted by an prejudicial to the infant. The same adult and a minor should sue the result would have followed from adult alone, holding it voidable. * La Grange, etc., Institute v. An- 8 Jones V. Payne, 41 Ga. 23 ; Baker derson, 63 Ind. 367 ; 30 Am. Rep. V. Lovett^ 6 Mass. 78; 4 Am. Dec. 224; Keokuk, etc., Bank v. Hall, 106 88; Barnaby v. Barnaby, 1 Pick. la. 540; 76 N. W. 832; Best v. Giv- (Mass.) 221; Jones v. Bank, 8 N. ens, 3 B. Mon. (Ky.) 72; Stern v. Y. 228. Freeman, 4 Met. (Ky.) 309; Whit- sMillsaps V. Estes, 134 N. C. 486; ney v. Dutch, 14 Mass. 457; 7 Am. 46 S. E. 988; Britton v. Williams, Dec. 229; Baker v. Stone, 136 Mass. 6 Munf. (Va.) 453. 405; Minock v. Shortridge, 21 Mich. 1 Burgess v. Merrill, 4 Taunt, 304; Edgerly v. Shaw. 25 N. H. 514; 468; Swasey v. Van derhey den's 57 Am. Dec. 349; Houston v. Coop- Admr., 10 Johns. (N. Y.) 33; Mc- er, 3 X. J. L. 866 (where a note of Minn v. Richmonds, 6 Yerg. an infant was said to be " invalid ") ; (Tenn.) 9. Brown v. Bank, 88 Tex. 265; 33 L. 2 Morton v. Steward 5 111. App. R. A. 359; 31 S. W. 285; Askey v. CONTKACTS OF INFANTS. 1359 surety is collateral only, not original.^ An infant's liability to a surety on his note is also voidable unless for necessaries;" but if for a reasonable value for necessaries he must reimburse the surety/ While it is ordinarily no defense to a surety that the principal is a minor,* a surety on a minor's note is not liable where the minor disaffirms and returns the consideration.^ An infant's contract of indorsement is voidable only. It is not void, since the maker cannot refuse to pay the indorsee;^*' and it is not valid, since the infant can avoid his liability to the in- dorsee,^^ and before payment by the maker he can avoid the indorsement and recovery from the maker.^^ Whether he can avoid his indorsement and recover of the maker after payment by the maker to the indorsee is a point upon which is found no direct authority and conflicting dicta. ^^ Of course if an in- Williams, 74 Tex. 294; 5 L. R. A. 176; 11 S. W. 1101; Patchin v. Cromach, 13 Vt. 330. As to con- tracts for necessaries, see § 865. 5 Brown v. Bank, 88 Tex. 265 ; 33 L. R. A. 359; 31 S. W. 285. 6 Leacox v. Griffith, 76 la. 89 ; 40 N. W. 109. In this case the execu- tor became surety for an infant heir on a note and was secured by a chattel mortgage. The infant sold the property before the mortgage was recorded and the surety had to pay the note. To reimburse him the infant released to him his claims against the estate. This was held voidable. Leacox v. Griffith, 76 la. 89; 40 N. W. 109. 7 Conn V. Coburn, 7 N. H. 368 ; 26 Am. Dec. 746; Haines Admr. v. Tar- rant, 2 Hill (S. C.) 400. Contra, Ayers v. Burns, 87 Ind. 245; 44 Am. Rep. 759. 8 Hesser v. Steiner, 5 Watts & S. (Pa.) 476. 9 Keokuk, etc.. Bank v. Hall, 106 la. 540; 76 N. W. 832; citing and following, Baker v. Kennett, 54 Mo. 82 Patterson v. Cave, 61 Mo. 439. 10 Frazier v. Massey, 14 Ind. 382; Hardy vt Waters, 38 Me. 450; Nightingale v. Withington, 15 Mass. 272; 8 Am. Dec. 101. This is true even if the indorsement is made by an agent. Hardy v. Waters, 38 Me. 450; Whitney v. Dutch, 14 Mass. 457 ; 7 Am. Dec. 229. However, early authority holds under the old rule given in § 855 that an indorse- ment made by one for an infant even in her presence and with her consent is void, so that it passes no title even though the infant does nothing to avoid it. Hence the holder cannot use it as a set-off. Semple v. Morrison, 7 T. B. Mon. (Ky.) 298. 11 Nightingale v. Withington, 15 Mass. 272; 8 Am. Dec. 101; Dulty V. Brownfield, 1 Pa. St. 497. 12 Hastings v. Dollarhide, 24 Cal. 195. 13 In Briggs v. McCabe, 27 Ind. 327, the court said that in such case the infant could recover, prefacing their remarks with " as to what would be the effect of payment by the maker of a note to the assigTiee 1360 PAGE ON CONTRACTS. fant's contracts are made void bj statute, this will include com- niercial paper. Thus, in England an infant cannot bind him- self by the acceptance of a bill of exchange given for necessaries under such a statute.^* §878. Contracts of partnership. An infant's contract of partnership usually presents one of four points for adjudication: (1) can an infant empower his partners to bind him ; (2) can an infant be held personally liable by the partnership creditors; (3) can an infant recover his prop- erty contributed to the partnership as against the rights of part- nership creditors; and (4) can an infant recover such property as against his partners. As we have seen/ an infant's appoint- ment of an agent is by the better view, voidable and not void. Hence his authority to his partners to bind him, is voidable.^ Until avoided the contract is valid. Hence it may be dissolved and a receiver appointed,^ and an assignment of the property of a firm which is largely indebted but not insolvent may be avoided by an infant partner.* It is well settled, moreover, that an infant can avoid his contract of partnership to the extent of relieving himself from his individual liabilty for partnershp debts.^ So a continuing partner who assumes all the firm lia- of an infant payee before disaffirm- 2 Whitney v. Dutch, 14 Mass. 457 ; anee, it is not now necessary for us 7 Am. Dec. 229; Dunton v. Brown, to decide." In Welch v. Welch, 103 31 Mich. 182; Folds v. Allardt, 35 Mass. 562, quoting from Nightin- Minn. 488; 29 N. W. 201. gale V. Withington, 15 Mass. 272; 3 Bush v. Linthicum, 59 Md. 344. 8 Am. Dec. 101, is a dictum that in 4 Foot v. Goldman, 68 Miss. 529; such a case the minor could not re- 10 So. 62. coVer; but in Nightingale v. With- s Lovell v. Beauchamp (1894), A. ington there was no revocation ; and C. 607 ; Goode v. Harrison, 5 Barn, in Welch v. Welch the court held & Aid. 147; Conklin v. Ogborn, 7 that one who had on order of an in- Ind. 553; Mehlhop v. Rae, 90 la. fant paid over the infant's money to 30; 57 N". W. 650; Neal v. Berry, 86 the necessary support of the in- Me. 193; 29 Atl. 987; Mason v. fant's father could not be com- Wright, 13 Met. (Mass.) 306; Tobey pelled to pay it again to the infant. v. Wood, 123 Mass. 88; 25 Am. Rep. 14 7w re Soltykoflf (1891) 1 Q. B. 27; Osburn v. Farr, 42 Mich. 134; 413. 3 N. W. 299; Folds v. Allardt, 35 1 See § 859. Minn. 488; 29 N. W. 201. CONTEACTS OF IXFAXTS. 1361 bilities cannot recover from a minor partner his sliare of a firm note excluded from such liabilities." He may even disaffirm his individual liability without disaffirming his contract with his partners/ Whether on disaffirming he can recover property contributed by him to the partnership assets, to the prejudice of partnership creditors is not so clear. In some cases, it has merely been held that the proceeding in question was not a proper one for asserting such a right, without always deciding whether the right existed.^ Thus pleading infancy in a suit on a partnership debt," suing the assignee in insolvency to recover one-half of the partnership assets,^" or suing to renounce the partnership and have a receiver appointed, with a prayer for priority in payment of money advanced,^^ have each been held not to permit the infant to recover his share of the assets to the prejudice of the firm creditors. But where the courts have ex- pressed an opinion on thi's point they have denied the existence of this right.^^ The weight of authority clearly is that an in- 6Neal V. Berry, 86 Me. 193; 29 Atl. 987. 7Mehlhop V. Rae, 90 la. 30; 57 N. W. 650; Conary v. Sawyer, 92 Me. 463; 69 Am. St. Rep. 525; 43 Atl. 27; Tobey v. Wood, 123 Mass. 88 ; 25 Am. Rep. 27 ; apparently con- tra, Miller v. Sims, 2 Hill (S. C.) 479; Salinas v. Bennett, 33 S. C. 285; 11 S. E. 968. 8 " If an infant partner can re- pudiate his contract and call for a return of his share of the capital, without regard to the account of profit and loss, it must be upon some proceeding instituted for that purpose, and on which the rights of the other partners and of creditors of the firm may be considered and protected." Gay v. Johnson, 32 N. H. 167, 169. 9 Gay V. Johnson, 32 N. H. 167 10 Conary v. Sawyer, 92 Me. 463 ; 69 Am. St. Rep. 525-, 43 Atl. 27. "Shirk V. Shultz, 113 Ind. 571; 15 N. E. 12. 86 12 Shirk V. Shultz, 113 Ind. 571; 15 N. E. 12; Conary v. Sawyer, 92 Me. 463; 69 Am. St. Rep. 525; 43 Atl, 27; Bush v. Linthicum, 59 Md. 344; Pelletier v. Couture, 148 Mass. 269; 1 L. R. A. 863; 19 N. E. 400; Yates V. Lyon, 61 N. Y. 344; revers- ing, Yates V. Lyon, 61 Barb. (N. Y.) 205. "The plaintiff, however, con- tends that inasmuch as he was a minor and had disaffirmed his per- sonal liability for the debts of the firm, he has an individual interest in such of the partnership property as had been fully paid for at the time when insolvency proceedings were instituted. We do not think that such a contention is maintain- able either on principle or on au- thority. ... It will be observed that he did not and does not dis- affirm his contract of copartnership, but only his liability for firm debts. He claims title to the goods sued for as a partner, such goods having been paid for by the firm and being part- 1362 PAGE ON CONTRACTS. fant cannot on rescinding Lis contract on that ground alone re- cover from his partners what he has advanced to the assets of the firm, but only his proportionate share after payment of all debts/^ This of course eliminates the question of fraud and the like. Thus a loss of capital must be divided equally, and not be borne exclusively by the adult partners.^* Unfortunately, many of the decided cases rest on the proposition that a minor cannot recover back money paid by him ; and sound reason seems to be with the minority view that the minor may recover money advanced by him.^^ iiersliip assets." Conaiy v. Sa\\'yer, 92 Me. 463, 467; 69 Am. St, Rep. 525; 43 Atl. 27. "It is not too much to say that if an infant goes into a mercantile venture which proves unsuccessful he ought, at least, to be held so far that the as- sets acquired by the firm should be applied to the payment of the debts of the concern. If he has been ca- joled into any waste of his capital, it hardly seems equitable that the creditor of his firm should, either directly or indirectly, be called upon for reimbursement." Yates v. Lyon, 61 jST. Y. 344, 346; reversing, Yates V. Lyon, 61 Barb. (N. Y.) 205. But Yates v. Lyon is obiter in this point, as the question was whether an assignment by a firm of which an infant was a member was void. The distinction suggested by the note to Craig v. Van Bebber, 18 Am. St. Rep. 569, 604, one of the clear- est discussions of the rights of in- fants yet written, between creditors who have disposed of property to the firm which it still retains and others, is ignored 4n Conary v. Saw- yer, 92 Me. 463; 69 Am. St. Rep. 525; 43 Atl. 27. 13 Ex 'parte Taylor, 8 De Gex, M. & G. 254; Adams v. Beall, 67 Md. 63; 1 Am. St. Rep. 379; 8 Atl. 664; Page V. Morse, 128 Mass. 99; Moley V. Brine, 120 Mass. 324; Breed v. Judd, 1 Gray (Mass.) 455. li Moley V. Brine, 120 Mass. 324. " Whilst fully recognizing the privi- lege which the law accords minors in regard to contracts made during their minority, yet in a case like the present, where money is paid by a minor in consideration of being ad- mitted as a partner in the business of the appellant, and he does become and remains a partner for a given time, he ought not to be allowed to recover back the money thus paid, unless he was induced to enter into the partnership by the fraudulent representations of the appellant." Adams v. Beall, 67 Md. 53, 59; 1 Am. St. Rep. 379; 8 Atl. 664. 15 Sparman v. Keim, 83 N. Y. 245. In Heath v. Stevens, 48 N. H. 251, an agreement by A to pay the fare of B, a minor, to New York, and if he was not accepted for enlistment, to pay his expenses home again; if B was accepted and received a boun- ty, B was to pay A $200. B was accepted, received a bounty of $700, and paid A $200. B subsequently sued to rescind, and he was allowed to do so, and to recover $200 less his expenses to New York. The facts of this case resemble Breed v. Judd, CONTRACTS OF INFANTS. 1363 §879. Infant as member of corporation. The courts are divided as to whether an infant can be a member of a mutual or assessment corporation.^ So there is a conflict of authority as to whether an infant can be an incorpora- tor of an ordinary stock corporation. It has been held that he might be an incorporator as far as collateral attack was con- cerned ;" but on direct attack it has been held that he could not be an incorporator.^ As between vendor and vendee, there is no difference between a sale of corporation stock and other chattels, but the minor may disaffirm.* This is true even if the vendor is the corporation itself, which issues its shares to the infant to take up shares in a dissolved corporation whose prop- erty has been transferred to the corporation issuing stock.^ It has been held that the directors may refuse to allow a transfer to a minor to be made on the books of the company f but if they do, the transfer is merely voidable,'^ is good until avoided,® and cannot afterward be ignored by the corporation f and a corpora- 1 Gray (Mass.) 455, in which the infant was sent to California for a third of his earnings; but the result was exactly opposite. 1 In Chicago, etc., Association v. Hunt, 127 111. 257; 2 L. R. A. 549; 20 N. E. 55, it was held that he could be a member of such a cor- poration. In In re Globe, etc., As- sociation, 135 N. Y. 280; 17 L. E. A. 547; 32 N. E. 122, affirming 63 Hun (N. Y.) 263, it was held that the statutes contemplated only mem- bers who could not avoid their con- tracts; and hence an infant could not be a member or incorporator. 2 In re Nassau Phosphate Co., 2 Ch, Div. 610; In re Saxon & Co. (1892), 3 Ch. 555; but in these cases the validity of the corporation was not directly attacked by the state, but collaterally. 3 In Hamilton, etc., Co. v. Town- send, 13 Ont. App. 534; 16 Am. & Eng. Corp. Cas. 645, it was held that a statute authorizing five per- sons to form a corporation meant five persons of full age, and that if one was a minor, even if he ratified his act after majority, the incor- poration was defective. 4 Indianapolis, etc., Co. v. Wilcox, 59 Ind. 429; Robinson v. Weeks, 56 Me. 102. 5 White V. Cotton- Waste Corpora- tion, 178 Mass. 20; 59 N. E. 642. 6 Symon's Case, L. R. 5 Ch. App. C. 298. , 7Maguire's Case, 3 De Gex & S. 31 ; Lumsden's Case, L. R. 4 Ch. App. C. 31; Ebbett's Case, L. R. 5 Ch. App, C. 302; Baker's Case, L. R. 7 Ch. App. C. 115. 8 In re Nassau Phosphate Co., 2 Ch. Div. 610. 9 Hart's Case, L. R. 6 Eq. 512 Wilson's Case, L. R. 8 Eq. 240 Mitchell's Case, L. R. 9 Eq. 363 Creed v. Bank, 1 O. S. 1. 1364 PAGE ON CONTRACTS. tion wliich makes transfer on its books of shares of stock sold by a minor is not liable therefor/" Under the English statutes, an avoidance bj a minor relieves him from liability for calls on liis stock bought or subscribed for by him/^ if in a reasonable time,^^ and subject to the rule that he cannot retain the shares and repudiate his liability for calls.^^ He must avoid the whole contract to escape this liability/* Of course if he ratifies his contract after majority he cannot escape liability/^ It may un- doubtedly be provided by statute that the property of a minor in the hands of his guardian may be taken on his stock-liability ; and under such a statute his real estate may be levied on/® Of course one subscribing for stock in name of minors, who himself receives the benefit of stock is personally liable for debt/^ §880. Concealment or misrepresentation of minority. Mere omission to disclose minority does not estop the infant to avoid the contract, or give to the adversary party any right of action, either in law or equity.^ l^To estoppel can arise by reason of matter occurring after the transaction in question. Thus ■where A conveyed realty to B when a minor, and thereafter brought suit to have such deed set aside on the ground of fraud 10 Smith V. Ry. Co., 91 Tenn. 221; Mar. (Ky.) 1; Roman v. Fry, 5 J. 18 S. W. 546. J. Mar. (Ky.) 634. 11 Newry, etc., Ry. v. Coombe, 3 i Confederation Loan Association Ex. 565; Northwestern Ry. v. Mc- v. Kinnear, 23 Ont. App. 497; Michael, 5 Ex. 114. Davidson v. Young, 38 111. 145; 12 Dublin, etc., Ry. v. Black, 8 Ex. Alvey v. Reed, 115 Ind. 148; 7 Am. 181. « St. Rep. 418; 17 N. E. 265; Price 13 Leed, etc., Ry. v. Fearnley, 4 v. Jennings, 62 Ind. Ill; Sewell v. Ex. 26. Sewell. 92 Ky. 500; 36 Am. St. Rep. 1* Northwestern Ry. V. McMichael, 606; 18 S. W. 162; Bailey v. Barn- 5 Ex. 114. berger, 11 B. Mon. (Ky.) 113; 15 Cork, etc., Ry. v. Cazenove, 10 Baker v. Stone, 136 Mass. 405; Q. B. 935 (10 Ad. & El.). Thig Brantley v. Wolf, 60 Miss. 420; case has been criticised, but on the Stack v. Cavanaugh, 67 N. H. 149; question whether the act of retain- 30 Atl. 350; Waugh v. Beck, 114 ing stock after majority was a rat- Pa. St. 422; 60 Am. Rep. 354; 6 Atl. ification. 384; Bible v. Wisecarver (Tenn. leMansur v. Pratt, 101 Mass. 60. Ch. App.), 50 S. W. 670. 17 Castleman v. Holmes, 4 J. J. CONTKACTS OF INFANTS. 136; alleging that he was of age when such conveyance was made, he is not estopped to allege thereafter in a subsquent suit that he was a minor. ^ Where the infant has made false representa- tions as to his age no estoppel can arise where the other party is not in fact deceived thereby.^ So no estoppel can arise out of a representation of infancy made to the agent of the mortgagee and known to him to be false ;* or where before his conveyance a minor testified , that he was of full age, it not being shown that grantee knew of and relied on such statement.^ Even where the adversary party is deceived, no estoppel can arise in an action at law,° except where the Common Law is modified bj statute.^ So a misrepresentation by an infant that his disability to contract; has been removed by decree of court does not estop him from pleading infancy as a defense.^ In Kentucky the doc- trine of estoppel seems to be applied in such cases, even at law,* 2Ridgeway v. Herbert, 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040. 3 Watson V. Billings, 38 Ark. 278 ; 42 Am. Rep. 1; Bradshavv v. Van Winkle, 133 Ind. 134; 32 N. E. 877; Ridgeway v. Herbert, 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040; Charles v. HasLedt, 51 N. J. Eq. 171; 26 All. 564. 4 Charles v. Hastedt, 51 N. J. Eq. 171 ; 26 Atl. 564. 5 Bradshaw v. Van Winkle, 133 Ind. 134; 32 N. E. 877. 6 Burdett v. Williams, 30 Fed. 697; Oliver v. McClelland, 21 Ala. 675; Watson v. Billings, 38 Ark. 278; 42 Am. Rep. 1; Wieland v. Kobick, 110 111. 16; 51 Am. Rep. 676; Vallandingham v. Johnson, 85 Ky. 288; 3 S. W. 173; WMlson v. Wilson (Ky.), 50 S. W. 260; Merri- man v. Cunningham, 11 Cush. (Mass.) 40; Folds v. Allardt, 35 Minn. 488; 29 N. W. 201; Conrad V. Lane. 26 Minn. 389; 37 Am. Rep. 412; 4 N. W. 695; Ridgeway v. Her- bert, 150 Mo. 606; 73 Am. St. Rep. 404; 51 S. W. 1040; Burley v. Rus- sell, 10 N. H. 184; 34 Am. Dec. 146; Houston v. Cooper, 3 N. J. L. 866; Studwell v. Shapter, 54 N. Y. 249 ; Conroe v. Birdsall, 1 Johnson's Cases (N. Y.) 127; 1 Am. Dec. 105; Carolina, etc.. Association v. Black, 119 N. C. 323; 25 S. E. 975; Cresinger v. Welch, 15 Ohio 156; 45 Am. Dec. 565; Whitcomb v. Joslyn, 51 Vt. 79; 31 Am. Rep. 678; Eliot V. Eliot, 81 W'is. 295; 15 L. R. A. 259; 51 N. W. 81. 7 Dillon V. Burnham, 43 Kan. 77 ; 22 Pac. 1016. Thus in Kansas a minor who by representations that he is of full age, or by engaging in business as an adult, deceives the other party, cannot rescind. Dil- lon V. Burnham, 43 Kan. 77; 22 Pac. 1016. 8 Wilkinson v. Buster. 124 Ala. 574; 26 So. 940. 9 Damron v. Commonwealth, 110 Ky. 268; 96 Am. St. Rep. 453; 6i S. W. 459. 13G6 PAGE ON CONTRACTS. In equity, however, an infant, who by representations or by conduct, misleads the other party into believing that the infant is of full age, is estopped to allege his infancy;" as where a minor obtained a settlement with his guardian by representing that he w^as of age,^^ or where the infant in order to induce the purchaser to buy, has made affidavit that he was of age.^" In Minnesota it has been held that a minor is not estopped by his representation that he is of age to avoid a mortgage/'* Whether an infant who falsely represents himself as being of full age and thereby induces one to sell him chattels is liable on an action for fraud, is a question on which the authorities are in conflict. In the majority of cases it has been held that he is not liable f* but in other cases it has been held that he is liable.^^ It has been held that if the infant has induced the adversary party to enter 10 Schmitheimer v. Eiseman, 7 Bush. (Ky.) 298; Ferguson v. Bobo, 54 Miss. 121 ; Ryan v. Growney, 125 Mo. 474, 484; 28 S. W. 189, 755; Hayes v. Parker, 41 K J. Eq. 630; 7 Atl. 511; Pemberton, etc.. Asso- ciation V. Adams, 53 N. J. Eq. 258; 31 Atl. 280; Adams v. Fite, 3 Baxt. (Tenn.) 69; Harsein v. Cohen (Tex, Civ. App.), 25 S. W. 977. On re- hearing in Eyan v. Growney, 125 Mo. 474; 28 S. W. 189, the court on account of the insufficiency of the record finally on motion for rehear- ing remanded the case " in order that the lower court may rehear the case, unboimd by any^iing said in the original opinion." "Hayes v. Parker, 41 N. J. Eq. 630; 7 Atl. 511. 12 Schmitheimer v. Eiseman, 7 Bush. (Ky.) 298; Ryan v. Growney, 125 Mo. 474, 484; 28 S. W. 189, 755. 13 Alt V. Groff, 65 Minn. 191; 68 N. W. 9. This case was brought at law, but the validity of the mort- gage was raised by the answer and denied by the reply, and raised a question in equity. 14 Johnson v. Pie, 1 Lev. 169; 1 Sid. 258; 1 Keb. 905; Grove v. yevill, 1 Keb. 778; Jennings v. Run- dall, 8 T. R. 335; Green v. Green- bank, 2 Marsh. 485; Price v. Hew- ett, 8 Exch. 146 ; Wright v. Leonard, 11 C. B. (N. S.) 258; De Roo v. Foster, 12 C. B. (N. S.) 272; Brown v. Dunham, 1 Root (Conn.) 272; Geer v. Ho\y, 1 Root (Conn.) 179; Burns v. Hill, 19 Ga. 22; Slay- ton V. Barry, 175 Mass. 513; 78 Am. St. Rep. 510; 49 L. R. A. 560; 56 N. E. 574; Merriam v. Cunningham, 11 Cush. (Mass.) 40; Wilt v. Welsh, 6 Watts (Pa.) 9; Kilgore v. Jordan, 17 Tex. 341; Nash v. Jewett, 61 Vt. 501; 15 Am. St. Rep. 931; 4 L. R. A. 561 ; 18 Atl. 47 ; Gilson v. Spear, 38 Vt. 311; 88 Am. Dec. 659. 15 Rice V. Boyer. 108 Ind. 472; 58 Am. Rep. 53; 9 N. E. 420; Hall v. Butterfield, 59 X. H. 354; 47 Am. Rep. 209; Eaton v. Hill. 50 X. H. 235 ; 9 Am. Rep. 189 ; Fitts v. Hall, 9 N. H. 441; Wallace v. Morss, 5 Hill (X. Y.) 391. CONTKACTS OF INFAffTS. 1367 into the contract by a fraudulent representation as to the age of the infant, he must account for the consideration even if he has wasted it.^** §881. Ratification. — Who can ratify. The proposition that an infant's contracts in general are voidable implies that they may be ratified. This cannot be done by an infant before reaching- majority as his ratification would have no greater effect than his original contract.^ In case the infant dies before reaching majority his personal representative may affirm,^ even before the infant would have reached majority had he lived.^ Like other agreements, a valid ratification must be made by one who is competent to contract and free from restraint.* Hence a ratification is ineffectual if made after majority by one who has been put under guardianship as a spendthrift, the statute making void his contracts after the appointment of a guardian.^ A threat of a civil action does not prevent a ratification from being binding.® By the better reasoning it has been held that a ratification after majority is valid though the fonner infant did not know that by kw infancy wa? a defense.^ The amount of legal knowledge poes^ssed by 16 Pemberton. etc., Association v. 300 ; McCarty v. Carter, 4? JU. 53 ; Adams. 53 N. J. Eq. 258; 31 Atl. 95 Am. Dec. 572. 280. See obiter in Petty v. Rob- ^ Chandler v. Simmons, 97 Mass. erts, 7 Bush. (Ky.) 410. 508; 9S Am. Dec. 117. 1 Sanger v. Hibbard, 104 Fed. 6 Bestor v. Hickey, 71 Conn. 18i : 455; 43 C. C. A. 635; Dana v. 41 Atl. 555. Coombs, 6 Greenleaf (Me.) 89; 19 ^ American, etc., Co. v. Wright. Am. Dec. 194; Chandler v. Simmons, 101 Ala. 658; 14 So. 399; Bestor v. 97 Mass. 508; 93 Am. Dec. 117; Hickey, 71 Conn. 18; 41 Atl. 555; Corey v. Burton, 32 Mich. 30; Clark v. Van Court, 100 Ind. 113; Ridgeway v. Herbert, 150 Mo. 606; 50 Am. Rep. 774; Morse v. Wheeler, 73 Am. St. Rep. 464; 51 S. W. 1040; 4 All. (Mass.) 570; Anderson v. Cheshire v. Barrett, 4 McCord. (S. Soward, 40 0. S. 325; 48 Am. Rep. C.) 241; 17 Am. Dec. 735; O'Dell v. 687. "The contract of a minor, in- Rogers, 44 Wis. 136. eluding the power, on coming of age, 2 Bozeman v. Browning, 31 Ark. without any new consideration, to 364. make the contract binding on him, 3 Shropshire v. Burns, 46 Ala. is a transaction sui generis, and is 108. not strictly analogous to any other 4 Sims V. Everhardt, 102 U. S. known to the law. The nature and 1368 PAGE ON CONTRACTS. any one at a given time in the past is a question almost impos- sible to determine from evidence, as the person himself is usually the only one who knows how much he knew ; and the rule just given is a wise and safe one ; yet it must be admitted that a con- siderable number of cases, mostly however, in mere dicta, hold that a ratification is invalid unless made with knowledge that infancy was a defense.^ §882. Nature and eflfect of ratification. Ratification is not the making of a new contract, but is an election by the infant between his two antagonistic rights of treating a pre-existing contract as void or valid, in favor of treating it as valid.^ No new consideration is therefore neces- sary," and on ratification the contract becomes valid from the validity of the contract depend on the acts of a minor who has the capacity to assent, but not the ca- pacity to bind himself during mi- nority; the right to enforce the con- tract depends on the acts of an adult who has no special incapaci- ties nor privileges. When he exer- cises his option, which results from his contract made while a minor, to bind or not to bind himself by the contract to which he has as- sented, he stands as every one else stands in the performance of a vol- untary act; he is presimied to know the law. So in the present case, the defendant knew he had, while a minor, agreed, for a fair considera- tion which he had received and en- joyed, to pay the amount in ques- tion to the plaintiflf, and voluntarily, in specific terms, promised to pay that sum. This promise bound him to make the payment by force of the same law that exempted him from liability until the promise was made. It is immaterial whether he knew or did not know the law; if such knowledge could affect his act, he is charged with the knowl- edge, and cannot be permitted to show the contrary." Bestor v. Hickey, 71 Conn. 181, 186; 41 Atl, 555. sHarmer v. Killing, 5 Esp. 102; Tucker v. Moreland, 10 Pet. (U. S.) 59; Petty v. Roberts, 7 Bush. (Ky.) 410; Owen v. Long, 112 Mass. 403; Hinely v. Margaritz, 3 Pa. St. 428; Scott V. Buchanan, 11 Humph. (Tenn.) 468; Hatch v. Hatch, 60 Vt. 160; 13 Atl. 791. 1 The act of an infant in making valid his prior voidable contract is said to be " analogous either to a waiver or a ratification or a new contract. Such a promise is fre- quently indicated by all these names; they have been indifferently used in several of our decisions as terms of convenience and partial il- lustration, but it certainly cannot be accurately described by either." Bestor v. Hickey. 71 Conn. 181, 187; 41 Atl. 555. 2 American, etc., Co. v. Dykes, 111 CONTRACTS OF INFANTS. 1369 date oii which it was made, and not merely from the date of the ratification.^ Hence a deed when ratified prevails over a gratuitous conveyance of the same property made between the original deed and the ratification.* A ratification once made without fraud, duress and the like is final, and the former infant cannot thereafter rescind.^ The proposition has been repeatedly advanced that a ratification, after suit was brought, is of no effect. The reason given is that " There must be a subsisting right of action at the time of suing out the plaintiff's writ, which right of action no subsequent promise can give."® Evi- dently this reasoning misapprehends the real nature of ratifi- cation, and rests upon the fallacy that an infant's executory con- tract is of no effect until ratified.^ It is even said that a " promise cannot relate back . . . so as to make the orig- inal contract a good foundation for an action from the beginning."^ An examination of the cases usually cited in sup- jiort of this proposition shows that in some it is a dictum, as there was no valid ratification at all, either before or after suit ;* while in others it is apparently necessary to the decision. ^° Even in some of the cases last cited it seems from somewhat in- complete statements of fact that the facts relied on as a ratifi- cation occurred after a disaffirmance of liability by a plea of in- fancy. Ala. 178; 56 Am. St. Rep. 38; 18 Carthy v. Nicrosi, 72 Ala. 332; 47 So. 292; Conklin v. Ogborn, 7 Ind. Am. Rep. 418; Hastings v. Dollar- 553; Grant v. Beard, 50 N. H. 129. hide, 24 Cal. 195; Yonmans v. For- 3 American, etc., Co. v. Dykes, 111 syth, 86 Hun (N. Y.) 370; Luce v. Ala. 178; 56 Am. St. Rep. 38; 18 Jestrab, — N. D. — ; 97 N. W. 848. So. 292; Hall v. Jones, 21 Md. 439; 6 Hale v. Gerrish, 8 N. H. 374. Durfee ex rel. Lantz v. Abbott, 61 375. Mich. 471; 28 N. W. 521; Minock v. 7 See § 872. Shortridge, 21 Mich. 304; Tibbets » Merriam v. Wilkins, 6 N. H. V. Gerrish, 25 N. H. 41 ; 57 Am. 432, 433 ; 25 Am. Dec. 472. Dec. 307; Holt v. Underbill, 10 N. 9 Thing v. Libbey, 16 Me. 55; H. 220; 34 Am. Dec. 148; Harner Ford v. Phillips, 1 Pick. (Mass.) V. Dipple, 31 0. S. 72; 27 Am. Rep. 202. 496; Cheshire v. Barrett, 4 McCord. lo Freeman v. Nichols. 138 Mass. (S. C.) 241; 17 Am. Dec. 735. 313; Hale v. Gerrish, 8 N. H. 374; 4 Palmer v. Miller, 25 Barb. (N. Merriam v. Wilkins, 6 N. H. 432; Y.) 399. 25 Am. Dec. 472. sVoltz V. Voltz, 75 Ala. 555; Mc- 1370 PAGE ON CONTEACTS. §883. What constitutes ratification. An express promise by the former infant to comply with the terms of the contract^ or his conduct in keeping realty purchased, and treating it as his own after hc comes of age," or selling it,^ or a suit for, and receipt of purchase price after majority,* is a ratification ; even if made after a suit to disaffirm the con- tract.^ Thus a sale of property which an infant bought, sub- ject to liens, and on which the infant gave a mortgage to raise money to discharge the liens, is a ratification of the entire transaction including the mortgage.^ So is a recital in a mort- gage given after majority, that the realty is subject to the lien of another mortgage given during minority.^ Where the prop- erty is sold before majority, giving a deed therefor after ma- jority is a ratification.^ So is the retention and use of the proceeds after majority.^ An oral promise to perform a bond 1 Bestor v. Hickey, 71 Conn. 181; 41 Atl. 555; Barlow v. Robinson. 174 111. 317; 51 N. E. 1045; Whitney v. Dutch, 14 Mass. 457; 7 Am. Dec. 229; Martin v. Mayo, 10 Mass. 137; 6 Am. Dec. 103; Tyler v. Gal- lop, 68 Mich. 185; 13 Am. St. Rep. 336 ; 35 N. W. 902 ; Hoiilton v. Man- teuffel, 51 Minn. 185; 53 N. W. 541; Edgerly v. Shaw. 25 N. H. 514; 57 Am. Dec. 349; Tibbets v. Ger- rish, 25 N. H. 41; 57 Am. Dec. 307; Hatch V. Hatch, 60 Vt. 160; 13 Atl. 791. 2 American, etc., Co. v. Dykes, 111 Ala. 178; 56 Am. St. Rep. 38; 18 So. 292 : Ellis v. Alford, 64 Miss. 8; 1 So. 155; Baxter v. Bush. 29 Vt. 465; 70 Am. Dec. 429. 3 Buchanan v. Hubbard, 119 Ind. 187; 21 N. E. 538; Leathers v. Ross, 74 la. 630; 38 N. W. 516; Dana v. Coombs. 6 Greenl. (Me.) 89; 19 Am. Dec. 194; Uecker v. Koehn, 21 Neb. 559; 59 Am. Rep. 849; 32 N. W. 583; Lynde v. Budd. 2 Paisje Ch. (N. Y.) 191; 21 Am. Dec. 84. 4Lathrop v. Doty, 82 la. 272; 47 N. W. 1089. 5 Buchanan v. Hubbard, 119 Ind. 187; 21 N. E. 538. 6 Langdon v. Clayson, 75 Mich. 204; 42 N. W. 805. In this case the infant on reaching majority quit-claimed the land to A, and afterward made a warranty deed to A, reciting therein that it was for the purpose of " expressly revoking all former deeds and mortgages made by me before I became of age." 7 Ward V. Anderson, 111 N. C. 115; 15 S. E. 933. 8 Wall V. Mines, 130 Cal. 27; 62 Pac. 386. 9 Waters v. Lyon, 141 Ind. 170; 40 N. E. 662. In Owens v. Phelps, 95 N. C. 286, this was said to be ad- missible in evidence, though not of itself a ratification. Contra, in Walsh V. Powers, 43 N. Y. 23, 3 Am. Rep. 654; retention of the pro- ceeds of the sale of real estate was held not to ratify a mortgage given thereon during minority. CONTRACTS OF INFANTS. 1371 to convey realty and a request for a payment thereon/" a prom- ise after majority to pay the note given for laud and take the land, if the vendor will remit the accrued interest," and an oral statement of satisfaction with a deed executed during minority^^ have each been held to be a ratification. But where A, while a minor, gave notes secured by a real estate mortgage, then married, and after coming of age executed an instrument without any consideration, reciting that she took " pride and pleasure in ratifying, affirming and indorsing the said acts as fully " as if she had been of age, this did not affirm the mort- gage, because it was not executed in the method prescribed by the Tennessee statute for the conveyance by married women of their interests in realty.^^ While good as against the infant, an oral affirmance has, under recording statutes, been held in- valid as to subsequent purchasers for value who know of the deed made by the infant, but are ignorant of his ratification.^* So conduct in keeping personalty and using it as his own after majority,^^ or demanding and receiving it after majority," or selling it," or exchanging it,^* is a ratification. Thus an infant partner cannot retain partnership property transferred to him on his promise to pay partnership debts and refuse to pay such debts.^^ But retaining possession for three months, notice of rescission being promptly given is not ratification,^*' nor is 10 Barlow v. Robinson, 174 111. Tex. 240; sm 6 ?iom., Manney v. Allen, 317; 51 N. E. 1045. 13 S. W. 989. Contra, Paul v. 11 Houlton V. Manteuffel, 51 Minn. Smith, 41 Mo. Ap. 275 (retaining 185; 53 N. W. 541. property did not amount to ratifi- 12 Ferguson v. Bell, 17 Mo. 347. cation in conformity with Missouri 13 Walton V. Gaines, 94 Tenn. statute). 420; 29 S. W. 458. le Nanny v. Allen, 77 Tex. 240; 1* Black V. Hills, 36 111. 376; 87 sub nomine, Manney v. Allen, 13 S. Am. Dec. 224. W. 989. isLawson v. Lovejoy, 8 Greenl. i^ Hilton v. Shepherd, 92 Me. 160; (Me.) 405; 23 Am. Dec. 526; Delano 42 Atl. 387. V. Blake, 11 Wend. (N. Y.) 85; 25 is Curry v. Plow Co., 55 111. App. Am. Dec. 617; Cheshire v. Barrett, 82. 4 McCord (S. C.) 241; 17 Am. Dec. is Kitchen v. Lee, 11 Paige (N. 735; Ihley v. Padgett, 27 S. C. 300; Y.) 107; 42 Am. Dec. 101. 3 S. E. 468; Nanny v. Allen, 77 20 Scott v. Scott, 29 S. C. 414; 7 S. E. 811. 1372 PAGE ON CONTKACTS. retaining property if claimed by a different title, as where the property in question was partnership property which was at- tached, sold, bought in by the infant's grandfather, and sold by him to the infant."^ Acting as a partner for a few days after majority, by drawing profits has been held not to be a ratification of individual liability if in ignorance of outstanding debts,^^ but otherwise it is."^ By the weight of authority the rule in ratification of an infant's contracts, different from that in waiv- ing the statute of limitations, is that a mere acknowledgment that the obligation has been incurred,'* or even a part payment thereon,"^ is not a ratification. Even payment of interest, part payment of principal, and a mere acknowledgment of the debt,"'' or a statement, " I owe a debt, and you will get your pay," was held not to be a ratification f^ nor is an acknowledg- ment of the debt coupled with a statement that he would not pay it,"* or with an offer to compromise, if not accepted."" A provision in a will directing just debts to be paid, does not authorize the executors to pay debts contracted during infancy.^" If a conditional ratification is made, the offer must be accepted and the condition complied with to make it a valid ratification.^^ 21 Todd V. Clapp, 118 Mass. 495. transaction was just and giving a 22Tobey v. ^Yood, 123 Mass. 88; watch to be taken as part payment 25 Am. Rep. 27. if it kept good time was a ratifica- 23 Salinas v. Bennett, 33 S. C. tion. 285; 11 S. E. 968. 26 Kendrick v. Xeisz, 17 Colo. 506; 24 Fetrow v. Wiseman, 40 Ind. 30 Pac. 245. 148; Martin V. Mayo, 10 Mass. 137; 2- Hale v. Gerrish, 8 N. H. 374. 6 Am. Dec. 103; (obiter) Reed v. 28 Minock v. Shortridge, 21 Mich. Boshears, 4 Sneed (Tenn.) 118; 304. Hatch V. Hatch, 60 Vt. 160; 13 Atl. 29 Bennett v. Collins. 52 Conn. 1. 791. 30 Jackson v. Mayo. 11 Mass. 147: 25Thrupp V. Fielder. 2 Esp. 628; 6 Am. Dec. 167; Smith v. Mayo. 9 Kendrick v. Neisz, 17 Colo. 506; 30 Mass. 62; 6 Am. Dec. 28. Contra, Pac. 245; Catlin v. Haddox, 49 Merchants', etc., Ins. Co. v. Grant, Conn. 492; 44 Am. Rep. 249; Barn- 2 Edw. Ch. (N. W.) 544. aby V. Barnaby, 1 Pick. (Mass.) 3i Craig v. Van Bebber, 100 Mo. 221; Hinely v. Margaritz, 3 Pa. St. 584; 10 Am. St. Rep. 569; 13 S. W. 428 ; Rapid, etc., Co. v. Sanford 906 ; State ex rel. Peacock v. Binder, (Tex. Civ. App.), 24 S. W. 587. 57 N. J. L. 374; 31 Atl. 215: Bre- But in Little v. Duncan, 9 Rich, see v. Stanley, 119 N. C. 278; 25 S. Law (S. C.) 55; 64 Am. Dec. 760, it E. 870. was held that admitting that the CONTEACTS OF INFANTS. 1373 Thus neither a promise by a minor after coming of age to pay if he was ever to do so without inconvenience/" nor an offer after majority to execute a deed of confirmation on jjayment of the balance of the purchase money/'' is a ratification. So to enforce a contract which the former infant promised to perform if able, it must be shown that he is able.^* If an express promise is relied on as a ratification, it must be made to the adversary party or his agent ; not to a stranger,^^ Hence it may be made to an attorney with whom the debt is placed for collection,^® or his clerk,^^ even if there is nothing to show that the former infant knew of his agency.^* At Common Law an infant's ratification may be made orally f^ but by statutes of certain states this rule is modified and an infant's express ratification must be in writ- ing.*** The express promise must be absolute. A conditional promise to pay an open account, contained in a letter written after majority, is not a compliance with the Virginia statute.*'' These statutes do not apply to contracts ratified by the conduct of the infant, as by selling*" or retaining possession of the property purchased.*^ Mere failure to disaffirm promptly is not a ratification.** Thus, continuing to live with his parents 32 Bresee V. Stanley, 119 N.C. 278; lips v. Green, 5 T. B. Mon. (Ky.) 25 S. E. 870. 344; Wheaton v. East, 5 Yerg. 33 Craig V. Van Bebber, 100 Mo. (Tenn.) 41; 26 Am. Dec. 251; 584; 18 Am. St. Rep. 569; 13 S. Stokes v. Brown, 4 Chand. (Wis.) W. 906. 39; 3 Pinney (Wis.) 311. 34 Proctor V. Sears, 4 All. (Mass.) 4o Hartley v. Wharton, 11 Ad. & 95; Thompson v. Lay, 4 Pick. El. 934; Stern v. Freeman, 4 Met. (Mass.) 48; 16 Am. Dec. 325. (Ky.) 309; Neal v. Berry. 86 Me. 35Hoit V. Underbill, 9 N. H. 436; 193; 29 Atl. 987; Bird v. Swain, 79 32 Am. Dec. 380; Chandler v. Glo- Me. 529; 11 Atl. 421; Thurlow v. ver, 32 Pa. St. 509. Gilmore, 40 Me. 378; Ward v. Sche- 30 Hodges V. Hunt, 22 Barb. (N. rer, 96 Va. 318; 31 S. E. 518. Y.) 150. 41 Ward v. Scherer, 96 Va. 318; 37 Mayer v. McLure, 36 Miss. 389; 31 S. E. 518. 72 Am. Dec. 190. 42 Hilton v. Shepherd. 92 Me. 160; 38Hoit V. Underbill, 10 N. H. 42 Atl. 387. 220; 34 Am. Dee. 148. 43 McKaniy v. Cooper, 81 Ga. 679; 39 West V. Penny, 16 Ala. 180; 8 S. E. 312. Jeffords v. Ringgold, 6 Ala. 544; 44 Hill v. Xelms, 86 Ala. 442: 5 Vaughan v. Parr, 20 Ark. 600 ; Phil- So. 796 ; Hoffert v. Miller, 86 Ky. 1374 PAGE ON CONTRACTS. after majority is not a ratification hy an infant of an applica- tion by his father of such infant's wages to the rent.*^ How- ever, silence, where circumstances impose on the minor the duty of speaking, may operate as a ratification," as where he stands by, knowing that the grantee,*' or the vendee of his grantee,** is making valuable improvements on realty sold by him, in reliance on the title. The mere erection of valuable improve- ments, unknown to the minor, as where he was absent from the state, does not affect his right to disaffirm.*^ §884. Who can disaffirm. The infant may elect the other alternative and rescind the contract. This privilege is personal to himself and his repre- sentatives. The adversary party to the contract cannot avoid it.^ Thus insurance of a property of a minor is enforceable where the party taking insurance had no notice of a rule not to insure property of minors.^ So an employer of an infant 572; 6 S. W. 447; Lynch v. John- son, 109 Mich. 640; 67 X. W. 908. i5 Lymansville Co. v. Nieber, 19 R. I. 398; 36 Atl. 1133. Contra, obi- ter, Ridgeway v. Herbert, 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040. 46 Wheaton v. East, 5 Yerg. (Tenn.) 41; 26 Am. Dec. 251; Bige- low V. Kinney, 3 Vt. 353; 21 Am. Dec. 589. 47 Davis V. Diidey, 70 Me. 236; 35 Am. Rep. 318. 48 Lacy V. Pixler, 120 Mo. 383 ; 25 S. W. 206. (In this case the infant also received part of the purchase price after majority.) 49 Birch V. Linton. 78 Va. 584 ; 49 Am. Rep. 381. iSeaton v. Tohill, 11 Colo. App. 211; 53 Pac. 170; Gooden v. Rayl, 85 la. 592; 52 N. W. 506; Resso v. Lehan, 96 la. 45; 64 N. W. 689; Arnous v. Lesassier, 10 La. 592 ; 29 Am. Dec. 470; Oliver v. Houdlet, 13 Mass. 237; 7 Am. Dec. 134; Patter- son V. Lippincott, 47 N. J. L. 457; 54 Am. Rep. 178; 1 Atl. 506; Wil- lard V. Stone, 7 Cow. (N. Y.) 22; 17 Am. Dec. 496; Hunt v. Peake, 5 Cow. (N. Y.) 475; 15 Am. Dec. 475; Hicks V. Beam, 112 N. C. 642; 34 Am. St. Rep. 521; 17 S. E. 490; Withers v. Ewing. 40 O. S. 400; As- signees of Hull V. Connolly, 3 Me- Cord (S. C.) 6; 15 Am. Dec. 612; Warwick v. Cooper, 5 Sneed (Tenn.) 659; Stringfellow v. Early, 15 Tex. Civ. App. .597; 40 S. W. 871; Plate v. Durst, 42 W. Va. 63; 32 L. R. A. 404; 24 S. E. 580; Johnson v. Insurance Co., 93 Wis. 223; 67 N. W. 416. 2 .Johnson v. Insurance Co., 93 Wis. 223; 67 N. W. 416. CONTRACTS OF INFANTS. 1375 cannot avoid his contract on the ground of infancy.' So a vendee of realty cannot disaffirm a contract for the purchase thereof because the vendor is a minor.* A stranger to the con- tract cannot avoid it.^ Thus, an insurance company cannot refuse to pay a policy on the ground that it was assigned to the holder by a minor, the minor having died during minority f nor can a railroad company plead the infancy of the owner of property which it has destroyed.' So a surety on a note given by an infant for a premium for an insurance policy cannot avoid the insurance policy.* The infant's blood representatives, such as his heirs,^ or his personal representatives, such as his executor or administrator,^" or a beneficiary of insurance taken by a minor,^^ may avoid his contracts. Those who have merely acquired the infant's estate by bargain and sale,^^ or by pur- chase at a foreclosure sale,^' cannot avoid the infant's contracts 3 Hicks V. Beam, 112 N. C. 642; 34 Am. St. Rep. 521; 17 S. E. 490. 4Dentler v. O'Brien, 56 Ark. 49; 19 S. W. 111. 5 Hooper v. Payne, 94 Ala. 223; 10 So. 431; La Grange College v. Anderson, 63 Ind. 367; 30 Am. Rep. 224; Cannon v. Alsbury, 1 A. K. Marsh. (Ky.) 76; 10 Am. Dec. 709; Beeler v. Bullitt, 3 A. K. Marsh. (Ky.) 280; 13 Am. Dee. 161; Thompson v. Hamilton, 12 Pick. (Mass.) 425; 23 Am. Dec. 619; Nightingale v. Withington, 15 Mass. 272; 8 Am. Dec. 101; HiVl v. Tay- lor, 125 Mo. 331; 28 S. W. 599; Mott V. Purcell. 98 Mo. 247; 11 S. W. 564; Bordentown v. Wallace, 50 N. J. L. 13; 11 Atl. 267; Grogan v. Insurance Co., 90 Hun (N. Y.) 521; Curtiss V. McDougal. 26 O. S. 66; Blankenship v. Ry. Co., 43 W. Va. 135; 27 S. E. 355. 6 Grogan v. United States, etc., Insurance Co., 90 Hun (N. Y.) 521. 7 Blankenship v. Ry. Co., 43 W. Va. 135; 27 S. E. 355. 8 Union Central Life Ins. Co. v. Hilliard, 63 0. S. 478; 81 Am. St. Rep. 644; 53 L. R. A. 462; 59 N. E. 230. 9 Bozeman v. Browning, 31 Ark. 364; Illinois, etc., Co. v. Bonner, 75 111. 315; Gillenwater v. Campbell, 142 Ind. 529; 41 N. E. 1041; Hill V. Keyes, 10 All. (Mass.) 258; Har- ris V. Ross, 86 Mo. 89; 56 Am. R6p. 411; Ihley v. Padgett, 27 S. C. 300; 3 S. E. 468; Walton v. Gaines, 94 Tenn. 420; 29 S. W. 458. 10 Shropshire v. Burns, 46 Ala. 108; Vaughn v. Parr, 20 Ark. 600; Hill V. Keyes, 10 All. (Mass.) 258; Hussey v. Jewett, 9 Mass. 100; Par- sons V. Hill, 8 Mo. 135; Roberts v. Wiggin, 1 N. H. 73; 8 Am. Dec. 38; Tillinghast v. Holbrook, 7 R. I. 230; Person v. Chase, 37 Vt. 647; 88 Am. Dec. 630. "O'Rourk V. Ins. Co., 23 R. I. 457; 91 Am. St. Rep. 643; 57 L. R. A. 496; 50 Atl. 834. 12 Curtiss V. McDougal, 26 O. S. 66. 13 Harris v. Ross, 112 Ind. 314; 13 N. E. 873. 1376 PAGE ON CONTKACTS. with reference to such property. An infant's guardian ap- pointed on the ground of infancy, cannot avoid a contract of the infant;" but a guardian appointed after majority on the ground that the former minor is a spendthrift may avoid a conveyance made by the infant/^ So it has been held 'that neither an infant's assignee in insolvency/" nor his trustee/'^ can avoid his contract. A parent cannot avoid a contract of employment made by the infant.^® An infant cannot avoid a contract for his employment made by his father.^^ §885. When infant can disaffirm. An infant can disaffirm any contract during minority/ except a contract executed by the conveyance of real estate, which can be disaffirmed only after he reaches majority.^ On reaching 14 Oliver v. Houdlet, 13 Mass. 237; 7 Am. Dec. 134. In this ease the above proposition was limited to contracts beneficial to the infant. So in case of a mortgage of realty. Shreeves v. Caldwell, — Mich. — ; 97 N. W. 764. 15 Chandler v. Simmons, 97 Mass. 508; 93 Am. Dee. 117. 16 Mansfield v. Gordon, 144 Mass. 168; 10 N. E. 773. IT Des Moines Insurance Co. v. Mclntire, 99 la. 50; 68 N. W. 565. 18 Ping, etc., Co. v. Grant, — Kan. — ; 75 Pac. 1044. 19 Tennessee Mfg. Co. v. James, 91 Tenn. 154; 30 Am. St. Rep. 865; 15 L. R. A. 211; 18 S. W. 262. 1 Carpenter v. Carpenter, 45 Ind. 142; Indianapolis, etc., Co. v. Wil- cox, 59 Ind. 429; Clark v. Van Court, 100 Ind. 113; 50 Am. Rep. 774; House v. Alexander, 105 Ind. 109; 55 Am. Rep. 189; 4 N. E. 891; Rice v. Boyer, 108 Ind. 472; 58 Am. Rep. 53; 9 N. E. 420; 7 West. 68; Shirk V. Shultz, 113 Ind. 571; 15 N. E. 12; Childs v. Dobbins, 55 la. 205; 7 N. W. 496; Bailey v. Bam- berger, 11 B. Mon. (Ky.) 113; Adams v. Beall. 67 Md. 53; 1 Am. St. Rep. 379; 8 Atl. 664; Blooming- dale V. Chittenden, 74 Mich. 698; 42 N. W. 166; Carr v. Clough, 26 N. H. 280; 59 Am. Dec. 345; Grace v. Hale, 2 Humph. (Tenn.) 27; 36 Am. Dec. 296; Price v. Furman, 27 Vt 268; 65 Am. Dec. 194. Contra, as to a compromise of personal inju- ries which cannot be avoided by the infant during minority. Lansing v. R. R., 126 Mich. 663; 86 Am. St. Rep. 567; 86 N. W. 147 (citing Dunton v. Brown, 31 Mich. 182; Armitage v. W^idoe, 36 Mich. 124; Osburn v. Farr, 42 Mich. 134; 3 N. W. 299). sProut v. Cock (1896), 2 Ch. 808; Welch v. Bunce, 83 Ind. 382; Phillips v. Green, 3 A. K. Marsh. (Ky.) 7; 13 Am. Dec. 124; Ridge- way V. Herbert, 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040; Shipley v. Bunn, 125 Mo. 445; 28 S. W. 754; Walsh v. Powers, 43 N. Y. 23; 3 Am. Rep. 654; Logan v. Gardner, 136 Pa. St. 588: 20 Am. St. Rep. 939; 20 Atl. 625; Scott CONTEACTS OF INFANTS. 1377 majority he can disaffirm a deed given by him during minority.' His right to disaffirm contracts concerning personalty during minority has been limited to cases where such a course was evidently necessary to protect his interests,* but this rule has been abandoned and he can now disaffirm such contracts at any time before minority that he sees fit.^ Rescission of prop- erty made during minority is final and the infant or his repre- sentatives cannot thereafter rescind such rescission. Thus if an infant surrenders a life insurance policy taken out by him and accepts cash therefor, his administrator cannot avoid such surrender and enforce payment of the policy, since the surrender is a rescission by the infant.*' So stringent is the rule that con- veyances of realty cannot be avoided during minority that a minor cannot redeem realty mortgaged by his father and devised to himself and his mother, of which the mortgagee has obtained possession by acquiring the widow's estate.^ But an infant at majority may avoid a deed of his interest in remainder, though the life estate has not expired.® With reference to his executed contracts for conveying realty, it has been held that he could at least enter during minority and take the rents and profits,* but this view seems illogical and has been stoutly denied.^" With reference to the rule as to the length of time allowed to an infant in which to disaffirm his contracts and conveyances after reaching majority, it must be admitted that the decisions are sharply at variance. The English courts, followed by a very considerable number of American courts, hold that the infant must rescind within a reasonable time after majority ;^^ V. Buchanan, 11 Humph. (Tenn.) 23; 57 L. R. A. 505; 40 S. E. 822, 468. Contra, Harrod v. Myers, 21 7 Prout v. Cock (1896), 2 Ch. Ark. 592; 76 Am. Dec. 409 808. (obiter). 8 ihley v. Padgett, 27 S. C. 300; 3 Shroyer v. Pittinger, 31 Ind. 3 S. E. 468. App. 158; 67 N. E. 475. 9 Bool v. Mix, 17 Wend. (N. Y.) 4Farr v. Sumner, 12 Vt. 28; 36 119; 31 Am. Dec. 285; Cummings Am. Dee. 327. v. Powell, 8 Tex. 80. 5 See cases cited in third preced- lo Shipley v. Bunn, 125 Mo. 445; ing note. And see Shipley v. Smith, 28 8. W. 754. _ Ind. _; 70 N. E. 803. ii Edwards v. Carter (1893), A. ePippen v. Ins. Co., 130 N. C. C. 360; Viditz v. O'Hagan (1899), 87 1378 PAGE ON CONTKACTS. and this conclusion is in some states the result of specific statu- tory provisions/^ This rule is insisted on with especial force in contracts relating to personalty.^^ What a reasonable time is, is a question of fact, depending on the circumstances of each case. It may be said at the outset that if any acts of ratification liave taken place, the question of the lapse of time becomes wholly immaterial. Where there are no circumstances to show a ratification, a delay of thirty-two days," of three and a half months,^^ of four months,^^ or of eighteen months,^^ has in each case been held reasonable. Delay for a much greater time has been held not to be unreasonable where there are circumstances to explain the delay. Thus where coverture prevents the wife from suing without the consent of her husband, a delay after majority, if due to coverture, of nineteen years,^^ of twenty- 2 Ch. 569; 68 L. J. Ch. N. S. 553; McDonald v. Salmon Club, 33 N. B. 472; Watson v. Billings, 38 Ark. 278; 42 Am. Rep. 1; Hastings v. Dollarhide, 24 Cal. 195; Kline v. Beebe, 6 Conn. 494; Wallace v. Lewis, 4 Harr. (Del.) 75; Tunnison V. Cbamberlin, 88 111. 378; Buchan- an V. Hubbard, 96 Ind. 1; Stringer V. Ins. Co., 82 Ind. 100; Petty v. Roberts, 7 Bush. (Ky.), 410; Boo- dy V. McKenney, 23 Me. 517; Amey V. Cockey, 73 Md. 297; 20 Atl. 1071; Goodnow V. Lumber Co., 31 Minn. 468; 47 Am. Rep. 798; 18 N. W. 283; Dolph v. Hand, 156 Pa. St. 91; 36 Am. St. Rep. 25; 27 Atl. 114; Walton v. Gaines, 94 Tenn. 420; 29 S. W. 458; Searcy v. Hun- ter. 81 Tex. 644; 26 Am. St. Rep. 837; 17 S. W. 372; Askey v. Wil- liams, 74 Tex. 294; 5 L. R. A. 176; 11 S. W. 1101; Bingham v. Barley, 55 Tex. 281 ; 40 Am. Rep. 801 ; Sim- kins V. Searcy, 10 Tex. Civ. App. 406; 32 S. W. 849; Richardson v. Boright, 9 Vt. 368; Thormaehlen v. Kaeppel, 86 Wis. 378; 56 N. W. 1089. i2Bentley v. Greer, 100 Ga. 35; 27 S. E. 974; Green v. Wilding, 59 la. 679; 44 Am. Rep. 696; 13 N. W. 761; Englebert v. Troxell, 40 Neb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852; O'Brien V. Gaslin, 20 Neb. 347; 30 N. W. 274. isMcKamey v. Cooper, 81 Ga. 679; 8 S. E. 312; Deason v. Boyd, 1 Dana (Ky.) 45; Robinson v. Hoskins, 14 Bush. (Ky.) 393; De- lano V. Blake, 11 Wend. (N. Y.) 85; 25 Am. Dec. 617. "Leacox v. Griffith, 76 la. 89; 40 N. W. 109. 15 Thormaehlen v. Kaeppel, 86 Wis. 378 : 56 N. W. 1089. 16 Rapid, etc., Co. v. Sanford (Tex. Civ. App.), 24 S. W. 587. ".Johnson v. Storie, 32 Neb. 610; 49 N. W. 371. 18 Richardson v. Pate, 93 Ind. 423; 47 Am. Rep. 374. CONTKACTS OF INFANTS. 1379 eight years/" of thirty-two years/*^ or of thirty-five years,^^ has in each case been held reasonable. Where there are no special circumstances to explain the delay, a delay of forty years after executing a deed, and five years after the disability of coverture is removed f' a delay for fifteen years after majority, vs^ith the erection of improvements and the appreciation of the value of the realty ;"^ a delay of fourteen years ;"* a delay of six years, together with treating the property purchased by him as his own;"^ a delay of four years ;-° a delay of three years and a half ;-^ and in extreme cases, where the facts pointed strongly to a ratification, a delay of two months,^^ or one,"" has in each case been held an unreasonable delay. The other rule, which is followed by an equal number of American states, is that an infant has the time fixed by the statute of limitations for bring- ing an action to recover real property, after reaching majority before his failure to disaffirm will bar his right so to do.^" So isMcMorris v. Webb, 17 S. C. 558; 43 Am. Rep. 629. 20 Wilson V. Branch, 77 Va. 65; 46 Am. Rep. 709. But in Virginia the infant has the entire period fixed by the statute of limitationa in which to disaffirm. See cases cited in note 30, this section. 21 Sims V. Bardoner, 86 Ind. 87 ; 44 Am. Rep. 263. 22Amey \. Cockey, 73 Md. 297; 20 Atl. 1071. 23 Dolph V. Hand, 156 Pa. St. 91 ; 36 Am. St. Rep. 25; 27 Atl. 114. 24lhley V. Padgett, 27 S. C. 300; 3 S. E. 468. 25 Land Co. v. Nixon (Tenn. Ch. App.), 48 S. W. 405. 26 Carter v. Silber (1892). 2 Ch. 278; reversing (1891) 3 Ch. 553. 27 Goodnow V. Lumber Co., 31 Minn. 468; 47 Am. Rep. 798; 18 N. W. 283. 28Spicer v. Earl, 41 Mich. 191; 32 Am. Rep. 152; 1 N. W. 923. 29 Forsyth v. Hastings, 27 Vt. 646. 30 Sims V. Everhardt, 102 U. S. 300; Irvine v. Irvine, 9 Wall. (U. S.) 617; Gilkinson v. Miller. 74 Fed. 131; Hill v. Nelms, 86 Ala. 442; 5 So. 796; McCarthy v. Ni- crosi, 72 Ala. 332; 47 Am. Rep. 418; Eureka Co. v. Edwards, 71 Ala. 248; 46 Am. Rep. 314; Stull v. Har- ris, 51 Ark. 294; 2 L. R. A. 741; 11 S. W. 104; Kountz v. Davis, 34 Ark. 590 ; Hoffert v. Miller, 86 Ky. 572; 6 S. W. 447; Davis v. Dudley. 70 Me. 236; 35 Am. Rep. 318; Donovan v. Ward, 100 Mich. 601; 59 N. W. 254; Shipp v. McKee. 80 Miss. 741; 92 Am. St. Rep. 616; .32 So. 281; 31 So. 197; Allen v. Poole. 54 Miss. 323; Wallace v, Latham, 52 Miss. 291 ; Peterson v. Laik. 24 Mo. 541; Huth v. Ry.. 56 Mo. 292; Thomas v. Pullis. 56 Mo. 211; Lacy v. Pixler, 120 Mo. 383; 25 S. W. 206; Emmons v. Murray. 16 N. H. 385; Green v. Green. 69 N. Y. 553; 25 Am. Rep. 233: Cre- singer v. Welch. 15 Ohio 156; 45 1380 PAGE ON CONTKACTS. where an infant delayed disaffirming a deed for eighteen years/^ or twenty years and seven months,^^ he was still allowed to disaffirm. A compromise rule has been suggested in Illinois, where it was held that the minor would have a reasonable time to avoid his deed, and that the court would by analogy adopt the time fixed by the statute of limitations for one under dis- ability when his cause of action accrued to bring an action after his disability was removed by statute, three years.^^ Equity will compel an infant on reaching majority to adopt or abandon an agreement for quieting title to realty.^* §886. What constitutes disaffirmance. The modern rule is that no set form of disaffirmance is neces- sary, but that the infant's intention to disaffirm together with any conduct on his part which makes this intention clear consti- tutes a sufficient disaffirmance.^ It was once held that a Com- mon Law conveyance such as feoffment, could be avoided only by an act of equal notoriety ;" but this rule has no application to modern forms of conveyances.^ Undoubt- edly, re-entry with intent to hold land adversely will avoid a deed,* or a grant of an easement, as a right to construct a sewer across his land.^ However, the act of an executor in taking possession of realty does not bind a minor heir to avoid the deed.^ Am. Dec. 565; Drake v. Ramsay, 5 158; 67 X. E. 475; Co.irley v. Cush- Ohio 252; Birch v. Linton, 78 Va. man, 16 Minn. 397; Chapin v. Sha- 584; 49 Am. Rep. 381; Gillespie v. fer, 49 N. Y. 407. Bailey. 12 W. Va. 70; 29 Am. Rep. 2 Jackson v. Burchin. 14 Johns. 445. (N. Y.) 124; Bool v. Mix, 17 Wend. 31 Birch V. Linton, 78 Va. 584; (N. Y.) 119; 31 Am. Dec. 285. 49 Am. Rep. 381. s Slaughter v. Cunningham, 24 32Cresinger v. Welch. 15 Ohio Ala. 260; 60 Am. Dec. 463. 156; 45 Am. Dec. 565. * Harrod v. Myers, 21 Ark. 592; 33Keil V. Healey, 84 111. 104; 25 76 Am. Dee. 409 (obiter). Am. Rep. 434. ^ McCarthy v. Nicrosi, 72 Ala. 34 0verbaeh v. Heermance, 1 332; 47 Am. Rep. 418. Hopk. Ch. (X. Y.) 337; 14 Am. Dec. 6 Cardwell v. Rogers. 76 Tex. 37; 546. 12 S. W. 1006 (the deed was made 1 Bagley v. Fletcher. 44 Ark. 153; hy the donee of an invalid power Long V. Williams, 74 Ind. 115; given by the testator who deviseu Shrryer v. Pittinger, 31 Ind. App. the land to the infant). COi^TEACTS OF INFAIMTS. 13S1 An executed conveyance of realty may also be avoided by an action of ejectment ;" or by a suit to cancel the deed ;* or by an answer in an ejectment suit, where the infant or one claiming under him is in possession of the realty f or by a deed executed by the former infant after majority, and inconsistent with the deed executed by him before majority/** Thus, an infant can disaffirm a mortgage by giving notice on the day of the fore- closure sale that her interest cannot be sold and by conveying her laud by warranty deed/^ A deed to an infant may be disaffirmed by him at majority by a letter demanding back the installment of the purchase price already paid in/^ An executed contract for the sale or mortgage of personal property may also be avoided by an act inconsistent with the former act such as a second conveyance/^ As a sale of property mortgaged by an infant is a disaffirmance of the mortgage it is hence not a crime/* A purchase of personalty by an infant may be avoided by notice of disaffirmance ;^^ or by suit for the purchase price ;^® or by delivering the chattel bought to the vendor, and 7 Cole V. Pennoyer, 14 111. 158; Mich. 731; 30 N. W. 385; Haynes Haynes v. Bennett, 53 Mich. 15; 18 v. Bennett, 53 Mich. 15; 18 N. W. N. W. 539; Craig v. Van Bebber, 539; Dawson v. Helmes, 30 Minn. 100 Mo. 584; 18 Am. St. Rep. 569; 107; 14 X. W. 462; Ridgeway v. 13S. W. 906; Harris v. Ross, 86 Mo. Herbert, 150 Mo. 606; 73 Am. St. 89; 56 Am. Rep. 411; Drake v. Ram- Rep. 464; 51 S. W. 1040; Peterson say, 5 Ohio 252; Birch v. Linton, v. Laik, 24 Mo. 541; 69 Am. Dec. 78 Va. 584; 49 Am. Rep. 381. 441; Roberts v. Wiggin, 1 X. H. 8 Englebert v. Troxell. 40 Xeb. 73 ; 8 Am. Dee. 38 ; Bool v. Mix, 17 195; 42 Am. St. Rep. 665; 26 L, Wend. (X. Y.) 119; 31 Am. Dee. R. A. 177; 58 X. W. 852. 285; Cresinger v. Welch, 15 Ohio Ridgeway v. Herbert. 150 Mo. 156; 45 Am. Dec. 565. 606; 73 Am. St. Rep. 464; 51 S. n Scott v. Brown, 106 Ala. 604; W. 1040. 17 So. 731. 10 Tucker V. Moreland, 10 Pet. (U. i2MeCarty v. Iron Co., 92 Ala. S.) 58; Scott V. Brown, 106 Ala. 463; 12 L. R. A. 136; 8 So. 417. 604; 17 So. 731; Hastings v. Dol- i3 Chapin v. Shafer, 49 N. Y. 407.« larhide. 24 Cal. 195; Losey v. Bond, i* State v. Plaisted. 43 X. H. 413; 94 Ind. 67; Long v. Williams, 74 Jones v. State, 31 Tex. Crim. Rep. Ind. 115; Estep v. Estep (Ky.), 252; 20 S. W. 578. 73 S. W. 777; Moore v. Baker. 92 is Stack v. Cavanaugh. 67 X. H. Ky. 518; 18 S. W. 363; Vallanding- 149; 30 Atl. 350. ham V. .Johnson, 85 Ky. 288; 3 S. is Lemmon v. Beeman, 45 O. S. W. 173; Corbett v. Spencer, 63 505; 15 N. E. 476. 1382 PAGE ON CONTEACTS. acquiescing in a suit by his next friend to recover the money paid for it/^ So a mortgage may be disaffirmed by a plea of infancy in a suit to enforce it. Thus, a minor mortgaged a steamboat. At the time the mortgage became due the court appointed a receiver and granted an injunction. Both orders were set aside on motion, it appearing that the mortgagor had not affirmed the mortgage after reaching majority and now dis- affirmed it by plea.^* An executory contract may be disaffirmed by notice or its equivalent,^'' or by interposing infancy as a de- fense to a suit thereon. ^° An infant should offer to rescind to the adversary party — not to a purchaser from the adver- sary.^' §887. Partial disaffirmance impossible. The infant cannot, without the consent of the adversary party, affirm that part of the transaction which is advantageous to him and disaffirm the rest; but he must treat the entire trans- action as a unit.^ Thus, an infant cannot avoid a contract made by both herself and her father, by which it is agreed that she shall draw her wages subject to the conditions of the 17 Pyne v. Wood, 145 Mass. 558; 562; Biederman v. O'Connor. 117 14 N. E. 775. 111. 493; 57 Am. Rep. 876; 4 West. isSparr v. Ry. Co., 25 Fla. 185; 152; 7 N. E. 463; Carpenter v. 6 So. 60. Carpenter, 45 Ind. 142 ; Robinson v. 19 Mustard V. Wohlford, 15 Gratt. Berry, 93 Me. 320; 45 Atl. 34; (Va.) 329; 76 Am. Dec. 209 (as White v. Mount Pleasant, etc., Corp., where a minor avoided a contract 172 Mass. 462; 52 N. E. 632; to sell land by selling the property Strong v. Ehle, 86 Mich. 42; 48 N. to another after majority). W. 868; Ladd v. Wiggin, 35 N. H. 2oSparr v. Ry., 25 Fla. 185; 6 428; Henry v. Root, 33 N. Y. 526; So. 60; Fetrow v. Wiseman. 40 Overbaeh v. Heermance, 1 Hopk. Ind. 148; Stern v. Freeman, 4 Met. Ch. (N. Y.) 337; 14 Am. Dec. 546; (Ky.) 309; Freeman v. Nichols, Kitchen v. Lee, 11 Paige (N. Y.) 138 Mass. 313. 107; 42 Am. Dec. 101; Kincaid v. 21 Downing v. Stone, 47 Mo. App. Kincaid, 85 Hun (K Y.) 141; Cur- 144. tiss V. McDougal, 26 O. S. 66; Ten- 1 Peers v. McLaughlin, 88 Cal. nessee, etc., Co. v. James, 91 Tenn. 294; 22 Am. St. Rep. 306; 26 Pac. 154; 30 Am. St. Rep. 865; 15 L. R. 119; Howard v. Cassels, 105 Ga. A. 211 ; 18 S. W^ 262. 412; 70 Am. St. Rep. 44; 31 S. E. CONTRACTS OF INFANTS. 1383 contract, and recover the wages unconditionally.^ A minor bought stock from a corporation. Subsequently such corpora- tion transferred its business to another under a contract that upon repayment to such other of the purchase price of such plant it would issue certificates of its own stock. The infant sued such other corporation to recover the price paid for the stock. It was held that he could not recover.^ In another case a contract was made by infants for the purchase of lands, which lands were deeded to them, and paid for in part by cash and the rest by notes given by their guardian in his official capacity. Subsequently suit was brought on the notes and a judgment was obtained, on which the realty was sold. It was held that the infants could not demand that the vendors make title on payment to them of the balance of the purchase price.* So a minor cannot adopt the acts of his agent in part and repudiate them in part.^ The infant cannot claim the benefit of a condi- tional contract, and refuse to be bound by the condition.^ So a minor purchasing goods by conditional sale cannot, after con- dition broken, interpose infancy as a defense.'^ So, an infant cannot retain property purchased by him, whether realty,* or personalty,^ and avoid a purchase-money mortgage given there- for, or a vendor's lien reversed in the deed,^" or refuse to pay therefor on the ground of infancy,^^ even if the mortgage was given to a third person who advanced the purchase money.^^ 2 Tennessee, etc., Co. v. James, 91 « Strong v. Ehle, 86 Mich. 42; 48 Tenn. 154; 30 Am. St. Rep. 865; N. W. 868; Uecker v. Koehn, 21 15 L. R. A. 211; 18 S. W. 262. Neb. 559; 59 Am. Rep. 849; 32 N. 3 White V. Mount Pleasant, etc., W. 583; Bigelow v. Kinney, 3 Vt. Corp., 172 Mass. 462; 52 N. E. 353; 21 Am. Dec. 589. 632. 9 Heath v. West, 28 N. H. 101; 4 Howard v. Cassels, 105 Ga. 412; Curtiss v. McDougal, 26 O. S. 66; 70 Am. St. Rep. 44; 31 S. E. 5G2. Knaggs v. Green, 48 Wis. 601; 33 5 State V. New Orleans, 105 La. Am. Rep. 838; 4 N. W. 760. 768; 30 So. 97. lo Smith v. Henkel, 81 Va. 524. 6 Biedermann v. O'Connor, 117 n Thomason v. Phillips, 73 Ga. HI. 493; 57 Am. Rep. 876; 7 N. E. 140. 463; Lowry V. Drake, 1 Dana (Ky.) 12 Ready v. Pinkham, 181 Mass. 46. 351 ; 63 N. E. 887. So Thurston v. 7 Robinson v. Berry, 93 Me. 320; Building Society (1902), 1 Ch. 1. 45 Atl. 34. ^384 PAGE ON CONTRACTS. An advance to an infant to enable liim to purchase land forms fln entire transaction with the purchase of such land, and the infant cannot jDrevent the lender from being subrogated to the rights of the vendor and enforcing a vendor's lien, though a mortgage given by the infant to secure such debt in part is not valid,^^ while, an advance to an infant to enable him to erect buildings on land purchased is not an entire transaction with the purchase, and the infant niaj retain such land and repudiate liability for such advances.^* This view is not, however, en- tertained in all cases. Thus where A borrowed money from B to enable him to pay X for certain realty, and A gave to B a mortgage on such realty, it was held that A could repudiate the mortgage while retaining the realty. ^^ So if an infant repudiates a sale, one claiming under him cannot enforce a chattel mortgage given as part of the transaction.^^ But where A, a minor, sold a horse which he warranted sound, and after majority the note given in part payment therefor was paid and A endorsed " The note being paid, I discharge property thereby secured," it was held that this did not ratify the warranty.^'^ In a recent case, however, the infant's representative has been allowed to avoid a contract in part.^^ Tlie infant had secured a life insurance policy by an application in which he warranted certain facts which were not true. The policy of an adult could have been avoided by the insurance company for such false warranties, but it was held that the beneficiary could avoid such warranties and enforce the rest of the policy. The court based its decision on the rule that an infant was not liable on his warranty collateral to an executed contract of sale.^^ This latter rule is absolutely correct,^" but it does not apply to the case at bar. In a warranty collateral to a sale, the infant i3Thuston V. Building Society it Bird v. Swain, 79 Me. 529; 11 (1902), 1 Ch. 1. Atl. 421. 14 Thurston v. Building Society is O'Rourke v. Ins. Co., 23 R. I. (1902), 1 Ch. 1. 457; 91 Am. St. Rep. 643; 57 L. R. 15 Citizens', etc., Association v. A. 496; 50 Atl. 834. Arvin, 207 Pa. St. 293; 56 Atl. is Citing West v. Moore, J4 Vt. 870. 447; 39 Am. Dec. 235. 16 Hyde v. Courtwright, 14 Ind. 20 See § 872 et seq. App. 106; 42 N. E. 647. CONTRACTS OF INFANTS. 13S5 is merely resisting the enforcement of a contract, executory as to himself. The adversary party might possibly have rescinded the contract for fraud or for breach, but he has elected to affirm it and enforce the executory contract. In O'Eourk v. Ins. Co. the infant's representative is seeking to enforce that part of a contract favorable to herself and to avoid the part unfavorable to her. §888. Restoration of consideration on disaffirmance. It is difficult to state a general rule which will in every case operate fairly between the infant who disaffirms a contract and the adversary party. It is evident, however, that if the infant is in every case bound to return the consideration which he has received, or its equivalent, his disability will amount to little except in executory contracts, and in cases where the infant is so prudent and careful in his management of the property which he receives under the contract, that he really does not need the protection of the law. After some conflict, it has finally been held by the weight of judicial opinion, that an infant is bound to restore so much of the consideration as he has when he disaffirms the contract, if during minority; or when he comes of age, if he disaffirms when his minority ends.^ iMacGreal v. Taylor, 167 U. S. Van Bebber, 100 Mo. 584; 18 Am. 688; Tucker v. Moreland, 10 Pet. St. Rep. 569; 13 S. W. 906; Betts (U. S.) 58; American, etc., Co. v. v. Carroll, 6 Mo. App. 518; Bloom- Dykes, 111 Ala. 178; 56 Am. St. er v. Nolan, 36 Neb. 51; 38 Am. St. Eep. 38; 18 So. 292; Jenkins v. Eep. 690; 53 N. W. 1039; Hamblett Jenkins, 12 la. 195; Bennett v.Mc- v. Hamblett, 6 N. H. 339; Green v. Laiighlin, 13 111. App. 349; Shirk v. Green, 69 N. Y. 553; 25 Am. Rep. Shultz, 113 Ind. 571; 15 N. E. 12; 233; Lane v. Coal Co., 101 Tenn. Sanger v. Hibbard, 2 Ind. Ter. 547; 581; 48 S. W. 1094; Grace v. Hale, 63 S. W. 330; Burgett v. Barrick, 2 Humph. (Tenn.) 27; 36 Am. Dec, 25 Kan. 527; Morse v. Ely, 154 296; Bullock v. Sprowls, 93 Tex. Mass. 458; 26 Am. St. Rep. 263; 28 188; 77 Am. St. Rep. 849; 47 L. N. E. 577; Dube v. Beaudry, 150 R. A. 326; 54 S. W. 661; Abernathy Mass. 448; 15 Am. St. Rep. 228; 6 v. Phillips, 82 Va. 769; 1 S. E. 113; L. R. A. 146 ; 23 N. E. 222 ; Dawson Bedinger v. Wharton, 27 Gratt. V. Helmes, 30 Minn. 107; 14 N. W. (Va.) '857; Young v. Ry. Co., 42 462; Brantley v. Wolf. 60 Miss. 429; W. Va. 112; 24 S. E. 615; Gillespie Harvey v. Briggs, 68 Miss. 60; 10 v. Bailey. 12 W. Va. 70; 29 Am. L. R. A. 62; 8 So. 274; Craig v. R.-p. 445. 1386 PAGE OKT CONTRACTS. If before this time be bas wasted or lost the property received by bim under the contract, be is not bound to retura its equiva- lent.^ By statute in Indiana a minor married woman w^bo bas joined witb ber busband in conveying realty must first restore tbe consideration before repudiating tbe sale.^ Even if tbe prop- erty bas depreciated in value,* as tbrougb tbe misuse tbereof by tbe infant,^ or if tbe infant bas consumed tbe property,® or sold it,^ be need not account for tbe loss. If tbe consideration for tbe contract of tbe infant was money paid not to bim but to some other person/ as where it is paid to tbe infant's husband,^ 2 Fox V. Drewry, 62 Ark. 316; 35 S. W. 533 ; Reynolds v. McCurry, 100 111, 356; Featherstone v. Betle- jewski, 75 111. App. 59; United States, etc., Co. v. Harris, 142 Ind. 226; 40 N. E. 1072; 41 N. E. 451; Gillenwaters v. Campbell, 142 Ind. 629; 41 N. E. 1041; Shipley v. Smith, — Ind. — ; 70 N. E. 803; White V. Cotton- Waste Corporation, 178 Mass. 20; 59 X. E. 642; Walsh V. Young, 110 Mass. 396; Chandler V. Simmons, 97 Mass. 508; 93 Am. Dec. 117; Corey v. Burton, 32 Mich. 30; Miller v. Smith, 26 Minn. 248; 37 Am. Rep. 407; 2 N. W. 942; Ridgeway v. Herbert. 150 Mo. 606; 73 Am. St. Rep. 464; 51 S. W. 1040; Craig v. Van Bebber, 100 Mo. 584; 18 Am. St. Rep. 569; 13 S. W. 906; Tower-Doyle Commission Co. V. Smith, 86 Mo. App. 490; Clark V. Tate, 7 Mont. 171 ; 14 Pac. 761; Englebert v. Troxell, 40 Xeb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852; Bloomer v. Xolan, 36 Xeb. 51 ; 38 Am. St. Rep. 690; 53 X. W. 1039; Green v. Green, 69 X. Y. 553; 25 Am. Rep. 233; Petrie v. Williams, 68 Hun fX. Y.) 589; Kincaid v. Kincaid, 85 Hun (X. Y.) 141; Youmans v. Forsythe. 86 Hun (X^. Y.) 370; Lemmon v. Beeman, 45 O. S. 505; 15 X. E. 476; Lane v. Dayton, etc., Co., 101 Tenn. 581; 48 S. W. 1094; Bullock V. Sprowls, 93 Tex. 188; 77 Am. St. Rep. 849; 47 L. R. A. 326; 54 S. W. 661; Wiser v. Lock- wood, 42 Vt. 720; Price v. Furman, 27 Vt. 268; 65 Am. Dec. 194; Thor- maehlen v. Kaeppel, 86 Wis. 378; 56 X. W. 1089. 3 Blair v. Whitaker (Ind. App.\, 69 X. E. 182. 4\Vhitconib v. Joslyn, 51 Vt. 79; 31 Am. Rep. 678. 5 White V. Branch, 51 Ind. 210. eXichol V. Steger, 6 Lea (Tenn) 393 ; affirming 2 Tenn. Ch. 328. 7Beickler v. Guenther, 121 la. 419; 96 X. W. 895. 8 Law V. Long, 41 Ind. 586; Wade V. Love, 69 Tex. 522; 7 S. W. 225; Vogelsang v, Xull, 67 Tex. 465; 3 S. W. 451 ; Thormaehlen v. Kaep- pel, 86 Wis. 378; 56 X. W. 1089. 9 Fox V. Drewry, 62 Ark. 316; 35 S. W. 533 ; Stull v. Harris, 51 Ark. 294; 2 L. R. A. 741; 11 S. W. 104; Richardson v. Pate, 93 Ind- 423; 47 Am. Rep. 374; Bradshaw V. Van Valkenburg, 97 Tenn. 316; 37 S. W. 88; Smith v. Evans, 5 Humph. (Tenn.) 70; Thormaehlen V. Kaeppel, 86 Wis. 378; 56 X, W. 1089. CONTRACTS OF INFANTS. 1387 or father/" or agent," and the infant never in fact re- ceives it, he is not bound to restore an equivalent. So if an infant has not received anything under his contract he is not bound to restore anjthing.^^ The earlier cases tend to require an infant to return the consideration received by him, or its equivalent if he has squandered it; but these cases have for the most part been overruled or limited by later cases.^^ Where the infant has sold the property received by him, or changed its form in some other way, it becomes a difficult question to determine how far the fund or property may be traced in order to compel its return by the infant. Where the money received was in part spent on necessaries, it has been held that the infant is not bound to repay the value of the necessaries thus obtained.^* It seems only fair that if the infant has expended 10 Clark v. Tate, 7 Mont. 171; 14 Pac. 761; Griffis v. Younger, 41 N. C. 520; 51 Am. Dec. 438. 11 Vogelsang v. Null, 67 Tex. 465; 3 S. W. 451. 12 Shroyer v. Pittinger, 31 Ind. App. 158; 67 N. E. 475. 13 St. Louis, etc., Ry. v. Higgins, 44 Ark. 293 ; overruling Bozeman V. Browning, 31 Ark. 364; Chandler V. Simmons, 97 Mass. 508; 93 Am. Dec. 117; not following Bartlett v. Cowles, 15 Gray (Mass.) 445; Craig V. Van Bebber, 100 Mo. 584; 18 Am. St. Rep. 569; 13 S. W. 906; limiting Kerr v. Bell, 44 Mo. 120; Higbley v. Barron, 49 Mo. 103; Baker v. Ken- nett, 54 Mo. 82, in which it had been said, without making any ex- ception, that an infant must restore the consideration on disaffirmance; Bullock V. Sprowls, 93 Tex. 188 ; 77 Am. St. Rep. 849; 47 L. R. A. 326; 54 S. W. 661 ; limiting the general language used in Cummings v. Powell, 8 Tex. 93 ; Womack v. Wom- ack, 8 Tex. 397; 58 Am. Dec. 119; Kilgore v. Jordan, 17 Tex. 341; Stuart V. Baker, 17 Tex. 417; Bing- ham V. Barley, 55 Tex. 281; 40 Am. Rep. 801 ; Graves v. Hickman, 59 Tex. 383; Harris v. Musgrove, 59 Tex. 403;. Vogelsang v. Null, 67 Tex. 465; 3 S. W. 451; Wade v. Love, 69 Tex. 522; 7 S. W. 225; Ferguson v. Ry., 73 Tex. 344; 11 S. W. 347; Houston, etc., Ry. v. Fer- guson, 73 Tex. 349; 13 S. W. 57; Whitcomb v. Joslyn, 51 Vt. 79; 31 Am. Rep. 678; modifying the views expressed in Farr v. Sumner, 12 Vt. 28; 36 Am. Dec. 327; Taft v. Pike, 14 Vt. 405; 39 Am. Dec. 228. 1* Featherstone v. Betlejewski, 73 111. App. 59; Bedinger v. Wharton, 27 Gratt. (Va.) 857. In Bullock v. Sprowls, 93 Tex. 188; 77 Am. St. Rep. 849; 47 L. R. A. 326; 54 S. W. 661, the court allowed a writ of error, on the authority of Searcy v. Hunter, 81 Tex. 644; 26 Am. St. Rep. 837; 17 S. W. 372; it being stated by the court of civil appeals that part of the consideration was used to buy supplies and clothing, and the court at the outset being under the impression that he should account for the value of such neces- 1388 PAGE ON CONTRACTS. the consideration received by him for necessaries which he has consumed or for property which he still has, that he should account for the reasonable valne of the necessaries, or return the property thus acquired by him. In some cases this view has been enforced. ^^ Thus where money borrowed was spent in paying off valid liens and making valuable improvements on the infant's realty, the infant was obliged to account therefor.^* In some states it has been held that unless the identical money is under the control of the minor he need not return it;^^ and property for which the consideration has been exchanged need not be returned as a condition of rescission.^^ Where the pur- chase money for an infant's realty was paid to her husband, and with it he bought other land in which she had a dower interest, she was not required to repay the purchase money in order to disaffirm f^ and a similar view was taken where an infant sold land, and the price was paid to his father who invested the proceeds in a piano for the infant."" Where an infant bought goods on credit, intermingled them with his own goods so as to be indistinguishable, and transferred the entire saries; but this point was not de- simply as a shield to protect the cided, as it was not raised by the infant from injustice and wrong." record. McGreal v. Taylor, 167 U. S. 688, 15 If the consideration received 701. consisted in part of necessaries the it Hawes v. Burlington, etc., Ry. infant must account for such neces- Co., 64 la. 315; 20 N. W. 717; cit- saries. Stiill v. Harris, 51 Ark. ing and following Jenkins v. Jen- 294; 2 L. R. A. 741; 11 S. W. 104. kins, 12 la. 194. 16 United States Investment Cor- is Leacox v. Griffith, 76 la. 89 ; 40 poration v. Ulrickson, 84 Minn. 14; X. W. 109; Englebert v. Troxell, 87 Am. St. Rep. 326; 86 N. W. 40 Neb. 195; 42 Am. St. Rep. 665; 613. ". . . To say that the 26 L. R. A. 177; 58 N. W. 852; consideration paid to Mrs. M. for Walsh v. Powers, 43 N, Y. 23; 3 the deed of trust of 1889 is not in Am. Rep. 654. her hands, when the money has been i9 Richardson v. Pate, 93 Ind. 423; put into her property in conform- 47 Am. Rep. 374. ity with the disaffirmed contract, 20 Englebert v. Troxell, 40 Neb. and notwithstanding such property, 195; 42 Am. St. Rep. 665; 26 L. is still held and enjoyed by her, is R. A. 177; 58 N. W. 852. The cases to sacrifice substance to form, and last cited really limit the question to make the privilege of infancy a to whether the return of the prop- sword to be used to the injury of erty thus acquired was a condition others, although the law intends it precedent to disaffirmance. CONTRACTS OF INFANTS. 1389 stock to his father in fraud, it was held that the entire stock or the proceeds thereof could be subjected to the debt."^ In Indiana the earlier cases denied the duty of the infant to return the purchase price as a condition precedent to disaffirming a sale of realty." A later case has gone farther and taken the position that the infant was not liable to return the purchase money at all, even after rescission.^^ Local statutes in some states modify the Common Law rules. In Iowa a minor must restore " all money or property received by him by virtue of the contract and remaining within his con- trol at any time after he has attained his majority."^* In Cali- fornia a minor must return the property received by him in consideration of the conveyance " or its equivalent," by force of which statute he must return the equivalent of what he has wasted.^^ In Indiana an infant may disaffirm a sale of realty without returning the price unless he has falsely represented himself an adult."*' Since a mortgage is a conveyance an in- fant feme covert cannot disaffirm a mortgage in which her hus- band, who is of full age, has joined, without returning the con- sideration."^ If two infants contract with each other, the one 21 Evans v. Morgan, 69 Miss. 328 ; him to account for the property or 12 So. 270; and to substantially the repay the money upon his disaf- same effect is Sanger v. Hibbard, firmance of the contract. It is not 2 Ind. Ter. 547; 53 S. W. 330, necessary that the other party 22 Towell V. Pence, 47 Ind. 304 ; should be placed in statu quo." Dill Miles V. Lingeman, 24 Ind. 385; v. Bowen, 54 Ind. 204, 208. Pitcher v. Laycock, 7 Ind. 398. 24 Statute quoted in Stout v. Mer- 23 Dill V. Bowen, 54 Ind. 204. rill, 35 la. 47; and- see Hawes v. "Having disaffirmed the contract, Burlington By. Co., 64 la. 315; 20 the law imposes on her no legal N. W. 717; Leacox v. Griffith, 76 la. obligation to repay the purchase 89; 40 N. W. 109. money. ... If an infant dis- 25 Whyte v. Bosencrantz, 123 Cal. affirm a contract after coming of 634; 69 Am. St. Bep. 90; 56 Pac. age he must do it in toto ; that is to 436. say, if he has property in his 26 Gillenwater v. Campbell, 142 Tiands acquired by the contract the Ind. 529; 41 N. E. 1041. other party may reclaim it. But 27 United States, etc., Co. v. Har- if the property has passed from his ris, 142 Ind. 226; 40 N. E. 1072; liands or if he has received money, ' 41 N. E. 451. the law imposes no obligation upon 1390 PAGE ON CONTRACTS. who seeks to disaffirm the contract is not liable for what he has spent before disaffirmance.^^ §889. When restoration of consideration must be made. Whether restoration of consideration by an infant is on the one hand a condition precedent to disaffirmance or concurrent with it, or, on the other, it is not a condition precedent, but on disaffirmance the adversary party has merely a right of action against the infant for so much of the consideration as he is bound to return is a question on which there is a hopeless divi- sion of authority. There is a tendency not to insist on restora- tion as a condition precedent at law, as the infant is either resisting enforcement of the contract, if defendant ; or, if plain- tiff, has avoided the contract by his o^vn conduct without the aid of the court and is suing to regain possession of what he has parted with or to obtain judgment for its equivalent.^ There is a tendency in equity to insist on restoration as a condition precedent to the right of disaffirmance or concurrent with it, on the principle that he who seeks equity must do eqiiity.^ Some courts suggest the distinction that an infant must return the consideration to rescind an executed contract but not to rescind one executory as to him f but this rule has been said to exist only in equity.* This distinction reconciles many of the cases but by no means all. Thus a return of the consideration has been treated as a condition precedent to allow infancy to be interposed as a defense to a promissory note.^ To work out 28 Drude V. Curtis, 183 Mass. 317; Bamberger, 11 B. Mon. (Ky.) 113; 62 L. R. A. 755; 67 N. E. 317. Badger v. Phinney, 15 Mass. 359; 1 Shuford V. Alexander, 74 Ga. 8 Am. Dec. 105 ; Craighead v. Wells, 293; Clark v. Van Court, 100 Ind. 21 Mo. 404; Bedinger v. Wharton, 113; 50 Am. Rep. 774; Briggs v. 27 Gratt. (Va.) 857; Mustard v. MeCabe, 27 Ind. 327; 89 Am. Dec. Wohlford, 15 Gratt. (Va.) 329; 76 503. Am. Dec. 209. 2 Eureka Co. v. Edwards, 71 Ala. * Smith v. Evans, 5 Humph. 248; 46 Am. Rep. 314; Englebert (Tenn.) 70. V, Troxell, 40 Neb. 195; 42 Am. St. s At law. Philpot v. Mfg. Co., Rep. 665; 26 L. R. A. 177; 58 N. 18 Neb. 54; 24 N. W. 428. In W. 852. equity. Pemberton, etc.. Associa- sEvireka Co. v. Edwards. 71 Ala. ' tion v. Adams, 53 N. J. Eq. 258; 31 248; 46 Am. Rep. 314; Bailey v. Atl. 280. CONTRACTS OF INFANTS. 1391 this distinction : if the contract has been executed by the infant and he is suing to recover what he has parted with, restoration is not a condition precedent at hiw.'' At equity, however, restoration is a condition precedent to relief if the infant is ask- ing affirmative relief, '^ or restoration is decreed in the same ac- tion in which the infant seeks relief.^ In a suit in equity to recover realty conveyed by the infant, restoration of the consid- eration seems to be at least a concurrent condition.'' If the contract is executory as to the infant and he is resist- ing the enforcement of it at law, he need not restore the con- sideration as a condition precedent.^" If he is defending in equity he need not restore the consideration as a condition precedent to avoiding the contract.^^ In some jurisdictions an attempt has been made to reconcile authorities by holding that an infant need not repay the consid- eration still held by him as to condition precedent to avoiding a conveyance of realty ;^^ but that he must do so to avoid an exe- cuted sale by him of personalty. ^^ Other courts have held that 6 Miller v. Smith, 26 Minn. 248; 37 Am. Rep. 407; 2 N. W. 942. (His ability to restore was not shown, however.) Ruehizky v. De Haven, 97 Pa. St. 202; Shaw v. Boyd, 5 Serg. & R. (Pa.) 309; 9 Am. Dee. 368. The court, in speak- ing of the proposition that restora- tion is a condition precedent, said: " As a general rule it is unsound." Ruehizky v. De Haven, 97 Pa. St. 202. Contra, Carr v. Clough, 26 N. H. 280; .59 Am. Dec. 345. 7 Eureka Co. v. Edwards. 71 Ala. 248; 46 Am. Rep. 314; Utermehle V. McGreal, 1 D. C. App. 359; En- glebert v. Troxell, 40 Neb. 195; 42 Am. St. Rep. 665; 26 L. R. A. 177; 58 N. W. 852. 8 Smith V. Evans, 5 Humph. (Tenn.) 70. 9 Bozeman v. Browning, 31 Ark. 364; Bryant v. Pottinger, 6 Bush. (Ky.) 473. 10 Craighead v. Wells, 21 Mo. 404. Contra, Philpot v. Mfg. Co., 18 Neb. 54; 24 N. W. 428. "Petty v. Roberts, 7 Bush. (Ky.) 410. Contra, that the infant can- not defend against his note and mortgage without restoring the con- sideration received by him. Pember- ton, etc., Association v. Adams, 53 N. J. Eq. 258; 31 Atl. 280. (The infant had, however, made a false representation as to his age.) 12 Carpenter v. Carpenter, 45 Ind. 142; Moore v. Baker, 92 Ky. 518; 18 S. W. 363; Dawson v. Helmes, 30 Minn. 107; 14 N. W. 462; Cresin- ger V. Welch, 15 Ohio 156; 45 Am. Dec. 565. 13 Bailey v. Bamberger, 11 B. Mon. (Ky.) 113; Philpot v. Mfg. Co., 18 Neb. 54; 24 N. W. 428; Stack V. Cavanaugh, 67 N. H. 149; 30 Atl. 350. 1392 PAGE ON CONTRACTS. an infant is obliged to return the purchase price as to condition precedent to avoiding a conveyance of realty/* If the infant after coming of age has conveyed to a bona fide purchaser and has thereby rescinded a prior deed made during infancy, the second purchaser may recover the realty from the first without restoring to the latter the consideration paid by him/^ It has been held that equity will not enjoin an infant from disaffirm- ing a sale of land without returning the purchase money ;^*' but in other jurisdictions equity will enjoin an infant from enforc- ing a judgment in ejectment before he restores the money paid for the land to his guardian and by him paid to the infant/^ Even where restoration is a condition concurrent or prece- dent, it must be shown that the infant actually received the con- sideration/* and that he has it/® If he has wasted it, he is not bound to restore it at all/^ Even where the return of the con- sideration is said to be a condition precedent, if the infant in his petition to recover realty offers to pay whatever has been ex- pended by grantee in behalf of the infant, alleges that he does not know what the amount is and asks for an accounting, this is sufficient without an actual tender/^ §890. Results of disaffirmance. On disaffirmance of the contract by the infant, the rights of the parties are to be determined without any reference to the provisions of the contract.^ Thus, an infant agreeing to work i4Hobbs V. R. E., 122 Ala. 602; 82 Am. St. Rep. 103; 26 So. 139. 82 Am. St. Rep. 103; 26 So. 139; is At law. Manning v. Johnson, Stout V. Merrill, 35 la. 47; Ring- 26 Ala. 446; 62 Am. Dec. 732. In ham V. Rarley. 55 Tex. 281; 40 Am. equity. Monumental, etc., Associa- Rep. 801. tion v. Herman, 33 Md. 128. 15 Moore v. Baker, 92 Ky. 518; 18 i9 Miller v. Smith, 26 Minn. 248; S. W. 363; Vallandingham v. John- 37 Am. Rep. 407; 2 N. W. 942. son, 85 Ky. 288; 3 S. W. 173; Cre- 20 Green v. Green. 69 N. Y. 553; singer v. Welch, 15 Ohio 156; 45 25 Am. Rep. 233. See § 888. Am. Dec. 565. 21 Graves v. Hickman, 59 Tex. 16 Brawner v. Franklin, 4 Gill 381. (Md.) 463; Mustard v. Wohlford, 1 Myers v. Rehkopf. 30 111. App. 15 Gratt. (Va.) 329; 76 Am. Dec. 209; Danville v. Mfg. Co., 62 N. H. 209. 133. 17 Hobs V. R. R., 122 Ala. 602; CONTEACTS OF INFAKTS. 1393 for necessaries may repudiate his contract and recover a reason- able compensation.''^ If he repudiates the contract of employ- ment he can recover the difference between the reasonable value of his services and what has been paid him.^ So a minor who works for five months under a contract for two years, and is paid for four months and then avoids his contract cannot recover more than a fair value for his work less what he has received,* In an action by a minor for his wages it is no defense that he agreed to forfeit wages by leaving without two weeks' notice.^ So an infant lessee who avoids the lease at majority is not liable for a breach of conditions.^ So on avoiding a sale by the in- fant's recovering mortgaged property and vendor's recovering projDerty sold, no liability remains.^ The better view, there- fore, is that on repudiating a contract the infant cannot be held for damages caused by the breach of his contract;^ though the contrary view has been expressed.*^ Since an infant who repu- diates his contract cannot be held for damages, directly, the same result cannot be accomplished indirectly by allowing a lien to be enforced against his property.^'' A minor on rescinding a purchase of realty is chargeable with the rents and profits from the time of taking possession.^^ He has a lien on the realty to 2 Meredith v. Crawford, 34 Ind. 6 Harrison v. Burns, 84 la. 446; 399; Wheatly v. Miscal, 5 Ind. 142; 51 N. W. 165. Van Pelt v. Corwine, 6 Ind. 363 ; 7 Stotts v. Leonhard, 40 Mo. App. overruling Harney v. Owen, 4 336. Blackf. (Ind.) 337; 30 Am. Dec. sDerocher v. Mills, 58 Me. 217; 662; Morse v. Ely, 154 Mass. 458; 4 Am. Eep. 286; Widrig v. Taggart, 26 Am. St. Rep. 263; 28 N. E. 577; 51 Mich. 103; 16 N. W. 251. Tower-Doyle Commission Co. v. " 9 Moses v. Stevens, 2 Pick. (Mass.) Smith, 86 Mo. App. 490. 332; Lowe v. Sinklear. 27 Mo. 308; 3Hagerty v. Lock Co., 62 N. H. Thomas v. Dike, 11 Vt. 273; 34 576 (if his services at first were Am. Dec. 690. worth less than he was paid, this lo McCarty v. Carter, 49 111. 53 ; fact must be considered) ; Hoxie 95 Am. Dec. 572; Alvey v. Reed, 115 V. Lincoln. 25 Vt. 206. Ind. 148; 7 Am. St. Rep. 418; 17 4Hagerty v. Lock Co., 62 N. H. N. E. 265; Bloomer v. Nolan, 35 576. Neb. 51; 38 Am. St. Rep. 690; 53 5 Danville v. Manufacturing Co., N. W. 1039. 62 N. H. 133; and see Dearden v. "Scott v. Scott, 29 S. C. 414; 7 Adams, 19 R. L 217; 36 Atl. 3. S. E. 811. 139-i PAGE ON CONTRACTS. secure the return of the purchase money paid in by him/^ but the infant cannot recover money paid in under the contract by another. Thus, land was deeded to A, an infant feme covert, under contract with B, A's husband, to build a house thereon. B furnished some money to complete the house. On rescind- ing, A cannot recover the money paid by B,^^ His mere dis- affirmance of the sale of realty to him does not re-vest the legal title in the vendor, but a suit in equity to cancel the' conveyance is an appropriate remedy.^* On rescinding a sale of realty, the infant may be held liable for the value of the improvements erected upon the realty by the purchaser,^^ though it has been held that his liability is limited to the increased rental value of the property.^® AVhile as we have seen the adversary party may be subrogated to the rights of the lien-holders whom he has paid, the facts which entitle him to subrogation must be alleged by him.^^ His mere disaffirmance of a conveyance made by him is now held to re-vest the legal title in him, so as to allow him to sue in ejectment.^* In sales of personalty to the infant, the title is re-vested in the vendor on disaffirmance and he may recover the specific chattel if in the infant's possession,^^ or its value if he has had it in his possession or under his control after rescinding."" 12 Scott V. Scott, 29 S. C. 414; 7 i9 Bennett v. McLaughlin, 13 111. S. E. 811; Morris v. Holland, 10 App. 349; Shirk v. Shultz, 113 Ind. Tex. Civ. App. 474; 31 S. W. 690. 571; 15 N. E. 12; Bailey v. Barn- is Jennings v. Hare, 47 S. C. 279; berger, 11 B. Mon. (Ky.) 113; 25 S. E. 198; distinguishing Scott Badger v. Phinney. 15 Mass. 359; V. Scott, 29 S. C. 414; 7 S. E. 811; '8 Am. Dec. 105; Heath v. West. 28 in which the minor had furnished N. H. 101; Kitchen v. Lee, 11 Paige the money and was allowed to re- (N. Y.) 107; 42 Am. Dec. 101; cover it on rescinding. Lynde v. Budd, 2 Paige Ch. (N. Y.) i4McCarty v. Iron Co., 92 Ala. 191; 21 Am. Dec. 84; Farr v. Sum- 463; 12 L. R. A, 136; 8 So. 417. ner, 12 Vt. 28; 36 Am. Dec. 327. 15 Runale v. Spencer, 67 Mich, 20 Shuford v. Alexander, 74 Ga. 189; 34 N. W. 548. 293; Strain v. Wright, 7 Ga. 568; 16 Sewell V. Sewell, 92 Ky. 500 ; Jefford v. Ringgold, 6 Ala. 544 ; 36 Am. St. Rep. 606; 18 S. W. 162. Briggs v. McCabe, 27 Ind. 327; 89 17 Bradshaw v. Van Valkenburg, Am. Dee. 503 ; Carpenter v. Carpen- 97 Tenn. 316; 37 S. W. 88. ter, 45 Ind. 142; Shirk v. Shultz, 18 See §§ 873, 886. 113 Ind. 571; 15 N. E. 12; Badger V. Phinnev, 15 Mass. 359; 8 Am. CONTKACTS OF INFANTS. 1395 ^891. Other theory of infant's contracts. There is another theory of the nature and effect of an in- fant's voidable contract, which is inconsistent with the opera- tion of the principles already laid down, and often gives, in particular cases, the opposite result from that which they would indicate. This theory is that a contract of an infant, if fair and reasonable, cannot be rescinded as far as it is executed un- less the adversary party is placed substantially in statu quo} The list of cases cited might be greatly increased by adding cases which involve this general principle, but which have been over- ruled on the specific point decided. The operation of this prin- ciple places an infant's contracts ou much the same footing as a contract for necessaries, that is, they are to be enforced if fair and reasonable, as far as they are executed, though the reason- able value rather than the contract price controls. This prin- ciple is enforced to its fullest extent in New Hampshire, where the adversary party must be put in statu quo,~ at least to the full extent of the benefit received by the infant.^ Thus an agreement by a minor to apply certain chattels to a debt due to him can be repudiated to the extent that only the value of the chattels need be applied on the debt.* In other jurisdictions it has been applied to special cases rather than broadly and gener- ally. Thus, it has been held that an infant lessee who avoids his lease cannot recover the rent paid for the time that he used the premises.^ So beneficial legal legal services may be en- Dec. 105; Walker v. Davis, 1 Gray 47 Am. Rep. 209; Heath v. Stevens, (Mass.) 506; Taft v. Pike, 14 Vt. 48 N. H. 251; Rice v. Butler, 160 405; 39 Am. Dee. 228; Mustard v. N. Y. 578; 73 Am. St. Rep. 703; Wohlford, 15 Gratt. (Va.) 329; 76 47 L. R. A. 303; 55 N. E. 275; Am. Dec. 209. Searcy v. Hunter, 81 Tex. 644; 26 iValentini v. Canali, L. R. 24 Am. St. Rep. 837; 17 S. W. 372. Q. B. D. 166; Adams v. Beall. 67 2 Heath v. Stevens. 48 N. H. 251; Md. 53; 1 Am. St. Rep. 379; 8 Atl. Locke v. Smith, 41 N. H. 346. 664 ; Johnson v. Insurance Co., 56 3 Bartlett v. Bailey. 59 N. H. 408 ; Minn. 372; 45 Am. St. Rep. 473; 26 Hall v. Butterfield, 59 N. H. 354; L. R. A. 187; .59 N. W. 992; 57 47 Am. Rep. 209. N. W. 934 ; Epperson v. Nugent. 57 * Kimball v. Bruce. 58 N. H. 327. Miss. 45; 34 Am. Rep. 434; Clark s Valentini v. Canali, L. R. 24 v. Tate, 7 Mont. 171; 14 Pac. 761; Q. B.. D. 166. Hall V. Butterfield, 59 N. H. 354; 1396 PAGE ON CONTEACTS. forced against the infant's estate/' So a minor cannot recover premiums paid hy him for insurance/ at least, where not in excess of a fair value of the risk actually incurred by the com- pany; though where an additional sum is added thereto to form an accumulating fund, as is generally done under modern meth- ods of insurance, he may recover this additional sum.* So, in order to avoid a minor's assignment of a life insurance policy on his father's life he must repay the premiums paid by the assignee before the assignment was avoided, to keep the policy up/ So an infant who buys goods, not necessaries, must ac- count for the benefit derived therefrom/" Thus where an in- fant bought a bicycle on the installment plan, paid for it in part, used it awhile, and then returned it and sued to rescind, it was held that she must account for a reasonable value for its use, which in this case, equaled what she had paid in/^ ^^^lile this theory may in some cases be reconciled with the one generally received, it cannot be so reconciled in others, and it had better be classed as a divergent holding; nor can it be classed as an 6 Epperson v. Nugent, 57 Miss. 45; 34 Am. Rep. 434; Searcy v. Hunter, 81 Tex. 644; 26 Am. St. Rep. 837; 17 S. W. 372. In the case last cited it was said that they might be considered as necessaries. 7 Metropolitan Life Ins. Co. v. Bowser, 20 Ind. App. 557 ; 50 N. E. 86. " We do not assent to the view that as a further consequence of his disability, he may recover back the dues and assessments he may have already paid." Chicago, etc.. Asso- ciation v. Hunt, 127 111. 257, 277; 2 L. R. A. 549; 20 N. E. 55. 8 Johnson v. Ins. Co., 56 Minn. 372; 45 Am. St. Rep. 473; 26 L. R. A. 187; 59 N. W. 992; 57 X. W. 934 (note the modification on re- hearing, in accordance with the text). Contra, under general theory of infancy. Simpson v. Ins. Co.. 184 Mass. 348; 68 X. E. 073. 9 City Savings Rank v. Whittle, 63 N. H. 587 ; 3 Atl. 645. 10 Hall v. Butterfield. 59 X. H. 3.54; 47 Am. Rep. 209; Rice v. But- ler, 160 X. Y. 578; 73 Am. St. Rep. 703; 47 L. R. A. 303; 55 N. E. 275. 11 " The plaintiff, having had the use of the bicycle during the time intervening between her purchase and its return, ought, in justice and fairness, to account for its reason- able use or deterioration in value, otherwise she would be making use of the privilege of infancy as a sword, and not as a shield." Rice V. Butler, 160 X. Y. 578, 583; 73 Am. St. Rep. 703; 47 L. R. A. 303; 55 X. E. 275; criticising Pyne v. Wood. 145 Mass. 558; 14 X. E. 775; McCarthy v. Henderson, 138 ^lass. 310. Contra, as to a sale of a bicycle on the installment plan. Gillis V. Goodwin. 180 Mass. 140; 91 Am. St. Rep. 265; 61 N. E. 813. CONTEACTS OF INFANTS. 1397 obsolete theory. It must be reckoned with at Modern Law as a principle that still shows evidences of vitality. Even where the theory discussed in this section is in force, an infant may avoid any contract which is not fair and reasonable, with- out making any compensation beyond returning so much of the consideration received by him as he has left.^^ §892. Infant as bankrupt. Under the United States bankruptcy act it has been held that an infant cannot be made a bankrupt,^ even as a member of a firm,^ on the ground ^hat he might avoid his contracts at ma- jority. The English cases took the same view,^ except where the infant had estopped himself, under the equitable principles controlling a court of bankruptcy, by a false representation that he was of age.* Under the present English statute making an infant's contracts void except for necessaries he cannot be made a bankrupt for his general debts,^ and it has been doubted if he can be forced into involuntary bankruptcy even for necessaries.*^ §893. Infant's torts arising out of contract. While an infant is as a general rule liable for his torts, yet if the tort is so connected with contract that without the contract no cause of action in tort could exist, the infant cannot be held in tort.^ Thus if an infant makes a fraudulent warranty of 12 Braucht v. Graves-May Co., Ex parte Bates, 2 Mont. D. & D. — Minn. — ; 99 N. W. 417. 337; In re Unity, etc.. Association, 1/to re Derby, Fed. Cas. 3815 3 De Gex & J. 63. (where this rule was said to apply ^ Ex parte Kibble, L. R. 10 Ch. to voluntary and involuntary pro- 373; Ex parte Jones, L. R. 18 Ch, eeedings alike). Apparently con- Div. 109. *ra, /n re Book. 3 McLean 317. ^ In re SoltykofT (1891), 1 Q. 2 7w re Duguid, 100 Fed. 274 (a B. 413. ease of involuntary bankruptcy) . i Burns v. Smith, 29 Ind. App. 3 Belton V. Hodges, 9 Bing. 365; 181; 94 Am. St. Rep. 268; 64 N. E. O'Brien v. Currie, 3 Car. & P. 283; 94; Lowery v. Cate, 108 Tenn. 54; Ex parte Layton, 6 Ves. 4.34; Ex 91 Am. St. Rep. 744; 57 L. R. A. parte Barwis, 6 Ves. 601. 073; 64 S. W. 1068; West v. Moore, ^Ex parte Watson, 16 Ves. 265; 14 Vt. 447; 39 Am. Dec. 235. 139S PAGE ON CONTRACTS. goods sold hj him," or makes a fraudulent representation as to its ownership,'^ he cannot be held liable thereon. So an infant emiDloyer cannot be held liable for damages caused by the negli- gence of her servant.* So an infant cannot be held liable for his own negligence if it amounts merely to improper perform- ance of a contract. Thus where an infant agreed to thresh cer- tain wheat, and performed the contract in a negligent manner so that the wheat and the barn in which it was stored were burned, no recovery can be had against him for such negligence.^ If the infant by word or act repudiates the contract and is then guilty of a tort with reference to the subject-matter he is liable in damages, although the contract afforded him the means of committing the tort. Thus if an infant hires a horse for a specified journey and drives to another place,® or drives beyond the place to which he had agreed to go,^ he is liable for any dam- age suffered by such horse, on the theory that he has converted it to his own use. While an infant is not liable for breach of a promise to marry,* he is liable for seduction accomplished by means of such promise. ** So an infant caused an old man to be- come intoxicated and then induced him to sell a cow for the infant's note. It was held that the vendor could recover the cow in the action of trover.^" 2 Morrill v. Aden, 19 Vt. 505. v. Wiley, 23 Vt. 355; 56 Am. Dec. 3 Doran v. Smith, 49 Vt. 353. 85 ; Ray v. Tubbs, 50 Vt. 688 ; 28 4 Burns v. Smith, 29 Ind. App. Am. Rep. 519, 181; 94 Am. St. Rep. 268; 64 N. E. « See § 861. 94. 9 Hawk v. Harris, 112 la. 543; 84 sLowery v. Cate, 108 Tenn. 54; Am. St. Rep. 352; 84 N. W. 664. 91 Am. St. Rep. 744; 57 L. R. A. Suit by parent. Fry v. Leslie, 87 673; 64 S. W. 1068. Va. 269; 12 S. E. 671. By the 6 Churchill v. White, 58 Neb. 22; woman who was seduced. Becker v. 76 Am. St. Rep. 64 ; 78 N. W. 369. Mason, 93 Mich. 336; 53 N. W. 7 Homer v. Thwing, 3 Pick. 361. (Mass.) 492 ; Freeman V. Boland, 14 lo Walker v. Davis, 1 Gray R. I. 39; 51 Am. Rep. 340; Towne (Mass.) 506, CONTRACTS OF INSANE. 1399 CHAPTER XXXIX. CONTRACTS OF INSANE. §894. Nature of insanity in contract law. In order to affect the power of a person to bind himself by contract, it is now held that there must be such a degree of men- tal weakness at the time of making the contract as will mate- rially affect his ability to contract. Slight departure from the normal type is insufficient to affect his legal status.^ A person may be absent-minded," or ill, infirm and subject to the influence of others,^ without being insane in this sense. It is not neces- sary that he should be at his best, mentally.^ Impairment of mental power is not necessarily incapacity f and old age and weakness of mind do not necessarily incapacitate.'' Nor is it insanity where a grantor is so worried over financial troubles as to make a foolish contract.^ So the fact that one has been deaf and dumb from birth does not conclusively establish his iMann v. Bank, 86 Fed. 51; 821; 36 S. E. 100; Seward v. Sew- White V. Farley, 81 Ala. 563; 8 So. ard, 59 Kan. 387; 53 Pac. 63; Paine 215; Waterman v. Higgins, 28 Fla. v. Aldrich, 133 N. Y. 544; 30 N. E. 660; 10 So. 97; Richardson v. 725; Chadd v. Moser, 25 Utah 369; Adams, 110 Ga. 425; 35 S. E. 648; 71 Pac. 870. Kelly V. Perrault, 5 Ida. 221; 48 * Ralston v. Turpin, 129 U. S. Pae. 45; Shea v. Murphy, 164 111. 663. 614; 56 Am. St. Rep. 215; 45 N. E. 5 Harrison v. Otley, 101 la. 652; 1021; Hall v. Ins. Co. (Ky.) ; 43 S. 70 N. W. 724; Paine v. Aldrich, 133 W. 194; Frush v. Green, 86 Md. N. Y. 544; 30 N. E. 725. 494; 39 Atl. 863; Cutler v. Zollin- e Wheatley v. Wheatley, 102 la. ger, 117 Mo. 95; 22 S. W. 895; 737 ; 70 N. W. 689 ; Trinibo v. Ti-im- Swank v. Swank, 37 Or. 439; 61 bo, 47 Minn. 389; 50 N. W. 350; Pac. 846. Delaplain v. Grubb, 44 W. Va. 612; 2Galer v. Galer, 108 la. 496; 79 67 Am. St. Rep. 788; 30 S. E. 201. N. W. 257. '^ De Witt v. Mattison, 26 Neb. 3 Nance v. Stockburger, 111 Ga. 655; 42 N. W. 742. 1-iOO PAGE ON CONTRACTS. insanity;^ and a belief in spiritualism is compatible with capacity to convey realty.^ On the other hand, a person may be so insane as to affect his capacity to make a valid contract without being totally devoid of reason.'" The test now adopted by the weight of authority is that in order to affect contractual power, the insanity must be of such a sort that it renders the victim incapable of understanding with reasonable clearness what he is doing; what is the nature and effect of the transaction in which he is engaging.^^ This rule recognizes that a man may have full power to make con- tracts without being able to manage his own affairs in a reason- able and prudent manner.^^ The statement of the rule further shows that in order to affect contractual capacity, the mental derangement must be such as not merely can prevent this fair and reasonable understajidiug on his part of some of his acts; but it must further be such as does in fact prevent his under- standing the nature and result of the act under judicial investi- gation.^^ As expressed in a recent Massachusetts case, an in- 8 Christmas v. Mitchell, 3 Ired. Eg. (N. C.) 535. 9 Connor v. Stanley, 72 Cal. 556; 1 Am. St. Rep. 84; 14 Pac. 306; Lewis V. Arbuckle, 85 la. 335; 16 L. R. A. 677 ; 52 N. W. 237. 10 Dominiek v. Randolph, 124 Ala. 557; 27 So. 481; Hay v. Miller, 48 Xeb. 156; 66 N. W. 1115; Dewey V. Algire, 37 Neb. 6; 40 Am. St. Rep. 468; 55 N. W. 276. 11 Griffith V. Godey. 113 U. S. 89; Allore V. Jewell. 94 U. S. 506 ; Sands V. Potter, 165 111. 397; 56 Am. St. Rep. 253; 46 N. E. 282; affirming 59 111. App. 206; Lindsey v. Lind- sey, 50 111. 79; 99 Am. Dec. 489; Teegarden v. Lewis, 145 Ind. 98; 40 N. E. 1047; 44 N. E. 9; Ray- mond V. Wathen, 142 Ind. 367; 41 X. E. 815; Elwood v. O'Brien. 105 la. 239; 74 N. W. 740; Milks v. Milks, 129 Mich. 164; 88 N. W. 402; Jamison v. Culligan, 151 Mo. 410; 52 S. W. 224; Boggess v. Bog- gess, 127 Mo. 305; 29 S. W. 1018; State V. Grand Lodge, 78 Mo. App. 546; Dennett v. Dennett, 44 N. H. 531; 84 Am. Dec. 97; Young v. Stevens, 48 N. H. 133; 97 Am. Dec. 592; Kastell v. Hillman, 53 N. J. Eq. 49; 30 Atl. 535; Wilkinson v. Shernian, 45 N. J. Eq. 413; 18 Atl. 228; Aldrich v. Bailey, 132 N. Y. 85; 30 N. E. 264; Valentine v. Lunt, 115 N. Y. 496; 22 N. E. 209; Riggs V. Tract Society, 95 N. Y. 503; Whitaker v. Hamilton, 126 N. C. 465; 35 S. E. 815; Carnagie v. Diven. 31 Or. 366; 49 Pac. 891; Miller v. Rutledge, 82 Va. 863; 1 S. E. 202 ; Buckey v. Buckey. 38 W. Va. 168; 18 S. E. 383; Wright v. .Jackson, 59 Wis. 569; 18 N. W. 486. 12 Moffitt V. Witherspoon, 10 Ired. (N. C.) 185. 13 Wetter v. Habersham, 60 Ga, CONTKACTS OF INSANE. 1401 sane delusion must be the " moving cause " of a deed or a con- tract in order to invalidate it/* and one may be sane enough to transact simple business and yet too insane for complicated mat- ters.^^ Accordingly, though it has been said that it requires a higher degree of capacity to exchange lands than to make a will,^" the better view is that capacity to contract and capacity to make a will are so different in many points that they should not be compared. Since the condition of the contracting party at the time of making the contract determines its validity, the contract of one ordinarily insane is valid if made during a lucid interval. ^^ The earlier authorities do not always recognize the rules just given. In some cases apparently any degree of in- sanity was held to destroy contractual capacity ;^* in others, nothing short of a total lack of reason would have that effect.^^ Weakness of mind not caused by technical insanity may avoid a contract. A judgment note given by one dying of meningitis, who is in such physical and mental condition that he does not understand the nature of the act is invalid.-'' If a person not technically in the class of the insane or imbecile, but below the normal type of mental capacity is subjected to fraud or duress, and he is thereby misled or coerced, relief is given against con- tracts into which he is induced to enter by such means. This 184; Emery v. Hoyt, 46 111. 258; ig Turner v. Haupt, 53 N. J. Eq. Burgess v. Pollock, 53 la. 273: 36 526; 33 Atl. 28. Am. Rep. 218; 5 N. W. 179; Meiga i7 Lilly v. Waggoner, 27 111. 395; V. Dexter, 172 Mass. 217; 52 N. E. Jones v. Perkins, 5 B. Mon. (Ky.) 75; Holyoke v. Haskins, 5 Pick. 222; Richardson v. Smart, 152 Mo. (Mass.) 20; 16 Am. Dee. 372; Ben- 623; 75 Am. St. Rep. 488; 54 S. oist V. Murrin, 58 Mo. 307 ; Concord W. 542 ; Gangwere's Estate. 14 Pa. V. Rumney, 45 N. H. 423; Loder St. 417; 53 Am. Dec. 554; Wright V. Loder, 34 Neb. 824; 52 N. W. v. Bank (Tenn. Ch. App.), 60 S. 814; Wilkinson v. Sherman. 45 N. W. 623. J. Eq. 413; 18 Atl. 228; Pidcock V. 18 Owing's Case, 1 Bland Ch. Potter, 68 Pa. St. 342; 8 Am. Rep. (Md.) 370; 17 Am. Dec. 311. 181 ; Mays v. Prewett. 98 Tenn. i9 Stewart v. Lispenhard, 26 474; 40 S. W. 483. Wend. (N. .Y.) 255; Jackson v. 14 Meigs V. Dexter. 172 Mass. 217; King. 4 Cow. (N. Y.) 207; 15 Am. 52 N. E. 75. Dec. 354. isSeerley v. Sater, 68 la. 375; 20 Kedward v. Campbell. 166 Pa. 27 N. W. 262. St. 365; 31 Atl. 114. 1402 PAGE ON CONTKACTS. topic does not involve any technical consideration of capacity and is discussed elsewhere.^^ §895. Validity of contracts of an insane person. — Before adjudi- cation. At early law it was laid down that a party should not " dis- able himself "^ by alleging his insanity. By this view of the law, his contracts generally were absolutely valid, unless a guar- dian were appointed to represent him, or he had died leaving his heirs and personal representatives to avoid the contract. At Modern Law this rule has been repeatedly rejected," and under proper circumstances insanity may be interposed as a defense by the insane person himself.^ In some cases the conveyances and contracts of an insane person have been said to be void as a class f but in most of the cases cited below, it was not necessary to hold the contract void ah initio, as the record showed that proper steps had been taken to avoid it ; and accordingly it had become void, whether originally void or voidable. Still it has recently been held that the only liability of an insane person is for the consideration, on common counts.^ At Modern Law the contracts of an insane person are to be divided into two gen- eral classes, those entered into before the insane person was adjudicated insane in a proceeding instituted for that purpose; and those entered into after such adjudication. 21 See Ch. XI and XII. purchaser from grantor) ; Sullivan iCo. Litt. 247b; Beverly's Ease., v. Flynn, 9 Mack. (D. C.) 396; 4 Coke 123b. Van Patton v. Beals, 46 la. 62; 2 Grant v. Thompson, 4 Conn. Corbit v. Smith, 7 la. 60; 71 Am. 203; 10 Am. Dee. 119; Mitchell v. Dec. 431; Owing's Case, 1 Bland. Kingman, 5 Pick. (Mass.) 431; Rice Ch. (Md.) 370; 17 Am. Dec. 311; V. Peet, 15 Johns. (N. Y.) 503; Seaver v. Phelps, 11 Pick. (Mass.) Bensell v. Chancellor, 5 Whart. 304; 22 Am. Dec. 372; Brown v. (Pa.) 370. " Miles, 61 Hun (N. Y.) 453; Lee v. 3 See cases cited in this section. Lee, 4 McCord (S. C.) 183; 17 Am. 4 Parker v. Marco. 76 Fed. 510; Dec. 722. German, etc.. Society v. De Lash- s Milligan v. Pollard, 112 Ala. mutt- 67 Fed. 399 (as to a hona fide 465; 20 So. 620. CONTRACTS OF INSANE. 1403 §896. Void contracts. Of the contracts entered into before adjudication some are still said to be void. A power of attorney is the best example of a void act of a lunatic.^ While in some of these cases it does not appear where the power was void originally, or whether it has been avoided, in others it clearly appears that the power is void. Thus a third person may raise the question of the valid- ity of the power. ^ Appointment of agents by means less formal than by power of attorney are generally held to be merely void- able.' §897. Valid contracts. The valid contracts of an insane person are those whereby he agrees to do whatever the law would compel him to do. Thus the release of a ground rent inherited from an ancestor, upon the happening of the conditions on which under the terms of the deed accepted by such ancestor, it should be released,^ is not made voidable by the insanity of the releasor. So a sale by a trustee is not affected by the insanity of the owner of the equity of redemption who bought the land subject to the mortgage.^ So where the vendor was sane when contract was made for the sale of realty, but was insane when the deed was delivered, the deed was held valid.' The renewal by an insane person of an accom- modation note given by him when sane is binding when the payee takes the new note hona fide and surrenders the old ;* and the insanity of a maker of notes given as a subscription to buy a 1 Dexter v. Hart, 15 Wall. (U. 2 piaster v. Rigney, 97 Fed. 12; S.) 9; Plaster v. Rigney, 97 Fed. 38 C. C. A. 25. 12; 38 C. C. A. 25; Rigney v. Plas- 3 Arthurs v. Gas Co., 171 Pa. St. ter, 88 Fed. 686; McClun v. McClun, 532; 33 Atl. 88. 176 111. 376; .52 N. E. 928, where it 1 Hirst's Estate, 147 Pa. St. 319; is said to be " wholly void " ; Smith 23 Atl. 455. V. Smith, 106 N. C. 498; 11 S. E. 2 Bensieck v. Cook, 110 Mo. 173; 188; In re Misselwitz,, 177 Pa. St. 33 Am. St. Rep. 422; 19 S. W. 642. 359; 35 Atl. 722, where it is said 3 Brown v. Miles, 61 Hun (N. Y.) to be "of no avail"; Elias v. Loan 453. Association, 46 S. C. 188; 24 S. E. * Bank v. Sneed, 97 Tenn. 120; 102, where it is said to be "null 56 Am. St. Rep. 788; 34 L. R. A. and void." 274; 36 S. W. 716. 1404 PAGE ON COXTRACTS. site for a school library, occurring after exi^enses were incurred in reliance on the subscription, but before the site was bought, does not revoke the subscrijition.^ So an insane person is liable for a breach, committed during insanity, of a contract made while sane,*' The most important topic under this head is neces- saries. An insane person like an infant is liable for a reason- able value for such necessaries as are furnished to him,^ or to his wife and family.^ This liability is measured, not b}^ the terms of the contract but by the pre-existing legal liability, and does not need any express promise.^ In the case of necessaries, the question of adjudication is immaterial. An insane person, after adjudication, may bind himself by a contract for neces- saries if his guardian fails to provide them.^° By statute in some jurisdictions the estate of an insane person is liable for his support in an asylum.^^ The rules determining what neces- saries are, are much the same as in the case of infants. In most of the cases already cited, food and clothing were the necessaries in question. The services of a physician,^^ or 5 School District v. Stocking (also cited as School District v. Scheid- ley), 138 Mo. 672; 60 Am. St. Rep. 576; 37 L. R. A. 406; 40 S. W. 656. eBaldrick v. Garvey, 66 la. 14; 23 N. \Y. 156; Williams v. Hays, 143 N. Y. 442; 42 Am. St. Rep. 743; 26 L. R. A. 153; 38 X. E. 449: In re Strasburger, 132 N. Y. 128; 30 X. E. 379. 7/» re Rhodes, L. R. 44 Ch. D. 94; Borum v. Bell, 132 Ala. 85; 31 So. 454; Ex parte Xorthington, 37 Ala. 496; 79 Am. Dec. 67; Henry v. Fine. 23 Ark. 417; Miller v. Hart, 135 Ind. 201; 34 X. E. 1003; Sawyer V. Liifkin, 56 Me. 308; Hallett v. Oakes. 1 Cush. (Mass.) 296; Ken- dall V. May, 10 All. (Mass.) 59; Reando v. Misplay, 90 Mo. 251; 59 Am. Rep. 13; 2 S. W. 405; Young V. Stevens. 48 X. H. 133; 97 Am. Dec. .592; Van Horn v. Hann, 39 X. J. L. 207; Richardson v. Strong. 13 Ired. (X. C.) 106; 55 Am. Dec. 430; Beals V. See, 10 Pa. St. 56 ; 49 Am. Dec. 573; La Rue v. Gilkyson, 4 Pa. St. 375; 45 Am. Dec. 700; Stannard V. Burn, 63 Vt. 244; 22 Atl. 460. 8 Booth V. Cottingham, 126 Ind. 431; 20 X. E. 84; Pearl v. McDow- ell, 3 J. J. Marsh. (Ky.) 658; 20 Am. Dec. 199; Shaw v. Thompson, 16 Pick. (Mass.) 198; 26 Am. Dec. 655. 9 Palmer v. Hospital, 10 Kan. App. 98; 61 Pac. 506. lO'Creagh v. Tunstall, 98 Ala. 249; Seaver v. Phelps, 11 Pick. (Mass.) 304; 22 Am. Dec. 372; Darby v. Cabanne, 1 Mo. App. 126; Maughan v. Burns, 64 Vt. 316; 23 Atl. 583; Stannard v. Burns. 63 Vt. 244; 22 Atl. 460. 11 Board of Chosen Freeholders of Camden County v. Ritson, 68 X. J. L. 666; 54 Atl. 839. 12 Booth V. Cottingham, 126 Ind. 431; 20 X. E. 84. CONTRACTS OF INSANE. 1405 nurse/^ have beeu held necessaries ; as have the services of an attorney where rendered in good faith to obtain the removal of a guardian and an adjudication of sanity.^* Where no per- sonal liability has been held to exist in such cases, as on a con- tract for attorney's fees and expert witnesses in a hearing on lunacy, it is because under the procedure then in force allow- ance out of the estate of the insane person should be awarded as costs by the court before which the hearing is had/^ One who lends money to an insane person is subrograted to claims for necessaries and the like to the payment of which such money is devoted/^ §898. Voidable contracts. The remaining contracts of an insane person are voidable in. the sense that by taking proper steps the insane person or his rep- resentatives may disaffirm them. This includes ordinary execu- tory contracts,^ and executed conveyances of property," as a bill of sale by an insane person to his father in consideration of his paying debts of the son which were not incurred for neces- 13 Richardson v. Strong, 13 Ired. 415; 39 Am. Dec. 744; Arnold v. L. (N. C.) 106; 55 Am. Dec. 430. Iron Works, 1 Gray (Mass.) 434; 14 Carter v. Beekwith, 128 N. Y. Carrier v. Sears, 4 All, (Mass.) 312; 28 N. E. 582. 336; 81 Am. Dec. 707; Campbell 15 Freeman's Appeal (Pa.), 13 v. Kuhn, 45 Mich. 513; 40 Atl. 552; 22 W. N. C. 173. Am. Rep. 479; 8 N. W. 523; 16 First National Bank v. McGin- Bates v. Hyman (Miss.), 28 So. ty, 29 Tex. Civ. App. 539 ; 69 S. W. 567 ; Nicholas, etc., Co. v. Hard- 495. man, 62 Mo. App. 153; Eaton v. iLuffboro V. Foster, 92 Ala. 477; Eaton, 37 N. J. L. 108; 18 Am. 9 So. 281; Bunn v. Postell, 107 Ga. Rep. 716; Ingraham v. Baldwin, 9 490; 33 S. E. 707; Schuff v. Ran- N. Y. 45; Hanley v. Loan Co., 44 W. som, 79 Ind. 458; Copenrath v. Va. 450; 29 S. E. 1002. Kienby, 83 Ind. 18; Boyer v. Berry- 2 Luhrs v. Hancock, 181 U. S. man, 123 Ind. 451; 24 N. E. 249; 567; Woolley v. Gaines, 114 Ga. Louisville, etc., Ry. Co. v. Herr, 135 122 ; 88 Am. St. Rep. 22 ; 39 S. E. Ind. 591; 35 N. E. 556; Aetna, etc., 892; Burnham v. Kidwell, 113 111. Co. V. Sellers, 154 Ind. 370; 77 Am. 425; Copenrath v. Kienby, 83 Ind. St. Rep. 481; 56 N. E. 97; Allen 18; Fay v. Burditt, 81 Ind. 433; 42 V. Berryhill, 27 la. 534; Hovey v. Am. Rep. 142; Sedgwick v. Jack, Hobson, 53 Me. 451; 89 Am. Dec. Ill la. 745; 82 N. W. 1027; Brown 705; Allis V. Billings, 6 Met. (Mass.) v. Cory, 9 Kan. App. 702; 59 Pac. 1406 PAGE ON CONTEACTS. saries/ mortgages,* the forfeiture of a mortgage for non-pay- ment of installments due before the mortgagor was adjudged insane/ a sale of realty after insanity under a power of sale in a mortgage given before insanity,® and the release of a mort- gage/ So the lunacy of a partner makes the deed of the firm voidable.^ Thus a conveyance by an insane person is " void- able; that is, it may be confirmed or set aside."^ In some states a conveyance by an insane person is said to be invalid until it is ratified,^" but the better view is that such deed is valid until set aside.^^ " Until disaffirmed the voidable executed con- tract in respect to the property or benefits conveyed passes the right or title as fully as an unimpeachable contract. By ratifica- tion it becomes impervious ; by disaffirmance, a nullity."^^ However, in some cases it has been said that such deeds were void/^ The fact that the property has been sold,^* or mort- 1097; Gribben v. Maxwell, 34 Kan. 8; 55 Am. Rep. 23.3; 7 Pae. 584; Breckenridge v. Ormsby, 1 J. J. Marsh. (Ky.) 236; 19 Am. Dec. 71; Riley v. Carter, 76 Md. 581 ; 35 Am. St. Rep. 443; 19 L. R. A. 489; 25 Atl. 667; Reason v. Jones, 119 Mich. 672; 78 N. W. 899; Thorpe v. Hans- com, 64 Minn. 201; 66 N. W. 1; McAnaw v. Tiffin, 143 Mo. 667; 45 S. W. 656; Hay v. Miller, 48 Neb. 156; Riggan v. Green, 80 N. C. 236; 30 Am. Rep. 77; Crawford v. Sco- vell, 94 Pa. St. 48; 39 Am. Rep. 766; Wille v. Wille. 57 S. C. 413; 35 S. E. 804; Pearson v. Cox. 71 Tex. 246; 10 Am. St. Rep. 740; 9 S. W. 124 ; French Lumbering Co. v. Theriaiilt, 107 Wis. 627; 51 L. R. A. 910; 83 N. W. 927. sWilkins v. Wilkins, 35 Neb. 212; 52 N. W. 1109. arty does not affect the validity of the contract, but does determine the rule as to the return of the con- sideration.*" §899. Disaffirmance. The insane person,^ or his guardian,^ or his heirs,^ or the per- sonal representative of a lunatic may avoid his contracts.* But the adversary party cannot avoid them f nor can a third person. Thus, where A, who was insane, telegraphed to B to send money to C, A's attorney, to whom it was due for services, and B sent it, it was held that B could not recover from C.^ Any conduct 35 Stockmejer v. Tobin, 139 U. S. iLuffboro v. Foster, 92 Ala. 477; 176; Ehoades v. Fuller, 139 Mo. 9 So. 281. 179; 40 S. W. 760. So of a convey- 2 Hull v. Louth, 109 Ind. 315; 58 ance. Gingrich v. Rogers, — Neb Am. Rep. 405; 10 N. E. 270; Rea- — ; 96 N. W. 156. son v. Jones, 119 Mich. 672; 78 N. 36 Jurgens v. Ittman, 47 La, Ann. W. 899. 367; 16 So. 952. 3 Downham v. Holloway, 158 Ind. 37 Schmidt V. Ittman, 46 La. Ann. 626; 92 Am. St. Rep. 330; 64 N. E. 888; 15 So. 310. 82; (conveyance of realty). ssWooley v. Gaines, 114 Ga. 122; * Qrr v. Equitable Mortgage Co., 88 Am. St. Rep. 22; 39 S. E. 892; 107 Ga. 499; 33 S. E. 708. Gibson v. Soper, 6 Gray (Mass.) 5 Harmon v. Harmon, 51 Fed. 279; 66 Am. Dec. 414; Hovey v. 113; Allen v. Berryhill, 27 la. 534; Hobson, 53 Me. 451; 89 Am. Dec. 1 Am. Rep. 309; Atwell v. Jenkins, 705. 163 Mass. 362; 47 Am. St. Rep. saSeaver v. Phelps, 11 Pick. 463; 28 L. R. A. 694; 40 N. E. 178. (Mass.) 304, 300; 22 Am, Dee. 372; e Atwell v, Jenkins, 163 Mass. quoted in Brigham v. Fayerweather, 362; 47 Am. St. Rep. 463; 28 L. R. 144 Mass. 48, 52; 10 N. E. 735, A. 694; 40 N. E. 178. 40 See § 901. 89 1410 PAGE ON CONTEACTS. which clearly shows an intention to avoid is sufficient. Thus an ejectment suit/ or an equity suit to quiet title/ or to relieve against forfeiture/ or a conveyance to another grantee, made after grantor has regained his sanity/" are sufficient to operate as a disaffirmance. §900. Ratification. Since the contract of an insane person is voidable, it may be ratified. This may be effected by an express promise to perform the contract. Thus a conveyance may be ratified by reac- knowledging the deed and having it signed by another attesting witness.^ Conduct may also amount to a ratification if un- equivocal.* Thus knowingly retaining property received under the contract,^ especially if it has meanwhile depreciated greatly,* or receiving the benefit of the contract,^ may amount to a ratification. However, a guardian's entering every room in the house or bringing a suit, which abates by the death of the ward and is never revived, is not ratification.^ The insane per- son on recovering his reason,' or his personal representatives on his death,^ may ratify his contract. However, neither the in- sane person while insane, nor his guardian, nor the county court, nor all of them together, can affirm a conveyance made by him 7 Jackson v. King, 4 Cowen (N. 415; 39 Am. Dec. 744; Gibson v. R. Y.) 207; 15 Am. Dec. 354. R. Co.^ 164 Pa. St. 142; 44 Am. St. sowing's Case, 1 Bland Ch. (Md.) Rep. 586; 30 Atl. 308. 370; 17 Am. Dec. 311. 6 McAnaw v. Tiffin, 143 Mo. 667; 9Helbreg v. Schumann, 150 111. 45 S. W. 656. 12; 41 Am. St. Rep. 339; 37 N. E. 7 Barry v. Hospital (Cal.), 48 99. Pac. 68; Stroder v. Granite Co., 99 10 Clay V. Hammond, 199 111. 370; Ga. 595; 27 S. E. 174; Beasley v. 93 Am. St. Rep. 146; 65 N. E. 352. Beasley, 180 111. 163; 54 N. E. 187; iDoran v. McConlogue, 150 Pa. Louisville, etc., Ry. v. Herr, 135 Ind. St. 98; 24 Atl. 357. 591; 35 N. E. 556; Whitcomb v. 2 Beasley v. Beasley, 180 111. 163; Hardy, 73 Minn. 285; 76 N. W. 29; 54 K E. 187. Allis v. Billings, 6 Met. (Mass.) 3 Barry v. Hospital (Cal.), 48 415; 39 Am. Dec. 744; Gibson v. R. Pac. 68 ; Strodder V. Granite Co., 99 R. Co., 164 Pa. St. 142; 44 Am. Ga. 595; 27 S. E. 174. St. Rep. 586; 30 Atl. 308. 4Bunn V. Postell, 107 Ga. 490; 33 « Bunn v. Postell, 107 Ga. .490; 33 S. E. 707. S. E. 707; Bullard v. Moor, 158 6 Allis V. Billings, 6 Met. (Mass.) Mass. 418; 33 N. E. 928. CONTKACTS OF INSANE. 1411 while insane.** A ratification precludes subsequent disaffirm- ance.^*' §901. Kestoration of consideration. The widest divergence between the voidable contracts of an infant and those of an insane person consists in the duty to re- store the consideration on disaffirmance. If the contract is a fair and reasonable one and the insane person has received the con- sideration, and the adversary party did not know of the insan- ity, the insane person cannot disaffirm without putting the ad- versary party in statu quo by restoring to him the consideration which he has received or its equivalent.^ It follows that in such a case if the insane person does not or cannot place the adversary party in statu quo the contract is binding upon the insane person ; since though it was originally voidable he has not taken the proper steps to avoid it.^ This is said to be the 9 Gingrich v. Rogers, — Neb. — 96 N. W. 156. loBunn v. Postell, 107 Ga. 490 33 S. E. 707. 1 Molton V. Camroux, 4 Exch. 17 Imperial Loan Co. v. Stone (C. A.) (1892) 1 Q. B. 599; Cockrill v Cockrill, 79 Fed. 143; Parker v Marco, 76 Fed. 510; More v. Calkins 85 Cal. 177; 24 Pac. 729; Strodder V. Granite Co., 99 Ga. 595; 27 S. E. 174; Eldredge v. Palmer, 185 111. 618; 76 Am. St. Rep. 59; 57 N. E. 770; Ronan v. Bluhm, 173 111. 277; 50 N. E. 694; Boyer v. Berryman, 123 Ind. 451; 24 N. E. 249; Thrash v. Starbuck, 145 Ind. 673; 44 N. E. 543; Alexander v. Haskins, 68 la. 73; 25 N. W. 935; Harrison v. Otley, 101 la. 652; 70 N. W. 724; Behrens v. McKenzie, 23 la. 333; 92 Am. Dec. 428; Grib- ben V. Maxwell, 34 Kan. 8; 55 Am, Rep. 233; 7 Pac. 584; Leavitt v. Files, 38 Kan. 26; 15 Pac. 891; Brown v. Cory. 9 Kan. App. 702; 59 Pac. 1097; Riley v. Carter, 76 Md. 581; 35 Am. St. Rep. 443; 19 L. R. A. 489; 25 Atl. 667; Flach v. Gottsehalk Co., 88 Md. 368; 71 Am. St. Rep. 418; 42 L. R. A. 745; 41 Atl. 908; Gibson v. Soper, 6 Gray (Mass.) 279; 66 Am. Dec. 414'; Morris v. Ry. Co., 67 Minn. 74; 69 N. W. 628; Schaps v. Lehner, 54 Minn. 208; 55 N. W. 911; McKen- zie V. Donnell, 151 Mo. 431; 52 S. W. 214; Dewey v. Allgire, 37 Neb. 6; 40 Am. St. Rep. 468; 55 N. W. 276; Young v. Stevens, 48 N. H. 133; 97 Am. Dec. 592; Matthiessen, etc., Co. V. McMahon, 38 N. J. L. 536; Memphis, etc., Bank v. Sneed, 97 Tenn. 120; 56 Am. St. Rep. 788; 34 L. R. A. 274; 36 S. W. 716; Lincoln v. Buckmaster, 32 Vt. 652. 2Burnham v. Kidwell, 113 111. 425; Scanlon v. Cobb, 85 111. 296; Alexander v. Haskins, 68 la. 73; 25 N. W. 935; Gribben v. Maxwell. 34 Kan. 8; 55 Am. Rep. 233; 7 Pac. 584; Young v. Stevens, 48 N. H. 133; 97 Am. Dec. 592; Matthiessen V. McMahon, 38 N. J. L. 536; Yau- 1412 PAGE ON CONTRACTS. rule " not so much upon the idea that (the transaction) pos- sesses the legal essential of consent, but rather because, by means of an apparent contract he has secured an advantage or benefit Avliich cannot be restored to the other party, and there- fore it would be inequitable to permit him or those in privity with him to repudiate it."^ Thus a compromise with an insane person before adjudication of insanity can be avoided only on his placing the adversary in statu quo^ It has even been held that a fair deed will not be set aside where the grantee cannot be placed in statu quo and had no knowledge of the insanity of the grantor except that he had once been sent to an insane asy- lum.^ But if the vendor has a mortgage upon the property con- veyed by him to the vendee and also on other property, the ven- dee if insane may avoid without offer to return the property sold to him as a condition precedent.^ But where the prima facie rule of law is that the services ren- dered or property furnished are rendered gratuitously, as where a daughter renders services for her father,'^ or a husband pays money for the support of his wife and step-daughter,^ and the party rendering the services claims that it was done under a contract, no return need be made in such cases for the consider- ation furnished if the party receiving the services is shown to have been insane. Where the consideration was furnished not to the insane person, but to another, as where money was loaned to a husband secured by a mortgage on his insane wife's prop- erty, ** or where an education was furnished to a nephew and ger V. Skinner, 14 N. J. Eq. 389; 5 Schaps v. Lehner, 54 Minn. 208; Insurance Co. v. Hunt, 79 N. Y. 541; 55 N. W. 911. Riggan v. Green, 80 N. C. 236; 30 6 Bates v. Hyman (Miss.), 28 So. Am. Rep. 77; Lancaster Bank v. 567. (The vendor's right in the Moore, 78 Pa. St. 407; 21 Am. Rep. property sold being fully secured by 24; Beals v. See, 10 Pa. St. 56; 49 mortgage.) Am. Dec. 573; Sims v. McLure, 8 7 Kostuba v. Miller, 137 Mo. 161; Rich. Eq. (S. C.) 286; 70 Am. Dec. 38 S. W. 946. 196. sNatcher v. Clark, 151 Ind. 368; 3 Flach V. Gottschalk Co., 88 Md. 51 N. E. 468. 368, 375; 71 Am. St. Rep. 418; 42 » Js^orth Western, etc., Co. v. Blan- L. R. A. 745; 41 Atl. 908. kenship, 94 Ind. 535; 48 Am. Rep. 4 Morris v. Ry. Co., 67 Minn. 74; 185. 69 N. W. 628. CONTKACTS OF INSANE. 1413 niece of an insane grantor,^" the insane person is not required to place the adversary party in statu quo.^^ But where one in- dorsed a note while sane, and renewed his liability after becom- ing insane, and the time for protesting the original note had passed, he was held bound to pay the note even though he was originally an accommodation indorser/" Where the parties are in personal communication, the fact that the adversary party is ignorant of the insanity implies that the insane person was not clearly and evidently insane. If the parties are not in personal communication the rather peculiar view has been expressed that the adversary party had no reason for thinking that the other was sane, and hence was not misled though he was insane.^^ Conversely, if the adversary party knew of the insanity or had such knowledge and information as would arouse inquiry in the mind of an ordinarily prudent man which would result in his learning of such insanity, the contract may be avoided without replacing such adversary party in statu quo;^*" and a similar rule obtains where the contract is harsh and op- pressive.^^ Thus specific performance was refused where the contract was oppressive, and the defendant was given to an ex- cessive use of intoxicating liquors, was predisposed to insanity and was unable to understand the transaction intelligently;^® 10 Physio-Medical College v. Wil- tliiessen, etc., Co. v. McMahon, 38 N. kinson, 108 Ind. 314; 9 N. E. 167. J. L. 536; Creekmore v. Baxter, 121 iiMusselman v. Cravens, 47 Ind. N. C. 31; 27 S. E. 994; Hosier v. 1; Van Patton v. Beals, 46 la. 62. Beard, 54 0. S. 398; 56 Am. St. 12 Bank v. Sneed, 97 Tenn. 120; Rep. 720; 35 L. R. A. 161; 43 N. E. 56 Am. St. Rep. 788; 34 L. R. A. 1040; Crawford v. Scovell, 94 Pa. 274; 36 S. W. 716. St. 48; 39 Am. Rep. 766. 13 Chew V. Bank, 14 Md. 299, as is Hale v. Kobbert, 109 la. 128; explained in Flacli v. Gottschalk 80 N. W. 308; Halley v. Troester, Co., 88 Md. 368; 71 Am. St. Rep. 72 Mo. 73; Wager v. Wagoner, 53 418; 42 L. R. A. 745; 41 Ail. 908. Neb. 511; 73 N. W. 937; Crawford i4Allore V. Jewell, 94 U. S. 506; v. Scovell, 94 Pa. St. 48; 39 Am. Harding v. Wheaton, 2 Mason (U. Rep. 766; Garrow v. Brown. Winst. S.) 278; Henry v. Fine, 23 Ark. Eq. (N. C.) 46; 86 Am. Dec. 450; 417; Thrash v. Starbuck, 145 Ind. Sims v. McLure, 8 Rich. Eq. (S. 673; 44 N. E. 543; Hale v. Kobbert, C.) 286; 70 Am. Dec. 196. 109 la. 128; 80 N. W. 308; Clark v. le Mulligan v. Albertz, 103 Wis. Lopez, 75 Miss. 932; 23 So. 648; re- 140; 78 N. W. 1093. hearing denied, 23 So. 957; Mat- 1414 PAGE ON CONTRACTS. and if false representations were made, it is no defense that the party to whom they were made was in such mental condition that he could not understand them.^'^ So if A conveyed realty situated on a river bank to B in exchange for other realty, the exchange being greatly in A's favor, and A knowing of B's in- sanity, B's heirs can rescind although a change in the bed of the river has washed away the greater part of the land so con- veyed to B/^ A contract is not, however, unfair merely be- cause there is some advantage in it to the adversary party/* Wliat the insane person should return in the two classes of cases last given is not clear from the authorities, while it has been said that he need not make restitution,"" this probably means that restitution is not a condition precedent."^ The best view seems to be that as in the case of infants, so much of the consid- eration as remains must be restored f^ though a fair rule not necessarily inconsistent is that one who makes advances on a mortgage given by one whom he knows to be insane can hold him only for benefits actually received by him.^^ In any case if the benefit received from the rents and profits equals the value of the consideration parted with, no further restitution is neces- sary.^* Wliere the proceeds of the sale have been used to pay valid debts, and the purchaser has made valuable improve- ments on the realty, he has been held to be subrogated to the rights of the creditors and entitled to retain possession until paid.^^ So if money lent to an insane person and secured by a mortgage given by him is, imder the contract of loan, used in 17 Kramer V. Williamson, 135 Ind. 22Helbreg v. Schumann, 150 111. 655; 35 N. E. 388. 12; 41 Am. St. Rep. 339; 37 K E. 18 Hale V. Kobbert, 109 la. 128; 99; Encking v. Simmons, 28 Wis. 80 X. W. 308. 272. isEldredge v. Palmer, 185 111. 23 Creekmore v. Baxter, 121 N. 618; 76 Am. St. Rep. 59; 57 N. E. C. 31; 27 S. E. 994. 770, where there was a profit of 24 Physio-Medical College v. Wil- about $500 in an exchange of valua- kinson. 108 Ind. 314; 9 N. E. 167; ble real estate. Alexander v. Haskins, 68 la, 73; 25 20 Crawford v. Scovell, 94 Pa. St. N. W. 935. 48; 39 Am. Rep. 766. 25 Cathoart v. Sugenheimer, 18 S. 21 Thrash v. Starbuck, 145 Ind. C. 123. (In this case the sale 673; 44 N. E. 543; Wager v. Wag- was made by the committee, not by oner, 53 Neb. 511; 73 N. W, 937. the insane person. ) But in German, CONTRACTS OF INSANE. 1415 part to pay off a prior mortgage on the same property, the second mortgagee is subrogated to the riglits of the first mortgagee.^* In some states the right to rescind seems to be recognized even where the adversary party cannot be placed in statu quo.^^ §902. Contracts made after adjudication. In many, if not all, jurisdictions, the statutes provide for a proceeding to determine directly the question of the sanity or in- sanity of the person against whom such proceeding is instituted, and for appointing a guardian for him in case it is decided that he is insane. While the test of insanity for the appointment of a guardian on adjudication is in some respects different from the test for contractual capacity, such an adjudication binds the world,^ though the party instituting the proceedings is not bound more than others." The effect of such an adjudication, where a guardian has been appointed and has taken control of the estate of his ward, is to render all contracts and convey- ances of the ward during such guardianship void.^ So after such adjudication a check given by the lunatic is void and the etc., Society v. De Lashmutt, G7 3 American, etc., Co. v. Boone, 102 [Fed. 399, a grantee was not allowed Ga. 202; 66 Am. St. Rep. 167; 40 subrogation as to the amount of the L. R. A. 250; 29 S. E. 182; Burn- purchase money spent on neces- ham v. Kidwell, 113 111. 425; New saries for the insane person. England, etc., Co. v. Spitler, 54 26 McCracken v. Levi, 24 Ohio C. Kan. 560; 38 Pac. 799; Pearl v. C. 584. McDowell, 3 J. J. Marsh. (Ky.) 27 0rr V. Equitable, etc., Co., 107 658; 20 Am. Dec. 199; Bradbury v. Ga. 499; 33 S. E. 708; Hovey v. Place (Me.), 10 Atl. 461; Lynch Hobson, 53 Me. 451; 89 Am. Dec. v. Dodge, 130 Mass. 458; Leonard 705. To the same effect is Seaver v. Leonard, 14 Pick. (Mass.) 280; V. Phelps, 11 Pick. (Mass.) 304; 22 Wait v. Maxwell, 5 Pick. (Mass.) Am. Dec. 372. Where a pledge of 217; 16 Am. Dec. 391; White v. a note was rescinded without placing Palmer, 4 Mass. 147; Payne v. Bur- the adversary party in statu quo. dette, 84 Mo. App. 332; Carter v. 1 American, etc., Co. v. Boone, 102 Beckwith, 128 N. Y. 312; 28 N. E. Ga. 202; 66 Am. St. Rep. 167; 40 582; Wadsworth v. Sherman. 14 L. R. A. 250; 29 S. E. 182. Barb. (N. Y.) 169; Fitzhugh v. 2 Hughes V. Jones, 116 N. Y. 67; Wilcox, 12 Barb. (N. Y.) 235; Mc- 15 Am. St. Rep. 386; 5 L. R. A. Creight v. Aiken, Rice (S. C.) 56; 632; 22 N E. 446; Gangwere's Es- Elston v. Jasper, 45 Tex. 409; Han- tate, 14 Pa. St. 417; 53 Am. Dec. ley v. Loan Co., 44 W. Va. 450; 29 554. S. E. 1002. 1416 PAGE ON CONTRACTS. bank on which it is drawn is not protected in paying it, even if in ignorance of such adjudication.* The rule itself is an old Common Law rule. The reason for the rule is that the adjudi- cation is intended to determine the question of status once and for all ; that it is notice to the world ; and that the guardian should not be driven to the perpetual litigation that would be necessary if the sanity of the ward could be retried whenever he made a contract or a conveyance. Accordingly where there has been an adjudication of insanity but no guardian has been appointed,^ or where the guardianship has been in fact aban- doned,*' the contract or conveyance cannot be treated as void ; and whether no guardian was appointed,'^ or one was appointed but never took charge of the estate,^ if the insane person recov- ers, his subsequent contracts are valid. So where the guardian who was appointed to enable the insane person to draw his pension, refused to take charge of a valuable mill on which repairs were needed, it was held that the insane person might bind himself by a fair contract, at least to the extent of paying a reasonable compensation for the repairs needed, though they were not technical necessaries.^ Where the guardian was re- moved by an appellate court as an unsuitable person, the cause remanded to the court of probate powers, and a petition for the appointment of another guardian dismissed, it was held that after this the former adjudication ceased to be conclusive, as it was not intended to fix " permanently the status of the party affected by it."^° So where an adjudication of insanity was set aside, a sale made thereafter by such alleged insane person .was held not to be void, even though the adjudication of insanity was subsequently reinstated." IsTormal status may in some 4 American, etc., Co. v, Boone. 102 ^ Water, etc.^ Co. v. Root, 53 Kan, Ga. 202; 66 Am. St. Rep. 167; 40 187; 42 Pac. 715. L. R. A. 250; 29 S. E. 182. 8 Lower v. Schumacher, 61 Kan. sMcCormick v. Littler, 85 111. 625; 60 Pac. 538, 62; 28 Am. Rep. 610; Water, etc., o Kimball v. Bumgardner, 16 Co. V. Root, 56 Kan. 187; 42 Pac. Ohio C C. 587; 9 Ohio C. D. 409. 715. Contra, Kiehne v. Wessell, 53 loWillwerth v. Leonard, 156 Mo. App. 667. Mass. 277; 31 N. E. 299. 8 Thorpe v. Hanscom, 64 Minn. n In this case, however, the de- 201; 66 X. W. 1. cree reinstating the adjudication CONTEACTS OF INSANE. 1417 jurisdictions be restored by a discharge from an asylum as cured, without formal adjudication of restoration of sanity.^^ Thus a physician's discharge from an asylum restores capacity to sue ;^^, and a similar view of the effect of a discharge from an asylum as cured was taken in a divorce suit," and in a suit on an insurance policy involving the question of the sanity of the insured when he met his death/^ The adjudication has been held binding though made in another state, and one in which the person adjudged insane was not domiciled, but in which he had been appointed the administrator of an estate/® There is some authority for holding in opposition to the majority view that adjudication and guardianship make only a prima facie case of incapacity to make subsequent contracts and convey- ances/^ But in most of the cases cited in support of this propo- sition, the contract or conveyance was made before the adjudi- cation but within the time during which insanity has been found to exist/^ In such case the effect of the adjudication is " no more than prima facie evidence as to the past condition of was held to be erroneous, and fur- ther the trial court was held never to have acquired jurisdiction. Mitchell V. Spaulding, 206 Pa. St. 220; 55 Atl. 968. 12 Clay V. Hammond, 199 111. 370; 93 Am. St. Rep. 146; 65 X. E. 352; Topeka, etc., Co. v. Root, 56 Kan. 187; 42 Pac. 715. 13 Kellogg V. Cochran, 87 Cal. 192; 12 L. R. A. 104; 25 Pac. 677. 14 Rodgers v. Rodgers, 56 Kan. 483; 43 Pac. 779. 15 Mutual, etc., Co. v. Wisvell, 56 Kan. 765; 35 L. R. A. 258; 44 Pac. 996. 16 American, etc., Co. v. Boone, 102 Ga. 202; 66 Am. St. Rep. 167; 40 L. R. A. 250; 29 S. E. 182. In this case A, after becoming insane, and being adjudged insane by the Florida courts, where he was act- ing as administrator, drew a check on a Georgia bank, which paid the check without any notice of his condition or of the adjudication. The check was on a fund held by A as administrator, but deposited by him to his personal account with knowledge of the bank. Suit was brought by A's successor as admin- istrator against the bank, for the amount of the original deposit. He recovered the amount of the check drawn by A while insane, on the theory that the check was void and the bank paid at its peril; but he also recovered checks drawn before insanity, on the theory that the deposit was a trust fund to the knowledge of the bank. 1- Field V, Lucas, 21 Ga. 447 ; 68 Am. Dec. 465; Armstrong v. Short, 1 Hawks. (X. C.) 11. 18 Hopson V. Boyd, 6 B. Mon. (Ky. ) 296 (where the sale was 16 years before the inquisition) ; Kern V. Kern. 51 X. J. Eq. 574; 26 Atl, 1418 PAGE ON CONTEACTS. the person/'^® a proposition supported by ample authority.^" A note given by a person as surety, pending an inquisition of lunacy is said to be prima^ facie made while insane.'^ In the suit for an adjudication as to sanity, the court has no power to pass upon the validity of past transfers of property.^^ Possibly contracts for necessaries are an exception to the general rule concerning contracts after adjudication. If, however, the guar- dian of the insane person has contracted with one person for the support of the insane ward, and such support is furnished a third person who renders services as nurse, not vinder contract with the guardian, cannot recover therefor on the theory that such services were necessaries.^^ 837; Mott v. Mott, 49 N. J, Eq. 192; 22 Atl. 997; Eeeves v. Mor- gan, 48 N. J. Eq. 415; 21 Atl. 1040; Hart v. Deamer, 6 Wend. (N. Y.) 497 (two months before) ; Eip- py V. Gant, 4 Ired. Eq. (N. C.) 443 (thirteen months before) ; Noel V. Kerper, 53 Pa. St. 97 ; Gang- were's Estate, 14 Pa. St. 417; 53 Am. Dec. 554 (about six months be- fore ) . i9Hopson V. Boyd, 6 B, Mon. (Ky.) 296, 297. aoSergeson v. Sealy, 2 Atk. 412; Titcomb v. Vantyle, 84 111. 317; Wall V. Hill, 1 B. Mon. (Ky.) 290; 36 Am. Dee. 578. 21 Moore v. Hershey, 90 Pa. St. 196. 22 Hughes V. Jones, 116 N. Y. 67; 15 Am. St. Eep. 386; 5 L. R. A. 632; 22 N. E. 446. 23 Further the services were ren- dered by a nephew of the insane person, apparently without intent at the time to charge therefor. Schramek v. Shepeck, — Wis. — ; 98 N. W. 213. CONTEACTS OF UBUNKAKDS. 1419 CHAPTER XL. CONTRACTS OF DRUNKARDS. §903. Nature of drunkenness in contract law. Drunkenness in contract law is treated in almost the same way as insanity. Before adjudication as an habitual drunkard, a person cannot escape his liability on a contract on the mere ground that he was intoxicated when he executed it, unless he can show that at the very moment of execution he was so in- toxicated that he was unable to understand the nature and con- sequences of the transaction.^ Where this degree of intoxication exists, the contract is voidable, even if the intoxication is vol- untary and not produced by the adversary party.^ A less degree 1 Matthews v. Baxter, ' L. E. 8 Ex. 132; Taylor v. Purcell, 60 Ark. 606; 31 S. W. 567; Hale v. Stery, 7 Colo. App. 165; 42 Pac. 598; Watson V. Doyle, 130 111. 415; 22 N, E. 613; Schramm v. O'Connor, 98 111. 539; Bates v. Ball, 72 111. 108; Davidge v. Crandall, 23 111. App. 360; Harbison v. Lemon, 3 Blackf. (Ind.) 51; 23 Am. Dec. 376; Willeox v. Jackson, 51 la. 208; 1 N. W, 513; Byrne v. Long (Ky.), 15 S. W. 778; Carpenter v. Rodgers, 61 Mich. 384; 1 Am. St. Rep. 595; 28 N. W. 156; Newell V. Fisher, 11 Sm. & M. (Miss.) 431; 49 Am. Dec. 66; Rogers v. Warren, 75 Mo. App. 271; French V. French, 8 Ohio 214; 31 Am. Dec. 441; Bush v. Breinig, 113 Pa. St. 310; 57 Am. Rep. 469; 6 Atl. 86; Birdsong v. Birdsong, 2 Head. (Tenn.) 289; Morris v. Nixon, 7 Humph, (Tenn.) 579; Belcher v. Belcher, 10 Yerg. (Tenn.) 121 ; Rey- nolds V. Dechaums, 24 Tex. 174; 76 Am. Dee. 101; Wells v. Houston, 23 Tex. Civ. App. 629; 57 S. W. 584; Barrett v. Buxton, 2 Aikens (Vt.) 167; 16 Am. Dec. 691; Wiggles- worth V. Steers, 1 H. & M. (Va.) 70; 3 Am. Dec. 602; Loftus v. Ma- loney, 89 Va. 576; 16 S. E. 749. The degree of intoxication has been especially insisted on in Johns v. Fritchey, 39 Md. 258, where the proof was required to be clear and convincing; and in Caulkins v. Fry, 35 Conn. 170, where it was held that one who could remember on the next day that he had made a contract was not drunk enough- to escape liability. 2 Bush V. Breinig, 113 Pa. St. 310; 57 Am. Rop. 469; 6 Atl. 80; Barrett v. Buxton, 2 Aikens (Vt.) 1420 PAGE ON CONTRACTS. of intoxication,'' even though causing exhilaration and excite* ment,* or preventing him from acting as carefully as if he were sober,^ does not affect his contractual capacity. So where one is often intoxicated, but makes a contract while sober he is bound as absolutely as though he were never drunk." §904. Legal effect of intoxication. At early Common Law it was held, or at least asserted, that a contract entered into by one who was then intoxicated was absolutely binding.^ A reaction from this early strictness re- sulted in holding such contracts void." At Modern Law, how- ever, the weight of authority is clearly to hold such contracts voidable.^ The note of one voluntarily intoxicated is not ab- 167; 16 Am. Dec. 691; Wiggles- worth V. Steers, 1 H. & M. (Va.) 70; 3 Am. Dec. 602. 3 Davidge v. Crandall, 23 111. App. 360; Armstrong v. Breen, 101 la. 9; 69 N. W. 1125; Belcher v. Belcher, 10 Yerg. (Tenn.) 121. 4 Byrne v. Long (Ky.), 15 S. W. 778; Johnson v. Phifer, 6 Neb. 401. 5 Wright V. Waller, 127 Ala. 557; 54 L. R. A. 440; 29 So. 57; Taylor V. Purcell, 60 Ark. 606; 31 S. W. 567. " One may sufficiently under- stand a contract and the nature and effect of his entering into it to be fully bound by it although he be capable of a very much less con- sideration of it than would be be- stowed by a man of ordinary pru- dence." Wright V. Waller, 127 Ala. 557, 562; 54 L. R. A. 440; 29 So. 57. 6 Ralston v. Turpin, 129 U. S. 663; Watson v. Doyle, 130 111. 415; 22 N. E. 613; Coonibe v. Carthew, 59 N. J. Eq. 638; 43 Atl. 1057. 1 Yates V. Boen, 2 Stra. 1104. " As for a drunkard, who is voluntarius Daemon, he hath (as hath been said) no privilege thereby; but what hurt or ill soever he doeth, his drunkenness doth aggravate it." Co. Litt. 247a; a remark which should be limited to certain branches of the law of torts and crimes. 2 Wade v. Colvert, 2 Mill. ( S. C. ) 27; 12 Am. Dec. 652, where a bill of sale was avoided by the assignee for creditors. 3 Pickett V. Sutter, 5 Cal. 412; Bates V. Ball, 72 111. 109; Joest v. Williams, 42 Ind. 565; 13 Am. Rep. 377; Hawley v. Howell, 60 la. 79; Franks v. Jones, 39 Kan. 236; 17 Pac. 663; Carpenter v. Rodgers, 61 Mich. 384; 1 Am. St. Rep. 595; 28 N. W. 156; Wright v. Fisher, 65 Mich. 275; 8 Am. St. Rep. 886; 32 N. W. 605; Van Wyck v. Brasher, 81 X. Y. 260; French v. French, 8 Ohio 214; Baird v. Howard, 51 O. S. 57; 22 L. R. A. 846; 36 N. E. 732; Bush v. Breinig, 113 Pa. St. 310; 57 Am. Rep. 469; 6 Atl. 86; Birdsong v. Birdsong, 2 Head. (Tenn.) 289; Barrett v. Buxton, 2 Aikens (Vt.) 167; 16 Am. Dec. 691; Wigglesworth v. Steers, 1 H. & M. (Va.) 70: 3 Am. Dec. 602. But in Hunter v. Tolbard, 47 W. CONTRACTS OF DEUNKAKDS. 1421 solutely void.* It is therefore error to charge so as to eliminate the question whether there had been a rescission or ratification by charging that the former was unnecessary and the latter im- possible.^ In some jurisdictions it seems to be held that intoxi- cation is of no legal effect unless the adversary party either pro- cured it, or took an unfair advantage of it." Whether it is necessary, in order to make the contract voidable, that the ad- versary party should know of the intoxication is in some dis- pute on the authorities. It has been said not to be necessary,' but in a recent case it was assumed apparently that drunkenness unknown to the adversary party would be ineffectual. In that case a written guaranty was obtained from an illiterate man who was drunk, and sent to one who did not know how it was obtained, and who extended credit thereon. The Court of Appeals decided the case solely on the question of the negligence of the maker.* Drunkenness is ordinarily apparent to those in personal communication with the drunken man, long before it reaches that stage where it affects contractual capacity. Prob- ably for this reason the effect of the knowledge of the adver- sary has rarely been decided. Analagous to this is the question of the right of the drunken person to avoid where the contract has passed into the hands of a bona fide purchaser for value. If the instrument is negotiable it has been held that in such case the right to avoid the contract is lost.'' In principle it is dis- tinguished from the case of the infant or the insane person by the fact that the disqualification of drunkenness is one voluntar- ily assumed.^** In Michigan a somewhat different view seems Va. 258; 34 S. E. 737, a contract 7 Hawkins v. Bone, 4 F. & F. of a person is held void if executed 311. ■when lie is so drunk as not to know s Page v. Krekey, 137 N. Y. 307; its true intent or meaning. 33 Am. St. Eep. 731; 21 L. R. A. 4 Wright V. Waller, 127 Ala. 557; 409; 33 N. E. 311. 54 L. R. A. 440 ; 29 So. 57. » State Bank v. McCoy, 69 Pa. 5 Carpenter v. Rodgers, 61 Mich. St. 204; 8 Am. Rep. 246; McSpar- 384; 1 Am. St. Rep. 595; 28 N. ran v. Neeley, 91 Pa. St. 17; Smith W. 156. V. Williamson, 8 Utah 219; 30 Pac. eRottenburgh v. Fowl (N. J. 753. Eq.), 26 Atl. 338; Burroughs v. io"If a man voluntarily de- Richman, 13 N. J. L. 233; 23 Am. prives himself of the use of his Dec. 717. reason by strong drink, why should 1422 PAGE ON CONTKACTS. to have been taken, holding that drunkenness must either ex- tend to such total incapacity that no assent at all could be given or else be complicated with fraud in order to amount to a de- fense against a bona fide holder. But these remarks are in the nature of an obiter as the record did not disclose any such evi- dence and a judgment in favor of the makers of the note was reversed for want of evidence to support it/^ §905. Intoxication as affected by unfair conduct of adversary. 'A less degree of intoxication than that described may serve as a basis for avoiding contracts if the drunkenness was caused by the adversary party,^ or if without causing the intoxication he took an unfair advantage of it.^ In such cases, it is sufficient ground for avoiding the contract if the intoxication was the means by which the drunken person was deceived or misled to his prejudice. These cases do not involve questions of capacity but of fraud and imdue influence.^ §906. Contracts for necessaries. A drunkard even after adjudication is liable for the reason- able value of necessaries furnished to himself or his family.^ he not be responsible to an inno- 67; Woodson v. Gordon, Peck cent party for the acts which he (Tenn. ) 196; 14 Am. Dec. 743 performs when in that condition? Dunn v. Amos, 14 Wis. 106. It seems to me that he ought, on 2 Holland v. Barnes, 53 Ala. 83 the principle that where a loss must 25 Am. Rep. 595; Crane v. Conk be borne by one of two innocent lin, 1 N. J. Eq. 346; 22 Am. Dec persons it shall be borne by him 519; Baird v. Howard, 51 0. S. 57 who occasioned it." State Bank v. 46 Am. St. Eep. 550; 22 L. R. A McCoy, 69 Pa. St. 204, 208; 8 Am. 846; 36 N. E. 732; Jones v. Mc Rep. 246. Cruder, 87 Va. 360; 12 S. E. 792 11 Miller v. Finley, 26 Mich. 249 ; And see eases cited in last note. 12 Am. Rep. 306. 3 See Chs. XI., XII. 1 Newell V. Fisher, 11 Sm. & M. i Kandall v. May, 10 All. (Mass.) (Miss.) 431; 49 Am. Dec. 66; War- 59; Hallett v. Oakes, 1 Cush. nock V. Campbell, 25 N. J. Eq. 485; (Mass.) 296; McCrillis v. Bartlett, O'Connor v. Rempt, 29 N. J. Eq. 8 N. H. 569 ; Van Horn v. Hann. 39 156; Burroughs v. Richman, 13 N. N. J. L. 207; Parker v. Davis, 8 J. L. 233; 23 Am. Dec. 717; Hotch- Jones (N. C.) 460. kiss V. Fortson, 7 Yerg. (Tenn.) CONTEACTS OF DRUNKARDS. 1423 The term necessaries mchides not only food and clothing,^ but also nursing^ and the services of an attorney in resisting the ad- judication.* Where an oral contract is made for the purchase of realty, which can not be proved under the statute of frauds, it is held that a subsequent written agreement entered into when one of the parties is drunk may be avoided by him when he becomes sober, and he may recover whatever he has paid thereon while drunk.^ §907. Ratification and disaffirmance. Since the contract is voidable it may be ratified by the drunken person on becoming sober.^ Ratification may be affected either by express agreement or by conduct which necessarily shows an intention consistent only with the validity of the contract. Thus exchanging the property received under the contract,^ or selling it,^ operates as a ratification. But where A, who owned property worth one thousand six hundred dollars, was induced by B, who knew of his intoxication, to transfer it while in such condition for one thousand dollars it was held that A's condition in keep- ing the one thousand dollars, treating B's conduct as a wrongful conversion and suing for the difference of six hundred dollars was not a ratification but a disafiirmance.* The drunken person may disaffirm the contract if he acts within a reasonable time af- ter he becomes sober.^ What constitutes disaffirmance is not al- ways clear from the authorities. It seems to be held that some act of disaffirmance,^ such as a return of the consideration,'^ is 2 Parker v. Davis, 8 Jones (N, 2 Smith v. Williamson, 8 Utah. C.) 460. 219; 30 Pae. 753. sBrockway v, Jewell, 52 0. S. 3 Oakley v. Shelley, 129 Ala, 467 187; 39 N. E. 470, 29 So. 385. 4 Hallett V. Oakes, 1 Cush. (Mass.) 4Baird v, Howard, 51 0, S, 57 296. 46 Am, St, Rep. 550; 22 L, R. A 5 Bush V. Breinig, 113 Pa, St. 846; 36 N. E. 732. 310; 57 Am. Rep. 469; 6 Atl. 86. 5 Cummings v. Heniy, 10 Ind 1 Strickland v. Orendorf Co., 118 109, Ga, 213; 44 S. j:. 997; Taylor v, 6 Carpenter v, Rodgers, 61 Mich Patrick, 1 Bibb, (Ky,) 168; Carpen- 384; 1 Am, St, Rep, 595; 28 N. W, ter V, Rodgers, 61 Mich. 384; 1 Am. 156. St. Rep. 595 ; 28 N. W, 156. 7 Williams v, Inabnet, 1 Bailey L. (S. C.) 343. 1424 PAGE ON CONTKACTS. necessary before bringing suit based on such disaffirmance. "Wbile this is a proper rule where the return of the consideration is a condition precedent to rescission, yet if the circumstances dispense with such return, no formal rescission before bringing suit would be necessary.* §908. Restoration of consideration. In the absence of fraud, the drunken person must restore as a condition precedent to disaffirmance whatever he has received tinder the contract.^ This rule, however, must undoubtedly be tjualified by providing that the drunken person need not account for whatever he may have lost or wasted during the same period *f intoxication in which he made the contract. If fraud co-exists with intoxication, the return of the consideration is not a con- dition precedent, at least in equity, but provision will be made in the decree for a fair compensation.^ In any event, on dis- affirmance the consideration may be recovered in assumpsit from the drunken person.^ §909. Effect of adjudication as habitual drunkard. Many jurisdictions provide for a proceeding resembling an in- quisition in^ lunacy, by which one who is given over to con- stant indulgence in alcoholic stimulants whereby intoxication is produced, may be adjudged an habitual drunkard and placed under guardianship.^ The effect of such adjudication upon contractual capacity depends upon the provisions of the statutes controlling. In general all contracts, conveyances and the like made after such adjudication are void.^ Under the Alabama statute this adjudication is solely for the preservation of the sBaird v. Howard, 51 O. S. 57; i Menkins v. Lightner, 18 111. 46 Am. St. Rep. 550; 22 L. R. A. 282; Brockway v. Jewell, 52 0. S. 846; 36 N. E. 732. 187; 39 N. E. 470. 1 Joest V. Williams, 42 Ind. 565 ; 2 Pinkston v. Semple, 92 Ala. 564 ; 13 Am. Rep. 377. 9 So. 329 ; Redden v,. Baker, 86 Ind. sThackrah v. Haas, 119 U. S. 191; Devin v. Scott, 34 Ind. 67; 499. Pearl v. McDowell, 3 J. J. Marsh. sHaneklau v. Felchlin, 57 Mo. (Ky.) 658; 20 Am. Dec. 199; Leon- App. 602. ard v, Leonard, 14 Pick. (Mass.) CONTRACTS OF DRUNKARDS. 1425 estate described in the Lill filed for the adjudication. Over property not therein described, the drunkard has full power;' over property described, he has no power even with the consent of his trustee.* But in a case Avhere A was found on inquisition to be an habitual drunkard and subsequently carried on his business in the ordinary manner, and B paid a debt to A, taking A's receipt therefor, such receipt was held to discharge B's debt.^ Upon the discharge of the guardian and termination of the guar- dianship, contractual capacity is restored so that a conveyance the next day is valid ; and is not invalidated by a subsequent re-adjudication." §910. Effect of drugs. The same principles apply to the mental effects of morphine/ or of anaesthetics," as to the use of alcohol though such effect is not technically drunkenness. Thus a release given by one who was so under the influence of opiates that he did not know what he was doing is voidable.^ He may thereafter avoid* or ratify^ such release. Thus one who agreed to release a rail- road from liability for accidents for two hundred forty dollars and his hospital bills has affirmed such contract even if he was under the influence of opiates when he entered into it, by keeping the money after recovering his senses, and remaining at the 283; Wait v. Maxwell, 5 Pick. s Union Pacific Ey. v. Harris, 158 (Mass.) 217; 16 Am. Dec. 391; U. S. 326 (effect of morphine and Wadsworth v. Sharpsteen, 8 N. Y. whiskey given for medicinal pur- 388; 59 Am. Dec. 499; Clark v. poses) ; Chicago, etc., R. R. v. Doyle, Caldwell, 6 Watts (Pa.) 139. 18 Kan. 58; Buford v. R. R., 82 3 Jones V. Semple, 91 Ala. 182; 8 Ky. 286; Alabama, etc., Ry. v. So. 557. Jones, 73 Miss. 110; 55 Am. St. 4Pinkston V. Semple, 92 Ala. 564; Rep. 488; 19 So. 105; Gibson v. 9 So. 329. R. R., 164 Pa. St. 142; 44 Am. St. 5 Black's Appeal, 132 Pa. St. 134; Rep. 586; 30 Atl. 308 (effect of 19 Atl. 31. chloroform and ether). G Cockrill V. Cockrill, 92 Fed. * Alabama, etc., Ry. v. Jones, 73 811; 79 Fed. 143. Miss. 110; 55 Am. St. Rep. 488; 19 1 Swank v. Swank, 37 Or. 439; 61 So. 105. Pac. 846. 5 Gibson v. R. R., 164 Pa. St. 142; 2 Gibson v. R. R. Co., 164 Pa. St. 44 Am. St. Rep. 586; 30 Atl. 308. 142; 44 Am. St. Rep. 586; 30 Atl. 308. 90 1426 PAGE ON CONTRACTS. hospital for several weeks at the company's expense.*' It Lus been held in some courts that ratification by one who does not know that he has the right in law to avoid is not binding.'' But one who understands the nature of the transaction cannot avoid a contract though " not in possession of full mental powers."® If the adversary party does not know of the condition of the party seeking relief, no rescission can be had unless such adver- sary party can be placed in statu quo.^ 6 Gibson v. R. R., 164 Pa. St. 142; 8 Cooney v. Lincoln, 21 tt. I. 246; 44 Am. St. Rep. 586; 30 Atl. 308. 79 Am. St. Rep. 799; 42 Atl. 867. 7 Alabama, etc., Ry. v. Jones, 73 » Cooney v. Lincoln, 2\ R. I. 246; Miss. 110; 55 Am. St. Rep. 488; 19 79 Am. St. Rep. 799; 42 A.tl. 867. So. 105. CONTBACTS OF MARRIED WOMEN. 1427 CHAPTER XLI. CONTRACTS OF MARRIED WOMEN. §911. Contracts of married women at common law. At Common Law, subject to certain exceptions, it was well settled that an executory contract entered into by a married woman was void, and even now no contract is enforceable against her at law unless under the provisions of some statute/ Thus a 1 Johnson v. Gallagher, 3 De G. F. & J. 515; Smith v. Plorner, 15 East. 607; Threefoot v. Hillman, 130 Ala. 244; 89 Am. St. Rep. 39; 30 So. 513; Dobbin v. Hubbard, 17 Ark. 189; 65 Am. Dec. 425; Butler V. Buckingham, 5 Day (Conn.) 492; 5 Am. Dec. 174; Ross v. Singleton, I Del. Ch. 149; 12 Am. Dec. 86; Snell V. Snell, 123 111. 403; 5 Am. St. Rep. 526; 14 N. E. 684; Stevens V. Parish, 29 Ind. 260; 95 Am. Dec. 636; Graham v. Graham (Ky.) , 56 S. W. 708; Brown v. Dalton, 105 Ky. 669; 88 Am. St. Rep. 325; 49 S. W. 443; Robinson v. Robinson, II Bush. (Ky.) 174; Breckenridge V. Ormsby, 1 J. J. Marsh. (Ky.) 236; 19 Am. Dec. 71; Burton v. Marshall, 4 Gill (Md.) 487; 45 Am. Dec. 171; Shaw v. Thompson, 16 Pick. (Mass.) 198; 26 Am. Dec. 655 ; Palmer v. Oakley, 2 Doug. (Mich.) 433; 47 Am. Dec. 41; Por- terfield v. Butler, 47 Miss. 165; 12 Am, Rep. 329; Stephenson v. Os borne, 41 Miss. 119; 90 Am. Dec 358; Maefarland v. Heim, 127 Mo 327 ; 48 Am. St. Rep. 629 ; 29 S. W 1030; Musick v. Dodson, 76 Mo 624; 43 Am. Rep. 780; Citizens State Bank y. Smout, 62 Neb. 223; 86 N. W. 1068; Wadleigh v. Glines, 6 N. H. 17; 23 Am. Dec. 705; Brick V. Campbell, 122 N. Y. 337; 10 L. R. A. 259; 25 N. E. 493; Jackson V. Vanderheyden, 17 Johns. (N. Y.) 167; 8 Am. Dec. 378; Martin v. Dwelly, 6 Wend. (N. Y.) 9; 21 Am. Dec. 245; Terry v. Bobbins, 128 N. C. 140; 83 Am. St. Rep. 663; 38 S. E. 470; Dorrance v. Scott, 3 Whart. (Pa.) 309; 31 Am. Dec. 509; Mackinley v. McGregor, 3 Whart. (Pa.) 369; 31 Am. Dec. 522; First National Bank v. Shaw, 109 Tenn. 237; 59 L. R. A. 498; 70 S. W. 807; Harris v. Taylor, 3 Sneed (Tenn.) 536; 67 Am. Dec. 576; Hollis v. Francois, 5 Tex. 195; 51 Am. Dec. 760; Sherwin v. San- ders, 59 Vt. 499; 59 Am. Rep. 750; 9 Atl. 239; Stewart v. Conrad, 100 Va. 128; 40 S. E. 624; Pickens v. Kniseley, 36 W. Va. 794; 15 S. E. 997; Weisbrod v. Ry., 18 Wis. 35; 86 Am. Dec. 743. See Haggett v. Hurley, 91 Me. 542; 41 L. R. A, 362; 40 Atl. 561, for a discussion of the Teutonic theory of the fam- 1428 PAGE ON CONTExVCTS. contract by a married woman to surrender her child is void,^ and cannot be ratified.^ So her assignments,* covenants of war- rantj,^ agreements to assume debts/ and notes" are void. So a bond given by her is not jDayment of a pre-existing debt of her husband's.® To such an extreme is this view carried that a note purporting on its face to be executed by a married woman can- not be the subject of forgery.^ A married woman's lack of capacity is not affected by the fact that the adversary party did not know that she was married.^'* §912. Exceptions to Common Law rule. By certain local customs, as in the city of London, a married woman might contract as a sole trader if her business was in fact free from her husband's control.^ These customs w'ere not generally adopted in this country except possibly to a modiHed extent in South Carolina." The remaining classes of cases were said to arise out of necessity, though it will be seen that there is not absolute uniformity as to when it is necessary to al- low a married woman to make contracts as if siilgle. If the husband was an alien and had never been in the jurisdiction of the wife's residence,^ or if whether an alien or not he had left such jurisdiction under such circumstances as would preclude 2Stapleton v. Poynter (Ky.), 53 L. R. A. 784; 62 S. W. 730. 3 Austin V. Davis, 128 Ind. 472; 25 Am. St. Rep. 456; 12 L. R. A. 120; 26 N E. 890. 4 As of notes owned by her. Brewer v. Hobbs (Ky.), 30 S. W. 605. sThreefoot v. Hillman, 130 Ala. 244; 89 Am. St. Rep. 39; 30 So. 513. 6 Brown v. Dalton. 105 Ky. 669; 88 Am. St. Rep. 325; 49 S. W. 443. '^ Bougliner v. Laughlin (Ky.), 64 ^. W. 856. 8 Terry v. Bobbins, 128 N. C. 140; 83 Am. St. Rep. 663; 38 S. E. 470. 9 King V. State, 42 Tex. Cr. App. 108; 96 Am. St. Rep. 792; 57 S. W. 840. 10 Collins V. Hall, 55 S. C. 336; 33 S. E. 466; Stewart v. Conrad, 100 Va. 128; 40 S. E. 624. 1 Lavie v. Phillips, 3 Burr. 1776; Xewbiggin v. Pillans^ 2 Bay (S. C.) 162. 2 Jacobs V. Featherstone, 6 W. & S. (Pa.) 346. 3 Derry v. Mazarine, 1 Ld. Raym. 147; Walford v. Pienne, 2 Esp. 554; Gaillon v. L'Aigle, 1 Bos. & P. 357; Gregory v. Paul, 15 Mass. 31 ; Gregory V. Pierce, 4 Met. (Mass.) 478; Troughton v. Hill, 3 N. C. 406; Levi v. Marsha, 122 N. C. 565; 29 S. E. 832; Wagg v. Gib- bons, 5 O. S. 580; Bean v. Morgan, CONTRACTS OF MARRIED WOMEN. 1429 his return, as where he al)jured the realm/ or was banished," she miglit contract as a feme sole. A similar hoWing has been made where the husband has left the state as a fugitive from justice.*' If the husband abandons his wife, leaves the state in which they were residing and takes up his residence elsewhere permanently, the English authorities hold that the married woman has not the power to make contracts,^ even if he is an alien.^ American authorities hold that such facts confer ca- pacity to contract.^ Indeed if the abandonment is absolute and the husband leaves the state without the intention of return- ing, it seems immaterial whether he is permanently domiciled in any specific foreign jurisdiction.^** If the husband abandons the wife and is absent and unheard of for so long a time that the presumption of death arises (a length of time often held to be seven years,) the wife has power to contract.^^ But where the husband has abandoned the wife, but has neither left tlie state permanently nor has been absent and unheard of, the weight of authority seems to be that such facts do not remove the dis- ability of the married woman, even though the contract is for 4 McCord (S. C.) 148; Robinson v. sKay v, De Pienne, 3 Campb. Reynolds, 1 Aiken (Vt.) 174; 15 123. Am. Dee. 673. » Rhea v. Renner, 1 Pet. (U. S.) 4 Carrol v. Bleneow, 4 Esp. 27. 105; Krebs v. O'Grady, 23 Ala. " An Abjuration, that is, a Deporta- 726; 58 Am. Dee. 312; Mead v. tion forever into a foreign Land Hughes, 15 Ala. 141; 50 Am. Dee. like to a Profession ... is a 123; Roland v. Logan, 18 Ala. 307; Civil Death; and that is the reason Arthur v. Broadnax, 3 Ala. 557; 37 that the wife may bring an Action Am. Dee. 707; Cornwall v. Hoyt, 7 or be impleaded during the natural Conn. 420; Love v. Moynehan, 16 life of her Husband." Co. Litt. 111. 277; 63 Am. Dee. 306; Gregory 133a. V. Pierce, 4 Met. (Mass.) 478; Ab- 5 Co. Litt. 132b, 133a; Ex parte bott v. Bayley. 6 Pick. (Mass.) 89; Franks, 7 Bing. 762. Gallagher v. Delargy, 57 Mo. 29; 6 Cheek v. Bellows, 17 Tex. 613; Rose v. Bates, 12 Mo. 30; Starrett 67 Am. Dee. 686. But in Texas, v. Wynn, 17 Serg. & R. 130; 17 Am. permanent separation gives the wife Dec. 654 ; Buford v. Adair, 43 W. the powers of a feme sole. Va. 211; 64 Am. St. Rep. 854; 27 7 Marsh v. Hutchinson, 2 Bos. & S. E. 260. P. 226; Williamson v. Dawes, 9 lo See cases cited in last note. Bing. 292. ii Rosenthal v. Mayhugh, 33 0. S. 155. 1430 PAGE ON CONTRACTS. necessaries/^ Still less of course does capacity to contract arise Avliere the husband is often away for long periods of time, but does not abandon his wife/^ §913. Contracts of married women in equity. By a species of judicial legislation, the Courts of Equity had by the end of the seventeenth century,^ established the doc- trine that with reference to property held to the separate use of a married woman, free from her husband's control, she had in many ways the power of a feme sole.^ Legislation in the nine- teenth century created separate estates of married women in property which before such statutes was her general estate, sub- ject to the Common Law rights of her husband. Where such statutory estates were created witliout adding statutory provis- ions conferring upon the owner the power to contract at law, the rules of equity determined the married woman's power to contract with reference thereto. It is not the province of this work to discuss what property was included in equitable or statutory separate estates, or the rights of a married woman or her husband in such estates except in so far as the contracts of a married woman with reference thereto are concerned. In equity a married woman could not bind herself personally any more than she could at law.^ But her promises upon valuable consideration were enforced rather as obligations resembling contracts than as contracts, by compelling performance out of the separate estate owned by her at the time of making the 12 Marshall v. Rutton, 8 T. R. 3 Johnson v. Gallagher, 3 De G. 545 ; Musick v. Dodson, 76 Mo. 624 ; F. & J. 494 ; Aylett v. Ashton, 1 43 Am. Rep. 780; Hayward v. Bar- Myl. & C. 105; Ankeney v. Hannon, ker, 52 Vt. 429; 36 Am. Rep. 762. 147 U. S. 118; Canal Bank v. Par- Conira, Rariden V. Mason, 30 Ind. tee, 99 U. S. 325; Prentiss v. Pais- App. 425; 65 N. E. 554. ■ ley, 25 Fla. 927; 7 L. R. A. 640; 7 13 Rogers v. Phillips, 8 Ark. 366; So. 56; Rodemeyer v. Rodman, 5 la. 47 Am. Dec. 727. 426; Bell v. Kellar, 13 B. Mon. 1 Drake V. Storr, 2 Freem. 205. (Ky.) 381; Kocher v. Cornell, 59 2Kloke V. Martin, 55 N"eb. 554; Neb. 315; 80 N. W. 911; Pierson v. 76 iST. W. 168; Elliott v. Lawhead, Limi, 25 N. J. Eq. 390; Fallis v. 43 O. S. 171; 1 N. E. 577; Elliott Keys, 35 O. S. 265; Pilcher v. Smith, V. Gower, 12 R. I. 79; 34 Am. Rep. 2 Head. (Tenn.) 208. 600. CONTRACTS OF MARRIED WOMEN. 1431 promise.* Property acquired Lj her afterward could not be held for her contracts to use the customary and convenient but rather inaccurate term,^ nor her projierty which was her general estate when the contract was made, but which was afterwards by statute made her separate estate.'^ The claim against the separate estate of the married woman is therefor somewhat in the nature of a lien. It is not a specific lien however. Property sold or disposed of by the married woman before judg- ment is not subject to her debts contracted while she owned it.'' So adding to a note " for the payment of which I bind my separate estate," is not a mortgage in equity, giving the holder of such notes priority over the holders of notes enforceable only at law by statute.^ Where there is a restraint on auticipation, the income cannot be made liable to a judgment rendered before it came due.° While the liability of a married woman's estate in equity for her contracts is sul generis, it is an instructive analogy to regard her separate estate as a legal entity, liable it- self for her contracts. " It is not the woman, as a woman, who becomes a debtor but her engagement has made that particular part of her property which is settled to her separate use a debtor, and liable to satisfy the engagement."^'' §914. Extent of power over separate estate. The questions that generally arose in determining the. liability of a married woman's separate estate, may be grouped under two 4 Deering v. Boyle, 8 Kan. 525 ; 46 Mo. App, 28 ; Flanagan v. Gro« 12 Am. Rep. 480. ceiy Co., 98 Tenn. 599; 40 S. W. 5 Pike V. Fitzgibbon, L. R. 17 Ch. 1079. Div. 454; Sykes's Trusts, 2 Johns. s Western, etc.. Bank v. Bank, & H. 415; Ankeney v. Hannon, 147 91 Md. 613; 46 Atl. 960. U. S. 118; Mendenhall v. Leivy, 45 9 Hood Barrs v. Cathcart (C. A.) Mo. App. 20; Kocher v. Cornell, 59 (1894), 2 Q. B. 559. Neb, 315; 80 N. W. 911; Sticken ^o Ex parte Jones, L. R. 12 Ch. V. Schmidt, 64 O. S. 354; 60 N. E. Div. 484, 490. To the same eflfect 561; Manahan v. Hart, 24 Ohio C. are Shattoc-k v. Shattock, L. R. 2 C. 527; Flanagan v. Grocery Co., 98 Eq. 182; London, etc., Bank v. Lem- Tenn. 599; 40 S. W. 1079; Filler v. priere, L. R. 4 P. C. 572; Warren V. Tyler, 91 Va. 458; 22 S. E. 235. Freeman, 85 Tenn. 5l3j 3 S. W, cFallis V. Keys, 35 O. S. 265. 513. 7 D. M. Osborne & Co. v. Graham, 1432 PAGE ON CONTRACTS. general classes : first, to what extent a married woman had the j)ower to hind her separate estate by contract ; and second, what contracts within the scope of her power had the effect of bind- ing her separate estate. The weight of authority on the first question is that a married woman is empowered to bind her separate estate by contract except in so far as she is restrained by the instrument creating the estate, or by the statute which made the estate a separate statutory estate.^ In other jurisdic- tions, however, a married woman has only such power to charge her separate estate as is specifically conferred on her by the in- strument creating it.^ §915. Presumptive intent to charge separate estate. Upon the question of what contracts within the scope of a mar- ried woman's power do in fact bind her separate estate there is even less harmony of judicial decision. Undoubtedly the gen- eral rule is that the intention of the parties, to be ascertained according to the rules of equity determines whether the contract binds the separate estate. The divergence of decisions arises in applying this rule to specific states of fact. 1 Taylor v. Meads, 4 De G. J. & 8 Am. Dec. 447; Methodist, etc., S. 597; Pride v. Bubb, L. R. 7 Ch. Church v. Jacques, 3 Johns. Ch. 64; Cooper v. McDonald, L. R. 7 (N. Y.) 77; Edwards v, Edwards, Ch, Div. 288; Steed v. Knowles, 79 24 0. S. 402; Phillips v. Graves, 20 Ala. 446; Bradford v. Greenway, 17 O. S. 371; Machir v. Burroughs, 14 Ala. 797; 52 Am. Dec. 203; Dobbin O. S. 519; Warren v. Freeman, 85 V. Hubbard, 17 Ark. 189; 65 Am. Tenn. 513; 3 S. W. 513; Young v. Dec. 425; Smith v. Thompson, 2 Young, 7 Cald. (Tenn.) 461; Hollis McArt. (D. C.) 291; 29 Am. Rep. v. Francois, 5 Tex. 195; 51 Am. 621; Zeust v. Staffan, 14 App. D. C. Dec. 760; Finch v. Marks, 76 Va. 200; Miner v. Pearson, 16 Kan. 27; 207; Justis v. English, 30 Gratt. Cardwell v. Perry, 82 Ky. 129; (Va.) 565; Dages v. Lee, 20 W. Burch V. Breckenridge, 16 B. Mon. Va. 584; Hughes v. Hamilton, 19 (Ky.) 482; 63 Am. Dec. 553; Cooke W. Va. 366. V. Husbands, 11 Md. 492; Musson 2 Thomas v. Tolwell 2 Whart. V. Trigg, 51 Miss. 172; Ryland v. (Pa.) 11; 30 Am. Dec. 230; Coch- Banks, 151 Mo. 1; 51 S. W. 720; ran v. O'Hern, 4 Watts & S. (Pa.) Kim V. Weippert, 46 Mo. 532; 2 95; 39 Am. Dec. 60; Cater v. Eve- Am. Rep. 541; Batchelder v. Sar- leigh, 4 DeSaus Eq. (S. C.) 19: 6 gent, 47 N. H. 262; Jacques v. N. Am. Dec. 596; Creighton v. Clif- E. Church, 17 Johns. (N. Y.) 549; ford, 6 S. C. 188. CONTRACTS OF MAKEIED WOMEX. 1433 If the intent to bind the separate estate is expressed, no question of presumptive intent can arise. If the debt is spe- cifically charged upon the separate estate, as by note and mort- gage/ or if it is made expressly on the credit of the separate estate,^ it is of course a charge thereon. Indorsing on the con- tract " I hereby bind my separate estate," is sufficiently specific.^ On the other hand the contract may show affirmatively that the married woman did not intend to bind her separate estate, as by her giving a purchase money note specifying on what property it is a lien.* In such cases there is of course, no charge on her separate realty. It may not appear affirmatively from the contract itself whether it was or was not intended that the contract should be a charge on the married woman's separate estate. In such cases the first question to determine is whether the contract is on the one hand intended for the benefit of the married woman or her separate estate ; or on the other, is not. If the contract is for the benefit of the married woman or her separate estate,^ the courts are practically unanimous in holding that such estate is bound. Even under a statute providing that a contract shall charge a separate estate if such intention appear therein, it 1 Hester v. Barker, 42 S. C. 128; 20 S. E. 52. 2 Baker v. Gregory, 28 Ala. 544 ; 65 Am. Dee. 366; Rogers v. Wood, 8 All. (Mass.) 387; 85 Am. Dec. 710; Jones v. Craigmiles, 114 N. C. 613; 19 S. E. 638; Singluff v. Tin- dal, 40 S. C. 504; 19 S. E. 137; Martin v. Suber, 39 S. C. 525; 18 S. E. 125; National, etc., Bank v. Lumber Co., 100 Tenn. 479; 47 S. W. 85; Priest v. Cone, 51 Vt. 495; 31 Am. Rep. 695. 3 National, etc.. Bank v. Lumber Co., 100 Tenn. 479; 47 S. W. 85. 4 Harvey v. Curry, 47 W. Va. 800; 35 S. E". 838. 5 Halle V. Einstein, 34 Fla. 589; 16 So. 554; Smith v. Poythress, 2 Fla. 92; 48 Am. Dec. 176; Johnson V. Cummins, 16 N. J. Eq. 97; 84 Am. Dec. 142; Armstrong v. Ross, 20 N. J. Eq. 109; Noel v. Kinney, 106 N. Y. 74; 60 Am. Rep. 423; 12 N. E. 351; Dyett v. Coal Co., 20 \Yend. (N. Y.) 570; 32 Am. Dec. 598; Patrick v. Littell, 36 O. S. 79; 38 Am. Rep. 552; Avery v. Van- sickle, 35 O. S. 270; Winternitz v. Porter, 86 Pa. St. 35; Scottish, etc., Co. v. Deas, 35 S. C. 42; 28 Am. St. Rep. 832; 14 S. E. 486; Cater v. Eveleigh, 4 DeSaus. Eq. (S. C.) 19; 6 Am. Dec. 596; James v. May- rant, 4 DeSaus. Eq. (S. C.) 591; 6 Am. Dec. 630; Hubbard v. Bugbee, 55 Vt. 506; 45 Am. Rep. 637; Dale V. Robinson, 51 Vt. 20; 31 Am. Rep. 669. 1434 PAGE ON CONTKACTS. need not appear if the contract is for the benefit of the separate estate." The only serious conflict of authority in cases of this class exists where the contract is in writing and it is sought to show by extrinsic evidence that it was intended to charge the separate estate. If the contract is not one for the benefit of the married woman or her estate, and no express charge on her separate estate is made, the divergence of authority is complete. Some courts hold that in such case there is no presumption that the married woman intends to charge her separate estate by her contracts, but that such intent must be shown either from the form of the con- tract or from the surrounding circumstances.^ Under this rule a note does not bind the separate estate if the intent appears only in a trust deed which is void for usury.^ So a note signed by a married woman does not raise a presumption of a consid- eration moving to her and hence to charge her separate estate ; her intent to do so must be shown specifically.^ In other juris- dictions the more reasonable rule prevails that if no other source of payment appears to have been contemplated by the contract, the married woman will be presumed to have intended that her contract should have some effect and not be merely a means of defrauding the adversary party ; and that effect can only be to bind her separate estate.^" It is perhaps in contracts of surety- 6 Gibson V. Hutelnns, 43 S. C. 287; (Tenn.) 209; Chatterton v. Young, 21 S. E. 250. 2 Tenn. Ch. 768 ; Dismukes v. Shafer 7 Goldsmith v. Ladson, 9 Mack (Tenn. Ch. App.), 54 S. W. 671. (D. C.) 220; Kantrowitz V. Prather, s Wallace v. Goodlet, 93 Tenn. 31 Ind. 92; 99 Am. Dec. 587; Ben- 598; 30 S. W. 27. son V. Simmers (Ky.), 53 S. W. 9 Grand, etc., Co. v. Wright, 53 1035; Burch v. Breekenridge, 16 Neb. 574; 74 X. W. 82; Wester- B. Mon. (Ky.) 482; 63 Am. Dec. velt v. Baker, 56 Xeb. 63; 76 N. W. 553; Westervelt v. Baker, 56 Xeb. 440; Farmers' Bank v. Boyd, — 63; 76 X. W. 440; citing and fol- Xeb. — ; 93 X. W. 676. lowing Grand, etc., Co. v. Wright, loCardwell v. Perry, 82 Ky. 129; 53 Xeb. 574; 74 X. W. 82; Jordan Hershizer v. Florence, 39 O. S. 516; V. Keeble, 85 Tenn. 412; 3 S. W. Williams v. Urmston, 35 O. S. 296; 511; Ragsdale v. Gossett, 2 Lea 35 Am. Rep. 611 (overruling Levi (Tenn.) 729; Shacklett v. Polk, 4 v. Earl, 30 O. S. 147; and Rice v. Ileisk. (Tenn.) 104; Cherry v. R. R., 32 0. S. 380; 30 Am. Rep. Clements. 10 Humph. (Tenn.) 552; 610); Phillips v. Graves, 20 O. S. Litton V. Baldwin, 8 Humph. 371; 5 Am. Rep. 675; Price v. Bank, CONTBACTS OF MAEKIED WOMEN. 1435 ship that the application of these divergent rules is best seen. Where a married woman has no power to bind her estate except that conferred bj the instrument creating such estate, she can- not ordinarily bind her estate as suretj.^^ Where her contract does in fact bind her estate only when it is for her benefit or that of the estate or is expressly charged upon the estate, her signing a note as surety does not bind her separate estate/^ §916. Contracts of married women under modem statutes. The rules of equity and Common Law upon the subject of a married woman's contracts are modified by statute in almost every jurisdiction. Within the scope of the powers conferred upon her by statute her liability is governed by the rules that apply to persons of full capacity.^ Thus within her statutory powers she may make a contract which will result in a lien on her separate property in the same way as anyone of full capac- ity." Without the scope of statutory power her contracts and conveyances are void, no matter what other powers may have been given to her by statute.^ Thus since in Pennsylvania the statutes removing disabilities of married women in general does not apply to their capacity with reference to their separate use trusts, they have under such statutes no more power over such trusts than they had before.* So an agreement concerning a note given by a married woman cannot change the character of the liability of her separate realty from that shown by the deed 92 Va. 468; 32 L. R. A. 214; 23 S. 2 Tarr v. Muir, 107 Ky. 283; 53 E. 887. S. W. 663. iiHartman.v. Ogborn, 54 Pa, St. s Haas v. Shaw, 91 Ind. 384; 46 120; 93 Am. Dec. 679. Am. Rep. 607. A statute conferring 12 Yale V. Dederer, 22 N. Y. 450; power to act with reference to her 78 Am. Dee. 216; Willard v. East- separate estate "does not, expressly ham, 15 Gray (Mass.) 328; 77 or by implication, enlarge a wife's Am. Dec. 366; Wilcox v. Arnold, capacity to contract generally." 116 N. C. 708; 21 S. E. 434. Grand Island Banking Co. v. iTarr v. Muir, 107 Ky. 283; 53 Wright, 53 Neb. 574, 578; 74 N. W. S. W. 663; McKell v. Bank, 62 82; quoted in Kitchen v. Chapin, Neb. 608; 87 N. W. 317; Hacketts- 64 Neb. 144, 146; 57 L. R. A. 914; town National Bank v, Ming, 52 N. 89 N. W. 632. J. Eq. 156; 27 Atl. 920. ^Holliday v. Hively, 198 Pa. St. 335; 47 Atl. 988. 1436 PAGE OlSr COXTKACTS. executed as required by statute.^ The power of a married woman to make contracts at Modern Law dejiends therefor upon the phraseology of the statute in the j)articular jurisdiction whose law is in question, and the construction placed upon it by the courts. Xo attempt can be made here to give the de- tails of the statutes in the different states or to discuss their effect, state by state. The different statutes can, however, for purposes of convenience be grouj)ed into general classes which can be discussed. §917. Power to contract for benefit of separate estate. (1) Some statutes create a separate estate and give a mar- ried woman power to make contracts for the benefit of such estate.^ Under such statute a married woman is liable on her contracts which fairly tend to benefit her separate estate. Thus a married woman is liable for the wages of a laborer working on her farm, though originally employed by her husband," or on a contract that the report of the appraisers as to the amount of loss to her insured property shall be final f or on a loan made to her ;* or on a debt incurred by her in her business.^ She is not liable on her contracts not for the benefit of her separate es- tate under these statutes. Thus she is not liable on a covenant of general warranty in a deed conveying her husband's realty which she executes to release her dower,® nor on a judgment 5McCollum V. Boughton, 132 Mo. 129; Doane v. Feather, 119 Mich. 601; 35 L. R. A. 480; 30 S. W. 691; 78 N. W. 884. 1028; 33 S. W. 476; denying re- sMosher v. Kittle, 101 Mich, hearing, 130 Mo. 617; 35 L. R. A. 345; 59 N. W. 497. 487; 34 S. W. 480. s Montgomery v. Ins. Co., 108 1 Robertson v. Robertson (Ky.), Wis, 146; 84 N. W, 175 (under the 72 S. W. 813; Ring V, Burt, 17 ■ Michigan statute). Mich, 465; 97 Am, Dec. 200; Rus- 4 Fletcher v, Brainerd, 75 Vt. 300; sel V, Bank, 39 Mich, 671; 33 Am. 55 Atl. 608. Rep. 444; Mosher v. Kittle, 101 5 First National Bank v. Hirsch- Mich. 345; 59 N. W. 497; Detroit kowitz, — Fla. — ; 35 So. 22. Chamber of Commerce v, Goodman, 6 Pyle v. Gross, 92 Md. 132; 48 110 Mich. 498; 35 L. R. A. 96; 68 Atl. 713; Augusta National Bank K W, 295; Edison v. Babka, 111 v. Beard's Executor, 100 Va. 687; Mich. 235; 69 N. W. 499; Caldwell 42 S. E. 694. V, Jones, 115 Mich. 129; 73 N. W. ' CONTEACTS OF MARRIED WOMEX. 1437 note not given for the benefit of licr separate estate/ nor for a note given for realty^ or personalty'' transferred to herself and her husband together ; nor for a contract concerning land leased to her husband though afterwards sold to her ;^" nor on a contract between herself and her husband on one side and a third person on the other for repairing property owned by the husband and wife jointly,^^ nor for a contract of suretyship/" nor for a sub- scription toward the erecting of a chamber of commerce build- ing, though her realty might possibly be advanced in price there- by/^ nor on a mortgage to secure payment of agricultural sup- plies furnished to other persons joining in the mortgage, to be used in cultivating land which is hers in part/* nor on a con- tract to pay her sister's board/^ Outside of her separate estate these statutes confer no power to contract.^^ §918. Power to contract as feme sole with reference to separate estate. (2) Other statutes, not only create separate statutory estates, but give a married woman power to contract with reference thereto as if she were single/ Under most of these statutes a 7 Investment Co. v. Eoop, 132 Pa. i* Simon v. Sabb, 56 S. C. 38; 33 St. 496; sub nomine, Eoop v. Invest- S, E. 799. ment Co., 7 L. R. A. 211; sub nom- is June v. Labadie, — Mich. — ; ine, Appeal of Roop, 19 Atl. 278. 92 N. W. 937. 8 Doane V. Feather, 119 Mich. 691; is American, etc., Co. v. Owens, 78 N. W. 884. 72 Fed. 219; 18 C. C. A. 513; Shaf- 9 Caldwell v. Jones, 115 Mich. fer v. Kugler, 107 Mo. 58; 17 S. 129 ; 73 N. W. 129 ; Chamberlain v. W. 698 ; Stenger, etc.. Association Murrin, 92 Mich. 361; 52 N. W. v. Stenger, 54 Neb. 427; 74 N. W. 640. 846; Godfrey v. Megahan; 38 Neb. 10 Edison v. Babka, 111 Mich. 748; 57 N. W. 284; Hirth v. Hirth, 235; 69 N. W. 499. 98 Va. 121; 34 S. E. 964. 11 Speier v. Opfer, 73 Mich. 35 ; i American, etc., Co. v. Owens, 72 16 Am. St. Rep. 556; 2 L. R. A. Fed. 219; 18 C. C. A. 513; Liebes v. 345; 40 N. W. 909. Steffy, — Ariz. — ; 32 Pac. 261; i2Russel V. Bank, 39 Mich. 671; Warner v. Hess, 66 Ark. 113; 49 S. 33 Am. Rep. 444. W. 489; Kirkley v. Lacey. 7 Hoiist. 13 Detroit Chamber of Commerce (Del.) 213; Tarr v. Muir, 107 Ky. v. Goodman, 110 Mich. 498; 35 L. 283; 53 S. W. 663; First, etc., Bank R. A. 96; 68 N. W. 295 (two judges v. Moss, 52 La. Ann. 1524; 28 So. dissenting). 133; Citizens' State Bank v. Smout, 1438 PAGE ON CONTRACTS. married "woman has as much power to contract with reference to her separate property as her husband has with reference to his.* Thus she may be a surety^ or sole trader/ or may be a member of a partnership of which her husband is not a member,^ and it is everywhere held that she may buy property® or sell it, and this rule applies to lands owned at the passage of the statute as well as those afterwards acquired.^ She may authorize an at- torney in fact to mortgage her realty.^ She may assign her in- terest in a life insurance policy without the intervention pf a trustee/ or may release a cause of action in tort for personal injuries.^" She may assume a mortgage debt on realty bought by her/^ and may borrow money to pay off a lien and confess judgment therefor/^ or confess judgment for debt for the im- provement of her separate real estate." So her note given for money borrowed to buy realty/* or for any other loan^^ is 62 Neb. 223; 86 N. W. 1068; Sten- ger, etc., Association v. Stenger, 54 Neb. 427 ; 74 N. W. 846 ; Melick v. Varney, 41 Neb. 105; 59 N. W. 521; Farwell v. Cramer, 38 Neb. 61; 56 N. W. 716; Godfrey v. Mega- han, 38 Neb. 748; 57 N. W. 284; Society, etc., v. Haines, 47 0. S. 423; 25 N. E. 119; Steffen v. Smith, 159 Pa. St. 207; 28 Atl. 295; Dar- win V. Moore, 58 S. C 164 ; 36 S. E. 539; Hirth v. Hirth, 98 Va. 121; 34 S. E. 964; Tufts v. Copen, 37 W. Va. 623; 16 S. E. 793. 2 Farwell v. Cramer, 38 Neb. 61; 56 N. W. 716. 3 Westervelt v. Baker, 56 Neb. 63 ; 76 N. W. 440 (though in Nebraska such contract does not prima facie bind her separate estate). 4Kirkley v. Lacy, 7 Houst. (Del.) 213. 5 Vail V. Winterstein, 94 Mich. 230; 34 Am. St. Rep. 334; 18 L. R. A. 515; 53 N. W. 932. 6 Liebes v. Steffy, — Ariz. — ; 32 Pae. 261; Hays v. Jordan, 85 Ga. 741; 9 L. R. A, 373; 11 S. E. 833; Melick V. Varney, 41 Neb. 105; 59 N. W. 521. 7 Jackson v. Everett (Tenn.), 58 S. W. 340. 8 Linton v, Ins. Co., 104 Fed. 584; 44 C. C. A. 54. 9 (Supreme Assembly) Good Fel- lows V. Campbell, 17 R. I. 402; 13 L. R. A. 601; 22 Atl. 307. 10 Cooney v. Lincoln, 20 R. 1. 183; 37 Atl. 1031 (citing Chicago, etc., R. R. Co. V. Dunn, 52 111. 260; 4 Am. Rep. 606; Berger v. Jacobs, 21 Mich. 215; Leonard v. Pope, 27 Mich. 145). 11 Society, etc., v. Haines, 47 O. S. 423; 25 N. E. 119; Brewer v. Maurer, 38 0. S. 543; 43 Am. Rep. 436. i2Abell V. Chaffee, 154 Pa. St. 254 ; 26 Atl. 364. 13 Latrobe, etc., Association v. Fritz. 152 Pa. St. 224; 25 Atl. 558. "Steffen v. Smith, 159 Pa. St. 207; 28 Atl. 295. 15 Crampton v. Newton's Estate, — Mich. — ; 93 N. W. 250. CONTRACTS OF MARRIED WOMEN. 1439 valid. So a married woman separated in property from her husband may become a stockholder/^ She may employ an at- torney at least if for her own interests, as to institute divorce proceedings,^' even if the suit is afterwards dismissed ;^^ or to discharge an attachment levied on her goods as the property of her husband.^^ She may incur liability for necessaries, such as the attendance of a doctor, even if she is living with her husband,^" or for the services of a nurse.^^ To hold her estate, it is not necessary to trace proceeds of a note into her separate estate if her intent to bind it appears from the transaction."^ Under such statutes her after-acquired property is liable for her contracts.^^ §919. Statutes conferring limited capacity. (3) The remaining statutes which confer partial capacity may be grouped under this head. By the express provisions of some a woman who is deserted by her husband may contract as if she were unmarried,^ at least to the extent of binding herself for such necessaries as medical attendance.^ Under other statutes, the court under certain circumstances may by decree confer upon a married woman the power of acting as a feme sole. Under some of these statutes, desertion or its equivalent is 16 First, etc., Bank v. Moss, 52 27 Atl. 132; Darwin v. Moore, 58 La. Ann. 1524; 28 So. 133. So Kerr S. C. 164; 36 S. E. 539 (note given V. Urie, 86 Md. 72; 63 Am. St. Eep. in 1890). 493; 37 Atl. 789. 23/^ re Ann (1894), 1 Ch. 549 17 Wells V. Gilpin, 19 Colo. 305; Williamson v. Cline, 40 W. Va. 194 35 Pac. 545. 20 S. E. 917. 18 Wolcott V. Patterson, 100 Mich. i Arthur v. Broadnax, 3 Ala. 557 227; 43 Am. St. Rep. 456; 24 L. R. 37 Am. Dec. 707; Love v. Moyne A. 629; 58 N. W. 1006. han, 16 III. 277; 63 Am. Dec. 306 19 Thresher v. Barry, 69 Conn. Carstens v. Hanselman, 61 Mich 470; 37 Atl. 1064. 426; 1 Am. St. Rep. 606; 28 N. W 20 Goodman v. Shipley, 105 Mich. 159; Wright v. Hays. 10 Tex. 130 439; 63 N. W. 412; following Meads 60 Am. Dec. 200; Golden v. Galves V. Martin, 84 Mich. 306; 47 N. W. ton, 20 Tex. Civ. App. 584; 50 S. W 583; Hirshfield v. Waldron, 83 Mich. 416. 116; 47 N. W. 239. 2 Carstens v. Hanselman. 61 Micli. 2iBonebrake v. Tauer, 67 Kan. 426; 1 Am. St. Rep. 606; 28 N. W. 827; 72 Pac. 521. 159. 22Spott's Estate, 156 Pa. St. 281; 1440 PAGE ON CONTEACTS. necessary for sucli decree;^ as wliere tlie wife is living apart from her liiisband and supports herself.* But the mere insol- vency of husband is not ground for a decree authorizing the wife to act as a sole trader; nor is evidence that her father-in-law will assist her evidence of a separate estate.^ As the decree is notice of her status to the world, a defect in the application of such nature that the court obtain? no jurisdiction to make such decree is also notice to the world that the decree is in law a nullity.^ §920. Husband required to join in contract. Some statutes require the husband to join in his wife's con- tract. Under such statutes a sej)arate pledge of property by the wife is invalid f- as is a note signed by the wife, payable to the husband and indorsed by him," or a judgment by confession where the husband did not join in the note or sign the order for confession.^ A purchase of land at public sale by an agent ap- pointed with the consent of her husband is valid.* Under such statutes the contract or conveyance is valid only if the hus- band joins therein.^ A deed executed by a married woman alone to defraud her creditors and subsequently ratified by a second deed in which her husband joins is invalid as to such creditors.® A deed in which the husband did not join, convey- ing her interest in land previously her husband's, to her chil- 37n re Hughes (1898), 1 Ch. 529; sHoflfman v. Shupp, 80 Md. 611; 67 L. J. Ch. N. S. 279; Hill v. 31 Atl. 505. Cooper (189.3), 2 Q. B. 85; Azbill 4 Moore v. Taylor, 81 Md. 644; V. Azbill, 92 Ky. 154; 17 S. W. 32 Atl. 320; 33 Atl. 886. 284. ^De Roux v. Girard, 112 Fed. 4 Azbill V. Azbill, 92 Ky. 154; 17 89; 50 C. C. A. 136 (decided under S. W. 284. the Pennsylvania statute) ; Weber sKohn V. Steinau (Ky.), 29 S. v. Tanner (Ky.), 64 S. W. 741; W. 885. Harvard, etc., Co. v. Benjamin, 84 6 New England, etc., Co. v. Pow- Md. 333; 57 Am. St. Rep. 402; ell, 94 Ala. 423; 10 So. 324. 35 Atl. 930; Westlake v. (City of) 1 Taylor v. Jackson (R. I.), 25 Youngstown, 62 O. S. 249; 56 N. Atl. 348. E. 873; Bingler v. Bowman, 194 Pa. 2 Harvard, etc., Co. v. Benjamin, St. 210; 45 Atl. 80. 84 Md. 333; 57 Am. St. Rep. 402; « IMurphy v. Green, 128 Ala. 486; 35 Atl. 930. 30 So. 643. CONTEACTS OF MAEKIED WOMEX. 1441 dren in consideration of love is void \' and a written contract by a married woman to sell land is unenforceable unless her hus- band joins, or she is living apart from him.^ So a mortgage in which the husband does not join is a nullity.^ So a mortgage may be void as not executed by husband and wife jointly and the note secured thereby may be valid j^" but if she could incur the debt for which the mortgage was given, it may be held in equity as an appointment of her property for payment/^ Under such statute it has been held that a note given by a wife to her husband and indorsed by him is invalid as he did not join in the execution/" Such statute is held not to apply where the husband has deserted his wife.^^ Under a statute requiring hus- band and wife to join in conveying the wife's property, but excepting women whose husbands are non-resident, a woman who is a non-resident may execute a valid deed without hei husband's joining, though he is also a non-resident/* A resi* dent married woman cannot avail herself of a statute confer^ ring power on non-resident married women/^ If the husband sigTis the deed but does not join in acknowledging it, the deed is invalid in some jurisdictions,^^ and in others good in equity as a contract." A married woman who bought land is estopped 7 Ellis V. Pearson, 104 Tenn. 591; 84 Md, 333; 57 Am. St. Rep. 402; 58 S. W. 318. 35 Atl. 930. sBartlett v. Williams, 27 Ind. is Bieler v. Dreher, 129 Ala. 384; App. 637; 60 N. E. 715; and the 30 So. 22 (by special statutory ex. doctrine of part performance has no ception ) . application. Rosenour v. Rosen- i4 High v. Whitfield, 130 Ala. our, 47 W. Va. 554; 35 S. E. 918, 444; 30 So. 449. under a special statute of a com- i5 Swafford v. Herd (Ky.)- 65 S. bination type. W. 803 (a statute authorizing a 9 Sipley V. Wass, 49 X. J. Eq. non-resident married woman to ap- 463; 24 Atl. 233. point an attorney in fact to con- 10 Hart V. Church, 126 Cal. 471; vey). 77 Am. St. Rep. 195; 58 Pac. 910. is Weber v. Tanner (Ky.), 64 S. A mortgage by a feme covert on W. 741 ; Morgan v. Snodgrass, A9 part of her separate estate with the W. Va. 387 ; 38 S. E. 695. So of a joinder of her husband is good in mortgage. Dietrich v. Hutchinson, equity. Lynch v. Moser, 72 Conn. 73 Vt. 134; 87 Am. St. Rep. 098; 50 ^■14; 46 Atl. 153. Atl. 810. iiPerrine v. Newell, 49 N. J. Eq. i7 Rushton v. Davis, 127 Ala. 279; Sf; 23 Atl. 492. 28 So. 476. 12 Harvard, etc., Co. v. Benjamin, 91 1442 PAGE ON CONTEACTS. to deny the lien of the vendor thereon, though the notes given therefor were void as not signed by her husband.^* So under some statutes her trustee must join. Under such statute a con- veyance by husband and wife is void.^^ Under a statute author- izing a married woman to act as if she were single in dealing with her sej^arate estate, her power of attorney is valid, though not signed by her husband.^* §921. Consent of husband necessary. Some statutes require the consent of the husband, and in some cases his written consent, to the wife's contracts.^ Under such statutes a married woman is not bound by an oral contract for the care of an insane husband, though by statute she could act as sole trader if her husband was insane.^ So as attorney's fees are a matter of negotiation, not merely a liability created and fixed by law, like costs, a married woman though empowered to sue alone on all her contracts, cannot bind herself by con- tract therefor without her husband's consent.^ Some statutes require the written assent of her husband to any conveyance of her property. Under such statute her endorsement and delivery of her note without her husband's consent is a nullity.* A transfer by a married woman of a note assigned to her, without the written consent of her husband is invalid, even in the hands of a hona fide holder.^ But the indorsement of the note by the husband as well as by the wife, has been held to be a sufficient isWeller v. Monroe (Ky.), 55 S. sMcAnally v. Insane Hospital, W. 1078 (citing Faught v. Henry, 109 Ala. 109; 55 Am. St. Rep. 923; 13 Bush. 471; Bybee v. Smith, 88 34 L. R. A. 223; 19 So. 492. Ky. 648; 11 S. W, 722; McClure v. 3 Cowan v. Motley, 125 Ala. 369; Bigstaff (Ky.), 37 S. W. 294; 28 So. 70. Adam v. Feeder (Ky.), 41 S. W. 4Vann v. Edwards, 128 N. C. 275. 425; 39 S. E. 66 (hence on her 19 Johnson v. Sanger, 49 W. Va. death the title thereto vests in her 405; 38 S. E. 645. husband, in North Carolina, subject 2« Farmers', etc., Bank v. Loftus, to her debts). 133 Pa. St. 97; 7 L. R. A. 313; 19 5 Walton v. Bristol, 125 N. C. Atl. 347. 419; 34 S. E. 544; Whelpley v. iBazemore v. Mountain, 126 N. Stoughton, 119 Mich. 314; 78 N. tV. C. 313; 35 S. E. 542; CoflFey v. 137. Shuler, 112 N. C. 622; 16 S. E. Sll. CONTRACTS OF MARRIED WOMEN. 1443 "Written assent.® A contract of sale of goods without consent of the husband is not void, but voidable, whether treated as a Georgia or as an Alabama contract/ A letter written bj a husband as the wife's agent is sufficient to show consent, where it orders the goods to be shipped because of the writer's good standing, and where it states what the wife's property is, it charges it sufficiently.* So is his joining in the execution of the instrument," or signing as a witness.^" This consent must be, however, to the same contract that the wife assents to.^* An exception to these statutes is generally made in case of necessaries, repairs and the like.^^ §922. Contract required to be in writing. Some statutes require a married woman's contracts to be in writing except in certain cases ; as in Alabama, where she is a sole trader under the statute.^ Under such statutes an agent cannot be appointed orally," nor can an oral contract for a build- ing be enforced by taking a lien,^ nor can it be ratified,* nor can the consent of the husband give it validity.^ Indorsement of a promissory note in blank is not written consent within the provision of the statute, so as to enable her husband to pass title thereto.*' Contracts for necessaries are excepted from the c Coffin V. Smith, 128 N. C. 252; 19 So. 25; Strauss, etc., Co. v. Glass, 38 S. E. 864. 108 Ala. 546; 18 So. 526 (qualify- 7Clewis V. Malon, 119 Ala. 312; ing Strauss v. Schwab, 104 Ala. 24 So. 767; overruling Strauss v. 669; 16 So. 692; Strouse v. Leipf, Schwab, 104 Ala. 669; 16 So. 692. 101 Ala. 433; 46 Am. St. Rep. 122; sBrinkley v. Ballance, 126 N. C. 23 L. R. A. 622; 14 So. 667; Mitch- 393; 35 S. E. 631. elf v. Mitchell, 101 Ala. 183; 13 So. sRushton V. Davis, 127 Ala. 279; 147). 28 So. 476; Wachovia, etc.. Bank v. 2 Scott v. Cotten, 91 Ala. 623; 8 Ireland, 122 N. C. 571; 29 S. E. So. 783. 835; In re Freeman, 116 N. C. 199; 3 Weathers v. Borders, 121 N. C. 21 S. E. 110. 387; 28 S. E. 524. 10 Sender v. Bank, 156 Pa. St. 4 Weathers v. Borders, 121 K. C. 374; 27 Atl. 293. 387; 28 S. E. 524. U Walton V. Bristol, 125 N. C. s Strauss, etc., Co. v. Glass, 108 419; 34 S. E. 544. Ala. 546; 18 So. 526. 12 McAnally v. Lumber Co., 109 « Case v. Espenschied, 169 Mo. Ala. 397; 19 So. 417. 215; 69 S. W. 276. 1 Clement v. Draper, 108 Ala. 211 ; 1444 PAGE ON CONTEACTS. provisions of some of the statutes already referred. The term necessaries has a different meaning in this connection from its meaning in the law of infancy. It includes a mule used to cultivate a farm from which the married woman is supported/ and goods sold to renters on shares f but not the wages of an overseer, his services not being shown to be necessary;* nor the rent of a hotel.^° Contracts for necessaries are not enforceable without due process of law. Thus a creditor who has sold a married woman merchandise necessary for the sup- port of her family cannot take possession of crops raised by her on her own land, but he must take judgement and issue execution subject to her right to exemptions.^^ §923. Power as sole trader. Under other statutes a married woman is empowered to act as a sole trader, and as such to bind herself by contract.^ Such statutes are constitutionak" Under such a statute a married woman may carry on business in the nam-e of an agent. ^ Unless her note is given in connection with her sole business, such statutes do not make it valid.* A feme covert trading as a sole trader is not subject to the act concerning involuntary insolv- ency.^ Her ownership of a farm which her husband manages is not a separate business.^ If by statute a decree of court is necessary to empower a married woman to act as sole trader, 7 Allen V. Long (Ky.), 41 S. W. len, 29 Cal. 564; Wallace v. Rowley, 17. 91 Ind. 586; Eskridge v. Carter sBazemore v. Mountain, 121 iST. (Ky.), 29 S. W. 748; Clark v. C. 59; 28 S. E. 17. Manko. 80 Md. 78; 30 Atl. 621. sSanderlin v. Sanderlin, 122 N. 2 Eskridge v. Carter (Ky.), 29 S. C. 1; 29 S. E. 55 (in this case tlie W. 748. contract was invalid, as neither in 3 Reed v. Xewcomb, 64 Vt. 49; 23 writing nor for necessaries). Atl. 589. 10 Crow V. Shacklett (Ky.), 38 4 First National Bank v. Hirsch. S. W. 692. kowitz, — Fla. — ; 35 So. 22. iiRawlings v. Neal, 126 N. C. 5 Clarke v. Manko, 80 Md. 78; 271; 35 S. E. 597. 30 Atl. 621. 1 Hickey v. Thompson, 52 Ark. c Union, etc.. Bank v. Coffman, 234; 12 S. W. 475; Camden v. Mul- 101 la. 594; 70 N. W. 693. CONTRACTS OF MARRIED WOMEN. 1445 she lias not such power without such decree, even if she has invested her separate property in her business.^ §924. Capacity under contract with husband. Under some statutes a married woman is given power to contract by contract with her husband for the application to her property of the provisions of the separate property acts. In , the absence of such contract she cannot bind herself even as his surety.^ §925. Power to contract as feme sole generally. (4) Other statutes confer upon a married woman the power of contracting as if she were unmarried/ subject in some cases to limitations which will be hereafter discussed. Under some statutes her power to contract is said to be the same as that of her husband.^ Unless the case falls within one of the exceptions her power to contract is the same as if she were unmarried.^ Under such statutes a married woman is liable personally on her contracts.* So she may be estopped by a covenant of war- ranty from denying that the deed was given on valuable con- 7 McDonald v. Rozen, — Ida. — ; Minn. 538; 71 N. W. 699; Wyatt 69 Pac, 125. v. \Yyatt, 81 Miss. 219; 32 So. 317; 1 Barlow Brothers Co. v. Parsons, McHenry v. Batavia, etc., Co., 17 73 Conn. 696; 49 Atl. 205. Ohio C. C. 206; Hackman v. Cedar, 1 Village of Western Springs v. 5 Ohio C. D. 293 ; Cooney v. Lincoln, Collins, 98 Fed. (111.) 933;40C.C. 20 R. .1. 183; 37 Atl. 1031; Ex A. 33; Stacy v. Walter, 125 Ala. porfe Xurnberger, 40 S. C. 334; sh6 291; 28 So. 89; Rose v. Otis, 18 nomine, Nurnberger v. Ludekins, 18 Colo. 59; 31 Pac. 493; Goodrich v. S. E. 935; Valentine v. Bell, 66 Vt. Association, 96 Ga. 803; 22 S. E. 280; 29 Atl. 251; Brookman v. In- 585; Pease v. Furniture Co., 176 111. surance Co., 18 Wash. 308; 51 Pac. 220; 52 N. E. 932; affirming 70 395. 111. App. 138; Snell v. Snell, 2 First, etc., Bank v. Leonard. 36 123 111. 403; 5 Am. St. Rep. 526; 14 Or. 390; 59 Pac. 873. N. E. 684; Crum v. Sawyer, 132 3 Hackettstown, etc., Bank v. 111. 443; 24 N. E. 956; Koh-i-noor Ming, 52 N. J. Eq. 1.56; 27 Atl. 920. Laundry Co. v. Lockwood, 141 Ind. * McHenry v. Batavia, etc., Co., 140; 40 N. E. 677; Young v. Mc- 17 Ohio C. C. 206; First, etc.. Bank Fadden, 125 Ind. 254; 25 N. E. v. Leonard, 36 Or. 390; 59 Pac. 873. 284; Security Bank v. Holmes, 68 1446 PAGE ON CONTKACTS. sideration.^ Under such statutes a married woman may con- vey her legal title to land acquired since the statute was passed without her husband's joining in the deed.*' She is personally liable on her covenants of warranty.^ But in Iowa her joining in a covenant in a deed conveying her husband's realty does not bind her unless she expressly so states.® Pier liability is not to be extended beyond her contract, however. Thus she is not liable on the covenants of her husband's deed in which she joins to release dower or homestead rights,^ nor does such deed convey an undivided interest in the property therein de- scribed, owned by her.^*^ As the progress of legislation is toward states of this class, a detailed discussion of the other classes of statutes is of less importance. §926. Contracts of suretyship. At Common Law a contract of suretyship by a married wom- an was void, like her other contracts. Where she has a separate estate , either at equity or by statute her contracts of suretyship are valid except in jurisdictions in which her power over her separate estate is limited to that expressly conferred upon her or necessarily implied from the nature of her estate.^ So where the statute authorizing her to contract with reference to her separate estate is construed to apply only to contracts beneficial to her estate, she cannot act as surety." Under such view of 5 Stacey v. Walter, 125 Ala. 291; » Village of Western Springs v. 82 Am. St. Jtep. 235; 28 So. 89. Collins, 98 Fed. 933; 40 C. C. A. 6 Farmers' Exchange Bank v. 33. Hageluken, 165 Mo. 443; 65 S. W. lo Penny v. Mortgage Co., 132 728; or her eqviitable interest, Ala. 357; 31 So. 96. Cadematori V. Ganger, 160 Mo. 352 ; i See § 911. Fredericktown Sav- 61 S. W. 195. ings Institution v. Michael, 81 Md. 7 Security Bank v. Holmes, 68 487; 33 L. E. A. 628; 32 Atl. 189, Minn. 538; 71 N. W. 699. 340; Binney v. Bank, 150 Mass. 8 Moore v. Graves, 97 la. 4; 65 574; 6 L. R. A. 379; 23 N. E. 380; K W. 1008. This is by force of a Major v. Holmes, 124 Mass. 108; special statute that a spouse join- Metropolitan Bank v. Taylor, 62 ing in a covenant of warranty in a Mo. 338; Lincoln v. Eowe, 51 Mo. deed conveying the realty of the 571. other is not bound personally unless 2 Kohn v. Collison, 1 Marv. (Del.) the deed so states expressly. 109; 27 Atl. 834; Wright v. Parvis, CONTRACTS OF MARKIED WOMEN". 1447 the statute a contract of suretyship for her husband is void, though given for property which will make his estate more valuable and thereby increase her share in his estate if she survives him. The consideration moving to her is too remote.^ As with other contracts, in some jurisdictions her contract of suretyship prima facie binds her separate estate/ in others it binds her separate estate if specifically charged thereon f but otherwise not.*' Under statutes conferring general power to contract, a contract of suretyship is valid.^ Thus a statute authorizing a married woman to give a bond with or without a warrant of attorney, as if she were a feme sole, includes a bond to secure the debt of her husband or another.^ Under a decree allowing a married woman to contract as a feme sole she can act as surety f but apparently not under a decree of less etc., Co., 1 Marv. (Del.) 325; 40 Atl. 1123; Jaeckel v. Pease, 6 (Ida.) 131; 53 Pac. 399; Guy v. Liberenz, 160 Ind. 524; 65 N. E. 186; Magoffin v. Bank (Ky.), 69 S. W. 702; De Vries v. Conklin, 22 Mich. 255 ; Ott v. Hentall, 70 N. H. 231; 51 L. R. A. 226; 47 Atl. 80; Mueller v. Wiese, 95 Wis. 381; 70 N. W. 485. 3 Bishop V. Bourgeois, 58 N. J. Eq. 417; 43 Atl. 655. 4 Miller v. Brown, 47 Mo. 504; Kimm v. Weippert, 46 Mo. 532; Moeckel v. Heim, 46 Mo. App. 340; Williams v. Urmston, 35 0. S. 296; 35 Am. Rep. 611; Williamson v. Cline, 40 W. Va. 194; 20 S. E. 917. 5 Kershaw v. Barrett (Neb.), 90 N. W. 764; Briggs v. Bank, 41 Neb. 17; 59 N. W. 351; Smith v. Spalding, 40 Neb. 339; 58 N. W. 952; Spatz v. Martin, 46 Neb. 917; 65 N. W. 1063; First National Bank V. Stoll, 57 Neb. 758 ; 78 N. W. 254 ; Webster v. Helm, 93 Tenn. 322; 24 S. W. 488. 6 Union, etc.. Bank v. Coffman, 101 la. 594; 70 N. W. 693; Smith V. Bond, 56 Neb. 529; 76 N. W. 1062; Eckman v. Scott, 34 Neb. 817; 52 N. W. 822. 7 Binney v. Bank, 150 Mass. 574; 6 L. R. A. 379; 23 N. E. 380; State Bank v. Maxson, 123 Mich. 250; 81 Am. St. Rep. 196; 82 N. W. 31 (under Kansas statute) ; King V. Hansing, 88 Minn. 401 ; 93 N. W. 307; Grandy v. Campbell, 78 Mo. App. 502; Cooper v. Bank, 4 Okla. 632; 46 Pac. 475; Colonial Etc., Co. V. Stevens, 3 N. D. 265; 55 N, W. 578; Miller v. Purchase, 5 S. D. 232; 58 N. W. 556; Colo- nial, etc., Co. V. Bradley, 4 S. D. 158; 55 N. W. 1108; First, etc.. Bank v. Leonard, 36 Ore. 390; 59 Pac. 873; distinguishing Knoll v. Kiessling, 23 Ore. 8; 35 Pac. 248, and Campbell v. Snyder, 27 Ore. 249; 41 Pac. 659, as cases where the wife could, under the law then in force, bind only her separate es- tate and not herself personally. Bit- ter V. Bruss, 116 Wis. 55; 92 N. W. 361. 8 Warder, etc., Co. v. Stewart, 2 Marv. (Del.) 275; 36 Atl. 88. 9 Sypert v. Harrison, 88 Ky. 461 ; 11 S. W. 435; Skinner v. Carr 1448 PAGE ON CONTRACTS. extensive scope/" Statutes specifically forbid a married wom- an to act as surety in some jurisdictions for any person ; and in some others, for her husband/^ and it is really because of these statutes that contracts of suretyship must be considered apart from other contracts. Where she cannot be surety for her husband, she is not liable on a note of a firm of which her hus- band is a member.^" Under such statutes the test of surety- ship seems to be whether the married woman received anything of value for incurring the obligation.^^ Her obligation is valid if she receives anything of value,^* as where it is for her own debt as a separate trader,^^ or for her ante-nuptial debt,^^ or for the discharge of liens on her proj)erty;^' even where the (Ky.), 51 S. W. 799. By this rule is possibly modified by the Act of 1894, under which she can only se- cure the debt of another by setting aside specific property for such debt, not incurring any personal liability therein. Skinner v. Lynn (Ky.), 51 S. W. 167. The statement in Lane v. Bank (Ky.), 43 S. W. 442, that she cannot be a surety un- der such a decree is an obiter. In Mundo V. Anderson, 109 Ky. 147; 58 S. W. 520, it is held that after such decree she may be surety even under the Act of 1894. 10 Bidwell v. Robinson, 79 Ky. 29. 11 Pvichardson v. Stephens, 122 Ala. 301; 25 So. 39; Schenig v. Cofer, 97 Ala. 726; 12 So. 414; Finch V. Barclay, 87 Ga. 393; 13 S. E. 566; Strickland v. Vance, 99 Ga. 531; 59 Am. St. Eep. 241; 27 S. E. 152; Smith v. Hardman, 99 Ga. 381; 27 S. E. 731; Munroe v. Haas, 105 Ga. 468; 30 S. E. 654; Coffee V. Ramey, 111 Ga. 817; 35 S. E. 641; Cook v. Buhrlage, 159 Ind. 162; 64 N. E. 603; Andrysiak V. Satkoski, 159 Ind. 428; 63 N. E. 854; 65 N. E, 286; International, «tc.. Association v. Watson, 158 Ind. 508; 64 N. E. 23; Seigman v. Streeter, 64 N. J. L. 169; 44 Atl. 888; Pittman v. Eaysor, 49 S. C. 469; 27 S. E. 475. 12 Storrs, etc., Co. v. Wingate, 67 N. H. 190; 29 Atl. 413. 13 Cook V. Buhrlage, 159 Ind. 162; 64 N. E. 603; Field v. Noblett, 154 Ind. 357; 56 N. E. 841; Bowles v. Trapp, 139 Ind. 55; 38 N. E. 406; Goff V. Hankins, 11 Ind. App. 456; 39 X. E. 294; Eead v. Brewer (Miss.), 16 So. 350; Simon v. Sabb, 56 S. C. 38 ; 33 S. E. 799 ; Griffin v. Earle, 34 S. C. 246; 13 S. E. 473. iiSidway v. Nichol, 62 Ark. 146; 34 S. W, 529; Morningstar v. Hard- wick, 3 Ind. App. 431 ; 29 N. E. 929; Shaw V. Fortine, 98 Mich, 254; 57 N". W. 128; Schmidt v. Spencer, 87 Mich. 121 ; 49 N. W. 479. 15 Witkowski v. Maxwell, 69 Miss. 56; 10 So. 453, 16 Harrisburg, etc.. Bank v. Brad- shaw, 178 Pa. St. 180; 34 L. R. A. 597; 35 Atl. 629; even if she was originally liable only as accommoda- tion indorser, and she was released by failure to protest in time. !■ Jones V. Rice, 92 Ga. 236: 18 S. E. 348; Waldrop v. Beal, a« Ga. 306; 15 S. E. 310. CONTRACTS OF :markied wo:mex. 1449 debt was primarily her busband'Sj as wbere witbout any intent of evading tbe statute tbe busband borrowed money, giving as security a mortgage on certain real estate wbicb be afterwards transferred to bis wife/® So a covenant not to engage in a certain business in a certain city, in wbicb a married woman joins witb ber busband on tbeir selling tbeir business and good will is valid ;^^ as is ber note given to take up ber busband's note and prevent jDayee from attacking a transfer of property to ber as in fraud of ber busband's creditors ;"'^ or ber note given to settle an action brought against ber busband and ber- self, tbougb tbe debt on wbicb tbe action was brougbt was ber husband's,"^ or on a promise as principal jointly witb ber bus- band to reimburse a tbird person for paying ber busband's debt,^^ or a note given by a married woman as premium on an insurance policy taken out by ber on ber busband's life in bis absence,^^ or a note given by herself and ber busband for money ad'vranced by a third person to pay premiums on a policy on ber husband's life in ber favor.^* So she is liable on a promise to pay a debt incurred by him as ber agent for her separate estate,^^ or to pay his debt in consideration of a trans- fer of realty to her.^*' It is even held that her promise to pay his debt secured by a mortgage is valid by reason of the benefit to ber dower in tbe mortgaged lands."^ Her possible interest in her husband's personalty is too remote to constitute a benefit to ber under this rule. Hence her promissory note given to pay bis debt incurred in buying personalty is invalid."^ A note given by a married woman to secure a debt which is partly hers and partly her husband's is valid as to ber own debt, though 18 Taylor v. Mortgage Co., lOG 23 Mitchell v. Richmond, 164 Pa. Ga. 238; 32 S. E. 153; Daniel v. St. 566; 30 Atl. 486. Royce, 96 Ga. 566; 23 S. E. 493, 24 Crenshaw v. Collier, 70 Ark. 5; 19 Koh-i-noor Laundry Co. v. 65 S. W. 709. Lockwood, 141 Ind. 140; 40 N. E. 25 Christensen v. ^^■ells, 52 S. C. 677. 497; 30 S. E. 611. zoWhelpley v. Stoughton, 112 26 Strickland v. Gray, 98 Ga. 667; Mich. 594; 70 N, W. 1098. 27 S. E. 155. 21 Thornton v. Lemon, 1 14 Ga. 27 Beberdick v. Crevier. 60 N. J. 155; 39 S. E. 943. L. 389; 37 AtL 959. 22 Hill V. Cooley, 112 G*,. 115; 37 2s Bishop v. Bourgeois. 58 N. J. S. E. 109. Eq. 417; 43 Atl. 655. 1450 PAGE ON CONTEACTS. invalid as to her husband's.^'* If under the contract she receives a thing of value she is liable though she incurs a liability greatly in excess thereof.^'' The form of the contract is there- fore immaterial. If the debt is the married woman's she is liable even if she appears on the contract as a surety.^^ If the contract is made directly with the married woman and she acquires a thing of value thereby she cannot evade liability on the ground that she was really acquiring such property in order that her husband might have the use thereof, even if such purpose was known to the adversary party.^' If a loan is actually made to the wife she is liable even though she intends to and does apply the money to her husband's debts, or allows him to use it/^ So she is liable on a note to obtain a loan made to her, though with the knowledge of the lender she means to use the loan in paying a debt of her husband's.^* So a sale of her separate estate is valid, though the purchaser knows that she means to use the proceeds to pay her husband's debt, he not being a creditor of the husband.^^ A married woman is liable on a contract of guaranty made as part of a contract of sale of a note owned by her, irrespective of the disposition of the pro- ceeds.^^ But a device to evade the statute meets with no sup- port from the courts. Thus a wife who gives her note for money borrowed to pay her husband's debt is not liable where part of the agreement of the contract of lending was such use ;^'^ 29 Lanier v. OUiff, 117 Ga. 397; 92 Ga. 319; 18 S. W. 65; McCoy v. 43 S. E. 711. Barns, 136 Ind. 378; 36 N. E. 134; 3oVliet V. Eastburn, 64 N. J. L. State ex rel. Morris v, Frazier, 134 627; sub nomine Eastburn v. Vliet, Ind. 648; 34 N. E. 636; Zona, etc., 46 Atl. 735, 1061. She was held Bank v. Boynton, 69 K H. 77; 39 liable on a note of $2,080 because Atl. 522; Todd v. Bailey, 58 N. J. she received a note of $80. So Wool- L. 10; 32 Atl. 696. verton v. Van Syckel, 57 N. J. L. 34 Chastain v. Peak, 111 Ga. 889; 393; 31 Atl. 603. 36 S. E. 967; First, etc., Bank v. siMaddox v. Wilson, 91 Ga. 39; Hunton, 69 N. H. 509; 45 Atl. 351. 16 S. E. 213; Arthur v. Caverly, 98 35 Xelms v. Keller, 103 Ga. 745; Mich, 82; 56 N. W. 1102. 30 S. E. 572. 32 McDonald v. Bluthenthal, 117 36 Kitchen v. Chapin, 64 Neb. Ga. 120; 43 S. E. 422; Kriz v. 144; 97 Am. St. Rep. 637; 57 L. R. Peege, 119 Wis. 105; 95 N. W. 108. A. 914; 89 N. W. 632. 33 Hamil v. Mortgage Co., 127 Ala. 37 First, etc., Bank v. Hunton, 6!> 90; 28 So. 558; McCrory v. Grandy, N. H. 509; 45 Atl. 351. CONTRACTS OF MAKRIED WOMEN. 1451 nor is she liable on a guaranty of a note assigned to her by her husband and re-delivered by her to him, where the lender knows that the husband is to use the money, in part, to pay a loan due the same lender.^^ So one lending money to a husband on his wife's note, knowing that the husband is going to use the money to pay his debt, cannot recover/'' On the same prin- ciple business by a husband and wife jointly, as a means of making her liable as surety for his debts is not her separate business under the statute authorizing her to contract for her separate business/'^ So if the money is paid to the husband and there is nothing to show what disposition was made of it, the wife is not liable,*^ while if the husband takes it as her agent she is liable.*^ The Avife's liability as surety is not increased by her signing as an indorser.*^ It has been held that where the loan is made to the husband, the wife is not liable as surety, even if he applies the money to the use of his wife's separate estate,^* or to necessaries for the family/^ Where on the face of the instrument the married woman does not appear as surety, some authorities hold that she cannot set up her suretyship against a hona fide holder for value ;*" others hold that she can/^ It seems to be held that she estops herself from denying the validity of her note by representing that the proceeds thereof are for her separate estate,'*^ as where the check given for the note is payable to her,*^ or where she acquiesces in her husband's 38 First, etc., Bank v. Hanscom, Ala. 238; 21 So. 949; Wiltbank v. 104 Mich. 67; 62 N. W. 167. Tobler, 181 Pa. St. 103; 37 Atl. 188. 39Fisk V. Mills, 104 Mich. 433; 45 Elston v. Corner, 108 Ala. 76; 62 N. W. 559. 19 So. 324. 40 Emerson, etc., Co. V. Knapp, 90 46 Scott v. Taul, 115 Ala. 529; Wis. 34; 62 N. W. 945. 22 So. 447; Venable v. Lippold, 102 41 Merchants', etc., Association v. Ga. 208; 29 S. E. 181 (where she Jarvis, 92 Ky. 566; 18 S. W. 454; was a joint maker). Magill V. Trust Co., 81 Ky. 129; 47Leschen v. Guy, 149 Ind. 17; Hirshman v. Brashears, 79 Ky. 258. 48 N. E. 344; Voreis v. Nussbaum, 42 Hounshell V. Ins. Co., 81 Ky. 304. 131 Ind. 267; 16 L. R. A. 45; 31 43 Continental, etc.. Bank v. Clark, N. E. 70. 117 Ala. 292; 22 So. 988; National 48 McVey v. Cantrell, 70 N. Y. etc., Bank v. Whicher, 173 Mass. 295; 26 Am. Rep. 605; Bratton v. 517; 73 Am. St. Rep. 317; 53 N. E. Lowry, 39 S. C. 383; 17 S. E. 832. 1004. 49 Hackettstown, etc.. Bank v. 44 Richardson v. Stephens, 114 Ming, 52 N. J. Eq. 156; 27 Atl. 920. 1452 PAGE ON CONTRjiCTS. statement that the money is to be used in paying off a mortgage on the wife's property.^" A note by a husband and wife who are partners is valid as to her/^ or a note given to raise money for a corporation in which she is a stockholder,^^ or medical services for her/^ or to cultivate a farm owned by her,^* A clause in a mortgage to the effect that the mortgagors will pay the note with interest does not bind a married woman who signs as mortgagor only.^^ §927. Mortgage or conveyance of wife's property to secure debt of husband. A married woman has power to mortgage her propery to peeure her husband's debt if she is authorized by statute to contract as a feme sole; or if she has power by statute or in equity to deal with her separate estate.^ Even under statutes which do not allow a married woman to be surety or guarantor for her husband, it is held that such statutes refer to personal liability, and that her power to mortgage or pledge her property for her husband's debt is not thereby limited." Such statute soVosburg V. Brown, 119 Mich. Wilcox v. Todd. 64 Mo. 390; Schnei- 697; 78 N. W. 886. der v. Staihr, 20 Mo. 269; Wilson siCompton v. Smith, 120 Ara. v. Xew, 1 Neb. Un. 42; 95 N. VV. 233 ; 25 So. 300. 502 ; Watts v. Gantt, 42 Neb. 869 ; 52 Williams v. Bank (Ky.), 49 S. 61 N. \\. 104; Holmes v. Hull, 50 W. 183. Contra, Allen v. Beebe, 63 Neb. 656; 70 N. W. 241; Linton v. N. J. L. 377; 11 Am. & Eng. Corp. Cooper, 53 Neb. 400; 73 N. W. 731; Cas. N. S. 20; 43 Atl. 681. Meares v. Butler, 123 N. C. 206; 31 53 Harper v. O'Neil, 194 Pa. St. S. E. 477; Knoll v. Kiessling, 23 141 ; 44 Atl. 1065. Or. 8; 35 Pac. 248; Campbell v. 54 Richardson v. Stephens,, 122 Snyder, 27 Ore. 249; 41 Pac. 659; Ala. 301 ; 25 So. 39. Citizens', etc., Association v. Heiser, 55 Exchange, etc., Bank v. Wolver- 150 Pa. St. 514; 24 Atl. 733. ton, 11 Wash. 108; 39 Pac. 248. 2 Meares v. Butler, 123 N. C. 206; 1 Thompson v. Kyle, 39 Fla. 582; 31 S. C. 477; Gore v, Townsend, 63 Am. St. Rep. 193; 23 So. 12; 105 N. C. 228; 8 L. R. A. 443; 11 Marx V. Bellel, 114 Mich. 631; 72 S. E. 160; Siebert v. Bank. 186 Pa. N. W. 620; Ferguson v. Soden, 111 St. 233; 40 Atl. 472; Kuhn v. Ogil- Mo. 208; 33 Am. St. Rep. 512; 19 vie, 178 Pa. St. 303; 35 Atl. 957. S. W. 727 ; Rines v. Mansfield, 96 So with suretyship in general. Mo. 394; 9 S. W. 798; Hagerman Meads v. Hutchinson, 111 Mo. 620; V. Sutton, 91 Mo. 519; 4 S. W. 73; 19 S. W. 1111. CONTKACTS OF MARRIED WOMEX. 1453 does not prevent her from assigning a life insurance policy of which she is the beneficial owner as security for the debt of her husband.^ Under the Kentucky statute a married woman can secure her husband's debt only by setting aside some part of her property by deed, mortgage and the like/ A pledge of an insurance policy to secure the joint note of husband and wife/ or a written assignment of a life insurance policy,* complies with this statute; but a note given by her to take up her hus- band's note is invalid/ Under statutes specifically forbidding a married woman to mortgage her property for her husband's debts; and even in some cases under statutes which forbid her to act as surety, she cannot give a valid mortgage for his debt/ So an assignment of a life insurance policy as security for her husband is void/ So a pledge of a note owned by a married woman to secure a debt which is due in part from herself and in part from her husband is valid as to her debt but not as to her husband's/" So a mortgage on land owned by husband and wife in com- mon,^^ or by the entirety,^' is invalid at least as to the wife's interest. The mortgage is not valid even if the wife gives it by way of compromise, believing that her husband's debt is enforceable out of her estate/^ A mortgage given to a surety sDusenberry v, Ins. Co., 188 Pa. 19 So. 324; MeXeil v. Davis, 105 St. 454; 41 Atl. 736. Ala. 657; 17 So. 101; First, etc.. 4 New, etc., Bank v. Blytlie (Ky.), Bank v. Bayless, 96 Ga. 684; 23 S. 53 S. W. 409. E. 851; Merchants, etc., Association sWirgman v. Miller, 98 Ky. 620; v. Scanlan, 144 Ind. 11; 42 X. E. 33 S. W. 937. 1008; Carrigan v. Drake, 36 S. C, 6 New York, etc., Co. v. Miller 354; 15 S. E. 339. (Ky.), 56 S. W. 975. 9 Union, etc., Ins. Co. v. Woods. T Russell V. Rice (Ky.), 44 S. W. 11 Ind. App. 335; 37 N. E. 180, 110; Crumbaugh v. Postell (Ky.), 353; 39 N. E. 205. 49 S. W. 334; Bank v. Stitt, 107 lo Johnston v. Gulledge, 115 Ga. Ky. 49; 52 S. W. 950; Milburn v. 981; 42 S. E. 354. Jackson (Ky.), 52 S. W. 949. n Osborne v. Cooper, 113 Ala. 8 American, etc., Co. v. Owens (S. 405; 59 Am. St. Rep. 117; 21 So. C), 72 Fed. 219; 18 C. C. A. 513; 320. American, etc., Co. v. Owens, 64 Fed. 12 Wilson v. Logue, 131 Ind. 191; 249; Osborne v. Cooper, 113 Ala. 31 Am. St. Rep. 426; 30 N. E. 1079. 405; 59 Am. St. Rep. 117; 21 So. i3 First, etc.. Bank v. Bayless, 96 320; Elston v. Comer, 108 Ala. 76; Ga. 684; 23 S. E. 851. 1454 PAGE ON CONTRACTS. or co-suretj of her husband's to indemnify him, has been held invalid/* Under this statute such a mortgage is void at law and equity, even as to a bona fide purchaser. No decree in equity is needed to interpose such defense in an action of eject- ment at law,^^ Evasions of this statute are common, but are repressed by the courts wherever shown by the evidence. A mortgage was held invalid where the creditor suggested that the married woman deed the property to her son, and that the son then give a mortgage for his debt f^ and so where a husband and wife, tenants by the entirety, joined in conveying the realty to a third person, who reconveyed to the husband ; the latter then mort- gaged the land to secure his individual debt, this way of evad- ing the statute being taken with the knowledge of the agent of the mortgagee.^^ A different rule applies where the husband held the legal title as trustee for his wife and with her consent deeded the property to their son by a deed reciting a money consideration, in order to enable the son to raise money for his father by mortgage.^^ If a married woman borrows money secured by mortgage on her property to discharge a prior mort- 14 McNeil V. Davis, 105 Ala. 657; feet see Taylor v. Allen, 112 Ga. 17 So. 101. Contra: where a trust 330; 37 S. E. 408. deed given to indemnify several mak- le National Bank v. Carlton, 96 ers of a note against liability there- Ga. 469; 23 S. E. 388. on was held valid though the prin- i7 Abicht v. Searls, 154 Ind. 594; cipal debtor was her husband and 57 N. E. 246 ; Bennett v. Mattingly, the others his sureties. McCollum 110 Ind. 197; 10 N. E. 299; 11 N. v. Boughton, 132 Mo. 601; 35 L. R. E. 792; Crooks v. Kennett, 111 Ind. A. 480; 30 S. W. 1028; 33 S. W. 347; 12 N. E. 715; Machine Co. v. 476; 34 S. W. 480. Scovell, III Ind. 551; 13 N. E. 58; 15 Richardson v. Stephens, 122 Long v. Crosson, 119 Ind. 3; 4 L. R. Ala. 301; 25 So. 39; distinguishing A. 783; 21 N. E. 450; Wilson v. Williams, etc., Co. v. Bass, 57 Ala. Logue, 131 Ind. 191; 31 Am. St. 487, as under a statute by which Rep. 426; 30 N. E. 1079; Sohn appropriation of property by a wife v. Gantner, 134 Ind. 31; 33 N. E. for her husband's debt would be de- 787; Klein v. Gantner, 135 Ind. clared void on her application, and 699; 35 N. E. 2; Gezesk v. Hibberd, which required a precedent decree 149 Ind. 354; 48 N. E. 361; Govern- so declaring it void; and qualifying ment, etc., Institution v. Denny, 154 Richardson v. Stephens, 114 Ala. Ind. 261; 55 N. E. 757. 238; 21 So. 949. To the same ef- is Smyth v. Fitzsimmons, 97 Ala. 451; 12 So. 48. CONTKACTS OF MARKIED WOMEN. 1455 gage given by her to secure her husband's debt, such subsequent loan and mortgage are both valid. ^"^ Under a statute forbidding a married woman to act as surety, she may, if within the general powers conferred on her by equity or by statute, pay the debt of her husband or of a third person, ^^ even though she cannot a6t as surety,^^ and her execu- tory contracts of suretyship are void,^" such as a contract to convey her realty to pay for the sale to her husband of a print- ing establishment.^^ Thus she may convey realty to pay such debt."* Thus if she joins her husband in conveying property owned by them in entirety, in trust for her husband's debts, this amounts to a payment of her husband's debts after a sale of such property under such trust deed, and she cannot maintain ejectment against the purchaser. ^^ In Georgia a married wom- an, while she cannot be surety may pay the debt of a third person,^*' but cannot pay her husband's debt even by way of compromise of an alleged claim against her therefor, ^^ or if she was surety for such debt.^^ If the wife delivers property to pay her husband's debt,^** or money,^'* she may recover it. So where a married woman borrowed money and gave her note for the 19 Field V. Campbell, — Ind. App. Shewmaker, 27 Ind. App. 631 ; 87 — ; 67 N. E. 1040; rehearing denied, Am. St. Rep. 274; 60 N. E. 462. , 68 N. E. 911. 25 Rogers v. Shewmaker, 27 Ind. 20 Hollingsworth v. Hill, 116 Ala. App. 631; 87 Am. St. Rep. 274; 184; 22 So. 460; Hubbard v. Sayre, 60 N. E. 462. 105 Ala. 440; 17 So. 17; Babbitt v. 26 Villa Rica, etc., Co. v. Paratain, Morrison, 58 N. H. 419; Thompson 92 Ga. 370; 17 S. E. 340; Finch v. V. Ela, 58 N. H. 490; Shipman v. Barclay, 87 Ga. 393; 13 S. E. 566; Lord, 60 N. J. Eq. 484; 46 Atl. Freeman v. Coleman, 86 Ga. 590; 1101; affirming 58 N. J. Eq. 380; 12 S. E. 1064. 44 Atl. 215; Meiley v. Butler, 26 27 Mickleberry v. O'Neal, 98 Ga. O. S. 535. 42; 25 S. E. 933. 21 Hubbard v. Sayre, 105 Ala. 28 Riviere v. Ray, 100 Ga. 626 ; 28 440; 17 So. 17. S. E. 391. 22 Warwick v. Lawrence, 43 N. J. 29 Grant v. Miller, 107 Ga. 804; Eq. 179; 3 Am. St. Rep. 299; 10 33 S. E. 671 (where the husband de- Atl. 376. livered the property with the wife's 23 Thomas v. Weaver, 52 N. J. consent). Eq. 580; 29 Atl. 353. so Maddox v. Oxford, 70 Ga. 179; 24 Pratt, etc., Co. v. McClain, 135 Chappell v. Boyd, 61 Ga. 662. Ala. 452; 33 So. 185; Rogers v. 1456 PAGE ON CONTRACTS. amount of the loan plus a debt of her husband's, and paid part of her note, she could recover the excess so paid over the amount of the loan to her.^^ A statute forbidding a conveyance for the debt of the husband is held to include a mortgage.^^ A married woman may buy up her husband's debts and give a mortgage on her lands to secure the purchase price thereof.^' §928. Contracts between husband and wife. At Common Law a valid contract between husband and wife was impossible ; since the wife had no power to contract gen- erally, and further the Common Law theory of the legal unity of husband and wife made a promise between husband and wife one which in law had but one party.^ It was therefore unenforceable by either even after divorce," or after the death of the other.^ Thus a contract for the division of property be- tween husband and wife, each agreeing to make no claim to the estate of the other, does not bar the right of either.* Under this rule a note by a wife to a partnership of which her hus- band is a member is invalid.^ This rule applied at Common Law even to executed contracts,*^ including direct conveyances 31 Lewis V. Howell, 98 Ga. 428; Dee. 95; Johnston v. Johnston, 31 25 S. E. 504. Pa. St. 450; Putnam v. Bicknell, 18 32 Parsons v. Rolfe, 66 N. H. 620; Wis. 333. The court calls it "the 27 Atl. 172. rule of the Common Law which has 33 Ellis V. Cribb, 55 S. C. 328; been declared and recognized by the 33 S. E. 484. Igeislature and by this court that 1 Wallingsford v. Allen, 10 Pet. contracts between husband and wife (U. S.) 583; Erringdale v. Riggs, are void." National Granite Bank 148 111. 403; 36 N. E. 93; Scarbor- v. Tyndale, 176 Mass. 547, 550; 51 ough V. Watkins, 9 B. Mon. (Ky.) L. R. A. 447; 57 N. E. 1022. 540; 50 Am. Dec. 528; National 2 pittman v. Pittman, 4 Or. 298. Granite Bank v. Whicher, 173 Mass. 3 Clark v. Royal Arcanum, 176 517; 53 N. E. 1004; Clark v. Patter- Mass. 468; 57 N. E. 787. son, 158 Mass. 388; 33 N. E. 589; 4 Jewell v. McQuesten, 68 N. H. Roby V. Phelan, 118 Mass. 541; 233; 34 Atl. 742. Loomis V. Brush, 36 Mich. 40; Tur- s Clark v, Patterson, 158 Mass. ner v. Davenport, 61 N. J. Eq. 18; 388; 35 Am. St. Rep. 498; 33 N. E. 49 Atl. 463 ; Woodruff v. Apgar, 42 589. N. J. L. 198; Homan v. Headley. 58 e Homan v. Headley, 58 N. J. L. N. J. L. 485; 34 Atl. 941; Fowler 485; 34 Atl. 941; Woodruff v. Ap- V. Trebein, 16 O. S. 493; 91 Am. gar, 42 N. J. L. 198. CONTRACTS OF MAKKIED WOMEN. 1457 of land by one to the other.' These rules apply only to a contract with a lawful wife, a contract with a wife by a biga- mous marriage not being invalid for that reason.^ Such contracts were invalid in equity while executory,^ but if executed and fair and reasonable, equity would enforce them." But as such conveyance does not pass the legal title, it is not available in an action in ejectment.^^ The effect of modern statutes upon the power of a married woman to make contracts with her husband is a question on which there is a l?ck of harmony arising in part only from a diversity of the statutes. IsTo question can arise where the statute specifically permits a husband and wife to make contracts with each other,^^ except where they attempt to modify the rights and duties growing out of the marriage relation itself. A promise by a husband to pay his wife for performing domestic duties is invalid ;^^ and so seems to be a promise to pay her for assisting him in his business,^* or a promise by him that the property produced by their joint labor in farming shall be the property of the wife in consideration of her working for him.^^' As addi- 7 Newman v. Willetts, 48 111. 534 ; Sims V. Ricketts, 35 Ind. 181; 9 Am. Rep. 679; Fowler v. Trebein, 16 O. S. 493; 91 Am. Dec. 95; Ball v. Ball, 20 R. I. 520; 40 Atl. 234. 8 Vaughn v. Vaughn, 100 Tenn. 282; 45 S. W. 677. 9 Erringdale v. Riggs, 148 111. 403; 36 N. E. 93. 10 Jones V. Clifton, 101 U. S. 225; Ogden V. Ogden, 60 Ark. 70 ; 46 Am, St. Rep. 151; 28 S. W. 796; Corr's Appeal, 62 Conn. 403; 26 Atl. 478; McCormick v. Hammersley, 1 Ajjp. D. C. 313; Eckermeyer v. Hoffmeier, 98 Ky. 724; 34 S. W. 521; Vought V. Vought, 50 N. J. Eq. 177; 27 Atl. 489; Ball v. Ball, 20 R. I. 520; 40 Atl. 234. 11 Wallace v. Pereles, 109 Wis. 316; 83 Am. St. Rep. 898: 58 L. K. A. 644; 85 N. W. 371. i2Larkin v. Baty, 111 Ala. 303; 93 18 So. 666; Osborne v. Cooper. 113 Ala. 405; 59 Am. St. Rep. 117; 21 So. 320; Roth's Estate, 6 Ohio N. P. 498. 13 Brittain v. Crowther, 54 Fed. 295; Lee v. Guano Co., 99 Ga. 572; 59 Am. St. Rep. 243; 27 S. E. 159; Michigan, etc., Co. v. Chapin, 106 Mich. 384; 58 Am. St. Rep. 490; 64 N. W, 334; Blaechinska v. How- ard Mission, 130 N. Y. 497; 15 L. R. A. 215; 29 N. E. 755; Birkbeck v. Ackroyd, 74 N. Y. 356; 30 Am. Rep. 304. i*7« re Kaufmann, 104 Fed. 768; Brittain v. Crowther, 54 Fed. 295; Turner v. Davenport, 61 N. J. Eq. 18; 47 Atl. 766; Blaechinska v. Howard Mission, 130 N. Y. 497; 15 L. R. A. 215; 29 N. E. 755. 15 Dempster Mill Mfg. Co. v. Bun- dy. 64 Kan. 444; 67 Pac. 816; 6fi L. R. A. 739. 1458 PAGE ON CONTRACTS. tional reasons for the invalidity of sucli contracts have been sug- gested a lack of consideration,^" and the requirements of public policy." But a contract by a wife to furnish board for prison- ers in jail, made with her husband who had a right to sublet his contract with the county to furnish such board, has been held to be so far outside the duties incident to the marriage re- lation as to be enforceable.^^ So under a statute expressly for- bidding a contract between husband and wife Avith reference to realty, it is clear that such a contract is invalid, even if they have separated. ^^ So power to husband and wife to contract with each other does not include contracts for future separa- tion.-° Power to a married woman to convey directly to her husband does not authorize mutual releases of dower rights."^ By statute in some jurisdictions husband and wife cannot con- tract with each other with reference to their dower rights.^^ Statutes providing for separate property subject to the absolute disposition of the married woman are held to permit her to contract with her husband.^^ In some jurisdictions contracts between husband and wife are enforceable in equity and not at law.^* Statutes conferring contractual power either gen- enerally or with reference to the separate estate have been held to make contracts between husband and wife valid.^^ Even though the wife cannot sue her husband in his lifetime, she can 16 Le? V. Guano Co., 99 Ga. 572; 22 Potter v. Potter, 43 Ore. 149; 59 Am. St. Rep. 243; 27 S. E. 159. 72 Pae. 702. 17 Michigan, etc., Co. v. Chapin, 23 Lulirs v. Hancock, 181 U. S. 106 Mich. 384; 58 Am. St. Rep. 567. 490 ; 64 N. W, 334. See § 426. 24 First National Bank v. Albert- is Carse V. Reticker, 95 la. 25; son (X. J. Eq.), 47 Atl. 818; Bish- 58 Am. St. Rep. 421; 63 N. W. 461. op v. Bourgeois, 58 N. J. Eq. 417; (This ease was also explained by 43 Atl. 655; Rahway Bank v. Brew- the court as in effect a gift of the ster, 49 N. J. L. 231; 12 Atl. 769. profits. ) 25 Ward v. Shallet, 2 Ves. Sr. 16 ; 19 Phillips V. Blaker, 68 Minn. Jones v. Clifton, 101 U. S. 225; 152; 70 N. W. 1082. Jones v. Chenault, 124 Ala. 610; 82 aoFoote v. Nickerson, 70 X. H. Am. St. Rep. 211 ; 27 So. 515; Luhrs 496; 54 L. R. A. 554; 48 Atl. 1088. v. Hancock, — Ariz. — ; 57 Pac. See § 428. 605 ; Magruder v. Belt, 7 App. D. C. 2iPinkham v. Pinkham, 95 Me. 303; Fritz v. Fernandez, — Fla. — ; 71; 85 Am. St. Rep. 392; 49 Atl. 34 So. 315; Herbert v. Mueller, 83 48. 111. App. 391; North v. North, 166 COXTKACTS OF MARRIED WOMEN. 1459 enforce payment out of his estate after his death.^*' Thus a contract by a wife to repay to her husband money advanced to improve her property, even if it is used as the family home- stead;" or by a husband to repay to his wife a loan made by her,^* or interest thereon,^'' is valid, as is a contract to dismiss a divorce suit,^° or a conveyance of reaF^ or personal property,^' or a contract by a wife to release her dower in her husband's realty in consideration of his promise to pay her a certain part of the purchase money received by him.^^ So is a contract by a married woman to repay her husband out of her share of her father's estate for advances to her by him.^* So a husband 111. 179; 46 N. E. 729; affirming 63 111. App. 129; Luttrell v. Boggs, 168 111. 361; 48 N. E. 171; Milburn v. Milburn, 143 Ind. 187; 42 X. E. 611; Walker v. Walker (Ky.), 41 S. W. 315; McCann v. Letcher, 8 B. Mon. (Ky.) 320; Moaj'on v. Moa- yon, — Ky. — ; 60 L. E. A. 415; 72 S. W. 33; Peaks v. Hutchinson, 96 Me. 530; 59 L. R. A. 279; 53 Atl. 38; Matley v. Sawyer, 38 Me. 68; Trader v. Lowe, 45 Md. 1 ; Sturm- felsz V. Frickey, 43 Md. 569; Need- ham V. Sanger, 17 Pick. (Mass.) 500; 19 Am, Dec. 292; Bullard v. Briggs, 7 Pick. (Mass.) 533; Just v. Bank, — Mich. — ; 94 N. W. 200; Jenne V. Marble, 37 Mich. 319; Far- well V. Johnston, 34 Mich. 342; Gregory v. Doods, 60 iliss. 549 ; Rice V. Sally, 176 Mo. 107; 75 S. W. 398; Crawford v. Crawford, 24 Xev. 410; 56 Pac. 94; distinguishing Dickerson V. Dickerson, 24 Neb. 530; 8 Am. St. Rep. 213; Nims v. Bigelow, 44 N. H. 343; Thompson v. Taylor, 66 N. J. L. 253; 88 Am. St. Rep. 485; 54 L. R. A. 585; 49 Atl. 544 (de- cided under >sew York law) ; In re Collister, 153 N. Y. 294; 60 Am. St. Rep. 620; 47 N. E. 268; Cornman's Estate, 197 Pa. St. 125; 46 Atl. 940; Kolbo V. Harrington, 15 S. D. 263; 88 N. W. 572; Ficklin v. Rixey, 89 Va. 832; 37 Am. St. Rep. 891; 17 S. E. 325; Atkins v. At- kins, 69 Vt. 270; 37 Atl. 746. 26 7,t re Callister, 153 N. Y. 294; 60 Am. St. Rep. 620; 47 N. E. 268; Atkins V. Atkins, 69 Vt. 270; 37 Atl. 746. 27 North V. North, 166 111. 179; 46 N. E. 729 ; affirming 63 111. App. 129. 28 Fritz V. Fernandez, — Fla. — ; 34 So. 315; Herbert v. Mueller, .83 111. App. 391; In re Callister, 153 N. Y. 294; 60 Am. St. Rep. 620; 47 N. E. 268; Kolbe v. Harrington, 15 S. D. 263; 88 N. W. 572. 29 Cornman's Estate, 197 Pa, St. 125; 46 Atl. 940. 30 Crawford v. Crawford, 24 Nev. 410; 56 Pac. 94; distinguishing Dickerson v. Dickerson, 24 Neb. 530; 8 Am. St. Rep. 213. 31 Duffy V. White, 115 Mich. 264; 73 N. W\ 363. 32 Sherman v. Davenport, 106 la. 741; 75 N. W. 187. 33Dailey v. Dailey, 26 Ind. App. 14; 58 N. E. 1065. 34 Hendricks v. Isaacs, 117 N. Y. 411; 15 Am. St. Rep. 524; 6 L. R, A. 559; 22 N. E, 1029. 1400 PAGE ON CONTRACTS. signing a note as surety for his wife may recover from her estate.^^ So under a contract whereby a wife authorizes her Inisband to buy property for her as her agent, the title to such property vests in the wife, even as against her husband's cred- itors.^^ So a contract whereby it is agreed that a house built by a husband on his wife's land shall remain his property is valid.^^ While under statutes allowing a married woman to contract with reference to her separate estate as if unmarried, it is often held that she may contract with her husband,^^ it has been held that such statutes do not authorize contracts be- tween husband and wife.^^ So while a statute conferring gen- eral power to contract has been held to make valid a contract between husband and wife,'**' the opposite view has been taken, on the theory that though the wife's disabilities are removed, those of her husband are not.*^ So a husband and wife can- 35 Feather v. Feather, 116 Mich. 384; 74 N. W. 524. 36 Jones V. Chenault, 124 Ala. 610; 82 Am. St. Rep. 211; 27 So. 515; Paull v. Parks (Ky.), 45 S. W. 873; Young v. Hurst (Tenn, Ch. App.), 48 S. W. 355. 37 Peaks V. Hutchinson, 96 Me. 530; 59 L, R. A. 279; 53 All. 38. 38 Leach v. Rains, 149 Ind. 152; 48 N. E. 858 ; Huffman v. Copeland, 139 Ind. 221; 38 N. E. 861; Third National Bank v. Guenther, 123 N. Y. 568; 20 Am. St. Rep. 780; 25 N. E. 986; Suau v. Gaffe, 122 N. Y. 308; 9 L. R. A. 593; 25 N. E. 488; Williams v. Harris, 4 S. D. 22; 46 Am. St. Rep. 753 ; 54 N. W. 926. 39 0'Daily v. Morris, 31 Ind. Ill; Jenne v. Marble, 37 Mich. 319; Hen- dricks V. Isaacs, 117 N. Y. 411; 15 Am. St. Rep. 524; 6 L. R. A. 559; 22 N. E. 1029. 40Grubbe v. Grubbe, 26 Or. 363; 38 Pac. 182 (holding that the stat- ute restricting the form of convey- ing realty did not apply to con- tracts). 41 Heacock v. Heacock, 108 la. 540; 75 Am. St. Rep. 273; 79 N. W. 353 (a note given by husband to wife during coverture) ; citing and following Hoker v. Boggs, 63 111. 161; Lord v. Parker, 3 All. (Mass.) 127; Knowles v. Hull, 99 Mass. 562; Roby V. Phelon, 118 Mass. 541; Aultman v. Obermeyer, 6 Neb. 260; White V. Wagner, 25 N. Y. 328; Real Estate, etc., Co. v. Roop, 132 Pa. St. 496; 7 L. R. A. 211; 19 Atl.*278; which do not all sustain the proposition. " Both husband and wife were under such legal dis- abilities at Common Law as that they could not contract with each other. To remove the disability of one will not validate the contract for one of the contracting parties has no assenting mind; and it would be strange doctrine to announce that because the disability was removed from one of the contracting parties, the contract is good, although the other is without a concurring mind." Heacock v. Heacock, 108 la. 540, 544; 75 Am. St. Rep. 273; 79 CONTKACTS OF MAERIED WOMEN. 1461 not contract as to the distributive share of the husband in the wife's estate/" Contracts between husband and wife had pre- viously been recognized in lowa/^ and as the statute allowed either to sue the other for conversion of property, it was held that a note given by the husband to the wife for property of hers which he had converted was valid/* §929. Partnership between husband and wife. There is a lack of harmony on the question of whether hus- band and wife can act as partners with each other, due in part to differences in statutory provisions and in part to differences in determining the legal effect of similar statutes. A married woman may be a partner of her husband in business under statutes authorizing her to contract as if she were unmarried.^ A statute authorizing her to contract with reference to her separate estate specifically providing that she may contract with her husband allows her to form a partnership] with him." Under a statute allowing her to contract with others than her husband as if she were unmarried, and forbidding her to become his surety except by a mortgage it is held that she can incur liability to third persons as his partner.^ Under statutes authorizing her to contract with reference to her separate estate, she cannot enter into a partnership with her husband.* From the cases cited N. W. 353. See the dissenting opin- 4* Dunham v. Bentley, 103 la. ion in this case. To the same effect 136; 72 N. W. 437. see National Granite Bank v. i Burney v. Grocery Co., 98 Ga. Whicher, 173 Mass. 517; 73 Am. St. 711; 58 Am. St. Rep. 342; 25 S. E. Rep. 317; 53 N. E. 1004 (also on a 915; Hoaglin v. Henderson, 119 la. note). 720; 97 Am. St. Rep. 335; 61 L. R. 42 Poole V. Burnham 105 la. 620; A. 756; 94 N. W. 247; Louisville, 75 N. W. 474. (Under a statute etc., Ry. v. Alexander (Ky.), 27 S. providing that if either husband or W. 981; Snell v. Stone, 23 Or. 327; wife owned property the other had 31 Pac. 663. no interest therein which could be 2 Reiser v. Banking Co., 105 Ala. contracted for.) 514; 17 So. 40. 43 Corse V. Reticker, 95 la. 25; 58 s Lane v. Bishop, 65 Vt. 575; 27 Am. St. Rep. 421; 63 N. W. 461 (a Atl. 499. contract by a wife to board prisoners 4 Gilkerson, etc., Co. v. Salinger, for her husband, who had the care of 56 Ark. 294; 35 Am. St. Rep. 105; them). 16 L. R. A. 526; 19 S. W. 747; Bar- 1462 PAGE ON CONTRACTS. it ■will be seen that this view is taken bj states that allow a husband and wife to make contracts with reference to her separate estate,^ and by those which hold that a married woman may bind her separate estate by her contracts as effectually as her husband can bind his f as well as by states which restrict her power under the statute to contracts intended for the man- agement and benefit of her estate/ His management of her farm does not constitute a partnership, however f nor does their leasing a hotel together and buying furniture.^ A statute giv- ing her the power to contract as a feme sole and providing that she should have the same powers in law as her husband does not authorize her to form a partnership with him. She is not liable to third persons as a partner." A statute making her personally liable on debts incurred in her own name does not authorize her to form a partnership with her husband.^^ Under statutes allowing her to conduct business on her sole and sepa- rate account she cannot form a partnership with her husband. ^^ low Bros. Co. V. Parsons, 73 Conn. 696; 49 Atl. 205; Haas v. Shaw, 91 Ind. 384; 40 Am. Rep. 607; Scarlett V. Snodgrass, 92 Ind. 262; Lord v. Parker, 3 All. (Mass.) 127; Lord v. Davison, 3 All. (Mass.) 131; Ed- wards V. Stevens, 3 All. (Mass.) 315; Palmer v. Lord, 5 All. (Mass.) 460; Bowker v. Bradford, 140 Mass. 521; 5 N. E. 480; Artman x. Fergu- son, 73 Mich. 146; 16 Am. St. Rep. 572; 2 L. R. A. 343; 40 N. W. 907; Speier v. Opfer, 73 Mich. 35; 16 Am. St. Rep. 556 ; 2 L. R. A. 345 ; 40 N. W. 909; Bassett v. Shepardson, 52 Mich. 3; 17 N. W. 217; Payne v. Thompson, 44 O. S. 192; 5 X. E. 654; Weisiger v. Wood, 36 S. C. 424 ; 15 S. E. 597 ; Gwynn v. Gwynn, 27 S. C. 525; 4 S. E. 229; Cox v. Miller, 54 Tex. 16; Seattle Board of Trade v. Hayden, 4 Wash. 263; 31 Am. St. Rep. 919; 16 L. R. A. 530; 30 Pac. 87; 32 Pac. 224: Carey v. Burruss, 20 W. Va. 571 ; 43 Am. Rep. 790; Fuller, etc., Co. v. Mc- Henry, 83 Wis. 573; 18 L. R. A. 512; 53 N. W. 896. 5 Haas V. Shaw, 91 Ind. 384; 46 Am. Rep. 607. 6 Payne v. Thompson, 44 O. S. 192 ; 5 N. E. 654. 7 Fuller, etc., Co. v. McHenry, 83 Wis. 573; 18 L. R. A. 512; 53 N. W. 896. sKrouskop v. Shontz, 51 Wis. 204; 37 Am. Rep. 817; 8 N. W. 241. 9 Wineman v. Phillips, 93 Mich. 223; 53 N. W. 168. 10 Seattle Board of Trade v. Hay- den, 4 Wash. 263; 31 Am. St. Rep. 919; 16 L. R. A. 530; 32 Pac. 224; 30 Pac. 87. iiHaggett V. Hurley, 91 Me. 542; 41 L. R. A. 362; 40 Atl. 561. 12 Gilkerson, etc., Co. v. Salenger, 56 Ark. 294; 35 Am. St. Rep. 105; 16 L. R. A. 526; 19 S. W. 747; Lord V. Parker, 3 All. (Mass.) 127. Contra, Suau v. Caffe, 122 X. Y. 308; 9 L. R. A. 593; 25 N. E. 488. CONTKACTS OF MAKKIED WOMEN. 1463 As partners are principals, and not sureties each for the other, a statute forbidding a wife to act as surety for her husband does not of itself prevent them from acting as partners.^^ §930. Agent of married woman. Unless restrained bv statute a married woman may appoint an agent, or an attorney in fact,^ to make any contract or con- veyance which she could make herself. If the contract is one which she cannot make herself, she cannot make it by an agent. ^ Where a married woman cannot charge her general estate she cannot appoint an agent to charge it.^ §931. Ratification. As a married woman's contract is void and not voidable it is incapable of ratification by any agreement or conduct after the woman acquires the power to make contracts,^ whether such power is acquired by the death of the husband," or by her ob- is Belser V. Banking Co., 105 Ala. 514; 17 So. 40. 1 Williams v. Paine, 169 U. S. 55; Davie v. Davie (Ark.), 18 S. W. 935 ; Williams v. Paine, 7 App. D. C. 116; Security Savings Bank v. Smith, 38 Or. 72; 62 Pac. 794; Farmers', etc., Bank v. I.oftus. 133 Pa. St. 97; 7 L. R. A. 313; 19 Atl. 347. - Freeman's Appeal, 68 Conn. 533 ; 57 Am. St. Rep. 112; 37 L. R. A. 452; 37 Atl. 420; Weisbrod v. Ry., 18 Wis. 35; 86 Am. Dec. 743. 3 Macfarland v. Heim, 127 Mo. 327; 48 Am. St. Rep. 629; 29 S. W. 1030. 1 Xew England, etc., Co. v. Powell, 94 Ala. 423; 10 So. 324; Heiney v. Lontz, 147 Ind. 417; 46 N. E. 665; Austin v. Davidson, ' 128 Ind. 472; 25 Am. St. Rep. 456; 12 L. R. A. 120; 26 N. E. 890; Davis v. Schmidt (Ind. App.), 31 N. E. 84; Ruppel v. Kissel (Ky.), 74 S. W. 220; Porter- field v. Butler, 47 Miss. 165; 12 Am. Rep. 329; Musick v. Dodson, 76 Mo. 624; 43 Am. Rep. 780; Weathers v. Borders, 121 N. C. 387; 28 S. E. 524; Buchanan v. Hazzard, 95 Pa. St. 240; Glidden v. Strupler, 52 Pa. St. 400; Radican v. Radican, 22 R. I. 405; 48 Atl. 143; Sherwin v. Sanders, 59 Vt. 499; 59 Am. Rep. 750; 9 Atl. 239. But where the in- strument takes effect on delivery, a re-delivery after acquiring capacity makes the instrument valid. Brown V. Bennett. 75 Pa. St. 420; Jourdan V. Jourdan, 9 S. & R. (Pa.) 268; 11 Am. Dec. 724. 2 Meyer v. Haworth, 8 Ad. & El. 467; 35 E. C. L. 442; Union, etc.. Bank v. Hartwell, 84 Ala. 379; 4 So. ^56; Austin v. Davis, 128 Ind. 472; 25 Am. St. Rep. 456; 12 L. R. A. 120; 26 N. E. 890; Long v. Brown, 66 Ind. 160; Porterfield v. 1464 PAGE ON CONTRACTS. taining an absolute divorce from him/ or by a cbange in tbe law giving her jwwer to make contracts/ or by the rendition of a decree of court under local statutes, conferring the powers of a feme sole.^ In obiter, however, some dissent from this view may be found.^ Under some statutes, moreover, a con- tract of a married woman may be voidable only, and subject to ratification/ Ratification must be at least as formal, even un- der these statutes, as an original contract.^ It must also be effected by conduct unequivocally intended as a ratification. Thus if it was possible to ratify business debts after the act of 1897 authorizing a married woman to incur such debts, the mere recognition, after the passage of the act, of the existence of a note given for such debts before the passage of the act, does not make her liable.^ While perfectly harmonious with the views already expressed, it must be noticed that if the con- tract could cause any liability in equity, such liability would support a promise made after capacity had been acquired and this contract would be enforceable at law.^" So a subsequent promise after acquiring capacity to contract, to perform a con- tract made before such capacity is acquired is enforceable if based on a new consideration. Thus a note executed bv a Butler, 47 Miss. 165; 12 Am. Rep. avoid them she must plead her dis- 329; Condon v. Barr, 49 N. J. L. ability." Strauss v. Glass, 108 Ala. 53; 6 Atl. 614; Xesbitt v. Turner, 546, 551; 18 So. 526. 155 Pa. St. 429; 23 Atl. 750. ? Steiner v. Tramum, 98 Ala. 315; 3 Putnam v. Tennyson. 50 Ind. 13 So. 365. This case was decided 456; Thompson v. Warren, 8 B. under a statute allowing a wife to Mon. £Ky. ) 488; Musick v. Dodson, authorize her husband to sell or ex- 76 Mo. 624; 43 Am. Rep. 780; Hay- change her estate; and it was held ward V. Barker, 52 Vt. 429; 36 Am. that she might ratify an exchange Eep. 762. made by him so as to vest in herself 4 Thompson v, Hudgins, 116 Ala. title to the property received in ex- 93; 22 So. 632; Xew England, etc., change. Co. V. Powell, 94 Ala. 423; 10 So. « Duncan v. Freeman, 109 Ala. 324; Loomis v. Brush, 36 Mich. 40; 185; 19 So. 433. Valentine v. Bell, 66 Vt. 280; 29 9 Mercantile Co. v. Bowers, 105 Atl. 251. Tenn. 138; 58 S. W. 287. 5 Russell v. Rice (Ky.), 44 S. W. lo Condon v. Barr, 49 N. J. L. 53; 110. * 6 Atl. 614; Sherwin v. Sanders, 59 c'Her contracts independent of Vt. 499; 59 Am. Rep. 750; 9 Atl. statute were merely voidable and to 239. CONTEACTS OF MARRIED WOMEN. 1465 niamed woman and her husband was void as to her before 1881, in Indiana/^ but a renewal after 1881 by husband and wife of note given before is good as to both/^ §932. Restitution. If a married woman invokes coverture as a defense to an executory contract/ or a means of recovering what she has parted with under an executed contract,^ she is liable for what- ever she has received under such contract.^ Thus a married woman to obtain a loan gave her note payable to her husband, who indorsed it over to the creditor. The note itself was held to be void, as being a contract between husband and wife ;* but recovery of the amount so loaned was allowed in assumpsit.^ In some jurisdictions, no personal liability exists against her if the contract is void, and the only remedy of the adversary party is an action m rem against the money received by her under the contract or against any property into which it can be traced.*' If the money was paid to her husband and it is not shown to have been paid over to her, she is not liable for it on avoiding her contract.^ She cannot retain the property conveyed to her and avoid having the purchase money collected by a sale of such property therefor.* 11 Lackey v. Boruff, 152 Ind. 371; 25 Tex. Civ. App. 503; 61 S. W. 53 N. E. 412. 939. 12 Lackey V. Boruff, 152 Ind. 371; * Xational Granite Bank v. 53 N. E. 412. \Yhicher, 173 Mass. 517; 73 Am. St. 1 National Granite Bank v. Tyn- Rep. 317; 53 N. E. 1004. dale, 176 Mass. 547; 51 L. R. A. 5 National Granite Bank v. Tyn- 477; 57 X. E. 1022; Willock's Es- dale, 176 Mass. 547; 51 L. R. A. tate, 165 Pa. St. 522; 30 Atl. 1043; 447; 57 N. E. 1022. Bueknor's Estate, 136 Pa. St. 23; « Smith v. Ingram, 130 N. C. 100; 20 Am. St. Rep. 891; 19 Atl. 1069. 61 L. R. A. 878; 40 S. E. 984. 2 Pilcher v. Smith, 2 Head. 7 ilcKinney v. Street, 107 Tenn. (Tenn.) 208. 526; 64 S. W. 482. ^Contra, where her acknowledg- « Kennedy v. Harris, 3 Ind. Ter. ment to the conveyance of her sepa- 487; 58 S. W. 567; Blantz v. Bain, rate estate was not taken as pro- 95 Tenn. 87; 31 S. W. 159. vided by law. Silcock v. Baker, 1466 PAGE ON CONTRACTS. §933. Estoppel. Within the limits of her statutory capacity she may be bound by estoppel like a person of full capacity.^ Thus a deed by a married woman of lands devised to her estops her from setting up an after-acquired title.^ So if she ostensibly borrows money, the fact that she indorses the check to her husband does not relieve her from liability, though she could not act as his surety.^ If she signs the instrument first and represents that she is the j)rincipal thereon she is estopped from avoiding liabil- ity by claiming to be surety.* She is not bound by estoppel in instruments outside her statutory capacity. So where by statute she cannot mortgage her property for the debt of her husband, she is not estopped to deny the validity of such mortgage,^ nor is she estopped by joining in her husband's deed of her property, releasing dower therein as if it were his.® Thus if she has no capacity to make a covenant of warranty she is not estopped to set up an after-acquired title in realty conveyed by her by deed containing such covenant.^ However, if she has agreed to a separation, the written agreement for which is not acknowledged by her as' required by statute, but which is immediately per- formed, she cannot retain what she has received under such contract and claim the dower released by such defective con- tract.* Mere delay in giving notice of the fact that an instru- ment is a forgery has been held not to estop her.® §934. Right to avoid executed contracts. In some jurisdictions a married woman may acquire prop- erty, and yet may not bind herself by an executory contract. In 1 Estoppel by deed, Jones v. Hill, 5 Bentley v. Goodwin, 26 Ind. App. 70 Ark. 34; 66 S. W. 194; Sand- 689; 60 N. E. 735. •wich, etc., Co. v. Zellmer, 48 Minn. 6 Gibson v. Clark, 132 Ala. 370; 408; 51 N. W. 379. 31 So. 472. Contra, Jones v. Hill. 2 Bruce v. Goodbar, 104 Tenn. 70 Ark. 34; 66 S. W. 194. 638; 58 S. W. 282. 7 Threefoot Bros. v. Hillman, 130 3 Hackettstown, etc., Bank v. Ala. 244; 89 Am. St. Rep. 39; 30 Ming, 52 N. J. Eq. 156; 27 Atl. 920. So. 513; Wadkins v. Watson, 86 Tex. 4 Tompkins v. Triplett, 110 Ky. 194; 22 L. R. A. 779; 24 S. W. 385. 824; 96 Am. St. Rep. 472; 62 S. W. « Kaiser's Estate, 199 Pa. St. 269; 1021, 85 Am. St. Rep. 785; 49 Atl. 79. 9 Hunt V. Keilly, 24 R. I. 68; 96 CONTRACTS OF MAKEIED WOMEN. 1467 such jurisdictions a married woman cannot avoid a purchase of property, and recover money paid therefor by her, after such purchase has been executed, even if she might have avoided liability under the contract while it was executory.^ §935. Coverture must be pleaded. To be available as a defense coverture must be pleaded.'^ If such defense is not made, a judgment against on a void con- tract is valid.^ If under the law a married woman is liable except in certain cases, an answer alleging coverture, but not alleging facts within one of such cases is insufficient.^ As to a petition filed against a married woman the weight of authority is that facts must appear both in i)leading and evidence to bring the married woman within the provisions of the statute in order to hold her on her contracts, her liability not being presumed.* §936. Who can use coverture as a defense. Only the married woman can take advantage of coverture as a defense.^ Thus under a statute forbidding a married woman to act as surety only she or her privies in blood representation or estate can interiDose coverture as a defense." The husband Am. St. Rep. 707; 52 Atl. 681. (De- S. W. 489; Emmett v. Yandes, 60 lay for three years.) Ind. 548; Westervelt v. Baker, 56 1 Sellmeyer v. Welch, 47 Ark. 485; Xeb. 63; 76 N. W. 440; citing and 1 S. W. 777; Johnson v. Jones, 51 following. Grand, etc., Co. v. Wright, Miss. 860; Gould v. McFall, 118 Pa. 53 Xeb. 574; 74 X. W. 82; Moore St. 455; 4 Am. St. Rep. 606; 12 Atl. v. Wolfe, 122 X. C. 711; 30 S. E. 336; Pitts v. Elser, 87 Tex. 347; 28 120; Koechling v. Henkel, 144 Pa. S. W. 518. St. 215; 22 Atl. 808; Hecker v. 1 Strauss v. Glass, 108 Ala. 546; Haak, 88 Pa. St. 238; Duval v. Chef, 18 So. 526; Rogers v. She\\-maker, 92 Va. 489; 23 S. E. 893. 27 Ind. App. 631; 87 Am. St. Rep. i Jones v. Harrell, 110 Ga. 373; 274; 60 X. E. 462; Smoot v. Judd, 35 S. E. 690; Hawes v. Favor, 161 161 Mo. 673; 84 Am. St. Rep. 738; 111. 440; 43 X. E. 1076; Lackey v. 61 S. W. 854. Boruflf, 152 Ind. 371; 53 X. E. 412; 2 Smoot v. Judd, 161 Mo. 673; 84 Slagle v. Hoover, 137 Ind. 314; 36 Am. St. Rep. 738; 61 S. W. 854. X. E. 1099. 3 Strauss v. Glass, 108 Ala. 546; 2 Lackey v. BoruflF, 152 Ind. 371; 18 So. 526. 53 X. E. 412. 4 Warner v. Hess, 66 Ark. 113; 49 1468 PAGE OIS" C0^^T1^ACTS. or those claiming under liim cannot plead lier coverture.^ So the adversary party to the contract cannot avoid the contract on the ground of coverture if the married woman offers to per- form.* Thus if she has agreed to convey realty, and tenders a valid deed/ the adversary party cannot interpose the objection of her original lack of capacity. So he cannot recover pay- ments made by him under such contract.*' If she has performed and cannot be placed in statu quo she may have specific perform- ance.^ So after she has jDerformed, the adversary party is liable for the payments stipulated in the contract.^ If, however, the contract is executory on both sides, and the promise of the married woman is the sole consideration for the promise of the adversary party, no consideration exists for such promise of the adversary party, where the jDromise of the married woman is void. In cases of this sort, the adversary party does not use coverture as a defense ; but there is no con- sideration and hence no contract.^ 3Slagle V. Hoover, 137 Ind. 314; 36 N. E. 1099. 4Hawes v. Favor, 161 111. 440; 43 N. E. 1076; Carpenter v. Mitchell, 54 111. 126; Holmes v. Holmes, 107 Ky. 163; 92 Am. St. Eep. 342; 53 S. W. 29. 5 Holmes v. Holmes, 107 Ky. 163; 92 Am. St. Eep. 342; 53 S. W. 29. (She was a feme covert when the contract was made, but discovert when the deed was tendered.) 6 Keystone Iron Co. v. Logan, 55 Minn. 537; 57 N. W. 156. 7 Richards v. Doyle, 36 O. S. 37; 38 Am. Rep. 550. sLindsey v. Lindsey, 116 la. 480; 89 N. W. 1096. (In this case she had authority to contract for her own services. She was living with her husband, and contracted with a third party to furnish board to his employees. It was held that a set- tlement between such third person and her husband could not discharge her liability.) 9 Shirk V. Stafford, 31 Ind. App. 247; 67 N. E. 542. PAKTNEESHIP. 1469. CHAPTER XLII. PARTNERSHIP. §937. Nature and formation of partnership. A partnersliip is a business relation between two or more persons arising out of a contract^ by which they agree to unite their property, credit, services, skill or influence in some busi- ness, so that they have a community of interest in such business,^ and usually divide the profits and losses between themselves in a fixed j^roportion. A partnership differs from a corporation in this: that a corporation is a legal personalty,^ while a partnership is merely a relation between two or more persons* and " is not a be- ing distinct from its members."^ The contract of partner- ship may be express, and either written^ or oral/ An oral contract of partnership to last for more than one year from iMayfield v. Turner, 180 111. 332; 67 N. W, 650; Baldwin v. Eddy, 64 54 N. E. 418; Briggs v. Rice Co., 83 Minn. 425; 67 N. W. 349; Willey v. 111. App. 618; Simmons v. Ingram, Renner, 8 N. M. 641; 45 Pac. 1132; 78 Mo. App. 603; Martin v. Baird, Harvey v. Childs, 28 O. S. 319; 22 175 Pa. St. 540; 34 Atl. 809. "A Am. Rep. 387; Frazier v. Linton, copartnership is in its essence a 183 Pa. St. 186; 38 Atl. 589; Carter contract of agency. Each partner v. McClure, 98 Tenn. 109; 60 Am. is the general agent of the firm, and St. Rep. 842; 36 L. R. A. 282; 38 the firm is the agent of each partner, S. W, 585. with power to bind him to a personal 3 See § 1065. liability in favor of partnership 4 Harris v. Visscher, 57. Ga. 229; creditors." Lapento v. Lettieri, 72 Mayfield v. Turner, 180 111. 332; 54 Conn. 377, 383; 77 Am. St. Rep. X. E. 418. 315; 44 Atl. 730. 5 Chambers v. Sloan, 19 Ga. 84, 85. 2StaflFord v. Sibley, 113 Ala. 447; e Gibbs's Estate, 157 Pa. St. 59; 21 So. 459; National Surety Co. v, 22 L. R. A. 276; 27 Atl. 383. Townsend, etc., Co., 176 111. 156; 'Jones v. Davies, 60 Kan. 309; 52 N. E. 938; affirming, 74 111. App. 72 Am. St. Rep. 354; 56 Pac. 484. 312; McKasy v. Huber, 65 Minn. 9; 1470 PAGE ON CONTEACTS. the date of the making is held to be within the statute of frauds in some jurisdictions and unenforceable with reference to its duration.^ The contract of partnership may be implied from the conduct of the parties.*^ It may include a single transac- tion^" as well as an extended series of transactions. As between the parties the question of partnership is one of intention, being in the first instance a question of fact/^ but when the facts are conceded or established, a question of law.^^ If the parties enter into a relationship Avhich the law holds to be a partnership they are partners although they may not have known the legal effect of their acts," or though they may have called the contract one of employment.^* A partnership is not an artificial person at law. Its liability exists only sWahl V. Barnum, 116 N. Y. 87; 5 L. R. A. 623 ; 22 N. E. 280". 9 Haug V. Hang, 90 111. App. 604 ; Hallenbaek v. Rogers, 57 N. J. i^q. 199; 40 Atl. 576; affirmed, 58 N. J. Eq. 580; 43 Atl. 1098; William Deering, etc., Co. v. Coberly, 44 W. Va. 606; 29 S. E. 512. An actual partnership in which the partnership contract is inferred as a fact from the conduct of the parties must be distinguished from those cases where there is no partnership, but the per- sons have estopped themselves from denying its existence. See § 950 et seq. 10 Winstanley v. Gleyre, 146 111. 27; 34 N. E. 628; Holmes v. Mc- Cray, 51 Ind. 358; 19 Am. Rep. 735; Pennybacker v. Leary, 65 la. 220; 21 N. W. 575; Richards v. Grinnell, 63 la. 44; 50 Am. Rep. 727; 18 N. W. 668; Jones v. Davies, 60 Kan. 309; 72 Am. St. Rep. 354; 56 Pac. 484; Simpson v. Tenney, 41 Kan. 561; 21 Pac. 634; Hunter v. White- head, 42 Mo. 524; Chester v. Dick- erson, 54 N. Y. 1 ; 13 Am. Rep. 550; Yeoman v. Lasley, 40 O. S. 190; Hulett V. Fairbanks, 40 O. S. 233; Spencer v. Jones, 92 Tex. 516; 71 Am. St. Rep. 870; 50 S. W. 118; Canada v. Barksdale, 76 Va. 899. 11 Adamson v. Guild, 177 Mass. 331; 58 N. E. 1081; Densmore v. Mathews, 58 Mich. 616; 26 N. W. 146; Seabury v. Bolles, 51 N. J. L. 103; 11 L. R. A. 136; 16 Atl. 54; Spencer v. Jones, 92 Tex. 516; 71 Am. St. Rep. 870; 50 S. W. 118. 12 Morgan v. Parrel, 58 Conn. 413 18 Am. St. Rep. 282; 20 Atl. 614 Schmidt v. Balling, 91 111. App 388; Janney v. Springer, 78 la. 617 16 Am. St. Rep. 460; 43 N. W. 461 Kingsbury v. Thorp, 61 Mich. 216 28 N. W. 74; Farmers' Ins. Co. v. Ross, 29 O. S. 429. 13 Chapman v. Hughes, 104 Cal. 302; 37 Pac. 1048; 38 Pac. 109; Webster v. Clark, 34 Fla. 637; 43 Am. St. Rep. 217; 27 L. R. A. 126; 16 So. 601; Jones v. Davies, 60 Kan, 309; 72 Am. St. Rep. 354; 56 Pac. 484; Magovern v. Robertson, 116 N. Y. 61; 5 L. R. A. 589; 22 N. E. 398; Spaulding v. Stubbings, 86 Wis. 255; 39 Am. St. Rep. 888; 56 N. W. 469. 14 Cameron v. Ry., 108 La. 83; 32 So. 208. PARTNERSHIP. 1471 through the liability of its partners. Without statutory a^u- thority it cannot be sued in its firm name/^ A statute allowing a suit against a firm by the firm name does not destroy the Common Law right to sue the individual.^® §938. Name of partnership. A partnership may, in the absence of statutory provision, transact business under an arbitrary or fictitious name.^ Some statutes forbid a partnership to use a name which will deceive the general public as to the identity of the members of the partnership.^ Under many of the statutes allowing a firm to sue in its firm name it must file a certificate with some specified officer showing the true names of the partners.^ This statute does not apply to a firm whose name shows the surnames of its partners,* or to a foreign partnership which has no place of doing business within the state.^ A partnership having a ficti- tious name must file a new certificate on a change in member- ship, or it cannot take a cognovit judgment.® §939. Joint ownership. The real test of the existence of a partnership is a community of interest in the partnership business. Joint ownershij)^ or a 15 Fox V. Grocery Co. (Ky.), GO 3 Calvert v. Newberger, 20 Ohio S. W. 414. C. C. 35.3; 11 Ohio C. D. 184. 16 Davidson v. Knox, 67 Cal. 143; * Carlock v. Cognacci, 88 Cal. 7 Pac. 413; Sawyer v. Armstrong, 600; 26 Pac. 597; Pendleton v. 23 Colo. 287; 47 Pac. 391; Craig v. Cline, 85 Cal. 142; 24 Pac. 659; Smith, 10 Colo. 220; 15 Pac. 337; Guiterman v. Wishon, 21 Mont. 458; Peabody v. Oleson, 15 Colo. App. 54 Pac. 566; Czatt v. Case, 61 O. S. 346; 62 Pac. 234. 392; 55 N. E. 1004. iWinship v. Bank, 5 Pet. (U. S.) 5 Swope v. Burnham, 6 Okla. 736; 529; Manufacturers', etc., Bank v. 52 Pac. 924. Winship, 5 Pick. (Mass.) 11; 16 6 Cobble v. Bank, 63 O. S. 528; Am. Dee. 369; Holbrook v. Ins. Co., 59 N. E. 221. 25 Minn. 229; Kelley v. Bourne, 15 i Anaconda, etc., Co. v. Mining Or. 476; 16 Pac. 40. Co., 17 Mont. 519; 43 Pac. 924; 2 Gay v. Seibold, 97 N. Y. 472 ; 49 State Bank v. Kelley Co., 47 Neb. Am. Rep. 533; Zimmerman v. Er- 678; 66 N. W. 619; rehearing, 49 hard, 83 N. Y. 74; 38 Am. Rep. Neb. 242; 68 N. W. 481; Dunham 396. V. Loverock, 158 Pa. St. 197; 38 1472 PAGE ON CONTKACTS. joint leasing" of property does not constitute a partnership. So a partnership was not formed where the owner of property transferred it to others to enable them to form a corporation, stock in which was to be part consideration for the property.' So a communistic society owning all jiroperty in common but not carrying on any business is not a partnership.* §940. Sharing profits. Sharing profits and losses is so usjial an attribute of a part- nership that it is implied from the relationship, and there need not be an express agreement to share losses.^ An agreement to share losses is implied from a contract to share net profits.^ So where A is to furnish capital, B to furnish labor, and both to share in the profits, a sharing of losses is implied.' By express contract, however, there may be a partnership in which there is no sharing of losses.* Conversely, if the contract pro- vides for a sharing in profits and losses in business it is ijrima facie a partnership contract.^ However, as the question is one of the intention of the parties, it is not safe to make even this an arbitrary test. If there is no community of interest in the business transaction, mere sharing of profits and losses by spe- cial contract does not constitute a partnership f as where A, Am. St. Rep. 838; 27 Atl. 990; 4 Leeds v. Townsend. 89 111. App. Strickley v. Hill, 22 Utah 257; 83 646; Jones v. Murphy, 93 Va. 214; Am. St. Rep. 786; 62 Pac. 893; Fish 24 S. E. 825. V. Thompson, 68 Vt. 273 ; 35 Atl. 5 Straus v. Kohn. 83 111. App. 174 ; Ferguson v. Gooch, 94 Va. 1 ; 497 ; Atchinson, etc., Ry. v. Huckle- 40 L. R. A. 234; 26 S. E. 397. bridge, 62 Kan. 506; 64 Pac. 58; 2 0ttison V. Edmonds, 15 Wash. Xoyes v. Tootle, 2 Ind. Ter. 144; 48 362; 46 Pac. 398. S. W. 1031; Hart v. Hiatt, 2 Ind. 3 Hosier v. Parry, 60 O. S. 388; Ter. 245; 48 S. W. 1038; Winter v. 54 N. E. 364. Pipher, 96 la. 17; 64 N. W. 663; 4 Teed v. Parsons, 202 111. 455; Bryan v. Bullock, 119 N. C. 193; 25 66 N. E. 1044; reversing, 100 HI. S. E. 865; Commercial Bank v. Mil- App. 342. ler, 96 Va. 357; 31 S. E. 812; Smith 1 Gates V. Johnson, 56 Xeb. 808; v. Putnam, 107 Wis. 155; 82 N. W. 77 N. W. 407. 1077; rehearing denied, 83 N. W. 2 Johnson v. Carter, 120 la. 355; 288. 94 N. W. 850. 6 Xational Surety Co. v. Town- 3 Dow V. Dempsey, 21 Wash. 86; send, etc., Co.. 176 111. 156; 52 N. E. 57 Pac. 355. 938; affirming, 74 111. App. 312. PARTNERSHIP. 1473 the owner of a farm and the implements thereon, leased it to B, who w^as to manage it, A to have two-thirds of the profits or pay two-thirds of the losses, B the other third/ So one partner's sharing profits and losses with a stranger does not make him a partner.^ An agreement to share profits alone is prima facie a partnership contract, though the inference is not as strong as from a sharing of both profits and losses.^ At English Law an attempt was made to distinguish between a compensation equal to a share of the profits, and a share of the profits as profits, holding a partnership always to exist in the latter case as a matter of law/** This arbitrary distinction was overthrown in England ;^^ and at Modern Law contracting for a sharing of profits does not constitute a partnership if the parties do not intend a community of interest/^ Thus a promise to pay a cer- 7 Bradley v. Ely, 24 Ind. App. 2 ; 79 Am. St. Rep. 251; 56 N. E. 44. 8 O'Connor v. Sherley, 107 Ky. 70; 52 S. W. 1056. 9 Paul V. Culluin, 132 U. S. 539; London, etc., Corp. v. Drennen, 116 U. S. 461; Beauregard v. Case, 91 U. S. 134; Pleasants v. Fant, 22 Wall. (U. S.) 116; Tyler v. Wad- dingham, 58 Conn. 375; 8 L. R. A. 657; 20 Atl. 335; Dame v. Kemp- ster, 146 Mass. 454; 15 N. E. 927; Torbert v. Jeflfrey, 161 Mo. 645; 61 S. W. 823 ; Fourth National Bank V. Altheimer, 91 Mo. 190; 3 S. W. 858; First National Bank v. Gal- laudet, 122 N. Y. 655; 25 N. E. 909; Southern Fertilizer Co. v. Reams, 105 N. C. 283; 11 S. E. 467; Cos- sock V. Burgwyn, 112 N. " C. 304; 16 S. E. 900; Sawyer v. Bank, 114 N. C. 13; 18 S. E. 949; Wood v. Vallette, 7 O. S. 172; First Na- tional Bank v. Ballard, 19 Ohio C. C. 63; 10 Ohio C. D. 298; Wessels v. Weiss, 166 Pa. St. 490; 31 Atl. 247; Walker v. Tupper, 152 Pa. St. 1; 25 Atl. 172; Wipperman v. Stacy, 80 Wis. 345; 50 N. W. 336; Spauld- 93 ing V. Stubbings, 86 Wis. 255; 39 Am. St. Rep. 888; 56 N. W. 469. 10 Waugh V. Carver, 2 H, Bl. 235. 11 Cox V. Hickman, 8 H. L. Cas. 268. 12 Cox V. Hickman, 8 H. L. Cas. 268; Wilson v. Edmonds, 130 U. S. 472 ; Meehan v. Valentine, 145 U. S. 611; Johnson v. Rothschilds, 63 Ark. 518; 41 S. W. 996; Cadenasso v. Antonelle, 127 Cal. 382; 59 Pae. 765; Nofsinger v. Goldman, 122 Cal. 609; 55 Pac. 425; Coward v. Clan- ton, 122 Cal. 451; 55 Pac. 147; Butler V. Hinckley, 17 Colo. 523; 30 Pac. 250; Morton v. Nelson, 145 111. 586; 32 N. E. 916; Grinton v. Strong, 148 111. 587; 36 N. E. 559; Gottschalk v. Smith, 156 111. 377; 40 N. E. 937; Clark v. Barnes, 72 la. 563; 34 N. W. 419; Porter v. Curtis, 96 la. 539; 65 N. W. 824; Winter v. Pipher, 96 la. 17; 64 N. W. 663; Leonard v. Sparks, 109 La. 543; 33 So. 594; McWilliams v. El- der, 52 La. Ann. 995; 27 So. 352; Drovers', etc.. Bank v. Roller, 85 Md. 495; 60 Am. St. Rep. 344; 36 L. R. A. 767; 37 Atl. 30; Wild v. 1474 PAGE ON CONTEACTS. tain percentage of profits for the use of a machine^^ or of a manufacturing plant," or for a lease of property/^ or for services rendered in the business/*' as for managing and selling land/^ or for services and the use of a patent-right/^ or for saw- ing logs for another/'' or cutting and rafting logs/" or for selling cross-ties for another,"^ or to share commissions for customers furnished/^ are none of them partnership contracts if the ele- Davenport, 48 N. J. L. 129; 57 Am. Rep. 552; 7 Atl. 295; Whiting v. Leakin, 66 Md. 255; 7 Atl. 688; Murphy v. Craig, 76 Mich. 155; 42 N. W. 1097; Clifton v. Howard, 89 Mo. 192; 58 Am. Rep. 97; 1 S. W. 26; Kellogg Newspaper Co. v. Far- rell, 88 Mo. 594; Breman Savings Bank v. Saw Co., 104 Mo. 425; 16 S. W. 209; Congdon v. Olds, 18 Mont. 487; 46 Pac. 261; Whitney V. Bank, 50 Neb. 438; 69 N. W. 933; ^tna Ins. Co. v. Bank, 48 Neb. 544; 67 N, W. 449 ; Eastman v. Clark, 53 N. H. 276; 16 Am. Rep. 192; Jernee V. .Simonson, 58 N. J. Eq. 282 ; 43 Atl. 370; Seabury v, Bolles, 51 N. J. L. 103; 11 L. R. A. 136; 16 Atl. 54; Wild v. Davenport, 48 N. J. L. 129; 57 Am. Rep. 552; 7 Atl. 295; Grapel v. Hodges, 112 N. Y. 419; 20 N. E. 542; Waverly National Bank v. Hall, 150 Pa. St. 466; 30 Am. St. Rep. 823; 24 Atl. 665; Dun- ham V. Loverock, 158 Pa. St. 197; 38 Am. St. Rep. 838; 27 Atl. 990; Butler Savings Bank v. Osborne, 159 Pa. St. 10; 39 Am. St. Rep. 665; 28 Atl. 163; Taylor v. Fried, 161 Pa. St. 53; 28 Atl. 993; Ryder v. Jacobs, 182 Pa. St. 624; 38 Atl. 471 ; Brown v. W^atson, 72 Tex. 216; 10 S. W. 395; Riedeburg v. Schmitt, 71 Wis. 644; 38 N. W. 336. 13 Nofsinger v. Goldman, 122 Cal. 609; 55 Pac. 425. 14 Thornton v. McDonald, 108 Ga. 3 ; 33 S. E. 680. 15 Bradley v. Ely, 24 Ind. App. 2; 79 Am. St. Rep. 251; 56 N. E. 44; Garrett v. Publishing Co., 61 Neb. 541; 85 N. W. 537; Austin v. Neil, 62 N. J. L. 462; 41 Atl. 834; Wormser v. Lindauer, 9 N. M. 23; 49 Pac. 896; State v. Sanders, 52 S. C. 580; 30 S. E. 616; Houston, etc., Co. V. McFadden, 91 Tex. 194; 40 S. W. 216; 42 S. W. 593. 16 Gulf, etc., Co. V. Boyles, 129 Ala. 192; 29 So. 800; Johnson v. Carter, 120 la. 355; 94 N. W. 850; Morrow v. Murphy, 120 Mich. 204; 79 N. W. 193; modified, 80 N. W. 255; Canton Bridge Co. v. Eaton Rapids, 107 Mich. 613; 65 N. W. 761; Stone v. Mfg. Co., 65 N. J. L. 20; 46 Atl. 696; Cornell v. Redrow, 60 N. J. Eq. 251; 47 Atl. 56; Kootz v. Tuvian, 118 N. C. 393; 24 S. E. 776; Murray City Ginning Co. v. Bank (Tex. Civ. App.), 61 S. W. 508. IT Coward v. Clanton', 122 Cal. 451; 55 Pac. 147; Mayfield v. Tur- ner, 180 HI. 332; 54 N. E. 418; Grigsby v. Day, 9 S. D. 585; 70 N. W. 881. 18 Warwick v. Stockton, 55 N. J. Eq. 61; SQ Atl. 488. 19 Hodges V. Rogers, 115 Ga. 951; 42 S. E. 251. 20 Gore v. Benedict (Tenn. Ch. App.), 61 S. W. 1054. 21 Padgett V. Ford, 117 Ga. 508 ;■ 43 S. E. 1002. 22 Wheeler v. Lack, 37 Or. 238; 61 Pac. 849. PARTNEKSHIP. 1475 ments of community of interest and common control of business are lacking. A loan of money for use in partnership business,^* even if a percentage of the profits is given therefor"* and the lender gives advice,"^ or manages the business as an agent,"® or leases a fishery and lends money to operate it for one-half of the net proceeds as rental/^ none of them constitute the lender a partner. So a contract to indemnify against a certain per cent, of loss in consideration of a corresponding per cent, of the profits is not a partnership."^ So a contract by which one furnishes logs and the other saws them into lumber and they divide the lumber^'' or the profits ^° is not a partnership. If, however, there is a community of interest in the capital of the business the transaction creates a partnership,^^ even if the transaction assumes the outward form of a loan.^" So contracts between A and B whereby A is to buy goods of certain kinds and B is to sell them, are held to create partnerships whether profits alone^^ or both profits and losses"* are to be shared. But 23 Johnson v. Carter, 120 la, 355 ; 94 N. W. 850; Richardson v. Carl- ton, 109 la. 515; 80 N. W. 532; Krall V. Forney, 182 Pa. St. 6; 37 Atl. 846, 24 /n re Young (1896), 2 Q. B. 484; King v. Whichelow, 64 L. J. Q. B. N. S. 801 ; Meehan v. Valen- tine, 145 U. S, 611; Randle v. Bar- nard, 81 Fed. 682; Thillman \. Ben- ton, 82 Md. 64; 33 Atl, 485; Clayton V, Davett (N. J. Ch.), 38 Atl. 308; State V, Hunt, 25 R. I. 69; 54 Atl. 937. Contra, Rahl v. Orendorff Co., 27 Tex, Civ, App. 72; 64 S. W. 1007, 25 Page V, Simpson, 188 Pa. St, 393; 68 Am, St. Rep, 874; 41 Atl. 638. 26 7,1 re Young (1896), 2 Q, B. 484, 27 Hanthorn v, Quinn, 42 Or, 1 ; 69 Pac, 817. 28 Haines's Estate, 17G Pa, St. 354; 35 Atl, 237. 29 Thornton v. George, 108 Ga. 9; 33 S. E. 633. 30 (A share of profits for sawing logs, drying lumber and shipping it.) J. A. Fay, etc., Co. v. Ouachita, etc., Co., 51 La. Ann. 1708; 26 So. 386. Contra, where one was to furnish logs, the other to saw them, and the profits to be divided. Loveland v. Peter, 108 Mich. 154; 65 N. W. 748. 31 Huggins V, Huggins, 1 17 Ga. 151; 43 S. E. 759; Snyder v. Lind- sey, 157 N. Y. 616; 52 N. E. 592; Orvis V. Curtiss, 157 N. Y. 657; 68 Am. St. Rep. 810; 52 N. E. 690; re- hearing denied, 53 N. E. 1129. 32 Johnson v, Rothschilds, 63 Ark. 518; 41 S, W, 996. Citing Pooley V, Driver, L. R. 5 Ch. Div. 458; Du- bos V. Jones, 34 Fla. 539; 16 So. 392; Harvey v. Childs, 28 O. S. 319; 22 Am. Rep. 387. 33 Torbert v, Jeff"rey, 101 Mo. 645; 61 S. W. 823. ' • 34 Atchison, etc., Ry. v. Huckle- bridge, 62 Kan, 506; 64 Pae, 58, 1476 PAGE ON CONTRACTS. a contract whereby A sells land to B, and C is to erect certain car-shops on part of it, and on resale the profits are to be divided between B and C, does not create a partnership. A cannot, therefore, hold C for the purchase price of the realtj.^^ Shar- ing in gross receipts is not a partnership,^® as where A trained B's horses, and they divided the winnings.^^ So the ordinary form of a contract between a depot company and a railroad company,^^ or between connecting carriers,^* does not constitute a partnership. §941. Examples of partnership. A partnership is formed by a combination of two land-owners to sell the timber off their lands,^ or to sell land," or where one is to furnish money to manufacture an article patented by the other,^ or wdiere one is to furnish estimates and iron for bridges and the other is to furnish other material and work and solicit orders,* or where two attorneys take specified cases together, and assume the costs and divide the profits.^ But an agreement betw'een A and B, attorneys, on the one part, and C, a client, on the other, whereby A and B were to manage certain litigation for C, C to pay costs, expenses and fees, and A and B to divide the fees, does not constitute A and B partners.® So creditors of an insolvent partnership who allowed the business to be car- ried on to make a profit for them were held as partners.^ A 35 Hughes V. Ewing, 162 Mo. 261 ; 55 L. R. A. 481 ; 52 S. W. 301. 62 S. W. 465. 1 Tanner v. Hughes (Ky.), 50 S. 36 Shrum v. Simpson, 155 Ind. W. 1099. 160; 49 L. R. A. 792; 57 N. E. 708 2 Cronkrite v. Trexler, 187 Pa. (a cropping contract) ; Concannon St. 100; 41 Atl. 22. V. Rose, 9 Kan. App. 791; 59 Pac. s Illinois, etc., Co. v. Reed, 102 la. 729; Beecher v. Bush, 45 Mich. 188; 538; 71 N. W. 423. 40 Am. Rep. 465; 7 N. W. 785; Mc- 4 Clinton, etc., Works v. Bank, 103 Arthur v. Ladd, 5 Ohio 514; Cedar- Wis. 117; 79 N. W. 47. berg V. Guernsey, 12 S. D. 77; 80 5 Southworth v. People, 183 HI. N. W. 159. 621; 56 X. E. 407; affirming, 85 111. 3T Stone V. Supply Co., 103 Ky. App. 289. 318; 45 S. W. 78. 6 Willis v. Crawford, 38 Or. 522; 38 Brady v. Ry.. 114 Fed. 100; 57 53 L. R. A. 904; 64 Pac. 866; 63 L. R. A. 712. Pac. 985. 39 Post V. R. R., 103 Tenn. 184; "Webb v. Hicks, 123 N. C. 244; PARTXERSniP. 14YY voluntary association of dredgers to fix prices and divide up Avork is not a partnership.* §942. Limited partnerships. Statutes of many states provide for limited partnerships, in which one partner is the general partner, personally liable for all the firm's debts, while the others are special partners, liable only for the amount contributed by them.^ The statute in such cases provides fully for filing a certificate showing the facts about the limited partnership and for publication as a means of giving notice. An attempted limited partnership which does not comply fully with the statute is a general partnership,^ as where publication is omitted,^ or the statutory statement is omitted,* or does not show the value of the contribution of the special partner as required by statute,^ or is false, as where it omits a mortgage,® or where it recites that a partner's share is paid in when it is not paid in for a week thereafter.'^ An at- tempted limited i^artnership becomes a general partnership where the assets on renewal were substantially less than at the original formation,^ or where assets of the old partnership are taken of such a value that it does not leave enough to pay old debts and the new firm assumes some of such debts,® or where all the property of the old insolvent partnership was set aside as the property of the special partner.^** A limited partnership be- 31 S. E. 479 [citing, Tayloe v. 5 Blumenthal v. Whitaker, 170 Pa. Bush, 75 Ala. 432; Hitchiiigs v. El- St. 309; 33 Atl. 103 (where a refer- lis, 12 Gray (Mass.) 449]. Contra, ence to an appraisement of such con- Fewell V. Surety Co., 80 Miss. 782; tribution filed in court was held in- 92 Am. St. Rep. 625; 28 So. 755. sufficient) . 8 Potter V. Dredging Co., 59 N. J. 6 First National Bank v. Creve- Eq. 422; 46 Atl. 537. ling, 177 Pa. St. 270; 35 Atl. 595. 1 Bobbins Electric Co. v. ^Yeber, 7 Myers v. Electric Co., 59 N. J. 172 Pa. St. 635; 34 Atl. 116. L. 153; 35 Atl. 1069. 2 Van Home v. Corcoran, 127 Pa. s Durgin v. Colburn, 176 Mass. St. 255; 4 L. E. A. 386; 18 Atl. 16; 110; 57 N". E. 213. Ussery v. Crusman (Tenn. Ch. » Lee v. Burnley, 195 Pa. St. 58; App.), 47 S. W. 567. 45 Atl. 668. 3 Davis V. Sanderlin, 119 N. C. lo Fourth Street National Bank V. 84; 25 S. E. 815. Whitaker, 170 Pa. St, 29V; 33 Atl. 4 Spencer, etc.. Co. v. Johnson, 53 100. S. C. 533; 31 S. E. 392. 1478 PAGE ON CONTEACTS. comes a general partnership on expiration of the time for which it was formed/^ But under a statute allowing a limited part- nership to succeed to a firm name it may succeed to the name of one who becomes a limited partner, even if without such succes- sion the use of his name would have made him a general part- ner/" §943. Joint stock companies. A partnership may by agreement issue stock and thus resem- ble a corporation in outward form without losing any of the essential attributes of a partnership.^ §944. Scope of partnership. The scope of a partnership is primarily a question of the in- tention of the partners. There is no restriction on the exercise of such powers as it chooses at any time to exercise, except such prohibitions on illegal, immoral or fraudulent conduct as apply equally to individuals.^ A partnership may itself be a member of another firm if the partners of the constituent firm consent thereto.^ If it appears that all the partners have either author- ized or ratified the contract, no further question as to its valid- ity ordinarily remains. The cases where the question of the validity of partnership contracts arises is where one partner has made the contract without specific authority from his co-part- 11 Sarmiento v. The Catharine C, A partnership is not a " corporation, 110 ]\Iich. 120; 67 N. W. 1085. joint-stock company, or association, 12 Groves v. Wilson, 168 Mass. or acting corporation or associa- 370; 47 N. E. 100. tion " for purposes of serving sum- 1 Wadsworth v. Duncan, 164 III. mons. In re Grossmayer, 177 U. S. 360; 45 N. E. 132; Hodgson v. Bald- 48, 50. win, 65 111. 532 ; Kenyon v. Will- i In this respect it differs sharply lams, 19 Ind. 44; Edwards v. Gaso- from corporations. See § 1067 et line Works, 168 Mass. 564; 38 L. R. seq. A. 791; 47 N. E. 502; Farnum v. 2 Willson v. Morse, 117 la. 581; Patch, 60 N. H, 294; 49 Am. Rep. 91 N. W. 823; Meador v. Hughes, 14 313; Carter v. McClure, 98 Tenn. Bush (Ky.) 652; McLaughlin v. 109; 60 Am. St. Rep. 842; 36 L. R. Mulloy, 14 Utah 490; 47 Pac. 1031; A. 282; 38 S. W. 585; Willis v. Commercial Bank v. Miller, 96 Va. Chapman, 68 Vt. 459; 35 Atl. 459. 357; 31 S. E. 812. PAKTNERSHIP. l-iTO ners. As to their implied scope partnersliips may be divided into the classes of the non-trading and the trading. Some pow" ers can be exercised by partners in partnership of either type. Thus a partner may retain an attorney to protect the interests of the firm.^ §945. Liability of partners on contract within scope of business. Liability to third persons on j)ai'taership contracts arises from the actual existence of the partnership in question, by ex- press acquiescence, by ratification and by estoppel. If a part- nership exists in fact, the partners are liable on contracts made within the scope of the partnership business by any one of the partners, if the adversary party knows of no limitation on his authority,^ even where the adversary party did not know who such partners were when he entered into such contract." If the contract is within the actual scope of the partnership business, the members are liable thereon, without any reference to prin- ciples of estoppel.^ Thus if a partner has authority to obtain certain information the partnership is liable for acts done by him to obtain such information.* Illustrations of the power of a partner to bind the firm within the general scope of its business are given in subsequent sections.^ 3 Tomlinson v. Broadsmith 229; Weir Furnace Co. v. Bodwell, (1896), 1 Q. B. 386. 73 Mo. App. 389; Jones v. Beekman iFlagg V. Stowe, 85 111. 164; (N". J. Eq.), 47 Atl. 71; Central, Baxter v. Rollins, 90 la. 217; 48 etc.. Bank v. Walker, 66 N. Y. 424; Am. St. Rep. 432; 57 N. W. 838; Ash v. Guie, 97 Pa. St. 493; 39 Am. Warren v.* French, 6 All. (Mass.) Rep. 818; Harrod v. Hamer, 32 Wis. 317; Mace v. Heath, 30 Neb. 620; 162. 46 K W. 918; Pooley v. Whitmore, 3 Chicago, etc.. Bank v. Kinnare, 10 Heisk. (Tenn.) 629; 27 Am. Rep. 174 m. 358; 51 N. E. 607; revers- 733. ing, 67 111. App. 186; Slater v. 2 Blanehard v. Kaull, 44 Cal. 440; Clark, 68 111. App. 433; Patterson v. Bigelow V. Gregory, 73 111. 197; Swickard (Ky.), 41 S. W. 435; Coleman v. Coleman, 78 Ind. 344; Vetsch v. Neiss, 66 Minn, 459; 69 Kaiser v. Bank, 56 la. 104; 41 Am. N. W. 315. Rep. 85; 8 N. W. 772; Johnson v. ^Hamlyn v. Houston (1903), 1 Carter, 120 la. 355; 94 N. W. 850; K. B. 81."^ Parrish v. Maupin (Ky.), 42 S. W. 5 See §§ 946, 947. 1121; Holbrook v. Ins. Co., 25 Minn. ■1-:S0 PAGE OJST CONTEACTS; §946. Non-trading firms. A partner in a non-trading firm has very limited power to bind tlie partnershij). A partner in a non-trading firm may contract for supplies/ but lie cannot otherwise contract firm debts," and he cannot give the firm's note even for the firm's debt, so as to bind his partners if they object thereto.^ Thus a member of a law firm cannot borrow money for the firm,^ or bind the firm by a note,° or agree to collect a note without charge,^ or be a constructive trustee so as to charge his partner with knowledge.'^ So one of a firm of solicitors cannot allow a third person to use the firm name.* A member of a mining partnership has not general power to bind his partners." So a member of a firm of physicians/'' publishers," or planters,^^ iMcPherson v, Bristol, 122 Mich. 354; 81 N". W. 254. 2 Schellenbeck v. Studebaker, 13 Ind. App. 437; 55 Am. St. Rep. 240; 41 N. E. 845; Breckinridge v. Shrieve, 4 Dana (Ky.) 375; Smitli V. Sloan, 37 Wis. 285; 19 Am. Rep. 757. sDowling V. Bank, 145 U. S. 512; Teed v. Parsons, 202 111. 455 ; 66 N. E. 1044; reversing, 100 111. App. 342; Schellenbeck v. Studebaker, 13 Ind. App. 437; 55 Am. St. Rep. 240; 41 K E. 845; Lee v. Bank, 45 Kan. 8; 11 L. R. A. 238; 25 Pac. 196; Harris v. Baltimore, 73 Md. 22; 25 Am. St. Rep. 565; 8 L. R. A. 677; 17 Atl. 1046; 20 Atl. Ill, 985; Mc- Pherson v. Bristol, 115 Mich, 258; 73 N. W. 236 ; Stavnow v. Kenefick, 79 Mo. App. 41 ; National, etc.. Bank V. Xoyes, 62 N. H. 35; Walker v. Walker, 66 Vt. 285; 29 Atl. 146; Snively v. Matheson, 12 Wash. 88; 50 Am. St. Rep. 877; 40 Pac. 628; Smith V. Sloan, 37 Wis, 285; 19 Am. Rep. 757. *Worster v. Forbush, 171 Mass. 423; 50 N. E. 936. sHedley v. Bainbridge 3 Q, B. 316; Garland v. Jacomb, L. R. 8 Exch. 216; Lexj v, Pyne, Car. & M. 453; Breckinridge v. Shrieve, 4 Dana (Ky.) 375. 6 Davis V. Dodson, 95 Ga. 718; 51 Am. St, Rep. 108; 29 L, R, A. 496; 22 S. E. 645. (Hence if he misap- propriates the money, the firm is not liable.) 7 Mara v. Browne (C. A.) (1896), 1 Ch. 199, 8 Marsh v. Joseph (C. A.) (1897), 1 Ch. 213. sMcConnell v. Denver, 35 Cal. 365; 95 Am. Dec. 107; Skillman v. Lachman, 23 Cal. 199; 83 Am. Dec. 96 ; Patrick v. Weston, 22 Colo, 45 ; 43 Pac, 446; Judge v. Brasewell, 13 Bush (Ky.) 67; Congdon v. Olds, 18 Mont. 487; 46 Pac. 261; Wal- dron V. Hughes, 44 W. Va. 126; 29 S. E. 505. 10 Crosthwait v. Ross, 1 Humph. (Tenn.) 23; 34 Am. Dee. 613, 11 Pooley V, Whitmore, 10 Heisk. (Tenn.) 629; 27 Am. Rep. 733. 12 Benton v. Roberts, 4 La. Ann. 216; Prince v. Crawford, 50 Misa- 344. PAETNEESIIIP. 1481 3annot bind the firm bj a note. A firm engaged in the business of contracting and building/^ or digging tunnels," or in paving and curbing streets/^ or in keeping a tavern/^ or in milling/''^ is a non-tradinc; firm. §947. Trading firms. A member of a trading firm may bind his firm by borrowing money on their behalf/ especially if the partnership has ac- quiesced in similar loans on former occasions,^ and giving their note/ or making drafts for them/ even if the money thus ad- vanced in good faith is in fact diverted by the borrowing part- ner.^ So where A indorsed a note for a firm, in good faith, though the proceeds were not applied to the firm's debts, and A had to jDay the note, he may recover from the firm.*' A partner may give a chattel mortgage.'^ A partner cannot bind the firm by accommodation j^aper,^ or by a contract of guaranty,® nor by 13 Snively v. Matheson, 12 Wash. 88; 50 Am, St. Rep. 877; 40 Pac. 628. 14 Gray v. Ward, 18 111. 32. 15 Harris v. Baltimore, 73 Md. 22; 25 Am. St. Rep. 565; 8 L. R. A. o77; 17 Atl. 1046; 20 Atl. Ill, 985. iG Cocke V. Bank, 3 Ala. 175. 17 Lanier v. McCabe, 2 Fla. 32; 48 Am. Dec. 173, 1 First National Bank v. Grignon, 7 Ida. 646; 65 Pac. 365. 2 Salt Lake City Brewing Co. v. Hawke, 24 Utah 199; 66 Pac. 1058. (A loan by a brewery to a saloon, borrowed to cash miners' checks.) 3 Morris v. Maddox, 97 Ga. 575; 25 S. E. 487; First National Bank v. Grignon, 7 Ida. 646; 65 Pac. 365; Dickson v. Dryden, 97 la. 122; 66 N. W. 148; Carter v. Steele, 83 Mo. App. 211. 4 Farmer v. Bank (Ky.), 51 S. W. 586. sDowling V. Bank, 145 U. S. 512; Winship v. Bank, 5 Pet. (U. S.) 529; Sherwood v. Snow, 46 la. 481; 26 Am. Rep. 155; Smith v, Collins, 115 Mass. 388; Stimsou v. Whitney, 130 Mass. 591; Fuller v. Percival, 126 Mass. 381; Atlas National Bank V. Savery, 127 Mass. 75; 34 Am. Rep. 345; Reed v. Bacon, 175 Mass. 407; 56 N. E. 716; Stevens v. Mc- Lachlan, 120 Mich. 285; 79 N. W. 627; First National Bank v. Mor- gan, 73 N. Y. 593; Real Estate In- vestment Co. V. Smith, 162 Pa. St. 441 ; 29 Atl. 855. eMeyran v. Abel, 189 Pa. St. 215; 69 Am. St. Rep. 806; 42 Atl. 122. 7 Morris v. Hubbard, 14 S. D. 525; 86 N. W. 25; Rock v. Collins, 99 Wis. 630; 67 Am. St. Rep. 885; 75 N. W. 426. But in Louisiana a partner must have express authority to execute a mortgage. Kahn v. Becnel, 108 La. 296; 32 So. 444. s Union National Bank v. Wick- ham, IS Ohio C. C. 685; 6 Ohio C. D. 790. 9 Kelley-Goodfellow Shoe Co. v. Lumber Co., 86 Mo. App. 438. 1482 PAGE ON CONTEACTS. a note for a debt of their predecessors/" nor by a note given ior an individual debt in wbole/^ or in part/" even to prevent sucb creditor from reaching such partner's interest in such firni/^ nor can he give a note in renewal of a debt from which the firm has been released by failure to protest/* nor can he give a note due at once for debt not yet due.^^ Ordinarily he cannot as- sume debts of others/® or bind the firm for his own debt/^ and he cannot pay individual debts with firm money/^ or prefer indi- vidual debts in assignment/® or mortgage firm property for an individual debt,^° nor can he bind the firm by a promise to in- demnify a surety/^ though he may bind the finn as surety on their own debt."" Thus he may guarantee a note sold by them,"^ or may buy a stock of goods and assume debts against it, in or- der to secure their own debt/* or may give a mortgage to secure a firm debt, even though the notes of individual partners were originally given therefor.^^ He cannot confess judgment against the firm,"'' though as such judgment is voidable only at 10 Broughton v. Sumner, 80 Mo. App. 386. iiTeny v. Piatt. 1 Penn. (Del.) 185; 40 Atl. 243; Cody v. Bank, 103 Ga. 789; 30 S. E. 281; McPvae v. Campbell, 101 Ga. 662; 28 S. tl. 920; Brobston v. Penniman, 97 Ga. 627; 25 S. E. 3.50. 12 Hatch V. Reid, 112 Mich. 430; 70 N. W. 889; Huttig, etc., Co. v. Mc:\Iahon, 81 Mo. App. 440. i3Durrell v. Staples, 169 Mass. 49; 47 N. E. 441. 14 Meyer v. Hegler, 121 Cal. 682 ; 54 Pac. 271. isMcCord Co. v. Callaway, 109 Ga. 796; 35 S. E. 171. 16 Rice V. Jackson, 171 Pa. St. 89; 32 Atl. 1036. 17 Lewin v. Barry, 15 Colo. App. 461; 63 Pac. 121 (for rent); Tal- bott V. Plaster Co., 86 Mo. App. 558; \Yoolson v. Fuller, 71 Vt. 335; 45 Atl. 753 (for clothes). 18 Columbia National Bank v. Rice, 48 Xcb. 428; 67 N. W. 165; Brown v. Pettit, 178 Pa. St. 17; 56 Am. St. Rep. 742; 34 L. R. A. 723; 35 Atl. 865. 19 Field V. Romero, 7 N. M. 630 ; 41 Pac. 517. 2oMcCord Co. v. Callaway, 109 Ga. 796; 35 S. E. 171; Johnson v. Shirley, 152 Ind. 453; 53 N. E. 459; Mansur, etc., Co. v. Ritchie, 143 Mo. 587; 45 S. W. 634 (even if all part- ners concur — but see Buchanan V. Bank (Tenn. Ch. App.), 57 S. W. 207). 21 Seeberger v. Wyman, 108 la. 527 ; 79 N. W. 290. 22 McLaughlin v. Mulloy, 14 Utah 490; 47 Pac. 1031. 23 McXeal v. Gossard, 6 Okla. 363 ; 50 Pac. 159. 24 National Bank v. Dickinson, 107 Ala. 265; 18 So. 144. 25 \Yest Coast Grocery Co. v. Stin- son, 13 Wash. 255- 43 Pac. 35. 2G Harper v. Cunningham, 8 App. D. C. 430. Contra, Adams v. Leeds Co., 195 Pa. St. 70; 45 Atl. 666. .PARTNERSHIP. 1483 the election of the partners, a creditor cannot attack it.^^ One partner cannot make a general assignment for the benefit of the firm's creditors^ if the other partners are accessible,"^ though he can if thej have absconded.-** He cannot mortgage all the prop- erty of the firm even for firm debts if the other partners are accessible,^" but he may give a chattel mortgage on all the firm's property in the absence of his partners.^^ He cannot execute a sealed instrument on behalf of the firm,^" even if a sealed in- strument is negotiable by law in the state iii which it is exe- cuted,^^ but if a seal is not necessary to its validity, it may be rejected as surplusage.^* While a partner in a trading firm has power to sell property of the firm in the general course of the firm's business, he has no power to sell partnership property, the sale of which will make it practically impossible for the firm to continue in business.^^ Thus a member of a farming firm can- not sell the live stock and farming implements.^® He cannot sell property of the firm in which it does not deal.^' He can buy and sell such articles as are proper in the exercise of the business of the firm, and the firm is bound by such contract even if other partners have already sold all of such goods on hand.^* He cannot buy, on speculation, articles in which the firm deals 27 Belcher v. Curtis, 119 Mich. 1; 25 S. E. 298; Waldron v. Hughes, 75 Am. St. Rep. 376; 77 N. W. 310; 44 W. Va. 126; 29 S. E. 505. McAlpin Co. v. Finsterwald, 57 O. S. 33 Hull v. Young, 30 S. C. 121 ; 3 524; 49 N. E. 784. L. R. A. 521; 8 S. E. 695. 28 Parker v. Brown, 85 Fed. 595; 34 Waldron v. Hughes, 44 W. Va. 29 C. C. A. 357; Mills v. Miller, 109 126; 29 S. E. 505. la. 688; 81 N. W. 169; Loeb v. Pier- 35 Lowman v. Sheets, 124 Ind. pont, 58 la. 469; 43 Am. Rep. 122; 416; 7 L. R. A. 784; 24 N. E. 351; 12 N. W. 544; Shattuck v. Chan- Hewitt v. Sturdevant, 4 B. Mon. dler, 40 Kan. 516; 10 Am. St. Rep. (Ky.) 453; Cayton v. Hardy, 27 Mo. 227; 20 Pac. 225; Fox V. Curtis, 176 536; Phillips v. Thorp, 12 Okla. Pa. St. 52; 34 Atl. 952. 617; 73 Pac. 268. 29Voshmik v. Urquhart, 91 Wis. 36 Rutherford v. McDonnell, 66 513; 65 N. W. 60. Ark. 448; 51 S. W. 1060. Contra, soMcGrath v. Cowen, 57 O. S. one partner may sell the entire 385; 49 N. E. 338; McManus v. stock, Hetterman Bros. Co. v. Young Smith, 37 Or. 222; 61 Pac. 844. (Tenn. Ch. App.), 52 S. W. 532. siBeckman v. Noble, 115 Mich. 37 pimpton v. Taylor, 11 Ohio C. 523; 73 N. W. 803. D. 570. 32Milwee v. Jay, 47 S. C. 430; ss Bass Dry Goods Co. v. Mfg. 1484 PAGE ON CONTKACTS. regularly.^* A member of a firm of cotton factors cannot make a valid sale of cotton for his firm on speculation.*" He can com- promise claims if in good faitli/^ but not where the only consid- eration for such compromise is a personal advantage received by such partner.*^ One partner cannot contract for liquidated damages,*^ or waive exemptions/* or bind his partner by repre- sentations as to property formerly owned by the firm which has been divided between the partners and has become individual property.*^ A member of a firm of real-estate brokers may agree to pay a commission to an agent acting for the firm in making sales/'' or may revoke a contract to give his firm ex- clusive right to sell realty on commission in a certain time.*^ A partner of a firm in the bicycle business may give a note for a rubber and cement business /^ a partner in a saw mill may con- tract to return borrowed lumber.*^ A partner in a stage line has no power to contract for mining/" a partner to train and race horses, cannot sell one owned by them as tenants in com- mon/^ and power to reorganize and issue new bonds is not power to change the gauge of the road.^^ Co., 113 Ga. 1142; 39 S. E. 471. ssMaurin v. Lyon, 69 Minn. 257; 65 Am. St. Rep. 568 ; 72 N. W. 72. 40 Sparks v. Flannery, 104 Ga. 323 ; 30 S. E. 823. 4i\Yalker v. Lumber Co. (Ky.)j 35 S. W. 272. 42 Remington v. Ry. Co., 109 Wis. 1.54; 84 N. W. 898; 85 N. W. 321 (where a fee due to a firm of attor- neys was compromised by one of them by accepting employment as attorney at a salary which formed a reasonable compensation for such services). So, Davis v. Dodson, 95 Ga. 718; 51 Am. St. Rep. 108; 29 L. R. A. 496; 22 S. E. 645. 43 Waldron v. Hughes, 44 W. \'^. 126; 29 S. E. 505. 44 Guscott v. Roden, 112 Ala. 632; 21 So. 313. 45 Spencer v. Jones, 92 Tex. 516; 71 Am. St. Rep. 870; 50 S. W. 118; reversing, 47 S. W. 29, 665. 46 Boyd V. Watson, 101 la. 214; 70 X. W. 120. 47 Harper v. McKinnis, 53 O. S. 434; 42 N. E. 251 (even in order to buy such realty himself). 48 Ketcham National Bank v. Hagen, 164 N. Y. 446; 58 N. E. 523. 49 Forbes v. Morehead (Ky.), 58 S. W. 982. 50 Gutheil v. Gilmer, 23 Utah 84 ; 63 Pae. 817; Cavanaugh v. Salis- bury, 22 Utah 465 ; 63 Pac. 39. 51 Williams v. Tam, 131 Cal. 64; 63 Pac. 133. 52 Browning v. Kelley, 124 Ala. 645: 27 So. 391; Modifying on re- hearing, 113 Ala. 420; 21 So. 928. PAETNEESHIP. 1485 §948. Express acquiescence. A contract to which all the members of a partnership give their consent is binding upon them/ even if outside the ordinary business of the partnership." Thus all the partners may agree to an assignment for the benefit of creditors.^ So with the eon- sent of all the partners, one partner may apply partnership funds to an individual liability.* §949. Liability of partners on contract without scope of business. If a contract is made by one partner in excess of his authority and no circumstances of estoppel exist, the remaining partners are not liable upon such contract.^ If the firm consists of two partners, one of them can avoid liability on future contracts by giving notice of his dissent to the person with whom such con- tract is made,^ even if under such contract property was actually received by the firm.^ So if A and B are partners and X before selling to the firm through A on credit is notified by B not to sell on credit, X cannot, after selling on credit, hold B.* If the firm consists of more than two members a minority cannot re- voke the authority of agents previously appointed and empow- ered to act.^ So employment of an attorney by the majority may bind the firm even as against the active dissent of one part- iKling V. Tunstall, 109 Ala. 608; Peterson v. Armstrong, 24 Utah 96; 19 So. 907; Seeberger v. Wyman, 06 Pac. 767. 108 la. 527; 79 N. W. 290. 2 Wilcox v. Jackson, 7 Colo. 521; 2Penn v. Fogler, 182 111. 76; 55 4 Pac. 966; Knox v. Buffington, 50 :N. E. 192; reversing, 77 111. App. la. 320; Johnston v. Bernheim, 86 365; Kincaid v. Paper Co., 63 Kan. N. C. 339; Yeager v. Wallace, 57 288; 88 Am. St. Rep. 243; 54 L. K. Pa. St. 365. A. 412; 65 Pac. 247. 3 Dawson v. Elrod, 105 Ky. 624; sDrucker v. Wellhouse, 82 Ga. 88 Am. St. Rep. 320; 49 S. W. 465; 129; 2 L. R. A. 328; 8 S. E. 40. Monroe v. Conner, 15 Me. 178; 32 4 Kincaid v. Paper Co., 63 Kan. Am. Dec. 148. 288; 88 Am. St. Rep. 243; 54 L. R. * Dawson v. Elrod, 105 Ky. 624; A. 412; 65 Pac. 247; Hutchinson v. 88 Am. St. Rep. 320; 49 S. W. 465; Morris, 86 Mo. App. 40. Monroe v. Conner, 15 Me. 178; 32 1 Thompson v. Bank, 111 U. S. Am. Dec. 148. 529; Nofsinger v. Goldman, 122 Cal. s Johnston v. Dutton, 27 Ala. 245; 609; 55 Pac. 425; Cook v. Slate Co., Lerch v. Bard, 177 Pa. St. 197; 35 36 0. S. 135; 38 Am. Rep. 568; Atl. 714, 1486 PAGE ON CONTRACTS. ner.® Still less can a firm Le held liable on a contracr with an individual member, where it is not shown that such contract was made on behalf of the firm/ §950. Estoppel. Although no partnership in fact exists, or although its pow- ers have been exceeded, third persons who have been misled as to the existence or powers of the partnership and have acted in reliance on such belief, may enforce partnership liabilitj' against those persons who have so misled them and held themselves out as members of the partnership in question or have held out the person with whom such third person dealt as n member thereof.^ A partnership is liable for the transactions, of one whom they allow to act as a partner." So where creditors trust persons as partners, and property as firm property, they may subject such property to their debts as against individ-aal partners or their creditors.^ So secret limitations on the apparent power of a partner are ineffectual as to one dealing -ivith him in ignorance 6 At least such attorney may rep- resent the firm in court. Clark v. Ry., 136 Pa. St. 408; 10 L. R. A. 238; 20 Atl. 562. So the majority if acting in good faith cannot be charged with losses caused by events that could not be foreseen, as long as they act within the scope of the partnership business, even though the minority object. Markle v. Wil- bur, 200 Pa. St. 457 ; 50 Atl. 204. 7 Wood v. Martin, 115 Ga. 147; 41 S. E. 490; Rothrock Construc- tion Co. v. Mfg. Co., 80 Miss. 517; 32 So. 484. iMcGowan v. Tan Bark Co., 121 U. S. 575; Tillis v. McKinna, 114 Ala. 311; 21 So. 465; Carlton v. Grissom, 98 Ga. 118; 26 S. E. 77;' Gray v. Blasingame, 110 Ga. 343; 35 S. E. 653 ; Daugherty v. Heckard, 189 111. 239; .59 N. E. 569; Janes v. Gilbert. 168 111. 627; 48 N. E. 177; affirming, 68 111. App. 611; Dooley v. Vance, 97 111. App. 42; Janes v. Bergevin, 83 111. App. 607; Wilson V. Roelofs, 88 111. App. 480; Waller- ich V. Smith, 97 la. 308; 66 N. W. 184; Rideb v. Hammell, 63 Kan. 733; 66 Pac. 1026; Green v. Taylor, 98 Ky. 330; 56 Am. St. Rep. 375; 32 S. W. 945,^ Safety, etc., Associa- tion V. O'Meara (Ky.), 58 S. W. 775; Johnson v. Marx, 109 La. 1036; 34 So. 68; Houston River Canal Co. V, Kopke, 106 La. 609; 31 So. 156; Stimson v. Whitney, 130 Mass. 591; Princeton, etc., Co. v. Gulick, 16 N. J. L. 161; Fowler v. Bank (Tenn. Ch. App.), 57 S. W. 209; Bartlett v. Clough, 94 Wis. 196; 68 N. W. 875. 2 Chicago, etc.. Bank v. Kinnare, 174 111. 358; 51 N. E. 607; revers- ing, 67 111. App. 186; Tyler v. Omeis, 76 Minn. 537 ; 79 N. W. 528. 3 Thayer v. Humphrey, 91 Wis. 276; 51 Am. St. Rep. 887; 30 L. R. A. 549; 64 N. W. 1007. PAKTIS^EESIIIP. 1487 thereof,* as wlicre a partner had been for years accustomed to sign his firm's name to accommodation paper and they had ac- quiesced therein.^ So introducing one as a partner, putting his name on letter heads and signing a letter announcing that he is a member of the firm is admissible to prove liability as a partner.* 50 a contract with a firm whereby the firm is to furnish goods as a set-off against a debt incurred against the firm is binding upon a subsequent secret partner, so that after such goods are furnished the new firm cannot recover from the party to whom they are furnished/ The reason for this general rule is that third persons are not bound to know of the existence, scope or powers of a partner- ship, and under principles of estoppel may rely upon repre- sentations made to them, believed by them and acted on by them, so as to preclude those making such representations from after- wards denying them.* Estoppel may operate conversely to pre- vent proof of an existing partnership. Thus, if A has by his conduct induced X to believe that B is the sole party in interest and to deal with him accordingly, A is estopped from proving that he was in fact B's partner.^ This last principle is not, however, acquiesced in by all the courts. One who purchases goods as an individual is not estopped to show that he is acting 4 Irwin V. Williar, 110 U. S. 499; 221; Locke v. Lewis, 124 Mass. 1; Bass Dry-Goods Co. v. Mfg. Co., 113 26 Am. Rep. 631. Though such Oa. 1142; 39 S. E. 471; McDonald prior debt was not of itself binding V. Fairbanks, 161 111. 124; 43 N. E. on the incoming partner. 783; affirming, 58 111. App. 384; See § 955. Crane Co. v. Tierney, 175 111. 79 ; s An interesting example arising 51 N. E. 715; reversing, 75 111. App. occasionally under estoppel, of those 354; Rice v. Jackson, 171 Pa. St. cases where a person cannot lie 89 ; 32 Atl. 1036. though he tries strenuously to do so, 5 Bank, etc., v. Weston, 159 N. Y. exists where a retiring partner al- 201; 45 L. R. A. 547; 54 N. E. 40; lows a third person to deal with the Second National Bank v. Weston, firm after dissolution under the be- 161 N. Y. 520; 76 Am. St. Rep. 283; lief that he is still a member. As 55 N. E. 1080. he is thus estopped to deny the 6 Peninsular Savings Bank v. Cur- partnership, he is not guilty of rie, 123 Mich. 666; 82 N. W. 511. fraud. Wilson v. Roelofs, 88 111. TNeeley v. Flummerfelt, 116 App. 480. Mich. 344; 74 N. W. 1118, and see 9 Willard v. Bullen, 41 Or. 25; 67 Rogers v. Batchelor, 12 Pet. (U. S.) Pac. 924; 68 Pae. 422. 1488 PAGE ON CONTKACTS. for a firm of "which he is a member, when the vendor undertakes to apply a payment made for such goods to an individual debt due from such individual/" §951. Wrongful act or omission necessary to create estoppel. Estoppel can exist only where there is some wrongful act or omission of the person against whom estoppel is sought to be en- iorced. Where the person held out as a partner does not know that he is thus held out and is guilty of no negligence he cannot be held liable.^ Conduct not calculated or intended to mislead cannot be relied on as an estoppel. Thus the fact that a partnership has often given its check against funds in a certain bank to pay the indi- vidual debt of a partner is not such a course of dealing that it i^ estopped to deny the validity of a note signed with the partner- ship name, and given to such bank by one of the partners to take up his individual debt." The declaration of one alleged partner as to the existence of the partnership does not bind the other,^ and is not even ad- missible against such other,* though it is as against the party making it.^ §952. Reliance necessary to create estoppel. In order to estop one from denying his liability as a partner, the person in whose favor the estoppel is alleged must have acted in reliance upon the facts which are claimed to create the estop- pel.^ Eirst, to create estoppel such facts must be known to the loHoaglin v. Henderson, 119 la, 57; 20 L. R. A. 595; 30 Pac. 94; 720; 97 Am. St. Rep. 335; 61 L. R. First National Bank v. Cody, 93 Ga. A. 756; 94 N. W. 247. 127; 19 S. E. 831; Frisbie v. Felton, iNofsinger v. Goldman, 122 Cal. 65 Vt. 138; 26 Atl. 110; Commer- 609; 55 Pac. 425; Munton v. Ruth- cial Bank v. Miller, 96 Va. 357; 31 erford, 121 Mich. 418; 80 N. W. 112; S. E. 812. Seabury v. Bolles, 52 N. J. L. 413; 4 Thompson v. Mallory, 108 Ga. 51 X. J. L. 103; 11 L. R. A. 136; 797; 33 S. E. 986. 21 Atl. 952. sDodds v. Ragan Co., 110 Ga. 2 People's Savings Bank v. Smith, 303 ; 34 S. E. 1004. 114 Ga. 185; 39 S. E. 920. iNofsinger v. Goldman, 122 CaL sVanderhurst v. De Witt, 95 Cal. 609; 55 Pac. 425. PARTNEESIIIP. 1489 party alleging the estoppel at the time at which he enters into the transaction with reference to which the estoppel is invoked. Thus where he did not then know that the person against whom he is seeking to enforce liability was held out as a partner, he cannot claim that by reason of a holding out as a partner to others, an estoppel exists in his favor.~ So one who knows that no partnership exists cannot enforce liability as partners against members of an alleged firm other than the person with whom he dfealt.^ Second, to cause estoppel there must be an actual belief of third persons based on facts known to them when they deal with the partnership.* Where the representation was known to be untrue and not relied on, no estoppel can be claimed to exist.^ Thus if the powers of a partner are actually known to one who deals with him, the latter cannot claim that the partnership is bound by estoppel if such partner exceeds his powers.^ A part- nership is therefore not liable on a contract made in excess both of the real and of the apparent scope of partnership/ §953. Ratification. A partnership may become liable on the unauthorized con- tracts of its members, by ratification thereof/ Acquiescence by all the partners in a contract, whether before or after the con- tract is executed, makes them liable thereon, and acquiescence 2 Thompson v. Bank, 111 U. S. 472; Fisher v. McDonald Co., 85 III. 529; Webster v. Clark, 34 Fla. 637; App. 653; Fletcher v. Pullen, 70 43 Am. St. Rep. 217; 27 L. R. A. Md. 205; 14 Am. St. Rep. 355; 16 126; 16 So. 601; Wood v. Pennell, Atl. 887. 51 Me. 52; Parehen v. Anderson, 5 s Nightingale v. Furniture Co., 71 Mont. 438; 51 Am. Rep. 65; 5 Pac. Fed. 234; Thornton v. McDonald, 588; Carey v. Marshall, 67 N. J. L. 108 Ga. 3; 33 S. E. 680; Pratt v. 236; 51 Atl. 698; Cook v. Slate Co., Langdon, 97 Mass. 97; 93 Am. Dec. 36 O. S. 135; 38 Am. Rep. 508; Den- 61 ; Martin v. Fewell. 79 Mo. 401. ithorne v. Hook, 112 Pa. St. 240; 3 e Barwick v. Alderman, — Fla. Atl. 777; Hicks v. Cram, 17 Vt. — ; 35 So. 13. 449. 7 Brooks-Waterfield v. Jackson 3 Thornton v. McDonald, 108 Ga. (Ky.), 53 S. W. 41. 3; 33 S. E. 680; Baldwin's Estate, i McGahan v. Bank, 156 U. S, 170 N. Y. 156; 58 L. R. A. 122; 63 219; Pacific, etc., Ins. Co. v. Fisher, ]^. E. 62. . 109 Cal. 566; 42 Pac. 154; Sparks 4 Wilson V. Edmonds, 130 U. S. v. Flannery, 104 Ga. 323; 30 S. E. 94 1490 PAGE ON CONTRACTS. after the execution of the contract is ratification." Thus a chat- tel mortgage given by one partner without authority is valid if the rest acquiesce therein.^ So if a partner is authorized only to obtain an option on certain property, and he purchases it and gives the firm's note, subsequent acquiescence by the remaining partners makes such contract valid.* Ratification is also ef- fected by receiving the benefits of the transaction.^ So receiv- ing money obtained from notes is a ratification thereof.*^ Tak- ing possession and paying rent under a lease is ratification by the lessee, and receiving such rent is ratification by the lessor.'^ Partial ratification is impossible. Thus where a partner sold goods under an agreement that a part of the purchase price should be set off against his individual debt, the partnership cannot recover such part and affirm the sale.^ Ratification to be binding must be made with full knowledge of the material facts. Thus part payment by the firm's checks without the knowledge of the other partner, is not ratification.® So a ratifi- cation of a note under seal has been held invalid if the partner so ratifying did not know that it was under seal.^*' A ratifica- tion has been held binding where the partner had not full knowl- 823; Buettner V. Steinbreclier, 91 la. Neb. 508; 76 N. W. 1054; Rock v. 588; 60 N. W. 177; Corbett v. Can- Collins, 99 Wis. 630; 67 Am. St. non, 57 Kan. 127; 45 Pac. 80; Burk- Rep. 885; 75 N. W. 426. hardt v. Yates, 161 Mass. 591; 37 3 Columbus State Bank v. Dole, N. E. 759; Koch v. Endiiss, 97 Mich. 56 Neb. 508; 76 N. W. 1054; Rock 444; 56 N. W. 847; Edwards v. v. Collins, 99 Wis. 630; 67 Am. St. Spalding, 20 Mont. 54, 60; 49 Pac. Rep. 885; 75 N. W. 426. 443, 591; Columbia National Bank * Tj'ler v. Waddingham, 58 Conn. V. Rice, 48 Neb. 428; 67 N. W. 165; 375; 8 L. R. A. 657; 20 Atl. 335. Columbus State Bank v. Dole, 56 5 Smith v. Packard, 98 Fed. 793 ; Neb. 508; 76 N. W. 1054; Mc- 39 C. C. A. 294. Naughten V. Partridge, 11 Ohio 223; e O'Connor v. Sherley, 107 Ky. 38 Am. Dec. 731; Miller v. Glass 70; 52 S. W. 1056. Works, 172 Pa. St. 70; 33 Atl. 350; 7 Golding v. Brennan, 183 Mass. Gutheil V. Gilmer, 23 Utah 84; 63 286; 67 N. E. 239. Pac. 817. sGrover v. Smith, 165 Mass. 132; 2 Sparks v. Flannery, 104 Ga. 323; 52 Am. St. Rep. 506; 42 N. E. 555. 30 S. E. 823; Corbett v. Cannon, 57 9 Meyer v. Hegler, 121 Cal. 682; Kan. 127; 45 Pac. 80; Clippinger v. 54 Pac. 271. Starr, 130 Mich. 463; 90 N. W. 280; lo Hull v. Young, 30 S. C. 121* •» Columbus State Bank v. Dole, 56 L. R. A. 521 ; 8 S. E. 695, PAKTNEKSHIP. 1491 edge, but knew facts enough to put him on inquiry which would have resulted in full knowledge/^ Ratification is binding though made in ignorance of the legal effect of the contract/^ The partner who made the contract cannot ratify it/^ §954. Dissolution. A partnership when once formed may be dissolved by the agreement of the partners/ or by the act of either, even if be- fore the time for Avhich the contract was to last." Some courts have expressed the view that such a partnership cannot be dis- solved without cause before the time limited.^ If a partnership is formed to last for a fixed time, but the right to dissolve the partnership by giving written notice is reserved, it may be dis- solved at any time by such written notice.* Dissolution by op- eration of law may be caused by efilux of the time fixed by the partnership agreement,^ or by death of a partner.^ There is 11 Sibley v. Bank, 97 Ga. 126; 25 S. E. 470. 12 Miller v. Glass Works, 172 Pa. St. 70; 33 Atl. 350 (as that the partners were individually liable on the contract) . 13 Peterson v. Armstrong, 24 Utah 96; 66 Pac. 767. 1 Rii:hardson v. Gregory, 126 111. 166; 18 N. E. 777; Howard v. Pratt, 110 la, 583; 81 N. W. 722; Wood V. Fox, 1 A. K. Mar. (Ky.) 451. 2Lapenta v. Lattieri, 72 Conn. 377; 77 Am. St. Rep. 315; 44 Atl. 730; Solomon v. Kirkwood, 55 Mich. 256; 21 N. W. 336; Skinner v. Day- ton, 19 Johns. (N. Y.) 513; 10 Am. Dec. 286. Undoubtedly either has the power to end the partnership whenever he pleases; though his ex- ercise of that power without just cause may leave him liable in dam- ages for such dissolution. See La- penta v. Lattieri, 72 Conn. 377; 77 Am. St. Rep. 315; 44 Atl. 730. 3 Hannaman v. Karrick, 9 Utah 236; 33 Pac. 1039; Cole v. Moxley, 12 W. Va. 730; Moore v. May, 117 Wis. 192; 94 N. W. 45. Hannaman V. Karrich, 9 Utah 236; 33 Pac. 1039, was affirmed by the supreme court of tlie United States in Kar- rick V. Hannaman, 168 U. S. 328, not on the ground that the rule of law there laid down was correct, for the Supreme Court was " not prepared to assent " to the proposi- tion involved; but on the ground that the measure of damages given was exactly the same as would be allowed if the one partner could by his wrongful act dissolve the part- nership before the expiration of the time limited. 4 Swift v. Ward, 80 la. 700; 11 L. R. A. 302; 45 N. W. 1044. 5 Morrill v. Weeks, 70 X. H. 178; 46 Atl. 32. 6 Parker v. Parker, 99 Ala. 239; 42 Am. St. Rep. 48; 13 So. 520; Maynard v. Richards, 166 HI. 466; 1492 PAGE ON CONTRACTS. qualified existence of the partnership for purposes of settle- ment.^ By contract it may be agreed that death will not cause dissolution.^ A partnership formed by contract, as a joint-stock company, is not dissolved by the death of a member if such is the original agreement,'' or by a sale of the share of a partner to a person outside the company.^'' In legal effect a provision that death shall not dissolve the partnership creates a new partner- ship.^^ Conveyance of all the firm's property,^^ sale of the en- tire business,^^ ceasing to do business,^* and rescission by one partner because the other wrongfully refuses to pay in his share of the capital,^^ cause dissolution by operation of law. So a sale of one partner's interest is held to effect a dissolution.^" 57 Am. St. Rep. 145; 46 N. E. 1138; affirming, 61 111. App. 336; Schmidt V. Archer, 113 Ind. 365; 14 N. E. 543; Van Kleeck v. McCabe, 87 Mich. 599; 24 Am. St. Rep. 182; 49 X. W. 872; Russell v. McCall, 141 N. Y. 437; 38 Am. St. Rep. 807; 36 X. E. 498; Stubbings v. O'Con- nor, 102 Wis. 352; 78 N. W. 577. Contra of mining partnerships, Pat- rick V. Weston, 22 Colo. 45 ; 43 Pac. 446; Childers v. Xeely, 47 W. Va. 70; 81 Am. St. Rep. 777; 49 L. R. A. 468; 34 S. E. 828. - Maynard v. Richards, 166 111. 466; 57 Am. St. Rep. 145; 46 X. E. 1138; affirming, 61 111. App. 336. 8 Scholefield v. Eichelberger, 7 Pet. (U. S.) 586; Vincent v. Mar- tin, 79 Ala, 540; Rand v. Wright, 141 Ind. 226; 39 X. E. 447; Stan- wood V. Owen, 14 Gray (Mass.) 195; Exchange Bank v. Tracy, 77 Mo. 594; Wilcox v. Derickson, 168 Pa. St. 331; 31 Atl. 1080; Brew v. Hastings, 196 Pa. St. 222; 79 Am. St. Rep. 706; 46 Atl. 257; Davis v. Christian, 15 Gratt. (Va.) 11; Mc- Xash V. Oat Co., 57 Vt. 316; Willis V. Chapman, 68 Vt. 459; 35 Atl. 459. Contra, Laney v. Laney, 6 Dem. (X. Y.) 241. 9 Carter v. McClure, 98 Tenn. 109; 60 Am. St. Rep. 842; 36 L. R. A. 282; 30 S. W. 585. 10 Machinists' Xatioual Bank v. Dean, 124 Mass. 81; McXeist v. Oat Co., 57 Vt. 316; Walker v. Wait, 50 Vt. 668. 11 Pitkin V. Pitkin, 7 Conn. 307; 18 Am. Dec. Ill; Exchange Bank v. Tracy, 77 Mo. 594; Kennedy v. Por- ter, 109 N. Y. 526; 17 X. E. 426; McGrath v. Cowen, 57 O. S. 385 ; 49 N. E. 338. 12 Dellapiazza v. Foley, 112 Cal. 380; 44 Pac. 727. i3Haeberly^s Appeal, 191 Pa. St. 239; 43 Atl. 207. i*Ligare v. Peacock, 109 111. 94; Bank v. Page, 98 111. 109 ; Potter v. Tolbert, 113 Mich. 486; 71 X. W. 849; Jones v. Jones, 18 Ohio C. C. 260; 10 Ohio C. D. 71. 15 Lapenta v. Lettieri, 72 Conn. 377; 77 Am. St. Rep. 315; 44 Atl. 730. iGRowe \. Simmons, 113 Cal. 688; 45 Pac. 983; Summerlot v. Hamilton, 121 Ind. 87; 22 X. E. 973; Schlicher x. Vogel, 61 X. J. Eq. 158; 47 Atl. 448. Contra, in mining partnerships, Childers v. Xeely, 47 W. Va. 70; 81 Am, St, PARTNERSHIP. 1493 So, taking in new partner is a new contract, and abrogates a provision that if either partner becomes intoxicated he shall pay $1,000 to the other.^" But the mere delivery of a " trust mort- gage,"^^ or an agreement to sell partnership interest, do not effect dissolution/" A decree of court may effect a dissolution. Such a decree may be based on fraud,^*^ or exclusion from in- spection of books,"^ or insanity,"' or on the insolvency of a part- ner."* Thus the transfer of one partner's interest in partner- ship real estate made to his father without consideration to avoid paying debts of the firm is ground for dissolution.^* Insanity is not of itself dissolution, but is merely the ground for a decree of dissolution,"^ even after adjudication."® Bankruptcy of one partner does not of itself dissolve a partnership."^ If a partner- ship is formed between husband and wife, a divorce does not of itself dissolve such partnership."^ Lack of mutual trust is ground for a decree of dissolution."*^ But the sale of transfer- able-shares in a partnership organized as a joint stock company, if acquiesced in by other members, is not dissolution.*" §955. Assumption of debts on change of firm. If a retiring partner sells his interest to Iiis co-partners, it is an implied term of the contract that the purchasing partners Rep. 777; 49 L. R. A. 468; 34 S. E. 25 Raymond v. Vaughn, 128 111. 828. 256; 15 Am. St. Rep. 112; 4 L. R. "Givens v. Berry (Ky.), 52 S. A. 440; 21 N. E. 566; Walters v. W. 942. McGrea^y, 111 la. 538; 82 N. W. 18 Smith V. Smith, 93 Me. 253 ; 44 949. Atl. 905. 26 Raymond v. Vaughn. 128 111. 19 Phelps V. State, 109 Ga. 115; 256; 15 Am. St. Rep. 112; 4 L. R. 34 S. E. 210. A. 440; 21 N. E. 566. 20 White V. Smith, 63 Ark. 513; 27 Patrick v. Weston, 22 Colo. 45; 39 S. W. 555. 43 Pac. 446. 21 Moore v. Price, 116 Ala. 247; 28 Snell v. Stone, 23 Or. 327; 31 22 So. 531. Pac. 663. Whether such partner- 22 Walters v. McGrea\y, 111 la. ship can be formed, see § 929. .538 ; 82 N, W. 949. 29 Breaux v. Le Blanc. 50 La. Ann. 23Havner v. Stephens (Ky.), 58 228; 69 Am. St. Rep. 403; 23 So. S. W. 372. 281. 24 Hubbard v. Moore, 67 Vt. 532; 3o Carter v. McClure, 98 Tenn. 32 Atl. 465. 109; 60 Am. St. Rep. 842; 36 L. R. A. 282; 38 S. W. 585. 149-i PAGE ON CONTRACTS. assume the liabilities of tlie firm, and will protect the retiring partner against any liability by reason thereof/ An incoming partner does not assume any liability for pre-existing debts un- less he agrees so to do.^ So a new firm, one member of which was a member of the old firm, is not liable for the debts of the old firm.^ If one partner retires and the remaining partners or the members of the new firm agree with him to assume the partnership debts a question is presented as to whether the retir- ing partner remains primarily liable to the creditors of the firm whose debts were incurred while he was a partner, or whether he is now a surety for the members who have assumed such debts. He clearly does not become a surety as to creditors who do not assent to such an arrangement.* The weight of authority is that he remains primarily liable, even as to assenting creditors,^ and as he does not become a surety he is not released by an ex- tension of time for valuable consideration without his assent." There is some authority, however, for the proposition that such an arrangement makes the retiring partner a surety if the cred- itors assent/ So he is held to be a surety released by extension of time,^ and entitled to require the creditors of the partnership to sue promptly.^ Such an arrangement certainly does not re- lease the retiring partner entirely unless the creditors specific- ally assent thereto.^'' If a purchasing partner agrees to pay the debts of the firm, it has been held that the retiring partner has a iCobb V. Benedict, 27 Colo. 342; Jack, 47 W. Va. 201; 34 S. E. 62 Pac. 222; Edens v. Williams, 36 991. 111. 252; Lambert v. Griffith, 50 5 National Cash Eegister Co. v. Mich. 286; 15 K W. 458: Schlicher Brown, 19 Mont. 200; 61 Am. St. V. Vogel, 61 N. J. Eq. 158; 47 Atl. Rep. 498; 37 L. R. A. 515; 47 Pac. 448. 995. 2 Nix V. Bank, 23 Colo, 511 ; 48 e National Cash Register Co. v. Pac. 522. Brown, 19 Mont. 200; 61 Am. St. 3 Ball V. Mashburn, 110 Ga. 285; Rep. 498; 37 L. R. A. 515; 47 Pac. 34 S. E. 851. 995. 4 Eagle Mfg. Co. v. Jennings, 29 7 Wiley v. Temple, 85 111. App. Kan. 657; 44 Am. Rep. 668; Raw- 69. son V. Taylor, 30 O. S. 389; 27 Am. sMillerd v. Thorn, 56 N. Y. 402. Rep. 464; Shapleigh Hardware Co. » Colgrove v. Tallman, 67 N. Y. V. Wells, 90 Tex. 110; 59 Am. St. 95; 23 Am. Rep. 90. Rep. 783; 37 S. W. 411; McCoy v. "Andres v. Morgan, 62 O. S. 236; PARTNERSHIP. 1495 cause of action as soon as the jiurcliasing partner allows any bill of the original partnershiji to remain unpaid after it is due.^^ §956. Powers after dissolution. After dissolution either partner may settle outstanding ac- counts/ and may complete the performance of contracts previ- ously entered into,^ but he cannot bind his partners on new contracts/ and he cannot give notes/ even in renewal of a pre- existing firm debt/ or deliver a note previously signed," or bind his partners by a contract of indorsement/ or extend limi- tations by a new promise.* Pre-existing debts are not dis- charged by dissolution. Thus dissolution does not discharge 78 Am. St. Rep. 712; 56 N. E. 875. iiPeacey v, Peacey, 27 Ala. 683; Tucker v. Murphey, 114 Ga. 662; 40 S. E. 836; Gillen v. Peters, 39 Kan. 489; 18 Pae. 613; Ham v. Hill, 29 Mo. 275; Miller v. Bailey, 19 Or. 539; 25 Pac. 27. 1 Western Stage Co. v. Walker, 2 la. 504; 65 Am. Dec. 789; Gordon V. Albert, 168 Mass. 150; 46 N. E. 423; Riggen v. Investment Co., 31 Or. 35; 47 Pac. 923. Either part- ner has a right to possession of as- sets. Gray v. Green, 142 N. Y. 316; 40 Am. St. Rep. 596; 37 N. E. 124. 2 Western Stage Co. v. Walker, 2 la. 504; 65 Am. Dec. 789; Page v. Wolcott, 15 Gray (Mass.) 536. 3 Bass Dry Goods Co. v. Mfg. Co., 116 Ga. 176; 42 S. E. 415; Richard V. Moulton, 109 La. 465; 33 So. 563; Evangelical Synod v. Schoen- eich, 143 Mo. 652; 45 S. W. 647; Graves v. Bank, 49 Neb. 437; 68 N. W. 612 (especially for individual debts) ; Palmer v. Dodge, 4 O. S. 21; 62 Am. Dee. 271. 4 Potter V. Tolbert, 113 Mich. 486; 71 N. W. 849; Smith v. Shel- don, 35 Mich. 42; 24 Am. Rep. 529. 5 Harwell v. Mfg. Co., 123 Ala. 460; 26 So. 501; Perrin v. Keene, 19 Me. 355; 36 Am. Dec. 759; White V. Tudor, 24 Tex. 639: 76 Am. Dec. 126. elMerrit v. Pollys, 16 B. Mon. (Ky.) 355; Robb v. Mudge, 14 Gray (Mass.) 534; Gale v. Miller, 54 N. Y. 536; Woodworth v. Downer, 13 Vt. 522; 37 Am. Dec. 611. Contra, he may renew notes. Meyran v. Abel, 189 Pa. St. 215; 69 Am. St. Rep. 806; 42 Atl. 122. 7Whitworth v. Ballard, 56 Ind. 279; Bryant v. Lord, 19 Minn. 396; Fellows V. Wyman, 33 N. H. 351; Dana v. Conant, 30 Vt. 246. 8]Mayberry v. Willoughby, 5 Neb. 368; 25 Am. Rep. 491; Shoemaker V. Benedict, 11 K Y. 176; 62 Am. Dec. 95; Kerper v. Wood, 48 0. S. 613; 15 L. R. A. 656; 29 N. E. 501; Bush v. Stowell, 71 Pa. St. 208; 10 Am. Rep. 694. Contra, that he can extend limitations by a new promise. Cody v. Shepard, 11 Pick. (Mass.) 400; 22 Am. Dec. 379; Vinal v. Burrill, 16 Pick. (Mass.) 401; Mills v. Hyde, 19 Vt. 59; 46 Am. Dec. 177; Wheelock v. Doolittle, 18 Vt. 440; 46 Am. Dec 163. 1496 PAGE ON CONTRACTS. liability on a lease.*^ The managing partner after dissolution may incur debts for expenses necessary to winding up tbe busi- ness and lie is entitled to be reimbursed therefor." §957. Notice necessary on dissolution. On dissolution personal notice should be given to those who have dealt with the firm before dissolution and know of the connection of the partner in question with such firm, if the re- tiring partner wishes to avoid liability on subsequent contracts.^ Thus an attorney retained by the old firm,^ a person who has made one loan to the old firm/ a bank where the firm cashed drafts,* or borrowed money,^ and a depositor with a dissolved banking firm,^ are each entitled to personal notice. Where personal notice should be given, a notice published but not known by the party dealing with the firm,' or a notice mailed but not received,^ even if a red line is drawn around the notice,* or a notice to two commercial agencies and a local item in one or Barnes v. Trust Co., 169 111. 112; 48 N. E. 31; affirming 66 111. App. 282. 10 Conrad v. Buck, 21 W. Va. 396. 1 Court V. Berlin (1897), 2 Q. B. 396; Birckhead v. De Forest, 120 Fed. 645; 57 C. C. A. 107; Neal v. Smith, 116 Fed. 20; Camp v. South- ern, etc., Co., 97 Ga. 582; 25 S. E. 362; Arnold v. Hart, 176 111. 442; 52 N. E. 936 ; affirming 75 III. App. 165; Burgan v. Lyell, 2 Mich. 102; 55 Am. Dee. 53; Bank v, Weston, 172 N. Y. 259; 64 N. E. 946; Sec- ond National Bank v. \Yeston, 161 N. Y. .520; 76 Am. St. Rep. 283; 55 N. E. 1080; Ellison v. Sexton, 105 N. C. 356; 18 Am. St. Rep. 907; U S. E. 180; Tobin v. McKinney, 14 S. D. 52; 91 Am. St. Rep. 688; 84 N. W. 228; Amidown v. Osgood, 24 Vt. 278; 58 Am. Dec. 171. 2 Court V. Berlin (1897), 2 Q. B. 396. 3 Thayer v. Goss, 91 Wis. 90; 64 N. W. 312. 4 Camp V. Southern, etc., Co., 97 Ga. 582; 25 S. E. 362. 5 Bank v. Weston, 172 N. Y. 259; 64 N. E. 946. 6 Arnold v. Hart, 176 111. 442; 52 N. E. 936; affirming 75 111. App. 165. Even one who has made only two such deposits. Tobin v. McKin- ney, 14 S. D. 52; 91 Am. St. Rep. 688 ; 84 N. W. 228. 7H. H. Nevens & Co. v. Bulger, 93 Me. 502; 45 Atl. 503; Rose v, Coffield, 53 Md. 18; 36 Am. Rep. 380. 8 Austin V. Holland, 69 N. Y. 571; 25 Am. Rep. 246. 9 Haynes v. Carter, 12 Heisk. (Tenn.) 7; 27 Am. Rep. 747. PARTNERSHIP. 1497 iv/0 newspapers,^" or the general notoriety of the dissolution/^ is each insufficient. The contents of new letter-heads of the firm showing a change of members is sufficient if such letter- heads were sent to the customer in question, and he had been notified that the formation of certain contracts was delayed owing to a contemplated reorganization.^" A notice of a change in the partnership given to a traveling salesman as agent of the adversary party," is sufficient. liotice by publication is suf- ficient as to all other persons,^* in order to free the retiring partners from liability for future contracts. When a dormant partner w^ithdraws, notice is not necessary to those who did not know he was a partner.^^ Where dissolution takes place by operation of law, notice is not necessary,^^ So wdiere a firm is dissolved by bankruptcy proceedings instituted against one partner, such proceeding is notice to all creditors. ^^ So on the death of one partner notice of dissolution is not necessary.^® In the absence of necessary notice a retiring partner is liable for contracts entered into after dissolution with those who are ignorant thereof,^^ especially where the old firm name is re- 10 Citizens' National Bank v. Wes- cuse a dormant partner from notice ton, 162 N. f. 113; 56 N. E. 494 he must have been unknown or not (citing Bank v. \Yeston, 159 N. Y. generally known. Rowland v. Estes, 201; 45 L. E. A. 547; 54 N. E. 190 Pa. St. Ill; 42 Atl. 528. 40; Mill Co, V. Harris, 124 N. Y. le Little v. Hazlett, 197 Pa. St. 280; 26 N. E. 541). 591; 47 Atl. 855. 11 Pitcher v. Barrows, 17 Pick. i7 Eustis v. Bolles, 146 Mass. 413; (Mass.) 361; 28 Am. Dec. 306. 4 Am. St. Rep. 327; 16 N. E. 286. 12 Edwards v. Wheeler's Estate, is Bass Dry G.oods Co. v. Mfg. Co., 130 Mich, 219; 89 N. W. 679. 116 Ga. 176; 42 S. E. 415; Marlett 13 Ach V. Barnes, 107 Ky. 219; 53 v. Jackman, 3 All. (Mass.) 287; S. W. 293. Little v. Hazlett, 197 Pa. St. 591; "Watkinson v. Bank, 4 Whart. 47 Atl. 855. (Pa.) 4f^2; 34 Am. Dec. 521; Elli- w Bloch v. Price. 32 Fed. 562; son V. Sexton, 105 N. C. 356; 18 Y'oung v. Clapp. 147 111. 176; 32 N. Am. St. Rep. 907; 11 S. E. 180; New E. 187; 35 N. E. 372; Shapard Gro- Y^ork, etc.. Bank v. Crowell. 177 Pa. eery y. Hynes, 3 Ind. Ter. 74; 53 St. 313: 35 Atl. 613: Thayer v. Goss, S. W. 486; Dickson v. Diyden, 97 n Wis. 90; 64 K W. 312. la. 122; 66 N. W. 148; Turner v. 15 Gorman v. Davis, etc., Co., 118 Gill. 105 Ky. 414; 49 S. W. 311; K C. 370; 24 S. E. 770. To ex- H. H. Nevens & Co. v. Bulger. 93 1498 PAGE Olf CONTRACTS. tained,"*' or the retiring member holds himself out as a member of the firm.^^ The notice must be given before liability is in- curred by the adversary party to relieve the retiring partner. Thus where notice of retirement was given after A made a con- tract with the old firm, and after such notice A shipped goods in performance of such contract, the retiring partner is held to be a surety."^ If the notice is given but the dissolution never took place,^^ or if the retirement of the partner was merely ostensible to permit him to carry out an illegal scheme,^* none of the j)artners are thereby relieved from liability. While dis- solution with proper notice generally prevents further liability of a retiring partner, he is liable to the amount of money left in the business.^^ §958. Powers of surviving partners. On the death of a partner, the surviving partner has, under the statutes of many states, the legal title to the partnership property, with power to liquidate the firm's business.^ He can- not bind the firm or the estate of his deceased partner," or the Me. 502; 45 Atl. 503; Central Na- 22 Porter v. Baxter, 71 Minn. 195; tional Bank v. Frye, 148 Mass. 498 ; 73 N. W. 844. 20 N. E. 325; Elkinton v. Booth, 23 Spragans v. Lawson (Ky.), 60 143 Mass. 479; 10 N. K 460; Knaus S. W. 373. V. Givens, 110 Mo. 58; 19 S. W. 24 Utley v. Clements, 79 Minn. 535; Stoddard Mfg. Co. v. Krause, 68; 81 N. W. 739. 27 Neb. 83; 42 N. W. 913; Ellison v. 25 Adams v. Albert, 155 N. Y. 356; Sexton, 105 N. C. 356; 18 Am. St. 63 Am. St. Rep. 675; 49 N. E. 929. Rep. 907; 11 S. E. 180; Alexander 1 McKinzie v. United States, 34 V. Harkins, 120 N. C. 452; 27 S. E. Ct. CI. 278; Maynard v. Richards, 120; Robinson v. Floyd, 159 Pa. St. 166 111. 466; 57 Am. St. Rep. 145; 165; Brown v. Foster, 41 S. C. 118; 46 N. E. 1138; Bauer Grocer Co. v. 19 S. E. 299. Compare Swigert v. Shoe Co., 87 111. App. 434. The sur- Aspden, 52 Minn. 565; 54 N. W. viving partner of a firm of attor- 738; Green v. Bank, 78 Tex. 2; 14 neys must account for fees for serv- S. W. 253. iees rendered under the old contract. 20 Thatcher v. Allen, 58 N. J. L. Little v. Caldwell, 101 Cal. 553; 240; 33 Atl. 284; Evans, etc., Co. 40 Am. St. Rep. 89; 36 Pac. 107. V. Hadfield, 93 Wis. 665; 68 N. W. 2 Durant v. Pierson, 124 N. Y. 468. 444; 2r Am. St. Rep. 686; 12 L. R. 2iShapard Grocery Co. v. Hynes, A. 146; 26 N. E. 1095; Oyster v. ." Tnd. Ter. 74; 53 S. W. 486. Short, 177 Pa. St. 594, 601; 35 Atl. 710, 711. PARTNEESHIP. 1499 executor of his deceased partner/ bj a new contract as by pur- chasing goods/ or by giving a note.^ He cannot bind the heirs of decedent by renewing a lease, but their acceptance of rent for one year may ratify the lease for that year.*' Even where decedent by will gives the surviving partner power to continue the business, he cannot bind the estate of the deceased partner beyond the amount in the business,'^ unless the will specifically provides that he may bind the estate for new debts.* A surviving partner cannot give a cognovit note for a firm debt," though he may confess judgment." Proper items of indebtedness incurred by a surviving part- ner after the death of the other partner will be allowed him by the court in settling accounts.^^ He may be credited with ex- penses necessary to preserve the property, and even with ex- penses necessary to keep up its value. Thus the surviving part- ner of a horse-racing firm may be credited with the expenses of caring for and training horses aiter his partner's death and entering them for stakes.^^ If the law requires him to settle 3 Mattison v. Farnham, 44 Minn. 95; 46 N. W. 347. 4 Friend v. Young (1897), 2 Ch. 421. sBodey v. Cooper, 82 Md. 625; 34 Atl. 362. 6 Oliver v. Olmstead, 112 Mich. 483; 70 N. W. 1036; Belts v. June, .51 N. Y. 274. 7 Smith V. Ayer, 101 U. S. 320; Burwell v. Cawood, 2 How. (U. S.) 560; Steiner v. Steiner, etc., Co., 120 Ala. 128; 26 So. 494; Pitkin v. Pitkin, 7 Conn. 307; 18 Am. Dec. Ill; Stewart v. Robinson, 115 N. Y. 328; 5 L. R. A. 410; 22 N. E. 160, 163; Wilcox v. Derickson, 168 Pa. St. 331; 31 Atl. 1080. Contra, where a limited partner had become liable as a general partner by failure to comply with the statute, a pro- vision in the will that the business was to continue was held to charge subsequent debts against the estate. J. B. Wathen & Bro. Co. v. Carney (Tenn. Ch. App.), 47 S. W. 1115. So Ussery v. Crusman (Tenn. Ch. App.), 47 S. W. 567. 8 Ferris v. Van Ingen, 110 Ga. 102; 35 S. E. 347. Under such a will he can deed realty to secure debts. In this case the surviving partner was made executor. Laugh- lin V. Lorenz, 48 Pa. St. 275; 86 Am. Dec. 592; Davis v. Christian, 15 Gratt. (Va.) 11. 9 Bauer Grocer Co. v. Shoe Co., 87 111. App. 434. 10 Evans v. Watts, 192 Pa. St. 112; 43 Atl. 464. . 11 Wolfort V. Reilly, 133 Mo. 463; 34 S. W. 847. Even for borrowed money. Herron v. Wampler, 194 Pa. St. 277; 45 Atl. 81; Kenney v. Howard, 68 Vt. 194; 34 Atl. 700. 12 Central, etc., Co. v. Respass, 112 Ky. 606; 56 L. R. A. 479; 66 S. W. 421. 1500 PAGE ON CONTEACTS. his accounts with the partnership at a certain time, and he con- tinues the business bejond such time, he must, in case subse- quent losses occur, settle as of the date at which the settlement should have been made/^ §959. Peculiarities of enforcement of contract between partners. At Common Law one partner could not sue another on mat- ters arising out of the partnership before an accounting was had between the j)artners,^ and while the partnership was still in existence." So an action could not be brought by the execu- tor against the surviving partner,^ or by the surviving partner against the heirs of a deceased partner while the partnership ac- counts are unsettled.* This objection is waived by failure to object at trial.^ Such an action at law would lie after the part- nership was ended, or after accounting.'' A partner may sue at law for contribution upon a matter outside the partnership,'^ or where by express agreement a partnership item has been 13 Huggins V. Huggins, 117 Ga. 151; 43 S. E. 759. 1 Dukes V. Kellogg, 127 Cal. 563; 60 Pac. 44; Miller v. Freeman, 111 Ga. 654; 51 L. R. A. 504; 36 S. E. 961; Sindelare v. Walker, 137 111. 43; 31 Am. St. Rep. 353; 27 N. E. 59; Bowzer v. Stoughton, 119 111. 47; 9 N. E. 208; Newman v. Tich- enor, 88 111. App. 1; O'Brien v. Smith, 42 Kan. 49; 21 Pac. 784; Stone V. Mattingly (Ky.), 19 S. W. 402; Johnson v. Ewald, 82 Mo. App. 276 ; Willey v. Renner, 8 N. M. 641 ; 45 Pac. 1132; Devore v. Woodruff, 1 N. D. 143; 45 N. W. 701; Kun- neke v. Mapel, 60 0. S. 1 ; 53 N. E. 259; Oglesby v. Thompson, 59 O. S. 60; 51 N. E. 878; Eddins v. Mene- fee (Tenn. Ch. App.), 54 S. W. 992. 2 Miller v. Freeman, 111 Ga. 654; 51 L. R. A. 504; 36 S. E. 961; Se- bastian V. Academy Co. (Ky. ), 56 S. W. 810. 3 Palm V. Poponoe, 60 Kan. 297 56 Pac. 480. 4Blakley v. Smock, 96 Wis. 611 71 N. W. 1052. 5 Smith V. Putnam, 107 Wis. 155 82 N. W. 1077; rehearing denied 83 N. W. 288. 6 Johnson v. Peek, 58 Ark. 580 25 S. W. 865. 7 Bull V. Coe, 77 Cal. 54; 11 Am. St. Rep. 235; 18 Pac. 808; Mullany V. Keenan, 10 la. 224; Soule v. Frost, 76 Me. 119; Carpenter v. Greenap, 74 Mich. 664; 16 Am. St. Rep. 662; 4 L. R. A. 241; 42 N. W. 276; Bates v. Lane, 62 Mich. 132; 28 N. W. 753; Halleck v. Streeter, 52 Neb. 827; 73 N. W. 219; Bank V. Delafield. 126 N. Y. 410; 27 N. E. 797 ; Jennings v. Pratt, 19 Utah 129; 56 Pac. 951; Coffin v. Mcin- tosh, 9 Utah 315; 34 Pac. 247. PARTNEKSllIP. 1501 separated from the raass of partnership business.^ One partner may before final accounting maintain an action at law against another to recover money borrowed by the latter from the for- nier to put into the partnership business,** or for money which he is to pay the former for an interest in a patent which they are to contribute to the partnership/** So where a partnership is formed between physicians to carry out a contract to transfer the good will of one to the other a suit can be brought for fail- ure to transfer such good will/^ After an accounting and an adjustment of all rights and liabilities growing out of the part- nership one partner may maintain an action against the other for the balance due/^ Thus one partner may sue another on a noto given on sufiicient consideration based on partnership ac- counts/^ or on an express agreement based on a mutual adjust- ment of their affairs/* After dissolution and a sale by one partner to the others the former may maintain an action against such others/^ So, after a dissolution of a firm composed of A, B and C, whereby A was to collect all claims and pay all debts, A may maintain an action on a debt due from B and C to the firm of A, B and C/** So, after dissolution of a firm com- posed of A and B under an agreement whereby A owns all the accounts, A may maintain an action against B if B collects any of such accounts/^ 8 Williams v. Henshaw, 11 Pick. Berry v. DeBruyn, 77 111. App. 359; (Mass.) 79; 22 Am. Dec. 366; Hey v. Harding (Ky.), 53 S. W. George v. Benjamin, 100 Wis. 622; 33; Chamberlain v. Walker, 10 All. 69 Am. St. Rep. 963; 76 N. W. 619. (Mass.) 429; Mitchell v. Wells, 54 Compare McMahon v. Rauhr, 47 Mich. 127; 19 N. W. 777; Bank v. N. Y. 67. Wood. 128 N. Y. 35; 27 N. K 1020; 9 Bull V. Coe, 77 Cal. 54; 11 Am. Crater v. Bininger, 45 N. Y. 545; St. Rep. 235; 18 Pac. 808; Crater Moore v. Gano, 12 Ohio 300; Wilson V. Bininger, 45 N. Y. 545. v. Wilson, 26 Or. 251; 38 Pac. 185. 10 Cook V. Canny, 96 Mich. 398; i* Douthit v. Douthit, 133 Ind. 55 N. W. 987. 26; 32 N. E. 715. iiTichenor v. Newman, 186 III. is Huffman v. Huffman, 63 S. C. 264; 57 N. E. 826. 1 ; 40 S. E. 963, 12 Douthit V. Douthit, 133 Ind. le Beede v. Eraser, 66 Vt. 114; 26; Thompson v. Smith, 82 la. 598; 44 Am. St. Rep. 824; 28 Atl. 880. 48 N. W. 988; Logan v. Trayser, 77 it Glade v. White, 42 Neb. 336; Wis. 579; 46 N. W. 877. 60 N. W. 556. 13 Scott V. Campbell, 30 Ala. 728 ; 1502 PAGE ON CONTBACTS. The law cannot settle accounts between three partners/* nor could two firms sue each other if they had a member in com- mon. ^^ However, if one of two firms having a common mem- ber gives a note to the other firm for a partnership debt, signed by the individual names of some of the partners, omitting the name of the member in common, the payee firm may sue the makers at law."" Where the statute makes partnership con- tracts joint and several, one partner may sue the other at law on a joint and several note.^^ By reason of its more flexible pro- cedure, equity gives adequate relief in actions between partners growing out of partnership business,^^ or in an action between two firms having a common member."^ "Stevens v. Coburn, 71 Vt. 261; S. W. 289; Merrill v. Green, 55 N. 44 Atl. 354. Y. 270; Walker v. Wait, 50 Vt. 668. 19 Crosby v. Timolat, 50 Minn. 22 Vieth v. Ress, 60 Neb. 52; 82 171; 52 K W. 526. N. W. 116; Sanger v. French, 157 sojungk V. Reed, 9 Utah 49; 33 N. Y. 213; 51 N. E. 979. Pac. 236. 23 Schnebly v. Cutler, 22 111. App. 21 Morrison v. Stockwell, 9 Dana 87 ; Crosby v. Timolat, 50 Minn. (Ky.) 172; Sturges v. Swift, 32 171; 52 N. W. 526; Cole v. Rey- Miss. 239; Willis v. Barron, 143 nolds, 18 N. Y. 74. Mo. 450; 65 Am. St. Rep. 673; 45 AGENCY. 1503 CHAPTER XLIII. AGENCY. §960. Nature of agency. An agent is one appointed to transact business and to make contracts witli third persons in place of and on behalf of the person appointing him, known as the principal.^ If the facts exist which in law create the relation of principal and agent such relationship exists though the parties may not have in- tended such facts to have such legal effect,^ or though they may have expressly agreed that such should not be the legal effect.^ Thus an ostensible lease of a mill, the lessee to conduct the busi- ness for a fixed salary and a certain per cent of the profits is a contract of agency.* On the other hand, one who is really the adversary party cannot change the nature of the transaction by stipulating that he is merely an agent.^ Agency has therefore a two-fold aspect. It is, on the one hand, a contract between principal and agent, which does not differ as to its fundamental principles from other contracts ; on the other hand, it is a means of bringing the principal into contractual relations with persons with whom in point of fact he has had no personal dealings. In this chapter there will be presented only the general prin- ciples of the law of agency affecting the rights and liabilities of parties dealing with the principal through the agent. The 1 Central, etc., Co. v. Bank, 101 11,5; 13 Am. St. Rep. 768; 2 L. R. Ga. 345; 28 S. E. 863; Upham v. A. 405; 9 S. W. 753. Richey, 163 111. 5.30; 45 N. E. 228; 3 Hall v. Ins. Co., 23 Wash. 610; Metzger v. 'Huntington, 139 Ind. 51 L. R. A. 288; 63 Pac. 505. 501; 37 N. E. 1084; 39 N. E. 235; * Petteway v. Melntyre, 131 N. C. Barbar v. Martin, — Neb. — ; 93 N. 432; 42 S. E. 851. W. 722; Elwell V. Coon (N. J. Eq.), s So in gambling transaction. 46 Atl. 580. Miinns v. Commission Co., 117 la. 2Bradstreet Co. v. Gill, 72 Tex. 516; 91 N. W. 789. 1504 PAGE ON CONTRACTS. question of the rights of principal and agent between them- selves is a special branch of contract law, and is out of place in a general work on contract. >961. Appointment of agent. As between principal and agent, an agent can be appointed only by a contract, which may be express,^ though informal, as by a statement by the principal that w'hatever the agent did " went^ " ; or implied^ as by acquiescence in the assumption of such authority by the agent.* The chief rule as to form of ap- pointment is that it must be of as high a nature as the act to be done by the agent. At Common Law the classes of contracts as to dignity were the formal and the simple, there being no dis- tinction in rank between the oral and the written. Power to an agent to act under seal must be given by seal,^ unless he acts in the presence of his principal.*' So an agent cannot assign a tax certificate where an acknowledgment thereto is necessary.^ If the agent is to make a simple contract, any form of authority 1 Graves v. Horton, 38 Minn. 66; 35 N. W. 568; Hermann v. Ins. Co., 100 N. Y. 411; 53 Am. Rep. 197; 3 N. E. 341; Cribben v. Deal, 21 Or. 211; 28 Am. St. Rep. 746; 27 Pac. 1046; Bank v. Chester, 6 Humph. (Tenn.) 458; 44 Am. Dec. 318. 2 Scheibeek v. Van Derbeck, 122 Mich. 29; 80 N. W. 880. 3 Arnold v. Spurr, 130 Mass. 347; Matteson v. Blackmer, 46 Mich. 393; 9 N. W. 445; Reeves v. Kel- ley, 30 Mich. 132; Neibles v. Ry. Co., 37 Minn. 151; 33 N. W. 332; Cline V. Stradlee (Tenn. Ch. App.), 48 S. W. 272; Sheanon v. Ins. Co., 83 Wis. 507; 53 N. W. 878; Van Etta V. Evenson, 28 Wis. 33; 9 Am. Rep. 486. The statement is some- times made that there is an agency of necessity. Benjamin v. Dock- ham, 134 Mass. 418. This is a fig- urative expression used to denote a liability which may arise without the consent and in defiance of the intention of the party liable. 4Banlc V. Mohr, 130 Cal. 268; 62 Pac. 511; Sammis v. Poole, 188 111. 396; 58 N. E. 934; affirming 89 111. App. 118. 5 Overman v. Atkinson, 102 Ga. 750; 29 S. E. 758; Watson v. Sher- man, 84 111. 263; Jackson v. Mur- ray, 5 T. B. Mon. (Ky.) 184; 17 Am. Dec. 53; Emerson v. Mfg. Co., 12 Mass. 237; 7 Am. Dec. 66; Wor- rall V. Munn, 5 N. Y. 229; 55 Am. Dec. 330; Smith v. Dickinson, 6 Humph. (Tenn.) 261; 44 Am. Dec. 306. ejansen v. Cahill, 22 Cal. 563; 83 Am. Dec. 84 ; Croy v. Busenbark, 72 Ind. 48; Gardner v. Gardner, 5 Cush. (Mass.) 483; 52 Am. Dec. 740. 7 Wilson V. Wood, 10 Okla. 279; 61 Pac. 1045. AGENCY. 1505 is sufficient unless there is some specific statutory provision to the contrary. Thus a contract which by the statute of frauds must be proved by writing, such as a contract to sell realty,* may be made by an agent having oral authority. As between the principal and third persons, the facts may be such that the prin- cipal is estopped to deny the existence of an agency which is in fact non-existent, or to deny that it extends beyond its actual scope.® §962. Termination of agent's authority. The authority of an agent to bind his principal may cease by expiration of time,^ or the accomplishment of the purpose for which he was appointed," or by express^ or implied revocation arising out of the intention of the principal to revoke.* It may also be revoked by operation of law regardless of the intention of the principal, as by the death of either,^ or by insanity,*' as by 8 Cobban v. Hecklen, 27 Mont. 245; 70 Pac. 805; Smith v. Browne, 132 N. C. 365; 43 S. E. 915; Brod- head v. Reinbold, 200 Pa. St. 618; 86 Am. St. Rep. 735; 50 Atl. 229. See §§ 692, 693. 9 See § 965. 1 Gundlach v. Fischer, 59 111. 172. 2 Short V. Millard, 68 111. 292; Moore v. Stone, 40 la. 259; Ahern V. Baker, 34 Minn. 98; 24 N. W. 341 ; Hermann v. Ins. Co., 100 N. Y. 411; 53 Am. Rep. 197; 3 N. E. 341. 3 Sheahan v. Steamship Co., 87 Fed. 167; Duffield v. Michaels, 97 Fed. 825; Linder v. Adams, 95 Ga. 668; 22 S. E. 687; Ballard v. Ins. Co., 119 N. C. 187; 25 S. E. 956; Hitchcock V. Kelley, 18 Ohio C. C. 808; 4 Ohio C. D. 180; Flaherty v. O'Connor, 24 R. I. 587; 54 Atl. 376. As by demand for a power of attor- ney and surrender thereof. Kelly V. Brennan, 55 N. J. Eq. 423; 37 Atl. 137. 4 Walker v, Denison, 86 111. 142; 95 Chenault v. Quisenberry (Ky.), 56 S. W. 410; 57 S. W. 234; Elliott v. Barrett, 144 Mass. 256; 10 N. E. 820. A power of attorney to con- vey realty is revoked by a convey- ance to the agent as trustee. Chen- ault V. Quisenberry (Ky.), 56 S. W. 410; 57 S. W. 234. 5 Long V. Thayer, 150 U. S. 520; Pacific Bank v. Hannah, 90 Fed. 72; Krumdich v. White, 107 Cal. 37; 39 Pac. 1066; Lanaux's Succession, 46 La. Ann. 1036; 25 L. R. A. 577; 15 So. 708; Brown v. Cushman, 173 Mass. 368; 53 N. E. 860; Mills v. Ins. Co., 77 Miss. 327; 78 Am. St. Rep. 522; 28 So. 954; Martine v. Ins. Co., 53 N. Y. 339; 13 Am. Rep. 529; Duckworth v. Orr, 126 N. C. 674; 36 S. E. 150; McDonald v. Black, 20 Ohio 185; 55 Am. Dec. 448 ; Kern's Estate, 176 Pa. St. 373 ; 35 Atl. 231; Triplett v. Woodward, 98 Va. 187; 35 S. E. 455. 6 Blake v. Garwood, 42 N. J. Eq. 276; 10 Atl. 874.* 1506 PAGE ON CONTRACTS. the principal's lunacy known, though not adjudged/ or by bank- ruptcy of the principal,* or assignment for the benefit of cred- itors." However, the appointment of a receiver for the princi- pal does not revoke the agency, where the receiver accepts the services of the agent.^'* It has been said that the death of the principal does not always, as a matter of law, revoke the author- ity of the agent.^^ The cases cited, however, are those in which IDayment has been made to an agent after the death of the prin- cipal, such payment has been transmitted to the legal representa- tives of the principal, and accordingly as they have received and retained the benefits of the transaction they are estoppel to deny the authority of the agent. No one can appoint an agent in a hostile country during a war.^^ War revokes the agency of citizens of the one hostile country appointed by a principal domiciled in the other, as far as the execution of such power involves communication with the principal or transmission of property to him.^^ Other powers are not revoked by war.^* Thus, a power to sell, where advan- tageous to the donor of the power, is not revoked by war.^^ A power coupled with an interest cannot be revoked, and is an exception to the rules as to revocation.^'' Thus power to col- 7 Matthessen, etc., Co. v. McMa- Ga. 302 ; Conley v. Burson, 1 Heisk. hon, 38 N. J. L. 536. (Tenn.) 145. «In re Daniels, 6 Biss. (U. S.) i* Williams v. Paine, 169 U. S. 405. 55; Ward v. Smith, 7 Wall. (U. S.) sElwell V. Coon (N. J. Eq.), 46 447; Robinson v. Society, 42 N. Y. Atl. 580. 54; 1 Am. Rep. 490; Darling v. loLeupold V. Weeks, 96 Md. 280; Lewis, 11 Heisk. (Tenn.) 125; Ma- 53 Atl. 937. loney v. Stephens, 11 Heisk. (Tenn.) iiMeinhardt v. Newman, — Neb, 738; Manhattan, etc., Co. v. War- — ; 99 N. W. 261; Deweese v. Muff, wick, 20 Gratt. (Va.) 614; 3 Am. 57 Neb. 17; 73 Am. St. Rep. 488; Rep. 218. 42 L. R. A. 789; 77 N. W. 361; Ish is Williams v. Paine, 169 U. S. V. Crane, 8 0. S. 520; s. c, 13 0. S. 55. 574. 16 Jn re Hannan's, etc., Co. 12 United States v. Grossmayer, 9 (1896), 2 Ch. 643; Hunt v. Rous- Wall. (U. S.) 72; Hubbard v. Mat- manier, 8 Wheat. (U. S.) 174; Wal- thews, 54 N. Y. 43; 13 Am. Rep. ker v. Denison, 86 111. 142; Baker 562. V. Baird, 79 Mich. 255; 44 N. W. 13 New York, etc., Co. v. Davis. 604; Durbrow v. Eppens. 65 N. J. 95 U. S. 425; Hovtell v. Gordon, 40 L. 10; 46 Atl. 582; Wheeler v. AGENCY. 150* feet rents and apply proceeds on a mortgage," or power to sell and apply the proceeds/^ or an assignment of a life insurance policy with power to the assignee to collect it/® is not revoked by the death of the princij)al, §963. Scope of agent's authority. The extent of the agent's authority as between him and his principal is primarily a question of fact/ The construction of the language creating the authority or the inferences admissible from the facts from which authority may be inferred are ques- tions of law.^ As illustrating what powers have been held to be implied and what have not been so held, general power to manage a business includes power to do w^hatever is customary and necessary in such business.^ Thus it includes power to lease,* to vacate leased realty without surrendering the lease,^ to employ an attorney,® to borrow money,^ to give a note,^ to endorse checks of his principal for goods bought on credit in pursuance of his authority,^ and to rescind contracts,^^ but not to loan the principal's credit," unless the debt for which the principal becomes surety is really the principal's own debt;^^ Knaggs, 8 Ohio 169; Montague v. 57 L. R. A. 222; 51 Atl. 535 (the McCaiToll, 15 Utah 318; 49 Pac. agent's conduct after the term ended 418 (power to sell land in consid- being considered as a renewal), eration of $5.00). 6 Davis v. Matthews, 8 S. D. 300; 1- Kelly V. Bowerman. 113 Mich. 66 N. W. 456. 446: 71 N. W. 836. -Helena National Bank v. Tele- 18 Terwilliger v. R. R. Co., 149 graph Co., 20 Mont. 379; 63 Am. N. Y. 86; 43 N. E. 432. St. Rep. 628; 51 Pac. 829; McDer- 19 (Supreme Assembly) Good Fel- niott v. Jackson, 97 Wis. 64; 72 N. lows V. Campbell, 17 R. I. 402; 13 W. 375. L. R. A. 601; 22 Atl. 307. 8 Whitten v. Bank, 100 Va. .546; 1 Willcox V. Hines, 100 Tenn. 524; 42 S. E. 309. 66 Am. St. Rep. 761 ; 45 S. W. 781. 9 Graton, etc.. Co. v. Rodelshei- 2Seehorn v. Hall. 130 Mo. 257; 51 mer, 28 Wash. 370; 68 Pac. 879. Am. St. Rep. 562; 32 S. W. 643. lo Van Santvoord v. Smith, 79 3Rathbun v. Snow, 123 K Y. Minn. 316; 82 N. W. 642. 343; 10 L. R. A. 355; 25 N. E. 379. n Boord v. Strauss, 39 Fla. 381; 4 Phillips, etc., Co. v. Whitney, 22 So. 713. 109 Ala. 645; 20 So. 333. 12 Andres v. Morgan. 62 O. S. 236; 5 Byxbee v. Blake, 74 Conn. 607; 78 Am. St. Rep. 712; 56 X. E. 875. 1508 PAGE ON CONTRACTS. nor does a general manager have implied power to mortgage.^' Power to sell is not power to employ an attorney/* or to buy,^^ or to dedicate realty for a street/® or to indemnify against loss in business/'^ nor to sell on credit/* or to sell on credit, taking a note payable to the agent/^ or to rescind a sale already made.^" Power to sell land is not power to mortgage/^ or to ex- change,"" and power to sell goods at retail is not power to mort- gage the entire stock. ^^ Power to sell usually includes power to make such warranties as are customary in that place and busi- ness. Thus in sales of personalty power to warrant quality is implied from powder to sell as to such warranties as are cus- tomary.^* Whether the warranty is customary or not is a ques- tion of fact."^ Power to sell a new brand of fertilizer has been 13 First National Bank v. Kirkby, 43 Fla. 376; 32 So. 881. i4Kirby v. Scraper Co., 9 S. D. 623; 70 N. W. 1052. 15 Mclntogh-Huntington Co. v. Eice, 13 Colo. App. 393; 58 Pac. 358; Finance Co. v. Coal Co., 65 Minn. 442; 68 N. W. 70. 16 Anderson v. Bigelow, 16 Wash. 198; 47 Pac. 426. 17 Kinser v. Clay Co., 165 111. 505; 46 N. E. 372; affirming, 64 111. App. 437; Braun v. Hess, 187 111. 283; 58 N. E 371; affirming 86 111. App. 544. 18 Sale of realty. Burks v. Hub- bard, 69 Ala. 379; Dresden School Dist. V. Ins. Co., 62 Me. 330; Lump- kin V. Wilson, 5 Heisk. (Tenn.) 555. 19 McGrath v. Vanaman, 53 N. J. Eq. 459; 32 Atl. 686. 2oDiversy v. Kellogg, 44 111. 114; 92 Am. Dec. 154; West End, etc., Co. V. Crawford, 120 N. C. 347; 27 S. E. 31; Fletcher v. Nelson, 6 N. D. 94; 69 N. W. 53. Contra, Pal- mer V. Roath, 86 Mich. 602; 49 N. W. 590. But a state agent to sell machines has power to agree to take machine back if unsatisfactory. Ma- rion Mfg. Co. Harding, 155 Ind. 648; 58 N. E. 194. 21 Chapman v. Hughes, 134 Cal. 641; 58 Pac. 298; 60 Pac. 974; 66 Pac. 982; Salem National Bank v. White, 159 HI. 136; 42 N. E. 312; Minnesota Stoneware Co. v. Mc- Crossen, 110 Wis. 316; 84 Am, St. Rep. 927; 85 N. W^ 1019. 22 Chapman v. Hughes, 134 Cal. 641; 58 Pac. 298; 60 Pac. 974; 66 Pac. 982. 23 Kiefer v. Klinsick, 144 Ind. 46; 42 N. E. 447. 24 Dreyfus v. Goss, 67 Kan. 57; 72 Pac. 537; McCormick Harvest- ing Machinery Co. v. Hiatt. — Neb. — ; 95 N. W. 627; Bierman v. Mills Co., 151 N. Y. 482; 56 Am. St. Rep. 635; 37 L. R. A. 799; 45 N. E. 856 ; Reese v. Bates, 94 Va. 321 ; 26 S. E. 865 ; Westurn v. Page, 94 Wis, 251; 68 N. W. 1003; Pickert v. Marston, 68 Wis. 465; 60 Am. Rep. 876; 32 N. W. '550; overruling Boothby v. Scales, 27 Wis. 626. 25 Reese v. Bates, 94 Va. 321; 26 S. E. 865; Westurn v. Page, 94 Wis. 251; 68 N. W. 1003; Larson V. Taylor Co., 86 Wis. 281; 39 Am. St. Rep. 893; 56 N. W. 915. AGENCY. 1509 held to include power to warrant its quality.^* Power to sell as general agent has been held to include power to warrant," even as to one who knows that local agents are unauthorized to warrant."* Power given by a mortgagee to a mortgagor of chattels to sell and apply the proceeds to the mortgage debt is held to include power to warrant.^'' If the warranty is not cus- tomary the agent has no implied authority to make it.^° Title is usually warranted. Accordingly power to sell land includes power to warrant the title/^ and so does power to sell person- alty.^^ Power to sell guaranteed goods to be tested is power to fix the method of testing the goods,^^ or to extend the time of the trial.^* It is presumed that the principal intends that the cus- tom of the market shall determine the agent's power to sell therein.'^ Power given by a wife to her husband to mortgage her realty is not power to release her dower in his realty.^* Power to pledge includes power to pledge again to raise money to pay the first loan;^^ and power to pay includes power to promise to pay so as to avoid limitations.^® Power to loan is not power to negotiate/^ or to collect unless the note is in the posses- 26Hille V. Adair (Ky.), 58 S. W. Howe v. Harrington, 18 N. J. Eq. 697; Reese v. Bates, 94 Va. 321; 26 495. S. E. 865. 32 Nelson v. Cowing, 6 Hill (N. 27Hille V. Adair (Ky.), 58 S. W. Y.) 336; overruling Gibson v. Colt, 697. 7 Johns. (N. Y.) 390; Nixon v. 28 J. I. Case, etc., Co. v. McKin- Hyseratt. 5 Johns. (jST. Y.) 58. non, 82 Minn. 75 ; 84 N. W. 646. 33 Smith v. Mfg. Co., 58 N. J. L. 29 National Citizens' Bank v. Ertz, 242; 33 Atl. 244. 83 Minn. 12; 53 L. R. A. 174; 85 34 Reeves v. Cress, 80 Minn. 466; N. W. 821. ♦ 83 N. W. 443. 30 Wait v. Bourne, 123 N. Y. 592; 35 Taylor v. Bailey, 169 HI. 181; 25 N. E. 1053; Smith v. Tracy, 36 N. 48 N. E. 200; affirming 68 HI. App. Y. 79. 622. 31 Vanada v. Hopkins, 1 J. J. Mar. 36 Security Savings Bank v. Smith, (Ky.) 285; 19 Am. Dec. 92; Bron- 38 Or. 72; 84 Am. St. Rep. 756; 62 son v. Coffin, 118 Mass. 156; Le Pac 794. Roy v. Beard, 8 How. (U. S.) 451; 37 Hayes' Appeal, 195 Pa. St, 177; Backman v Charlestown, 42 N. H. 45 Atl. 1007. 125; Scltultz V. Griffin, 121 N. Y. 38 /„ re Hale (1899), 2 Ch. 107. 294; 18 Am. St. Rep. 825; 24 N. E. so Fortune v. Stockton, 182 111. 480; Peters v. Farnsworth. 15 Vt. 454; 55 N. E. 367; affirming 82 155; 40 Am. Dec. 671. Contra, see 111. App. 272. 1510 PAGE ON CONTRACTS. sion of the agent.**^ But general power to handle money for in- vestment is power to extend payment or to collect notes.*^ Power to buy for cash does not include power to buy on credit.*^ Power to collect is not power to modify the contract/^ or to ex- tend the time of payment/* or to waive the principal's right in property,*^ or to set off the debt to be collected against a debt owed by the principal,*^ or to indorse checks received,*^ and power to foreclose is not power to extend time of payment.** Power to collect interest is not power to collect the principal,*® at least before maturity,^" unless by custom, ^^ or by the prin- cipal's acquiescence in such conduct/^ or if the note is in the 40 Bacon v. Pomeroy, 118 Mich. 145; 76 N. W. 324; Church Associa- tion V. Walton, 114 Mich. 677; 72 N. W. 998; Bromley v. Lathrop, 105 Mich. 492; 63 N. W. 510; Smith V. Kidd, 68 N. Y. 130; 23 Am. Rep. 157; Hollinshead v. Stuart, 8 N. D. 35; 42 L. R. A. 659; 77 N. W. 89; Bartel v. Brown, 104 Wis. 493; 80 N. W. 801 ; Kohl V. Beach, 107 Wis. 409; 81 Am. St. Rep. 849; 50 L. R. A. 600; 83 N. W. 657. 41 Harrison National Bank v. Austin, 65 Neb. 632; 91 N. W. 540. 42 Fradley v. Hyland, 37 Fed. 49 ; 2 L. R. A. 749; Wheeler v. McGuire, 86 Ala. 398; 2 L. R. A. 808; 5 So. 190; Chapman v. Oil Co., 117 Ga. 881; 45 S. E. 268. 43 Rogers v. College, 64 Ark. 627 ; 39 L. R. A. 636; 44 S. W. 454. 44 Van Veehten v. Jones, 104 la. 436; 73 N. W. 1032. 45 Johnson v. Wilson, 137 Ala. 468; 97 Am. St. Rep. 52; 34 So. 392. 46 Hill V. Van Duzer, 111 Ga. 867; 36 S. E. 966. An agent to collect cannot set off his own debt to the debtor of the principal in payment of his principal's debt, leaving him- self indebted to his principal. West- ern, etc., Co. V. Portrey, 50 Neb. 801; 70 N. W. 383. (It is not a good novation, as the principal's con- sent is lacking. See § 1351. 4T Deering v. Kelso, 74 Minn. 41; 73 Am. St. Rep. 324 ; 76 N. W. 792 ; Jackson v. Bank, 92 Tenn. 154; 36 Am. St. Rep. 81.; 18 L. R. A. 663; 20 S. W. 802. Contra, if the agent collecting security of a loan associa- tion is to pay the money received therefrom to the treasurer he has authority to indorse. Gate City, etc.. Association v. Bank, 126 Mo. 82; 47 Am. St. Rep. 633; 27 L. R. A. 401 ; 28 S. W. 633. 48Karcher v. Gans, 13 S. D. 383; 83 N. W. 431. 49 Joy V. Vance, 104 Mich. 97; 62 N. W. 140; Walsh v. Peterson, 59 Neb. 645; 81 N. W. 853; Frey v. Curtis, 52 Neb. 406; 72 N. W. 478; Lawson v. Nicholson, 52 N. J. Eq. 821; 31 Atl. 386; Brewster t. Carnes, 103 N. Y. 556; 9 N. E. 323. 50 Little Rock, etc., Co, v. Wig- gins, 65 Ark. 385; 46 S. W. 731; Dilenbeck v. Rehse, 105 la. 749; 73 N. W. 1072; Smith v. Kidd, 68 N. Y. 130; 23 Am. Rep. 157. • 51 Thornton v. Lawther, 169 HI. 228; 48 N. E. 412; reversing 67 111. App. 214. 52 Springfield Savings Bank v. Kjaer, 82 Minn. 180; 84 N. W. 752. AGENCY. 1511 possession of the agent.^^ Power to collect installments when due is not power to collect before they are due.^* Power to col- lect and reinvest is power to collect before maturity.^^ Power to collect is power to accept cash only therefor, not a savings de- posit book."^** Power to settle a debt is power to accept the note of a third person/^ or personal property,^^ A collecting agency has power to employ an attorney for its principal.^^ Power to solicit orders is not power to collect,'^" or to rescind,^^ or to make a binding contract of sale.*^^ Power to ship goods includes power to take a special bill of lading.*'^ Power to write insur- ance wdthin certain territorial limits is not power to write in- surance outside such limits.*'* Power to insure is not power to insure on credit, taking a promissory note for the premium.*'^ Power to lease is not power to covenant to irrigate f^ but such agent may bind his principal by a representation that a wall of the building to be leased is fire-proof. '^'^ An attorney has no implied authority to consent to a compromise judgment against 53 Ambrose v. Barrett, 121 Cal. 297; 53 Pac. 805; 54 Pac. 264; Hitchcock V. Kelley, 18 Ohio C. C. 808; 4 Ohio C. D. 180. 54 Park V. Cross, 76 Minn. 187; 77 Am. St. Rep. 630; 78 N. W. 1107; Smith v. Kidd, 68 N. Y. 130; 23 Am. Rep. 157 55 Thornton v. Lawther, 169 111. 228; 48 N. E. 412; reversing 67 111. App. 214. 56 Dixon V. Guay, 70 N. H. 161; 46 Atl. 456. To the same effect is Cram v. Sickel, 51 Neb. 828; 66 Am. St. Rep. 478; 71 N. W. 724. 57 Nichols & Shepard Co. v. Hack- ney, 78 Minn. 461 : 81 N. W. 322. 58 Oliver v. Sterling, 20 O. S. 391. 59 Strong V. West, 110 Ga. 382; 35 S. E. 693. 60 .Jackson Paper Mfg. Co. v. Bank, 199 111. 151; 59 L. R. A. 657; 65 N. E. 136; Dreyfus v. Goss, 67 Kan. 57; 72 Pac. 537; Clark v. Murphy, 164 Mass. 490; 41 N. E. 674; Brown v. Lally, 79 Minn. 38; 81 N. W. 538; Smith v. Browne, 132 N. C. 365; 43 S. E. 915; Simon v. Johnson, 105 Ala. 344; 53 Am. St. Rep. 125; 16 So. 884. 61 Bingham v. Hibbard, 28 Or. 386; 43 Pac. 383. 62 John Matthews, etc., Co. v. Renz (Ky.), 61 S. W. 9. 63 California, etc.. Works v. R. R. Co., 113 Cal. 329; 36 L. R. A. 648; 45 Pac. 691. But a vendor deliver- ing live stock to the railroad is not the agent of the purchaser. Nor- folk, etc., R. R. Co. V. Harman, 91 Va. 601; 50 Am. St. Rep. 855; 22 S. E. 490. 64 Ins. Co. V. Thornton, 130 Ala. 222; 55 L. R. A. 547; 30 So. 614. 6 5 Mutual Life Ins. Co. v. Logan, 87 Fed. 637; 31 C. C. A. 172. 66 Durkee v. Carr, 38 Or. 189; 63 Pac. 117. 67Matteson v. Rice, 116 Wis. 328; 92 N. W. 1109. 1512 PAGE ON CONTRACTS. his client.*'® A husband has no implied authority to act as agent for his wife."** §964. Liability of principal. — Agent acting within authority. If the contract of the agent is in fact within his authority, the principal is liable thereon, without reference to any facts creat- ing estoppel, or to the knowledge possessed by the adversary party of the facts that make the principal liable.^ Payment to an authorized agent discharges the debt paid." The principal is liable for the acts of his agent within the scope of his authority even if the existence of the principal is not disclosed.^ Thus payment to the agent of an undisclosed principal discharges the debt.* So if the contract does not purport to bind the real prin- cipal, but the agent,^ or a third party who does not consent thereto,''' the real principal is liable thereon. §965. liability of principal. — Estoppel. Outside of the class of public agents the actual authority con- ferred by a principal upon his agent is practically inaccessible 68 Kilmer v. Gallaher, 112 la, 583; 80 N. W. 517; Jones v. Johnson, 86 84 Am. St. Rep. 358; 84 N. W. 697. Ky. 530; 6 S. W. 582; Maxcy Mfg. 69 Rust-Owen Lumber Co. V. Holt, Co. v. Burnham, 89 Me. 538; 56 60 Neb. 80; 83 Am. St. Rep. 512; 82 Am. St. Rep. 436; 36 Atl. 1003; N. W. 112. Schendel v. Stevenson, 153 Mass. 1 Garfield, etc., Co. v. Lime Co., 351; 26 N. E. 689; Simmons Hard- 184 Mass. 60; 61 L. R. A. 946; 67 ware Co. v, Todd, 79 Miss. 163; 29 N. E. 863; Home Fire Ins. Co. v. So. 851; Weber v. Collins, 139 Mo. Kuhlman, 58 Neb. 488; 76 Am. St. 501; 41 S. W. 249; Yates v. Kepet- Rep. Ill; 78 N. W. 936; Nutter v. to, 65 N. J. L. 294; 47 Atl. 632; Brown, 51 W. Va. 5^8; 42 S. E. Belt v. Water Power Co., 24 Wash. 661. 387; 64 Pac. 525. An undisclosed 2 Henken v. Schwicker, 174 N. Y. principal is not liable on a convey- 298; 66 N. E. 971. ance of realty. Sanger v. Warren, sBergtholdt v. Porter Bros. Co., 91 Tex. 472; 66 Am. St. Rep. 913; 114 Cal. 681; 46 Pac. 738; Simp- 44 S. W. 477. son V. Guano Co., .99 Ga. 168; 25 * Cheshire Provident Institution v. S. E. 94; Allison v. Sutlive, 99 Ga. Gibson (Neb.), 89 N. W. 243. 151; 25 S. E. 11; Baldwin v. Gar- s Crawford v. Moran, 168 Mass. rett, 111 Ga. 876; 36 S. E. 966; 446; 47 N. E. 132. Woodford v. Hamilton, 139 Ind. 6 Simmons Hardware Co. V. Todd, 481; 39 N. E. 47; Steele-Smith Gro- 79 Miss. 163; 29 So. 851. cerv Co. V. Potthast, 109 la. 413; AGENCY. 1513 to the public at large. Accordingly persons who do not know what the agent's authority really is are justified in dealing with him upon the assumption that he has the authority which the principal indicates by his conduct that the agent possesses. Thus dealing with the agent, such persons may hold the princi- pal on contracts outside the real authority of the agent but in- side his apparent authority.^ Thus if a husband is his wife's agent to deliver a note signed by them both, his statement that she is principal is binding on her, if her name is written above his and prevents her from interposing the defense that she was a surety.^ In contracts made in excess of the real authority of the agent the liability of the principal depends on the application of principles of estoppel. Thus the principal is liable only so far as the person dealing through the alleged agent had reason to believe from the facts known to him at the time, that the con- iPost V. Pearson. 108 U. S. 418; Lucas V. Brooks, 18 Wall. (U. S.) 436; Phillips, etc. Co. v. Whitney, 109 Ala. 645; 20 So. 333; A. G. Rhodes Furniture Co. v. Weeden, 108 Ala. 252; 19 So. 318; Buckley V. Silverberg, 113 Cal. 673; 45 Pac. 804; Camp v. Hall, 39 Fla. 535; 22 So. 792; Thornton v. Lawther, 169 111. 228; 48 N. E. 412; reversing 67 111. App. 214; Nash v. Classen, 163 111. 409; 45 N. E. 276; Croy V. Busenbark, 72 Ind. 48; Sawin v. Savings Association, 95 la. 477; 64 N. W. 401; Vanada v. Hopkins, 1 J. J. Mar. (Ky.) 285; 19 Am. Dec. 92; Columbia, etc., Co. v. Tinsley (Ky.), 60 S. W. 10; H. Herman Sawmill Co. v. Bailey (Ky.), 58 S. W. 449; Heath v. Stoddard, 91 Me. 499; 40 Atl. 547; Schendel v. Stevenson, 153 Mass. 351; 26 N. E. 689; Lock v. Lewis, 124 Mass. 1; 26 Am. Rep. 631; Thompson v. Clay, 60 Mich. 627 ; 27 N. W. 699 : Drohan v. Lumber Co., 75 Minn. 251 ; 77 N. W. 957; Day, etc., Co. v. Bixby. (Neb.), 93 N. W. 688; Phoenix Ins. Co. V. Walter. 51 Neb. 182; 70 N. W. 938; Thomson v. Shelton, 49 Neb. 644; 68 N. W. 1055; Cam- den, etc., Co. v. Abbott, 44 N. J. L. 257; Edwards v. Dooley, 120 N. Y. 540; 24 N. E. 827; Schley v. Fryer, 100 N. Y. 71 ; 2 N. E. 280, Hubbard v. Tenbrook, 124 Pa. St. 291; 10 Am. St. Rep. 585; 2 L. R. A. 823; 16 Atl. 817; Minnelly v. Goodwin (Tenn. Ch.), 39 S. W, 855; Griggs v. Selden, 58 Vt. 561; 5 Atl. 504; Rohrbough v. Express Co.. 50 W. Va. 148; 88 Am. St. Rep. 849; 40 S. E. 398. "Persons deal- ing with an agent have a right to presume that his agency is general and not limited, and notice of the limited authority must be brought to their knowledge before they are bound to regard it." Trainer v. Morison, 78 Me. 160, 163; 57 Am. Rep. 790: 3 Atl. 185; quoted in Wood v. Finson, 89 Me. 459, 460 ; 36 Atl. 911. 2 Tompkins v. Triplett, 110 Ky. 824; 62 S. W. 1021. 1514 PAGE ON CONTRACTS. tract was within the scope of the agent's authority.' The prin- cipal may be estopped to deny the authority of the agent by ac- tively holding him out to the world as his agent. Thus private instructions contrary to the apparent authority of the agent and not known to the person dealing with him/ or an uncommuni- cated revocation of the agent's authority,^ do not prevent the principal from being bound by the contract of his agent made in his behalf with a person acting in good faith. Thus a recorded power of attorney and a deed made in pursuance thereof passes title to a hona fide grantee is against a grantee from the principal by a prior unrecorded deed.^ So a principal is bound by a let- ter written by his agent at his order, though its contents differ 3 Nofsinger v. Goldman, 122 Cal. 609; 55 Pac. 425; Rodgers v. Peck- ham, 120 Cal. 238; 52 Pac. 483; Blass V. Terry, 156 N. Y. 122; 50 N. E. 953; reversing 87 Hun (N. Y.) 563; Fabian Mfg. Co. v. New- man (Tenn. Ch. App.), 62 S. W. 218. 4 Butler V. Maples, 9 Wall. (U. S.) 766; A. G. Rhodes Furniture Co. V. Weeden, 108 Ala. 252; 19 So. 318; Sweetser v. Shorter, 123 Ala. 518; 26 So. 298; Lytle v. Bank, 121 Ala. 215; 26 So. 6; Louis- ville, etc., Co. V. Tift, 100 Ga. 86; 27 S. E. 765; Armour v. Ross, 110 Ga. 403; 35 S. E. 787; Grain v. Bank, 114 111. 516; 2 N. E. 486; Hichhorn v. Bradley, 117 la. 130; 90 N. W. 592; Dreyfus v. Goss, 67 Kan. 57; 72 Pac. 537; Sanford v. Ins. Co., 174 Mass. 416; 75 Am. St. Rep. 358; 54 N. E. 883; Brown v. Ins. Co., 165 Mass. 565; 52 Am. St. Rep. 535; 43 N. E. 512; Baker v. Produce Co., 113 Mich. 533; 71 N. W. 866 ; Allis v. Voigt, 90 Mich. 125; 51 N. W. 190; Leo Austrian & Co. V. Springer. 94 Mich. 343; 34 Am. St. Rep. 350; .54 N. W. 50; Van Santvoord v. Smith, 79 Minn. 316; 82 N. W. 642; Watts v. How- ard, 70 Minn. 122; 72 N. W. 840; Potter V. Milling Co., 75 Miss. 532; 23 So. 259; Cross v. R. R. Co., 141 Mo. 132; 42 S. W. 675; affirming 71 Mo. App. 585; Hall v. Hopper, 64 Neb. 633 ; 90 N. W. 549 ; Rathbun v. Snow, 123 N. Y. 343; 10 L. R. A. 355; 25 N. E. 379; Franklin Fire Ins. Co. V. Bradford, 201 Pa. St. 32; 88 Am. St. Rep. 770; 55 L. R. A. 408; 50 Atl. 286; Anderson v. Surety Co., 196 Pa. St. 288 ; 46 Atl. 306; Wilson v. Assurance Co., 51 S. C. 540; 64 Am. St. Rep. 700; 29 S. E. 245; Smith v. Droubay. 20 Utah 443; 58 Pac. 1112; Hall v. Ins. Co., 23 Wash. 610; 83 Am. St. Rep. 844; 51 L. R. A. 288; 63 Pac. 505. 5 Swinnerton v. Argonaut, etc., Co., 112 Cal. 375; 44 Pac. 719; Maxcy Mfg. Co. v. Burnham, 89 Me. 538; 56 Am. St. Rep. 436; 36 Atl. 1003. 6 Gratz V. Improvement Co., 82 Fed. 381; 40 L. R. A. 393; 27 C. C. A. 305. AGENCY. 1515 from the instructions given/ and a third person may rely on the impression created by A's agent that the contract is made with A, though in fact the agent is making it for B.* So an uncom- municated rule that the insurance agent must make a personal examination is not binding on persons taking insurance.® So secret instructions to an agent not to insure certain kinds of property do not prevent the principal from being liable on insur- ance covering such property/" So a sub-agent, who was em- ployed as the agent of the general agent and not as the agent of the insurance company, may bind the company if held out as an agent/^ The same rule applies where a sub-agent, with similar powers, having authority to sign the general agent's name, signs it to a policy contrary to the instructions of the company. Such policy binds the company and therefore the general agent is liable over to the company.^^ So where an agent having power to deliver a note on receipt of a written contract delivers the note before such contract is executed, relying on the promise of the adversary party to execute it later, such note is valid in the hands of a hona fide holder.^^ So one who authorizes an agent to make a loan is liable for usury exacted by such agent, though such principal did not authorize usury or know of it.^* So an agent authorized to sell crops binds his principal by waiving his principal's lien as landlord though he sells more of the crops than specified in his secret instructions.^^ The principal may 7 Morris v. Posner, 111 la. 335; is Chase National Bank v. Fau- 82 N. W. 755. rot, 149 N. Y. 532; 35 L. R. A. 605; 8 Lambert v. Loan Association, 65 44 N. E. 165. So if the purchaser N. J. L. 79; 46 Atl. 766. of a note leaves it in the custody 9 Phillips V. Ins. Co., 101 Fed. 33, of payee and knowingly allows the 10 Franklin Fire Ins. Co. v. Brad- payee to collect it he is estopped ford, 201 Pa. St. 32; 88 Am. St. to deny payee's agency. Morgan Rep. 770; 55 L. R. A. 408; 50 AtL v. Neal, 7 Ida. 629; 97 Am. St. Rep. 286. 264: 65 Pac. 66. 11 Hall V. Ins. Co., 23 Wash. 610; i4 Robinson v. Blaken, 85 Minn. 83 Am. St. Rep. 844; 51 L. R. A. 242; 89 Am. St. Rep. 541; 88 N. W. 288; 63 Pac. 505. 845. 12 Franklin Fire Ins. Co. v. Brad- is Fishbaugh v. Spunaugle, 118 la. ford, 201 Pa. St. 32; 88 Am. St. 337; 92 N. W. 58. Rep. 770; 55 L. R. A. 408; 50 Atl. 286, 15 IG PAGE ON CONTEACTS. be estopped by acquiescence in conduct of the alleged agent, known,^® or which should be known/^ to such principal. Thus if a principal has acquiesced in an agent's collecting certain pay- ments, he is estopped to deny his authority to collect later pay- ments/^ It has been held that the liability of the principal to third persons is not based on estoppel ; and that it is not neces- sary to show that the person dealing with the agent knew of the facts upon which his apparent authority was based/" This is not in accordance with the weight of authority; and probably the courts so holding do so through a confusion between ap- parent authority vesting in estoppel ; and real authority which is proved by the past conduct of principal and agent, whether such conduct is knowu to the adversary party or not/° §966. Acts of unauthorized a^ent not estoppel. The acts which create estoppel must be those of the principal to be estopped or of some one authorized by him. The acts and declarations of the alleged agent cannot estop the principal from denying the fact of the agency, and are not even admissible in evidence to establish such agency, if such principal has not isHolt V. Schneider, 57 Neb. 523; Blake v. Mfg. Co. (X. J. Eq.), 38 77 N. W. 1086; De Witt v. De Witt, Atl. 241. 202 Pa. St. 255; 51 Atl. 987; Tele- 20 Moore v. Publishing Associa- phone Co. v. Brown, 104 Tenn. 56; tion, 95 Fed. 485; Lester v. Webb, 78 Am. St. Rep. 906; 50 L. R. A, 1 All. (Mass.) 34; Perry v. Ins. 277; 55 S. W. 155. Co., 67 X. H. 291; 68 Am. St. Rep. "Martin v. Webb, 110 U. S. 7; 668; 33 Atl. 731; Fifth National Blake v. Mfg. Co. (X. J. Eq.), 38 Bank v. Phosphate Co., 119 X. Y. Atl. 241; Hanover Xational Bank v. 256; 23 X. E. 737. '^ The recogni- American, etc., Co.. 148 X. Y. 612; tion by a corporation of acts on the 51 Am. St. Rep. 721 ; 43 X. E. part of an agent similar in charae- 72. ter to those which may be in dis- 18 Grant v. Humerick (la.), 94 pute tends strongly to establish the N. W. 510; Harrison Xational Bank agent's authority." Olcott v. R. R. V. Austin, 65 Xeb. 632; 59 L. R. A. Co., 27 X. Y. 546, 560; 84 Am. 294; 91 X. W. 540. Dec. 298. (Citing Munn v. Commis- loPrescott v. Flinn, 9 Bing. 19; sion Co., 15 Johns. (X. Y.) 44; 8 Williams v. Mitchell, 17 Mass. 98; Am. Dec. 219; Wood v. R. R. Co., 8 X. Y. 160.) AGENCY. 1517 acquiesced therein,^ though his testimony to the fact of his authority is admissible.^ §967. Liability of principal. — Agent acting outside of authority. The principal is not liable for a contract made by his agent outside both his real and his apparent authority.^ The liability of the principal where the agent has exceeded his authority de- 1 Trust Co. V. Robinson, 79 Fed. 420; Wailes v. Neal, 65 Ala. 59; Hawcott V. Kilbourn, 44 Ark. 213; Smith V. Ins. Co., 107 Cal. 432; 40 Pac. 540; Ferris v. Baker, 127 Cal. 520; 59 Pac. 937; Union Coal Co. V. Edman, 16 Colo. 438; 27 Pac. 1060; Amicalola, etc., Co. v. Coker, 111 Ga. 872; 36 S. E. 950; Massil- lon, etc., Co. v. Akerman, 110 Ga. 570; 35 S. E. 635; Grand Rapids, etc., Co. V. Morel, 110 Ga. 321; 35 S. E. 312; Proctor v. Tows, 115 III. 138; 3 N. E. 569; Whitam v. R. R. Co., 96 la. 737; 65 N. W. 403; Ma- chine Co. V. Clark, 15 Kan. 492; Eaton V. Provident Association, 89 Me. 58; 35 Atl. 1015; Fontaine, etc. Electrical Co. v. Ranch, 117 Mich 401; 75 N. W. 1063; Murphy v Ins. Co., 83 Mo. App. 481; Associa tion V. Murray, 47 Neb. 627; 66 N W. 635; Gifford v. Landrine, 37 N J. Eq. 127; Taylor v. Hunt, 118 N C. 168; 24 S. E. 359; Q. W. Loverin Browne Co. v. Bank, 7 N. D. 569 75 N. W. 923; Central, etc., Supply Co. V. Thompson, 112 Pa. St. 118 3 Atl. 439 ; Ehrhardt v. Breeland, 57 S. C. 142; 35 S. E. 537; Dickerman V. Ins. Co., 67 Vt. 609; 32 Atl. 489; Fisher v. White, 94 Va. 236; 26 S. E. 573; Garber v. Blatchley, 51 W. Va. 147; 41 S. E. 222; Rosen- dorf V. Poling, 48 W. Va. 621; 37 S. E. 555. 2 McRae v. Development Co. (Cal. ) , 54 Pa. 743; O'Leary v. Ins. Co., 100 la. 390; 69 N. W. 686; Lawall V. Groman. 180 Pa. St. 532; 57 Am. St. Rep. 662 ; 37 Atl. 98 ; Connor v. Johnson, 59 S. C. 115; 37 S. E. 240; Garber v. Blatchley, 51 W. Va. 147; 41 S. E. 222. 1 Simon v. Johnson, 101 Ala. 368 ; 13 So. 491; Birmingham, etc., Co. V. R. R. Co., 127 Ala. 137; 28 So. 679; Snapp v. Stanwood, 65 Ark. 222; 45 S. W. 546; Lakeside, etc., Co. V. Campbell, 39 Fla. 523; 22 So. 878; Brandenstein v. Douglas, 105 Ga. 845; 32 S. E. 341; Blackmer V. Mining Co., 187 111. 32; 58 N. E. 289; Kinser v. Clay Co., 165 111. 505; 46 N. E. 372; affirming 64 111. App. 437; Noftsger v. Barkdoll, 148 Ind. 531; 47 N. E. 960; Kiefer V. Klinsick, 144 Ind. 46; 42 N. E. 447; Stover v. Flower, 120 la. 514; 94 N. W. 1100; Godshaw v. Struck, 109 Ky. 285; 58 S. W. 781; 51 L. R. A. 668; Warren v. Goodwyn. 110 La. 198; 34 So. 411; Munroe v. White- house, 90 Me. 139; 37 Atl. 866; Davies v. Steamboat Co., 94 Me. 379; 53 L. R. A. 239; 47 Atl. 896; Clark V. Murphy, 164 Mass. 490; 41 N. E. 674; Gore v. Assurance Co., 119 Mich. 136; 77 X. W. 650; Clark V. Haupt, 109 Mich. 212; 68 N. W. 231; Olson v. Ry. Co., 81 Minn. 402; 84 N. W. 219; Perrine v. Coo- ley, 42 N. J. L. 623 ; Law v. Stokes, 32 N. J. L. 249; 90 Am. Dec. 655; Ferguson v. Mfg. Co., 118 N. C. 946; 24 S. E. 710; Thompson v. 1518 PAGE ON CONTRACTS. pends on principles of estoppel. If no facts exist, therefore, to estop the principal from denying the authority of the agent, persons dealing with the agent must take notice of his powers." So persons dealing with an agent are bound by known limita- tions on his authority.^ So where the agent is a special agent of limited powers, the principal in the absence of estoppel or ratification, is not bound by his contract in excess of his author- ity.* Thus an agreement by a local railway agent in violation of a known rule of the railway to make no charge to a large ship- per for demurrage or storage is not binding on the company.^ So an agent having an assignment of a judgment for safe keep- ing cannot assign such judgment to one who knows the facts. ^ So a conveyance by an attorney in fact, having known authority to convey only on approval by his principal, is of no validity if made without such approval.^ So if A buys a piano from B as agent of X and makes his note therefor payable to B person- ally, it has been held that if B does not account to X for the proceeds of such note, X may recover the piano, X not having ratified the sale and no such custom of business being shown.* Sproul, 179 Pa. St. 266; 36 Atl. tion, 97 Ga. 172; 25 S. E. 826; Gor« 290; Mundis v. Emig, 171 Pa. St. ham v. Felker, 102 Ga. 260; 28 S. E. 417; 32 Atl. 1135; Brown v. West, 1002; Wynne v. Parke, 89 Tex. 413; 69 Vt. 440; 38 Atl. 87; Parr v. 34 S. W. 907; Wells v. Ins. Co., 41 Mfg. Co., 117 Wis. 278; 93 N. W. W. Va. 131; 23 S. E. 527. 1099; McKindly v. Dunham, 55 Wis. ^Eigby v. Lowe, 125 Cal. 613; 58 515; 42 Am. Rep. 740; 13 N. W. Pae. 153; Baldwin Fertilizer Co. v. 485. Thompson, 106 Ga. 480; 32 S. E. 2 Insurance Co. v. Thornton, 130 591 ; Phoenix Ins. Co. v. Gray, 107 Ala. 222; 89 Am. St. Rep. 30; 55 Ga. 110; .32 S. E. 948; Jones v. L. R. A. 547; 30 So. 614; Planters', Brand. 106 Ky. 410; 50 S. W. 679; etc.. Fire Association v. De Loach, Hardwiek v. Kirwan, 91 Md. 285; 113 Ga. 802; 39 S. E. 466; Deffen- 46 Atl. 987; Norton v. Nevill«, 174 baugh V. Mfg. Co., 120 Mich. 242; Mass. 243; 54 N. E. 537; Mann v. 79 N. W. 197; Spelman v. Milling Oil Co., 92 Tex. 377; 48 S. W. 567. Co., 26 Mont. 76; 55 L. R. A. 640; 5 Harris v. Banking Co., 91 Ga. 66 Pae. 597; Chase v. Swift. 60 Neb. 317; 18 S. E. 159. 696; 83 Am. St. Rep. 552; 84 N. W. e Schmidt v. Shaver, 196 111. 108; 86; Carney v. Ins. Co., 162 N. Y. 89 Am. St. Rep. 250; 63 N. E. 655. 453; 76 Am. St. Rep. 347; 49 L. R. 7 Alcorn v. Buschke, 133 Cal. 655; A. 471; 57 N. E. 78; Fargo v. Cra- 66 Pae. 15. vens, 9 S. D. 646; 70 N. W. 1053. « Baldwin v. Tucker, 112 Ky. 282; 3 Littleton v. Loan, etc., Associa- 65 S. W. 841. AGENCY. 1519 So a principal is not bound where an agent with mere power to sell, inserts in a contract a clause for interest in case of delay in delivery/'* or makes specific representations that the threshing- machine sold by him has been shipped, thereby inducing the vendee to deliver his old machine in part payment, and thus leaving him without any threshing machine when needed/" So if an insurance agent delivers a policy which by its terms is not to take effect until the first premium is paid, and the insured agrees to pay therefor by giving the agent credit for such pre- mium on his private account, the insurance company is not lia- ble if the agent does not account to it for such premium/^ So if an insurance policy shows on its face that an agent has no authority to waive certain ])rovisions thereof, an attempted waiver by an agent not having such authority in fact is invalid.^^ So while a rule of an express company that express orders must be signed by their local agent does not prevent recovery on ex- press orders signed by a clerk in the office of the local agent, such rule not being known,^^ yet if this clerk had solicited business outside the office and had made no charge therefore, the person buying such orders with knowledge of these facts must take no- tice that such business is outside the apparent authority of an express agent. So an agent who has merely power to sell cannot bind his principal by a contract of sale which provides for pay- ment in something other than cash, such as lumber,^* second- hand machinery,^^ or a note and a certificate of deposit/^ An agent with authority to inspect lumber cannot bind his principal by agreeing to accept lumber \\hich he has not inspected.^^ So 9 Hardwiek v. Kirwan, 91 Md. is Rohrbaugh v. Express Co., 50 285; 46 Atl. 987. W. Va. 148; 88 Am. St. Rep. 849; 10 J. L. Case, etc., Co. v. Eichin- 40 S. E. 398. ger, 15 S. D. 530; 91 N. W. 82. i* J. A. Fay, etc., Co, v. Causey, iiTomsecek v. Ins. Co., 113 Wis. 131 N. C. 350; 42 S. E. 827. 114; 57 L. R. A. 455; 88 N. W. is Elfring v. Birdsall Co., — S. 1013. D. — ; 92 N. W. 29. 12 Thornton v. Ins. Co., IIG Ga. le Wilken v. Voss, 120 la. 500; 121; 94 Am. St. Rep. 99; 42 S. E. 94 N. W. 1123. 287; Cook v. Ins. Co., 84 Mich. 12; it Camplipllsville Lumber Co. v. 47 N. W. 568; Cleaver v. Ins. Co., Rpotswood (Ky.), 74 S. W. 235. 65 Mich 527; 8 Am. St. Rep. 908; 32 N. W. 660. 1520 PAGE ON CONTRACTS. an agent with authority only to collect rents cannot bind his principal by a contract to lease.^^ So a principal is not bound by the act of his agent after the authority of such agent is known to the third person to be revoked.^'' Thus an agent originally authorized to sell realty, cannot bind his principal by accepting money from a vendee and putting him in possession, after such vendee knows that the principal has already sold the realty to another."*^ If the contract of the agent exceeds his authority, it will be held good as far as his authority extends if such part can be separated from the rest. Thus if an attorney in fact is authorized to execute a quit-claim deed only, a warranty deed executed by him will pass title, though the covenant of warranty will not bind the. principal."^ §968. Ratification. — Nature and effect. In addition to liability created originally by the contract of the agent, a principal may be liable by reason of his ratification of an unauthorized contract made by one who assumes to act as his agent, or who is his agent, but who exceeds his authority.^ Thus if a wife signs her husband's name to a note without au- thority, he is bound thereby if he subsequently ratifies it." The principal cannot ratify a contract which he could not have authorized originally. Thus where the princijDal is an admin- istratrix, she cannot ratify a contract of an agent which she isDieckman v. Weirich (Ky.), 73 S. W. 617; Kelly v. Thiiey. 143 Mo. S. W. 1119. 422; 45 S. W. 300; reversing in 19 Florida, etc.. R. R. v. Ashmore, banc, 37 S. W. 516; Daughters of 43 Fla. 272; 32 So. 832. American Revolution v. Sehenley, 20 Chandler v. Franklin, 65 S. C. 204 Pa. St. 572; o4 Atl. 366: (Su- 544; 44 s. E. 70. preme Assembly, etc.) Good Fellows 21 Robinson v. Lowe, 50 W. Va. v. Campbell. 17 R. I. 402; 13 L. 75; 40 S. E. 454. R. A. 601; 22 Atl. 307; Knights of lAvakian v. Noble, 121 Cal. 216; Pythias v. Cogbill, 99 Tenn. 28; 41 53 Pae. 559; Lynch v. Smyth, 25 S. W. 340; Richmond, etc., Co. v. Colo. 103; 54 Pac. 634; W. H. H. Ry. Co., 95 Va. 386; 28 S. E. 573; Peck Co. V, Gordon, 112 Mich. 487; McDermott v. Jackson, 97 Wis. 64; 70 N. W. 1034; Hunter v. Cobe, 84 72 N. W. 375. Minn. 187; 87 N. W. 612; In re 2 Hewling v. Wilshire (Ky.), 61 Soulard's Estate, 141 Mo. 642; A2 S. W. 264. AGENCY. 1521 could not have authorized,^ The principal has a reasonable time to ascertain the facts and return what he has received under such contract.* Delay beyond a reasonable time amounts to acquiescence.^ Ratification once made with full knowledge of facts prevents subsequent disaffirmance.® Since this is properly a ratification, no new consideration is necessary.^ Mere omis- sion to discharge the agent for other alleged misconduct is not ratification,* nor is a repudiation of the contract for an errone- ous reason.® §969. Methods of ratification. Ratification may be made expressly,^ even if the adversary parties have repudiated the contract,^ as by insisting on new con- ditions which are accepted,^ or it may be implied from the con- duet of the principal,* as by accepting the proceeds of the con- tract.^ This rule is sometimes stated in the form that retention 3 Upton V. Dennis, — Mich. — ; 94 N. W. 728. 4 McDermott v. Jackson, 102 Wis. 419; 78 N. W. 598; same case, 97 Wis. 64; 72 N. W. 375. 5 Georgia Home Ins. Co. v. Smith- ville (Tex. Civ. App.), 49 S. W. 412. 6 Hunter v. Cobe. 84 Minn. 187; 87 N. W. 612. 7 Plumb V. Curtis, 66 Conn. 154; 33 Atl. 998. 8 Fortune v. Stockton. 182 111. 454; 55 N. E. 367; affirming 82 111. App. 272. 9 Brown v. Henry, 172 Mass. 559; 52 N. E. 1073. 1 Pope V. Armsby Co., Ill Cal. 159; 43 Pac. 589; Brown v. Wilson, 45 S. C. 519; 55 Am. St. Rep. 779; 23 S. E. 630; Johnson v. Mfg. Co., 103 Wis. 291 ; 79 N. W. 236. 2 Tiedemann v Ledermann Freres (1899). 2 Q. B. 66. 3 Robert, etc., Co. v. Mfg. Co., 173 Pa. St. 447; 34 Atl. 450. 96 4Fant V. Campbell, 8 Okla. 586; 58 Pac. 741. 5 Goodman v. Winter, 64 Ala. 410; 38 Am. Rep. 13; Wagoner v. Silva, 139 Cal. 559; 73 Pac. 433; Duncan V. Kearney, 72 Conn. 585; 45 Atl. 358; Smith v. Holbrook, 99 Ga, 256; 25 S. E. 627; Booth v. Wiley, 102 111. 84; France v. Haynes, 67 la. 139; 25 N. W. 98; Noble v. White, 103 la. 352; 72 N. W. 556; Higbee v. Trumbauer, 112 la. 74; 83 N. W. 812; Fleischman v. Ver Does, 111 la. 322; 82 N. W. 757; Blaess v. Nichols Shepard Co., 115 la. 373; 88 N. W. 829; Cassady v. Ins. Co., 109 la. 539; 80 N. W. 521; State Bank v. Kelly. 109 la. 544; 80 N. W. 520; J. P. Calnan Con- struction Co. V. Brown, 110 la. 37; 81 N. W. 163; White v. Creamery Co., 108 la. 522; 79 N. W. 283; Russ V. Hansen. 119 la. 375; 93 N. W. 502; McKinstry v. Bank, 57 Kan. 279; 46 Pac. 302; Graves v. Cord (Ky.), 44 S. W. 665; Singer 1522 PAGE ON CONTRACTS. of the proceeds of the contract estops the principal to deny the agency.^ Thus a vendor who receives and retains the price of machinery cannot avoid a warranty thereof made by the agent who sold it.' So a vendee is liable for property bought for him by his agent without authority and received and accepted by him.* Retaining property received under the agent's contract is not ratification where rejection is impossible, as where the material was built into the principal's house,*^ or repairs were made upon property owned by the principal. ^° Ratification may be effected by accepting services under the contract/^ or suing thereon ;^^ or by acquiescence therein with knowledge of the facts," if for such a length of time that third parties have in the meanwhile acted in reliance on such acquiescence ;^* or by Mfg. Co. V. Stephens (Ky.), 53 S. W. 525; Sokup v. Letellier, 123 Mich. 640; 82 N. W. 523; Payn v. Gidley, 122 Mich. 605; 81 N. W. 558; Payne v. Hackney, 84 Minn. 195; 87 N. W. 608; Anderson v. Johnson, 74 Minn. 171; 77 N. W. 26; Wright v. Church, 72 Minn. 78; 74 N. W. 1015; Day v. Miller, 1 Neb. (Un.) 107; 95 N. W. 359; Smith V. Barnard, 148 N. Y. 420; 42 N. E. 1054; Williams v. Lumber Co., 118 N. C. 928; 24 S. E. 800; Woodward v. Suydam, 11 Ohio 360; Welch V. Mfg. Co., 55 S. C. 568 ; 33 S. E. 739 ; Marks v. Taylor, 23 Utah 152; 63 Pac. 897; modified, 23 Utah 470; 65 Pae. 203; Field v. Doyon, 64 Wis. 560 ; 25 N. W. 653 ; Kriz v. Peege, 119 Wis. 105; 95 N. W. 108. . 6 Lull V. Bank, 110 la. 537; 81 N. W. 784. 7 Blaess v. Nichols Shepard Co., 115 la. 373; 88 N. W. 829. sHaney, etc., Co. v. Institute, 113 Ga. 289; 38 S. E. 761. 9Moyle V. Society, 16 Utah 69; 50 Pac. 806. 10 Forman v. The Liddesdale (1900), A. C. 190 (repair of a ship) . 11 People's National Bank v. Geist- hardt, 55 Neb.. 232; 75 N. W. 582. 12 Curnane v. Scheidel, 70 Conn. 13; 38 Atl. 875; Shoninger v. Pea- body, 57 Conn. 42; 14 Am. St. Rep. 88; 17 Atl. 278; Warder, etc., Co. v. Cuthbert, 99 la. 681; 68 N. W. 917; Edgar v. Breck, 172 Mass. 581; 52 N. E. 1083; Piano Mfg. Co. v. Mil- lage, 14 S. D. 331; 85 N. W. 594. 13 Market, etc., Co. v. Hellman, 109 Cal. 571; 42 Pac. 225; J. B. Owens Pottery Co. v. Turnbull Co., 75 Conn. 628; 54 Atl. 1122; Glucose, etc., Co. V. Flinn. 184 III. 123; 56 N. E. 400; affirming 85 111. App. 131; Singer Mfg. Co. v. Flynn. 63 Minn. 475; 65 N. W. 923 (acquies- cence for two years) ; Lyle v. Ad- dicks, 62 N. J. Eq. 123; 49 Atl. 1121; Hanover National Bank v. American, etc., Co., 148 N. Y. 612; 51 Am. St. Rep. 721 ; 43 N. E. 72. 14 Smith V. Fletcher, 75 Minn. 189; 77 N. W. 800; Dewing v. Hut- ton, 48 W. Va. 576; 37 S. E. 670; Roiindy v. Erspamer, 112 Wis. 181; 87 N. W. 1087. AGENCY. ' 1523 payment under such contract,^^ or by receiving money there- under/" Acquiescence for three years" tends to show ratifica- tion. Mere failure to disavow an act of one who is not an agent does not amount to ratification unless such silence induces others to act in reliance upon the apparent validity of the transac- tion.^* But retention of a thing of no value as a deed made without principal's authority to a third person is not ratifica- tion.^'* So refusal to receive the purchase money when tendered excuses the principal from making tender of the purchase notes.^" To constitute ratification the money or property re- ceived must be received under the unauthorized contract. So if a lease made by an agent without authority is expressly re- pudiated by the principal, but he allows the tenant to remain from month to month at the rent fixed by the lease, this is not a ratification."^ If X, the agent of A, a steamship company, issues a bill of lading before receiving the goods, and A re- pudiates the contract as soon as it learns of it, A's act in taking property from X to secure A against any liability upon such bill is not ratification.^^ So if the principal claims damages from his agent for making an unauthorized contract, this does not amount to a ratification."^ If the conduct of another agent is relied upon as ratification, such other agent must himself have authority to perform or to ratify such act."* 15 Mullaney V. Evans, 33 Or. 330; 68 S. W. 32. (In this case the 54 Pac. 886; Anderson v. Surety abstract, too, was retained.) Co., 196 Pa. St. 288; 46 Atl. 306. 20 Cole v. Baker, — S. D. — ; 91 isDes Moines National Bank v. N. W. 324. Meredith, 114 la. 9; 86 N. W. 46; 21 Owens v. Swanton, 25 Wash. Dillaway v. Alden, 88 Me. 230; 33 112; 64 Pac. 921. Atl. 981. 22 Lazard v. Transportation Co., 17 Cheshire Provident Institution 78 Md. 1 ; 26 Atl. 897. V. Vandergrift, 1 Neb. (Un.) 339; 23 Jameson v. Colwell, 25 Ore. 55 N. W. 615. 199; 35 Pac. 245. isRobbins v. Blanding, 87 Minn. 24 Fay v. Slaughter, 194 113. 157; 246; 91 N. W. 844. 88 Am. St. Rep. 148; 56 L. R. A. "Bromley v. Aday, 70 Ark. 351; 564; 62 N. E. 592; Bohanan v. R. R., 70 N. H. 526; 49 Atl. 103. 1524 PAGE ON CONTRACTS. §970. Necessity of full knowledge of facts. In order to bind the principal finally a ratification must be made with full knowledge of the material facts. If made with- out such knowledge the j)rincipal may avoid both the ratifica- tion and the original contract, at least as to those who have not in good faith acted ujion the ratification.^ A sale is ratified by the principal's receipt of money which he had no reason to think came from any other source except the sale thus rati- fied ;" but mere delivery of goods by the principal according to the terms of the contract made by his agent would not be a ratification unless +he principal knew of the contract,^ as where the goods had been sold with an unauthorized warranty.* So if a claim agent agrees to pay one injured by the fault of the road a certain sum of money and employment for life in settlement of his claim, payment of such sum and employment of such person by the railroad for a limited time is not ratification of the contract for jDermanent employment unless known to the 1 Marsh v. Joseph (1897), 1 Ch. 213; Bennecke v. Ins. Co., 105 U. S. 355; Bell v. Cimninghani, 3 Pet. (U. S.) 69; Wheeler v. McGuire, 86 Ala. 398; 2 L. R. A. 808; 5 So. 190; Martin v. Hickman, 64 Ark. 217; 41 S. W. 852; Ballard v. Nye, (Cal.), 69 Pae. 481; Estrella Vine- yard Co. V. Butler, 125 Cal. 232; 57 Pae. 980; Dean v. Hipp, — Colo. App. — ; 66 Pae. 804; Oxford Lake Line v. Bank, 40 Fla. 349; 24 So. 480; Ludden, etc.. Music House V. McDonald, 117 Ga. 60; 43 S. E. 425; Meyer v. Wegener, 114 la. 74; 86 N. W. 49; Beacon Trust Co. V. Souther, 183 Mass. 413; 67 N. E. 345; Thatcher v. Pray, 113 Mass. 291; 18 Am. Rep. 480; Combs V. Scott, 12 AIL (Mass.) 493; Leon- ardson v. Troy Tp., 125 Mich. 209; 84 N. W. 63 ; Godfrey v. Ins. Co.. 70 Minn. 224; 73 N. W. 1; Hunt v. Agricultural Works, 69 Minn. 539; 72 N. W. 813; Prentiss v. Nelson, 69 Minn. 496; 72 N. W. 831; Bul- lard V. DeGraff, 59 Neb. 783; 82 N. W. 4; Henry, etc., Co. v. Halter, 58 Neb. 685; 79 N. W. 616; Cram v. Sickel, 51 Neb. 828; 66 Am. St. Rep. 478; 71 N. W, 724; Bierman V. Mills Co., 151 N. Y. 482 ; 56 Am. St. Rep. 636; 37 L. R. A. 799; 45 N. E. 856; Stock Exchange Bank v. Williamson, 6 Okla. 348; 50 Pae. 93; Conser y. Coleman, 31 Ore. 550; 50 Pae. 914; American National Bank v. Cruger, 91 Tex. 446; 44 S. W. 278; Moyle v. Society, 16 Utah 69 ; 50 Pae. 806 ; Halsey v. Monteiro, 92 Va. 581; 24 S. E. 258; Arm- strong V. Oakley, 23 Wash. 122; 62 Pae. 499; Knapp v. Smith, 97 Wis. Ill; 72 N. W. 349. 2 Columbia, etc., Co. v. Tinsle^ (Ky.), 60 S. W. 10. 3 Estrella Vineyard Co. v. Butler, 125 Cal. 232; 57 Pae. 980. 4 Bierman v. Mills Co., 151 N. Y. 482; 56 Am. St. Rep. 636; 37 L. R. A. 799; 45 N. E. 856,, AGEK'CY. 1525 railtoad.^ Mistake as to a collateral contract made with other parties as a means of performing the contract ratified, does not avoid a ratification.® §971. Partial ratification impossible. The principal must atfirm or disaflirm the contract as au entirety. He cannot affirm the part beneficial to himself and disaffirm the rest.^ Thus if he receives and retains property thereunder this amounts to a ratification of the entire contract, even if he expressly declares his intention of avoiding his liability." So a principal cannot retain land bought for her by her agent and avoid liability for his constructive fraud and undue influence.^ So a client who accepts and retains the pro- ceeds of a judgment cannot claim ignorance of the terms of the decree or want of authority in the attorney to enter it in such form.* So a receipt of part of the property to be delivered 5 Bohanan v. E. R., 70 N. H. 526 ; 49 Atl. 103. 6Brong V. Spence, 56 Xeb. 638; 77 N. W. 54. 1 Rader v. Maddox, 150 U. S. 128; Cochran v. Chitwood, 59 111. 53; Adams Express Co. v. Carnahan, 29 Ind. App. 606; 94 Am. St. Rep. 279; 64 N. E. 647; 63 N. E. 245; Travelers Ins. Co. v. Patten, 119 Ind. 416; 20 N. E. 790; Burke, etc., Co. V. Wells Fargo & Co., 7 Idaho 42; 60 Pae. 87; Coolidge v. Smith, 129 Mass. 554; St. Johns Mfg. Co. V. Munger, 106 Mich. 90; 58 Am. St. Rep. 468; 29 L. R. A. 63; 64 N. W. 3; Dodge v. Tullock, 110 Mich. 480; 68 X. W. 239; King V. Lumber Co., 80 Minn. 274; 83 N. W. 170; D. M. Osborn Co. v. Jordan, 52 Xeb. 465 ; 72 X^. W. 479 ; Hinman V. Mfg. Co., 65 Xeb. 187; 90 X. W. 934; Hall v. Hopper, 64 Xeb. 633; 90 X\ W. 549; German Na- tional Bank v. Bank. 50 Xeb. 7 ; 80 N. W. 48; Citizens' State Bank v. Pence, 59 Neb. 579; 81 N. W. 623; Martin v. Humphrey, 58 Neb. 414; 78 N. W. 715; Farmer's, etc.. Bank V. Bank, 49 Xeb. 379; 68 X. W. 488; Pennsylvania, etc., Co. v. Cook, 123 Pa. St. 170; 16 Atl. 762; Fort v. Coker, 11 Heisk. (Tenn.) 579; Lane V. Black, 21 W. Va. 617; Strasser v. Conklin, 54 Wis. 102; 11 X. W. 254. 2 Henry Vogt Machine Co. v. Ling- enfelser (Ky.), 62 S. W. 499; Boudreaux v. Feibleman, 105 La. 401; 29 So. 881; Coggins v. Higbie, 83 Minn. 83; 85 X. W. 930; Piano Mfg. Co. V. Xordstorm, 63 X^eb. 123; 88 X. W. 164; Aultman Co. v. Mc- Donough, 110 Wis. 263; 85 X. W. 980. 3 Stephens v. Ozbourne, 107 Tenn. 572; 89 Am. St. Rep. 957; 64 S. W. 902. 4julier V. Julier, 62 O. S. 90; 78 Am. St. Rep. 697; 56 N. E. 661. (In this case the decree was for alimony and barred the dower of the innocent and prevailing plaintiff 1526 PAGE 0]Sr CONTRACTS. under a contract is a ratification of the entire contract,^ So lie cannot enforce a note for an insurance policy taken bj his agent and repudiate the agreement for rescission at the ojDtion of the maker under which such note Avas giveu.'^ So the princi- pal cannot enforce a loan and repudiate liability for usury/ So a principal cannot retain property taken by his agent in payment of a debt due the principal and repudiate the contract under which it was given.* But if the agent has made two or more independent contracts, the principal may affirm one and disaffirm the other.^ §972. Necessity of acting as agent. The doctrine of ratification in agency applies only to the contracts of one who is an agent or who claims to act as agent. A contract made by one who is not an agent and does not. claim to act as agent cannot be ratified.^ Therefore, by the better reasoning a forgery cannot be ratified,^ though there is authority to the contrary.^ If the party whose name is forged to a contract receives money thereunder he is estopped to deny his liability.* However, if an agent forges his principal's signature to a certificate of stock, receives the money therefor, deposits it to his principal's account, and then embezzles it, in return for which she received a Sterns, 59 0. S. 28; 51 N. E. 439; larger allowance of alimony.) Backhaus v. Buells, 43 Ore. 558; 5 Daniels v. Brodie, 54 Ark. 216; 73 Pac. 342, 11 L. R. A. 81; 15 S. W. 467. 2 Henry v. Heeb, 114 Ind. 275; 5 6 Andrews v. Robertson, 111 Wis. Am. St. Rep. 613; 16 N. E. 606: 334; 54 L. R. A. 673; 87 N. W. 190. Owsley v. Philips, 78 Ky. 517; 39 7 Robinson v. Blaker, 85 Minn. Am. Rep. 258; Workman v. Wright, 242; 89 Am. St. Rep. 541; 88 N. 33 O. S. 405; 31 Am. Rep. 546; W. 845. Shisler v. Vandike, 92 Pa. St. 447; 8 Daniels v. Brodie, 54 Ark. 216; 37 Am. Rep. 702. 11 L. R. A. 81; 15 S. W. 467. 3 Hefner v. Vandolah, 62 111. 483; »Schollay v. Drug Co., 17 Colo. 14 Am. Rep. 106; Bartlett v. Tucker- App. 126; 67 Pac. 182. 104 Mass. 336; 6 Am. Rep. 240; iKeighley v. Durant (1901), Central National Bank v. Copp. 184 App. Cas. 240; reversing Durant v. Mass. 328; 68 N. E. 334; Commer- Roberts (1900), 1 Q. B. 629; Mer- cial Bank v. Warren, 15 N. Y. 577. rit V. Kewanee, 175 111. 537 ; 51 N. * Campbell v. Campbell, 133 Cai. E. 867; Rawlings v. Neal, 126 N. C. 33; 65 Pac. 134 (forgery of a note). 271; 35 S. E. 597; Williams v. AGENCY. 1527 such receipt of money is not a ratification by the principal.^ A principal who accepts the benefits of a contract made for him by a duly authorized agent does not incur liability for the rep- resentations of a third person made to the adversary party with- out the knowledge of the agent. ^ If an agent does not disclose the fact of his agency to the person with whom he deals, the- principal may nevertheless enforce the contract/ or may be held liable thereon.^ So if one who is really an agent does not disclose the fact of his agency and exceeds his authority his principal may ratify such contract." §973. Effect of ratification. — ■ Adversary party. Whether the lorincipal's ratification of an unauthorized act of one acting or claiming to act as his agent can make the con- tract enforceable as against the adversary party, is a question upon which there is a divergence of authority. If the adversary party has received a thing of value under the contract which he retains, it seems to be generally held that the principal can affirm and hold the adversary party to his executory contract. Thus where unauthorized loans have been made by state agents evidenced by notes, it has been held that the state may affirm the loan and enforce the notes.^ If the adversary party has not received anything of value under the contract, some jurisdictions hold that the principal can affirm and thus make the contract valid, even if the adversary party attempts to repudiate it.^ Thus where an insurance agent inserted unauthorized clauses in the policy, it was held that if the insurance company ratified the contract the other party could not avoid it.^ In other juris- 5 Fay V. Slaughter, 194 111, 157; i State v. Shaw, 28 la. 67; State 88 Am. St. Rep. 148; 56 L. R. A. v. Torinus, 26 Minn. 1; 37 Am. Rep. 564; 62 N. E. 592. 395; 49 N. W. 259. 6 Tecumseh v. Banking House, 63 2 Tiedeman v. Ledermann Freres Neb. 163; 57 L. R. A. 811; 88 N. (1899), 2 Q. B. 66. W. 186. 3 Andrews v. Ins. Co., 92 N". Y. 7 See §§ 606, 1236. 596. " So long as the condition of 8 See §§ 606, 607. the parties is unchanged, he cannot 9 Hay ward v. Langmaid, 181 Mfiss. be prevented from such adoption be- 426; 63 N. E. 912. cause the other party to the con- 1528 PAGE ON CONTRACTS. dictions it is held that as such contract is not binding on the principal it is not binding on the adversary party, and the principal's ratification cannot increase the liability of such adversary party.* The view entertained of such transaction by the Wisconsin courts seems to be that it does not even amount to an offer by the adversary party to the principal; but unless he ratifies and the adversary party then assents to such contract, no liability exists. Where this view is correct, ratification by the principal before the adversary party dissents does not make the contract valid. If the principal ratifies after the adversary party repudiates the contract it has been held that no liability attaches. Where the principal, A, had given oral authority to an agent B, to sell realty, which under the local statute was invalid because not in writing, and B makes a contract for the sale of such realty to X, X may disaffirm before A ratifies, and in such case he will not be bound even if A subsequently attempts to ratify such contract.^ Of course if the principal does not ratify, no liability attaches to the adversary party.® If the adversary party acquiesces in the principal's ratification the contract is binding upon both.' Since the adversary can hold the agent, who exceeds his authority only on the theory that he has been damaged in not obtaining the liability of the principal which he had contracted for, the principal's ratification relieves the agent from liability to the adversary party,^ except where the agent has so contracted as to incur personal liability in any event. tract may for any reason prefer to Bartholomew, 69 \Yis. 43 ; 5 Am. treat the contract as invalid." An- St. Rep. 103; 33 N. W. 110; Dodge drews v. Ins. Co., 92 N. Y. 596, v. Hopkins, 14 Wis. 630. 604. In this case ratification was 5 Baldwin v. Schiappacasse, 109 made as soon as the clause in ques- Mich. 170; 66 X. W. 1091. tion was called to the attention of 6 Davis v. Walker, 131 Ala. 204; the company; but such attention 31 So. 554; Shuttleworth v. Devel- ■was called thereto by the adversary opment Co. (Ky.), 61 S. W. 1012. party's attempt to avoid the eon- ^ Soames v. Spencer, 1 Dowl. & R. tract. 32. 4 Townsend v. Corning, 23 Wend. s Bowen v. Morris, 2 Taunt. 374 ; (X. Y.) 435. (A case of a sealed Hale Elevator Co. v. Hale, 201 111. instrument, however; signed by the 131; 66 X. E. 249; affirming 98 111. name of the agent alone.) Atlee v. App. 430; Roby v. Cossitt, 78 111. AGENCY. 1529 §974. Effect of ratification. — Third persons. Eatification cannot destroy intervening rights of third per- sons.^ Thus ratification cannot avoid an intervening chattel mortgage^ or attachment.^ So, an unauthorized assignment was made ; the alleged assignee sued on the claim ; and subse- quently such assignment was ratified. It was held that such ratification could not avail the assignee in that action.* §975. Liability of agent. An agent acting within the scope of his authority is not liable to third persons upon a contract made by him as agent for a principal whom he discloses, which does not by its terms purport to bind the agent personally,^ as for the sale of a forged note,^ or for receiving money which he has not paid over to his principal,^ or for money which he has paid over to his principal.* The known agent of a corporation who is authorized by it to 638; Ballou v. Talbot, 16 Mass. 461; 8 Am. Dec. 146; Lingenf elder V. Leschen, 134 Mo. 55; 34 S. W. 1089; Hopkins v. Eveily, 150 Pa. St. 117; 24 Atl. 624. iRead v. Buffuiu, 79 Cal. 77; 12 Am. St. Rep. 131; 21 Pac. 555 Wittenbrock v. Bellmer, 57 Cal. 12 Lampson v. Arnold, 19 la. 479 Clendenning v. Hawk, 10 N. D. 90 86 N. W. 114. 2 Clendenning v. Hawk, 10 N. D. 90; 86 N. VV. 114. 3 Pollock V. Cohen, 32 0. S. 514. 4 Read v. Buffum, 79, Cal. 77; 12 Am. St. Rep. 131; 21 Pac. 555. 1 Baldwin v. Bank, 119 U. S. 643; Whitney v. Wyman, 101 U. S. 392; Monticello Bank v. Bostwiek, 71 Fed. 641; Gulf, etc., Co. v. R. R. Co., 121 Ala. 621; 25 So. 579; An- derson v. Timberlake, 114 Ala. 377; 62 Am. St. Rep. 105; 22 So. 431; Tevis V. Savage, 130 Cal. 411; 62 Pac. 611; Merrill v, Williams, 63 Cal. 70; Stevenson v. Mathers, 67 111, 123; Lewis v. Harris, 4 Met. (Ky.) 353; Worthington v. Cowles, 112 Mass. 30; Huston v. Tyler, 140 Mo. 252; 41 S. W. 795; 36 S. W. 654 ; Sleeper v. Weymouth, 26 N. H. 34; American National Bank v. Wheelock, 82 N. Y. 118; Hall v. Lauderdale, 46 N. Y. 70; Ivurzaw- ski V. Schneider, 179 Pa. St. 500; 36 Atl. 319; Wilson v. Wold, 21 Wash. 398; 75 Am. St. Rep. 846; 58 Pac. 223; Johnson v. Welch, 42 W. Va. 18; 24 S. E. 585; Moody, etc., Co. V. Church, 99 Wis. 49; sub nomine, Moody, etc., Co. v. Leek, 74 N. W. 572. 2 Bailey v. Galbreath, 100 Tenn. 599; 47 S. W. 84. 3 Huffman v. Newman, 55 Neb. 713; 76 N. W. 409. (The third person suing to recover it.) 4 Wilson V. Wold, 21 Wash. 398; 75 Am. St. Rep. 846; 58 Pac. 223. 1530 PAGE ON CONTRACTS. make ultra vires contracts incurs no personal liability thereby.'' So if the agent discloses his lack of authority and signs the name of his principal he is not liable.'' One who purports to contract as agent is liable if he contracts in excess of his authority, and thereby induces the party contracting with him to believe that he possesses such authority.^ While some courts try to limit this rule to cases in which the agent acted in bad faith or carelessly,^ the weight of au- thority as shown by the cases cited is to ignore such distinction. Thus an agent with authority only to arbitrate disputes about insurance policies issued by the principal, who submits other disputes to arbitration is personally liable for the amount of the award.^ The chief exception to the rule is in cases where the agent once possessed full authority to act, and subsequent events, unknown to him, and which could not have been ascer- tained with due diligence, such as the death of his principal,^" have revoked such authority. The agent is personally liable where he fails to disclose the fact of his agency," or the identity sThilmany v. Bag Co., 108 la. 357; 75 Am. St. Rep. 259; 79 N. W. 261. 6 Kansas National Bank v. Bay, 62 Kan. 692; 54 L. R. A. 408; 64 Pac. 596. 7 Frankland v. Johnson, 147 111. 520; 37 Am. St. Rep. 234; 35 N. E. 480; Terwilliger v. Murphy, 104 Ind. 32; 3 N. E. 404; Duffy v. Mal- linkrodt, 81 Mo. App. 449; Patter- son V. Lippincott, 47 N. J. L. 457; 54 Am. Rep. 178; 1 Atl. 506; Arger- singer v. Macnaughton, 114 N. Y. 535; 11 Am. St. Rep. 687; 21 N. E. 1022; (Farmers', etc., Co.) Trust Co. V. Floyd, 47 0. S. 525; 21 Am. St. Rep. 846; 12 L. R. A. 346; 26 N. E. 110; Rosendorf v. Poling, 48 W. Va. 621; 37 S. E. 555. s Xewman v. Sylvester, 42 Ind. 106. sMacdonald v. Bond. 195 111. 122; 62 N. E. 881. 10 Jenkins v. Atkins, 1 Humph. (Tenn.) 294; 34 Am. Dec. 648. 11 Murphy v. Helmrich, 66 Cal. 69; 4 Pac. 958; Nelson Morris & Co., V. Malone, 200 111. 132; 93 Am. St. Rep. 180; 65 N. E. 704; Bick- ford V. Bank, 42 111. 238; 89 Am. Dee. 436 ; Scaling v. Knollin, 94 111. App. 443; Fritz v. Kennedy, 119 la. 628; 93 N. W. 603; Thompson v. Investment Co., 114 la. 481; 87 N. W. 438; Lull v. Anamosa National Bank, 110 la. 537; 81 N. W. 784; Blackmore v. Fairbanks, 79 la. 282; 44 N. W. 548; Stevenson v. Polk, 71 la. 278; 32 N. W. 340; Jones v. Johnson, 86 Ky. 530; 6 S. W. 582; Jutt V. Brown, 5 Litt. (Ky.) 1; 15 Am. Dec. 33 ; Nolan v. Clark, 91 Me. 38; 39 Atl. 344; Brighan v. Her- rick, 173 Mass. 460; 53 N. E. 906; Bartlett v. Raymond, 139 Mass. 275 ; 30 N. E. 91 ; Mitchell v. Beck, 88 Mich. 342; 50 N. W. 305; Amans AGEXCY. 1531 of his principal. ^^ But the agent of an originally undisclosed principal is not personally liable on contracts made after his principal is disclosed.^^ One who purports to contract as agent for a principal who has no legal existence or status is personally liable thereon/* except where there is an express agreement against personal liability.^^ Thus a personal liability rests upon a committee of citizens who have charge of constructing a highway as agents of a citizens' meeting/^ or on an agent of an unincorporated mili- tary company/" Special illustrations of this doctrine are given elsewhere/^ The nature of the agent's liability in the fore- going cases is a question of some difficulty. If he has so con- tracted as to bind himself personally he can be held on the contract in any event, and the additional fact that he acted V. Campbell, 70 Minn. 493; 68 Am. St. Eep. 547; 73 N. W. 506; Porter V. Merrill, 138 Mo. 555; 39 S. W. 798; Jackson v. McNatt (Neb.), 93 N. W. 425 ; Elliott v. Bodine, 59 N. J. L. 567; 36 Atl. 1038; McClure v. Trust Co., 165 N. Y. 108; 53 L. R. A. 153; 58 N. E. 777; De Remer v. Brown, 165 N. Y. 410; 59 X. E. 129; Argersinger v. Macnaughton, 114 N. Y. 535; 11 Am. St. Rep. 687; 21 N. E. 1022; Keokuk, etc., Co. v. Mfg. Co., 5 Okla. 32; 47 Pae. 484; Lindsay v. Pettigrew, 5 S. D. 500; 59 N. W. 726; Royce v. Allen, 28 Vt. 234 ; Poole v. Rice, 9 W. Va. 73 ; Morris v. Grocery Co., 46 W. Va. 197; 32 S. E. 997. 12 Welch V. Goodwin, 123 Mass. 71; 25 Am. Rep. 24; William Lin- deke Land Co. v. Levy, 76 Minn. 364; 79 N. W. 314; (overruling, Rowell V. Oleson, 32 Minn. 288; 20 N. W. 227) ; Long v. McKissick, 50 S. C. 218; 27 S. E. 636; Hughes v. Settle (Tenn. Ch. App.), 36 S. W. 577; Hoge v. Turner, 96 Va. 624; 32 S. E. 291. 13 Brackenridge v. Claridge, 91 Tex. 527; 43 L. R. A. 593; 44 S. W, 819; reversing, 42 S. W. 1005. Some authorities tend to restrict the liability of one who discloses his agency but conceals the identity of his principal to cases where the con- tract shows the intention of the agent to bind himself, a distinction however, generally repudiated. 14 Lewis V. Tilton, 64 la. 220; 52 Am. Rep. 436; 19 N. W. 911; Blakely v. Bennecke, 59 Mo. 193; Codding v. Munson, 52 Neb. 580; 66 Am. St. Rep. 524 ; 72 N. W. 846 ; Winona Lumber Co. v. Church, 6 S. D. 498; 62 N. W. 107; Steele v. Me- Elroy, 1 Sneed (Tenn.) 341. 15 Codding v. ]\Iunson, 52 Neb. 580; 66 Am. St. Rep. 524; 72 N. W. 846; Comfort v. Graham, 87 la. 295 ; 54 N. W. 242 ; Heath v. Goslin, 80 Mo. 310; 50 Am. Rep. 505; But- ton v. Winslow, 52 Vt. 430. 16 Learn v. Upstill, 52 Neb. 271; 72 N. W. 213. 17 Blakely v. Bennecke, 59 Mo. 193. 18 See Executors. Guardians. Sur- viving Partners, Trustees, Receivers. 1532 PAGE ON CONTKACTS. without authority should not relieve him from liability.^" If the contract does not purport to bind the agent personally, the logical view, entertained by a majority of the courts is that his liability is not on thr. contract as a principal in violation of its terms, but on the breach of the implied warranty of his authority, or in tort for his fraud and deceit.^" Some authori- ties hold that the remedy is exclusively on the breach of war- ranty of authority,^^ while others insist on the liability in tort." Even if the agent discloses the fact of his agency and the identity of his principal he may nevertheless so contract as to bind himself individually.^^ §976. Rights of principal on contract. A principal may, as a rule,^ enforce by action in his own name contracts entered into for him by his agent,^ even if the identity of the principal,^ or the fact of the agency"* were not disclosed 19 Terwilliger v. Murphy, 104 Ind. 32; 3 N. E. 404; Andrews v. Ted- ford, 37 la. 314; Solomon v. Pen- oyar, 89 Mich. 11; 50 X. W. 644; Walker v. Bank. 9 X. Y. 582. 20 Wallace v. Bently, 77 Cal. 19 11 Am. St. Rep. 231; 18 Pac. 788 Hancock v. Yunker, 83 111. 208 Duncan v. Xiles, 32 111. 532 ; 83 Am. Dec. 293; Bartlett v. Tucker, 104 Mass. 336; 6 Am. Rep. 240; Brong V. Spence, 56 Neb. 638; 77 N. W. 54; Cole v. O'Brien, 34 Neb. 68; 33 Am. St. Rep. 616; 51 N. W. 316; Patterson v. Lippincott, 47 N. J. L. 457; 54 Am. Rep. 178; 1 All. 506; Whitt V. Madison, 26 N. Y. 117; (Farmers', etc., Co.) Trust Co. v. Floyd, 47 O. S. 525; 21 Am. St, Hep. 846; 12 L. R. A. 346; 26 N, E. 110. 21 Taylor v. Nostrand, 134 N. Y. 108; 31 N. E. 346; Cochran v. Baker, 34 Or. 555; 56 Pac. 641; 52 Pac, 520; Kroeger v, Pitcairn, 101 Pa. St. 311; 47 Am. Rep. 718. 22 Hancock v. Yunker, 83 111. 208; Jefts V. York, 10 Cush. (Mass.) 392; Cole v. O'Brien, 34 Neb, 68; 33 Am, St. Rep. 616; 51 N. W. 316; McCurdy v, Rogers, 21 Wis. 199; 91 Am. Dec. 468. 23Dockarty v. Tillotson, 64 Neb. 432; 89 X. W. 1050. 1 For the exceptions see § 761. 2 Sullivan v. Shailor, 70 Conn. 733; 40 Atl. 1054; Sharp v. Jones, 18 Ind. 314; 81 Am. Dec, 359; Donahoe v. McDonald, 92 Ky, 123; 17 S. W. 195; Foster v. Graham, 166 Mass. 202; 44 N. E. 129. 3 Manker v. Telegraph Co., 137 Ala. 292; 34 So. 839; Powell v. Wade, 109 Ala. 95; 55 Am. St. Rep. 915; 19 So. 500; Central of Georgia Ry. V. James, 117 Ga. 832; 45 S. E. 223; Kelly v. Thuey. 143 Mo. 422; 45 S. W. 300; reA'ersing in banc, 37 S. W. 516; Jones v. Mfg. Co.. 32 Wash. 375; 73 Pac. 359. 4 Sullivan v. Shailor. 70 Conn. 733; 40 Atl. 1054; Conklin v. Leeds, AGENCY. 1533 when the contract was entered into. The adversary party can- not treat such non-disclosure as fraud.^ The undisclosed principal is subject to such defenses, counter- claims and set-offs as would be valid against the agent," though notice before payment, of a principal previously undisclosed, binds the adversary party from that time/ This right does not exist where the property is not in the agent's possession.^ Thus, where the agent had not possession of the goods, he cannot agree that his debt shall be set off on the purchase price.* 58 111. 178; Ilsley v. Merriam, 7 Cush. (Mass.) 242; 54 Am. Dec. 721; National Life Ins. Co. v. Al- len, 116 Mass. 398; Foster v. Gra- ham, 166 Mass. 202; 44 N. E. 129; Ludwig V. Gillespie, 105 N. Y. 653; 11 N. E. 835; King v. Batterson, 13 R. I. 117; 43 Am. Rep. 13; Foster v. Smith, 2 Coldw. (Tenn.) 474; 88 Am. Dec. 604. 5 Cowan V. Fairbrother, 118 N. C. 406; 54 Am. St. Rep. 733; 32 L. R. A. 829; 24 S. E. 212. 6 Ruiz V. Norton, 4 Cal. 355; 60 Am. Dec. 618; McConnell v. Land Co., 100 Ga. 129; 28 S. E. 80; Al- lison V. Sutlive, 99 Ga. 151; 25 S. E. 11; Stinson v. Gould, 74 111. 80; Tutt V. Brown, 5 Litt. (Ky.) 1; 15 Am. Dee. 33; Baxter v. Sherman, 73 Minn. 434; 72 Am. St. Rep. 631; 76 N. W. 211; Bernshouse v. Ab- bott, 45 N. J. L. 531; 46 Am. Rep. 789; Miller v. Sullivan, 39 0. S. 79; Belfield v. Supply Co., 189 Pa. St. 189; 69 Am. St. Rep. 799; 42 Atl. 131. 7 Rice, etc., Co. v. Bank, 185 IlL 422; 56 N. E. 1062. 8 Crosby v. Hill, 39 0. S. 100. sBertoii v. Smith, 69 Vt. 425; 38 Atl. 76. 1534 PAGE ON CONTRACTS. CHAPTER XLIV. AGENTS OF CORPORATIONS. I. Agents of Private Corporations. §977. General principles of agency applicable to private corpora- tions. The principles which control the power of an agent or officer of a corporation to bind the corporation, are in general those which are applicable to other forms of agency. The chief peculiarities of this branch of the subject are as follows: 1. A corporation, being an artificial person, can act only through its agents. Accordingly, every contract entered into by a corporation must present in some form the question of agency. If the contract is within the scope of the agent's authority the corporation is bound thereby.^ If the contract is within the scope of the agent's authority and the adversary party acts in good faith, the fact that the agent misappropriates the proceeds does not prevent the contract from being binding on the corporation.^ On the other hand, if the contract is beyond the powers of the agent of the corporation and no considerations of estoppel exist, no recovery can be had against the corpora- tion.^ 2. All who deal with a corporation are, as is said elsewhere,* bound to take notice of its charter. This may include the gen- eral laws concerning corporations. If the power of certain classes of agents of corporations is specified in the charter, 1 Bank v. Griffin, 66 111. App. 577; 3 Sullivan v. Ry., 128 Ala. 77; 30 Nichols V. R. R., 24 Utah 83; 91 So. 528; Savannah, etc., Ry. v. Am. St. Rep. 778; 66 Pac. 768. Humphreys, 114 Ga. 681; 40 S. E. 2 Reagan v. Bank, 157 Ind. 623; 711; Bristol Savings Bank v. Judd, 62 N. E. 701; 61 N. E. 575; Havens 116 la. 26; 89 N. W. 93. V. Bank, 132 N. C. 214; 95 Am. St. 4 See § 1065 et seq. Rep. 627; 43 S. E. 639. AGENTS OF CORPORATIONS. 1539 persons dealing with the corporation are bound to take notice of such powers.^ If the power of the agent depends on the construction of the articles of incorporation the question of his authority is one of law, for the court.® Strangers are not charged with presumptive knowledge of the by-laws of a cor- poration, either of a foreign^ or of a domestic corporation.^ Accordingly by-laws of a corporation, not in fact known to a person dealing with such corporation cannot limit the apparent authority of an agent of such corporation.^ A member of a corporation, such as a beneficial organization,^^ is charged with knowledge of the by-laws. Thus a member of a benevolent association is bound to know that the secretary cannot waive a constitutional requirement and excuse such member from pay- ing assessments on a benefit certificate issued in favor of such member on her husband's life, while she does not know whether such husband, being absent, is alive or dead." Secret limi- tations on the apparent authority of an agent cannot affect a contract entered into by a stranger with the corporation in reliance on the apparent authority of such agent.^' 3. The general business of most corporations is managed in about the same general way. Accordingly, custom and usage have annexed incidents to particular forms of corporate agency. These customs and usages have in some cases become so well established as to be recognized by the law. In such cases the sEelfe V. Rundle, 103 U. S. 222; — ; 99 N. W. 128; Rathbun v. Groeltz v. Real Estate Co.. 115 la. Snow, 123 N. Y. 343; 10 L. R. A. 602; 89 N. W. 21; Bocock v. Iron 355; 25 K E. 379; Moyer v. Ter- Co., 82 Va. 913; 3 Am. St. Rep. minal Co., 41 S. C. 300; 44 Am. St. 128; 1 S. E. 325. Rep. 709; 25 L. R. A. 48; 19 S. E. 6 Groeltz v. Real Estate Co., 115 651. la. 602; 89 N. W. 21. lo Kocher v. Benevolent Legion, 7 Union Mutual Life Ins. Co. v. 65 N. J. L. 649; 86 Am. St. Rep. White, 106 111. 67. 687; 52 L. R. A. 861; 48 Atl. 544. 8 Ashley Wire Co. v. Steel Co., n Kocher v. Benevolent Legion, 164 111. 149; 56 Am. St. Rep. 187; 65 N. J. L. 649; 86 Am. St. Rep. 45 N. E. 410; Smith v. Smith. 62 687; 52 L. R. A. 861; 48 Atl. 544. 111.493. 12 Domestic Building Association 9 Domestic Building Association v. Guadiano. 195 III. 222; 63 N. E. V. Guadiano, 195 111. 222; 63 N. E. 98; Heinze v. Dock Co., 109 Wis. 98; Groeltz v. Armstrong, — la. 99; 85 N. W. 145. 1536 PAGE ON CONTRACTS. incidental powers of certain classes of agents are defined with greater accuracy as matters of law than they are in ordinary classes of agents, §978. Stockholders. The stockholders of a corporation represent the corporation at a regular stockholders' meeting, or, as modern authorities put it, constitute the corporation.^ Ordinarily, whatever all the stockholders may do, a majority of them at a lawful meeting may do. However a solvent and going corix)ration cannot sell out its business with the consent of less than all its stockholders.^ This power of the stockholders to bind the corporation is limited to their action at a regular meeting, however, A single stock- holder, acting as an individual, has as such no implied power whatever to bind the corjjoration.^ This is true even if he is the chief stockholder.* §979. Directors. The board of directors, acting at lawful meetings, is the chief agency for directing and controlling the business of the cor- poration.^ The acts of such board at a lawful meeting bind the corporation though no formal resolution to make the con- tract in question is adopted.^ The fact that no written record of the proceedings of the board of directors is kept does not iCrossette v. Jordan, — Mich. Colo. App. — ; 67 Pac. 28 j Eastern — ; 92 N. W. 782; Burke v. Sidra R. R. v. R. R., Ill Mass. 125; 15 Bay Co., 116 Wis. 137; 92 N. W. Am. Rep. 13; Trephagen v. South 568. Omaha, — Xeb. — ; 96 N. W. 248; 2Elyton Land Co. v. Dowdell, 113 Beveridge v. R. R., 112 N. Y. 1; 2 Ala. 177; 59 Am. St. Rep. 105; 20 L. R. A. 648; 19 N. E. 489; Brad- So. 981. ford Belting Co. v. Gibson, 68 O. S. 3 Nebraska, etc., Bank v. Fergu- 442; 67 N. E. 888; Columbia, etc., son, 49 Neb. 109; 59 Am. St. Rep. Co. v. Transportation Co., 32 Or. 522; 68 N. W. 370. 532; 52 Pac. 513; Wright v. Lee, 4 Jones V. Williams, 139 Mo. 1 ; 2 S. D. 596; 51 N. W. 706; Murray 61 Am. St. Rep. 436; 37 L. R. A. v. Beal. 23 Utah 548; 65 Pac. 726. 6?2; 39 S. W. 486; 40 S. W. 353. 2 Salem Iron Co. v. Iron Mines, iMahoney Mining Co. v. Bank, 112 Fed. 239; 50 C. C. A. 213; Co- 104 U. S. 192; Aliunde Consoli- lumbia, etc., Co. v. Transportation dated Mining Co. v. Arnold, — Co., 32 Or. 532; 52 Pac. 513, AGENTS OF COEPOKATIOKS. U37 prevent their conduct from binding the corporation.'* This power must, however, be exercised at lawful meetings. A single member of the board of directors has not as such any implied power to bind the corporation ;* nor have any number of mem- bers acting individually,^ even if they amount to a majority of the board, ** The board of directors is necessarily a body meet- ing only occasionally, and accordingly it has been held that it may delegate its power to a smaller committee of its own mem- bers, often known as the " executive committee.'" §980. President. The original view of the position of the president was that he was merely the presiding officer of the board of directors. As such, he would not have any greater power to bind the cor- poration by his individual acts than any single director.^ Thus if the articles of incorporation provide that the directors shall conduct the affairs of the corporation, and that they shall elect from their own number a president who shall have such duties 3 Jones V. Stoddart, — Ida. — ; 67 Pac. 650; Murray v. Beal, 23 Utah 548; 65 Pac. 726. 4 New Haven, etc., Co. v. Hayden, 107 Mass. 525 ; Sias v. Lighting Co., 73 Vt. 35; 50 Atl. 554. 5 Nevada Nickel Syndicate v. Nickel Co., 96 Fed. 133; Kansas City, etc., Co. v. Devol, 72 Fed. 717; Alta Silver Co. v. Mining Co., 78 Cal. 629; 21 Pac. 373; Gash- wiler V. Willis, 33 Cal. 11; 91 Am. Dec. 607; Morrison v. Gas Co., 91 Me. 492; 64 Am. St. Rep. 257; 40 Atl. 542; England v. Dearborn, 141 Mass. 590; 6 N. E. 837; Calumet Paper Co. v. Printing Co., 144 Mo. 331; 66 Am. St. Rep. 425; 45 S. W. 1115; Edwards v. Water Co.. 21 Nev. 469; 34 Pac. 381; Columbia Bank v. Church, 127 N. Y. 361 ; 28 N. E. 29; People's Bank v. Church, 109 N. Y. 512; 17 N. E. 408; State v. Ben. Association, 42 O. S. 579; 97 Limer v. Traders' Co., 44 W. Va. 175; 28 S. E. 730. 6 Thompson v. West, 59 Neb. 677; 49 L. R. A. 337; 82 N. W. 13. T Union Pacific Ry. v. Ry., 163 U. S. 597; Andres v. Fry, 113 Cal. 124; 45 Pac. 534; Leavitt v. Mining Co., 3 Utah 265; 1 Pac. 356. Contra, Tempel v. Dodge, 89 Tex. 68; 32 S. W. 514; 33 S. W. 222. iCity Electric Street Ry. v. Bank, 62 Ark. 33; 54 Am. St. Rep. 282; 31 L. R. A. 535; 34 S. W. 89; Groeltz v. Real Estate Co., 115 la. 602; 89 N. W. 21; Titus v. R. R., 37 N. J. L. 98; Bangor, etc., Ry. v. Slate Co., 203 Pa. St. 6; 52 Atl. 40; Lyndon Mill Co. v. Institution, 63 Vt. 581; 25 Am. St. Rep. 783; 22 Atl. 575; St. Clair v. Rutledge. 115 Wis. 583; 95 Am. St. Rep. 964; 92 N. W. 234; Consolidated Water- Power Co. v. Nash, 109 Wis. 490; 85 N. W. 485. 1538 PAGE ON CONTEACTS. as shall be prescribed bj the by-laws, the president has, as such, no authority to bind the corporation in the absence of by-laws authorizing him to contract.^ Under this view he cannot bind the corporation by signing its name to a note.^ The practical workings of modern corporations have in most cases necessitated a departure from this original view. The president is the chief executive officer of the corporation, in many cases by a special grant of such power to him.* In other cases, without express grant of such power, he has in fact exercised such power with the acquiescence and approval of the corporation that the corporation is bound by his acts on the theory that it has held him out to the world as possessing such authority.^ This view of the power of the president is especially clear where the president, either by express authority or by the acquiescence of the corporation, assumes the powers of the general manager.* Thus the president and manager can agree that the corporation will not plead the statute of limitations in consideration of delay/ or may give a note, even if he is the payee, as long as the note is given for the benefit of the corporation,^ or employ a superintendent,^ or a cook for a mining camp.^° So a president who by acquiescence of the corporation has executed all the corporate instruments for years has implied power to bind the sGroeltz v. Real Estate Co., 115 v. Emight, 127 Cal. 669; 49 L. R. la. 602; 89 N. W. 21. ' A. 647; 60 Pac. 439; Ceeder v. Lum- 3 City Electric Street Ry. v. Bank, ber Co., 86 Mich. 541 ; 24 Am. St. 62 Ark. 33; 54 Am. St. Rep. 282; Rep. 134; 49 N. W. 575; Africa v. 31 L. R. A. 535; 34 S. W. 89. Tribune Co., 82 Minn. 283; 83 Am. 4McCormick v. R. R., 130 Cal. St. Rep. 424; 84 N. W. 1019; Sand- 100; 62 Pac. 267; National State berg v. Mining Co., 24 Utah 1; 66 Bank V. Bank, 141 Ind. 352; 50 Am, Pac. 360; Meating v. Lumber Co., St. Rep. 330; 40 N. E. 799. 113 Wis. 379; 89 N. W. 152. 5 State National Bank v. Bank, '^ Wells Fargo Co. v. Enright, 127 168 111. 519; 48 N. E. 82; National Cal. 669; 49 L. R. A. 647; 60 Pae. State Bank v. Tool Co., 157 Ind. 10; 439. 60 N. E. 699; White v. Creamery s Africa v. Tribune Co., 82 Minn. Co., 108 la. 522; 79 N. W. 283; 283; 83 Am. St. Rep. 424; 84 N. W. Jones V. Williams, 139 Mo. 1; 61 1019. Am. St. Rep. 436; 37 L. R. A. 682; » Sandberg v. Minijig Co., 24 Utah 39 S. W. 486; 40 S. W. 353. 1; 66 Pac. 360. fi Pettibone v. Town Co., 134 Cal. lo Meating v. Lumber Co., 113 227; 66 Pac. 218; Wells Fargo Co. Wis. 379; 89 N. W. 152. AGENTS OF COEPORATIOlSrS. 1539 corporation by a mortgage/^ The president has implied power to indorse negotiable paper owned by the corporation/^ The president may bind the corporation by his acquiescence in a bill of sale executed by the manager/^ Unusual contracts in whole or in part outside the business of the corporation are without the implied authority of the president. Thus if with- out the usual business of the corporation he cannot sell property of the corporation,^* nor can he buy property for the corpora- tion outside of its usual business/^ The president and actuary of an insurance company cannot employ a medical examiner for life/'' The president has no implied power to bind the corporation the benefits of which are to enure to him person- ally/^ or to another corporation in which he is interested as stockholder/® §981. Vice president. The vice president as such has no implied authority to bind the corporation if the president is capable of acting.^ In cases of the absence of the president, or his incapacity to act, the vice president, acting as president, may exercise such powers or- dinarily as the president might exercise." In many corporations a special grant of power is made to one or more vice presidents. In such cases they may bind the corporation within the j)ower thus granted to them. Without any express grant of power, the corporation may acquiesce in the assumption of the vice 11 National State Bank v. Tool Jones, 74 Conn. 149; 50 Atl. 41; Co., 157 Ind. 10; 60 N. E. 699. Wallace v. Packing Co., 25 Wash. 12 Jones V. Stoddart, — Ida. — ; 143; 64 Pac. 938. 67 Pac. 650. is Bloch Queensware Co. v. Metz- 13 Trent v. Sherlock, 26 Mont. 85 ; ger, 70 Ark. 232 ; 65 S. W. 929 66 Pac. 700. (even if the two corporations have 1* Mott V. Danville Seminary, 129 substantially the same stockhold- 111. 403; 21 N. E. 927; Asher v. ers). Sutton, 31 Kan. 286; 1 Pac. 535. i Shavalier v. Lumber Co., 128 isBlen v. Mining Co., 20 Cal. Mich. 230; 87 N. W. 212. 602; 81 Am. Dec. 132. 2 American Exchange National "Carney v. Ins. Co., 162 N. Y. Bank v. Ward, 111 Fed. 782; 55 L, 453; 76 Am. St. Rep. 347; 49 L. R. R. A. 356; 49 C. C. A. 611; Fernald A. 471; 57 N. E. 78. v. Telegraph Co., 31 Wash. 672; 72 17 Bowditch Furniture Co. v. Pac. 462. 1540 PAGE ON CONTRACTS. president of certain powers, so that they are bound by his con« tracts made within the limits of these powers. §982. Secretary, treasurer and cashier. The secretary of a corporation has in the absence of special authority, no general power by virtue of his office, to bind the corporation.^ The treasurer of a corporation has ordinarily authority to receive payments made to the corporation, and to pay out money subject to the instruction of his superior officers. If the corporation acquiesces in his assuming other duties, such as those of manager," it is bound by his contracts within the scope of such power. The cashier of a bank has no authority to draw a draft in the name of his principal in payment of his own debt.^ He cannot bind the bank by representations as to the solvency of a third person in a transaction in which the bank is not concerned.* §983. General manager. The general manager of a corporation has power to bind the corporation by such contracts as are an appropriate means of carrying on the ordinary business of the corporation.^ Thus the manager of a newspaper may charter a yacht, as a means for obtaining news during war.^ The general manager of a corporation may employ an attorney, where such employment is a proper means of carrying on the business of the corporation.^ He has no authority to indorse a check given to the corporation,* iRead v. Buffum, 79 Cal. 77; 12 65 Kan. 68; 68 Pac. 1099; Frost v. Am. St. Rep. 131; 21 Pac. 555. Machine Co., 133 Mass. 563. 2 Magowan v. Groneweg, 14 S. D. 2 Sun, etc., Association v. Moore, 543; 86 N. W. 626. 183 U. S. 642; affirming, 101 Fed. 3 Campbell v. Bank, 67 N. J. L. 591; 41 C. C. A. 506. 301; 91 Am. St. Rep. 438; 51 Atl. 3 General manager of insurance 497. company, Fidelity, etc., Co. v. FielO 4 Taylor v. Bank, 174 N. Y. 181; (Neb.), 89 N. W. 249 (even if i» 95 Am. St. Rep. 564; 66 N. E. 726. A-iolation of his actual instructioni 1 Sun, etc.. Association v. Moore, from the corporation ) . 183 U. S. 642; affirming, 101 Fed. 4 Jackson Paper Co. v. Bank, J'J9 591; 41 C. C. A. 506; Baird Lum- 111. 151; 93 Am. St. Rep. 113; 69 ber Co. v. Devlin, 124 Ala. 245; 27 L. R. A. 657; 65 N. E. 136. So. 425; Kansas City v. Cullinan, AGENTS OF CORPORATIONS. 1541 nor to borrow money for the corporation/ nor has he authority to bind the corporation by a bill of sale of the corporate prop- erty.*' A manager with general powers cannot bind the cor- poration by an agreement to pay the hospital bills of one injured through the fault of the corporation.^ The forewoman of a laundry cannot employ a physician for an injured employee,* nor can a foreman in charge of carpenter work.® There is some difference of opinion on this question, however. Agents much lower in rank than general manager have been held to have authority to employ medical assistance in emergencies. A conductor may, in the absence of a higher official, employ a physician to render services to an employee injured in the com- pany's business.^'' A conductor cannot employ additional sur- geons if the first is competent and able to attend to the needs of the injured. ^^ So one under direction to get the company's surgeon, cannot employ additional physicians.^^ Even a gen- eral manager cannot employ a physician to attend to an em- ployee injured outside the scope of his employment;" and a conductor has no authority from the railroad corporation to employ a physician to attend to a trespasser.^* §984. Ratification. A contract made by an agent of a corporation in excess of his authority, may be ratified by some higher agent who has 5 Breed v. Bank, 4 Colo. 481. 111. 295; Terre Haute, etc., Co. v. 6 Trent v. Sherlock, 26 Mont. 85 ; McMurray, 98 Ind. 358 ; 49 Am. 66 Pac. 700. Rep. 752; Terre Haute, etc., Co. v. 7 King V. Mfg. Co., 183 Mass. Stockwell, 118 Ind. 98; 20 N. E, 301; 67 N. E. 330; Spelman v. 650. Contra, Sevier v. Ry. Co., 92 Milling Co., 26 Mont. 76; 91 Am. St. Ala. 258; 9 So. 405; Tucker v. Ry., Rep. 402; 55 L. R. A. 640; 66 Pac. Co., 54 Mo. 177. 597. 11 Louisville, etc., Co. v. Smith, 8 Holmes v. McAllister, 123 Mich. 121 Ind. 353; 6 L. R. A. 320; 22 493; 48 L. R. A. 396; 82 N. W. N. B. 775. 220. 12 Smith v. Ry. Co., 104 la. 147 sGodshaw V. Struck, 109 Ky. 285; 73 N". W. 581. 51 L. R. A. 668; 58 S. W. 781. is Chase v. Swift, 60 Neb. 696 10 Arkansas, etc., Co. v. Lough- 83 Am. St. Rep. 552; 84 N. W. 86. ridge, 65 Ark. 300; 45 S. W. 907; i4 Adams v. Ry., 125 N. C. 565 Indianapolis, etc., Co. v. Morris, 67 34 S. E. 642. 1542 PAGE ON CONTRACTS. authority to make such a contract/ Thus the stockholders of a corporation at a lawful meeting, may ratify the acts of the board of directors in excess of their authority.' The directors may ratify the acts of some inferior agent of the corporation.^ Eatification has substantially the same meaning in this branch of the law as in the ordinary law of agency. §985. What amounts to ratification. An express approval of a contract, and an adoption of it, is of course a ratification. Acquiescence in the contract with full knowledge of the facts, amounts to ratification if the ad- versary party is thereby induced to perform the contract or otherwise alter his position in reliance upon such apparent ratification./ Retaining the benefits of the unauthorized con- tract with full knowledge of the material facts is a ratification ; as where the corporation receives and retains property^ or ac- 1 Smith V. Water- Works, 73 Conn. 626 ; 48 Atl. 754 ; National, etc., As- sociation V. Bank, 181 111. 35; 72 Am. St. Rep. 245; 54 N. E. 619; Germania, etc., Co.'s Assignee v. Hargis (Ky.), 64 S. W. 516; Cad- illac State Bank v. Heading Co., 129 Mich. 15; 88 N. W. 67; Sey- mour V. Association, 144 N. Y. 333 ; 26 L. R. A. 859; 39 N. E. 365; North Point, etc., Co. v. Utah, etc., Co., 16 Utah 246; 67 Am. St. Rep. 607; 40 L. R. A. 851; 52 Pac. 168. 2 Citizens' Gaslight Co. v. Wake- field, 161 Mass. 432; 31 L. R. A. 457; 37 N. E. 444. 3 Salem Iron Co. v. Iron Mines, 112 Fed. 239; 50 C. C. A. 213; Ger- mania, etc., Co.'s Assignee v. Har- gis (Ky.), 64 S. W. 516; Cadillac State Bank v. Heading Co., 129 Mich. 15; 88 N. W. 67; Webster V. Whitworth (Tenn. Ch. App.), 63 S. W. 290. 1 Domenico v. Packers' Associa- tion, 112 Fed. 554; Newport, etc.. Co. V. Lunyon, 69 Ark. 287; 62 S. W. 1047; Blood v. Water Co., 134 Cal. 361; 66 Pac. 317; Mills v. Min- ing Co., 132 Cal. 95; 64 Pac. 122; Illinois, etc.. Bank v. Ry., 117 Cal. 332 ; 49 Pac. 197 ; Streeten v. Robin- son, 102 Cal. 542; 36 Pac. 946; Smith V. Water-Works, 73 Conn. 626; 48 Atl. 754; Marion Trust Co. V. Investment Co., 27 Ind. App. 451; 87 Am. St. Rep. 257; 61 N. E. 688; Neosho Valley Investment Co= V. Hannum. 63 Kan. 621; 66 Pav. 631 ; Herring v. Turnpike-Road Co. (Ky.), 63 S. W. 576; Nebraska, etc., Bank v. Ferguson, 49 Neb. 109; 59 Am. St. Rep. 522; 68 N. W. 370; Murray v. Beal, 23 Utah 548; 65 Pac. 726. 2 Mills V. Mining Co., 132 Cai.95; 64 Pac. 122; Marion Trust Co. v. Investment Co., 27 Ind. App. 451 ; 87 Am. St. Rep. 257; 61 N. E. 688; Neosho Valley Investment Co. v. Hannum, 63 Kan. 621; 66 Pac. 631; Herring v. Turnpike-Road Co. AGENTiJ OF CORPORATIONS. 1543 cepts services^ rendered thereunder. So allowing a default judgment to be taken on the unauthorized contract/ or giving a note in renewal of an unauthorized note,"'^ amounts to a rati- fication thereof. The burden of showing a ratification of an unauthorized contract is on the party alleging it.° Conduct on the part of a corporation without full knowledge of the facts does not amount to ratification, even if such conduct is of a character which would amount to ratification if full knowledge existed.^ Thus an unauthorized agreement by the secretary and treasurer to pay a commission if he secured a purchaser for certain property of the corporation is not ratified by the fact that the president of the corporation, without knowledge of such contract, joins with the assignee for the benefit of creditors in petitioning the court for a sale to a purchaser secured under such contract. * So an unauthorized contract to pay the house rent of an employe, as well as his wages, is not ratified by pay- ment of such wages if the corporation does not know of the agreement to pay house rent.® Partial ratification is impos- sible.^" §986. Effect of ratification. On ratification the contract is as binding upon the corpora- tion as if it had been originally within the scope of the agent's authority.^ However, the corporation cannot, by ratification of an unauthorized contract, destroy intervening rights. Thus (Ky.), 63 S. W. 576; Murray v. 28 Colo. 237; 64 Pac. 198; Savan- Beal, 23 Utah 548; 65 Pac. 726. nah, etc., Ry. v. Humphrey, 114 Ga. 3 Domenico v. Packers' Associa- 681; 40 S. E. 711; Spelman v. Mill tion, 112 Fed. 554; Newport, etc., Co., 26 Mont. 76; 91 Am. St. Rep. Co. V. Lunyon, 69 Ark. 287; 62 S. 402; 55 L. R. A. 640; 66 Pac. 597. W. 1047; Streeten v. Robinson, 102 s Extension, etc., Co. v. Skinner, Cal. 542; 36 Pac. 946. 28 Colo. 237; 64 Pac. 198. 4 Nebraska, etc.. Bank v. Fergu- » Savannah, etc., Co. v. Hum- son, 49 Neb. 109; 59 Am. St. Rep. phreys, 114 Ga. 681; 40 S. E. 711. ?22; 68 N. W. 370. lo Fremont Carriage Mfg. Co. v 5 Smith V. Water- Works, 73 Conn. Thomsen, 65 Neb. 370; 91 N. W 626; 48 Atl. 754. 376; 6 Alabama National Bank v. i Citizens' Gaslight Co. v. Wake- O'Neil, 128 Ala. 192; 29 So. 688. field. 161 Mass. 432; 31 L. R. A. ■? Extension, etc., Co. v. Skinner, 457; 37 N. E. 444. 1544 PAGE ON CONTRACTS. an unauthorized assignment cannot be ratified after the assignee has commenced action thereon so as to prevent the defendant from setting up the invalidity of the assignment," So ratifi- cation of an unauthorized assignment for the benefit of creditors cannot defeat the intei"vening lien of an execution,^ nor can rati- fication of an imauthorized bill of sale defeat the intervening lien of an attachment* If a corporation, upon learning that an unauthorized contract has been made, repudiates it, it must restore whatever it has received under such contract. It is error to give the corporation two years and six months to repay the purchase money when it avoids an unauthorized sale of land, made by its president.^ II. Agents of Public Coepokations. §987. Agents of public corporations. Contracts entered into on behalf of the government or a pub- lic corporation by some one who claims to act as an officer or agent thereof presents some marked points of contrast to ordi- nary contracts of private agents. If, as is usually the case, the powers and duties of the public agent are prescribed by law, all who deal with such agent are charged with knowledge of his powers, whether they have such knowledge in fact or not.^ There can, therefore, be no agency by estoppel in such cases. ^ No liability, therefore, is imposed upon a government or public 2 Read v. Buffum, 79 Cal. 77; 12 Caslin v. State, 99 Ind. 428; Jewell Am. St. Rep. 131; 21 Pac. 555. Belting Co. v. Bertha, — Minn. 3 Friedman v. Lesher, 198 111. 21; — ; 97 N. W. 424; Lincoln v. Me- 92 Am. St. Rep. 255; 64 N. E. 736 Neal, 60 Neb. 613; 83 N. W. 847; (given by the vice-president, the Smith v. Epping, 69 N. H. 558; 45 president being dead). Atl. 416; Day, etc., Co. v. State, 4 Trent v. Sherlock, 26 Mont. 85 ; 68 Tex. 526 ; 4 S. W. 865. 66 Pac. 700 (given by the general 2 Mullan v. State, 114 Cal. 578 manager). 34 L. R. A. 262; 46 Pac. 670 5 Fitzhugh V. Land Co., 81 Tex. Wormstead v. Lynn, 184 Mass. 425 306; 16 S. W. 1078. 68 N. E. 841; Dube v. Peck, 22 R. 1 Madison v. Newsome, 39 Fla. I. 443, 467; 48 Atl. 477; Carolina 149; 22 So. 270; Fries v. Porch, 49 National Bank v. State, 60 S. C. la. 351; Marshall County v. Cook, 465; 85 Am. St. Rep. 865; 38 S. 38 111. 44; 87 Am. Dec. 282; Mc- E. 629. AGEXTS OF CORPORATIONS. 15-i5 ' corporation by reason of a contract entered into on its behalf by an agent acting in excess of the authority conferred upon him by the law.^ Hence if a council has no authority to let con- tracts, an ordinance directing to whom a contract for printing shall be let is void.* A statute providing that selectmen shall have their expenses when engaged in public business gives them no power to bind the city by a contract for their meals. ^ So a contract entered into by a mayor without authority does not bind the city.^ Power to collect convict hire is not power to accept notes therefor and then to bind the state by indorsing them over.'^ If a clerk is authorized to indorse on mortgage bonds issued by a water-works company the statement that the city will pay interest on such bonds in lieu of hydrant rentals up to the amount of three thousand dollars, the amount of rentals contracted for, his certificate that the city will pay interest as it matures does not impose any liability on the city.^ If a board or other corporate body has power to bind the public corporation it must do so by action as a board. Hence a mem- ber of a council has no authority to retain an attorney for the city.® So knowledge of a member of a school board that a given surety has signed the treasurer's bond to take effect only if other sureties sign is not notice to the board of that fact, where such member acquired such knowledge while acting in a private capacity to secure sureties for such bond.^" The govern- aMulnix v. Ins. Co., 23 Colo. 71; s Heublein v. New Haven, 75 33 L. R. A. 827; 46 Pae. 123; Dris- Conn. 545; 54 Atl. 298. coll V. New Haven, 75 Conn. 92 ; 52 6 Indiana Road - Machine Co. v. Atl. 618; Fairplay School Town- Sulphur Springs (Tex. Civ. App.), ship V. O'Neal, 127 Ind. 95; 26 N. 63 S. W. 908; (City of) Tyler v. E. 686; Goddard v. Lowell, 179 Adams (Tex. Civ. App.), 62 S. W. Mass. 496; 61 N. E. 53; Board of 119. Education v. Robinson, 81 Minn 305; 83 Am. St. Rep. 374; 84 N. W 105; Carolina National Bank v, State, 60 S. C. 465 ; 85 Am. St. Rep 865; 38 S. E. 629; Nash v. Knox ville, 108 Tenn. 68; 64 S. W. 1062 7 Carolina National Bank v. State, 60 S. C. 465; 85 Am. St. Rep. 865; 38 S. E. 629. 8 Painter v. Norfolk, 62 Neb. 330; 87 N. W. 31. 9 Root V. Topeka, 63 Kan. 129; 65 McCurdy v. Rogers, 21 Wis. 197; 91 Pac. 233. Am. Dec. 468. lo Board of Education v. Robin- 4 Goddard v. Lowell, 179 Mass. son, 81 Minn. 305; 83 Am. St. Rep. 496; 61 N. E. 53. 374; 84 N. W. 105. 1546 PAGE ON CONTKACTS. meut or municipality may be liable for the benefits received by reason of the unauthorized contract, which it would not ]>ave received otherwise. A board empowered to take charge of some municipal work and pay for the same out of certain funds has no power to bind the city generally by its contracts for machinery and the like, but it may make valid charges against such funds.^^ There is no liability for benefits which are no greater than those which would have been received had the officer done his duty. Thus an agent who w^as authorized to collect convict-hire in money accepted notes therefor, payable to the state, and indorsed them, depositing the money thus re- ceived to the credit of the state. It was held that on non payment of the notes the state was not liable as indorser, sincfi the agent had no authority so to indorse ; nor was it liable in quasi-contract for money had and received.^^ The rule that a contract by an unauthorized officer has no binding eifect op- erates against the municipality as well as for it. If a contract is tendered which is not approved by the council as required by statute, such contract has no validity. Therefore if a bidder refuses to accept such contract he does not thereby forfeit a deposit made by him to secure his bid.^^ Since all who deal with public agents are charged with knowledge of their au- thority, the agent is not personally liable if, acting in good faith, he exceeds his authority. Thus certain bonds were issued under a statute which was subsequently held unconstitutional. It was held that no liability attached personally to the public agents who sold such bonds, received the money therefor, and applied it as provided for by such statute.^* A contract entered into by a de facto public officer is as valid as if he were also an officer de jure.^^ 11 Kerr v. Bellefontaine, 59 O. S. City, 129 Mich. 65; 87 X. W. 1032. 446; 52 N. E. 1024. i4 Powell v. Heisler, 45 Minn. 12 Carolina National Bank v. ,549; 48 N. W. 411. State, 00 S. C. 465; 85 Am. St. is Waite v. Santa Cruz, 184 U. S. Rep. 865; 38 S. E. 629. 302; Lake Charles, etc., Co. v. Lake 13 Chicago, etc., Co. v. West Bay Charles, 106 La. 65; 30 So. 289. CONTEACTS OF FIDUCIAKIES. 1547 CHAPTER XLV. CONTRACTS OF PERSONS ACTING IN FIDUCIARY CAPACITY. I. Trustees. §988. Trustee cannot bind beneficiary personally. A trustee is one in whom is vested the legal title to property, the equitable interest in which belongs to another.^ A trustee has as such no power to bind a cestui que trust personally." Thus a cestui que trust is not liable personally to an attorney employed by a trustee.^ If the beneficiaries authorize the trus- tee to contract on their behalf they are personally liable on his contract.* This liability exists, however, by reason of his character of agent and not by reason of his character of trustee. Thus trustees of a dry trust cannot bind their beneficiaries by assuming a mortgage, so as to recover from them for money paid on such mortgage.^ §989. Power to bind trust estate. A trustee has no power to bind the estate by his contracts, if such power is not given to him by the instrument creating the trust.^ So a trustee cannot bind the estate by a judgment 1 " A trustee may be defined gen- 3 Truesdale v. Philadelphia, etc., erally as a person in whom some Co., 63 Minn. 49; 65 N. W. 133. estate, interest or power in or af- * Hanover • National Bank v. fecting property is vested for the Cocke, 127 N. C. 467; 37 S. E. 507. benefit of another." Ogden Ry. Co. 5 Winslow v. Young, 94 Me. 145; V. Wright, 31 Or. 150-153; 49 Pac. 47 Atl. 149. 975. 1 Taylor v. Davis, 110 U. S. 330; 2 Hartley v. Phillips, 198 Pa. St. Sanders v. Warehouse Co., 107 Ga. 9; 47 Atl. 929. 49; 32 S. E. 610; Flournoy V. John- 1548 PAGE ON CONTKACTS. bond given in a matter outside the estate.^ This rule is some- times said not to apply to cases where the consideration is oi such a. nature as to render the estate liable.^ If power to bind the estate is given to the trustee by the instrument creating the trust, his contracts made by virtue of such provision will bind the estate.* Power to a trustee by will to carry on business is power to bind the estate by debts thus incurred.^ Power to mortgage authorizes the trustee to bind the estate by a build- ing and loan association contract.^ §990. Personal liability of trustee. Unless a trustee clearly provides against it, he is personally liable on contracts made by him as trustee,^ even if he refers son, 7 B. Mod. (Ky.) 693; Hines v. Potts, 56 Miss. 346; New v. Nicoll, 73 N. Y. 127; 29 Am. Rep. 111. " The general rule undoubtedly is that a trustee cannot charge the trust estate by his executory con- tracts unless authorized to do so by the terms of the instrument creat- ing the trust. Upon such contracts he is personally liable and the rem- edy is against him personally." New V. Nicoll, 73 N. Y. 127, 130; 79 Am. Rep. 111. 2 Williams V. Tozer, 185 Pa. St. 302; 64 Am. St. Rep. 650; 39 Atl. 947. 3 Sanders v. Warehouse Co., 107 Ga. 49; 32 S. E. 610. 4Wagnon v. Pease, 104 Ga. 417; 30 S. E. 895; Riggins v. Adair, 105 Ga. 727; 31 S. E. 743; Bailie v. Loan Association, 100 Ga. 20; 28 S. E, 274; Judge v. Pfaflf, 171 Mass. 195; 50 N. E. 524; Packard v. King- man, 109 Mich. 497; 67 N. W. 551; United States Trust Co. v. Roche, 116 N. Y. 120; 22 N. E. 265. 5 Wadsworth v. Arnold. 24 R. 1. 32; 51 Atl. 1041. 6 Cottingham v. Loan Association, 114 Ga. 940, 944; 41 S. E. 72, 74. 1 Taylor v. Davis, 110 U. S. 330; Hewitt V. Phelps, 105 U. S. 393; Duvall V. Craig, 2 Wheat. (U. S.) 45; Bloom v. Wolfe, 50 la. 286; Farmers' and Traders' Bank v. De- posit Co., 108 Ky. 384; 56 S. W. 671; Gill V. Carmine, 55 Md. 339; Odd Fellows Hall Association v. McAllister, 153 Mass. 292; 11 L. R. A. 172; 26 N. E. 862; Mayo v. Moritz, 151 Mass. 481; 24 N. E. 1083; Mitchell v. Whitlock, 121 N. C. 166; 28 S. E. 292; Wells-Stone Mercantile Co. v. Grover, 7 N. D. 460; 41 L. R. A. 252; 75 N. W. 911; Ogden Ry. Co. v. Wright, 31 Or. 150; 49 Pac. 975; Fehlinger v. Wood, 134 Pa. St. 517; 19 Atl. 746; McDowall V. Reed, 28 S. C. 466; 6 S. E. 300; Mclntyre v. Williamson, 72 Vt. 183; 82 Am. St. Rep. 929; 47 Atl. 786. " When a trustee con- tracts as such, unless he is bound, no one else is bound, for he has no principal. The trust estate cannot promise. The contract is therefore the personal undertaking of the trustee." Taylor v. Davis, 110 U. S. 330, 335; quoted Germania CONTRACTS OF FIDUCIAKIES, 1549 to himself in the contract as trustee^ or adds " trustee " to his signature.' Thus a trustee is personally liable on his indorse- ment of negotiable paper payable to himself as trustee.* Thus if one covenants in his own name, adding " as trustee," he is personally liable.^ An assignee for the benefit of creditors is personally bound on contracts in which he refers to himself as trustee, unless there is an express provision to the contrary.* Even if the instrument creating the trust gives the trustee power to bind the estate, he is personally liable on such con- tracts unless he contracts for exemption from personal liabil- ity;^ and this principle has been applied even where there is a provision in the instrument creating the trust that the trustee is to be free from personal liability.® He may contract for freedom from personal liability,^ but such immunity must be contracted for when the original liability is incurred. A subse- quent promise not to hold the receiver liable personally is unen- forceable as without consideration.^'' A trustee is not person- ally responsible for debts incurred by his predecessor for the benefit of the estate.^^ Bank v. Michaud, 62 Minn. 459, 6 Gibson v. Gray, 17 Tex. Civ. 465; 54 Am. St. Rep. 653; 30 L. App. 646; 43 S. W. 922. R. A. 286; 65 N, W. 70. t Connally v. Lyons, 82 Tex. 664; 2 Gibson v. Gray, 17 Tex. Civ. 27 Am. St. Rep. 935; 18 S. W. App. 646; 43 S. W. 922. 799. 3 Ogden Ry. Co. v. Wright, 31 Or. s American, etc., Co. v. Converse, 150; 49 Pac. 975; Mclntyre v. Wil- 175 Mass. 449; 56 N. E. 594. But liamson, 72 Vt. 183; 82 Am. St. where the deed authorizes trustee to Rep. 929 ; 47 Atl. 786. Contra, no borrow money, a covenant by trus- personal liability was held to exist tee to pay the mortgage debt does where the trustee gave his note for not bind him personally. Glenn v. money borrowed for the estate Allison, 58 Md. 527. signed "A, trustee for B." Printup o Xew v. Nicoll. 73 N. Y. 127; 79 V. Trammel, 25 Ga. 240. Am. Rep. 111. 4 Tradesmen's National Bank v. lo New v. Nicoll, 73 N. Y. 127; 79 Looney, 99 Tenn. 278; 63 Am. St. Am. Rep. 111. Rep. 830; 38 L. R. A. 837; 42 S. W. n Baxter v. McDonnell, 155 N. Y. 149 (even if he adds "trustee" to 83; 40 L. R. A. 670; 49 N. E. 667 his signature). (a bishop received trust property 5 Duvall V. Craig, 2 Wheat. (U. from his predecessor). S.) 45. 1550 PAGE ON CONTRACTS. §991. Liability of estate for benefits received. While a trustee cannot create debts against the trust, the creditors can subject the rents and profits of the trust estate to their claims as far as their loans were advantageous to such trust estate/ or they may be remitted by subrogation to the trustee's claim against the estate," especially if he is insolvent' or a non-resident.* In settling accounts the trustee will be al- lowed his reasonable expenses incurred in managing the trust," or incurred with the consent of the beneficiaries,*^ and it is ■ held that he has a lien therefor.^ II. EXECUTOES AND ADMINISTRATORS. §992. General want of power to bind estate. Executors and administrators are ofiicers of the court ap- pointed for the purpose of settling decedent's estates. In the absence of statutory provision or of authority given by will they have, in general, no power to bind the estates of their decedents by their own contracts so as to change any pre-existing liability which might have been enforced without such contract, or to incur additional liability,^ even if for the benefit of such estate. iNeal V. Bleckley, 51 S. C. 506; Marks v. Semple, 111 Ala. 637; 20 29 S. E. 249. To the same effect is So. 791. Sanders v. Warehouse Co., 107 Ga. 6 Casey v. Lockwood, 24 R. I. 72; 49; 32 S. E. 610; Kupferman v. 52 Atl. 803 (where the remainder- McGehee, 63 Ga. 250. men authorized the trustee to pay 2 Mosely v. Norman, 74 Ala. 422 ; the funeral expenses of the life- Steele v. Steele, 64 Ala. 438; 38 Am. tenant). Rep. 15. TKofold v. Gordon, 122 Cal. 314; 3 Clapton V. Gholson, 53 Miss. 54 Pac. 1115. 466. 1 Taylor v. Crook, 136 Ala. 354; 4 Norton v. Phelps, 54 Miss. 467. 96 Am. St. Rep. 26; 34 So. 905; 5 A trustee may deduct reasonable Pike v. Thomas, 62 Ark. 223 ; 54 expenses for a foreclosure suit and Am. St. Rep. 292; 35 S. W. 212; for investigating the title to prop- Tucker v. Grace, 61 Ark. 410; 33 erty. Wordin's Appeal, 71 Conn. S. W. 530; Sterrett v. Barker, 119 531; 71 Am. St. Rep. 219; 42 Atl. Cal. 492; 51 Pac. 695; Schlicker v. 659. A trustee cannot be paid for Hemenway, 110 Cal. 579; 52 Am. legal services rendered by himself. St. Rep. 116; 42 Pac. 1063; Taylor CONTEACTS OF FIDUCIARIES. 1551 Where no authority to contract on behalf of the estate exists, the order of the court is ineffectual to create such power." Thus executors cannot create debts against the estate/ even by borrow- ing money to pay the debts of the estate, or by giving their notes therefor/ or by indorsing notes of the estate/ or by accepting a draft/ or by giving a note for a debt barred by limitations in the life of decedent.^ The executor cannot bind the estate by a contract for legal services/ as by a contract to pay a con- V. Mygatt, 26 Conn, 184; Wilson V. Mason, 158 111. 304; 49 Am. St. Rep. 162; 42 N. E. 134; Clark v. Ross, 96 la. 402; 65 N. W. 340; Chicago Lumber Co. v. Tomlinson, 54 Kan. 770; 39 Pac. 694; Baker V. Moor, 63 Me. 443; Davis v. French, 20 Me. 21; 37 Am. Dec. 36; Durkin v. Langley, 167 Mass. 577; 46 N. E. 119; Kingman v. Soule, 132 Mass. 285; Luscomb v. Ballard, 5 Gray (Mass.) 403; 66 Am. Dec. 374; Smith gv. Brennan, 62 Mich. 349; 4 Am. St. Rep. 867; 28 N. W. 892; Brown v. Farnham, 55 Minn. 27 ; 56 N. W. 352 ; Stirling v. Win- ter, 80 Mo. 141; Richardson v. Pal- mer, 24 Mo. App. 480; Doolittle v. Willet, 57 N. J. L. 398; 31 Atl. 385 ; Schmittler v. Simon, 101 N. Y. 554; 54 Am. Rep. 737; 5 N. E. 452; Austin V. Munro, 47 N. Y. 360; Ferrin v. Myrick, 41 N. Y. 315; Lucht V. Behrens, 28 O. S. 231; 22 Am. Rep. 378; Patterson v. Craig, 1 Baxt. (Tenn.) 291; Fine v. Free- man, 83 Tex. 529; 17 S. W. 783; 18 S. W. 963; Rich v. Sowles, 64 Vt. 408; 15 L. R. A. 850; 28 Atl. 723; Adams v, Adams, 16 Vt. 228; Fitzhugh V. Fitzhugh, 11 Gratt. (Va.) 300; 62 Am. Dec. 653. 2 Valley National Bank v. Crosby, 108 la. 651; 79 N. W. 383. 3 Germania Bank v. Michaud, 62 Minn. 459; 54 Am. St. Rep. 653; 30 L. R. A. 286; 65 N. W, 70; Cur- tis V. Bank, 39 O. S. 570; McGrath V. Barnes, 13 S. C. 328; 36 Am. Rep. 687; Rich v. Sowles, 64 Vt. 408; 15 L. R. A. 850; 23 Atl. 723. 4 Christian v. Morris, 50 Ala. 585; Sterrett v. Barker, 119 Cal. 492; 51 Pac. 695; Cornthwaite v. Bank," 57 Ind. 268; Valley National Bank v. Crosby, 108 la. 651; 79 N. W. 383; Rice V. Strange (Ky.), 72 S. W. 756; Ellis v. Merriman, 5 B. Mon. (Ky. ), 297; Rittenhouse v. Ammer- man, 64 Mo. 197; 27 Am. Rep. 215; First National Bank v. Collins, lY Mont. 433; -52 Am. St. Rep. 695; 43 Pac. 499; Morehead Banlcing Co. V. Morehead, 122 N. C. 318; 30 S. E. 331; Smith v. Hayward, 5 Ohio N. P. 501; Boyd v. Johnston, 89 Tenn. 284; 14 S. W, 804; Gregory v. Leigh, 33 Tex. 813; Robertson v. Breckenridge, 98 Va. 569; 37 S. E. 8. 5 Johnston v. Bank, 37 Miss, 526. 6 Perry v. Cunningham, 40 Ark. 185. TClaghorn's Estate, 181 Pa. St. 600; 59 Am, St. Rep, 680; 37 Atl. 918. 8 Pike V. Thomas, 62 Ark. 223; 54 Am. St. Rep. 292; 35 S. W. 212; Tucker v, Grace, 61 Ark, 410; 33 S. W. 530; Argo v. Blondel, 100 la. 353; 69 N. W. 534; Wait v. Holt, 58 N. H. 467; Parker v. Day, 155 N. Y. 383; 49 N. E. 1046 j 1552 PAGE ON CONTRACTS. tingent fee in the event of the recovery for the death of the decedent.'' Accordingly the court cannot fix the amount which an administrator must pay for legal services.^" Some courts seem to hold that an executor may bind the estate by a reasonable contract for attorney fees," as to pay a reason- able contingent fee for recovery for the death of decedent/^ or to pay one-third of the amount recovered of a claim against a foreign government. ^^ The estate is not liable for the price of property bought for the estate/* as on a contract to buy realty f^ nor on a contract by the executrix to refund money received by her on a sale of her decedent's realty which she could not complete f^ nor on a warranty of property sold ;^^ nor on a contract to sell realty, not made as provided by statute ;^^ nor on a contract for services for the estate.^* An executor cannot create debt Piatt V. Piatt, 105 N. Y. 488; 12 N. E. 22; McBride v. Brucker, 5 Ohio C. C. 12; 3 Ohio C. D. 7 ; Mel- len V. West, 5 Ohio C. C. 89; 3 Ohio C. D. 46; Miller v, Tracy, 86 Wis. 330; 56 N. W. 866. 9 Tucker v. Grace, 61 Ark. 410; 33 S. W. 530; Rickel v. Ry. Co., 112 la. 148; 83 N. W. 957; Thomas V. Moore, 52 O. S. 200; 39 N. E. 803. 10 State V. District Court, 25 Mont. 33; 63 Pac. 717. A note by brothers of the decedent to an attorney to prosecute the murderer of decedent is not a charge against the estate. Alexander v. Alexander, 120 N. C. 472; 27 S. E. 121. 11 Alexander v. Bates, 127 Ala. 328; 28 So. 415; Mclntire v. Mc- Intire, 14 App. D. C. 337; Gairdner V. Tate, 110 Ga. 456; 35 S. E. 697. 12 Lee V. Van Voorhis, 78 Hun (X. Y.) 575; In re McCulloiigh's Estate, 31 Or. 86; 49 Pac. 886. 13 Mackie v. Howland, 3 App. D. C. 461. 14 Daily v. Daily, 66 Ala. 266 (food for stock of estate) ; Yarbor- ough V. Ward, 34 Ark. 204; Wilsou V. Mason, 158 111. 304; 49 Am. St. Rep. 162; 42 N. E. 134; Durkin v. Langley, 167 Mass. 577; 46 N. E. 119; West v. Dean, 15 Ohio C. C. 261. 15 Wilson V. Mason, 158 111. 304; 49 Am. St. Rep. 162; 42 N. E. 134. 16 Hall V. Wilkinson, 35 W. Va. 167; 12 S. E. 1118. 17 Bauerle v. Long, 187 111. 475; 52 L. R. A. 643; 58 N. E. 458; Huffman v. Hendry, 9 Ind. App. 324; 53 Am. St. Rep. 351; 36 N. E. 727; Dunlap v. Robinson, 12 O. S» 530; Lockwood v. Gilson, 12 O. S. 526; Arnold v. Donaldson, 46 O. S. 73 ; 18 N. E. 540. isBauerle v. Long, 187 111. 475; 52 L. R. A. 643; 58 N. E. 458. 19 7n re Page, 57 Cal. 238; Dod« son V. ?^evitt, 5 Mont. 518; 6 Pac 358: Daingerfield v. Smith, 83 Va^ 81; IS. E. 599. CONTKACTS OF FIDUCIAKIES. 1553 against the estaie by accepting a deed to his decedent.^" The beneficiaries of decedent's estate cannot, however, affirm the contract of the administrator in part and avoid it in part. Thus where an administrator without order of the court lent money of the estate to a corporation, the beneficiaries could not, in the absence of fraud or collusion, hold the directors of such corporation personally liable for such money as trustees."^ §993. Statutory power to bind estate. While some courts use language which seems to admit of a considerably greater power of executors to bind the estate than the preceding authorities recognize,^ the cases where the con- tract of the executor is of any force against the estate may be reduced to two classes. Pirst, he may contract as far as the statute gives him power to contract expressly or impliedly.^ He may compromise claims f he may bind the estate by a consent judgment on a just claim ;* he may extend the time for paying off a mortgage f he may ratify an indorsement made for de- cedent by his wife where the proceeds were part of the estate before the death of decedent;® and as the estate is liable for breach of a contract made by decedent,^ he may complete a contract for the erection of a building and thereby incur ex- penses.^ So, by statutory provision, he may employ an attorney to defend the will in contest,^ or may without^** or with leave of 2oShives v. Johnson (Ky.), 38 3 Mulville v. Ins. Co., 19 Mont. S. W. 694. 95; 47 Pac. 650. 21 Wilson V. Stevens, 129 Ala. 630; 4 Shelden v. Warner, 59 Mich. 87 Am. St. Rep. 86 ; 29 So. 678. 444 ; 26 N. W. 667. 1 Mackie v. Rowland, 3 App. D. 5 Campbell v. Linder, 50 S. C. C. 461; Scott V. Meadows, 16 Lea 169; 27 S. E. 648 (though a deed (Tenn.) 290; Jack v. Cassin, 9 Tex. in form). Civ. App. 228 ; 28 S. W. 832 ; Wil- 6 Seaver v. Weston, 163 Mass. liams V. Howard, 10 Tex. Civ. App. 202; 39 N. E. 1013. 527; 31 S. W. 835. 7 Parker v. Barlow, 93 Ga. 700; sWilburn v. McCalley, 63 Ala. 21 S. E. 213. 436 ; Brown v. Eggleston, 53 Conn. 8 Bambrick v. Church Association, 110; 2 Atl. 321; Brown v. Earn- 53 Mo. App. 225. ham, 55 Minn. 27; 56 N. W. 352; 9 Penner v. McCan, 49 La. Ann. Price V. Mclver, 25 Tex. 769; 78 600; 21 So. 768. Am. Dec. 558. lo Baker v. Cauthorn, 23 Ind. 98 1554 PAGE ON" CONTRACTS. court^^ employ an attorney ; he may on order of court borrow money on mortgage to pay debts and legacies ;^^ or may take a note and mortgage on realty sold by him/^ In view of his general power to sell personalty of the estate, he may pledge personalty for a loan advanced by one who, in good faith, believes that the loan is obtained for the benefit of the estate/* In short, wherever his promise is co-extensive with his liability in his official capacity, his promise is enforceable against the estate.^^ §994. Power created by will to bind estate. Second, the will may confer power to bind the estate by contract;^ as to borrow money to carry on business.^ Power to carry on a plantation,^ to keep an estate together,* to manage a mine,^ or to raise money,^ or to defer the sale of a business for App. 611; 77 Am. St. Rep. 443; 55 N. E. 963; Jackson v. Leech, 113 Mich. 391; 71 N. W. 846. By stat- ute in West Virginia attorney fees are " as binding on the estate as a debt created by the decedent in life — more so." Crim v. England, 46 W. Va. 480, 484; 76 Am. St. Rep. 826; 33 S. E. 31o! And giving notes therefor signed as " adminis- trator of the estate " of decedent does not discharge this liability. 11 Wassell V. Armstrong, 35 Ark. 247. 12 Hart V. Allen, 166 Mass. 78; 44 N. E. 116. isjelke V. Goldsmith, 52 O. S. 499; 49 Am. St. Rep. 730; 40 N. E. 167. "Smith V. Ayer, 101 U. S. 320; Carter v. Bank, 71 Me. 448; 36 Am. Rep. 338; Gottberg v. Bank, 131 N. Y. 595; 30 N. E. 41; Hemmy V. Hawkins, 102 Wis. 56; 72 Am. St. Rep. 863; 78 N. \\. 177. isAshby v. Ashby, 7 Barn. & C 444; Haynes v. Forshaw, 11 Hare 93; Brown v. Farnham, 55 Minn. 27; 56 N. W. 352. 1 Ames V. Holderbaum, 44 Fed. 224. 2 Whitman's Estate, 195 Pa. St. 144; 45 Atl. 673. 3 Primm v. Mensing, 14 Tex. Civ. App. 395; 38 S. W. 382. 4Brannon v. Ober, 106 Ga. 168; 32 S. E. 16. 5 He may sink a shaft, though it results in loss. Waddell's Estate, 196 Pa. St. 294; 46 Atl. 304. 6 Fletcher v. Banking Co., Ill Ga. 300; 78 Am. St. Rep. 164; 36 S. E. 767. Under a power by will " to raise a sufficient amount of money for this purpose in such way as seems best to him," he can borrow and give a mortgage, even though the amount thus borrowed exceeds the debts, and can bind the estate by a promise to pay attorney fees. Fletcher v. Banking Co., Ill Ga. 300; 78 Am. St. Rep. 164; 36 S. E. 767. CONTRACTS OF FIDUCIARIES. 1555 n certain time^ each confers power to borrow or create debts. Where power is given to carry on business it has been held that trade debts bind only the money in the business ; not the estate in general f and power by will to use the corpus of the prop- erty, is not power to borrow." However, a power given by will to an executrix " to conduct for such time as she may see fit the business in which I may be engaged at my death," has been held to confer power to subject the entire estate to debts con- tracted for the purpose of continuing such business.^* A power to the executor to sell is not power to warrant.^^ §995. Personal liability of executors. Executors are liable personally upon contracts which they attempt to make in their official capacity when they cannot bind the estate, unless they specifically contract against a per- sonal liability.^ They are liable personally on their notes,^ ■^ In re Crowther (1895), 2 Ch. 56. sFrey v. Eisenhardt, 116 Mich. 160; 74 N. W. 501; citing Althei- mer V. Hunter, 56 Ark. 159; 19 S. W. 496; Laible v. Ferry, 32 N. J. Eq, 791 ; Lucht v. Behrens, 28 O. S. 231; 22 Am. Rep. 378. 9 McMillan v. Cox, 109 Ga. 42; 34 S. E. 341. loFurst V. Armstrong, 202 Pa. St. 348; 90 Am. St. Rep. 653; 51 Atl. 996. iiBauerle v. Long. 187 111. 475; 52 L. R. A. 643; 58 N. E. 458. 1 Tucker v. Grace, 61 Ark. 410; 33 S. W. 530; Melone v. Ruffino, 129 Cal. 514; 79 Am. St. Rep. 127; 62 Pae. 93; In re Page, 57 Cal. 238; Mitchell V. Hazen, 4 Conn. 495; 10 Am. Dec. 169; De Coudres v. Trust Co., 25 Ind. App. 271; 81 Am. St. Rep. 95; 58 N. E. 90; Mills v. Kuy- kendall, 2 Blackf. (Ind.) 47; Lus- comb V. Ballard, 5 Gray (Mass.) 403; 66 Am. Dec. 374; Sumner v. Williams, 8 Mass. 162; 5 Am. Dec. 83; Germania Bank v. Michaud, 62 Minn. 459; 54 Am. St. Rep. 653; 30 L. R. A. 286; 65 N. W. 70; First National Bank v. Collins, 17 Mont. 433; 52 Am. St. Rep. 695; 43 Pac. 499; Doolittle v. Willet, 57 N. J. L. 398; 31 Atl. 385; Parker v. Day, 155 N. Y. 383; 49 N. E. 1046; Moorehead Banking Co. v. Moore- head, 122 N. C. 318; 30 S. E. 331; Thomas v. Moore, 52 O. S. 200; 39 N. E. 803; West v. Dean, 15 Ohio C. C. 261; Hall v. Wilkinson, 35 W. Va. 167; 12 S. E. 1118. 2 Lynch v. Kirby, 65 Ga. 279; Dunne v. Deery, 40 la. 251; WMnter V. Hite, 3 la. 142; White v. Thomp- son; 79 Me. 207; 9 Atl. 118; Ger- mania Bank v. Michaud. 62 Minn. 459; 54 Am. St. Rep. 653; 30 L. R. A. 286; 65 N. W. 70; First Na- tional Bank v. Collins, 17 Mont. 433; 52 Am. St. Rep. 695; 43 Pac 499. 1556 PAGE ON CONTRACTS. even if they sign in their official capacity,^ as by signing " as execntor,"* or by signing " The Estate of E. Langevin by Achille Michaud, Administrator,"^ or by accepting a draft, " ac- cepted to be i^aid when funds are received for the estate. C. Carter, Administrator.'"' The executor or administrator is liable personally, even if the note signed by him as executor and the like is given to take up a debt of the decedent.^ So an executor is personally liable on his acceptance of an order drawn on him payable out of the rentals of the estate.* So where A, as administrator of B's estate, bought a team to operate B's farm, and A signed the letter whereby the contract of sale was made, " A, administrator," A was held liable per- sonally.^ If they secure the note by mortgaging part of the estate they are personally liable for a deficiency after fore- closure, this not being a waiver of personal liability.^" Where they sign as executors, " but not personally,"^^ or where there is no new consideration and the note is in the hands of the payee,^" there is no personal liability on the contract, if the estate is properly administered. As to payee the executor may be relieved on a note in settlement of his decedent's claim by showing a deficiency in decedent's estate.^^ An executor is liable for commission on a loan which was not con- 3 Dunne v. Deery, 40 la. 251 ; Boyd V. Johnston, 89 Tenn. 284; 14 S. W. 804. 4 Hopson V. Johnson, 110 Ga 283; 34 S. E. 848; Morehead Bank ing Co. V. Morehead, 116 N. C. 410 21 S. E. 190; In re Claghorn's Es tate, 181 Pa. St. 600; 59 Am. St Eep. 680; 37 Atl. 918; Boyd v Johnston, 89 Tenn. 284; 14 S. W 804. 5 Gerniania Bank v. Michaud, 62 Minn. 4,59; 54 Am. St. Rep. 653; 30 L. R. A. 286; 65 N. W. 70. 6 Carter v. Thomas, 3 Ind. 213. "!■ Cornthwaite v. Bank, 57 Ind. 268; In re Claghorn's Estate, 181 Pa. St. 600; 59 Am. St, Rep. 680; 37 Atl. 918. 8 Perry v. Cunningham, 40 Ark. 185. 9 Rich V. Sowles, 64 Vt. 408; 15 L. R. A. 850; 23 Atl. 723. 10 De Coudres v. Trust Co., 25 Ind. i^pp. 27i; 81 Am. St. Rep. 95; 58 N. E. 90. iiM(rehead Banking Co. v. More- head, 116 N. C. 413; 21 S. E. 191. 12 Gerniania Bank v. Michaud, 62 Minn. 459; 54 Am. St. Rep. 653; 30 L. R. A. 286; 65 N. W. 70. i3McGrath v. Barnes, 13 S. C. 328; 36 Am. Rep. 687; Boyd v. Johnston, 89 Tenn. 284; 14 S. W. 804; East Tennessee, etc., Co. v. Gaskell, 2 Lea (Tenn.) 742. CONTRACTS OF FIDUCIAEIES. 1557 flmmated because the executor could not get a proper order c.f court to mortgage the realty/* An executor who carries on decedent's business is personally liable for new debts thus incurred/^ He is personally liable on his contract for sawing decedent's lumber." In some cases the personal liability of the executor may exist even if the executor is authorized by will to carry on a business and to incur debts. Even if the will authorizes the executor to carry on " some legitimate busi- ness/' the executor is personally liable for debts incurred in. such business. ^'^ The executor is not, however, personally liablfc unless the contract purports to have been made with him. If an executor signs in his official capacity in indorsing a note owned by decedent, which note the executor is transferring to a vendee thereof under authority of law, he incurs no personal liability. ^^ By statute an executor may be free from certain kinds of liability imposed on him.^" §996. Liability of estate for benefits received. The i-ule that an executor cannot bind the estate by his con- tract is intended for the protection of the estate. It is not intended to operate as a confiscation of anything of value which the estate may receive under such contract. In an accounting with the estate the executor must be credited with the value which has actually enured to the estate under such contract. The executors may reimburse themselves for debts of the estate paid by them.^ Thus, if executors who might have sold realty of their decedent to pay his debts which exceed his personalty, pay such debts out of their own funds they may be reimbursed 14MOXOI1 V. Jones, 128 Cal. 77; 303; 43 L. R. A. 831; 52 N. E. 60 Pac. 316. 1067. 15 Alsop V. Mather, 8 Conn. 584 ; i9 As for costs : Bruning v. Gol- 21 Am. Dec. 703; Wild v. Daven- den, 159 Ind. 199; 64 N. E. 657; port, 48 N. J. L. 129; 57 Am. Rep. Moise's Succession, 107 La. 717; 31 552; 7 Atl. 295. So. 990. 16 Botts V. Barr, 95 Ind. 243. i Peter v. Beverly, 10 Pet. (U. S.) "Willis V. Sharp, 113 N. Y. 586; 532; Bolton v. Myers, 146 N. Y. 4 L. R. A. 493; 21 N. E. 705. 257; 40 N. E. 737; affirming 83. 18 Grafton Savings Bank V. Wing, Hun (N. Y.) 259. 172 Mass. 513; 70 Am. St. Rep. 1558 ' PAGE ON CONTRACTS. thereafter out of tlie proceeds of the realty." So an executor who pays a judgment against decedent out of his own funds may be reimbursed out of the estate.^ So an executor who has given his own note for a debt of his decedent may be reim- bursed out of the estate for the amount paid by him on suck note.* This right, however, is not an indirect means of enforc- ing the contract. The measure of recovery is the benefit to the estate; and not the contract itself. Thus executors cannot recover interest on money borrowed by them to pay debts ot the estate before they were due, which did not draw interest.^ If the property or services furnished by the adversary party has in fact enured to the benefit of the estate, there is some authority for holding that the creditor of the executor may apply to the court of probate powers for an order to the execu- tor to pay the claim out of the estate, which application will, in a proper case, be allowed ;*' and more for holding that equity may enforce payment out of the estate, not strictly speaking on the contract, but for a reasonable compensation for the value of the services to the estate, or the property received by it.^ Thus if the executor borrows money, giving a note signed with his own name " as executor for " the decedent and uses such money to pay debts of the estate, the creditor may recover from the estate in such amount as has actually been expended to pay the debts of the estate. * Since the amount recovered by the creditor is not credited to the executor this is in effect 2 Bolton V. Myers, 146 N. Y, 257; 35 S. W. 212 (overruling Turner v. 40 N. E. 737. Tapscott, 30 Ark. 312; Yarborough sPursel V. Pursel, 14 N. J. Eq. v. Ward, 34 Ark. 204); Ferrin v. 514. Mvrick, 41 N. Y. 315. 4 Peter v. Beverly, 10 Pet. (U.S.) 7 Hewitt v. Phelps, 105 U. S. 393; 532; Douglas v. Eraser, 2 McCord Mosely v. Norman, 74 Ala. 422; Eq. (S. C.) 105. Pike v. Thomas, 65 Ark. 437; 47 5 Nicholson v. Whitlock, 57 S. C. S. W. 110; Norton v. Phelps, 54 36; 35 S. E. 412. Miss. 467; Thompson v. Smith, 64 6Kasson's Estate, 119 Cal. 489; X. H. 412; 13 Atl. 639; Leible v. 51 Pac. 706; Long v. Rodman, 58 Ferry, 32 N. J. Eq. 791;' Willis v. Ind. 58; Baker v. Cauthorn, 23 Ind. Sharp, 113 N. Y. 586; 4 L. E. A. App. 611; 77 Am. St. Rep. 443; 55 493; 21 N. E. 705. N. E. 963. Contra, Pike v. Thomas, s Dunne v. Deery, 40 la. 251. 62 Ark. 223; 54 Am. St. Rep. 292; CONTRACTS OF FIDUCIARIES. 1559 a method of subjecting whatever claim the executor may have against the estate to the payment of such claim. This right usually exists only when the executor is personally insolvent. III. Guardians. §997. Contracts of guardians. Guardians are officers of the court for the purpose of man- aging the estates of persons who are in law considered incap- able of managing their own property. In the absence of statu- tory authority they have no power to bind such estates by their contracts so as to modify pre-existing liability, which may be enforced against such estate irrespective of such contract^ A guardian cannot charge the estate by carrying on business on his ward's capital and credit," or form a corporation on behalf of his ward out of a partnership in which the ward had an interest,^ or bind the estate by a covenant of quiet enjoyment,* or subject the estate of the ward to a lien for labor or ma- terials,^ or borrow money on the credit of the estate," even to 1 Chestnut v. Tyson, 105 Ala. 149 ; Jones, 52 N. C. 14 ; 75 Am. Dee. 53 Am. St. Rep. 101; 16 So. 723; 445; Shepard v. Hanson, 9 N. D. Fish V. McCarthy, 96 Cal. 484; 31 249; 83 N. W. 20. Contra, Robin- Am. St. Rep. 237; 31 Pac. 529; son, v. Hersey, 60 Me. 225; Price's Morse v. Hinckley, 124 Cal. 154; Appeal, 116 Pa. St. 410; 9 Atl. 56 Pac. 896; Wright v. Byrne, 129 856. Cal. 614; 62 Pac. 176; Brown v. 2 Warren v. Bank. 157 N. Y. 259; Eggleston, 53 Conn. 110; 2 Atl. 68 Am. St. Rep. 777; 43 L. R. A. 231; Baird v. Steadman, 39 Fla. 256; 51 N. E. 1036. 40; 21 So. 572; Nichols v. Sargent, 3 Weld v. Mfg. Co., 86 Wis. 549; 125 111. 309; 8 Am. St. Rep. 378; 86 Wis. 552; 57 N. W. 378; 57 N. 17 N. E. 475; Sperry v. Fanning, W. 374. 80 111. 371; Lewis v. Edwards, 44 4 Chestnut v. Tyson. 105 Ala. Ind. 333; Lindsay v. Stevens, 5 149; 53 Am. St. Rep. 101; 16 So. Dana (Ky.) 104; Massachusetts 723. General Hospital v. Fairbanks, 132 5 Fish v. McCarthy, 96 Cal. 484; Mass. 414; Rollins v. Marsh, 128 31 Am. St. Rep. 237; 31 Pac. 529. Mass: 116; Wood v. Truax, 39 Mich. 6 Wright v. Byrne, 129 Cal. 614; 628; Reading V. Wilson, 38 N. J. Eq. 62 Pac. 176 (the ward is not per- 446; Hardy v. Bank, 61 N. H. 34; . sonally liable therefor); Buie's Es- Warren v. Bank. 157 N. Y. 259; tate v. White, 94 Mo. App. 367; 68 68 Am. St. Rep. 777; 43 L. R. A. S. W. 101. 256; 51 N. E. 1036; Fessenden v. 1560 PAGE ON CONTKACTS. take up debts of the estate/ nor can he bind the ward's estate by a contract to pay attorneys' fees.^ If the statute does not authorize such contract to employ an attorney the order of the court cannot validate it.° So money borrowed by a guardian and expended for his ward is not a consideration for a note given by the succeeding guardian/" The contract of one not a guardian is, of course, not binding on the estate.^^ So a general judgment against the guardian cannot be enforced out of the ward's property/" An attorney who acts as guardian ad litem cannot have any greater compensation than the allow- ance made to him by the court having jurisdiction of the case in which such services were rendered/^ One who is employed as attorney by a guardian ad litem may have such compensa- tion as the court before which such case is tried may allow if reasonable in amount/* The guardian is personally liable in such contracts/^ unless he has expressly relieved himself from personal liability by the terms of the contract,^^ though in a proper case he may be reimbursed out of the estate for such TAndrus v. Blazzard, 23 Utah 190 Pa. St. 558; 190 Pa. St. 577; 233; 54 L. R. A. 354; 63 Pac. 888 42 Atl. 1094; 42 Atl. 1117. (the note was signed "John Blaz- 12 Baird v. Steadman, 39 Fla. 40; zard by Joseph H. Hurd, his general 21 So. 572. guardian"). i3 Englebert v. Troxell, 40 Neb. 8 Morse v. Hinckley, 124 Cal. 195; 42 Am. St. Rep. 665; 26 L. R. 154; 56 Pac. 896; Cole v. Superior A. 177; 58 N. W. 852. Court, 63 Cal, 86; 49 Am. Rep. 78; i* Richardson v. Tyson, 110 Wis, Glassgow V. McKinnon, 79 Tex. 116; 572; 84 Am. St. Rep. 937; 86 N, W. 14 S. W. 1050; Richardson v. Tyson, 250. 110 ^Yis. 572; 84 Am. St. Rep. 937; is Chestnut v. Tyson, 105 Ala, 86 N. W. 250. (For other phases 149; 53 Am. St. Rep. 101; 16 So. of this litigation, see Tyson v. Rich- 723; Hunt v. Maldonada, 89 Cal, ardson, 103 Wis. 397; 79 N. W, 636; 27 Pac. 56; Sperry v. Fanning, 439; Tyson v. Tyson, 94 Wis. 225; 80 111. 371; Rollins v. Marsh, 128 68 N, W. 1015.) Mass. 116; Forster v. Fuller, 6 9 Glassgow V. McKinnon, 79 Tex. Mass. 58; 4 Am. Dec. 87; Hardy v. 116; 14 S. W. 1050; Andrus v. Bank, 61 N, H. 34 ; Shepard v. Han- Blazzard, 23 Utah 233; 54 L. R. A. son, 9 N, D. 249; 83 K w. 20; An- 354; 63 Pac. 888. drus v. Blazzard, 23 Utah 233; 54 10 Wright V. Byrne, 129 Cal. 614; L. R. A. 354; 63 Pac. 888. 62 Pac. 176. le Morse v. Hinckley, 124 Cal. "Columbia, etc., Co. v. Lewis, 154: 56 Pac. 896. CONTRACTS OF FIDUCIARIES. 1561 expense/^ and he lias an equitable lien on the estate for such expenses/® Even if the guardian designates himself in the contract " as guardian " he is personally liable.^" A guardian may, however, provide for freedom from personal liability and full effect must be given to such stipulation.^" Conversely the interest of a guardian in a contract which he has made in his own name is a personal interest and not an interest as guardian."^ Thus he can sue in his own name on a note payable to himself, the consideration of which was prop- erty of the ward,^^ can release a guarantor on a note payable to himself,^^ and the ward cannot bring suit thereon.^* But in some states the ward may avoid the entire contract and hold the person who borrows money of the estate from the guardian with knowledge of the facts, as trustee.^^ A guardian is not liable on a contract made by the infant even for necessaries.^® StJ»tutoiy provisions may confer upon a guardian power to bind the estate by his contracts with reference thereto.^^ He can contract for the location of a land certificate, the locator 17 Curran v. Abbott, 141 Ind. 492; 60 Am. St. Rep. 337; 40 N. E. 1091 J (insurance) Sims v. Billing- ton, 60 La. Ann. 968; 24 So. 637; (money) Merkel's Estate, 154 Pa. St. 285 ; 26 Atl. 428. isCurran v. Abbott, 141 Ind. 492; 50 Am. St. Rep. 337; 40 X. E. 1091. laSperry v. Fanning, 80 111. 371; Forster v. Fuller, 6 Mass. 58 ; 4 Am. Dec. 87; Andrus v. Blazzard, 23 Utah 233; 54 L. R. A. 354; 63 Pac. 888. 20 Nichols V. Sargent, 125 III. 309; 8 Am. St. Rep. 378; 17 N. E. 475. 21 Thompson v. Duncan, 85 Ga. 542; 11 S. E. 860. Contra, that the guardian cannot sell notes payable to himself or bearer as guardian, without an order of the court. See Gillespie v. Crawford (Tex. Civ. App.), 42 S. W. 621; Strong v. Strauss, 40 0. S. 87. 22 McLean v. Dean, 66 Minn. 369; 69 X. W. 140. 23 Ditmar v. West, 7 Ind. App. 637; 35 X. E. 47. 21 Brewster v. Seeger, 173 Mass. 281; 53 X. E. 814 (citing Hippee V. Pond, 77 la. 235; 42 X. W. 192; Gard v. Xeff, 39 0. S. 607. (Prop- osition of text not passed upon in this case.) Chitwood v. Cromwell, 12 Heisk. (Tenn.) 658; Zachary v. Gregory, 32 Tex. 452), 25 Easton v. Somerville, 111 la. 164 ; 82 Am. St. Rep. 502 ; 82 X. W. 475. 26 Overton v. Beavers, 19 Ark. 623; 70 Am. Dec. 610; Baird v. Steadman. 39 Fla. 40; 21 So. 572; McXabb v. Clipp, 5 Ind. App. 204; 31 X. E. 858; Spring v. Woodworth, 4 All. (Mass.) 326; Pendexter v. Cole, 66 X. H. 556 ; 22 Atl. 560. 2" L'nited States Mortgage Co. v. Sperry, 138 U. S. 313. 1562 PAGE ON CONTKACTS. to be paid a part of the land,"^ or can lease,"" or borrow money to discharge liens on order of the court.^° The general power of a guardian over personalty, together with the provisions found in most statutes empower a guardian to compromise clainis,^^ though an order of court may be necessary.'^^ A guardian's contract with the stockholders of an insolvent national bank in which the ward holds stock for raising funds to pay the debts of the bank with as little expense as possible,^^ and his surrender of a life insurance policy,"* have been held valid. He cannot arbitrate where his interest is adverse to his ward's.^^ In some cases the guardian has been allowed to bind the estate of his Avard without an order of court ; as where a guardian employed a doctor to save the ward's life.^® If the property has been applied to the use of the estate equity may enforce at least a reasonable compensation therefor out of the estate,^" but this relief will not be given if the prop- erty was not applied to the use of the estate.^^ So attorneys employed by the guardian may receive a reasonable compensa- tion for the benefits which have resulted to the estate from such services.^® IV. Receivers. §998. Contracts under order of court. A receiver is an officer of the court, especially appointed, to whom is committed the control and management of property 28 Ellis V. Stone, 4 Tex. Civ. App. 3* ]Maclay v. Assurance Society, 157; 23 S. W. 405. 152 U. S. 499. 29 Windon v. Stewart, 43 W. Va. 35 Fortune v. Killebrew, 86 Tex. 711; 28 S. E. 776. 172; 23 S. W. 976. 30 Ray V. McGinnis, 81 Ind. 451. 3g Williams v. Bonner, 79 Miss. siManion v. Ry. Co., 99 Ky. 504; 664; 31 So. 207. 36 S. W. 530; Worthington v. 37 James v. Lane, 33 N. J. Eq. Worthington (Ky.), 35 S. W. 1039. 30. 32 Johnson's Appeal, 71 Conn. 38 Xoble v. Runyon, 85 111. 618. 590; 42 Atl. 662; Davis v. Beall. 21 39 Caldwell v. Young, 21 Tex. Tex. Civ. App. 183; 50 S. W. 1086. 800. Contra, Reading v. Wilson, 38 33 Hanover National Bank v. X, J. Eq. 446. Cocke, 127 N. C. 467 ; 37 S. E. 507. CONTRACTS OF FIDUCIARIES. 1563 which is in the custody of the law. As he is not the agent of either party he cannot bind either personally by his contracts/ nor can his acts amount to ratification by them.^ The only question then, is as to his right to make contracts which will be a lien on the trust funds in his charge, and will not bind him personally. Contracts made by a receiver in his official capacity and under order of court, are " sui generis/'^ Under proper circumstances a receiver acting under order of the court may incur debts, which will not bind him. personally but will be a lien upon the fund.* If no rights of lien-holders inter- vene, the receiver of a private corporation may be authorized to borrow money and make such debt a first lien upon certain trust property ; as by pledging collateral to secure a loan.^ So the court may by its order make a debt incurred by the receiver a lien upon the product manufactured by the receiver,^ The assent of creditors to the appointment of a receiver and to the powers conferred upon him may prevent them from attacking the validity of contracts made by him under such powers. If the court when having power to act, has authorized a receiver to make certain contracts and has properly made the debt aris- ing from such contract a lien upon certain property, the court cannot revoke such power after such contract has been made. " Contracts of a receiver made with express or implied au- thority cannot be annulled at the pleasure of the court.'" If the receiver of a going concern enters inter a contract with a bank for borrowing money and depositing collateral security, and such contract is made under order of court and with con- 1 Farmers' Loan Co. v. R. R. Co., N. J. Eq. 669; 12 Atl. 188; State 31 Or. 237; 65 Am. St. Rep. 822; Bank v. Machine Co., 99 Va. 411; 38 L. R. A. 424; 48 Pac, 706. 86 Am. St. Rep. 891; 39 S. K 141. 2 Groveland Improvement Co. v. 5 Clarke v. Banking Co., 54 Fed. Supply Co., 25 Wash. 344; 87 Am. 556; State Bank v. Machine Co., 99 St. Rep. 755; 65 Pac. 529 (especial- Va. 411; 86 Am. St. Rep. 891; 39 ly if the receiver is ignorant of the S. E. 141. facts giving the party a right to 6 American, etc., Co. v. German, avoid). » 126 Ala. 194; 85 Am. St. Rep. 21; sVanderbilt v. R. R., 43 N. J. 28 So. 603. Eq. 669; 12 Atl. 188. 7 State Bank v. Machine Co., 99 4Girard, etc., Co. v. Cooper, 51 Va. 411, 417; 86 Am. St. Rep. 891; Fed. 332; Vanderbilt v. R. R., 43 39 S. K 141. 15G4 PAGE ON CONTKACTS. sent of the creditors, the court must on the final settlement allow the hank priority as to such collateral.^ Xo personal liahility exists against the receiver while acting under order of the court.® Thus if the receiver employs an attorney in his official capacity, and the court sanctions such employment and fixes the compensation of the attorney, the latter cannot maintain an action against the receiver personally.^" The com- pensation of an attorney thus employed is to be fixed by the court.^^ If a corporation is dissolved the receiver may, under order of the court, complete a contract entered into by such corporation and collect compensation therefor under the con- tract.^^ The receiver of a corporation is not liable officially on a lease made by the corporation unless he adopts such lease.^* If he takes possession of the leased premsies he is liable for a reasonable compensation, but not on the covenants of the lease as an assignee of the term." A creditor who wrongfully pro- cures the appointment of a receiver and prolongs the receiver- ship unreasonably may be required, if he has received all the funds collected by the receiver, to pay the rent of premises used by the receiver.^^ §999. Power to displace prior liens. — Receiver of private corpo- ration. Wliere the receiver is authorized by the court to make con- tracts and to charge them upon the trust fund, the question is often presented: Can debts incurred by a receiver under order of the court displace specific prior liens upon part or all 8 state Bank v. Machine Co.. 99 i3 Tradesmen's Publishing Co. v. Va. 411; 86 Am. St. Rep. 891; 39 Car- Wheel Co., 95 Tenn. 634; 49 S. E. 141. Am. St. Rep. 943; 31 L. R. A. 593; 9 Vanderbilt v. R. R., 43 N. J. 32 S. W. 1097. Eq. 669; 12 Atl. 188. i4 Bell v. Protective League, 163 10 Walsh V. Raymond, 58 • Conn. Mass. 558 ; 47 Am. St. Rep. 481 ; 28 251; 18 Am. St. Rep. 264; 20 Atl. L. R. A. 452; 40 N. E. 857. 464. 15 Link Belt Machinery Co. v. "Stuart V. Boulware, 133 U. S. Hughes, 195 111. 413; 59 L. R. A. 78. 673; 63 N. E. 186; affirming, 95 12 Florence, etc., Co. v. Hanby, III. App. 323. 101 Ala. 15; 13 So. 343. CONTEACTS OF FIDUCIARIES. 1565 of the property held by the receiver. If the corporation is a private corporation the court cannot authorize the receiver to incur debts which shall displace existing liens unless the lien- holder consents thereto.^ So if the lien-holder objects to the authority given to the receiver to carry on business," or if he is not a party to the suit in which the receiver is appointed/ his lien has priority over debts incurred by the receiver. A j)rior mortgage if duly recorded/ or a vendor's lien/ have •under these circumstances been given priority over the debts incurred by the receiver. ^Neither his certificates/ nor his simple contract debts/ can be preferred to such prior liens. The court cannot authorize a receiver of a private corporation to carry on a business and incur debts which displace prior liens. Thus the court cannot so authorize the receiver to carry on the hotel business.^ This power has, however, been exer- cised when it is advantageous to all parties concerned to sell iDoe V. Transportation Co., 78 Fed. 62; Hanna v. Trust Co., 70 Fed. 2; 30 L. R. A. 201; Fidelity, etc., Co. V. Iron Co., 68 Fed. 623; Farmers', etc., Co. v. Coal Co., 50 Fed. 481; 16 L. R. A. 603; Belknap Savings Bank v. Land Co., 28 Colo. 326; 64 Pac. 212; Lamar, etc., Co. V. Bank, 28 Colo. 344; 64 Pac. 210; International Trust Co. v. Coal Co., 27 Colo. 246; 83 Am. St. Rep. 59; 60 Pac. 621; Hooper v. Trust Co., 81 Md. 559; 29 L. R. A. 262; 32 Atl. 505; Farmers', etc., Co. v. Tele- graph Co., 148 N. Y. 315; 51 Am. St. Rep. 690; 31 L. R. A. 403; 42 N. E. 707; Raht v. Attrill, 106 N. Y. 423; 60 Am. Rep. 456; 13 N. E. 282; United States Investment Cor- poration V. Portland Hospital, 40 Or. 523; 56 L. R. A. 627; 64 Pac. 644; 67 Pac. 194; Merriam v. Min- ing Co., 37 Or. 321; 56 Pac. 75; 58 Pac. 37; 60 Pac. 997. 2 Hanna v. Trust Co., 70 Fed. 2; 30 L. R. A. 201. 3 International Trust Co. v. Coal Co., 27 Colo. 246; 83 Am. St. Rep. 59; 60 Pac. 621. 4 Hanna v. Trust Co., 70 Fed. 2; 30 L. R. A. 201 ; Farmers', etc., Co. V. Coal Co., 50 Fed. 481; 16 L. R. A. 603; International Trust Co. v. Coal Co., 27 Colo. 246; 83 Am. St. Rep. 59; 60 Pac. 621; United States Investment Corporation v. Portland Hospital, 40 Or. 523; 56 L. R. A. 627; 64 Pac. 644; 67 Pac. 194. 5 Hooper v. Trust Co., 81 Md. 559; 29 L. R. A. 262; 32 Atl. 505. 6 Metropolitan Trust Co. v. Ry,, 100 Fed. 897; Hanna v. Trust Co., 70 Fed. 2; 30 L. R. A. 201; Farm- ers', etc., Co. V. Coal Co., 50 Fed. 481; 16 L. R. A. 603; International Trust Co. V. Coal Co., 27 Colo. 246; 83 Am. St. Rep. 59; 60 Pac. 621; Hooper v. Trust Co., 81 Md. 559; 29 L. R. A. 262; 32 Atl. 505. 7 United States Investment Cor- poration V. Portland Hospital, 40 Or. 523; 56 L. R. A. 627; 64 Pac. 644; 67 Pac. 194. sMaKeel v. Hotchkiss, 190 111. 1566 PAGE ON CONTRACTS. the business as a going concern." Even in case of private cor- porations it seems to be iield that expenses incurred by the receiver in preserving the property may be given priority over pre-existing liens." However, if certain employees who have not been paid, threaten to burn property of which the receiver has charge, and he thereupon issues certificates for a loan with which he pays such employees, this is not an expense for pre- serving the property, in the projDer sense of the term, since the receiver should invoke the protection of the law.^^ On the other hand, if the receiver is appointed at the instance of a lien- holder, proper expenses of the receivership have priority over such lien.^^ So if the lienor consents that the debts of the receivership shall have priority over his lien, effect will be given to such agreement.^^ Since contracts of the receiver of a private corporation cannot affect the rights of a prior lien- holder who does not acquiesce in the receivership, it follows that such creditor cannot take advantage of such contract. So where a receiver took out insurance on certain property and collected such insurance when such property was burned, it was held that a creditor who had levied on such property and had never acquiesced in the receivership or authorized such insurance, cannot have the insurance money subjected to his claim as a prior lien thereon.^* 311; 83 Am. St. Rep. 131; 60 N. E. Makeel v. Hotchkiss, 190 111. 311; 524; Lane v. Hotel Co., 190 Pa. St. 83 Am. St. Rep. 131; 60 N. E. 524 230; 42 Atl. 697. (obiter) ; Karn v. Iron Co., SG Va, 9 Knickerbocker v. Mining Co., 754; 11 S. E. 431. 172 111. 535; 64 Am. St. Rep. 54; " Rabt v. Attrill, 106 N. Y. 423; 50 N. E. 330; Ellis v. Water Co., 60 Am. Rep. 456; 13 N E. 282. 86 Tex. 109; 23 S. W. 858. Hotel. 12 Shelburn Coal Miring Co. v. Cake V. Mohun, 164 U. S. 311; Delashmutt, 21 Ind. App. 257; 52 Thornton v. R. R., 94 Ala. 353; 10 N. E. 102; Gallagher v. Gingrich, So. 442. Manufacturing corpora- 105 la, 237; 74 N. W. 763; Ellis v. tion. Blythe v. Gibbons, 141 Ind. Water Co., 86 Tex. 109; P3 S. W. 332; 35 N. E. 557; Grainger v. 858. Paper Co., 105 Ky, 683; 49 S. W. i3 Reinhard v. Investment Co., 94 477. Fed. 901. 10 Cake V. Mohun, 164 U. S. 311; "McLaughlin v. Bank, 23 Utah Beckwith v. Carroll, 66 Ala. 12; 473: 54 L. R. A. 343; 03 Pac 5i»a CONTRACTS OF FIDUCIAKIES. 1567 §1000. Receiver of quasi-public corporation. The receiver of a quasi-public corporation may, if acting imder order of a court having jurisdiction, incur debts in order to carry on the business, which debts may be given priority over prior liens. This principle is most frequently applied to debts created by receivers of railway companies.^ Thus acting under order of the court he may issue certificates, and the debts thus evidenced may be made a first lien on the trust prop- erty displacing prior liens thereon.^ Under special circum- stances the expenses of completing a road may be made a lien prior to a pre-existing mortgage.^ The receiver should be given authority to issue certificates which displace prior liens only in case the lienor is a party to the suit,* and is given notice of the application.^ While this is undoubtedly the safer practice, it seems that if those who furnish money or property to the receiver are willing to take the risk of the final action of the court, prior notice is not necessary; it being suflScient if notice is given before the final order is made.^ The general power of a receiver of a railroad to bind the trust-fund by his contracts is limited to expenses incurred in the ordinary daily administration of the railroad.^ Thus without special author- ity from the court he cannot bind the fund by accepting a lease of general offices for a term of years which extends beyond the receivership,^ nor can he be allowed expenditures incurred iKneeland v. Luce, 141 U, S. 36 X. E. 896; Hoover v. Ry., 29 N. 491; Morgans, etc., Co. v. R. E., J. Eq. 4; State v. R. R., 6 Lea 137 U. S. 171; Kneeland v Trust (Tenn.) 353; Vermont, etc., R. R. Co., 136 U. S. 89; Union Trust Co. v. R. R., 50 Vt. 500. V. Ry., 117 U. S. 434; Miltenberger 3 First National Bank v. Ewing, V. Ry., 106 U. S. 286; Barton v. 103 Fed. 168. Barbour, 104 U. S. 126; Wallace v. 4 Metropolitan Trust Co. v. Ry., Loomis, 97 U. S. 146; Vilas v. Page, 100 Fed. 897. 106 N. Y. 439; 13 N. E. 743. 5 Osborne v. Colliery Co., 96 Va. 2 Union Trust Co. v. Ry., 117 U. 58; 30 S. E. 446. S. 434; Swann v. Clark, 110 U. S. e Union Trust Co. v. Ry.. 117 U. 602; Shaw v. R. R., 100 U. S. 605; S. 434. Browning v. Kelly, 124 Ala. 645; 7 Cowdrey v. R. R., 93 U. S. 352. 27 So. 391; Illinois, etc.. Bank v. s Chicago Deposit Vault Co. v. Ry., 115 Cal. 285; 47 Pac. 60; McXulta, 153 U. S. 554. Fletcher v. Waring, 137 Ind. 159; 1568 PAGE ON CONTEACTS. in defeating a jDroposed suLsidv, from a city to aid m con- structing a parallel road." The power of a court to authorize a receiver to incur obligations which shall incur private liens has been recognized as existing in corporations of a quasi-public character other than railroads, such as electric lighting com- panies which are under contract to furnish light for the public,^" or to telephone and telegraph companies." §1001. Contracts not under order of court. A receiver is personally liable upon his contracts made in his oflBcial capacity unless he makes them under order of the court appointing hrm ; or by virtue of statutory authority ; or unless there is in his contract an express stipulation against personal liability.^ Thus he is liable on his notes, though issued for the benefit of the receivership.^ Without an order of the court the receiver cannot make his contracts a lien on the trust fund,' though if he is reimbursed therefor his creditors might un- doubtedly be subrogated to his rights. While precaution de- mands that a receiver have authority of the court for liabilities incurred and expenditures made by him before he acts, no technical rule requires confiscation of the receiver's individual 9 Cowdrey v. R. R., 93 IT. S. 352. one is responsible. If the debt was 10 Illinois Trust Co. v. Ey., 89 properly incurred, he will be al- Fed. 235. lowed the amount paid out on his 11 Keelyn v. Telegraph Co., 90 accounting. Plaintiff's right of ac- Fed. 29. tion, if it has any, is on the de- 1 Vilas V. Page, 106 N. Y. 439; fendant's promise. Like the execu- 13 N. E, 743. tor, the assignee, the guardian and 2 Peoria, etc., Works v. Hickey, the administrator, he has no re- 110 la. 276; 80 Am. St. Rep. 296; sponsible principal behind for whom 81 N. W. 473. The note was he may promise, and he alone is given for property that went into liable on the contract." Peoria, the stock of which receiver had con- etc., Works v. Hickey, 110 la. 276, trol. The note was signed " Jas. 279; 80 Am. St. Rep. 296; 81 N. Hickey, Receiver." Reformation W. 473. was denied. In its opinion the 3 Union Trust Co. v. Midland Co., court said: "As the receiver had 117 U. S. 434; Cowdrey v. R. R., no authority to execute the notes in 93 U. S. 352; Lehigh, etc., Co. v. suit, he had no principal against R. R., 35 N. J. Eq. 426; Wyckoflf v. whom plaintiff might maintain an Scofield, 103 N. Y. 630; 9 N. E- action, and, unless he is bound, no 498; Hand v. R. R., 17 S. C. 219. CONTRACTS OF FIDUCIARIES. 1569 property if he makes proper expenditures or incurs proper liabilities without an order of the court. What the court could authorize in advance it may subsequently ratify if the receiver and those dealing with him are willing to take such risk. Accordingly the receiver should be reimbursed out of the prop- erty for his reasonable expenses incurred in such receivership ;* and he should be reimbursed for contract liabilities incurred by him on contract for the benefit of the estate, if fair and reasonable.^ V. Contracts of Promoters. §1002. Contracts of promoters not binding on corporation. There cannot be a valid contract without two parties thereto. Accordingly, a contract made by the promoters of a corporation before the corporation is created cannot bind the corporation.* So a contract to locate the jDlace of business of the corporation, 4 Knickerbocker v. Mining Co., 172 111. 535; 64 Am. St. Rep. 54; 50 N. E. 330. 5 Chicago Deposit Vault Co. v. McNulta, 153 U. S. 554; Vanderbilt V. R. R., 43 N. J. Eq. 669; 12 Atl. 188. 1 Winters v. Mining Co., 57 Fed. 287; Moore, etc., Co. v. Hardware Co., 87 Ala. 206; 13 Am. St. Rep. 23; 6 So. 41; San Joaquin, etc., Co. V. West, 94 Cal. 399; 29 Pac. 785; Ruby, etc., Co. v. Gurley, 17 Colo. 199; 29 Pac. 668; New York, etc., R. R. V. Ketehum, 27 Conn. 170; Park V. Woodmen of America, 181 111. 214; 54 N. E. 932; Western, etc., Mfg. Co. V. Cousley, 72 111. 531; Gent v. Ins. Co., 107 111. 652; Smith V. Parker, 148 Ind. 127; 45 N. E. 770; Davis, etc., Co. v. Cream- ery Co., 10 Ind. App. 42; 37 N. E. 549; Carey v. Mining Co., 81 la. 674; 47 N. W. 882; Tryber v. Cold 99 Storage Co., 67 Kan. 489; 73 Pac. 83; Holyoke Envelope Co. v. En- velope Co., 182 Mass. 171; 65 N. E. 54; Abbott v. Hapgood, 150 Mass. 248; 15 Am. St. Rep. 193; 5 L. R. A. 586; 22 N. E. 907; Penn Match Co. v. Hapgood, 141 Mass. 145; 7 N. E. 22; Durgin v. Smith, — Mich. — ; 94 K W. 1044; Battelle v. Pavement Co., 37 Minn. 89; 33 N. W. 327; Hill v. Gould, 129 Mo. 106; 30 S. W. 181; Davis v. Creamery Co., 48 Neb. 471; 67 N. W. 436; Munson v. R. R., 103 N. Y. 58; 8 N. E. 355; Tift v. Bank, 141 Pa. St. 550; 21 Atl. 660; Weatherford, etc., Co. V. Granger, 86 Te.x. 350; 40 Am. St. Rep. 837; 24 S. W. 795; Bash V. Mining Co., 7 Wash. 122; 34 Pac. 462; Buffington v. Bardon, 80 Wis. 635; 50 N. W. 776; Stand- ard, etc., Co. V. Publishing Co., 87 Wis. 127; 58 N. W. 238. 1570 PAGE ON CONTRACTS. made bj the promoters," or to appoint a custodian of cor- porate funds,^ or to pay a bonus for selling stock,* does not bind the corporation of its own force ; nor can such a contract be enforced by the corporation.^ So an executory agreement to take a certain amount of the capital stock," or a contract giv- ing a refusal to the corporation of all stock sold by promoters,'^ cannot be enforced by the corporation, without further action on its part. So a contract by the creditors of a corporation to take in payment of their debts, notes to be issued by a corpora- tion to be formed is without consideration.^ If the promoter makes a contract on behalf of the corporation for the purchase of certain property, and countermands it subsequently ; and accordingly the corporation does not ratify such contract and does not receive anything of value under it, the corporation is not liable for such breach." §1003. Effect of acceptance by corporation. An attempted contract made on behalf of a corporation to be formed subsequently, by a promoter thereof, may be treated as at least equivalent to a continuing offer, and if not revoked by the adversary party, and accepted by the corporation when it is formed, it becomes a valid contract.^ So the corporation's 2 Park V. Woodmen of America, by the corporation even if not in 181 111. 214; 54 N. E. 932. compliance with the statute. 3 San Joaquin, etc., Co. v. West, Marysville, etc., Co. v. Johnson, 93 94 Cal. 399; 29 Pac. 785. Cal. 538; 27 Am. St. Rep. 215; 29 4 Tift V. Bank, 141 Pa. St. 550; Pac. 126. 21 Atl. 660; Weatherford, etc., Co. 7 Ireland v. Milling, etc., Co., 20 V. Granger, 86 Tex. 350; 40 Am. St. R. I. 190; 38 L. R. A. 299; 38 Atl. Rep. 837; 24 S. W. 795. 116. 5 Plaquemines, etc., Co. v. Buck, « Providence Albertype Co. v. 52 N. J. Eq. 219; 27 Atl. 1094; Kent & Stanley Co., 19 R. I. 561; Ireland v. Reduction Co., 20 R. I. 35 Atl. 152. 190; 38 L. R. A. 299; 38 Atl. 116. » Bank v. Orgill, — Miss. — ; A deed to the " incorporators " doea 34 So. 325. not vest the legal title in the cor- i Bridgeport, etc., Co. v. Meader, poration. McCandless v. Acid Co., 72 Fed. 115; 18 C. C. A. 451; af- 112 Ga. 291; 37 S. E. 419. firming, 69 Fed. 225; 15 C. C. A. Dayton, etc., Co. v. Coy, 13 O. 694; Old Colony Trust Co. v. Du- S. 84. Contra, a contract of sub- buque, etc., Co., 89 Fed. 794; Davis scription to stock may be enforced v. Dexter, etc., Co., 52 Kan. 693; CONTRACTS OF FIDUCIAEIES. 1571 taking an assignment of a contract for the purchase of certain realty, and issuing stock to those who have contributed money for the purchase of such realty is an acceptance of the contract." A corporation which is formed to carry on the business of a partnership and which does carry on such business is pre- sumed to adopt its contracts.^ Thus if the partnership had guaranteed certain titles as part of its business of loaning money as agent, the corporation formed to carry on such busi- ness cannot make any charge for services in perfecting such title.^ If a firm incorporates and all the assets of the firm are turned over to such corporation, the latter becomes liable for the debts of the former.^ Acceptance may be made by conduct as well as by words. Receiving benefits under such a contract with knowledge of its terms is an acceptance of the offer thus made, if it is possible for the corporation to choose between receiving and returning such benefits,*' such as using a machine bought before incorporation and making a part payment thereon,'^ or accepting and using the proceeds of a loan,^ or receiving and using material, labor, and taking possession of a building rented for the corporation,^ or taking possession of mining claims leased to it." Where property bought in this way is received a mortgage given thereon in the name of the corporation is valid in equity.^^ So a corporation which has 35 Pac. 776; Red Wing Hotel Co. Mortgage Co., 83 Fed. 796; 28 C. V. Friedrieh, 26 Minn. 112; IN. W. C. A. 88. 827; Pitts v. Mercantile Co., 75 s Andres v. Morgan, 62 O. S. 236 ; Mo. 221; Seymour v. Cemetery As- 78 Am. St. Rep. 710; 56 N. E. 875. sociation, 144 N. Y. 333; 26 L. R. 6 Huron, etc., Co. v. Kittleson, 4 A. 859; 39 N. E. 365; Oakes v. S. D. 520; 57 N. W. 233. Water Co., 143 N. Y. 430; 26 L. R. 7 Bridgeport, etc., Co. v. Meader, A. 544; 38 N. E. 461; Ratlibun v. 72 Fed. 115; 18 C. C. A. 451; af- Snow, 123 N. Y. 343; 10 L. R. A. firming, 69 Fed. 225; 15 C. C. A. 355; 25 N. E. 379; Schreyer v. 694. Mills Co., 29 Or. 1; 43 Pac. 719. » Schreyer v. Mills Co., 29 Or. 1; 2Esper V. Miller, 131 Mich. 334; 43 Pac. 719. 91 N. W. 613. 9Kaeppler v. Creamery Co., 12 S. 3 North American, etc., Co. v. D. 483; 81 N. W. 907. Mortgage Co., 83 Fed. 796; 28 C. loWall v. Smelting Co., 20 Utah C. A. 88. 474; 59 Pac. 399. 4 North American, etc., Co. v. n Bridgeport, etc., Co. v. Meader, 72 Fed. 115; 18 C. C. A. 451. 1572 PAGE ON CONTRACTS. received the benefit of a mortgage cannot avoid it on the ground that it was executed before one half of the capital stock had been paid in, contrary to the requirements of the statute/^ If the promoters, who made the contract for the corporation, be- come stockholders, directors, and officers, the corporation is charged with their knowledge." Thus a president of a cor- poration,^* or a president and general manager may ratify a contract made by himself for the corporation before it wag organized. ^^ A transaction of this sort is, properly speaking, a new contract, made by acceptance of an outstanding offer.^* Thus delivery of a subscription to a promoter is in effect deliv- ery to the corporation when subsequently formed.^^ Accord- ingly since this is in effect an offer until accepted by the cor- poration, the adversary party may withdraw such offer at any time before the corporation accepts it.^^ Some courts, how- ever, speak of this as a ratification of the contract.^^ Authori' ties differ as to whether a corporation can be charged with expenses necessary to its very existence, such as attorney fees for incorporating, irrespective of its own agreement to pay therefor after incorporation.-*' Even if the services necessary to the 12 Wood V. Water Works Co., 44 Co. v. Davis, 40 Minn. 110; 12 Am. Fed. 146; 12 L. R. A. 168. St. Eep. 701; 3 L. R. A. 796; 41 J^. 13 Rogers v. Land Co., 134 X. Y. W. 1026. 197; 32 N. E. 27; Kaeppler v. is Consolidated Water-Power Co. Creamery Co., 12 S. D. 483; 81 N. v. Nash, 109 Wis. 490; 85 N. W. W. 907. 485. 1* Kaeppler v. Creamery Co., 12 i9 Davis v. Montgomery, etc., S. D. 483; 81 N. W. 907. Co. (Ala.), 8 So. 496; Stanton v. isOakes v. W^ater Co., 143 N. Y. New York, etc., Co., 59 Conn. 272; 430; 26 L. R. A. 544; 38 N. E. 21 Am. St. Rep. 110; 22 Atl. 300; 461. Contra, the directors cannot Bruner v. Brown, 139 Ind. 600; 38 accept such a contract so as to bind N. E. 318; Oakes v. Cattaraugus, the corporation. Tift v. Bank, 141 etc., Co., 143 N. Y. 430; 26 L. R. Pa. St. 550; 21 Atl. 660. A. 544; 38 N. E. 461; Seymour v. leReichwald x. Hotel, 106 111. Cemetery, 144 N. Y. 333; 26 L. R. A. 439; McArthur v. Printing Co., 48 859; 39 N. E. 365; Pittsburg, etc., Minn. 319; 31 Am, St. Rep. 653; 51 Co. v. Quintrell, 91 Tenn. 693; 20 N. W. 216; Richardson v. Graham, S. W. 248, 45 W^ Va. 134; 30 S, E. 92; Pratt 20 That it is liable. Freeman Im- V. Match Co,, 89 Wis. 406; 62 N. W. plement Co, v, Osborn, 14 Colo, App. 84. 488: 60 Pac, 730; Farmers' Bank v. 17 Minneapolis Threshing Machine Smith, 105 Ky. 816; 88 Am. St. COXTKACTS OF FIDUCIARIES. 1573 formation of the corporation are rendered by a promoter,^^ and even if be becomes an officer and director, ^^ he can recover for special services outside of his line of duty as such director. A note given by a corporation for services rendered in procur- ing its incorporation is enforceable as on sufficient considera- tion.^^ In some jurisdictions it is held that a corporation can- not even adopt such contract or accept such offer."* The Massa- chusetts cases are not properly in point. Pennsylvania, etc., Co. V. Hapgood,"^ was a suit by the corporation against parties who had broken a contract with promoters of the corporation ; which suit failed because there was " no allegation of accept- ance " on the part of the corporation. Abbott v. Hapgood^' was a suit on the same contract by promoters. The observation as to the power of the corporation to adopt was pure dictum. §1004. Personal liability of promoters. Promoters are liable personally upon their contracts,^ and this liability is said in some cases to be in the nature of partner- ship liability.^ The promoters are not relieved of liability on their contracts because the corporation adopts them, unless there was an agreement to that effect.^ Thus where one in Eep. 341; 49 S. W, 810; Taussig v. E. 22. "The corporation after its R. R., 166 Mo. 28; 89 Am. St. Rep. organization cannot become a party 674; 65 S. W. 969. That it is not to the contract even by adoption or liable. Weatherford, etc., Co. v. ratification of it," Abbott v. Hap- Granger, 86 Tex. 350; 40 Am. St. good, 150 Mass. 248, 252; 15 Am. Rep. 837; 24 S. W. 795; reversing, St. Rep. 193; 5 L. R. A. 586; 22 N. 23 S. W. 425, E. 907 ; citing Kelner v. Baxter, L. 21 Farmers', Bank v. Smith, 105 R. 2 C. P. 174; Gunn v. Ins. Co., 12 Ky. 816; 88 Am. St. Rep. 341; 49 C. B. (X. S.) 694; Melhado v. Ry., S. W. 810. L. R. 9 C. P. 503; In re Empress 22 Taussig V. R. R., 166 Mo. 28; Engineering Co., 16 Ch. D. 125. 89 Am. St. Rep. 674; 65 S. W. 969. 25 141 Mass. 145; 7 N. E. 22. 23 Smith V. Water Works, 73 26 150 Mass. 248 ; 15 Am. St. Rep. Conn. 626; 48 Atl. 754. 193; 5 L. R. A. 586; 22 K E. 907. 24 North Sidney, etc., Co. v. Hig- 1 Mosier v. Parry, 60 O. S. 388; gins (P. C.) (1899). A. C. 263; Ab- 54 N. E. 364. bott V. Hapgood, 150 Mass. 248; 15 2 jjyland v. Hollinger, 117 Fed. Am. St. Rep. 193; 5 L. R. A. 586; 216: 54 C. C. A. 248. 22 X. E. 907; Pennsylvania, etc., s Roberts, etc., Mfg. Co. v. Schlick, Co. V. Hapgood, 141 Mass. 145; 7 X. 62 Minn. 332; 64 X. W. 826; Queen 1574 PAGE ON CONTKACTS. business orders goods, and the business is then incorporated; and the goods are actually delivered to and received by the corporation, the person originally ordering the goods may be held liable.* If the agreement releases the promoters and pur- ports to bind the corporation, the promoters are not liable, but the corporation which they organize is liable, as where a contract with partners provided that they were to incorporate and that the corporation should be liable on the contract.^ The promoters may be reimbursed by the corporation to the extent of their legitimate expenses on behalf of the corporation.* Thus promoters of a college, who agree to pay interest on a subscription to obtain it for the college may recover the sums thus advanced.'^ City, etc., Co. v. Crawford, 127 Mo. etc., Co., 106 Ga. 84; 31 S. E. 809. 356; 30 S. W. 163. 6 Hayward v. Leeson, 176 Mass, 4 Henderson Woolen Mills v. Ed- 310; 49 L. R. A. 725; 57 N. E. 656. wards. 84 Mo. App. 448, 7 Morton v. College, 100 Ky. 28)^^ 5 Chicago, etc., Co. v. Talbotton, 35 L. R. A. 275; 38 S. W. 1. VOLUNTARY ASSOCIATIONS. 1575 CHAPTER XLVI. VOLUNTARY ASSOCIATIONS. §1005. Contracts of voluntary associations. A voluntary association consists of a number of natural per- sons, united together without being incorporated, for some pur- pose other than carrying on a profession or business, or making profits.^ It usually takes the form of internal organization of a corporation not for profit, and exists for the same purposes as such corporations." The mere fact of membership in a voluntary association does not of itself render each member liable for con- tracts entered into by such association.^ Thus an association of pilots^ having no power to contract for pilot fees is not bound by a contract of a member on their behalf.* Subscribers to a law and order league's guaranty fund are not personally liable to an attorney retained by its officers even if they know and approve of such employment.^ A member is not liable for debts incurred before he became a member.*' In order to hold 1 Grand Grove v. Garibaldi Grove, gates of individuals, called, for eon- 130 Cal. 116; 80 Am. St. Rep. 80; venience, like partnerships, by a 62 Pac. 486; Lewis v. Tilton, 64 la. common name." Grand Grove v. 220; 52 Am. Rep. 436; 19 N. W. Garibaldi Grove, 130 Cal. 116, 119; 911; Brown v. Stoerkel, 74 Mich. 80 Am. St. Rep. 80; 62 Pac. 486. 269; 3 L. R. A. 430; 41 N. W. 921; 3 Clark v. O'Rourke, 111 Mich. Burt v. Lathrop, 52 Mich. 106; 17 108; 66 Am. St. Rep. 389; 69 N. W. N. W. 716; Abels v. McKeen, 18 N. 147; McFadden v. Leeka, 48 0. S. J. Eq. 462; Ash v. Guie, 97 Pa. St. 513; 28 N. E. 874. 493; 39 Am. Rep. 818; Kalbitzer v. 4 The City of Reading, 103 Fed. Goodhue, 52 W. Va. 435; 44 S. E. 696. 264. 5 McCabe v. Goodfellow, 133 N. Y. 2 " Associations of this character 89; 17 L. R. A, 204; 30 N. E. 728. are not bodies politic or corporate; 6 Hornberger v. Orchard, 39 Neb. nor are they recognized by the law 639 ; 58 N. W. 425. as persons. They are mere aggre- 1576 PAGE ON CONTRACTS. a member for a contract of such an association it must be shown that he either authorized it or ratified it. He may authorize such contract in three ways: First, he may join the association understanding that a part of its objects was making such contracts.^ Thus a member of a polo team who joins understanding that certain expenses were to be incurred in which he should share is liable thereon.^ Second, he may specifically authorize the contract in question.^ Third, his authority may be shown by the fact that he was instrumental in making the contract.^** Thus persons who sign as directors,^^ or as treasurer,^^ or allow their names to be used as officers,^^ or themselves make the contract as a committee,^* bind them- selves personally. Thus subscribers to a fund as a bonus to induce a factory to locate in their town are not liable for the contracts of an alleged association with no definite members, formed at a citizens' meeting, to secure such location.^^ A mem- ber may ratify contracts expressly, or impliedly as by accepting benefits which he knows or should know were obtained by such contract. Such an association cannot go out of existence, with contracts outstanding.^^ The members of the association may enforce a contract en- 7 Lawler v. Murphy, 58 Conn. 294; is Murray v. Walker, 83 la. 202 ; 8 L. R. A. 113; 20 Atl. 457; Mc- 48 N. W, 1075. Contra, by statute, Kenney v. Bowie, 94 Me. 397 ; 47 members of a G. A. R. post are not Atl. 918; Clark v. O'Rourke, 111 personally liable though they make Mich. 108; 66 Am. St. Rep. 389; 69 the contracts in person for the post. N. W. 147. Pain v. Sample, 158 Pa. St. 428; 27 8 Bennett v. Lathrop, 71 Conn. Atl. 1107. 613; 71 Am. St. Rep. 222; 42 Atl. i^McKinnie v. Postles (Del.), 54 634. Atl. 798. 9 Winona Lumber Co. v. Church, is Cheney v. Goodwin, 88 Me. 563 ; 6 S. D. 498; 62 N. W. 107. 34 Atl. 420. 10 Comfort v. Graham, 87 la. 295; is Camden, etc.. Co. v. Guarantors, 54 N. W. 242; Kierstead v. Bennett, etc., 59 N. J. L. 328; 35 Atl. 796; 93 Me." 328; 45 Atl. 42; Fredendall Roper v. Burke, 83 Ala. 193; 30 So. V. Taylor, 23 Wis. 538 ; 99 Am. Dec. 439 ; McFadden v. Murphy. 149 203. Mass. 341; 21 N. E. 868; Lafond v. iiPelton V. Place, 71 Vt. 430; 46 Deems, 81 N. Y. 507; Strickland v. Atl. 63. Prichard, 37 Vt. 324. 12 Kierstead v. Bennett, 93 Me. 328 ; 45 Atl. 42. VOLUNTARY ASSOCIATIONS. 1577 tered into with the association as made for their benefit/^ So where a superior labor organization took away the charter of an inferior association, the latter can sue on causes of action accruing in its favor/^ If a member of the association is liable in one of these ways, he cannot avoid liability because the contracting party did not know his name or identity/^ A difficulty in enforcing a contract against a voluntary asso- ciation is found in the fact that the association can not be sued by name, but the individual members in the jurisdiction of the court must be made parties,"'' unless by statute the association may be sued by its name. The statutory right to sue an association by name does not abrogate the Common Law right to sue the individual members,^^ nor does it give a member a right to sue the association.^^ Members of an association who are jointly liable cannot sue the association on a policy.^^ So the adjuster of a voluntary association of dredgers who divides the work cannot sue the association because he does not get his share of their earnings."* A note by a fluctuating society, signed individually by trus- tees, is considered in equity as a charge on their property,"^ and an association though it has no power to borrow, may pledge a claim against an insolvent trust company for its de- posits.^® 17 Senour v. Maschinot (Ky.), 31 21 Jenkinson v. Wysner, 125 Mich. S. W. 481; Local Union, etc., v. Bar- 89; 83 N. W. 1012. rett, 19 R. I. 663; 36 Atl. 5; Acker- 22 Huth v. Humboldt Stanim, 61 mann v. Schuetzen Verein (Tex. Civ. Conn. 227; 23 Atl. 1084. App.), 60 S. W. 366. 23 Perry v. Cobb, 88 Me. 435; 49 18 Wicks V. Monihan, 130 N. Y. L. R. A. 389; 34 Atl. 278. 232; 14 L. R. A. 243; 29 N. E. 139. 2* Potter v. Dredging Co., 59 N. laLawler v. Murphy, 58 Conn. J. Eq. 422; 46 Atl. 537. 294; 8 L. R. A. 113; 20 Atl. 457. 25 Society of Shakers v. Watson, aoAUnut v. Lancaster, 76 Fed. 68 Fed. 730; 15 C. C. A. 632. 131. 26 Commonwealth v. Trust Co., 161 Mass. 550; 37 N. E. 757. 1578 PAGE ON CONTKACTS. CHAPTER XLVII. THE GOVERNMENT. §1006. Contracts of the United States. The United States is a government of limited powers, pos- sessing only such as are expressly or impliedly conferred upon it by the Constitution of the United States. It has full power to contract when such contract is a suitable and appropriate method of carrying such powers into execution.^ The United States is liable for interfering with the work of a contractor,'* or for arbitrary and unreasonable conduct of its engineers,^ but not for damages for a delay not due the United States.^ The United States may be liable on an implied contract for office rent,^ or for use and occupation.® Under claim of implied contract the United States cannot be held for infringement of a patent,^ or for damage on an elevator in postoffice build- 1 Langford v. United States, 95 e Clifford v. United States, 34 Ct. Fed. 933 ; United States v. Utz, 80 CI. 223. Fed. 848; Starin v. United States, 7 Schillinger v. United States, 155 31 Ct. CI. 65; Myerle v. United U. S. 163 ; Russell v. United States, States, 31 Ct. CI. 105; Haliday v. 35 Ct. CI. 154. No implied con- United States, 33 Ct. CI. 453; Greg- tract to pay for a patent arises ory V. United States, 33 Ct. CI. 434 ; 'where patentor introduces it into Salisbury v. United States, 28 Ct. public service, and pattern, working CI. 52; Salisbury y. United States, drawings and machines were paid 28 Ct. CI. 404. for by the government. Gill v. 2 Kelly V. United States, 31 Ct. CI. United States, 160 U. S. 426. 361. Though where the patent is used 3 Collins V. United States, 35 Ct. with the understanding that pay- Cl. 122. ment is to be made therefor an im- 4 United States v. Bliss, 172 U. S. plied contract exists. United States 321; Churchyard v. United States, v. Mfg. Co., 1.56 U. S. 552; Talbert' 100 Fed. 920. v. United States, 25 Ct. CI. 141. A 5 Swigett v. United States, 78 Fed. local postmaster cannot be enjoined 456. from using a patented machine fur- THE GOVEKXMENT. 151(9 ing,^ or for fees voluntarily overpaid in by a consul-general," nor for attorneys' fees where the suit was brought in the name of the United States but the attorneys looked to their clients for their fees/" The chief peculiarity of United States contracts is the prac- tical difficulty in enforcing them against the government. From the very nature of a government, having no political superior, enforcing payment of its debts is war, actual or threatened. Permission to sue may be given by the state, either by general or by special statutes. The United States has established the Court of Claims and thus given permission to be sued therein on contracts,^^ but not in a state court.^" The Court of Claims can also entertain actions against the United States in quasi-contracts ; such as actions to recover payments illegally exacted by duress or compulsion of law.^^ The statute creating the Court of Claims does not, however, change the nature of the liability of the United States. Payments made voluntarily cannot be recovered in this court.^* If the claim is not on contract the sole remedy is to appeal to Congress.^^ The United States in giving permission to be sued may im- pose such conditions as it sees fit. In consenting to be sued, it may restrict the comjDensation of attorneys;^® or provide against any compensation ;^'^ or it may require claims to be paid direct to claimants and not to attorneys.^^ It may provide for nished by the government as this is v. Ellsworth, 101 U. S. 170; United really an action against the United States v. Lawson, 101 U. S. 164. States. International, etc., Co. v. i* United States v. Edmonston, Bruce, 194 U. S. 601 (decided by a 181 U. S. 500; United States v. Wil- divided court). son, 168 U. S. 273. 8 Bigby V. United States, 103 Fed. is German Bank v. United States, 597. 148 U. S. 573. 9 United States v. Wilson, 168 U. is Ball v. Halsell, 161 U. S. 72. S. 273. i'^ A statute that no part of money 10 Coleman v. United States, 152 repaid to a state in refunding direct U. S. 96. taxes shall go to an attorney binds 11 See Court of Claims eases in the state and the agent or attorney this section. of the state. Wailes v. Smith, 157 12 Stanley v. Schwalby, 162 U. S. U. S. 271. 255. 18 Spalding v. Vilas, 161 U. S. 13 Swift Company v. United 483. States, 111 U. S. 22; United States 1580 PAGE ON CONTRACTS. priority of payment of its own debts/*' and may set off damages for delay against the contract compensation.-'' The legislative department may also provide directly for enforcing contracts. An appropriation made by Congress for paying a claim is final.^^ In the absence of special restrictions the ordinary rules of contract law, such as the rules of commercial paper,^" apply to contracts with the United States ; and Common-Law rules of evidence apply to actions thereon. ^^ The United States has also provided that contractors cannot assign claims against the United States, and the allowance of such assignment by a disbursing officer gives it no validity.^* This prohibition does not apply to claims against officers, as to a claim against a post-office inspector for money seized by him but not then turned over to the postmaster-general,"^ or drafts of deputies accepted by a marshal,"*^ nor does it apply to a pledge of a crop of sugar including the bounty,^^ nor to a trans- fer by one partner to another of all the partnership property including such claim,'^ nor to an assignment of a claim against the United States to a receiver ordered by a court of chancery,^® nor to the purchase of a claim sold in bankruptcy.^" This stat- ute is solely for the protection of the government, and if the government sees fit to recognize the assignments^, or if the 19 State V. Foster, 5 Wyo. 199; 29 cock v. United States, 27 Ct. CI. L. R. A. 226; 38 Pac. 926. 185; Harris v. United States, 27 Ct. 2oSatterlee v. United States, 30 CI. 177. Ct. CI. 31. 25 United States v. Ferguson, 78 21 United States v. Louisville, 169 Fed. 103. U. S. 249. Where Xew York bor- 26 Douglas v. Wallace, 161 U. S. rowed from her canal fund to raise 346. troops, a U. S. statute to repay the 27 Barrow v. Milliken, 74 Fed. "costs, charges and expenses prop- 612; 20 C. C A. 559. erly incurred" includes such loan 28jernegan v. Osborn, 155 Mass. and interest paid thereon. United 207; 39 N. E. 520. States V. New York. 160 U. S. 598. 29 PHee v. Forrest, 173 U. S. 410; 22 Wells Fargo & Co. v. United Redfield v. United States, 27 Ct. CI. States. 45 Fed. 337. 393; Price v. Forrest. 54 N. J. Eq. 23 Allen V. United States, 28 Ct. 669; 35 Atl. 1075; Forrest v. Price, CI. 141. 52 N. J. Eq. 16; 29 Atl. 215. 24 Greenville Savings Bank v. so McKay v. United States, 27 Ct. Lawrence, 76 Fed. 545; 22 C. C. A. CI. 422. 646; U. S. Rev. St. § 3477; Hitch- 3i Hobbs v. McLean, 117 U. S. THE GOVERNMENT. 1581 question arises solely between assignor and assignee,^^ the as- signment is valid. So in claims where specified forms of assignment are required informality in assignment, though " absolutely void " by stat- ute, does not invalidate it as between the parties, but the as- signee may enforce his lien after payment by the government to the assignor.^^ §1007. Contracts of a State of the "Cnion. Each of the states of the Union is a government possessing general and unlimited powers, except such as are expressly or impliedly denied to it by the Constitution of the United States. Within the sphere of its powers it may make such contracts as it wishes.^ A state contract possesses the usual incidents of contracts. Thus a contract between the governor and a pri- vate partnership for public printing is assignable and the as- signee may mandamus college officials for " copy," and sureties on that bond are not released by such assignment.^ It is held, however, that a state is not liable for interest unless it has agreed to pay it.^ So the state may employ an agent to prosecute a claim against the United States.* The people of the state, being the ultimate sovereign power therein, may in the state constitution restrict the contractual power of the various departments of the state. Thus they 567; Goodman v. Niblack, 102 U. S. 33 York v. Conde, 147 N. Y. 486; 556; Lopez v. United States, 24 Ct. 42 N. E. 193; U. S. R. S. § 3477. CI. 84; 2 L. R. A. 571; Dulaney v. i Poole v. Fleeger, 11 Pet. (U. S.) Sciidder, 94 Fed. 6; 36 C. C. A. 52; 185; Green v. Riddle, 8 Wheat. (U. Thayer v. Pressey, 175 Mass. 225; S.) 1; Kaufmann v. Cooper, 46 Neb. 56 N. E. 5. 644 ; 65 N. W. 796 ; Van Dusen v. 32 Dexter v. Meigs, 47 K J. Eq. State, 11 S. D. 318; 77 N. W. 201. 488; 21 Atl. 114; In re Hone, 153 2 Leader Printing Co. v, Lowry, 9 N. Y. 522; 47 N. E. 798. The stat- Okl. 89; 59 Pac. 242. ute does not apply where the work 3 Carr v. State, 127 Ind. 204; 22 was finished by the creditors of the Am. St. Rep. 624; 11 L. R. A. 370; contractor, and one of the creditors 26 N. E. 778. secured all the money and applied it * Davis v. Massachusetts, 164 to his claim; other creditors gar- Mass. 241; 30 L. R. A. 743; 41 N. nisheed. Eewell v. Surety Co., 80 E. 292. Miss. 782; 28 So. 755. 1582 PAGE ON CONTKACTS. may limit the amount of the debt to be contracted for specified purposes,^ or may require advertisement for bids, in the absence of which no liability even in qumitum meruit will arise.** A constitutional provision that bids must be let to the lowest responsible bidder does not refer to incidental matters, such as printing proceedings of the general assembly from day to day, for which advertising is impracticable/ A limitation on the amount of indebtedness does not apply to a warrant payable only out of a specific fund.^ So the people may by the consti- tution forbid all contracts except those made in pursuance of some statute.'' The peculiarity of the contracts of a state, like those of the United States, is that they cannot be enforced against the state unless the state consents thereto.^'* A branch of the state gov- ernment, such as a state university,^^ cannot be sued except by statutory authority.^^ The rule that a state cannot be sued without its own consent cannot be evaded by bringing a suit in the nature of mandamus against a state officer the effect of which will be to enforce a contract against the state.^^ Thus an architect submitting plans for state capitol cannot have spe- cific performance, as the state is the real party defendant.^^ But while mandamus will not lie without statutory authority 5 In re Contracting of State Debt, n Oklahoma, e'^c, College v. Wil- 21 Colo. 399; 41 Pac. 1110. lis, 6 Okla. 593; 40 I, R. A. 677; 6Mulnix V. Ins. Co., 23 Colo. 71; 52 Pac. 921. 33 L. R. A. 827 ; 46 Pac. 123. 12 University of Illinois v. Bruner, 7 Stone V. Publishing Co. (Ky.), 175 111. 307; 51 N. E. 687; affirming 55 S. W. 725. 66 111. App. 665; distinguishing, 8 Allen V. Grimes, 9 Wash. 424; Thomas v. University, 71 111. 3J0. 37 Pac. 662. is Fitts v. McGhee, 172 U. S. 51^; 9 Locke V. State, 140 N. Y. 480; In re Ayers, 123 U. S 433; Hagood 35 K E. 1076; Stanton v. State, 5 v. Southern, 117 U. S. 52; Mills S. D. 515; 59 N. W. 738. Publishing Co. v. Larrabee, 78 la. 10 Denning V. State, 123 Cal. 316; 97; 42 N. W. 593; People v. Du- 55 Pac. 1000; Hope v. Board of laney, 96 111. 503; Board v. Gannt, Liquidation, 41 La. Ann. 535; 6 So. 76 Va. 455; Miller v. Board, etc., 819; Coxe V. State, 144 N. Y. 396; 46 W. Va. 192; 76 Am. St. Rep. 811; 39 N. E. 400; Sayre v. State. 123 N. 32 S. E. 1007. Y. 291; 25 N. E. 163; Northwestern. i4 Cope v. Hastings, 183 Pff. St. etc.. Bank v. State, 18 Wash. 73; 42 300; 38 Atl. 717. L. R. A. 33; 50 Pac. 586. THE GOVERNMENT. 1583 against state officials in cases in which the state is really a party as an indirect means of enforcing a state contract it will lie to compel a board to let a contract which it has awarded, if the proceedings have been regular, and the letting is a mere min- isterial act/^ The legislature may ratify specific contracts.^® Where shrub- bery and trees were planted on the grounds of a state college under an unauthorized contract with the board of regents, the state was held liable for a reasonable value therefor where with- out ratifying it the state passively enjoyed the benefit of such contract/^ A contract which cannot be enforced at any time or by any means is of course an anomaly. At the same time these are genuine contracts, though unenforceable without the consent of the state. This may be seen from the following considerations: (1) The principle that a state cannot be sued is not especially applicable to state contracts. It also prevents recovery in quasi-contract. So a county which overpaid its taxes cannot sue the state for them^^ unless by statutory author- ity/^ The same principle prevents recovery in tort. (2) The state may grant permission to bring suit against it. This per- mission does not create the liability sought to be enforced."" Statutory permission to sue includes breaches of contract occurring before the passage of such statute,^^ and implies that the case will be governed by the usual rules of law." Thus statutes of limitation will apply, and the court will not recom- mend the payment of what would otherwise be a just claim.^^ Power given to a court to allow " legal rights " against the state 15 state V. Toole, 26 Mont. 22 ; 91 County, 106 Mich. 662 ; 64 N. W. Am. St. Rep. 386; 55 L. R. A. 644; 570. 66 Pac. 496 (but relief was here i9 \\Tiite v. Smith, 117 Ala. 232 refused as bids had not been adver- 23 So. 525. tised for properly). 20 Denning v. State, 123 Cal. 316 16 Brown v. State, 14 S. D. 219; 55 Pac. 1000. 84 N. W. 801 ; Geo. H. Fuller Dock 21 Chapman v. State, 104 Cal. 690 Co. V. State, 6 Ida. 315; 55 Pac. 43 Am. St. Rep. 158; 38 Pac. 457. 857. 22 Harris v. State, 9 S. D. 453 ; 69 17 Jewell Nursery Co. v. State. 5 N. W. 825. S. D. 623; 59 N. W. 1025. 23 Cowles v. State, 115 N. C. 173; 18 Attorney General v. Bay 20 S. E. 384. 1584 PAGE ON CONTEACTS. does not include mere moral obligations neither legal nor equit- able."* Permission to sue on a contract is not ratification there- of.'^ A statutory right to sue a state can be revoked unless rights have vested thereunder."*^ If a state gives its consent to be sued it may impose such conditions as it pleases, as that the action can be brought only in a state court."^ So if the state gives a certain remedy against itself by statute only that remedy can be had."* So permission to sue on certain classes of claims does not confer the right to sue on other classes. An injury suffered by a fall of seats used to view horse racing on the grounds of a fair under state control cannot be treated as a breach of implied contract with the state. "^ (3) Under the Constitution of the United States^" the judicial power of the United States extends to controversies between two or more states and be- tween a state and citizens of another state. The supreme court of the United States has original jurisdiction of cases in which a state shall be a party. While the convention that drafted the Constitution seems to have believed that this grant of power did not give to an individual the right to sue a state, the Su- preme Court decided that it did, and the action of assumpsit was allowed.^^ In consequence of that decision the eleventh amendment to the Constitution of the United States was adopted, which provides that " the judicial power of the United States shall not be construed to extend to any suit in law or equity commenced or prosecuted against one of the United .24 Western, etc., Ry. v. State, 2g Maury v. Commonwealth, 92 (Ga.), 14 L. R. A. 438. Va. 310; 23 S. E. 757. 25 Carolina National Bank v. 27 Smith v. Reeves, 178 U. S, State, 60 S. C. 465 ; 85 Am. St. Rep. 436. 865; 38 S. E. 629. (A superin- 28 Cornwall v. Commonwealth, 82 tendent of the penitentiary had Va. 644; 3 Am. St. Rep. 121. taken notes for convict hire, and en- 29 Melvin v. State, 121 Cal. 16; dorsed them to the bank. It was 53 Pac. 416. (In this case the stat- held that as he had no authority to ute specifically forbade an appro- take them, the state was not liable priation of money for horse-races.) on his indorsement, or for money Citing Gibbons v. United States, 8 had and received.) Nichols v. State, Wall. (U. S.) 269. 11 Tex. Civ. App. 327; 32 S. W. so Art. III., § 2. 452 (defective advertisement for si chishclm v, Georgia, 2 Dall. bids). (c;. 15.) 41sl. THE GOVERNMENT. 1585 States by citizens of another state or by citizens or subjects of a foreign state." While this restricts the jurisdiction of the Supreme Court in cases brought by a natural person, it leaves it unaffected in suits brought against a state by the United States or another state of the Union. The Supreme Court of the United States may therefore enforce contracts made between two states of the Union.^^ So if a natural person buys bonds issued by one state and donates them absolutely to an- other state, the latter state may sue the former on them, even if the purpose of the assignment was to enable the state to maintain such action, as long as it was for the benefit of the state.^^ However, if the assignment of bonds to the state is not absolute, but merely for the purpose of enabling it to sue for the benefit of the real owners of the bonds the state cannot maintain the action.^* So the United States may sue a state in the action of debt on bonds issued by the latter,^^ or it may sue a state for an accounting and money.^® (4) While an individual cannot maintain an action against a state on a contract made with it, he can assert rights which he has acquired by virtue of such contracts ; such as a contract for taxing a railroad in a certain manner.^^ So in an action to which the state is not a party, rights existing by virtue of a contract made by a state may be asserted and enforced, as under a contract between two states.^^ 32 Virginia v. Tennessee, 148 U. S. se United States v. Michigan, 190 503. U. S. 379. 33 South Dakota v. North Caro- 37 Stearns v. Minnesota, 179 U. S. lina, 192 U. S. 286. 223. 34 New Hampshire v. Louisiana, 38 Poole v. Fleegler, 11 Pet. (U. 108 U. S. 76. S.) 185; Green v. Biddle, 8 Wheat. 35 United States v. North Caro- (U. S.) 1. lina, 136 U. S. 211. 100 1586 PAGE ON CONTKACTS. CHAPTER XLVm. PUBLIC CORPORATIONS. §1008. Nature and classes of public corporations. A public corporation is a corporation formed by the state for purposes of local government and administration.'^ Public corporations are divided into municipal corporations and the organizations of less extensive pov^ers, such as counties, schopl districts and the like known as' quasi corporations. Municipal corporations are those public corporations which have extensive powers of local government, including the power of making local laws. Quasi corporations have limited powers of govern- ment or administration, and lack the power of making local laws.^ The difference in powers between municipal corpora- tions and quasi corporations often leads to important distinc- tions in the validity of their contracts. The difference in name is unimportant. A county may be included imder the term *' municipal or other corporation."^ §1009. Notice of powers of public corporations. All persons dealing with a public corporation are bound to take notice of the statutes creating it and conferring power upon it, and the mandatory statutes which prescribe the man- ner in which it may exercise its power.' Thus where bonds iThe Mayor of Nashville v. Ray, i The Floyd Acceptances, 7 Wall. 19 Wall. (U. S.) 468; Eichards v. 666; Marsh v. Fulton Co., 10 Wall. Clarksburg, 30 W. Va. 491 ; 4 S. E. 676 ; German Savings Bank v. 774. Franklin Co., 128 U. S. 526; Bar- 2Schweiss v. Court, 23 Nev. 226; nett v. Dennison, 145 U. S. 135; Nes- 34 L. R. A. 602; 45 Pac. 289. bitt v. Riverside, etc., District, 144 3 Central, etc., Co. v. Wright, 164 U. S. 610; National Bank, etc., v. U. S. 327. So may a school district. Granada, 54 Fed. 100; Coffin v. Curry v. District Township, 62 la. Kearney Co.. 57 Fed. 137; Manhat- 102; 17 N. W. 191. tan Co. v. Ironwood, 74 Fed, 535; PUBLIC CORPORATIONS. 1587 were issued under a statute which fixed the levy at ten mills per annum for thirteen years, a sum insufficient to pay the bonds in full, the court said that all bondholders " were bound to take notice of the extent of the taxing district, and of the value of the property therein, and with those facts before them they acted at their peril as far as the property owners in this special taxing district are concerned."" So bonds of a school district are void if for purpose for which it can not borrow money. ^ §1010. Power of public corporations to make contracts. Where there is no specific statutory provision it is usually said that a public corporation has an implied power to make contracts necessary to enable it to exercise the powers and per- form the duties which are conferred or imposed upon it by law.^ It has even been held that if no provision therefor is made by statute a city has implied power to contract for light- 20 C. C. A. 642 ; Sutro v. Dunn, 74 Cal. 593; 16 Pac. 505; Smith, etc., Co. V. Denver, 20 Colo. 84; 36 Pac. 844; Law v. People, 87 111. 385; McPherson v. Foster, 43 la. 48; 22 Am. Rep. 215; Cedar Rapids Water Co. V. Cedar Rapids, 117 la. 250; 90 N. W. 746 ; Murphy v. Louisville, 9 Bush (Ky.) 189; Osgood v. Bos- ton, 165 Mass. 281; 43 N. E. 108; State V. Ry. Co., 80 Minn. 108; 50 L. R. A. 656; 83 N. W. 32; Raton Waterworks Co. v. Raton, 9 N. M. 70; 49 Pac. 898; reversed on an- other point, 174 U. S. 360; Commis- sioners of Wilkes Co. v. Call, 123 N. C. 308; 44 L. R. A. 252; 31 S. E. 481; McPeeters v. Blanken- ship, 123 N. C. 651; 31 S. E. 876; Roberts v. Fargo, 10 N. D. 230; 86 N. W. 726; People's Bank v. School District, 3 N. D. 496; 28 L. R. A. 642; 57 N. W. 787;' Wellston v. Morgan, 65 O. S. 219; 62 N. E. 127; Diggs v. Lobsitz, 4 Okla. 232; 43 Pac. 1069; Ecroyd v. Coggeshall, 21 R. L 1; 79 Am. St. Rep. 741; 41 Atl. 260; Livingston v. School Dis- trict, 9 S. D. 345; 69 N. W. 15. 2 Miller v. Hixson, 64 0. S. 39, 56; 59 N. E. 749. 3 Board of Education, etc., v. Blodgett, 155 111. 441; 46 Am. St. Rep. 348; 31 L. R. A. 70; 40 N. E. 1025. 1 French v. Paving Co., 181 U. S. 324; Alabama, etc., Co. v. Reed, 124 Ala. 253; 82 Am. St. Rep. 166; 27 So. 19; McBean v. Fresno, 112 Cal. 159; .53 Am. St. Rep. 191; 31 L. R. A. 794; 44 Pac. 358; Oakland v. Water Front Co., 118 Cal. 160; 50 Pac. 277; Heilbron v. Cuthbert, 96 Ga. 312; 23 S. E. 206; Agnew v. Brail, 124 111. 312; 16 N. E. 230; Board, etc., of Perry Co. v. Gardner, 1.55 Ind. 165; 57 N. E. 908; Mills Co. V. R. R. Co., 47 la. 66; Mitchell V. Negaunee. 113 Mich. 359; 67 Am. St. Rep. 468; 38 L. R. A. 157; 71 1588 PAGE ON CONTKACTS. ing^ or for water.^ These cases, however, represent a rather extreme view. Power of a municipal corporation is usually to be deduced, expressly or impliedly, from statutory provisions. §1011. Effect of statute on power to contract. The powers of public corporations are now provided for in most states by statute. Where such statutes are drawn with such detail that it is evidently the intention of the legislature to make complete provision for the power of cities to make contracts, the question of the existence of such power turns upon the construction of such statutes.^ Where the statutes completely provide for what purposes and in what manner a public corporation may contract, no implied power to contract exists.^ §1012. Effect of statute on power to make implied contracts. A public corporation may incur liability on implied contract if it could make an express contract of the same nature, and if the statute does not prescribe the exclusive method of making such contracts.^ Thus where a city causes part of the elec- N. W. 646 ; State v. Martin, 27 Neb. 69 Am. St. Rep. 304 ; 53 N. E. 441; 43 N. W. 244; Oakley v. At- 118; Wellston v. Morgan, 65 O. S. lantic City, 63 N. J. L. 127; 44 Atl. 219; 62 N. E. 127; Markley v. Min- 651; Hoffman v. Pawnee County, 3 eral City, 58 O. S. 430; 65 Am. Okla. 325; 41 Pac. 566; Renting v. St. Rep. 776; 51 N, E. 28; Gas and Titusville, 175 Pa. St. 512; 34 Atl. Water Co. v. Elyria, 57 O. S. 374; 916; Jones v, Camden, 44 S. C. 49 N. E. 335; Citizens' Bank v. 319; 51 Am. St. Rep. 819; 23 S. E. Terrell, 78 Tex. 450; 14 S. W. 1003; 141; Richmond, etc., Co. v. West Winchester v. Redmond, 93 Va. 711 ; Point, 94 Va. 668; 27 S. E. 460; 57 Am. St. Rep. 822; 25 S. E. Sheafe v. Seattle, 18 Wash. 298; 1001. 51 Pac. 385; Tiede v. Schneidt, 105 2 Wellston v. Morgan, 65 O. S. Wis. 470; 81 N. W. 826. 219; 62 N. E. 127; Gas and Water 2 Lake Charles, etc., Co. v. Lake Co. v. Elyria, 57 O. S. 374; 49 N. E. Charles, 106 La. 65; 30 So. 289; 335. Fawcett v. Mt. Airy, 134 N. C. 125; 1 Austin v. Bartholomew, 107 Fed. 45 S. E. 1029. 349; 46 C. C. A. 327; Brush, etc., 3 Lake Charles, etc., Co. v. Lake Co. v. Montgomery, 114 Ala. 433; 2) Charles, 106 La, 65; 30 So. 289. So. 960; Buck v. Eureka, 124 Cal. 1 Jacksonville, etc., Co. V. Jackson- 61; 56 Pac. 612; New Athens v. ville, 36 Fla. 229; 51 Am. St. Rep. Thomas, '82 111. 259; Frankfort 24; 30 L. R. A. .540; 18 So. 677; Bridge Co. v. Frankfort, 18 B. Mon. Danville v. Water Co., 178 111. 299; (Ky.) 41. PUBLIC COKPOEATIONS. 1589 i tricity furiiisLeJ, to bo used in lighting public buildings, and refuseki to designate the lights to be removed and notifies the company Bot to remove i»ny, it is liable for the electricity fur- nished in excess of the contract amount.^ So it may be liable on an implied contract for attorneys' fees.^ If the statute pre- scribes the method of making a contract, a city cannot be held liable on an implied contract, not entered into according to statute.* If there is no power to make an express contract there can be no implied contract.^ Thus where by statute there can be no contract between the city and an ofiicial, a pound master can have no claim on an implied contract for premises furnished as a pound.^ Thus in the absence of stat- ute a county is not liable to an acquitted defendant for costs in a criminal case,'^ nor to compensate attorneys for defendant on appeal,^ nor for physician's services at an inquest,^ nor for compensation for a sheriff's posse/*' So as he is not a peace oflScer a deputy marshal can have no fees for arrest of va- grants under the statute/^ The statute may impose a liabil- ity on the county for services rendered by a member of a board of health of a village to the poor during an epidemic of smallpox/^ A limitation on the amount of indebtedness ap- 2 Brush, etc., Co. v. Montgomery, N. W. 693. Nor is it liable for de- 114 Ala. 433; 21 So. 960. fendant's attorney fees unless the 3 Buck y. Eureka, 124 Cal. 61; 56 statute is complied with. De Long Pac. 612. V. Muskegon County, 111 Mich. 568; 4Zottman v. San Francisco, 20 69 JST. W. 1115. Cal. 96; 81 Am. Dec. 96; Detroit v. » Galveston County v. Ducie, 91 Robinson, 38 Mich. 108; Wellston Tex. 665; 45 S. W. 798. V. Morgan, 65 O. S. 219; 62 N. E. lo Sears v. Gallatin County, 20 127. Mont. 462; 40 L. R. A. 405; 52 Pac. 5 Berka v. Woodward, 125 Cal. 204, citing Anderson v. Jefferson 119; 73 Am. St. Rep. 31; 45 L. R. County, 25 O. S. 13; Chapin v. A. 420; 57 Pac. 777; Spitzer v. Ferry, 3 Wash. 386; 15 L. R. A. Blanchard, 82 Mich. 234; 46 N. W. 116; 28 Pac. 754; Randies v. Wan- 400. kesha County. 96 Wis. 629; 71 X. 6Macy V. Duluth. 68 Minn. 452; W. 1034. 71 N. W. 687. iiTwinim v. Lucas County. 104 7 v;»<>^ V, Multonomah County, 31 la. 231; 73 N. W. 473. or. 134; 49 Pac. 730. 12 St. John's v. Clinton County, 8 State V. Young, 104 la. 730; 74 111 Mich. 609; 70 K W, 131. 1590 PAGE ON CONTEACTS. plies to implied contracts as well as to express ones.*^ It doe* not apply, however, to quasi-contract as distinguished from gen- uine implied contracts. Thus it does not apply to the return of money paid for illegal tax certificates which under the ordi- nance in force was never the property of the city/* §1013. Construction of statutory powers. Power given by statute, either expressly or impliedly, carries with it power to make contracts necessary and proper to carry such power into execution.^ Thus power to provide for supply- ing water and lighting includes power to make contracts for that purpose.^ Power to provide a water supply confers power to erect a plant to supply water.^ Power to abate nuisances includes power to contract for the removal of garbage to a place without the city limits.* Power to build a sewer includes power to make a contract therefor.^ Power to keep streets in order includes power to release a railroad company from its liability to keep up a bridge. The city may agree to maintain such bridge itself.'' So power to grant franchises " upon such terms and conditions as council may prescribe " includes power to take a bond to insure the prompt installment and completion of the plant. ^ So power to contract includes power to impose reasonable restrictions.^ Power to construct waterworks in- 13 Hedges v. Dixon County, 150 Sehneidt, 105 Wis. 470; 81 N. W. U. S. 182; Windsor v. Des Moines, 826. 110 ia. 175; 81 N. W. 476; Board, 2 Reed v. Anoka, 85 Minn. 294; 88 etc, ci, D County v. Gillett, 9 Okla. N. W. 981. 5&<^; ^0 Pac. 277. 3 Pawcett v. Mt. Airy, 134 N. C. '4 f'holpa V. Taconia, 15 Wash. 125; 45 S. E. 1029. $'6"; 4 + o • t • -u^ ». *■ c^ ' o^ M T xp^ 14 Baxter Springs v. Light & Schumm v. Seymour, 24 N. J. Eq. ^ „ -r- 143; Dickinson v. Poughkeepsie. Power Co., 64 Kan. 591 ; 68 Pae. 63. 75 N. Y. 65; Addis v. Pittsburg, 1 5 state v. Butler, — Mo. — ; 77 85 Pa. St. 379; McManus v. Phila- s. W. 560; McCloud v. Columbus, ^tlF^'^'r l^^ ^^- ^Kr^'^t'-u^ w 54 O. S. 439; 44 N. E. 95; Lancas- 320; Watterson v. Nashville, 106 r=Q /^ o k-o ..i t.^ Tenn. 410; 61 S. W. 782. *"' "■'■ Miller, 58 O. S. 5o8; 51 Is. 10 Watterson v. Nashville. 106 ^- ^-• Tenn. 410; 61 S. W. 782. PUBLIC CORPORATIONS. 1653 by mandamus, if a warrant is given him after performance/^ Statutes which require advertisement for bids are intended to protect the public from collusion between contractors and public officials, and to secure to the public the best terms possi- ble. The policy of such statutes would be violated as well by permitting recovery for a reasonable compensation as by allow- ing recovery on an express contract. Accordingly if bids are not advertised for no recovery can be had on quantum meruit.^^ ^0 liability attaches to a municipal corporation by reason of a contract entered into by it for the construction of a sewer, when the cost exceeds $500, and there is neither advertisement for bids nor certificate that there is sufficient money in the treasury to the credit of such fund.^^ So no liability exists for supplies bought by the secretary of state for the legislature and used by the state if bids are not advertised for.^^ So if the contract is not let to the lowest and best bidder,^" or if the contract- is in excess of the amount authorized by law,^^ or is made before an appropriation is made for the contract,^' where such acts respectively are mandatory, no recovery can be had either on the contract or on quantum meruit. If the statute requires an election as a condition precedent a contract made without such election is a nullity.^^ It cannot be ratified,"* 16 State V. Yeatman, 22 0. S. i9 Mulnix v. Ins. Co., 23 Colo. 71; 546. 33 L. E. A. 827; 46 Pac. 123. 17 City Improvement Co. v. Brod erick, 125 Cal. 139; 57 Pac. 776 Zottman v. San Francisco, 20 Cal 96; 81 Am. Dee. 96; Mulnix v. Ins Co., 23 Colo. 71; 33 L. R. A. 827; 46 Pac. 123 ; McBrian v. Grand Rap ids, 56 Midi. 95; sub nomine Mc Brien v. Grand Rapids, 22 N. W 206; McDonald v. New York, 68 N 20 People V. Gleason, 121 N. Y. 631; 25 N. E. 4. 21 Black V. Detroit, 119 Mich. 571; 78 N. W. 660. 22 Roberts v. Fargo, 10 N. D. 230; 86 N. W. 726. 23 Smith V. Dublin, 113 Ga. 833; 39 S. E. 327; Grady v. Pruitt, 111 Ky. 100; 63 S. W. 283; Harrods- Y. 23; 23 Am. Rep. 144; Buchanan burg v. Water Co. (Ky.), 64 S. W. Bridge Co. v. Campbell, 60 O. S. 658; Painter v. Norfolk, 62 Neb. 406; 54 N. E. 372 (nor was the 330; 87 N. W. 31; Duncan v. contracting company allowed in this Charleston, 60 S. C. 532; 39 S. E, case to recover the material fur- 265. nished). 24 state v. Pullman, 23 Wash. 18 Lancaster v. Miller, 58 0. S. 583; 83 Am. St. Rep. 836; 63 Pac. 558; 51 N. E. 52. 265. 1654 PAGE ON CONTKACTS. nor is there any liability on quantum meruit.-^ But a contract is valid if a proposition made by proper authority is accepted by the water company to which it is made and a favorable vote is then taken upon it."^ Amendments in a contract made by the council after acceptance do not avoid the contract, but are themselves invalid.^^ §1061. Estoppel. Since all are bound to know the powers of a public corpora- tion and the formalities necessary to valid contracts^ there can ordinarily be no question of estoppel to deny the validity of an ultra vires contract." I'ayment of interest on invalid obliga- tions does not estop the corjwration from alleging their invalid- ity,^ even if the payments are continued for twenty years.* So a town cannot consent to a compromise judgment by which it issues a smaller amount of bonds than it voted, the judgment 25 state V. Pullman, 23 Wash. 583; 83 Am. St. Rep. 836; 63 Pac. 265; Davis v. Wayne Co., 38 W. Va. 104; 18 S. E. 373 (as binding fu- ture levies). 26 Lexington v. Bank, 165 Mo. 671; 65 S. W. 943. 27 Lexington v. Bank, 165 Mo. 671 ; 65 S. W. 943. 1 See § 1009. 2 Lake County v. Graham, 130 U. S. 674 ; Stevens v. St. Mary's Train- ing School, 144 111. 336 ; 36 Am. St. Rep. 438; 18 L. R. A. 832; 32 N. E. 962; Seeger v. Mueller, 133 111. 86; 24 N. E. 513; Pettis v. Johnson, 56 Ind. 139; Cedar Rapids Water Co. V. Cedar Rapids, 117 la. 250; 90 N. W. 746; Day v. Green, 4 Cush. (Mass.) 433; Black v. Detroit, 119 Mich. 571; 78 N^. W. 660; State v. Ry. Co., 80 Minn. 108; 50 L. R. A. 656 ; 83 N. W. 32 ; State v. Murphy, 134 Mo. 548; 56 Am. St. Rep. 515; 34 L. R. A. 369; 31 S. W. 784; 34 S. W. 51; 35 S. W. 1132; Wash- ington County V. David (Neb) ; 89 N. W. 737; Syracuse Wa- ter Co. V. Syracuse, 116 N. Y. 167; 5 L. R. A. 546; 22 N. E. 381; Cleveland v. Bank, 16 O. S. 236; 88 Am. Dee. 445; Dube v. Peck, 22 R. I. 443. 467; 48 Atl. 477; McAleer v. Angell, 19 R. I. 688; 36 Atl. 588. 3 Marsh v. Fulton Co., 10 Wall. (U. S.) 676; Town of South Ottawa V. Perkins, 94 U. S. 260; Lewis v. Shreveport, 108 U. S. 282; Daviess Co. V. Dickinson, 117 U. S. 657; Doon Township v. Cummins, 142 U. S. 366; Board, etc., of Oxford v. Bank, 96 Fed. 293; 37 C. C. A. 493; • Debnam v. Chitty, 131 N. C. 657; 43 S. E. 3; Glenn v. Wray, 126 N. C. 730; 36 S. E. 167; Buncombe Co. V. Payne, 123 N. C. 432; 31 S. E. 711; Xoel, etc., Co. v. Mitchell Co., 21 Tex. Civ. App. 638; 54 S. W. 284. 4 Clark V. Northampton, 105 Fed. 312. PUBLIC CORPOEATIONS. 1655 not involving the power of the town to issue such bonds.^ So as a warrant is non-negotiable, recitals of validity of its purpose are not conclusive even in the hands of a bona fide holder." So performance for several years of an ultra vires contract with a railroad company, whereby the city agrees to erect and main- tain a bridge over the railroad track, which it was the duty of the railroad to erect and maintain, does not estop the city to avoid such contract/ While acquiescence in issuing ultra vires bonds does not work an estoppel, it may lead the court to a more liberal construction of the statute in favor of the bondholders than would otherwise be made.® Payment of in- terest for a long period is a fact to be considered, if in the meantime the bonds have been transferred to boiw fide holders, in determining whether the bond was originally valid. Thus where bonds are issued irregularly, but within the powers of the corporation, jDayment of interest for nine years is a circum- stance tending to show the original validity of such bond.^ If, however, the contract is one which on its face is within the powers of the corporation, a question of estoppel may arise if by reason of facts not known to the adversary party such contract is in fact entered into for an ultra vires purpose.^** If bonds show on their face that they are issued for a lawful purpose, they are not invalidated by the fact that they were in fact issued for other purposes/^ or that their proceeds were misapplied. ^^ So if a building is contracted for for a lawful purpose, the fact that it is used for other purposes does not defeat the right of the contractor to recover.^^ 5 Board, etc., of Oxford v. Bank. » Wetzell v. Paducah, 117 Fed. 96 Fed. 293; 37 C. C. A. 493 (citing 647. Norton v. Shelby Co.. 118 U. S. 425; loFt. Scott v. Brokerage Co.. 117 Kelley v. Milan. 127 U. S. 1.39; Fed. 51 ; 54 C. C. A. 437. Doon Township v. Cummins. 142 U. n Board of Education v. McLean, S. 366). 106 Fed. 817; 45 C. C. A. 658; 6 Watson V. Huron. 97 Fed. 449 ; Thompson v. Mecosta. 127 Mich. 38 C. C. A. 264. 522; 86 N. W. 1044. 7 St. Paul V. Ry., 80 Minn. 108 ; 12 Jones v. City of Camden, 44 S. 50 L. R. A. 656; 83 N. W. 32. C. 319; 51 Am. St. Rep. 819; 23 S. 8 Washington County v. Williams, E. 141. Ill Fed. 801; 49 C. C. A. 621. is Hubbell v. Custer City, 15 S. D. 55 ; 87 X. W. 520. 1656 PAGE ON CONTEACTS. §1062. Estoppel by recitals. The common form of estoppel in contracts of public corpora- tions is found in cases of negotiable instruments in the hands of bona fide holders, where such instruments contain recitals of fact which, if true, make the instrument valid, and which are made by officers authorized to pass upon such facts. The public corporation in such case is estopped to deny the truth of such recitals as against a hona fide holder.^ Thus where the recital was that the instrument was issued pursuant to an elec- tion, the instrument is valid, though the vote was on a proposi- tion making the bonds redeemable after ten years, which pro- vision was not inserted in the bond." Where the recital is as to the amount of pre-existing indebtedness,^ or that the consti- tutional limit has not been exceeded where no record is to be inspected, by statute or constitution, at the peril of the pur- chaser,* or where it shows the finding of a board authorized by law to take final action on the question whether the limit is exceeded,^ or where the recitals show that the bonds are issued 1 Mercer Co. v. Hackett, 1 Wall. 83; Town of Coloma v. Eaves, 92 U. S. 484; Commissioners, etc., of Douglas Co. v. BoUes. 94 U. S. 104; Commissioners v. January, 94 U. S. 202 ; San Antonio v. Mehaffy, 96 U. S. 312; Warren Co. v. Marcy, 97 U. S. 96 ; Hackett v. Ottawa, 99 U. S. 86; Wilson v. Salamanca Tp., 99 U. S. 499; Sherman Co. v. Simons, 109 U. S. 735; Andes v. Ely, 158 U. S. 312; Commissioners, etc., of Gun- nison Co. V. Rollins, 173 U. S. 255; Waite V. Santa Cruz, 184 U. S. 302; Fairfield v. School District, 116 Fed. 838; reversing, 111 Fed. 453; Clapp V. Marice City, 111 Fed. 103; 49 C. T5. A. 251 ; Independent School District v. Rew. Ill Fed. 1; 55 L. R. A. 364; 49 C. C. A. 198; Hardy Township v. Bank, 106 Fed. 986; 46 C. C. A. 66 (affirming without opinion, Brattleboro Savings Bank v; Hardy Tp., 98 Fed. 524). Clapp V. Otoe Co., 104 Fed. 473; 45 C. C. A. 579; Hughes Co. v. Living- ston, 104 Fed. 306; 43 C. C. A. 541; Board, etc., of Barber Co. v. So- ciety, 101 Fed. 767; 41 C. C. A. 667; Brown v. Ingalls Township, 81 Fed. 485; South Hutchinson v. Barnum, 63 Kan. 872; 66 Pac. 1035. 2 Board, etc., of Cowley Co. v. Heed, 101 Fed. 768; 41 C. C. A. 668; affirming, Heed v. Cowley Co., 82 Fed. 716, which disapproved, Lewis V. Bourbon Co., 12 Kan. 186. 3 Dallas Co. v. McKenzie, 110 U. S. 686; Buchanan v. Litchfield, 102 U. S. 278; Chaffee Co. v. Potter. 142 U. S. 355; Board, etc., of Gunnison Co. V. Rollins, 173 U. S. 255; E. H. Rollins & Sons v. Gunnison Co., 80 Fed. 692. •* Board, etc., of Lake Co. v. Sut- liff, 97 Fed. 270; 38 C. C. A. 167. 5 Chilton v. Gratton, 82 Fed. 873. PUBLIC COKPOKATIONS. 165Y i(j refund debts," or are issued in satisfaction of judgments/ or where the recitals are as to the completion of a railroad by a certain date, which completion is a condition precedent to the validity of the bonds,^ or where the recitals are of specific facts showing compliance with formalities," or recite in general terms that the provisions of the statute,^*' or all requirements of the constitution and statutes^^ have been complied with, the corporation is estopped to deny the truthfulness of such re- citals. So a recital in a bond that the seal of the city is at- tached estops the city to deny that the clerk's seal attached to the bond is the seal of the city/" However, if the question of fact is one of which purchasers are bound to take notice at their peril,^^ as where they must take notice of amount of indebtedness,^* or of the facts apparent on the assessment roll, which with the recitals in the bonds in question show that the limit is exceeded,^^ or if the resolution under which the bonds were issued shows on its face that they exceed the constitutional 6 Pierre v. Duscomb, 106 Fed. 611; 45 C. C. A. 499; Kiowa Co. v. Howard, 83 Fed. 296; 27 C. C. A. 531; Wesson v. Mt. Vernon, 98 Fed. 804; 39 C. C. A. 301; Waite v. Santa Cruz, 89 Fed. 619; Huron v. Bank, 86 Fed. 272; 49 L. R. A. 534; 30 C. C. A. 78; State v. Wichita County, 62 Kan. 494; 64 Pac. 45. 7 Geer v. Ouray, 97 Fed. 435 ; 38 C. C. A. 250. 8 Oregon v. Jennings, 119 U. S. 74. sEvansville v. Dennett, 161 U. S. 434; Town of Coloma v. Eaves, 92 U. S. 484; Wesson v. Saline Co., 73 Fed. 917; 20 C. C. A. 227; Ashman V. Pulaski Co., 73 Fed. 927; 20 C. C. A. 232; South St. Paul v. Lam- precht Bros., 88 Fed. 449. 10 Evansville v. Dennett, 161 U. S. 434; Village of Kent v. Dana, 100 Fed. 56; 40 C. C. A. 281; Pick- ens Township v. Post, 99 Fed. 659; 41 C. C. A. 1 ; Meade Co. v. Ins. Co.. 90 Fed. 237; 32 C. C. A. 600; Haskell Co. v. Ins. Co., 90 Fed. 228 ; 32 C. C. A. 591. Examples of re- citals. " In pursuance of " the statute. Grattan Township v. Chil- ton, 97 Fed. 145; 38 C. C. A. 84; affirming, 82 Fed. 873 ; " full com- pliance with all requirements of " the statute. Miller v. Irrigation District, 99 Fed. 143. 11 St. Paul Gaslight Co. v. Sand- stone. 73 Minn. 225; 75 N. W. 1050. 12 Schmidt v. Defiance, 117 Fed. 702. 13 Gunnison Co. v. Rollins, 173 U. S. 255. Instate V. Helena, 24 Mont. 521; 63 Pac. 99. 15 Geer v. School District, 97 Fed. 732; 38 C. C. A. 392; Shaw v. Inde- pendent School District, 77 Fed. 277; 23 C. C. A. 169; National Life Ins. Co. V. Mead, 13 S. D. 37; 48 L, R. A. 785 ; 82 N. W. 78 ; affirmed on rehearing, 13 S. D. 342; 83 N. W. 335; Citizens' Bank v. Terrell, 78 Tex. 450; 14 S. W. 1003. 1658 PAGE ON CONTRACTS. limit of indebtedness/® or if the bond shows on its face that the election was held so soon after the organization of the county that by law the township could not issue the bonds/^ or if the fact recited is one which under the law the officers are not authorized to decide/^ no estoppel arises. So a recital of full compliance does not estop the corporation from showing that no ordinance had been passed authorizing the issue of bonds, as required by statute.^® No recitals can prevent even a hona fide holder from being charged with notice of the statute and the construction thereof,'" or the validity of the ordinanee^^ by virtue of which the bonds are issued. Thus if the recital is of an election on a given day and the statute under which the bonds are issued shows that no legal election could then have been held, the bonds are invalid.'" An erroneous recital of the statute authorizing the issue,^^ or a recital of both a valid and an invalid act authorizing such issue, ^* do not invalidate bonds. Purchasers are chargeable with notice of the original order of the commissioners' court as to the purpose for which the bonds are to be used, but not of a subsequent order f^ and with notice apparent on the face 16 Fairfield V. School District, 111 Kirsch v. Braun, 153 Ind. 247; 53 Fed. 453 (even if they recite that N. E. 1082; Uncas National Bank v, they are within the limit of indebt- Superior, 115 Wis. 340; 91 X. W. edness and issued " in strict com- 1004. pliance with the laws of the State." 21 Klamath Falls v. Sachs, 35 Or. 17 Sage V. Fargo Township, 107 325; 76 Am. St. Rep. 501; 57 Pac. Fed. 383; 46 C. C. A. 361. 329 (citing Barnett v. Denison. 145 18 Crow V. Oxford. 119 U. S. 215; U. S. 135: Hackett v. Ottawa, 99 U. Geer v. School District, 97 Fed. S. 86; Risley v. Howell, 57 Fed. 732; 38 C. C. A. 392. 544) ; Peck v. Hempstead, 27 Tex. 19 Swan V. Arkansas City. 61 Civ. App. 80; 65 S. W. 653. Fed. 478. 22 Sage v. Fargo Township. 107 20 Hill V. Memphis. 134 U. S. 198; Fed. 383; 46 C. C. A. 361; Manhat- Kelley v. Milan, 127 U. S. 139; tan Co. v. Ironwood, 74 Fed. 535; Wells V. Supervisors of Pontotoc 20 C. C. A. 642. Co., 102 U. S. 625; Township of 23 D'Esterre v. New York. 104 East Oakland v. Skinner, 94 U. S. Fed. 605; 44 C. C. A. 75. 255; McClure v. Township of Ox- 24 Evansville v. Dennett, 161 U. ford, 94 U. S. 429; Supervisors of S. 434. Marshal Co. v. Cook, 38 111. 44; 2.5 Mitchell Co. v. Bank, 91 Tex. 87 Am. Dec. 282; Bissell v. Kanka- 361; 43 S. W. 880; reversing. 15 kee, 64 111. 249; 16 Am. Rep. 554; Tex. Civ. App. 172; 39 S. W. 628. PUBLIC CORPORATIONS. 1659 of the county records as to a bond election, as where the votes are canvassed by a board having no authority so to do/® and as to the fact that the persons signing the bonds had ceased to be public officers and had antedated the bonds.^^ A bond is valid if signed by a de facto officer,^* but invalid if signed by one who is not an officer at all.^^ Where there is no recital of compliance with the statute, the registration and certification of bonds in compliance with statute does not effect an estoppel.^*^ Recitals do not work an estoppel as against one who acquires bonds from the municipality with knowledge of the facts mak- ing such bonds invalid. Thus if the bond issue exceeds the constitutional limits of indebtedness, and one purchaser buys them all, he is charged with notice of their invalidity.^^ So if there are no recitals in an original issue of bonds, recitals in refunding bonds given to take up the original issue cannot work an estoppel in favor of holders of the original bonds who receive the new issue.^" Estoppel by recitals operates only in favor of the holder of the bonds. The holder of bonds may contradict recitals therein for the purpose of establishing the validity of the bonds.^^ §1063. Ratification. If a contract is invalid because it is outside of the power of the public corporation, or not in compliance with a manda- tory requirement of the law as to its form, ratification is impos- sible.^ Thus the allowance by county commissioners of an 26 Brown v. Ingalls Township, 81 U. S. 526; Bolles v. Perry Co., 92 Fed. 485. Fed. 479; 34 C. C. A. 478. 27 Lehman v. San Diego, 73 Fed. 3i Burlington Savings Bank v. 105. Clinton, 111 Fed. 439. 28 Balls Co. V. Douglass, 105 U. S. 32 Salmon v. Allison, 125 Fed. 728; National Life Ins. Co. v. 235. Huron, 62 Fed. 778; 10 C. C. A. 33 Chicago, etc.. By. v. Dundy 637. County (Neb.), 91 N. W. 554. 29Coler V. Cleburne, 131 U. S. i Sage v. Fargo Township. 107 162. Fed. 383; 46 C. C. A. 361: Smeltzer 30 Citizens, etc.. Association v. v. Miller, 125 Cal. 41; 57 Pac. 668 Perry Co., 156 U. S. 692; German Berka v. Woodward. 125 Cal. 119 Savings Bank v. Franklin Co., 128 73 Am. St. Rep. 31; 57 Pac. 777 1660 PAGE ON CONTRACTS. invalid claim does not make it valid," and if money is paid under sucii allowance it may be recovered.'' If the invalid con- tract was one which the corporation could make, and is not void because not in comiDliance with a mandatory provision of the law, it may be ratified.* Thus a breach of condition avoid- ing the original liability may be waived by refunding such liability,^ and a contract invalid because no appropriation was made therefor may be ratified by an appropriation." Thus a subsequent resolution may make valid a contract void for want of such resolution.'^ A contract made by the members of a board of education acting individually may be ratified by their conduct as a board in accepting and using goods deliv- ered thereunder.® Ratification, where possible, must be un- equivocal. Where the individual members of a city council encouraged an attorney to bring an action, and the council as a body ordered the city's attorney to aid in such suit and Paxton V. Bogardus, 201 111. G28; 66 N. E. 853 ; Indianapolis v. Wann, 144 Ind. 175; 31 L. R. A. 743; 42 K K 901; Gemmill v. Arthur, 125 Ind. 258; 25 N. E. 283; Grady v. Pruit, 111 Ky. 100; 63 S. W. 283; Wadsworth v. Concord, 133 N. C. 587; 45 S. E. 948; McAleer v. An- gell, 19 R. I. 688; 36 Atl. 588; State V. Pullman, 23 Wash. 583; 83 Am. St. Rep. 836; 63 Pac. 265; Balch v. Beach, 119 Wis. 77; 95 N. W. 132. (Distinguishing, McGillivray v. School District, 112 Wis. 354; 88 Am. St. Rep. 969; 58 L. R. A. 100; 88 N. W. 310, as a case where the act ratified was within the power of the corporation, though without the power of the agent originally mak- ing it.) Uncas National Bank v. Superior, 115 Wis. 340; 91 N. W. 1004. " When a corporation or an agent thereof does an act or makes a promise that is forbidden by its charter or is not authorized there- by, either expressly or by fair im- plication, the act or promise is a nullity and cannot be binding by a subsequent ratification." City of IMemphis v. Gas. Co., 9 Heisk. (Tenn.) 531, 543, quoted in Wat- terson v. Nashville, 106 Tenn. 410, 424; 61 S. W. 782. 2 Commissioners v. Heaston, 144 Ind. 583; 55 Am. St. Rep. 192; 41 N. E. 457; 43 N. E. 651; Jones v. Lucas Co., 57 O. S. 189; 63 Am. St. Rep. 710; 48 N. E. 882. 3 Gross V. Whitley County, 158 Ind. 531; 58 L. R. A. 394; 64 N. E. 25. 4 Supervisors v. Schenck, 5 Wall. (U. S.) 772; State v. Milling Co., 156 Mo. 620; 57 S. W. 1008; Bell V. Waynsboro, 195 Pa. St. 299; 45 Atl. 930. 5 Graves v. Saline Co., 161 U. S. 359. 6 Hill V. Indianapolis, 92 Fed. 467. 7 Cooper V. Cedar Rapids, 112 la. 367; 83 N. W. 1050. 8 Johnson v. School Corporation, 117 la. 319; 90 N. W. 713. PUBLIC CORPORATIONS. 1661 appropriated money for getting testimony therein, such official acts are not a ratification, the city not being a party to the action.® Ratification must he by acts as formal as were neces- sary to make the original contract valid. If a contract must be made by ordinance, it must be ratified by ordinance.^" Rati- fication, if valid, makes the entire contract valid. Thus it validates a bond given by the contractor to the city to protect laborers and material men.^^ §1064. Curative legislation. The legislature may ratify and validate any obligation of a public corporation which it had power to authorize in advance.^ Thus debts in excess of the statutory limit may be made valid by subsequent legislation.^ Thus the legislature may authorize a vote to be taken to validate debts incurred in excess of the limit of indebtedness under a constitutional provision making void debts in excess of the limit unless pursuant to a vote.'' So a statute may require a county to repay the amount received from the sale of bonds, invalid because their proceeds were to be devoted to a state armory, though most of the proceeds have been expended on such armory.* So the legislature may validate a debt incurred when the legislature had power to authorize 9 Root V. Topeka, 63 Kan. 129; 216; Coleman v. Broad River Town- 65 Pac. 233. ship, 50 S. C. 321; 27 S. E. 774; loMcCracken v. San Francisco, Bell v. R. R. Co., 91 Va. 99; 20 S. 16 Cal. 591; Durango v. Penning- E. 942; State v. Winter, 15 Wash, ton, 8 Colo. 257; 7 Pac. 14. 407; 46 Pac. 644. Contra, Choisser 11 Devers v. Howard, 88 Mo. App. v. People, 140 111. 21; 29 N. E. 546; 253. Post V. Pulaski Co., 49 Fed. 628; 1 Steele Co. v. Erskine, 98 Fed. 9 U. S.'App. 1; affirming, 47 Fed. 215; 39 C. C. A. 173; (affirming, 87 282. Fed. 630); Yavapai Co. v. McCord, 2 Erskine v. Nelson Co., 4 K D. — Ariz. — ; 59 Pac. 99; Schneck v. 66; 27 L. R. A. 696; 58 N. W. 348; Jeffersonville, 152 Ind. 204; 52 N. Darke v. Salt Lake Co., 15 Utah E. 212; Board, etc., of Linn Co. v. 467; 49 Pac. 257. Snyder, 45 Kan. 636; 23 Am. St. 3 West v, Chehalis, 12 Wash. 369; Rep. 742; 26 Pac. 21; Erskine v. 50 Am, St. Rep. 896; 41 Pac. 171. Nelson Co., 4 N. D. 66; 27 L. R. A. 4 New York, etc., Co. v. Board, 696; 58 N. W. 348; Mill Creek, etc., etc., 106 Fed. 123; 45 C. C. A. 233. Ry. Co. v. Carthage, 18 Ohio C. C. 1662 PAGE ON CONTRACTS. it, though the statute is not passed till after a new constitutional provision is adopted, limiting debts so as to make the amount unlawful.^ So Congress may validate a bond of a territory.® Such a curative act makes bonds valid, even if after the passage of such act a judgment is rendered in a suit instituted before such act was passed adjudging such bonds invalid.'' Such curative acts must be complied with strictly. A statute making valid bonds issued in compliance with a certain ordinance does not make valid any bonds not so issued.* 5 Schneck v. Jeffersonville. 152 8 Lehman v. San Diego, 83 Fed. Ind. 204; 52 N. E. 212; (distin- 669; 27 C. C. A. 668; (where the gnishing Sykes v. Columbus, 55 denomination of the bonds was not Miss. 115. fixed in accordance with the ordi- 6 Utter V. Franklin. 172 U. S. 416. nance). 7 Middleton v. St. Augustine, 42 Fla. 287; 29 So. 421. PRIVATE COKPORATIONS. 1663 CHAPTER XLIX. PRIVATE CORPORATIONS. §1065. Nature and definition of private corporation, A private corporation is in fact a number of natural persons acting together for certain purposes under a definite organiza- tion and endowed by law with certain attributes different from those of a partnership, a voluntary association, or any other union of natural persons. The most characteristic of its at- tributes are the so-called perpetual succession, which means that the death or withdrawal of one or all of the natural persons does not necessarily dissolve the corporate organization, and the right to contract, sue and the like as a person.^ By the fiction of the law a corporation is an artificial person, distinct from the natural persons that in reality compose it, and possessed of certain limited powers.^ Thus a change in stock- holders of a corporation has no effect upon pre-existing liability of a corporation.^ So directors who have taken proj>erty as security for a corporation may convey it to the corporation by iHome Fire Ins. Co. v. Barber, Lowell, etc., R. R. Co., 136 U. S. — Neb. — ; 60 L. R. A. 927; 93 356; Baltimore, etc., R. R. Co. v. N. W. 1024. Church, 108 U. S. 317; Bank v. 2BIackstone calls corporations Earle, 13 Pet. (U. S.) 519; Smith "artificial persons, who may main- v. Hurd, 12 Mete. (Mass.) 371; 46 tain a perpetual succession, and en- Am. Dee. 690; Landers v. Church, joy a kind of legal immortality." 114 N. Y. 626; 21 N. E. 420; Rudd Black. Com. I, 467. Marshall, C. v. Robinson, 126 N. Y. 113; 22 Am. J., said that a corporation is "an St. Rep. 816; 12 L. R. A. 473; 26 artificial being, invisible, intangi- N. E. 1046; Weyeth, etc., Co. v. ble and immortal, and existing only James, etc., Co., 15 Utah 110; 47 in contemplation of the law." Dart- Pac. 604; State v. Ry. Co., 45 Wis. mouth College v. Woodward, 4 579. Wheat. (U. S.) 518, 636. Substan- 3 Andres v. Morgan, 62 0. S. 236; tially similar definitions are com- 78 Am. St. Rep. 712; 56 N. E. 87&. mon. Nashua, etc., R. R. Co. v. 1G64 PAGE ON CONTKACTS. public sale, free from the equity of redemption of the credilx)?."* So where the same persons own all the stock of two corpora- tions the contract of one is not the contract of the other.^ The existence of the corporation apart from its stockholders is a legal fiction.^ Thus where A transferred his business to a cor- poration in which he owned practically all the stock it was held to be substantially a transfer to himself/ and a corporation organized without capital or assets to cover a real partnership was treated as not existing.® This contradiction between fact and theory is the cause of the undoubted confusion that now exists in the law of corporations. The courts vacillate between a desire to effect justice by treating contracts and other trans- actions of a corporation as they would those of a partnership or other association of individuals as far as rights of creditors 4Copsey V. Bank, 133 Cal. 659; 85 Am. St. Rep. 238; 66 Pac. 7. As to contracts between a corpora- tion and its officers, see § 181. 5 Way Cross, etc., E. R. Co. v. R. R. Co., 109 Ga. 827; 35 S. E. 275. 6 " The general proposition that a corporation is to be regarded as a legal entity, existing separate and apart from the natural persons com- posing it, is not disputed; but that the statement is a mere fiction, ex- isting only in idea, is well under- stood." " Now so long as a proper use is made of the fiction, that a corporation is an entity apart from its shareholders, it is harmless, and, because convenient, should not be called in question ; but where it is urged to an end subversive of its policy, or such is the issue, the fic- tion must be ignored." State v. Standard Oil Co., 49 O. S. 137, 177; 34 Am. St. Rep. 541; 15 L. R. A. 145; 30 N. E. 279. "Modern de- cisions are tending to a disregard of the mental conception that a corporation is an entity separate from its corporators, as in many in- stances it is simply a * stumbling block ' in the way of doing justice between real persons." Andres v. Morgan, 62 O. S. 236, 245; 78 Am. St. Rep. 712; 56 N. E. 875. And see People v. Refining Co., 121 N. Y. 582; 18 Am. St. Rep. 843; 9 L. R. A. 33; 24 N. E. 834. 7 " His identity as owner of the property was no more changed by his conveyance to the company than it would have been by taking off one coat and putting on another. He was as much the substantial owner of the property after the conveyance as before." Bank v. Tre- bein, 59 O. S. 316, 325; 52 N. E, 834; (citing Hibernia Ins. Co. v. Transportation Co.. 13 Fed. 516; Kellogg V. Bank, 58 Kan. 43; 62 Am. St. Rep. 596; 48 Pac. 587; Terhune v. Bank. 45 N. J. Eq. 344; 19 Atl. 377; Bennett v. Minott, 28 Or. 339; 39 Pac. 997; 44 Pac. 288; Montgomery, etc., Co. v. Drenelt, 133 Pa. St. 585; 19 Am. St. Rep. 663; 19 Atl. 428). 8 Christian, etc., Co. v. Lun^ber Co., 121 Ala. 340; 25 So. 566. PRIVATE COEPOrvATIONS. 1665 are concerned, and a desire, in conformity to precedent, to treat them as those of an artificial person of limited powers, distinct from its stockholders. This confusion as to the legal effect of contracts of corporations is increased by additional causes. First, rules which properly apply to public corporations which exercise governmental powers affecting the whole public have been extended to private corporations. Second, rules which properly determine the extent of corporate power as between the state and the corporation in a direct proceeding to oust the corporation from unlawful exercise of franchises, have been extended to determine the validity of contracts entered into voluntarily between the corporation and private individuals. Third, rules which properly determine the rights of stockhold- ers who actively dissent from the management of the corpora- tion to invoke the action of courts of equity to restrain the directors from exceeding their authority, have been extended so as to determine the validity of contracts entered into by a corporation without objection from its stockholders, and often with their active assent ; and these rules have been so applied as to render invalid contracts which the stockholders might not have been able to prevent the directors from making §1066. The charter of the corporation. The charter of the corporation measures the powers which it may exercise lawfully.^ This charter is given by the state and accepted by the corporation. Under the old system of incorporation a corporation was created by a special act of thp. legislature, which was known as its charter, and which created, determined and limited its corporate powers. Many state constitutions now provide that corporations must be incorpo- rated under general laws. Under such provisions a corpora* tion is usually created by filing articles of incorporation in accordance with the provisions of the general incorporation laws ; and when its charter is spoken of this is a convenient and stereotyped form of expression used to denote its articles^ 1 Sturdevant Bros., etc., Co. v. affirming on rehearing, 62 Neb. 472; Bank, — Neb. — ; 95 N. W. 819; 87 N. W. 156. 105 1666 PAGE ON CONTRACTS. of iucorporation, together with the general laws applicable to a corporation, which determine its corporate powers." A cor- poration cannot by its articles of association assume a greater power than that given in the general statute/ though such addi- tion does not invalidate the powers authorized by statute.* Since the charter of a corporation is given by the state, the members of a corporation cannot alter or increase the powers of the corporation as the members of a partnership can alter or increase the powers of the partnership. This distinction re- sults in many of the practical differences between the con- tracts of partnerships and those of corporations. The moment at which a corporation de jure comes into exist- ence depends on local statute. In Wisconsin it exists as soon as its articles of association are recorded f in Ohio it does not exist until it organizes by electing a board of directors, after the stock is subscribed.® §1067. Scope and construction of corporate charters. The original rule for determining the powers of a corpora- tion was that the charter must be construed strictly against the corporation,^ and this is still repeated by some courts." It is 2 Danville v. Water Co., 178 111. (U. S.) 172; Bartram v. Turnpike 299; 69 Am. St. Rep. 304; 53 N. Co., 25 Cal. 283; St. Louis, etc., Co. E. 118; McLeod v. Medical College, v. Haller, 82 111. 208; Lincoln, etc., — Neb. — ; 96 N. W. 265. Co. v. Lincoln, 61 Neb. 109; 84 3 Oregon, etc., Co. v. Ry. Co., 130 N. W. 802; Mayor of Jersey City U. S. 1; People v. Gas Trust Co., v. Morris Canal, etc., Co., 12 N. J. 130 111. 268; 17 Am. St. Rep. 319; Eq. 547; Morris Canal, etc., Co. v. 8 L. R. A. 497; 22 N. E. 798; R. R., 16 N. J. Eq. 419; Bank v. Indiana Bond Co. v. Ogle, 22 Ind. Swayne, 8 Ohio 257; 32 Am. Dec. App. 593; 72 Am. St. Rep. 326; 54 707; Bonham v. Taylor, 10 Ohio N. E. 407. 108; Straus v. Insurance Co., 5 O. 4 Shoun V. Armstrong (Tenn. Ch. S. 59; State v. Cincinnati, etc., Co., App.), 59 S. W. 790. 18 0. S. 262; Dugan v. Bridge Co., 5 Badger Paper Co. v. Rose, 95 27 Pa. St. 303; 67 Am. Dec. 464; Wis. 145; 37 L. R. A. 162; 70 N. Commonwealth v. R. .R. Co., 27 Pa. W. .302. St. 339; 67 Am. Dec. 471; Talmadge estate v. Ins. Co., 49 0. S. 440; v. Transportation, 3 Head. (Tenn.) 34 Am. St. Rep. 573; 16 L. R. A. 337. 611; 31 N. E. 6.58. ~ 2 Oregon, etc., Co. v. Oregonian iPexrine v. Canal Co., 9 How. Ry., 130 U. S. 1; Louisville, etc., Ry. PRIVATE CORPORATIONS. 1667 still in force when the grant construed is a gift of franchises or exclusive privileges/ or of exemption from taxation,* or other gift in derogation of sovereign authority ; but it has little appli- cation to the construction of corporate powers when the rights and liabilities of those dealing with the corporation are con- cerned. After the Supreme Court of the United States held, in the Dartmouth College case,^ that the charter of a corpora- tion might be a contract between the state and the corporation, and accordingly, under the clause of the Federal Constitution prohibiting a state from impairing the obligation of contracts, it would be beyond the power of the state to revoke corporate powers once granted, the state courts were more than ever dis- posed to adhere to the old rule. But when by express reserva- tion in state constitutions corporate powers remain under state control the tendency is toward a more reasonable construction of grants of corporate authority.^ In determining the scope of corporate power in making contracts two rules have been ad- vanced, which in their abstract form are not perfectly consistent. The first is that corporate power includes only such as is ex- pressly granted by the corporate charter, together with those powers which are necessary to carry the express powers into execution.'^ The second rule is that corporate power includes express powers and such incidental powers as are proper and Co. V. Kentucky, 161 U. S. 677; 6 National Bank v. Insurance Co., Pearsall v. Ry., 161 U. S. 646; re- 41 O. S. 1. versing 73 Fed. 933; American, etc., 7 Minturn v. Larue, 23 How. (U. Co. V. R. R., 157 111. 641; 42 N. E. S.) 435; Charles River Bridge v. 153; Illinois Health University v. Warren Bridge, 11 Pet. 420;. Van- People, 166 111. 171; 46 N. E. 737. dall v. Dock Co., 40 Cal. 83; People 3 Covington, etc., Co. v. Sandford, ex rel. Moloney v. Pullman's, etc., 164 U. S. 578; Stein v. Water Sup- Co., 175 111. 125; 51 X, e. 664; ply Co., 141 U. S. 67; Indianapolis. Chicago, etc., Co. v. Coke Co.. 121 etc., R. R. Co. V. R. R. Co., 127 Ind. Til. 5.30; 2 Am. St. Rep. 124; 13 369; 8 L. R. A. 539; 24 N. E. 10.54; X. E. 169; People ex rel Peabody 26 N. E. 893; State v. Hamiltons. v. Trust Co., 130 111. 268; 17 Am. 47 O. S. 52; 23 N. E. 935; State v. St. Rep. 319; 8 L. R. A. 497; 22 N. Cincinnati, etc., Co., 18 O. S. 262. E. 798; National, etc.. Association 4 Chesapeake, etc., Ry. Co. V. Mil- v. Bank. 181 111. 35; 72 Am. St. ler, 114 U. S. 176. ^ Rep. 245; 54 N. E. 619; Franklin 5 Dartmouth College v. Wood- National Bank v. \Vliitehead, 149 ward, 4 Wheat. (U.S.) 518. Ind. 560; 63 Am. St. Rep. 302; 16CS PAGE ON CONTRACTS. convenient for executing the express powers given by the char- ter;* or as otherwise expressed it has within the limits of its general grant of power all the powers that an individual would have in executing such general power.® In practical applica- tion there is little difference between these two rules, as the term " necessary " in the first rule is usually treated as equiva- lent to " suitable " or " appropriate." " An incidental power is one that is directly and immediately appropriate to the exe- cution of the specific power granted, and not one that has a slight or remote relation to it."^° §1068. Implied powers. If power is either expressly given or expressly denied to a corporation by its charter, the only question open for discus- sion is the meaning of the express terms of the charter. But where a corporation attempts to exercise power neither ex- pressly given nor withheld by its charter the question presented 39 L. R. A. 725; 49 N. E. 592; Bankers' Union v. Crawford, 67 Kan. 449; 73 Pac. 79; Fulton v. Land, etc., Co., 47 Kan. 621; 28 Pae. 720; State v. Xewman, 51 La. Ann. 833 ; 72 Am. St. Rep. 476 ; 25 So. 408; Lindenborough Glass Co. V. Glass Co., Ill Mass. 315; State ex rel. Crow v. Trust Co., 144 Mo. 562; 46 S. W. 593; Equitable Trust Co. V. Garis, 190 Pa. St. 544; 70 Am. St. Rep. 644; 42 Atl. 1022; Union Bank v. Jacobs, 6 Humph. (Tenn.) 515; Xorthside Ry. Co. v. Worthington, 88 Tex. 562; 53 Am. St. Rep. 778; 30 S. W. 1055. "It is a creature of the law, having no powers but those which the law has conferred upon it. A corporation has no natural rights or capacities such as an individual or an ordinary partnership, and if such a power is claimed for it, the words giving the power, or from which it is neces- sarily implied must be found in the charter or it does not exist." Na- tional, etc.. Association v. Bank, 181 111. 35, 40; 72 Am. St. Rep. 245; 54 N. E. 619. 8 White Water, etc., Co. v. Val- lette, 21 How. 414; McKiernan v. Lenzen, 56 Cal. 61 ; Gould v. Fuller, 79 Minn. 414; 82 N. W. 673; Cen- tral, etc., Co. v. Dairy Co., 60 O. S. 96; 53 N. E. 711 ; Malone v. Lancas- ter, etc., Co., 182 Pa. St. 309; 37 Atl. 932. 9 Wright V. Hughes. 119 Ind. 324; 12 Am. St. Rep. 412; 21 X. E. 907: Thompson v. Lambert, 44 la. 239: Stockton V. Tobacco Co., 55 N. J- Eq. 352; 36 Atl. 971; Ohio, etc., Co. V. Merchants', etc., Co., 11 Humph. (Tenn.) 1; 53 Am. Dec. 742. 10 Hood V. Xew York, etc.. R. R. Co., 22 Conn. 1, 16; quoted in Nic- collet National Bank v. Frisk-Tur- ner Co., 71 Minn. 413, 418; 70 Am. St. Rep. 3^4; 74 N. W, 160, PRIVATE CORPOE^VTIOXS. 1669 is whether the power is implied from those expressly given. An exhaustive discussion of this question would occupy more space than can be given to it here, and properly belongs to corporation law. The following propositions are given rather as suggestive examples than as an exhaustive enumeration of implied powers . §1069. Borrowing money. A corporation has an implied power to borrow money for corporate purposes/ and to give its notes for its debts/ to pledge its bonds for its indebtedness/ and to secure its debts by mort- gage.* Thus a corporation formed to buy land may mortgage land thus bought for the purchase money/ and after acquired property may be mortgaged.^ Under a statute requiring the consent of the stockholders at a regularly called meeting as a condition precedent to the validity of a mortgage, a mortgage given under other circumstances is said to be ultra vires.'' However, such a statute restricting the power of mortgage, requiring a majority of the stockholders to acquiesce, applies to the corpus of the property, not to the output.^ iKneeland v. Ry. Co., 167 Mass. 161; 45 N. E. 86. 2 Tod V. Land Co., 57 Fed. 47; Temple, etc., Co. v. Hellman, 103 Cal. 634; 37 Pac. 530; Kneeland v, Ry. Co., 167 Mass. 161; 45 N. E 86; Merchants', etc., Bank v. Gas light Co., 159 Mass. 505; 38 Am St. Rep. 453 ; 34 N. E. 1083 ; Renin snlar, etc.. Bank v. Hosie, 112 Mich 351; 70 N. W. 890; Africa v. News Tribune Co.. 82 Minn. 283 ; 84 N. W 1019; National Bank v. Yovmg, 41 N. J. Eq. 531; 7 Atl. 488. 3 New Memphis Gaslight Co. Cases, 105 Tenn. 268; 80 Am. St. Rep. 880; sub nomine Rawlings v. Gaslight Co., 60 S. W. 206. 4 Jones V. Guaranty, etc., Co., 101 U. S. 622; Wood v. Whelen, 93 111. 153; Wright v. Hughes, 119 Ind. 324; 12 Am. St. Rep. 412; 21 N. E. 907; Bell, etc., Co. v. Glass-Works Co., 106 Ky. 7, 23; 50 S. W. 2, 1092; 51 S. W. 180; reversing on rehear- ing, 48 S. W. 440; Burrill v. Bank, 2 Met. (Mass.) 163; 35 Am. Dec. 395; Hays v. Galion, etc., Co., 29 O. S. 330; Hunt v. Gaslight Co., 95 Tenn. 136; 31 S. W. 1006; Threadgill v. Pumphrey, 87 Tex. 573; 30 S. W. 356; affirming 9 Tex. Civ. App. 184; 28 S. W. 450. 5 Sheppard v. Mining Co., 25 Ont. 305. 6 Frank v. Hicks, 4 Wyom. 502; 35 Pac. 475; rehearing denied, 4 Wyom. 534; 35 Pac. 1025. By stat- ute in Georgia, a corporation cannot mortgage future income. Lubroline Oil Co. V. Bank, 104 Ga. 376; 30 S. E. 409. 7 Southern, etc.. Association v. Stable Co., 128 Ala. 624; 29 So. 654. 8 Alabama, etc., Co. v. McKeever, 112 Ala. 134; 20 So. 84. ICTO PAGE 0:X CONTRACTS. §1070. Borrowing in excess of limitation of indebtedness. If a corporation borrows money in excess of its limitation of indebtedness/ the weight of anthoritj is that the corporation is liable therefor/ at least to the extent of benefits received in the transaction," or as far as it is used to pay pre-existing in- debtedness.^ One lending money is subrogated to prior debts as far as they are discharged by the new loan,* but is not subro- gated to the security or priority of such creditors.^ Subsequent creditors who knew that the prior indebtedness exceeded the limit cannot attack the validity of a mortgage given to secure such debt.^ Its mortgage for such indebtedness cannot be at- tacked by subsequent lienholders.'^ Some jurisdictions hold that the corporation is liable only up to the amount limited,* and where the subsequent creditors do not know of the prior debt the mortgage is void as to the excess above the limit of indebtedness as against their rights, and recording the mort- gage is not notice.* 1 Weber v. Bank, 64 Fed. 208; Wood V. Water Works Co., 44 Fed. 146; 12 L. R. A. 168; Warfield V. Canning Co., 72 la. 666; 2 Am. St. Eep. 263; 34 N. W. 467; Gar- rett V. Plow Co., 70 la. 697 ; 59 Am. Rep. 461 ; 29 N. W. 395 ; Humphrey V. Association, 50 la. 607. 2 Peatman v. Centreville, etc., Co., 100 la. 245; 69 X. W. 541; Beach V. Wakefield, 107 la. 567, 591; 76 N. W. 688; modified on rehearing, 78 X. W. 197. 3/>i re Cork, etc., Co., L. R. 4 Ch. App. 748; Powell v. Blair, 133 Pa. St. 550; 19 Atl. 559. 4 In re Cork, etc., Co., L. R. 4 ; Ch. App. 748. 5 In re Wrexham, etc., Ry. (1899), 1 Ch. 440; 68 L. J. Ch. 270. 6 Central Trust Co. v. Columbus etc., Ey. Co., 87 Fed. 815; (citing Union National Bank v. Matthews, 98 U. S. 621; National Bank v. \^Tiitney, 103 U. S. 99; Fritts v. Palmer, 132 U. S. 282; Logan, etc.. Bank v. Townsend, 139 U. S. 67) ; Beach v. Wakefield, 107 la. 567, 591; 76 N. W. 688; 78 N. W. 197. 7 Beach v. Wakefield, 107 la. 567, 591; 76 N. W. 688; 78 N. W. 197. 8 Covington First National Bank v.* Kiefer, etc., Co., 95 Ky. 97; 23 S. W. 675; Kraniger v. Building Society, 60 Minn. 94; 61 N. W. 904. 9 Bell, etc., Co. v. Glass Works, 106 Ky. 7, 23; 50 S. W. 2, 1092; 51 S. W. 180; reversing on rehear- ing 48 S. W. 440. PRIVATE COEPORATIONS. 1671 §1071. Accommodation paper. A corporation has no power to issue accommodation paper.* Hence a corporation cannot guarantee commercial paper exe- cuted by another.^ So a corporate note, signed for the cor- poration by its president, payable to himself, is prima facie void, even if the holder of the note requested that it be made payable to the president.^ Some authorities seem to dissent from this view, and to hold that the assent of all the stockhold- ers and directors may bind the corporation on accommodation paper.* But where the corporation is really the principal debtor its note is binding, though it takes the form of accommo- dation paper.^ Thus a corporation is liable on an indorsement made in part for the benefit of corporation and in part for the benefit of another, where the corporation received and retained benefits f it may buy goods by indorsing a note of another f and it is liable where the money was nominally lent to its stock- holders^ or its directors,^ but really to the corporation, though iTod V. Land Co., 57 Fed. 47; Lyon, etc., Co. v. Bank, 8.5 Fed. 120; 29 C. C. A. 45; Park Hotel Co. V. Bank, 86 Fed. 742; 30 C. C. A. 409; Steiner v. Lumber Co., 120 Ala. 128; 26 So. 494; Hall v. Turn- pike Co., 27 Cal. 255; 87 Am. Dec. 75; Aetna, etc., Bank v. Ins. Co., 50 Conn. 167; Wheeler v. Bank, 188 HI. 34; 58 N. E. 598; Lucas v. Transfer Co., 70 la. 541; 59 Am. Eep. 449; 30 N. W. 771; Trapp V. Bank, 101 Ky. 485; 41 S. W. 577; modified on rehearing 43 S. W. 470; M. V. Monarch Co. v. Bank, 105 Ky. 430; 88 Am. St. Rep. 310; 49 S. W. 317; Monu- ment, etc.. Bank v. Globe Works, 101 Mass. 57; 3 Am. Rep. 322; Preston v. Cereal Co., — Neb. — ; 93 N. W. 136; Blake v. Mfg. Co. (N. J. Ch.), 38 Atl. 241; National, etc., Bank v. German, etc., Co., 116 N. Y. 281 ; 5 L. R. A. 673; 22 N. E. 567; Bank of Genesee v. Bank, 13 N. Y. 309; Benedict v. Bank, 4 Ohio N. P. 231; 6 Ohio Dec. 320; Culver V. Reno, etc., Co., 91 Pa. St. 367 ; Madison, etc., Co. v. Road Co., 7 Wis. 59. 2 M. V. Monarch Co. v. Bank, 105 Ky. 430; 88 Am. St. Rep. 310; 49 S. W. 317. 3 Porter v. Grain Co., 78 Minn. 210; 80 N. W. 965. 4 Murphy v. Improvement Co., 97 Fed. 723; Martin v. Mfg. Co., 122 N. Y. 165; 25 N. E. 303 (obiter). 5 Beacon Trust Co. v. Souther, 183 Mass. 413; 67 N. E. 345; Bank V. Flour Co., 41 O. S. 552. 6 Lyon, etc., Co. v. Bank, 85 Fed. 120; 29 C. C. A. 45. 7 National Bank v. Allen, 90 Fed. 545; 33 C. C. A. 169. sStough V. Mill Co., 54 Neb. 500; 74 N. W. 868. 9 Allen V. Hotel Co.f 95 Tenn. 480; 32 S. W. 962, 1672 PAGE ON CONTRACTS. the transaction takes the form of the corporation's securing their personal debts. A real estate company may give its note for the debt of another, which is secured by attachment on land previously purchased by such corporation ;^° and where a part- nership incorporates and the corporation becomes liable for partnership obligations/^ a note for such obligation, signed by the corporation as surety, is binding on the corporation, since as to the payee it is a corporation debt.^^ So a corporation may buy a business, and assume the debts thereof.^^ A corporation is liable on its accommodation paper if in the hands of a bona fde holder for value and before maturity.^* But where certain warehouse receipts were given by a corporation as collateral security to a bank, for its loan, and before the loan was entirely paid, the treasurer of the corporation notified the bank that the corporation was indebted to him and that the receipts were to remain to secure his existing indebtedness to the bank and this statement was false, it was held that the pledging of the receipt for his debt was ultra vires.^^ §1072. Suretyship. A contract of suretyship in no way beneficial to the corpora- tion is ultra vires.^ The courts are divided as to the power of a corporation to enter into contracts of guaranty as an inci- 10 Leonard, etc., Co. v. Bank, 86 ing Co., 32 N. B. 692; Farmers' Fed. 502; 30 C. C. A. 221. Bank v. Steamboat Co., 108 Ky. 11 Pratt V. Mfg. Co., 64 Fed. 589; 447; 56 S. W. 719. Schufeldt V. Smith, 139 Mo. 367; 40 "Jacobs, etc., Co. v. Banking, S. W. 887; Reed Bros. Co. v. Bank, etc., Co., 97 Ga. 573; 25 S. E. 171; 46 Neb. 168 ; 64 N. W. 701 ; Andres Monument National Bank v. Globe V. Morgan, 62 O. S. 236; 78 Am. St. Works, 101 Mass. 57; 3 Am. Rep. Rep. 712; 56 N. E. 875. Apparent- 322; American, etc., Bank v. Gluck, ly contra, Lamkin v. Mfg. Co., 72 68 Minn. 129; 70 N. W. 1085; Na- Conn. 57; 44 L. R. A. 786; 43 Atl. tional Bank of Republic v. Young, 593, 1042, where it seems to be held 41 N. J. Eq. 531; 7 Atl. 488. that the corporation may assume is Wheeler v. Bank, 188 111. 34; the partnership debts, but is not 80 Am. St. Rep. 161; 58 N. E. 598; otherwise* liable. reversing, 85 111. App. 28. 12 Andres v. Morgan, 62 O. S. 2.36; i Wheeler v. Bank. 188 111. 34; 80 78 Am. St. Rep. 712; 56 N. E. 875. Am. St. Rep. 161; 58 N. E. 598. 13 Dominion, etc., Co. v. Publish- PEIVATE CORPORATIONS. 1673 dental means of carrying on its business. It is often stated as an abstract proposition that a corporation may guarantee performance of the contracts of others whenever it is reason- ably necessary or proper for carrying its own express powers into effect;^ but like other abstract rules this form of statement is of little practical value. Some authorities hold that a con- tract of suretyship is invalid where not expressly authorized, even if on an independent consideration^ or if very beneficial to the corporation. Thus it cannot guarantee performance of a contract for erecting a plant to get the sale of iron work for the plant to the contractor whose contract it guarantees;* nor can it sign an appeal bond as surety in order to keep the defend- ant in business so that he can continue to buy beer of the cor- poration,^ or to obtain a preference in collecting claims by suit f nor can a bank become surety on a replevin bond;' nor can a railway guarantee expenses of a festival to induce an increase in passenger traffic.® Other authorities uphold contracts of guaranty which are adapted to give collateral assistance to the chief business of the corporation. Thus it has been held that a corporation formed for the purpose of selling lumber may become surety on the bond of a contractor in order to secure the sale of lumber to him.^ A railroad, to obtain consent for its right of way, may 2 Zabriskie v. R. R. Co., 23 How. s Best Brewing Co. v. Klassen, (U. S.) 381; Marbury v. Land Co., 185 111. 37; 76 Am. St. Rep. 26; 50 62 Fed. 335; 10 C. C. A. 393; Tod v. L. R. A. 765; 57 N. E. 20. Land Co., 57 Fed. 47 ; Mercantile e Kelly, etc., v. Varnish Co., 90 Trust Co. V. Kiser, 91 Ga. 636; 18 111. App. 287. S. E. 358 ; Ellerman v. Chicago, etc., 7 Sturdevant Bros. v. Bank, — Co., 49 N. J. Eq. 217; 23 Atl. 287; Neb. — ; 95 N. W. 819; affirming on Holmes v. Willard, 125 X. Y. 75; rehearing, 62 Neb. 472; 87 N. W. 11 L. R. A. 170; 25 N. E. 1083. 156. (It not appearing that such 3 Great Northwest, etc., Ry. v. course of action was necessary to Charlebois (1899), App. Cas. 114; protect the bank's interests.) Ward V. Joslin, 105 Fed. 224; 44 8 Davis v. R. R. Co., 131 Mass. C. C. A. 456; Rogers v. Belting Co., 258; 41 Am. Rep. 221. 184 111. 574; 56 N. E. 1017; revers- 9 Central Lumber Co. v. Kelter, ing, Jewell Belting Co. v. Rogers, 201 111. 503; 66 N. E. 543; affirm- 84 111. App. 249. ing, 102 111. App. 333; F. Witt- 4 Humboldt, etc.. Co. v. Milling mer, etc., Co. v. Rice, 23 Ind. App. Co., 62 Fed. 356; 10 C. C. A. 415. 586; 55 N. E. 868; ^Yheeler, etc.. 1674 PAGE ON CONTRACTS. guarantee the value of lots or agree to pay the difference between a fixed price and what the lots will bring at auction." A cor- poration formed to sell land may agree to join with another per- son in repurchasing land sold and to divide the profit and loss with such co-purchaser in order to diminish its own losses;" a guaranty by a brewing company of the rent of a hotel in which its beer is sold has been upheld ;^^ a hotel may subscribe toward the expenses of a military encampment to draw trade;" a corporation formed to manufacture and deal in merchandise may make a subscription to secure the location of a post-office in an adjoining building in order to increase its trade ;^* and a lumber company may guarantee bonds of a railroad to carry its lumber to market.^^ A corporation formed to lay out and sell lots and promote a town may guarantee the location and operation of a railway in order to induce a store to move to the town/'' and a street railway company may subscribe to induce a baseball company to locate its grounds on said car line.^^ So where a debtor corporation had given a creditor corporation an order for the proceeds of the sale of certain articles in process of manufacture, it was held that the creditor corpora- tion might guarantee payment for finishing such articles.^* A corporation cannot guarantee the bonds of another corporation^® Co. V. Land Co., 14 Wash. 630; 45 is Mercantile Trust Co. v. Riser, Pac. 316; Interior Woodwork Co. v. 91 Ga. 636; 18 S. E. 358. Prasser, 108 Wis. 557 ; 84 N. W. is Arkansas, etc., Co. v. Lincoln, 833. 56 Kan. 145; 42 Pac. 706. 10 Vanderveer v. Ry. Co., 82 Fed. it Temple, etc., Ry. Co. v. Hell- 355. man, 103 Cal. 634; 37 Pac. 530. 11 Bates V. Beach Co., 109 Cal. is Flint, etc., Co. v. Mfg. Co. 160; 41 Pac. 855; same case. Bates (Ind.), 56 N. E. 858. V. Babcock, 95 Cal. 479; 30 Pac. is Louisville, etc., Co. v. Ohio, 605. etc., Co., 69 Fed. 431; Northside Ry. 12 Winterfield v. Brewing Co., 96 Co. v. Worthington, 88 Tex. 562 ; 53 Wis. 239; 71 N. W. 101. Am. St. Rep. 778; 30 S. W. 1055. 13 Richelieu Hotel Co. v. Encamp- (A land company was not allowed to ment Co., 140 111. 248; 33 Am. St. guarantee bonds of a street railway Rep. 234; 29 N. E. 1044. company to secure passenger service 14 B. S. Green Co. v. Blodgett. 150 to the addition laid out by the labJ 111. 169; .50 Am. St. Rep. 146; 42 company.) N. E. 176. PKIVATE CORPOKATIONS. 1675 nor dividends on stock,"" though it may guarantee bonds of another company which it has taken for a debt, in order to effect a sale."^ A corporation which may lease another road may guarantee the bonds of such other road as a consid- eration for the lease."" A corporation cannot assume indi- vidual debts of a stockholder,^^ or give a mortgage,^* or issue corporate securities,^^ or stock therefor,"'^ though where a corpo- ration receives its assets in fraud of the creditors of the chief stockholders and issues stock for such assets it may buy the judg- ments and secure release of the assets from attachment f and it cannot assume the debts of another corporation except to the ex- tent of the assets which it receives. ^^ While the conflict in some of the cases cited is hopeless, many of them may be reconciled by this statement of the rule. Where the contract of guaranty is the consideration of a valid contract of sale, to or by the corporation, it is valid. The corporation may agree to pay for the goods, as well as it may pay cash for them, and it makes no difference to whom the money is to be paid. But where the contract of guaranty is merely collateral to the authorized contract of sale, and forms an inducement therefor, the conflict is hopeless. Wliere power is given to one corporation to aid another, it may do so by guaranteeing its bonds. ^® §1073. Lending money. A corporation has usually an implied power to lend money where this is an appropriate means of carrying on its business.^ 20 Rhorer V. Middlesboro, etc., Co., 25 Wheeler v. Bank, 188 111. 34; 103 Ky. 146; 44 S. W. 448. 80 Am. St. Rep. 161; 58 N. E. 598; 2iMarbury v. Land Co., 62 Fed. Wilson v. Ry. Co., 120 N. Y. 145; 335; 10 C. C. A. 393; Ellerman v. 17 Am. St. Rep., 625; 24 N. E. 384. Chicago, etc., Co., 49 N. J. Eq. 217; 26 Farrington v. R. R. Co., 150 23 Atl. 287. See also Broadway Mass, 406; 15 Am, St. Rep. 222; 5 National Bank v. Baker, 176 Mass. L, R, A. 849; 23 N. E. 109. 294; 57 N, E. 603. 27 Sutton v. Dudley, 193 Pa. St. 22 Low V. R. R. Co., 52 Cal, 53; 194; 44 Atl. 438. 28 Am. Rep. 629. 28 Kentucky, etc.. Association v. 23 Gilbert v. Mfg. Co., 98 Fed. Lawrence, 106 Ky, 88; 49 S. W. 208. 1059, 2* Singer Piano Co. v. Barnard, 29 Zabriskie v. R. R. Co., 23 How. etc., 113 la, 664; 83 N. W. -725 (U. S.) 381. (the debts being for vinpaid sub- 1 Brown v. El well, 17 Wash, 442; scriptions for stock). 49 Pac. 1068. 1G76 PAGE ON CONTRACTS. It may loan undivided profits." So a mutual benefit society may take a note for money lent.^ A statute restricting the man- ner of lending on the security of chattels " or otherwise," does not apply to real estate mortgages.* A statute forbidding any corporation except a building and loan association to lend money to a stockholder prevents an insurance company from advancing money to its stockholders.^ §1074. Power to acquire real property. A corjKjration may acquire and hold realty which is proper for the exercise of its corporate powers.^ It cannot acquire land for purposes not connected with the purposes of its crea- tion." Thus a company formed to build cars cannot own land to build a town on and operate a sewage system and a sewage farm.^ A building and loan association cannot buy as an in- vestment realty on which it has no prior lien.* In I^ew Jersey it was held that a cemetery company may exchange its stock of little value for land to prevent competition.^ A corporation may acquire land in exchange for its stock of merchandise when it is going out of business.'' A corporation authorized to hold land may contract for proper easements for such land: 2 Dock V. Cordage Co., 167 Pa. St. Coleman v. Turnpike Co., 49 Cal. 370; 31 Atl. 656. 517; People v. Car Co., 175 111. 125; 3Kripner v. Lincoln, 66 111. App. 51 N. E. 664; Taber v. Ry. Co., 15 532. Ind. 459; Cynthiana, etc., Co. v. 4 Commercial, etc.. Association v. Hutchinson (Ky.), 60 S. W. 378; Mackenzie, 85 Md. 132; 36 Atl. 754. Thompson v. West, 59 Neb. 677; 49 5 Fisher v. Parr, 92 Md. 245; 48 L. R. A. 337; 82 N. W. 13; State v. Atl. 621. Newark, 26 N. J. L. 519; affirming, iLathrop v. Bank, 8 Dana (Ky.) 25 N. J. L. 315. 114; 33 Am. Dee. 481; Richardson 3 People v. Car Co., 175 111. 125; V. Mechanic Association, 131 Mass. 51 N. E. 664. 174; Thompson v. Waters, 25 Mich. 4 National, etc., Association v. 214; 12 Am. Rep. 243; People v. Bank, 181 111. 35; 72 Am. St. Rep. O'Brien, 111 N. Y. 1 ; 7 Am. St. Rep. 245; 54 N. E. 619. 684; 2 L. R. A. 255; 18 N. E. 692; 5 Rural Homestead Co. v. Wildes, Overmyer v. Williams, 15 Ohio 26; 54 X. J. Eq. 668; 35 Atl. 896. Covington, etc., Co. v. Magruder, 63 6 Morisette v. Howard, 62 Kan. O. S. 455; 59 N. E. 216. 463; 63 Pac. 756. 2 Case V. Kelly, 133 U. S. 21; PRIVATE CORPORATIONS. 1677 as a bank may contract for an easement of light and air/ and a street railway company which has acquired a right to operate a road by horse-power over the roadbed of a turnpike company may contract for the right to use electricity by paying an extra amount for the additional servitude ;^ or a corporation formed to lay out lots and sell them may build a bridge for access to such lots.® A corporation having legal capacity to hold prop- erty may hold it in trust as an individual could if not incon- sistent with its corporate powers.^'' §1075. Power to acquire personal property. The power of a corporation to acquire personal property suitable for its business/ such as supplies of material for manu- facturing," or means of transportation for its materials and product/ is so much broader than its power to acquire realty that it is rarely questioned. A corporation cannot, however, buy property suitable only for purposes outside the scope of the corporate business. Thus a bank cannot buy a manufac- turing plant.* So a corporation formed to manufacture and sell cotton-seed products, including fertilizer, cannot buy a dif- ferent kind of fertilizer to resell at a profit.^ So a manufactur- ing or trading corporation cannot buy up claims against others as a SToecnlation.^ It may buy up claims, however, as a means of carrying its own powers into execution. Thus a hardware company may buy up claims against its debtor for its own pro- tection.'^ So a corporation has implied power to purchase all 7 First, etc., Church v. Bank, 57 3 Callaway, etc., Co. v. Clark, 32 N. J. L. 27 ; 29 Atl. 320. Mo. 305. 8 Little, etc., Co. v. Ry. Co., 194 4 Harding v. Glucose Co., 182 111. Pa. St. 144; 75 Am. St. Rep. 690; 551; 74 Am. St. Rep. 189; 55 N. E. 45 Atl. 66. 577. 9 Fort Worth City Co. v. Bridge s Richmond Guano Co. v. Oil Mill Co., 151 U. S. 294. & Ginnery. 119 Fed. 709. 10 White V. Rice, 112 Mich. 403; « Farwell Co. v. Wolf, 96 Wis. 10; 70 N. W. 1024. 65 Am. St. Rep. 22; 37 L. R. A. 1 Adams Mining Co. v. Senter, 26 138; 70 N. W. 289; 71 N. W. 109. Mich. 73. TMahoney v. Hardware Co., 19 2 National, etc., Bank's Appeal, Mont. 377; 48 Pac. 545; same case, 55 Conn. 469; 12 Atl. 646. 27 Mont. 463; 71 Pac. 674. 1G78 PAGE ON CONTRACTS. the assets of a partnership, including an action for damages in tort/ §1076. Power to purchase its own stock. Whether a corporation can buy its own stock is another dis- puted point. The greater number of cases hold that it may except when it is insolvent and such purchases would defraud creditors.^ In some of the cases cited on this point, the only power involved was the power to rescind a conditional contract for the sale of stock on breach of that condition,^ or where the purchaser has never paid for his stock,^ or where the capital expended for stock was expended under a statute authorizing the reduction of the capital stock.* Other authorities deny the right of a corporation to buy its own stock,^ except where it acquires such stock to secure a debt due to the corporation from the stockholder. All the authorities agree that it may then 8 Central Ohio Nat'l Gas and Fuel Company v. Dairy Company, 60 O. S. 96; 53 N. E. 711. 1 Chicago, etc., R. R. Co. v. Mar- sielles, 84 111. 145; Clapp v. Peter- son, 104 111. 26; Republic, etc., Ins. Co. V. Swigert, 135 111. 150; 12 L. R. A. 328; 25 N. E. 680; Iowa Lum- ber Co. V. Foster, 49 la. 25; 31 Am. Rep. 140; Rollins v. Wagon, etc., Co., 80 la. 380; 20 Am. St. Rep. 427; 45 N. W. 1037; Davis v. Pro- prietors, etc., 8 Met. (Mass.) 321; Dupee V. Power Co., 114 Mass. 37; New England Trust Co. v. Abbott, 162 Mass. 148; 27 L. R. A. 271; 38 N. E. 432; Oliver v. Ice Co., 64 N. J. Eq. 596; 54 Atl. 460; Berger v. Steel Corporation, 63 N. J. Eq. 809 ; 53 Atl. 68; reversing, 63 N. J. Eq. 506; 53 Atl. 14; Chapman v. Rheo- stat Co., 62 N. J. L. 497; 41 Atl. 690; Strong v. R. R. Co., 93 N. Y. 426; City Bank v. Bruce, 17 N. Y. 507; Blalock v. Mfg. Co., 110 N. C. 99 J 14 S. E. 501; Eby v. Guest, 94 Pa. St. 160; Dock v. Cordage Co., 167 Pa. St. 370; 31 Atl. 656; Howe, etc., Co. V. Jones, 21 Tex. Civ. App. 198; 51 S. W. 24; Shoemaker v. Lumber Co., 97 Wis. 585; 73 N. W. 333. 2 Chicago, etc., Co. v. Marseilles, 84 111. 145 (subscription condi- tioned on completion of road in one year) ; Chapman v. Rheostat Co., 62 N. J. L. 497; 41 Atl. 690. 3 Shoemaker v. Lumber Co., 97 Wis. 585; 73 N. W. 333. 4 Strong V. Ry. Co., 93 N. Y. 426. 5Bellerby v. S. S. Co. (1902), 2 Ch. 14; San Luis Obispo Bank v. Wickersham, 99 Cal. 655; 34 Pac. 444; Abeles v. Cochran, 22 Kan. 805; 31 Am. Rep. 194; Price v. Coal Co. (Ky.), 32. S. W. 267; Coppin v. Greenlees, etc., Co., 38 O. S. 275; 43 Am. Rep. 425; Adams, etc., Co. v. Deyette, 8 S. D. 119; 59 Am. St. Rep. 751; 31 L. R. A. 497; 65 N. W. 471; same ease, 5 S. D. 418; 49 Am. PRIVATE CORPORATIONS. 1679 ucquire its own stock.*' If the creditors of the corporation object such purchase may be avoided as far as concerns their interests.'^ A loan to an insolvent corporation to enable it to buy its own stock was held to be illegal and void as in fraud of its creditors.* §1077. Power to purchase stock in other corporation. It is usually held that a corporation has no implied power to buy and hold stock in another corporation ;^ as where the incor- poration laws gave no authority to a manufacturing corporation to purchase stock, but such power was inserted by the incor- St. Rep. 887; 59 N. W. 214; Her- ring V. Co-operative Association (Tenn. Ch. App.), 52 S. W. 327 (orally affirmed by Supreme Court) . 6 Union National Bank v. Hunt, 7 Mo. App. 42; Taylor v. Exporting Co., 6 Ohio 176; Morgan v. Lewis, 46 O. S. 1 ; 17 N. E. 558. 7 Hall V. Henderson, 126 Ala. 449; 85 Am. St. Rep. 53; 61 L. R. A. 621; 28 So. 531. 8 Adams, etc., Co. v. Deyette, 8 S. D. 119; 59 Am. St. Rep. 751; 31 L. R. A. 497; 65 N. W. 471. 1 De La Vergne, etc., Co. v. Sav- ings Institution, 175 U. S. 40; Cali- fornia National Bank v. Kennedy, 167 U. S. 362; Pauly v. Coronado Beach Co., 56 Fed. 428; Marbury v. Land Co., 62 Fed. 335; 10 C. C. A. 393 ; Lanier Lumber Co. v. Rees, 103 Ala. 622; 49 Am. St. Rep. 57; 16 So. 637 (indirectly through a trus- tee) ; Lester v. Lumber Co., 71 Ark. 379; 74 S. W. 518; Knowles v. San- dercock, 107 Cal. 629; 40 Pac. 1047; Chemical National Bank v. Haver- male, 120 Cal. 601 ; 65 Am. St. Rep. 206; 52 Pac. 1071; Glengary, etc., Co. V. Boehmer, 28 Colo. 1 ; 62 Pac. 839; Hazelhurst v. Ry., 43 Ga. 13; McCoy V. Columbian Exposition, 186 111. 356; 78 Am. St. Rep. 288; 57 N. E. 1043; affirming, 87 111. App. 605; People ex rel. Moloney v. Pullman's, etc., Co., 175 111, 125; 51 N. E. 664; Martin v. Stove Co., 78 111. App. 105; Franklin Co. v. I^w- iston Inst., 68 Me. 43; 28 Am. Rep. 9; Hunt v. Malting Co., 90 Minn. 282; 96 N. W. 85; Bank of Com- merce V. Hart, 37 Neb. 197 ; 40 Am. St. Rep. 479; 20 L. R. A. 780; 55 N. W. 631; Nebraska Shirt Co. v. Horton (Neb.), 93 N. W. 225; Central R. R. Co. v. R. R. Co., 31 N. J. Eq. 475; Talmage v. Pell, 7 N. Y. 328; Coler v. Power Co., — N. J. Eq. — ; 54 Atl. 413; reversing, 64 N. J. Eq. 117; 53 Atl. 680; Val- ley Ry. Co. v. Iron Co., 46 O. S. 44 ; 1 L. R. A. 412; 18 N. E. 486; Buck- eye, etc., Co. V. Harvey, 92 Tenn. 115; 36 Am. St. Rep. 71; 18 L. R. A. 252; 20 S. W. 427; Denny Hotel Co. V. Schram, 6 Wash. 134; 36 Am. St. Rep. 130; 32 Pac. 1002. Con- tra, that a corporation may be a stockholder in another corporation. United, etc., Co. v. Electric Light Co., 68 Fed. 673. By statute in In- diana a corporation cannot purchase stock in another corporation with- out the written consent of all the stockliolders of each corporation. Midland Steel Co. v. Bank, 26 Ind. App. 71; 59 N. E. 211. 1680 PAGE ON CONTRACTS. porators in the articles of incorporation.^ Bnt it may acquire stock in the usual course of its business as it may other proj^erty. Thus a bank may lend money on stock as collateral, and sell the stock, buying it itself f or may take it in payment of a debt,* and a corporation, formed to deal in jewelry, may trade jewelry for stock in another corporation,^ or a corporation lawfully going out of business may take the stock in another corporation in pay- ment for its assets.® A corporation cannot purchase the stock of a rival in order to suppress competition."^ If power to own stock in other corporations is expressly granted, it may of cours6 be exercised.^ So power to consolidate and power to guarantee bonds includes power to buy stock f as does power to buy, sell 2 People V. Trust Co., 130 111. 268; 17 Am. St. Rep. 319; 8 L. R. A. 497; 22 N. E. 798, 3 Chemical, etc., Bank v. Haver- male, 120 Cal. 601 ; 65 Am. St. Rep. 206; 52 Pac. 1071; Calumet Paper Co. V. Investment Co., 96 la. 147; 59 Am. St. Rep. 362; 64 N. W. 782; Talmage v. Pell, 7 N. Y. 328. 4 National Bank v. Case, 99 U. S. 628; First National Bank v. Ex- change Bank, 92 U. S. 128 ; Holmes, etc., Co. v. Metal Co., 127 N. Y. 252; 24 Am. St. Rep. 448 ; 27 N. E. 831. 5 White V. Marquardt & Sons, 105 la. 145; 74 N. W. 930; affirming (on rehearing), 70 N. W. 193. eMetcalf v. Furniture Co., 122 Fed. 115; Holmes v. Metal Co., 127 N. Y. 252; 24 Am. St. Rep. 448; 27 N. E. 831. 7De La Vergne, etc., Co. v. Sav- ings Institution, 175 U. S. 40; Mem- phis, etc., Co. V. Woods, 88 Ala, 630; 16 Am. St. Rep. 81; 7 L. R. A. 605; 7 So. 108; People v. Trust Co., 130 111. 268; 17 Am. St. Rep. 319; 8 L. R. A. 497; 22 N. E. 798; Pearson v. R. R., 62 N. H. 537 ; 13 Am. St. Rep. 590 ; State v. Distilling Co., 29 Neb, 700; 46 N, W. 155. Contra, "under our liberal corpora- tion laws," Trenton Potteries Co. v^ Oliphant, 58' N, J. Eq. 507, 524; 78 Am, St. Rep. 612; 46 L. R. A. 255; 43 Atl. 723; affirming in part and reversing in part, 56 N. J. Eq. 680; 39 Atl. 923. It depends on the ob- jects to be attained, agreements to pool stock not being necessarily il- legal. Chapman v. Bates, 61 N. J, Eq. 658; 47 Atl. 638; affirming, 60 N. J. Eq. 17; 46 Atl. 591. 8 Rogers v. Ry. Co., 91 Fed. 299; 33 C. C. A. 517; Tod v. Land Co., 57 Fed. 47; Trust Co. v. State, 109 Ga. 736; 48 L. R. A. 520; 35 S. E. 323 ; Atchinson, etc., R. R. Co. v. Cochran, 43 Kan. 225; 19 Am. St, Rep. 129; 7 L. R. A. 414; 23 Pac. 151; Atchison, etc., R. R. Co. v. Davis, 34 Kan. 209; 8 Pac. 530; Atchison, etc., R. R. Co. v. Fletcher, 35 Kan. 236; 10 Pac. 596; Rubino V. Car Co., — N. J. Eq. — ; 53 AtL 1050; Ditman v. Distilling Co., 64 N. J. Eq. 537; 54 Atl. 570; North- ern Central Ry. Co. v. Walworth, 193 Pa. St. 207; 74 Am. St. Kep. 683 ; 44 Atl. 253. 9 Louisville, etc., Co. v. Ry. Co.,. 75 Fed. 433. PEIVATE COEPOKATIONS. 1681 and deal in public and private stock ;^" or power to buy " bonds, other securities and personal property."^^ Authority to buy stock does not include the right to get control of a corporation so as to prevent payment of interest on bonds, and resistance to a foreclosure suit/" nor to manage such other corporation/* But power to " take stock " is not power to sell all its assets in e»!hange for stock of other corporation/* Even where the stat- ute forbids a corporation to buy stock in another it may take stock in a building and loan association as a means of borrowing money, where such borrowing is proper/^ §1078. Partnership contracts. A corporation cannot enter into a partnership, since this places in the hands of others than the corporation's agents power to incur obligation due from the corporation,^ though it may be co-owner with another," and a purchaser of land by a corporation and another, the appointee of the corporation taking the legal title and managing the property, is valid.^ A contract between corporations supplying a city with water to work together, a director of each corporation acting together as trustees with limited powers of management, is valid since it is not a part- 10 Market, etc., Co. v. Hellman, v. Preservers' Co., 157 111. 284; 48 109 Cal. 571; 42 Pac. 225. Am. St, Eep. 317; 41 N. E. 765; 11 Calumet Paper Co. v. Invest- Whittenton Mills v. Upton, 10 Gray ment Co., 96 la. 147; 59 Am. St. (Mass.) 582; 71 Am. Dee. 681 ; Peo- Eep. 362; 64 N. W. 782. pie v. Refining Co., 121 N. Y. 582; 12 Farmers', etc., Co. v. Ry. Co., 18 Am. St. Rep. 843; 9 L. R. A. 150 N. Y. 410; 55 Am. St. Rep. 33; 24 N. E. 834; Geurinck v. Al- 689; 34 L. R. A. 76; 44 N. E. 1043. cott, 66 O. S. 94; 63 N. E. 714; 13 State v. Newman, 51 La. Ann. Merchants' National Bank v. Wagon 833; 72 Am. St. Rep. 476; 25 So. Co., 6 Ohio N. P. 264; Boyd v. Car- 408. bon-Black Co., 182 Pa. St. 206; 37 14 Elyton Land Co. v. Dowdell, Atl. 937 ; Mallory v. Oil Works. 86 113 Ala. 177; 59 Am. St. Rep. 105; Tenn. 598; 8 S. W. 396; Sabine, 20 So. 981. etc., Co. v. Bancroft, 16 Tex. Civ. isNorwalk, etc., Co. v. Norwalk, App. 170; 40 S. W. 837. etc., Co., 14 Ohio C. C. 1 ; 7 Ohio C. 2 Calvert v. Stage Co., 25 Or. 412; D. 275; reversing, 6 Ohio Dec. 70. 36 Pac. 24. iPearce V. R. R., 21 How. (U. S.) 3 Bates v. Beach Co., 109 CaL 441; Central, etc., Co. v. Smith, 76 160; 41 Pac. 855. Ala. 572; 52 Am. Rep. 353; Bishop 106 1682 PAGE ON CONTEACTS. nership.* Accordingly a corporation cannot be held liable for acts of a person whom it has held out as a partner.^ Some juris- dictions hold that such a partnership is valid as to third parties, either to enable them to recover against such partnerships/ or to enable the partnership to recover against them.' It has 'also been suggested that the corporation is estopped to deny the partnership : though the final disposition of the case made discussion of this question unnecessary.^ §1079. Power to dispose of corporate property. The power of a corporation to dispose of its property may be considered under three general heads. First, its power to dispose of such property as does not interfere with the continu- ance of its corporate functions is an implied one.^ Thus a corporation formed to establish a soldiers' home and to hold land, may sell land not needed by it.^ A corporation may sell surplus cteam for heating purposes f or may lease property not then used ;* or may temporarily lease all its plant in order to get money to conduct its business,^ even if the minority stock- 4 San Diego, etc., Co. v. Flume Co., 108 Cal. 549; 29 L. R. A. 839; 41 Pac. 495. But in Mallory v. Oil Works, 86 Tenn. 598; 8 S. W. 396, a similar arrangement in which the trustees had more extensive pow- ers of management was held a co- partnership. 5 Murray, etc., Co. v. Bank (Tex. Civ. App.), 61 S, W. 508. 6 Johnson v. Mfg. Co., 10.3 Wis. 291; 79 N. W. 236. 7 Wilson V. Oil Co., 46 W. Va. 469; 33 S. E. 249. sWilley v. Bank, 141 Cal. 508; 75 Pac. 106; reversing in banc, 72 Pac. 832. 1 State V. Canal Co., 40 Kan. 96 10 Am. St. Rep. 166; 19 Pac. 349 State v. Warehouse Co., 109 La. 64 33 So. 81 ; Joy v. Road Co.. 11 Mich 155; Stockton Attorney-General v, Tobacco Co., 55 N. J. Eq. 352; 36 Atl. 971; Holmes, etc., Mfg. Co. v. Metal Co., 127 N. Y. 252; 24 Am. St. Rep. 448; 27 N. E. 831; Ben- bow V. Cook, 115 N. C. 324; 44 Am. St. Rep. 454; 20 S. E. 453; Rey- nolds v. County, 5 Ohio 204; Davis v. Lee Camp (Va.), 18 S. E. 839. 2 Davis V. Lee Camp (Va.), 18 S. E. 839. 3 People V. Car Co., 175 111. 125; 51 N. E. 664. 4 Simpson v. Hotel Co., 8 H. L. Cas. 711; People v. Car Co., 175 111. 125; 51 N. E. 664; Brown v. Winnisimmet Co., 11 All. (Mass.) 326; Temple Grove Seminary v. Cramer, 98 N. Y. 121. 5 Plant V. Macon, etc.. Ice Co., 103 Ga. 666; 30 S. E. 567; citing Simpson v. Hotel Co., 8 H. L. Cas. 711; Hancock v. Holbrook, 9 Fed. PRIVATE CORPORATIONS. 1683 holders object.^ A corporation authorized to hold land may lease it to be used for purposes for which the corporation could not itself have used itJ Thus a steamship company may lease its land for hotel purposes, reserving a certain cash rent and a per cent of the income from the hotel in excess of a fixed sum.^ So a lease may be valid where the business of the lessee is incidental to the business of the lessor. A railroad company may lease property not needed in its own business to a public warehouse company,^ Second, as to property essential to carry- ing on its business, a corporation may dispose of such property on going out of business,^** and a solvent water power company going out of business may, by consent of all interested, convey its land in satisfaction of its own stock.^^ Franchises for use of streets may be alienated.^^ A corporation formed to deal in plate glass, etc., may sell its stock of glass, and agree not to compete for twenty years.^^ Third, a corporation cannot retain its corporate existence and transfer its property to another cor- poration, not as a means of winding uj), but as a permanent investment.^^ Such transactions are contrary to public policy as by such means the corporation maintains a corporate exist- 353; Treadwell v. Mfg. Co., 7 Gray Am. St. Rep. 166; 19 Pac. 349; Mor- (Mass.) 393; 66 Am. Dec. 490; dis- isette v. Howard, 62 Kan. 463; 63 tinguishing, Thomas v. R. R. Co., Pac. 756; Detroit v. Gaslight Co., 101 U. S. 71; Pennsylvania, etc., 43 Mich. 594; 5 N. W. 1039; Rey- Co. V. Ry. Co., 118 U. S. 290; Cass nolds v. Stark Co., 5 Ohio 204. V. Steel Co., 9 Fed. 640. n Dupee v. Power Co., 114 Mass. 6 Bartholomew v. Rubber Co., 69 37. Conn. 521; 61 Am. St. Rep. 57; 38 12 Michigan Telephone Co. v. St. Atl. 45. Joseph, 121 Mich. 502; 47 L. R. A. 7 Nye V. Storer, 168 Mass. 53; 46 87; 80 N. W. 383; Detroit v. Gas- N. E. 402; Benton v. Elizabeth, 61 light Co., 43 Mich. 594; 5 N. W. N. J. L. 693; 40 Atl. 1132; affirm- 1039. ing, 61 N. J. L. 411 ; 39 Atl. 683. i3 McCausland v. Hill, 23 Ont. sNantasket Beach Steamboat Co. App. 738. V. Shea, 182 Mass. 147; 65 N. E. 57. i^McCutcheon v. Merz & Co., 71 9 State V. Warehouse Co., 109 La. Fed. 787; 31 L. R. A. 415; affirm- 64; 33 So. 81. ing, 67 Fed. 414; Byrne v. Mfg. Co., 10 Miners' Ditch Co. v. Zellerbach, 65 Conn. 336; 28 L. R. A. 304; 31 37 Cal. 543; 99 Am. Dec. 300; War- Atl. 833; People v. Ballard, 134 N. field V. Canning Co., 72 la. 666; Y. 269; 17 L. R. A. 737; 32 N. E. 2 Am. St. Rep. 263 ; 34 N. W. 467 ; 54. State V. Canal Co., 40 Kan. 96; 10 1684 PAGE OX CONTRACTS. ence and yet makes it impossible for the corporation to exercise those functions for which it was created by the state/'' This principle applies with especial force to contracts whereby cor- porations of a public character attempt to transfer their powers and functions/^ Thus neither a turn-pike company" nor a gas company^^ can transfer their property so that they disable them- selves from serving the public. Under a statute, however, which authorizes a corporation to lease its property or franchises a lease may be made for so long a time as to amount practically to a conveyance in fee.^^ §1080. Examples of powers of particular corporations. A corporation formed " to encourage immigration " may ad- vertise ;^ a railroad may establish a relief fund for its employees, to insure them against accidents and relieve itself from liability therefor ;" a corporation may defend its employee in a libel suit, 15 Central Transportation Co. v. Palace Car Co., 139 U. S. 24; Thomas v. E. R. Co., 101 U. S. 71; People V. Sugar Refining Co., 121 N. Y. 582; 18 Am. St. Rep. 843; 9 L. R. A. 33; 24 N. E. 834; Mallory V. Hanaur Oil Works, 86 Tenn. 598 ; 8 S. W. 396. 16 Smith V. Cornelius, 41 W. Va. 59; 30 L. R. A. 747; 23 S. E. 599. 17 Lancaster, etc., Co. v. Rhoads, 116 Pa. St. 377; 2 Am. St. Rep. 608 ; 9 Atl. 852. 18 Chicago, etc., Co. v. Gas Light Co., 121 111. 530; 2 Am. St. Rep. 124; 13 N. E. 169. 19 Dickinson v. Traction Co., 119 Fed. 871. 1 Colorado Springs Co. v. Publish- ing Co., 97 Fed. 843; 38 C. C. A. 433. 2 Beck V. R. R. Co.. 63 N. -J. L. 232; 76 Am. St. Rep. 211; 43 Atl. 908 ; citing and following. Owens v. Ry. Co., 35 Fed. 715; 1 L. R. A. 75; State V. Ry. Co., 36 Fed. 655; Otis V. Ry. Co., 71 Fed. 136; Vickers v. Ry. Co., 71 Fed. 139; Eckman v. R. R. Co., 169 111. 312; 38 L. R. A. 750; 48 X. E. 496; Pittsburg, etc., Ry. Co. V. Moore, 152 Ind. 345; 44 L. R. A. 638; 53 N. E. 290; Lease V. Pennsylvania Co., 10 Ind. App. 47 ; 37 N. E. 423 ; Donald v. Ry. Co., 93 la. 284; 33 L. R. A. 492; 61 N. W. 971; Fuller v. Relief Associa- tion, 67 Md. 433; 10 Atl. 237; Chi- cago, etc., R. R. Co. V. Bell, 44 Neb. 44; 62 N. W. 314; Pittsburg, etc., Co. V. Cox, 55 O. S. 497 ; 35 L. R. A. 507; 45 N. E. 641; Ringle v. R. R., 164 Pa. St. 529; 44 Am. St. Rep. 628; 30 Atl. 492; and disapproving. Miller v. Ry. Co., 65 Fed. 305; Pittsburg, etc., Ry. Co. v. Montgom- ery, 152 Ind. 1; 71 Am. St. Rep. 301; 49 N. E. 582. This is not ultra vires, and is not engaging in the insurance business. State v. Ry., 68 O. S. 9; 96 Am. St. Rep. 635; 67 N. E. 93. PRIVATE CORPORATION'S. 1685 where the paper was published in the usual course of business f a bridge company may acquire land for the bridge and its approaches ;* and a land company may employ a surveyor.^ A mutual insurance company, if not forbidden by statute, may write ordinary insurance."^ On the other hand, a boom com- pany,^ or a corporation formed to improve the navigation of a stream,^ cannot handle or drive logs. A corporation formed for " manufacturing and selling heating and ventilating appa- ratus " cannot act as a broker of bonds f one formed to make insulated cables cannot contract to lay an electric conduit, taking risk of liability for damages ;^'' and a corporation formed for the purpose of " discussing arbitrating and settling all mat- ters pertaining to the prosperity and promotion of the jobbing plumber's supply business,", cannot engage in notifying creditors of delinquencies of debtors.^^ Since a bank cannot conduct a manufacturing business, a mortgage, in which the bank under- takes to carry on such business is invalid.^" §1081. Contracts collateral to corporate business. A corporation may make valid contracts in a business, collat- eral to that for which it was incorporated, if such business is a reasonably proper method for carrying on the principal business. A corporation may bind itself by an offer of reward ;^ or by a contract which extends over a period of time beyond the charter of the contracting corporation," and it may make a deposit of se- 3 Breay v. Nurses' Association, 9 Peck- Williamson, etc., Co. v. (1897), 2 Ch. 272; 66 L. J. Ch. N. Board, etc., 6 Okla. 279; 50 Pac. S. 587. 236. 4 Covington, etc., Co. v. Magrnder, lo Safety, etc., Co. v. Mayor, etc., 63 O. S. 455; 59 N. E. 216. of Baltimore, 74 Fed. 363; 20 C. C. 5 Heinze v. Dock Co., 109 Wis. 99; A. 453. 85 N. W. 145. 11 Hartnett v. Plumbers', etc., 6 Continental Fire Association v. Association, 169 Mass. 229; 38 L. R. Masonic Temple Co., 26 Tex. Civ. A. 194; 47 N. E. 1002. App. 139; 62 S. W. 930. 12 Louis Bletz & Co. v. Bank 7 Bangor Boom Co. v. Whiting, 29 (Ky.), 55 S. W. 697. Me. 123. 1 Norwood, etc., Co. v. Andrews, 8 Northwestern, etc., Co. v. 71 Miss. 641 ; 16 So. 262. O'Brien, 75 Minn. 335; 77 N. W. 2 Union Pacific Pvy. Co. v. Ry. Co., 989. 163 U. S. 564. 1686 PAGE ON CONTRACTS. curities in order to obtain permission to do business in another state, as required by the laws of such state.^ It may give a bonus in stock, to induce buyers to take bonds, and a dissenting stockholder cannot have the value of the stock bonus deducted from bonds,* or may pay reasonable commission to brokers for placing shares.^ Thus a mining corporation, with power to build or subscribe to the stock of a railroad necessary to facilitate the transportation of its produce to market, may join with a rail- road company in a mortgage to obtain money for the purpose of enlarging the facilities of the railroad to transport the coal f a gas company may buy the right to use steam heater, radiating mantel and gas consuming appliances, if propre for the gas busi- ness f and a railroad company, authorized to erect all convenient buildings for the accommodation and use of its passengers, may lease a summer hotel and covenant to insure it,® or may operate steam-boats as part of its line of transportation.^ A corporation may make a bona fide contract for future purchase of material necessary to its business,^" though it cannot deal in futures regularly, unless specially authorized ;^^ nor can a manufactur- ing corporation buy in order to sell at a profit." Thus a cor- poration formed to manufacture and sell ready-made clothing has no implied power to buy ready-made clothing to resell it at a profit. ^^ The right of a mining or manufacturing corporation 3 Lewis V. American, etc., Associa- 182 Pa. St. 309; 37 Atl. 932; citing tion, 98 Wis. 203; 39 L. R. A. 559; Brown v. Winnisimmet Co., 11 All. 73 N. W. 793. (Mass.) 326; Lyndeboroiigh Glass 4Dickerman v. Trust Co., 176 U. Co. v. Glass Co., Ill Mass. 315. S. 181. 8 Jacksonville, etc., Co. v. Hooper, 5 Metropolitan, etc., Association 160 U. S. 514. V. Scrimgeour (1895), 2 Q. B. 604. » Green Bay, etc., Co. v. R. R. 6 Central Trust Co. v. Columbus, Union, etc.. Steamboat Co., 107 U. etc., Co., 87 Fed. 815; citing Attor- S. 98. ney-General v. Ry. Co., L. R. 5 App. lo Sampson v. Cotton Mills, 82 Cas. 473; Green Bay, etc., R. R. Fed. 833. Co. V. Union, etc., Steamboat Co., ^ Jemison v. Bank, 122 N. Y. 107 U. S. 98; Zabriskie v. R. R. Co., 135; 19 Am. St. Rep. 482; 9 L. R. 23 How. (U. S.) 381; Vandall v. A. 708; 25 N. E. 264. Dock Co., 40 Cal. 83; Hill V. Nisbet, 12 Day v. Buggy Co., 57 Mich. 100 Ind. 341; Whetstone v. Univer- 146; 58 Am. Rep. 352; 23 N. W. sity, 13 Kan. 320. 628. 7 Malone v. Lancaster, etc., Co., i3 Xicollet National Bank v. PKIVATE COKPORATIONS. 1687 to operate a store for its employees is thus open to question/* though a manufacturing company may undoubtedly sell its own goods at a retail store/^ and a corporation formed to do " a general brewing and malting business, and manufacture and sell soda water," may lease a " saloon," as it could not be said as a matter of law that a saloon was not a place for the sale of soda water.^^ The mere fact, however, that a branch of business is profitable or advantageous to a corporation does not make it one of the implied powers of a corporation. " The ex- ercise of a power that might be beneficial to the principal busi- ness is not necessarily incident to it."^^ A land company cannot operate a street car line, and a street car company cannot buy land and sell it in lots/^ It has been held that a corporation formed for the purpose of manufacturing and selling electricity cannot engage in the business of selling electrical appliances/^ The power to increase the capital stock is not implied."" A cor- poration cannot change its principal ofiice without amending its fundamental law and articles of association."^ There is, it must be admitted, some lack of harmony in the cases discussed in this section. Frisk-Turner Co., 71 Minn. 413; 70 the business of a corporation, are Am. St. Rep. 334; 74 N. W. 160. too remote from its general pur- 14 That it can, see Searight v. poses to be denied reasonably within Payne, 6 Lea (Tenn.) 283. That its implied powers. Wliat is and it cannot, see Chewacla Lime Works what is not too remote must be de- V. Dismukes, etc., 87 Ala. 344 ; 4 L. termined according to the facts of R. A. 100; 6 So. 122. each case." Best Brewing Co. v. isDauchy v. Brown, 24 Vt. 197. Klassen, 185 111. 37, 40; 76 Am. St. 16 Brewer, etc., Co. v. Boddie, 181 Rep. 26; 50 L. R. A. 765; 57 N. E. 111. 622; 55 N. E. 49; affirming, 80 20. 111. App. 353. 18 Northside Ry. Co. v. Worth- 17 Nicollet National Bank v. ington, 88 Tex. 562; 53 Am. St. Frisk-Turner Co., 71 Minn. 413, Rep. 778; 30 S. W. 1055. 418; 70 Am. St. Rep. 3.34; 74 N. W. i9 Burke v. Mead, 159 Ind. 252; 160; quoted in Burke v. Mead. 159 64 N. E. 880. Ind. 252; 64 N. E. 880. "It cannot 20 Cooke v. Marshall, 191 Pa. St. be held that every act in furtherance 315; 43 Atl. 314. of the interests of a corporation is 21 Bastian v. Modern Woodmen, inter vires. Many acts can be sug- 106 111. 595; 46 N. E. 1090; revers- gested which, though beneficial to ing, 68 111. App. 378. * 1688 PAGE ON CONTRACTS. §1082. The origin of the doctrine of ultra vires. When it is once ascertained that a given contract is in excess of corporate power, only the first step has been taken to deter- mine its legal effect. As with contracts of infants and insane persons, rights and liabilities may grow out of contracts made by corporations which have not the legal capacity to bind them- selves thereby fully and completely. The rules determining the legal effect of such contracts are grouped under the general head of the doctrine of ultra vires. This term means " beyond the powers " of the corporation ; that the contract in question is beyond and outside of the scope of the powers conferred by its founders.^ The use of the technical Latin phrase has probably helped to obscure the real meaning of the doctrine. Rules have been formulated as to the effect of ultra vires contracts which could scarcely have been applied had the subject been discussed under its English name.^ The real difficulty of this topic is that there was practically no foun- dation for it at Common Law, eince no business corporations existed ; and that, without such foundation and without oppor- tunity to observe the practical working of the rules that they were laying down, the courts were forced, by reason of the sudden growth of manufacturing, trading and transportation corporations, to develop new rules, and to elaborate a subject whose fundamental principles were not understood. Early precedents, hastily decided, present difficulties in many jurisdic- tions, as they do not harmonize with the modem trend of judicial decision ; and the courts, unwilling to overrule them, follow them blindly, or distinguish them in cases often indis- tinguishable. The modern cases are therefore in hopeless confusion. There are conflicting views, not only upon isolated rules, but upon the whole theory of the subject; upon the question of what facts are operative as well as upon the question of what decision is to be rendered upon the facts given. K^o general statement can therefore be made of the 1 Citizens' Savings Bank v. Hawk- - National Bank v. Porter, 125 ins, 71 Fed. 369; 18 C. C. A. 78; Mass. 333; 28 Am. Rep. 235. ^Miners' Ditch Co. v. Zellerbach, 37 Cal. 543; 99 Am. Dec. 300. PRIVATE COEPOEATIONS. 1689 present scope of the doctrine of ulti-a vires, except that ultra vires contracts do not, under some circumstances, have the validity of contracts entered into within the limits of corporate power. In its early form, the doctrine of ultra vires was severely simple. Contracts which were ultra vires were void.^ Thus where an insurance company engaged in the banking business and dis- counted notes, it could not recover upon such notes, though it might on the loan.* This rule proved so disastrous in its effects on modern business that it was promptly " barnacled over with exceptions, and muzzled by estoppels,"^ and practically dis- carded in many jurisdictions.® §1083. Preliminary considerations. All persons dealing with a corporation must take notice of its charter,^ and of statutory limitations on its corporate sPearce v. R. R., 21 How. (U. S.) 441? Rock River Bank v. Sher- wood, 10 Wis. 230; 78 Am. Dec. 669. 4 Philadelphia Loan Co. v. Town' er, 13 Conn. 249; Utica Insurance Co. V. Scott, 19 Johns (N. Y.) 1; Life, etc., Ins. Co. v. Insurance Co., 7 Wend. (N. Y.) 31. 5 Walker's Am. Law, p. 242n <10th ed.). 6 " The safety of men in their •daily contracts requires that this doctrine of ultra vires should be confined within narrow bounds." Directors, etc., of the Eastern, etc., Ry. Co. V. Hawkes, 5 H. L. Cas. 331, 371; quoted in Bath Gaslight Co. V. Claffy, 151 N. Y. 24, 34; 36 L. R. A. G64; 45 N. E. 390. iMcCormick v. Bank, 165 U. S. 538; Salt Lake City v. Hollister, 118 U. S. 256; Pearce v. R. R., 21 How. (U. S.) 441; Sherwood v. Alvis, 83 Ala. 115; 3 Am. St. Rep. 695 ; 3 So. 307 ; National, etc.. Asso- ciation V. Bank, 181 111. 35; 72 Am. St. Rep. 245; 54 N. E. 619; Durkee V. People, 155 111. 354; 46 Am. St. Rep. 340; 40 N. E. 626; affirming, 53 111. App. 396; Humphrey v. As- sociation, 50 la. 607; New Orleans, etc., Co. V. Dock Co., 28 La. Ann. 173; 26 Am. Rep. 90; Franklin Co. V. Lewiston Inst., 68 Me. 43; 28 Am. Rep. 9; Davis v. R. R., 131 Mass. 258; 41 Am. Rep. 221; Kran iger V. Building Society, 60 Minn 94; 61 N. W. 904; Nicollet National Bank v. Frisk-Turner Co., 71 Minn 413; 70 Am. St. Rep. 334; 74 N. W 160; Jemison v. Bank, 122 N. Y 135; 19 Am. St. Rep. 482; 9 L. R A. 708; 25 N. E. 264; Elevator Co v. Memphis, etc., Co., 85 Tenn. 703 4 Am. St. Rep. 798; 5 S. W. 52 Franco-Texan Land Co. v. McCor mick, 85 Tex. 416; 34 Am. St. Rep 815; 23 S. W. 123; Smith v. Cor nelius, 41 W. Va. 59; 30 L. R. A 747 ; 23 S. E. 599. " A party deal ing with a corporation having lim- ited and delegated powers conferred by law is chargeable with notice of 1690 PAGE ox CONTEACTS. power." Why this rule aj^plies to corporations and not to part- nerships/ is by no means clear on principle. It is not limited to those cases of general laws alone, but extends to private acts of the legislature, foreign laws which are a part of the charter of the foreign corporatioif in question and to the articles of incor- poration.* A rigid application of this rule would charge per- sons with knowledge which it might be absolutely impossible for them to acquire, and would seriously affect the validity of contracts of corporations.^ It will not be presumed that a corporation has exceeded its powers in making a contract.® This is merely an application of the broader principle that capacity is always presumed, and that a lack of it must be shown affirmatively. Furthermore, while persons may be arbitrarily required to take notice of the powers of a corporation, they cannot be required to know all the facts and circumstances connected with the business of the corporation.^ Accordingly, if a contract may, under some states of fact, be within the power of the corporation, persons dealing with the corporation may assume that the proper facts exist which are requisite to the validity them and their limitations, and can- s See §§ 1066, 1067. not plead ignorance in avoidance of e Ohio, etc., Ry. Co. v. McCarthy, the defense." National, etc., Asso- 96 U. S. 258; Internatiofial, etc., eiation v. Bank, 181 111. 35, 44; 72 Association v. Wall, 153 Ind. 554; Am. St. Rep. 245; 54 N. E. 619. 55 N. E. 431; Wardner, etc.,. Co. v. 2 National, etc., Association v. Jack, 82 la. 435; 48 N. W. 729; Bank, 181 111. 35; 72 Am. St. Rep. West v. Grocery Co., 109 la. 488; 245; 54 N. E. 619. 80 N. W. 555; Gorder v. Platts- 3 See § 950. mouth, etc., Co., 36 Neb. 548 ; 54 N. 4McCormick v. Bank, 165 U. S. W. 830; Elkins v. R. R., 36 N. J. 538. The rule applies " whether Eq. 241. such charter be a private act or a 7 Kennedy v. Bank, 101 Cal. 495; general law under which corpora- 40 Am. St. Rep. 69; 35 Pac. 1039; tions of this class are organized." Monument National Bank v. Globe De La Vergne, etc., Co. v. Savings Works, 101 Mass. 57; 3 Am. Rep. Institution, 175 U. S. 40, 59; (citing 322; Bissell v. R. R., 22 N. Y. 258; Zabriskie v. R. R., 23 How. (U. S.) Miller v. Ins. Co., 92 Tenn. 167; 20 381; Thomas v. R. R., 101 U. S. 71; L. R. A. 765; 21 S. W. 39; North Pennsylvania Co. v. R. R., 118 U. S. Hudson, etc.. Association v. Bank, 290, 630; Oregon Ry. Co. v. Ry. Co.. 79 Wis. 31; 11 L. R. A. 845; 47 N. 130 U. S. 1; Pittsburgh, etc.. Ry. W. 300. Co. V. Bridge Co., 131 U. S. 371). PRIVATE CORPORATIONS. 1691 of the contract,® and it is no defense to an action on the con- tract that it was under the existing facts ultra vires, unless it can be shown that the contracting party knew the facts which rendered it uU?'a vires. This doctrine is applied generally to contracts performed by one party,^ as where one who does not know that the limit of corporate indebtedness has been reached, loans money to the corporation f^ or where a corporation pur- chases property which it might buy for a given purpose from one who does not know that it is to be used for other purposes.^'- §1084. What ultra vires includes. Ultra vires contracts are, strictly speaking, only those which are defective solely because they are beyond the power of the corporation.^ Where the legislature has forbidden a corpora- tion to engage in certain transactions, by statutes either de- claratory of the Common Law, or modifying it, such transac- tions are in some respects decided on different principles from ultra vires contracts.^ Ultra vires is also loosely used by some authorities to cover two classes of contracts which do not belong to it. First: Contracts which the corporation might lawfully have made, but which the agents making them were not author- ized to make, are not properly iilti'a vires contracts. Their validity turns on questions of agency as affected by the nature of the corporation.^ Second : If the contract is one which is 8 Colorado Springs Co. v. Pub lishing Co., 97 Fed. 843; 38 C. C. A 433; Kennedy v. Bank, 101 Cal 495; 40 Am. St. Rep. 69; 35 Pac 1039; Miners' Ditch Co. v. Zeller bach, 37 Cal. 543; 99 Am. Dec. 300; 10 Humphrey v. Association, 50 la. 607; Auerbach v. Mill Co., 28 Minn. 291; 41 Am. Rep. 285; 9 N. W. 799; Ellsworth V. St. Louis, etc., Co., 98 N. Y. 553. 11 Coweil V. Springs Co., 100 U. S. Monument National Bank v. Globe 55; Thompson v. Lambert, 44 la. Works, 101 Mass. 57; 3 Am. Rep. 239; Luttrell v. Martin, 112 N. C. 322; Bissell v. R. R., 22 N. Y. 258; 593; 17 S. E. 573. Miller v. Ins. Co., 92 Tenn. 167; 20 i Kadish v. Association, 151 111. L. R. A. 765; 21 S. W. 39; North 531; 42 Am. St. Rep. 256; 38 N. E. Hudson, etc., Association v. Bank, 236; Leslie v. Lorillard, 110 N. Y. 79 Wis. 31; 11 L. R. A. 845; 47 N. 519; 1 L. R. A. 456; 18 N. E. 363. W. 300. 2 See § 327 et seq. 9 Tourtelot v. \^niithed, 9 N. D. 3 Kelley. etc., v. Varnish Co., 90 407; 84 N. W. 8. 111. App. 287. 1692 PAGE ON" CONTRACTS treated as illegal if made hy a natural person, it is as illegal if made by a corporation, but as a rule, no more so and no less. These contracts are treated elsewhere/ An ultra vires contract in the proper sense, is " nothing criminal or against good morals."^ In many cases it is however said that an ultra vires contract is " unlawful and void."^ This is undoubtedly a loose use of the terms " unlawful " and " void." This confusion in terms often arises in cases, such as contracts tending to create monopolies,'^ or transferring the performance of duties toward the public,^ where the contract is both ultra vires and illegal. If the contract is illegal as in violation of established principles of public policy it cannot, of course, be enforced.^ If the contract is not merely ultra vires but is also forbidden by statute, no action can be brought on such contract.^" Thus, if the statute provides an exclusive method of giving a mort- 4 See Ch. XV-XXXI. 5 Illinois, etc., Bank v. Ry. Co., 117 Cal. 332, 343; 49 Pac. 197; ■" ultra vires and illegality repre- sent totally different and distinct ideas." Bissell v. R. R., 22 N. Y. 258, 269. GMcCormick v. Bank, 165 U. S. 538, 549; quoted in California, etc.. Bank v. Kennedy, 167 U. S. 362; 368. 7 People V. Gas Trust Co., 130 111. 268; 17 Am. St. Rep. 319; 8 L. R. A. 497; 22 N. E. 798; Harding v. Olucose Co., 182 111. 551; 74 Am. St. Rep. 189; 55 N. E. 577; Inter Ocean Publishing Co. v. Associated Press, 184 111. 438 ; 75 Am. St. Rep. 184; 48 L. R. A. 568; 56 N. E. 822. (Holding that the Associated Press cannot give a monopoly of its news to one paper.) 8 Central Transportation Co. v. Car Co., 139 U. S. 24; Oregon, etc., R. R. V. Oregonian, etc., R. R., 130 U. S. 1; Chicago, etc., Co. v. Gas- light Co., 121 111. 530; 2 Am. St. Rep. 124; 13 N. E. 169; Brunswick Gas Light Co. v. Gas, etc., Co., 85 Me. 532; 35 Am, St. Rep. 385; 27 Atl. 525; Stockton v. R. R., 50 N. J. Eq. 52; 17 L. R. A. 97; 24 Atl. 964; Smith v. Cornelius, 41 W. Va. 59; 30 L. R. A. 747; 23 S. E. 599. 9 Contract by one insurance com- pany to buy out another. MeClure V. Levy, 147 N, Y. 215; 41 N. E. 492. loVisalia Gas Co. v. Sims, 104 Cal. 326; 43 Am, St. Rep. 105; 37 Pac, 1042; McNulta v. Bank, 164 HI. 427; 56 Am. St, Rep. 203; 45 N. E. 954; In re Assignment Mu- tual, etc.. Ins, Co., 107 la. 143; 70 Am. St. Rep, 149; 77 N. W. 143; Beecher v. Mill Co., 45 Mich. 103; 7 N. W. 695; New York, etc.. Trust Co. v. Helmer, 77 N, Y, 64. The United States Supreme Court cases cited in the next paragraph are many of them cases involving con- tracts forbidden by statute or in- valid as against public policy. The court, however, places its decision on the broad ground of ultra vires. PRIVATE COKPOEATIOlirS. 1693 gage, a mortgage executed in any other manner and under any other circumstances is void/^ So if the statute provides a limit to the rate of interest which a corporation may agree to pay, a contract for a higher rate is void/" But the purpose of a statute restricting the exercise of corporate power must always be considered in construing it, and if intended to pro- tect those dealing with the corporation, as where a corporation is forbidden to transact business until its stock subscription is made,^^ or a foreign insurance company is forbidden to write policies until it complies with certain statutory provisions in- tended for the security of policy holders,^* such provisions will not make such contracts void. I^Tor can a statute as to the mode of pledging property, enacted for benefit of stockholders, be taken advantage of by creditors/^ §1085. The reasons underlying the doctrine of ultra vires. " The doctrine of ultra vires by which a contract made by a corporation beyond the scope of its corporate powers is unlaw- ful and void, and will not support an action, rests as this court has often recognized and affirmed upon three distinct grounds: The obligation of anyone contracting with a corporation to take notice of the legal limits of its powers; the interest of the stockholders not to be subject to risks which they have never undertaken ; and, above all, the interest of the public that the corporation shall not transcend the powers conferred upon it by law."^ These reasons cannot be considered conclusive. 11 Southern, etc., Association v. i McCormick v. Bank, 165 U. S. Stable Co., 128 Ala. 624; 29 So. 538, 549; citing Pearce v. R. R., 21 654. How. (U. S.) 441; Pittsburgh, etc., 12 Southern, etc.. Association v. Co. v. Bridge Co., 131 U. S. 371; Stable Co., 119 Ala. 175; 24 So. Central, etc., Co. v. Car Co., 139 U. 886. S. 24; quoted in California, etc., 13 City of Spokane v. Amster- Bank v. Kennedy, 167 U. S. 362, damsch Trustees, etc., 22 Wash. 172; 368, which cites on this point the 60 Pac. 141. English cases, Mann v. Tramways "Union, etc., Co. v. McMillan, 24 Co. (1893), App. Cas. 69; Ooregum O. S. 67. Mining Co. v. Roper (1892), App. 15 Anderson v. Bank, 122 Ala. Cas. 125; Directors, etc., Iron Co. 27^; 2^ So. 523. v. Richs, L. R. 7 H. L. 653. So 1G94 PAGE ON CONTBACTS. Even if all persons are required to take notice of the powers of a corporation, it is hard to see why ultra vires contracts should be nullities, any more than the contracts of an infant should be nullities. All persons are bound to take notice of the contractual powers of an infant and of the fact of infancy,^ yet his contracts are not unlawful or void. Stockholders who acquiesce in ultima vires contracts cannot rightfully complain that they never undertook the risk ; and the interest of the state would be better subserved by a greater willingness to take away charters for abuse of corporate powers, than by treating as void a contract of which the corporation has had the full benefit. Accordingly, many courts place the doctrine on dif- ferent grounds, with different practical results.^ §1086. Who can take advantage of ultra vires. To have the question of the validity of ultra vires contracts raised at all, there must be some one in a position to raise such question. The first point in any proceeding to determine the validity of an ultra vires transaction is to determine whether the party attacking the contract can be allowed to raise the question.^ While this principle does not, any more than any other that has been suggested, solve all difficulties or reconcile all cases, it is a very material help in determining the validity of any given contract. First, the state can attack the validity of any ultra vires transaction by a direct proceeding in quo ivarranto,' although it may decline through its courts to revoke a charter because of isolated ultra vires acts, since the essential purpose and object of such a suit is the determination of a private right.^ Second, persons not parties to the con- Lucas V. Transfer Co., 70 la. 541; State v. Standard Oil Co., 49 O. S. 59 Am. Rep. 449; .30 X. W. 771. 137: 34 Am. St. Eep. 541; 15 L. R. 2 See § 893. A. 145; 30 X. E. 279; State v. Dairy 3 See § 1086, et seq. § 1097. Co., 62 O. S. 350; 57 L. R. A. 181; 1 Benton v. Elizabeth, 61 N. J. L. 57 N. E. 62; State v. Water Co., 693; 40 Atl. 1132; affirming, 61 N. 107 Wis. 441; 83 N. W. 697. J. L. 411; 39 Atl. 683, 906. s People v. Cooper, 139 111. 461; 2 See §§ 1093, 1097. State v. Oil 29 N. E. 872; Cupit v. Bank, 20 Co., 153 Ind. 483; 74 Am. St. Rep. Utah 292; 58 Pac. 839. 314; 53 L. R. A. 413; 53 N. E. 1089; PRIVATE CORPORATIONS. 1695 tract cannot attack it, where not directly prejudiced thereby.* Thus, where a corporation laid oil pipes in a street, claiming under a transfer of property rights,^ or had obtained leave of the city to cross the streets,'' third persons cannot question its power to do so. Where a bank bought notes,^ or a judgment and a certificate of sale,* or land,^ as where a foreign corpora- tion acquired land and then conveyed it without complying with the local statutes,^^ persons not parties to. the transfer cannot resist the enforcement of rights thus acquired. Thus even if a corporation bought property in an ultra vires transac- tion, a lessee from such corporation cannot attack the validity of such conveyance ; nor can a guarantor of such rent.^^ So the right of a corporation to acquire realty cannot be inquired into in an action brought by it to enforce payment of a debt.^^ A creditor of a corporation cannot attack a transaction as ultra, vires unless the effect of such transaction is to divert corporate assets from the payment of his debt.^^ The judgment creditor 4 " None but a person directly in- terested in the corporation, or the state, can question such authority." John V. Farwell Co. v. Wolf, 96 Wis. 10, 14; 65 Am. St. Rep. 22; 37 L. R. A. 138; 70 N. W. 289; 71 N. W. 109 (citing Fritts v. Palmer, 132 U. S. 282; National Bank v. Whitney, 103 U. S. 99; National Bank v. Matthews, 98 U. S. 621; Natoma, etc., Co. v. Clarkin, 14 Cal. 544; Alexander v. Tolleston Club, 110 111. 65; Shewalter v. Pir- ner, 55 Mo. 218; Ragan v. McElroy, 98 Mo. 349; 11 S. W. 735). To the same effect see Springer v. Trust Co., 202 111. 17; 66 N. E. 850; af- firming, 102 111. App. 294; Beach V. Wakefield, 107 la. 567, 591; 76 N. W'. 688; 78 N. W. 197; Leazure V. Hillegas, 7 Serg. & R. (Pa.) 313; Read v. Ey., 110 Tenn. 316; 75 S. W. 1056. 5 Benton v. Elizabeth. 61 N. J. L. 693; 40 Atl. 1132; affirming, 61 N. J. L. 411; 39 Atl. 683, 906. 6 Pennsylvania, etc., R. R. Co. v. R. R. Co., 160 Pa. St. 277; 28 Atl. 784. 7 Prescott National Bank v. But- ler, 157 Mass. 548; 32 N. E. 909. 8 Hennessy v. St. Paul, 54 Minn. 219; 55 N. W. 1123 (citing Na- tional Bank v. Matthews, 98 U. S. 621 ; National Bank v. Whitney, 103 U. S. 99; Fortier v. Bank, 112 U. S. 439; Merchants' National Bank v. Hanson, 33 Minn. 40; 53 Am. Rep. 5; 21 N. W. 849). 9 Bank v. Matthews, 98 U. S. 621. 10 Fritts V. Palmer, 132 U. S. 282. 11 Nantasket Beach Steamboat Co. V. Shea, 182 Mass. 147; 65 N. E. 57. 12 Advance Thresher Co. v. Rock- afellow, — S. D. — ; 93 N. W. 652. 13 Force v. Age-Herald Co., 136 Ala. 271; 33 So. 866. 1696 PAGE ON CONTRACTS. of the j)resident of a corporation cannot attack the title of such corporation to property bought by it on an execution sale of such president's property/* So a third person/^ such as a subsequent judgment creditor/'* cannot attack a mortgage given by a corporation as ultra vires. One liable on a claim for damages cannot attack the purchase of such claim by a corporation if it is assignable/^ and one liable to a lessee of a railroad cannot attack the validity of the lease in a suit by lessee/^ So one liable on a note cannot attack the transfer of it by the payee corporation incident to a genuine sale of its business, as ultra vires.^^ One who with full knowledge of the material facts has accepted an assignment of a chattel mortgage given by a corporation cannot subsequently avoid the assignment on the ground that the mortgage was ultra vires.'^'* So if a stockyards corporation has erected a railroad and used it for an ultra vires purpose, it can resist its unauthorized removal by a city.^^ A trustee created in a trust deed given by a corporation cannot attack a conveyance to the corporation as ult7^a vires.^' Up to this point the courts are practically unanimous in their decisions as to who can plead ultra vires. These holdings show absolutely that an ultra vires contract is not, properly speaking, void ; since a void contract or transac- 14 Scott V. Bank, — Tex. — ; 75 the corporation his claim against S. W. 7; reversing (Tex. Civ. App.), the city for damages to such lots 67 S. W. 343, which denied rehear- due to the construction of a viaduct ing of 66 S. W. 485. and these facts appeared on the pe- ls Collins V. Rea, 127 Mich. 273; tition, it was held that demurrer 86 N. W. 811; Smith v. Bank, 45 would lie. Pueblo v. Investment Neb. 444; 63 N. W. 796. Co., 28 Colo. 524; 89 Am. St. Rep. 16 Beels V. Park Association, 54 221 ; 67 Pac. 162. Neb. 226; 74 N. W. 581. is Southern Pacific Co. v. United 17 Central Ohio, etc., Co. v. Dairy States, 28 Ct. CI. 77. Co., 60 O. S. 96; 53 N. E. 711; John i9 Ehrman v. Ins. Co., 35 O. S. V. Farwell Co. v. Wolf, 96 Wis. 10; 324. 65 Am. St. Rep. 22; 37 L. R. A. 20 Woodcock v. Bank, 113 Mich. 138; 70 N. W. 289; rehearing de- 236; 71 N. W. 477. nied, 37 L. R. A. 142; 71 N. W. 21 Chicago v. Transit Co., 164 111. 109 (this claim was held not as- 224; 35 L. R. A. 281; 45 N. E. 430. sigiiable). Contra, where a cor- 22 Hagerstown, etc., Co. v. Keedy, poration bought certain lots and 91 Md. 430; 46 Atl. 965. thereafter the grantor assigned to PRIVATE CORPORATIONS. 1697 tion may be attacked by any one whose interests are adverse to the validity of the transaction. In all these cases, it will be noticed that the person who seeks to invoke the doctrine of ultra vires is not in any way prejudiced by the ultra vires transactions, as it makes no difference to him whether the corporation or the other party to the transaction asserts the rights in question. This rule, therefore, extends no farther than its reason. A third person who is prejudiced by an ultra vires contract may attack it, as creditors when their rights are endangered by the ultra vires contract.^^ Thus where a cor- poration has borrowed money in excess of its limit of borrow- ing, a subsequent creditor who did not know of such excessive debt, may attack the transaction as fa»' a-« hi* claim is thereby diminished."* Thus a policy holder in a corporation may raise the question of ultra vires, where such corporation ha? acquired his notes to use them as a set-off. ^^ Stockholders wha act promptly may restrain the officers of the company from entering into ultra vires contracts,^*^ though they cannot compel the directors to avoid the contract while retaining the benefits," and they must act promptly."^ This leaves the question of the validity of the contract as far as the corporation itself is concerned, as the only remaining question to consider under ulti'a vires. In discussing the right of a corporation to avoid an ultra vires contract in order to protect non-assenting stock- holders, it must first be determined whether the contract is •purely uUr-a vires, or whether it is also subject to attack because beyond the power of the agents who made it on behalf 23 Washington Mill Co. v. Lumber the contract is ultra vires and also Co., 19 Wash. 165; 52 Pac. 1067. illegal, as creating a monopoly, a 24 See § 1070. stockholder may enjoin execution 25 Hart V. Insurance Co., 21 Mo. and performance. Harding v. Glu- 01; Straus v. Insurance Co., 5 O. S. cose Co., 182 111. 551; 74 Am. St- 59; though it will not be presumed Rep. 189; 55 N. E. 577. that the notes were so acquired, 27 Alexander v. Searcy, 81 Ga^. flart V. Insurance Co., 21 Mo. 91. 536; 12 Am. St. Rep. 337; 8 S. E. 26 Pratt V. Pratt, etc., 33 Conn. 630; Wright v. Hughes, 119 Ind. 446; Harding v. Glucose Co., 182 324; 12 Am. St. Rep. 412; 21 N. E. 111. 551; 74 Am. St. Rep. 189; 55 907. N. E. 577 ; Teachout v. Ry., 75 la. 28 Boyce v. Coal Co., 37 W. Va. 722; 38 N. W. 145. Thus where 73; 16 S. E. 501. 107 1698 PAGE ON CONTRACTS. of the corporation. In so far. as it is free from questions of agency and illegality, the legal effect of the contract depends upon how far it has been performed ; whether it is wholly executory, wholly executed, or partly executed. §1087. Executory contracts. If a contract is executory on both sides, it is subject to the defense of ultra vires by the corporation.^ If the doctrine of ultra vires has any force at all, it applies to cases like this where the adversary party as as yet parted with nothing of value in reliance on the contract. Thus notes given by an insurance company under a contract whereby it was to pur- chase another insurance company are void," The other party , may also treat the contract as invalid. Since the only con- sideration for his promise is the invalid promise of the cor- poration, his promise is in legal effect without consideration.^ The foregoing principles are necessarily based on the proposi- tion that an ultra vires contract, while executory on both sides, is more than merely voidable. For many purposes it may be treated as absolutely void. 1 Thomas v. R. R., 101 U. S. 71; Co., 38 O. S. 275; 43 Am. Rep. 425. First National Bank v. Winchester, 2 McClure v. Le\y, 147 N. Y. 215; 119 Ala. 168; 72 Am. St. Rep. 904; 41 N. K 492. 24 So. 351 ; Simmons v. Iron Works, s Governor, etc., v. Fox, 16 Q. B. 92 Ala. 427; 9 So. 160; Coleman v. 229; 71 E. C. L. 227; First Na- Turnpike Co., 49 Cal. 517; Me- tional Bank v. Winchester, 119 Ala. Nulta V. Bank, 164 111. 427; 56 168; 72 Am. St. Rep. 904; 24 So. Am. St. Rep. 203; 45 N. E. 954; 351; Screven Hose Co. v. Philpot, affirming, 63 111. App. 593; Wright 53 Ga. 625. Thus the court held V. Hughes, 119 Ind. 324; 12 Am. St. that "an executory contract, the en- Rep. 412; 21 N. E. 907; Sherman, forcement of which by the plaintiff etc., Co. V. Morris, 43 Kan. 282; 19 could be successfully resisted by the Am. St. Rep. 134; 23 Pac. 569; Gar- defendant on the ground that the rett V. Mining Co., 113 Mo. 330; 35 former was not authorized by its Am. St. Rep. 713; 20 S. W. 965; charter to enter into it," was formed Nassau Bank v, Jones, 95 N. Y. by the acceptance by a corporation 115; 47 Am. Rep. 14; Jemison v. of a proposition to enter into an Bank, 122 N. Y. 135; 19 Am. St. ultra vires contract and bound Rep. 482; 9 L. R. A. 708; 25 N. E. neither while executory. Boss- 264; Simpson v. Association, 38 0. hardt. etc., Co. v. Oil Co., 171 Pa. S. 349; Coppin v. Greenlees, etc., St. 109, 120; 32 Atl. 1120. PEIVATE COKPORATIONS. 1691) §1088. Contracts performed by one party. — Performance by the corporation. If a contract is fully performed by the corporation, so that whatever was to be done in excess of corporate power has been done, the corporation can recover on the contract and the adversary party cannot defend on the ground that the contract was ultra vires.^ Thus a lessee of gas works from a corpora- tion was held liable for rent on the lease during the time for which the lessee used it." This was a contract between two corporations ; and many authorities hold that part performance of such contract can give it no validity.^ The opposite result from that reached in Bath Gaslight Co. v. ClafFy was reached in Brunswick, etc., Co. v. Light Co.* The court said : " We do not doubt that the plaintiff company is entitled to recover a reasonable rent for the time the defendant company actually occupied the works ; but do not think the amount can be meas- ured by the ultra vires agreement. We think that in such cases the recovery must be had upon an implied agreement to pay a reasonable rent ; and that while the ultra vires agreement may be used as evidence, in the nature of an admission of what is a reasonable rent, it cannot be allowed to govern or 1 Union Gold Mining Co. v. Bank, low, 6.3 X. Y. 62 ; 20 Am. Rep. 504 ; 96 U. S. 640; Union National Bank Woodruff v. Erie Ry. Co., 93 N. Y. V. Matthews, 98 U. S. 621; Union 609; Bath Gaslight Co. v. Claffy, Water Co. v. Fluming Co., 22 Cal. 151 N. Y. 24; 36 L. R. A. 664; 45 620; Eckman v. R. R., 169 111. 312; X. E. 390; Oil Creek, etc., R. R. 38 L. R. A. 750; 48 N. E. 496; Lur- Co. v. Transportation Co., 83 Pa. ton V. Building Association, 187 HI. St. 160. 141; 58 X. E. 218; affirming. 87 111. 2 Bath Gaslight Co. v. Claffy, 151 App. 395; Poock v. Association, 71 X. Y. 24; 36 L. R. A. 664; 45 X. E. Ind. 357; Chicago, etc.. R. R. v. 390. Derkes, 103 Ind. 520; 3 X. E. 239; 3 Oregon, etc., R. R. v. Oregonian, Bowditch V. Ins. Co., 141 Mass. 292; etc., R. R., 130 U. S. 1; Brunswick 55 Am. Rep. 474; 4 N. E. 798; Mc- Gas Light Co. v. Light Co., 85 Me. Indoe V. St. Louis, 10 Mo. 575; Ash- 532; 35 Am. St. Rep. 385; 27 Atl. enbroel Club v. Finlay, 53 Mo. App. 525. See post this section, decisions 256; Equitable, etc., Association v. of U. S. Supreme Court. Bidwell, 60 Xeb. 169; 82 X. W. 384; * 85 Me. 532; 35 Am. St. Rep. Same v. Baird. 60 Xeb. 173; 82 X. 385; 27 Atl. 525. W. 385; Whitney Arms Co. v. Bar- 1700 PAGE ON CONTRACTS. control the amount."^ A sub-contract was assigned to a na- tional bank, which was obliged to complete the performance of such contract. In an action by the bank on such contract neither the owner nor the original contractor can set up ultra vires.^ A corporation which has issued accommodation paper may recover on an indemnity mortgage given to protect it in becoming surety.^ An ultra vires loan, made by a corpora- tion,* as a loan to an officer of the corporation,^ a loan for a period of two years made by a corporation authorized to loan money for one year only,^" or a discount by a safe deposit com- pany of a note," may be recovered. A loan to an individual in excess of a twenty-five per cent limit imposed by law, is good at least to such limit.^^ Thus, where a national bank made an nltra vires loan on real estate mortgage security, the party receiving the money can not use ultra vires as a defense.^' A corporation which has sold and delivered goods in which it is not authorized by its charter to deal, can recover the con- tract price ;^* and where a corporation made an ultra vires con- tract to construct a railroad in reliance upon subscriptions, and did so construct it, it can enforce such subscriptions.^^ This view is not unanimously entertained, however. Some authori- ties insist that no liability exists by reason of the contract, but only on a quantum meruit. Thus, where a corporation bought stock in another corporation, paid for it and had it trans- ferred, the vendor agreeing to indemnify the vendee against such judgments as might be rendered in suits then pending 5 85 Me. 541. 43 Wis. 420; 28 Am. Rep, 549. 6 Security National Bank v. n Pratt v. Short, 79 N. Y. 437; Power Co., 117 Wis. 211; 94 N. W. 35 Am. Rep. 531. 74. i2McClintock v. Bank, 120 Mo. 7 Butterworth, etc.. v. Milling 127 ; 24 S. W. 1052. Co., 115 Mich. 1; 72 X. W. 990. i3 Union National Bank v. Mat- 8 Union Water Co. v. Pluming thews. 98 U. S. 621. Co., 22 Cal. 620. i* Chester Glass Co. v. Dewey, 16 9 Bowditeh v. Ins. Co., 141 Mass. Mass. 94; 8 Am. Dec. 128; Whitney 292; 55 Am, Rep. 474; 4 N. E. 798, Arms Co. v. Barlow, 63 N, Y. 62; (Enforcing a pledge by a third per- 20 Am. Rep. 504. son. of bonds to secure such debt.) I'J Chicago, etc.. R. R. v. Derkes, 10 Germantown. etc., Co. v. Dhein, 103 Ind. 520; 3 N. C. 239, PRIVATE CORPORATIONS. 1701 against the corporation whose stock was sold, it was held that the vendee corporation could not enforce the contract of in- demnity.^^ At any rate the corporation may recover on quantum meruit for the property received under such contract by the adversary party.^^ §1089. Performance by adversary party. — Liability on contract. If the adversary party to the contract has performed his part thereof and by such performance the corporation has received something of value, some liability exists/ though the courts are divided as to its nature. Many jurisdictions hold that in such case the liability is on the contract." The corporation cannot 16 Buckeye, etc., Co. v. Harvey, 92 Tenn. 115; 36 Am. St. Rep. 71; 18 L. R. A. 252; 20 S. W. 427. The eases here cited and followed are many of them cases arising on con- tracts between two corporations, ultra vires as to each, so that noth- ing but full performance on each «ide could eliminate the ultra vires feature of the contract, and on prin- ciple are different from this case. 17 Even if such contract is for- bidden by statute, as long as it is not illegal. Philadelphia Loan Co. V. Towner. 13 Conn. 249; Vanatta V. State Bank, 9 O. S. 27. 1 Kadish v. Association, 151 111. 531; 42 Am. St. Rep. 256; 38 N. E. 236; Williams v. Bank, 71 Miss. 858; 42 Am. St. Rep. 503; 16 So. 238. - Poole V. Association, 30 Fed. 513; Wood v. Corry, etc., Works, 44 Fed. 146; 12 L. R. A. 168; Bowman V. Hardware Co., 94 Fed. 592; Il- linois, etc.. Bank v. Ry. Co., 117 Cal. 332; 49 Pac. 197; People v. R. R. Co., 178 HI. 594; 49 L. R. A. 650; 53 N. E. 349; Kadish v. Asso- ciation, 151 111. .531; 42 Am. St. Rep. 256; 38 N. E. 236; Ward v. Johnson. 95 111. 215; Peoria, etc., R. R. Co. V. Thompson, 103 111. 187; Thomas v. Ry. Co., 104 111. 462; R. R. Co. V. Flanagan, 113 Ind. 488; 3 Am. St. Rep. 674; 14 N. E. 370; Wright V. Hughes, 119 Ind. 324; 12 Am. St. Rep. 412; 21 N. E. 907; Bedford Belt Ry. Co. v. McDonald, 17 Ind. App. 492; 60 Am. St. Rep. 172; 46 N. E. 1022; White v. Marquardt, etc., 105 la. 145; 74 N. W. 930; Twiss v. Association, 87 la. 733; 43 Am. St. Rep. 418; 55 N. W. 8; Humphrey v. Association, 50 la. 607; Alexandria, etc., R. R. Co. v. Johnson, 58 Kan. 175; 48 Pac. 847; Sherman, etc., Co. v. Morris, 43 Kan. 282; 19 Am. St. Rep. 134; 23 Pac. 569; Louisville Tobacco Ware- house Co. V, Stewart (Ky.), 70 S. W. 285; Carson City, etc.. Bank v. Elevator Co., 90 Mich. 550; 30 Am. St. Rep. 454; 51 N. W. 641; Auerbaeh v. Mill Co., 28 Minn. 291; 41 Am. Rep. 285; 9 N. W. 799; Winscott V, Investment Co., 63 Mo. App. 367; Manchester, etc., R. R. v. R. R.. 66 N. H. 100; 49' Am. St. Rep. 582 ; Chapman v. Rheostat Co., 62 X. J. L. 497; 41 Atl. 690; Cam- den, etc., R. R. Co. v. R. R., 48 N. J. 1702 PAGE ON CONTRACTS. receive the benefits of a transaction and repudiate liability arising out of the same transaction.^ It is said to be " a general rule that undertakings, though they be ultra vires, will be enforced against quasi public corporations, if said corpora- tions retain and enjoy the benefits of concessions granted on condition such undertakings should be performed."* It is properly said that this rule " may not be strictly logical, but it prevents a great deal of injustice."^ Thus where a corporation borrows money,*' as by selling bonds,^ and such money has come into the possession of the corporation, it cannot retain the money and plead ultra vires. If a corporation buys property L. 530; 7 Atl. 523; Seymour v. Cemetery Association, 144 N. Y. 333; 26 L. R. A. 859; 39 N. E. 365; Linkauf v. Lombard, 137 N, Y. 417; 33 Am. St. .Rep. 743; 20 L. E. A. 48; 33 N. E. 472; Duncomb v. R. R., 84 N. Y. 190; Whitney Arms Co. v. Barlow, 63 N. Y. 62; 20 Am. Rep. 504; Jones v. Building Association, 94 Pa. St. 215; Wright v. Pipe Line Co., 101 Pa. St. 204; 47 Am. Rep. 701; Pittsburgh, etc., R. R. Co. v. R. R. Co., 196 Pa. St. 452; 46 Atl. 431; Northside Ry. Co. v. Worth- ington, 88 Tex. 562; 53 Am. St. Rep. 778; 30 S. W. 1055; Texas, etc., R. R. Co. V. Gentry, 69 Tex. 625; 8 S. W. 98; City of Spokane V. Amsterdamsch Trustees, etc., 22 Wash. 172; 60 Pac. 141; Horton v. Long, 2 Wash. 435 ; 26 Am. St. Rep. 867; 27 Pac. 271; North Hudson, etc.. Association v. Bank, 79 Wis. 31; 11 L. R. A. 845; 47 N. W. 300; McElroy v. Horse Co., 96 Wis. 317 ; 71 N. W. 652; Bullen v. Trading Co., 109 Wis. 41; 85 N. W. 115. 3 Marion Trust Co. v. Investment Co., 27 Ind. App. 451; 87 Am. St. Rep. 257; 61 N. E. 688. "That kind of plunder which holds onto the property, but pleads the doc- trine of ultra vires against the obli- gation to pay for it, has no recogni- tion or support in the laws of this state." Seymour v. Cemetery Asso- ciation, 144 N. Y. 333, 341; 26 L. R. A. 859; 39 X. E. 365; (citing Whit- ney Arms Co. v. Barlow, 63 N. Y. 62; 20 Am. Rep. 504; Duncomb v. R. R. Co., 84 X. Y. 190; Woodruff V. R. R. Co., 93 N. Y. 609, 619). " Where an ultra vires contract is made and performed on one side, the other party cannot be permitted to enjoy the benefits received, but will be required in a proper action to account." Twiss v. Association, 87 la. 733, 737; 43 Am. St. Rep. 418; 55 N. W. 8; quoted in Beach V. Wakefield, 107 la. 567, 585; 76 N. W". 688; 78 N. W. 197. 4 People V. R. R. Co., 178 IlL 594; 607; 49 L. R. A. 650; 53 N. E. 349; (citing Heims Brewing Co. v. Flan- nery, 137 111. 309; 27 N. E. 286; Kadish v. Association, 151 111. 531; 42 Am. St. Rep. 256; 38 N. E. 236; Eckman v. R. R. Co., 169 HI. 312; 38 L. R. A. 750; 48 N. E. 496). 5 Seymour v. Society, 54 Minn. 147, 149; 55 N. W. 907. 6 Wright V. Hughes, 119 Ind. 324; 12 Am. St. Rep. 412; 21 N. E. 907. ■^ International Trust Co. v. Mfg. Co., 70 N. H. 118; 46 Atl. 1054. PRIVATE COKPORATIOXS. 1703 and retains it,^ or sells it to another person and retains the proceeds of such sale,^ it cannot invoke the doctrine of ultra vires to avoid liability on the contract for the purchase price. So where a corporation bought certain mining claims under a contract to pay the owner thereof a certain per cent of the sales as payment for such claims it cannot keep the claim and refuse to make such payments/" An agreement to repay money borrowed by the corporation cannot be avoided as being ultra vires, even if the money borrowed was to be used for an unauthorized pur}X)se," if not known to the lender/- or even, it has been held, if such intention is known to the lender,^^ as long as the contract of loan does not require such use. Even in cases of this sort the corporation cannot retain the benefits of the transaction and avoid liability thereon. A corporation cannot contest its liability on mortgage security bonds, though given to raise money with which to aid a street car line.^* Where a church sold land and the vendee paid the church there- for and then paid off pre-existing liens on such realty, the church cannot recover such realty, even if the contract was ultra vires, unless it restores the money thus paid.^^ A cor- poration which has accepted the full benefit of the contract with a stockholder under which he became a member, cannot repudiate liability to him under such contract on the ground that it was ultra vires.^-^ In such a case the corporation " can- 8 Miners' Ditch Co. v. Zellerback, is Money borrowed by a loan asso- 37 Cal. 543; 99 Am. Dec. 300. ciation to pay off retiring share- 9 Rutland, etc., Co. v. Proctor, 29 holders. Marion Trust Co. v. In- Vt. 93. vestment Co., 27 Ind. App. 451; 87 10 Wall V. Smelting Co., 20 Utah Am. St. Rep. 257; 61 N. E. 688. 474; 59 Pac. 399. i* Illinois, etc.. Bank v. Ry. Co., 11 Bradley v. Ballard, 55 111. 413; 117 Cal. 332; 49 Pac. 197. 8 Am. Rep. 656. (A corporation is Madison, etc.. Church v. Church, formed to mine in Illinois borrowed 73 N. Y. 82. money and used it to mine in Colo- le Vought v. Loan Association, rado.) 172 N. Y. 508 ; 92 Am. St. Rep. 761 ; 12 As where money was borrowed 65 N. E. 496. This case was fol- by a loan association to pay off re- lowed in Eastern, etc., Association tiring shareholders. North Hudson, v. Williamson, 189 U. S. 122; af- etc, Association v. Bank, 79 Wis. firming Williamson v. Loan Asso- 31; 11 L. R. A. 845; 47 N. W. 300. ciation, 62 S. C. 390; 38 S. E. 616, 1704 PAGE ON CONTRACTS. not be excused from payment upon the plea that the contract was beyond its power."" Where A bought stock under an agreement with the corporation that he should be given employ- ment and that at the end of such emj^loyment the corporation would purchase his stock, it cannot avoid liability on such contract after A has fully performed his part.^^ Where one has rendered services to a corporation under a contract/'' ultra vires is no defense. Where an insurance company insured against a risk, not authorized by its charter and received the premium therefor, it was held liable on the policy.^" It is chiefly with reference to contracts of this class that the prin- ciple is suggested as a reason for the decisions, that ultra vires can be used as a defense only when " consistent with the obli- gations of justice."^^ This is a better statement of ethics than a practical rule of law. It has been repudiated as a mere dictum by some of the courts that have enunciated it."^ ■which involved a construction of the same statute. 17 Vought V. Loan Association, 172 N. Y. 508; 518; 92 Am. St. Eep. 761; 65 N. E. 496; quoted in East- ern, etc., Association v. Williamson, 189 U. S. 122. 18 Chapman v. Rheostat Co., 62 N. J. L. 497; 41 Atl. 690. 19 Tyler v. Academy, etc., 14 Or. 485; 13 Pac. 329. 20 Denver, etc., Co. v, McClelland, 9 Colo. 11; 59 Am. Rep. 134; 9 Pac. 771. Contra, where such policy was forbidden by statute. In re As- signment Mutual, etc., Ins. Co., 107 la. 143; 70 Am. St. Rep. 149. 21 Bath Gaslight Co. v. Claffy, 151 N. Y. 24, 37; 36 L. R. A. 664; 45 N. E. 390. To the same effect are the follow- ing eases: Ohio, etc., Ry. Co. V. Mc- Carthy, 96 U. S. 258; tJnion Water Co. V. Fluming Co., 22 Cal. 621; Burke, etc., Co. v. Wells Fargo & Co., 7 Ida. 42; 60 Pac. 87; Chester Glass Co. V. Dewey, 16 Mass. 94; 8 Am. Dec, 128; Whitney Arms Co. v. Barlow, 63 N. Y. 62; 20 Am. Rep. 504 ; Linkauf v. Lombard, 137 N. Y. 417; 33 Am. St. Rep. 743; 20 L. R. A. 48; 33 N. E. 472; Kadish v. Building Asssoeiation, 151 111. 531; 42 Am. St. Rep. 256; 38 N. E. 236; Carson City, etc.. Bank v. Elevator Co., 90 Mich. 550; 30 Am. St. Rep. 454; 51 N. W. 641; Portland, etc., Co. V. East Portland, 18 Or. 21; 6 L. R. A. 290; 22 Pac. 536; Bear, etc., Co. V. Hanley, 15 Utah 506; 50 Pac. 611; Lewis v. American, etc., Association, 98 Wis. 203; 39 L. R. A. 559; 73 N. W. 793. 22 It is called " a mere passing remark " in Central, etc., Co. v. Car Co., 139 U. S. 24, 55. So, Buckeye, etc., Co. V. Harvey, 92 Tenn. 115; 36 Am. St. Rep. 71; 18 L. R. A. 252; 20 S. W. 427. PRIVATE CORPORATIONS. 1705 §1090. Liability independent of contract. Other jurisdictions, led by the Supreme Court of the United States, hold that no liability exists on the contract, since it is a contract exectuory as to the unauthorized act ; but that an action in quant mn meruit will lie, to recover a reasonable com- pensation for the benefits received by the corporation under the contract.^ It is well settled that the corporation cannot retain what it has received under the contract without incurring any liability therefor.^ So if a corporation sues in equity to have an ultr^a vires mortgage cancelled, it must offer to restore to the mortgagee the amount received by the corporation and remaining unpaid.^ The same rule applies if it seeks to avoid its contract.* The liability is said to exist " irrespective of the invalid agreement."^ Where a land company and a street rail- 1 " Whatever doubts may have been once entertained as to the power of corporations to set up the defense of ultra vires to defeat a re- covery upon an executed contract, the rule is now well settled at least in this court, that where the ac- tion is brought upon the illegal con- tract, it is a good defense that the corporation was prohibited by stat- ute from entering into such contract, although in an action upon a quan- tum meruit it may be compelled to respond for the benefit actually re- ceived." De La Vergne, etc., Co. v. Savings Institution, 175 U. S. 40, 58. Citing Pearce v. E. R., 21 How. (U. S.) 441. So as to leases ultra vires of a corporation. Thomas v. R. R. Co., 101 U. S. 71; Pittsburgh, etc., Ry. V. Bridge Co., 131 U. S. 371; McCormick v. Bank, 165 U. S. 538 ; California Bank v. Kennedy, 167 U. S. 362; Central, etc., Co. v. Car Co., 171 U. S. 138. Also citing Buckeye Marble Co. v. Harvey, 92 Tenn. 115; 36 Am. St. Rep. 71; 18 L. R. A. 252 ; 20 S. \Y. 427. See on this point, Hitcock v. Galveston, 96 U. S. 341; Dickerman v. Trust Co., 176 U. S. 181; Emmerling v. Bank, 97 Fed. 739; 38 C. C. A. 399; Whit- ney V. Peay, 24 Ark, 22; In re As- signment Mutual, etc., Ins. Co., 107 la. 143; 70 Am. St. Rep. 149; 77 X. W. 868 (prohibition by statute) ; Brunswick Gas Light Co. v. Gas, etc., Co., 85 Me. 532; 35 Am. St. Rep. 385; 27 Atl. 525; Moore v. Tanning Co., 60 Vt. 459; 15 Atl. 114; Northwestern, etc., Co. v. Shaw, 37 Wis. 655; 19 Am. Rep. 781. 2 Great Northwestern Ry. v. Char- lebois (1899), A. C. 114; Louisiana, etc., Ry. V. Levee District, 87 Fed. 594; 31 C. C. A. 121. 3 Southern, etc., Association v. Stable Co., 128 Ala. 624; 29 So. 654. 4 Louisiana, etc., Ry. v. Board, etc., of Levee District, 87 Fed. 594; 31 C. C. A. 121. 5 Manchester, etc., R. R. Co. v. R. R. Co., 66 N. H. 100, 132; 49 Am. St. Rep. 582; 9 L. R. A. 689; 20 Atl. 383; see Davis v. R. R., 131 Mass. 258; 41 Am. St. Rep. 221; 1706 PAGE 02f CONTRACTS. way company issued bonds together and divided the money thus obtained, each company was held liable to pay the proportion of the bonds equal to the proportion of the money received bj it.^ This view has been carried in some jurisdictions to the logical conclusion that even if the corporation does not seek to avoid the transaction, the party who has performed may ignore the contract and recover a reasonable value for what he has parted with. Thus a corporation in consideration of a loan of twenty thousand dollars agreed to repay it in preferred stock. When the contract was entered into it was ultra vires, as the corporation had no power to issue preferred stock. Subse- quently the legislature gave to such corporation the power to issue preferred stock, and it was willing to deliver the proper amount to the creditor. It was held that such contract had no consideration, and that the creditor might ignore the contract and recover the amount of the loan.'^ An ultra vires contract for the purchase of certain goods for speculation had been made by a manufacturing company. The vendor delivered part of the goods, repudiated the contract and sued for the value of the goods delivered ; and recovery was allowed.* In some cases it is held that the corporation is not liable on the contract, but no opinion is given as to its liabilitj' in any other theory.^ Thus a manufacturing corporation which had been exceeding its au- thority in operating a store for its employees, was allowed to use ultra vires as a defense in an action for goods sold and delivered." Thus it has been held that a corporation to manu- facture and sell cotton-seed products, including fertilizers made Morville v. Tract Society, 123 Mass. ton, 88 Tex. 562; 53 Am. St. Rep. 129; 25 Am. Rep. 40; White v. 778; 30 S. W. 1055. Bank, 22 Pick. (Mass.) 181; Dill 7 Anthony v. Sewing Machine V. Wareham, 7 Met. (Mass.) 438; Co., 16 R. I. 571; 5 L. R. A. 575 Greenville, etc., Co. v. Warehouse 18 Atl. 176. Co., 70 Miss. 669 ; 35 Am. St. Rep. 8 Day v. Buggy Co., 57 Mich. 146 681; National Trust Co. v. Miller, 58 Am. Rep. 352; 23 N. W. 628. 33 N. J. Eq. 155; Tennessee Ice Co. » Sherwood v. Alvis, 83 Ala. 115 V. Raine, 107 Tenn. 151; 64 S. W. 3 Am. St. Rep. 695; 3 So. 307. 29; Miller v. Ins. Co., 92 Tenn. 167; lo Chewacla, etc., Works v. Dis- 20 L. R. A. 765; 21 S. W. 39. mukes, 87 Ala. 344; 5 L. R. A. 100; eNorthside Rv. Co. v. Worthing- 6 So. 122. PRIVATE CORPORATIONS. LiV i therefrom, is not liable on a note given by it for another kind of fertilizer which it intends to resell at a profit.^^ In some jurisdictions the liability of a corporation on an ultra vires contract which the other party has fully performed, is said to be in the nature of a liability in tort/" §1091. Partial performance by one party. If one party to an ultra vires contract has performed it in part, the executory part of such contract may nevertheless be avoided.^ An ultra vires lease made by one railroad to an- other, on which rent had been paid for several years, can be repudiated as to the executory part thereof.^ An ultra vires lease had been made, and installments paid for years. Suit was brought for an overdue installment of rent, the defendant still retaining the property. No recovery was allowed on the lease.^ If the corporation has partially performed the contract and it remains entirely executory on the other side, some authorities hold that no action can be maintained on the con- tract, but only to recover back what has been parted with under it.* If a contract is partially performed by the adversary party, the corporation is liable to the extent at least of benefits received. Here again there is a conflict of opinion ; some au- thorities holding that although the contract may be repudiated by the corporation as to the part not performed, the corporation 11 Richmond Guano Co. v. Oil Co., 118 U. S. 290; Thomas v. R. R., Mill & Ginnery, 119 Fed. 709. 101 U. S. 71; McNulta v. Bank, 12 « If the agreement was ultra 164 111. 427 ; 56 Am. St. Rep. 203 ; vires and the association entered 45 N. E. 954 ; Mallory v. Oil Works, into it knowing it could not perform 86 Tenn. 598 ; 8 S. W, 396. its part thereof, and thereby in- 2 Oregon, etc., Ry. v. Oregonian, duced plaintiff to part with its etc., Ry., 130 U. S. 1. money in the purchase of stock, then 3 Central, etc., Co. v. Car Co., 139 it was a tort, and the defendant U. S. 24. would be liable therefor." William- * Northwestern, etc., Co. v. Shaw, son V. Association, 54 S. C. 582, 37 Wis. 655; 19 Am. Rep. 781; 596; 71 Am. St. Rep. 822; 32 S. E. (where a packet company bought 765; Miller v. Insurance Co., 92 grain for speculation; and the cor- Tenn. 167; 20 L. R. A. 765; 21 S. poration was not allowed to recover W. 39. damages for non-performance). 1 Pennsylvania, etc., Co. v. R. R. 1708 PAGE ON CONTRACTS. is liable on the contract as to that part which is performed.* Thus where a corporation formed a partnership with a stock- holder, and he performed the contract, the corporation must account to him for the proceeds of the partneship received bj it.® Other authorities hold that in such case the liability is on quantum meruit for the benefits received, and not on the con- tract.'' §1092. Performance not conferring benefit on corporation. Where performance does not pass anything of value to the corporation, performance by the adversary party does not im- pose any liability on the corporation. This is the case where the corporation has issued accommodation paper,^ or has ultra vires acted as surety.^ Thus a brewing company was allowed to plead ultra vires to an appeal bond on which it had become surety to enable the appellee to continue in the saloon business and to buy beer of the company f and a railroad could thus defend against its guaranty of the expenses of a festival.* 5 Macon, etc., Co. v. R. R. Co., 63 ville, etc., Planter's, etc., Co., 70 Ga. 103. Miss. 669; 35 Am. St. Rep. 68; 13 6 Boyd V. Carbon-Black Co., 182 So. 879. Pa. St. 206; 37 Atl. 937. "While i Northside Ry. Co. v. Worthing- public policy demands that the ton, 88 Tex. 562; 53 Am. St. Rep. courts should declare such contracts 778; 30 N. W. 1055; see also to by corporations unlawful, and that the same effect M. V. Monarch Co. they will make no decree which pro- v. Bank, 105 Ky. 430; 88 Am. St. longs their life in fact for a single Rep. 310; 49 S. W. 317; see § 1071. day, every principle of equity com- 2 See § 1072; see to the same ef- mands that the corporation receiv- feet First National Bank v. Win- ing a benefit from such contract chester, 119 Ala. 168; 72 Am. St. shall account for what it has re- Rep. 904; 24 So. 351. ceived from him who has fully per- 3 Best Brewing Co. v. Klassen, formed." Boyd v, Carbon-Black Co., 185 111. 37; 76 Am. St. Rep. 26; 50 182 Pa. St. 206, 211 •, 37 Atl. 937. L. R. A. 765; 57 N. E. 20. 7 Pittsburgh, etc., Co. v. Bridge 4 Davis v. R. R., 131 Mass. 258; Co., 131 U. S. 371; McCormick v. 41 Am. Rep. 221. Contra, a street Bank, 165 U. S. 538; California, railroad was not allowed to plead etc.. Bank v. Kennedy, 167 U. S. vltra vires to a subscription to a 362; Nashua, etc., R. R. Co. v, fair, in order to increase traffic. R. R. Co., 164 Mass. 222; 49 Am. State Board v. R. R. Co., 47 Ind. St. Rep. 454; 41 N. E. 268; Green- 407; 17 Am. Rep. 702. PRIVATE CORPORATIONS. 1709 "Where a building association bought land and assumed a mort- gage ; and subsequently repudiated the transaction and tendered a deed to the grantor, it was held that, as the contract to assume the debt was ultra vires, and the holder of the debt and mort- gage had parted with nothing in reliance on such assuming the debt, he could not enforce the debt against the corporation.^ If a corporation bj an ultra vires contract buys stock in an- other corporation, it cannot be compelled to pay a stock liabil- ity.® This doctrine may properly be extended to cases where the corporation has no choice in receiving or retaining benefits. Thus where work was done under a contract, with an unauthor- ized (and possibly ultra vires) change made by the authority of the superintendent of the company, the contractor could not recover extra compensation for the change.^ §1093. Contracts fully performed. If a contract has been fully performed on both sides, neither party can take advantage of the fact that it was ultra vires} The right of attacking transaction ultra vires, but fully exe- cuted, belongs to the state alone.' Thus, the right of a cor-, poration to hold land can be questioned only by the state, not 5 National, etc., Association v. 1022; Miller v. Turnpike Co., 109 Bank, 181 111. 35; 72 Am. St. Rep. Ky. 475; 59 S. W. 512; Hennessy 245; 54 N. E. 619. v. St. Paul, 54 Minn. 219; 55 N. W. 6 Chemical National Bank v. Ha- 1123; Manchester, etc., R. R. v. R. vermale, 120 Cal. 601; 65 Am. St. R., 66 N. H. 100; 49 Am. St. Rep. Rep. 206; 52 Pae. 1071; White v. 582; 9 L, R. A. 689; 20 Atl. 383; Bank, 66 S. C. 491 ; 97 Am. St. Rep. Camden, etc., R. R. Co. v. R. R., 803; 45 S. E. 94. 48 N. J, L. 530; 7 Atl. 523; Holmes, 7 Boynton v. Gas Light Co., 124 etc., Co. v. Metal Co., 127 N. Y. 252; Mass. 197. 24 Am. St. Rep. 448; 27 N. E. 831; 1 Brown v. Schleier, 194 U. S. 18; Parish v. Wheeler, 22 N. Y. 494. Pennsylvania R. R. Co. v. R. R., 2 Benton v. Elizabeth, 61 N. J. L. 118 U. S. 290; Cincinnati, etc., 693; 40 Atl. 1132; affirming 61 N. Co. V. McKeen, 64 Fed. 36; 12 C. J. L. 411; 39 Atl. 683, 906; Barrow C. A. 14; Reorganized Church, etc., v. Turnpike Co., 9 Humph, (Tenn.) V. Church, etc., 60 Fed. 937; Long 304; Heiskell v. Chickasaw Lodge, V. Ry. Co., 91 Ala. 519; 24 Am. St. 87 Tenn. 668; 4 L. R. A. 699; 11 Rep. 931; 8 So. 706; Bedford Belt S. W. 825; Zinc Carbonate Co. v. Ry. Co. V. McDonald, 17 Ind. App. Bank, 103 Wis. 125; 74 Am. St 492; 60 Am. St. Rep. 172; 46 N. E. Rep. 845; 79 N. W. 229; see §1086. 1710 PAGE ON CONTRACTS. by a private individual.^ An illustration of several of tkese propositions is found in a case,* in which A, who" had subscribed for stock, defended a suit for his subscription on the ground that some of the stock was subscribed for by corporations ; that such subscriptions were ulh-a vires; and that accordingly he could not be held, since the corporation had organized without a complete list of subscribers. The court held that as long as the subscriptions were executory, they were " illegal in the sense that they were ultra vires^ and such corporations could make that defense or not at their pleasure " f yet when fully performed they were absolutely binding. A national bank erected an oflBce building upon realty on which it held a ninety- nine year lease at an annual rental, under a contract whereby the bank was to pay all taxes. Subsequently the bank became insolvent ; rent and taxes were in arrears, and the income from the building did not pay fixed charges. Under these circum- stances the bank agreed with the lessor to surrender the lease and to turn over the building to him, in consideration of his releasing the bank from all liability under the lease. There- after a receiver was appointed for the bank ; and he sued the lessor in equity to set aside the lease and the surrender thereof. It was held that he had no such right.^ §1094. Estoppel. The fact that an ultra vires contract, which is so often said to be void, does in many jurisdictions give rise to liability on 3 Union National Bank v. Mat- 90 Me. 405 ; 38 L. E. A. 339 ; 37 Ail. thews, 98 U. S. 621; Tidwell v. Cat- 652; In re Stiekney's Will, 85 Md. tie Co. (Ariz.), 53 Pac. 192; Water, 79; 60 Am. St. Rep. 308; 35 L. R. etc., Co. V. Tenney, 24 Colo. 344; 51 A. 693; 36 All. 654; Hanson v. Lit- Pac. 505; Chicago, etc., R. R. Co. tie Sisters, etc., 79 Md. 434; 32 L. V. Keegan, 185 111. 70; 56 N. E. R. A. 293; 32 Atl. 1052; Heiskell 1088; Cooney v. Packing Co., 169 v. Chickasaw Lodge, 87 Tenn. 668; 4 111. 370; 48 N". E. 406; Henderson L. R. A. 699; 11 S. W. 825. V. Coal Co., 78 111. App. 437 ; Watts 4 McCoy v. Columbian Exposition, V. Gantt, 42 Neb. 869; 61 N. W. 104; 186 111. 356; 78 Am. St. Rep. 288; Ray V. Foster (Tex. Civ. App), 53 57 N. E. 1043; affirming 87 111. App. S. W. 54. This rule is applied in 605. some jurisdictions to devises to a s 186 111. 360. corporation. Farrington v. Putnam, 6 Brown v. Schleier, 194 U. S. 18. PRIVATE CORPORATIONS. 1711 the contract, has caused many authorities to explain this ap- parent anomaly by invoking the doctrine of estoppel/ Thus whether a deposit of securities with state officers in compliance with the statutes thereof prescribing the terms on which foreign corporations may do business in such state is ultra vires of such foreign corporation or not, it cannot take advantage of its lack of power.^ So where a corporation bought bank stock as an investment and received dividends thereon for years, with the acquiescence of its own stockholders, it was held to be estopped to deny that it was a stockholder, in a suit to enforce a stock liability.^ So where a corporation made a conveyance to one who agreed to pay the debts of the corporation, it was held that after a delay of five years and after third persons have acquired an interest in such property, the corporation cannot have such conveyance set aside.* So one who has agreed to sell realty to a corporation is said to be estopped to avoid the contract after the corporation has taken possession of such 1 Eastern, etc.. Association v. Wil- liamson, 189 U. S. 122; American National Bank v. Paper Co., 77 Fed. 85; Wood v. Corry, etc.. Water Works, 44 Fed. 146; 12 L. R. A. 168; Kennedy v. Savings Bank, 101 Cal. 495; 40 Am. St. Rep. 69; 35 Pac. 1039; People v. R. R., 178 111. 594; 53 N. E. 349; Eckman v. R. R., 169 111. 312; 48 N. E. 496; Heims Bre\yng Co. v. Flannery, 137 111. 309; McCarthy v. Lavasche, 27 N. E. 286; 89 111. 270; 31 Am. Rep. 83; State Board v. Ry., 47 Ind. 407; 17 Am. Rep. 702; Wright v. Hughes, 119 Ind. 324; 12 Am. St. Rep. 412; 21 N. E. 907; White v. Marquardt, 105 la. 145; 74 N. W. 930; Sherman Center Town Co. v. Fletcher, 43 Kan. 282; 19 Am. St. Rep. 134; 23 Pac. 569; Nims v. School, 160 Mass. 177; 39 Am. St. Rep. 467; 22 L. R. A. 364; 35 N. E. 776; (a tort growing out of contract to carry as a ferryman) ; Carson, etc., Bank v. Carson, etc., Co., 90 Mich. 550; 30 Am, St. Rep. 454; 51 N. W. 641 ; Dewey v. Ry., 91 Mich. 351; 51 N. W. 1063; Manchester, etc., R. R. Co. V. R. R., 66 N. H. 100; 49 Am. ^t. Rep. 582; 9 L. R. A. 689; 20 Atl. 383; Bissell v. R. R., 22 N. Y. 258 ; Whitney Arms Co. V. Barlow, 63 N. Y. 62 ; 20 Am. Rep, 504; Kent v. Mining Co., 78 K Y. 159; Linkauf v. Lombard, 137 N. Y. 417; 33 Am. St. Rep. 743; 20 L. R. A. 48; 33 N. E. 472; Hannon v. Sie- gel-Cooper Co., 167 N, Y, 244; 52 L, R, A. 429 ; 50 N, E, 597 ; Vought V. Loan Association, 172 N. Y, 508; 92 Am, St, Rep. 761; 65 N. E. 496; Tyler v. Academy, 14 Or. 485; 13 Pac, 329, 2 Lewis V. American, etc., Loan Association, 98 Wis, 203; 39 L. R. A. 559; 73 N. W, 793, 3 Hunt V. Malting Co,, 90 Minn, 282; 96 N, W. 85, 4 Bear Valley, etc., Co. v. Trust Co., 117 Fed. 941. 1712 PAGE ON CONTEACTS. realty and made valuable improvements thereon.'^ However, it was held that no estoppel existed where a stockholder who had not assented to an ultra vires sale by the corporation of corporate property, received some of the bonds issued in pay- ment for such property as long as he did not assert any rights thereunder.^ Conversely, no estoppel exists if nothing of value is received by virtue of the transaction in question/ An ex- amination of these cases will show, however, that no technical estoppel is meant ; and they may be explained by saying that such contracts were originally voidable, and that those who have elected by receiving and retaining benefits thereunder, ta treat them as valid, are bound by such election. Estoppel in pais exists only where one party by false repre' sentations of fact has induced the other to act so that he would be prejudiced were the first party allowed to deny the truth of the facts as represented by him. If the power is one which might under proper circumstances be exercised by the corpora- tion, there may be a true estoppel,^ though the contract is much oftener, in such case, entered into in ignorance of the law. Where the power is one which the corporation cannot exercise under any circumstances, there can never be a technical estoppel if all are bound to take notice of the charter.^ The doctrine of estoppel is accordingly repudiated by some courts.^" For the 5 Coleridge Creamery Co. v. Jen- cause there was a failure to comply kins, — Neb. — ; 92 N. W. 123. with some regulation, or the power 6 Morris v. Land Co., 125 Ala. was improperly exercisedi" Nation- 263; 28 So. 513. al, etc., Association v. Bank, 181 111. 7 Nebraska Shirt Co. v. Horton 35, 46 ; 72 Am. St. Rep. 245 ; 54 N. (Neb.), 93 N. W. 225. "No fruits E. 619; Davis v. R. R., 131 Mass. of the transaction were received by 258; 41 Am. Rep. 221. the company and its mere acqui- 9 See § 1066. escence in the unauthorized acts of lo An ultra vires contract " cannot its officers in a matter outside of its be enforced or rendered enforceable corporate powers cannot give rise to by the aplication of the doctrine of an estoppel." Wheeler v. Bank, 188 estoppel." Union Pacific Ry. v. Ry., 111. 34, 38; 80 Am. St. Rep. 161; 58 103 U. S. 564, 581; quoted in Cali- N. E. 598. fornia, etc., Bank v. Kennedy, 167 8 Estoppel applies only where the U. S. 362, 371; Best Brewing Co. "making of the contract is within y. Klassen, 185 111. 37; 76 Am. St. the scope of the franchise and the Rep. 26; 50 L. R. A. 765; 57 N. E. contract is sought to be avoided be- 20; National, etc., Association v. PRIVATE CORPORATIONS. 1713 most part, however, these same courts say that such contracts are void. If the contract is invalid as against policy or as forbidden by statute, estoppel has no anplication/^ §1095. Ratification. In the strict sense of the term, a contract which is ultra vires is not susceptible of ratification.^ If it is in excess of the power of the corporation, there is, obviously, no power capable of ratifying it, not even all the stockholders.^ " Being ultra vires, the consent of its stockholders cannot legalize or vitalize the transaction."^ What is meant by using the term " ratifica- tion " in this connection is that by reason of performance on one or both sides, and acquiescence by parties affected thereby. Bank, 181 111. 35; 72 Am. St. Rep. 245; 54 N. E. 619; Franklin Na- tional Bank v. Whitehead, 149 Ind. 660; 63 Am. St. Rep. 302; 39 L. R. A. 725; 49 N. E. 592. 11 Franklin National Bank v. Whitehead, 149 Ind. 560; 63 Am. St. Rep. 302; 39 L. R. A. 725; 49 N. E. 592; In re Assignment Mu- tual, etc., Ins. Co., 107 la. 143; 70 Am. St. Rep. 149; 77 N. W. 868; Kent V. Mining Co., 78 N. Y. 159; Miller v. Ins. Co., 92 Tenn. 167; 20 L. R. A. 765; 21 S. W. 39. "His position is not such as appeals very strongly to a court of equity. He paid his money knowing that the company had no right to accept it, and ought not to be allowed to base an estoppel thereon. Again, the company was expressly prohibited from issuing such a policy as the one in suit." In re Assignment ^Mutual, etc., Ins. Co., 107 la. 143, 149; 70 Am. St. Rep. 149; 77 N. W. 868. 1 California Bank v. Kennedy, 167 U. S. 362; Central, etc., Co. v. Car Co., 139 U. S. 24; Pittsburgh, etc., Co. V. Bridge Co., 131 U. S. 371; 108 Chambers v. Falkner, 65 Ala. 448; San Diego, etc., R. R. Co. v. Pacific, etc., Co., 112 Cal. 53; 33 L. R. A, 788; 44 Pac. 333; National, etc.. Association v. Bank, 181 111. 35; 72 Am. St. Rep. 245; 54 N. E. 619; Davis v. R. R., 131 Mass. 258; 41 Am. Rep. 221; Thompson v. West, 59 Neb. 677; 49 L. R. A. 337; 82 N. W. 13; Miller v. Ins. Co., 92 Tenn. 167; 20 L. R. A. 765; 21 S. W. 39. Such a contract is " ultra vires, void, and incapable of ratification." W'heeler v. Bank, 188 111. 34, 38; 80 Am. St. Rep. 161; 58 N. E. 598. 2 Webster v. Machine Co., 54 Conn. 394; 8 Atl. 482; Washington, etc., Co. V. Lumber Co., 19 Wash. 165; 52 Pac. 1067. 3 McCutcheon v. Capsule Co.. 71 Fed. 787, 794; 31 L. R. A. 415. They may acquiesce so as to prevent them- selves from attacking its validity thereafter, but they cannot ratify so as to bind third persons, such as creditors who may be prejudiced by such transaction. l714 PAGE ON CONTRACTS. no one is in a position to take advantage of the fact that the contract was ultra vires in its inception. If the transaction is merely irregular, ratification is possible.* This is not, how- ever, a true case of ultra vires. §1096. Laches. Where the ultra vires contract is one which a dissenting stock- holder or the corjx)ration might at the outset have avoided, delay in proceeding to avoid it will bar whatever right origi- nally existed.^ The stockholders, or those representing them^ must be vigilant and diligent to be entitled to be relieved in equity.^ Thus where an ultra vires transfer had been acqui- esced for seventeen years,^ no stockholder could complain §1097. " Modern doctrine " of ultra vires. The proposition has been advanced in a number of recent cases, that only the state can take advantage of the fact that a contract is ultra vires, by a direct attack in quo warranto to oust the corporation from exercising such franchises ; and that private persons cannot attack the validity of the corporation's contracts on the ground of ultra vires.^ The reason underly- 4 Kessler v. Ensley Co., 123 Fed. in modern life, while its eflfective- 746. ness for all essential purposes of 1 St. Louis, etc., R. R. Co. v. R. restraint and punishment is fully R. Co., 145 U. S. 393; Boston, etc., preserved, furnishes no cause for R. R. Co. V. R. R., 13 R. I. 260. regret, but rather cause for grati- 2 Boston, etc., R. R. Co. v. R. R., fication at the evidence of how cer- 13 R. I. 260; Boyce v. Coal Co., 37 tainly principles by naxural growth W. Va. 73; 16 S. E. 501. and development adapt the law and 3 St. Louis, etc., R. R. Co. v. R. R. its administration to the ever-chang- Co., 145 U. S. 393. ing needs of advancing civilization, 1 " That such doctrine cannot be so as best to promote justice and resorted to as a weapon for attack the common welfare." John V. and defense in the hands of mere Farwell Co. v. Wolf, 96 Wis. 10, private persons and used as a ready 16 : 65 Am. iSt. Rep. 22 ; 37 L. R. A. means of embarrassing business op- 138; 70 N. W. 289; 71 N. W. 109. erations by and with corporate bod- " When a contract has been so far ies, which directly or indirectly executed that to allow the corpora- touch and administer to human de- tion to repudiate it would work in- sires at every turn of the individual justii>ri to the other party thereto, PRIVATE COEPORATIONS. 1715 ing this rule is that in its inception and true place in law, ultra vires was a doctrine for restraining the action of a corporation, not intended for the benefit of either party to the transaction, but api>licable only to public corporations or to questions be- tween private corporations and the state.^ An analysis of the cases in which this doctrine has been advanced, will show that it has not in fact the radical and sweeping effect that it at first seems to have.^ It is applied chiefly to cases where one not a party to the uUm vires transaction seeks to avoid it;^ or to cases where the contract has been performed fully on one or both sides, and is therefore treated as valid and binding, what- ever it may have been at its inception.^ who has in good faith relied thereon, the doctrine of estoppel applies and prevents such repudiation regardless of whether the corporation had a right to make it or not, unless its act in that regard was in violation of some written law of the State or sound public policy; (that) in such circumstances, if the corporation exceeds its power it commits a pun- ishable offense against the sover- eignty of the people, but cannot it- self invoke the doctrine of ultra vires to avoid its act, at the same time inflicting a grievous wrong up- on the one who has in good faith relied upon the assumption that it possessed in fact the power which it pretended to have authority to exercise." Wuerfler v. Trustees Grand Grove, 116 Wis. 19; 96 Am. St. Rep. 940; 92 N. W. 433. 2 " The doctrine of ultra vires is a most powerful weapon to keep private corporations within their le- gitimate spheres and to punish them for violations of their corporate charters, and it probably is not in- voked too often; but to place that power in the hands of the corpora- tion itself, or a private individual, to be used by it or him as a means of obtaining or retaining something of value which belongs to another, would turn an instrument intended to effect justice between the state and corporations into one of fraud as between the latter and innocent parties." Zinc Carbonate Co. v. Bank, 103 Wis. 125, 131; 74 Am. St. Rep. 845; 79 N. W. 229. Ex- pressing somewhat similar views are Union National Bank v. Matthews, 98 U. S. 621; Wood v. Water Works Co., 44 Fed. 146; 12 L. R. A. 168; Prescott National Bank v. Butler, 157 Mass. 548; 32 N. E. 909; State V. Thresher, etc., Co., 40 Minn. 213; 3 L. R. A. 510; 41 N. W. 1020; Bar- row v. Turnpike Co., 9 Humph. (Tenn.) 304. 3 Wuerfler v. Trustees Grand Grove, 116 Wis. 19; 96 Am. St. Rep. 940; 92 N. W. 433. 4 John V. Farwell Co. v. Wolf, 96 Wis. 10; 65 Am. St. Rep. 22; 37 L. R. A. 138; 70 N. W. 289; 71 N. W. 109. 5 Henderson v. Coal Co., 78 111. App. 437; Bank of Missouri v. Bank, 10 Mo. 123; Zinc Carbonate Co. v. Bank, 103 Wis. 125; 74 Am. St. Rep. 845; 79 N. W. 229. 11716 PAGE ON CONTRACTS. CHAPTER L. IRREGULAR CORPORATIONS. §1098. De facto private corporations. A de facto corporation is one whose members are in fact exercising and enjoying the franchise of being a corjX)ration, but whose members may be ousted of their right to exercise corporate power, in an action in quo wurranto, instituted by the state, by reason of omissions or defects in the incorporation.^ Thus an omission to record the final certificate,^ or recording the original articles of incorporation instead of a verified copy thereof,^ or a defective acknowledgment,* still leaves the organ- ization a de facto corporation. Many authorities hold that " where there cannot lawfully be a corporation de jure, there 1 " A corporation de facto is, in plain English, a corporation in fact." Lamkin v. Mfg. Co., 72 Conn. 57; 44 L. E. A. 786; 43 Atl. 593, 1042. " A corporation de facto exists when, from irregularity or defect in the organization or con- stitution, or from some omission to comply with the conditions prece- dent, a corporation de jure is not created, but there has been a color- able compliance with the require- ments of some law under which an association might lawfully be in- corporated; . . . when there is an organization with color of law, and the exercise of corporate fran- chises and functions." Snider's Sons' Co. V. Troy, 91 Ala. 224, 228; 24 Am. St. Rep. 887; 11 L. JR. A. 515; 8 So. 658. To the same effect see Duke v. Taylor, 37 Fla. 64; 53 Am. St. Rep. 232; 31 L. R. A. 484; 19 So. 172; Doty v. Patterson, 155 Ind. 60; 56 N. E. 668; Crowder v. Sullivan, 128 Ind. 486; 13 L. R. A. 647; 28 N. E. 94; Williams v. Ry., 130 Ind. 71; 30 Am. St. Rep. 201; 15 L. R. A. 64; 29 N. E. 408; Ten- nessee, etc., Co. V. Massey (Tenn. Ch. App.), 56 S. W. 35; American Salt Co. V. Heidenheimer, 80 Tex. 344; 26 Am. St. Rep. 743; 15 S. W. 1038; Marsh v. Mathias, 19 Utah 350; 56 Pac. 1074; Franke v. Mann, 106 Wis. 118; 48 L. R. A. 856; 81 N. W. 1014. 2 The Joliet v. Frances, 85 111. App. 243; Edwards v. Dryer Co., 83 111. App. 643. 3 Slocum V. Head, 105 Wis. 431 ; 81 N. W. 673. 4 Franke v. Mann, 106 Wis. 118; 48 L. R. A. 856; 81 N. W. 1014. IRKEGULAE COEPOEATIONS, 1717 cannot be one de fado."^ Other authorities hold that a de facto corporation may exist even when a de jure corporation would be impossible,*' A colorable compliance with the statute on the subject of incorporation is sufficient/ and it has been held that not even a colorable compliance with the incorporation laws is necessary.^ A corporation, whose charter limits a certain length of time for its existence is not a de facto corporation after the time thus limited has elapsed, but has no legal existence of any kind.^ If the corporate existence is continued by statute for certain purposes, it is a valid corporation for those pur- 5 McTighe v. Construction Co., 94 Ga. 306, 315; 47 Am. St. Rep. 153; 32 L. E. A. 208; 21 S. E. 701; cited also as Georgia R. E. Co. v. Mercan- tile, etc., Co.. To this effect are Davis V. Stevens, 104 Fed. 235; Peo- ple v. Toll Road Co., 100 Cal. 87; 34 Pac. 522; Jones v. Hardware Co., 21 Colo. 263; 52 Am. St. Rep. 220; 29 L. R. A. 143; 40 Pac. 457; American, etc., Co. v. R. R., 157 111. 641; 42 X. E. 153; Cozzens v. Brick Co., 166 111. 213; 46 X. E. 788; In- diana Bond Co. V. Ogle, 22 Ind. App. 593 ; 72 Am. St. Rep. 326 ; 54 X. E. 407; Heaston v. Ry. Co., 16 Ind. 275; 79 Am. Dec. 430; Snyder v, Studebaker, 19 Ind. 462; 81 Am. Dec. 415; Pape v. Bank, 20 Kan. 440; 27 Am. Rep. 183; Eaton v. Walker, 76 Mich. 579; 6 L. R. A. 102; 43 N. W. 638; Detroit, etc., Bund V. Verein, 44 Mich. 313; 38 Am. Rep. 270; 6 N. W. 675; St. Louis, etc.. Association v. Hennessy, 11 Mo. App. 555; Johnson v. Oker- strom, 70 Minn. 303 ; sub nomine Johnson v. Schulin, 73 X. W. 147; Vanneman v. Young, 52 X. J. L. 403; 20 Atl. 53; Gibb's Estate, 157 Pa. St. 59; 22 L. R. A. 276; 27 Atl. 383; McLeary v. Dawson, 87 Tex. 524; 29 S. W. 1044; Evenson V. Ellingson, 67 Wis. 634; 31 X. W. 342. 6Goff V. Flesher, 33 O. S. 107; (where the purpose of the corpora- tion was one not authorized by law) . 7 Bibb V. Hall, 101 Ala. 79; 14 So. 98; Central, etc., Co. v. Insurance Co., 70 Ala. 120; Jones v. Hard- ware Co., 21 Colo. 263; 52 Am. St. Rep. 220; 29 L. R. A. 143; 40 Pac. 457; Johnson v. Okerstrom, 70 Minn. 303 ; sub nomine Johnson v. Schulin, 73 X. W. 147; (distin- guishing Johnson v. Corser, 34 Minn. 355; 25 X. W. 799; and dis- approving Bergeron v. Hobbs, 96 Wis. 641; 65 Am. St. Rep. 85; 71 X. W. 1056): Pott V. Schmucker, 84 Md. 535; 57 Am. St. Rep. 415; 35 L. R. A. 392; 36 Atl. 592. 8 Finnegan v. Xoerenberg, 52 Minn. 239; 38 Am. St. Rep. 552; 18 L. R. A. 778; 53 X. W. 1150. 9 Wilson V. Tesson, 12 Ind. 285 ; Grand Rapids Bridge Co. v. Prange, 35 Mich. 400; 24 Am. Rep. 585; Bradley v. Reppell, 133 Mo. 545; 54 Am. St. Rep. 685; 32 S. W. 645; 34 S. W. 841; Sturges v. Vanderbilt, 73 X. Y. 384. 1718 PAGE ON CONTRACTS. poses, after the limitation of its existence has expired.^^ The status of a de facto corporation is not limited to those dealing with it in such capacity, but exists as to the world at large,^^ except in cases where the state is suing in quo warranto to oust the de facto corporation of its franchises. In an action between a de facto corporation and the state other than quo warranto, the de facto corporation is to be treated as a corporation.^^ §1099. Estoppel to deny corporate existence. Persons who deal with a corporation, or with an organization purporting to be a corporation, as if it were a corporation, are estopped to deny that it is a corporation,^ such as stockholders,^ or a judgment creditor.^ A subscriber to a corporation cannot deny its existence.* So the corporation is estopped to deny its 10 Miller v. Coal Co., 31 W. Va. 836; 13 Am. St. Rep. 903; 8 S. E. 600. 11 People V. Water Co., 97 Cal. 276; 33 Am. St. Rep. 172; 32 Pae. 236; Doty v. Patterson, 155 Ind. 60; 56 N. E. 668; Improvement Co. v. Small, 150 Ind. 427, 431; 47 N. E. 11; 50 N. E. 476; Taylor v. Ry., 91 Me. 193; 64 Am. St. Rep. 216; 39 Atl. 560; Society Perun v. Cleve- land, 43 O. S. 481; 3 N. E. 357. i2Coxe V. State, 144 N. Y. 396; 39 N. E. 400; (where the receiver of such corporation sues the state.) 1 Andes v. Ely, 158 U. S. 312; Close V. Cemetery, 107 U. S. 466; Owensboro Wagon Co. v. Bliss, 132 Ala. 253; 90 Am. St. Rep. 907; 31 So. 81 ; Schloss v. Montgomery Trade Co., 87 Ala. 411; 6 So. 360; Cahall v. Building Association, 61 Ala. 232; Raphael Weill, etc., Co. A-. Crittenden, 139 Cal. 488; 73 Pac. 238 ; Fresno, etc., v. Warner, 72 Cal. 379; 14 Pac. 37; Jones v. Hardware Co., 21 Colo. 263; 52 Am. St. Rep. 220; 40 Pac. 457; Winget v. Asso- ciation, 128 111. 67; 21 N. E. 12; Cravens v. Mills Co., 120 Ind. 6; 16 Am. St. Rep. 298; 21 N. E. 981; Hasselman v. Mtge. Co., 97 Ind. 365; Butchers', etc., Bank v. Mc- Donald, 130 Mass. 264; Stafflet v. Strome, 101 Mich. 197; 59 N. W. 411; Crete, etc.. Association v. Patz, 1 Xeb. ^ep. Unofficial 768; 95 N. W. 793; (following Livingston, etc.. Association v. Drummond, 49 Neb. 200; 68 N. W. 375) ; Otoe, etc.. Association v. Doman, 1 Neb. Rep. Unofficial 179; 95 N. W. 327; Ne- braska National Bank v. Ferguson, 49 Neb. 109; 59 Am. St. Rep. 522; 68 N. W. 370; Larned v. Beal, 65 N. H. 184; 23 Atl. 149; Washington, etc.. Association v. Stanley, 38 Or. 319; 58 L. R. A. 816; 63 Pac. 489; Hooven Mercantile Co. v. Mining Co., 193 Pa. St. 28; 44 Atl. 277; Hamilton v. R. R., 144 Pa. St. 34; 23 Atl. 53 ; suh nomine Hamilton v. Jackson, 13 L. R. A. 779. 2 Fish V. Smith, 73 Conn. 377; 47 Atl. 711. 3 Shoun V. Armstrong ( Tenn. Ch. App.), 59 S. W. 790. * ]\Iullen V. Driving Park, 64 Ind. 202. IRREGULAE CORPORATIONS. 1719 corporate existence.^ So persons who contract with a corpora- tion after the time limited for its existence has expired, are estopped to deny that it is a corporation.'' The doctrine of estoppel is properly distinguished from the doctrine of cor- porations de facto. The former applies only to those dealing with the corporation ; the latter to the world at large. In con- tracts of de facto corporations, the two doctrines necessarily exist together. Further, the doctrine of estoppel may apply to organizations which are not even de facto corporations. §1100. Contracts of de facto corporation. — Corporate liability. A de facto corporation is as liable on its contracts as a cor- poration de jure. It cannot deny its own corporate existence in order to evade liability.^ Its mortgage of its property is valid." On the other hand those who have dealt with such an organization on the theory that it is a corporation, cannot deny its corporate existence in an action based upon such dealings, and treat such corporation as a partnership.^ This rule rests 5 Crystal, etc., Co. v. Roseboom, 91 111. App. 551; Carroll v. Bank, 19 Wash. 639; 54 Pac. 32; Williams V. Lumber Co., 72 Wis. 487; 40 N. W. 154. 6 Citizens' Bank v. Jones, 117 Wis. 446; 94 N. W. 329. 1 Lamkin v. Mfg. Co., 72 Conn. 57; 44 L. Jl. A. 786; 43 Atl. 593, 1042; Cravens v. Mills Co., 120 Ind. 6; 16 Am. St. Rep. 298; 21 N. E. 981; Doty v. Patterson, 155 Ind. 60; 56 N. E. 668; Larned v. Beal, 65 N. H. 184; 23 Atl. 149. 2 McTighe v. Construction Co., 94 Ga. 306; 47 Am. St. Rep. 153; 32 L. R. A. 208; 21 S. E. 701; also cited as Georgia, etc., R. R. v. Mer- cantile, etc., Co. 3 Whitney v. Wyman, 101 U. S. 392; Gartside Coal Co. v. Maxwell, 22 Fed. 197; Owensboro Wagon Co. V. Bliss. 132 Ala. 253; 90 Am. St. Rep. 907; 31 So. 81; Louis Snider's Sons' Co. V. Troy, 91 Ala. 224; 24 Am. St. Rep. 887; 11 L. R. A. 515; 8 So. 658 ; Humphreys v. Mooney, 5 Colo. 282 ; Stafford National Bank V. Palmer, 47 Conn. 443 ; Planters & M. Bank v. Padgett, 69 Ga. 159; Arnold v. Conklin, 96 111. App. 373 ; Ward V. Brigham, 127 Mass. 24; Salem First National Bank v. Almy, 117 Mass. 476; Fay v. Noble, 7 Gush. (Mass.) 188; Merchants', etc., Bank v. Stone, 38 Mich. 779; Finnegan v. Noerenberg, 52; Minn. 239; 38 Am. St. Rep. 522; IS L. R. A. 778; 53 N. W. 1150; Stout v. Zulick, 48 N. J. L. 599; 7 Atl. 362; Jessup V. Carnegie, 80 N. Y. 441; 36 Am. Rep. 643; Central City Savings Bank v. Walker, 66 N. Y. 424; Sec- ond National Bank v. Hall. 35 O. S. 158; Rowland v. Furniture Co., 38 O. S. 269; Rutherford v. Hill, 22 Or. 218; 29 Am. St. Rep. 596; 17 L. R. A. 549; 29 Pac. 546. 1720 PAGE ON CONTEACTS. in part upon the theory of the natnre of the de facto corpora- tion ; and in part upon the rule that persons who deal with an organization as if it were a corporation, are estopped to deny its corporate existence.^ §1101. Partnership liability. There is a lack of harmony in the judicial utterances upon this question, however. In many cases a defective corporation, which has contracted as a corporation, has been treated as a partnership when it comes to enforcing liability.^ The diver- gence in result often turns on a different wording of the incor- poration statutes. There is, further, a real difference in opinion as to what constitutes a de facto corporation. Further, in many of these cases there was no attempt to comply with the incorporation statutes.^ Thus, if the articles of incorpora- tion are filed for record hut no stock is subscribed nor is any attempt made to organize, the organization 'is a partnership, where the statute requires such subscription as essential to cor- porate existence.^ A change in the corporate name without complying with the statute makes the new organization a part- iiership,^ and an unincorporated bank owned by one person is not a de facto corporation.^ So a joint stock partnership organ- 4See§1099. X. Y. 23; Jessup v. Carnegie, 12 iWecbselberg v. Bank, 64 Fed. Jones & S. (N. Y.) 260; Ridenour SO; 12 C. C. A. 56; 26 L. R. A. 470; v. Mayo, 40 O. S. 9. Garnett V. Richardson, 35 Ark. 144; 2 Liebold v. Green, 69 111. App. Jones V. Hardware Co., 21 Colo. 263; 527; Sebastian v. Academy Co. 52 Am. St. Rep. 220: 29 L. R. A. (Ky.), 56 S. W. 810. 143; 40 Pac. 457; Bigelow v. Greg- s Wechselberg v. Bank, 64 Fed. ory, 73 111. 197; Coleman v. Cole- 90; 12 C. C. A. 56; 26 L. R. A. man, 78 Ind. 344; Kaiser v. Law- 470; Jones v. Hardware Co., 21 rence Sav. Bank, 56 la. 104; 41 Am. Colo. 263; 52 Am. St. Rep. 220; 29 Rep. 85; 8 N. W. 772; Whipple v. L. R. A. 143; 40 Pac. 457; Bergeron Parker, 29 Mich. 369; Johnson v. v. Hobbs, 96 Wis. 641; 65 Am. St. Corser, 34 Minn. 355; 25 X. W. 799; Rep. 85; 71 X. W. 1056. Smith V. Warden, 86 Mo. 382 ; Fer- •* Cincinnati Cooperage Co. v. ris V. Thaw, V2 Mo. 446 ; Richardson Bate, 96 Ky. 356 ; 49 Am. St. Rep. V. Pitts, 71 Mo. 128; Abbott v. Be- 300; 26 S. W. 538. fining Co., 4 Keh. 416; Hill v. Beach, s Longfellow v. Barnard, 58 Xeb. 12 N. J. Eq 31; Fuller v. Rowe, 57 612; 76 Am. St. Rep. 117; 79 X. W. IRREGULAR CORPORATIONS. 1721 ized as a corporation is not a corporation de facto.^ " Tramp " corporations, or corporations formed in one state for the pur- pose of doing business in another, are held liable as partner- ships in some jurisdictions.'^ If the members of an irregular corporation or a de facto corporation hold themselves out to the world as partners, they are held liable as such.® §1102. De facto public corporations. Contracts of a de facto public corporation are as valid as those of a corporation de jwe/ though the corporation is dis- solved by a decree of court as including more territory than it should.^ So where a municipal corporation, organized under special act, tried to reorganize under general law, and issued bonds, and the new officers were removed, the bonds were valid.* This rule applies only to de facto corporations, however, and not to aggregations of individuals who may assume to act as a public corporation. Accordingly, bonds issued by an unincor- porated body, claiming to act as a town or city, are invalid.* 255; affirmed on rehearing 59 Neb. 24 Neb. 242; 8 Am. St, Rep. 202; 455; 81 N. W. 307; (though it has 38 N. W. 737; Coast v. Spring officers like a corporation). Lake, 56 N. J. Eq. 615; 51 L. R. A. 6 Allen V. Long, 80 Tex. 261 ; 26 657 ; 36 Atl. 21 ; Coler v. School Am. St. Rep. 735; 16 S. W. 43. Township, 3 N. D. 249; 28 L. R. A, 7 Taylor v. Branham, 35 Fla. 649; 55 N. W. 587. 297; 48 Am. St. Rep. 249; 39 L. R. 2 Uvalde v. Spier, 91 Fed. 594; A. 362; 17 So. 552; Hill v. Beach, 33 C. C. A. 501. 12 N. J. Eq. 31. 3 Lampasas v. Talcott, 94 Fed. 8 Simmons v. Ingram, 78 Mo. 547; 36 C. C. A. 318. App. 603; Slocum V. Head, 105 Wis. 4 Guthrie v. Lumber Co., 9 Okl. 431; 50 L. R. A. 324; 81 N. W. 673. 464; 60 Pac. 247; Ruohs v. Athens, iShapleigh v. San Angelo, 167 U. 91 Tenn. 20; 30 Am. St. Rep. 858; S. 646; Miller v. Irrigation District. 18 S. W. 400. 99 Fed. 143; Arapahoe v. Albee, PART V. CONSTRUCTION AND INTERPRETATION. GENERAL PRINCIPLES OF CONSTRUCTION. 1725 CHAPTER LI. GENERAL PRINCIPLES OF CONSTRUCTION. §1103. Nature of construction. If a question of construction becomes material, this necessarily implies that the contract is in every respect valid and enforce- able, at least under one of the constructions contended for. Questions as to the validity and enforceability of the contract cannot therefore be involved as a part of a question of con- struction. They may, of course, be presented in the same case ; and a question of construction, when once determined, may also determine the validity of the contract itself. Accordingly, many questions of construction have already been anticipated in connection wtih the formation of the contract. Still ques- tions of construction are easy to separate from questions of formation, until we reach the question of what terms of the negotiations constitute the terms of the contract. The line of demarkation between this subject and construction is an arbi- trary one.^ Construction is in reality a part of the contract. The division is solely for necessary convenience in discussion. When we attempt to distinguish questions of construction from those of the operation of the contract, or from those arising out of discharge, the difficulty of making any logical separation of topics is even greater. Operation and discharge are both de^ pendent on the construction of the contract, if there is any dispute as to its meaning. Accordingly many questions of con- struction are necessarily left for discussion in connection with, discharge. §1104. Intention deduced primarily from words employed. The primary object of construction in contract law is to dis- cover the intention of the parties.^ This intention in express 1 See § 598 et seq. Pac. 105, 236; Linehan, etc., Co. v. 1 Porter v. Allen, — Ida. — • m Ry., 107 La. (545- 31 So. 1026. 1726 PAGE ON" CONTRACTS. contracts is, in the first instance, embodied in the words which the parties have used and is to be deduced therefrom.^ This rule applies to oral contracts,^ as well as to contracts in writing, and is the rule recognized by courts of equity.* It follows, therefor, that construction cannot be expressed in a series of rigid rules from which in each case the legal effect of the par- ticular contract can be determined infallibly. The principles which follow are prima facie rules for determining the mutual intention of the contracting parties, liable in any particular case to be inapplicable because of some phrase in that contract showing a contrar}^ intention. The value of precedents in con- struction depends largely on the kind of contract involved. Certain kinds, such as bills of lading, insurance policies, and negotiable instruments are drawn in set forms, and precedents " The construction of a contract is nothing more than the gathering of the intention of the parties to it from the words they have used." Di Sora v. Phillips, 10 H. L. Cas, 624, 638; quoted in Gibbons v. Grin- sel, 79 Wis. 365, 369; 48 N. W. 255. 2 Rockefeller v. Merritt, 76 Fed. Rep. 909; 35 L. R, A. 633; 22 C. C. A. 608; Davis v. JfobeVt, 89 Ala. 402; 18 Am. St. Rep. 126; 8 So. 114; Schroeder v. Ins. Co.; 132 Cal. 18; 84 Am. St. Rep. 17; 63 Pac. 1074; McDermith v. Voorhees, 16 Colo. 402; 25 Am. St. Rep. 286; 27 Pac. 250; Atchison, etc., R. R. v. R. R., 162 111. 632; 35 L. R. A. 167; 44 N. E. 823; Cravens v. Cot- ton Mills, 120 Ind. 6; 16 Am. St. Rep. 298; 21 N. E. 981; Heiple v. Reinhart, 100 la. 525; 69 N. W. 871; superseding 65 K W. 331; Louisville, etc., "Rj. v. Ry., 100 Ky. 690; 39 S. W. 42; Yorston v. Brown, 178 Mass. 103; 59 N. E. 654; Hoose v. Ins. Co., 84 Mich, 309; 11 L. R. A. 340; 47 N. W. 587; Mathews v. i^'he.lps, 61 Mich. 327 ; 1 Am. St. Rep. 581 ; 28 N. W. 108; Lovelace v. Protective Asso- ciation, 126 Mo. 104; 47 Am. St, Rep. 638; 30 L. R. A. 209; 28 S. W. 877; Mastin v. Stoller, 107 Mo. -317; 17 S. W. 1011; McCormick Harvesting Machine Co. v. Brown, (Neb.), 98 N. W. 697; Jackson v. Phillips, 57 Neb. 189; 77 N. W. 683 ; Chism v. Schipper, 51 N. J. L. 1 ; 14 Am. St. Rep. 668 ; 2 L. R. A. 544; 16 Atl. 316; Berry Harvester Co. V. Machine Co., 152 N. Y. 540; 46 N. E. 952; Schoonmaker v. Hoyt, 148 N. Y. 425; 42 N. E. 1059; Smith v. Kerr, 108 N. Y. 31 ; 2 Am. St. Rep. 362; 15 N. E. 70; Travel- ers' Ins. Co. V. Myers, 62 0. S. 529; 49 L. H. A. 760; 57 N. E. 458; McFarland v. R. R., etc.. Associa- tion, 5 Wyom. 126 ; 63 Am. St. Rep. 29; 27 L. R. A. 48; 38 Pac. 347, 677. 3 Ins. Co. V. Crane, 134 Mass. 56; 45 Am. Rep. 282. 4 Atchison, etc., R. R. v. R. R., 162 111. 632; 35 L. R. A. 167; 44 N. E. 823. GENERAL PRINCIPLES OF CONSTRUCTION. 1727 ar to construction of a given form are of value in contracts of similar form, their value rapidly lessening as the form to be con- sidered departs from that considered in the precedent. Other contracts are rarely drawn in set forms, and in their construc- tion precedents are of value chiefly as illustrating the general principles by which the contract in question must be construed. §1105. Ordinary meaning of word prima facie correct. The ordinary meaning of a word is prima facie that em- ployed,^ and will be used in construction unless the context,* or admissible evidence shows that another meaning was in- tended, even if it may not be the accurate meaning,^ or even if the ordinary meaning is so colloquial as not to appear in the dictionary.* §1106. Context and subject-matter control meaning of word. The context and subject-matter may affect the meaning to be given to the words of a contract,^ especially if in connection with the subject-matter the ordinary meaning of the term would give an absurd result.^ The subject-matter of a contract to lay pipe for gas may be invoked to aid in determining the meaning of " light " pipe.^ So under a contract for the sale of a coal business in a certain township, a covenant not to en- 1 Fitzgerald v. Bank, 114 Fed. i Hull, etc, Co. v. Coke Co., 113 474; 52 C. C. A. 276; Francis Bros. Fed. 256; 51 C. C. A. 213; St. Lan- V. Boiler Co., 112 Fed. 899; Mis- dry State Bank v. Meyers, 52 La. souri, etc., Co. v. Bry, 88 Mo. App. Ann. 1769; 28 So. 136; Lehigh, etc., 135; Moore v. Ins. Co., 62 N. H. Coal Co. v. Wright, 177 Pa. St. 387; 240; 13 Am. St. Rep. 556; Metho- 35 Atl. 919; Ullman v. By., 112 Wis. dist, etc., Society v. Water Co., 20 150; 88 Am. St. Rep. 949; 56 L. R. Ohio C. C. 578; 10 Ohio C. D. 648. A. 246; 88 N. W. 41. 2 Brush, etc., Co. v. Montgomery, 2 Pendleton v. Saunders, 19 Or. 114 Ala. 433; 21 So. 960. 9; 24 Pac. 506; Kentzler v. Acci- 3 Kohl V. Frederick, 115 la. 517; dent Association, 88 Wis. 589; 43 88 N. W. 1055. Am. St. Rep. 934; 60 N. W. 1002. 4Ullman v. Ry., 112 Wis. 150; 88 s Columbus Construction Co. v. Am. St. Rep. 949; 56 L. R. A. 246; Crane Co., 98 Fed. 946; 40 C. C. A. 88 N. W. 41; (construction of " ac- 35. cident"). 1728 PAGE ON CONTEACTS. gage in such business for five years, will be construed to mean to engage in such business in such township.* §1107. Technical meaning. Words of technical meaning will be given that meaning/ unless the context shows that the ordinary meaning was in- tended.^ Thus " horse-power " in a contract for the sale of water power has been held to mean the efiicient, and not the theoretical horse-power.^ It is accordingly proper to introduce evidence to show that certain words in a written contract have a technical meaning, and what that meaning is.* Thus evi- dence is admissible to show the meaning of " watch makers' material/'^ " dry goods,"*' " artesian well,"' to " reduce " fire insurance,^ " order " in a contract of agency for the sale of books," " merchantable timber,"" or in the sale of horses, the meaning of " good condition,"" or " safe property,"^" or in con- tracts for the management of railroads, the meaning of " neces- sary signals and switchmen, "^^ or " other similar appliances,"" or " transportation," " switching," and " transfer."^^ 4Melick V. Foster, 64 N. J. L. 9 Xewhall v. Appleton, 114 N. Y. 394; 45 Atl. 911. 140; 3 L. R. A. 859; 21 N. E. 105. 1 Seymour v. Armstrong, 62 Kan. (The agent was to receive fifteen 720; 64 Pae. 612; affirming 10 Kan. dollars for each "order" taken. It App. 10; 61 Pac. 675. was held proper to show that " or- 2 Atkinson v. Sinnott, 67 Miss. der " meant at least five volumes of 602; 7 So. 289. the encyclopaedia taken and paid 3 Lloyd V. Kehl, 132 Cal. 107; 64 for.) Pac. 125. loDorris v. King (Tenn. Ch. 4Grasmier v. Wolf (la.), 90 N. App), 54 S. W. 683. W. 813; Cambers v. Lowry, 21 " Elwood v. McDill, 105 la. 437; Mont. 478; 54 Pac. 816. 75 N. W. 340. sMaril v. Ins. Co., 95 Ga. 604; 12 Thompson v. Pruden, 18 Ohio 51 Am. St. Rep. 102; 30 L. R. A. C. C. 886. 835; 23 S. E. 463. i3 Louisville, etc., Ry. v. Ry., 174 6 Wood V. Allen, 111 la. 97; 82 111. 448; 51 N. E. 824. N. W. 451. "Chicago, etc., Ry. v. Ry., 11$ THattiesburg Plumbing Co. v. Wis. 161; 89 N. W. 180; (whether Carmichael, 80 Miss. 66; 31 So. in view of the context, it included 536; (whether this implied that the a system of interlocking switches), water must rise to the top) is Dixon v. Ry., 110 Ga. 173; sHalsey v. Adams. 63 N. J. L. 35 S. E. 369. 330; 43 Atl. 708; (equivalent to "cancel"). GENEKAL PRINCIPLES OF CONSTRUCTION. 1729 §1108. Meaning of word controlled by usage. Usages/ such as those of a trade,^ may be resorted to to show the special meanings of words. Thus evidence of local usage as to the meaning of " cord " in a sale of cedar posts, or of a trade usage as to " subject to strikes " in a contract for the sale of coal/ is admissible, or as to " on approval " in the diamond trade.* If the meaning of a written contract is clear, a trade usage cannot change the meaning of the words, or add incidents so as to contradict the meaning.^ Thus a contract with a broker for the sale of certain articles, " seller paying brokerage at ten cents per ton," cannot be contradicted to cut down the broker's recovery by showing a usage to pay com- missions only on the amount delivered.^ l^o usage can be in- voked to change rules of law. Thus a usage among brokers that stock certificates are negotiable is invalid.^ §1109. Cipher. If a contract consists in part or all of cipher, extrinsic evi- dence is admissible to show the meaning of the terms written in cipher contracts by telegraph.^ Thus the meaning of " Buy three May," may be so explained.^ Without such evidence a contract in cipher could have no validity. 1 Metropolitan Exhibition Co. v. s Deacon v. Mattison, 11 N. D. Ewing, 42 Fed. 198; 7 L. R. A. 381. 190; 91 N. W. 35. 2 Seymour v. Armstrong, 62 Kan. 6 Fairly v. Wappoo Mills, 44 S. 720; 64 Pae. 612; affirming 10 Kan. C. 227; 29 L. R. A. 215; 22 S. E. App. 10; 61 Pac. 675; Smith v. 108. Clews, 114 N. Y. 190; 11 Am. St. 7 East Birmingham Land Co. v. Rep. 627; 4 L. R. A. 392; 21 N. Dennis, 85 Ala. 565; 7 Am. St. Rep. E. 160. 73; 2 L. R. A. 836; 5 So. 317. 3 Hesser, etc., Co. v. Fuel Co., 114 i Western Union Telegraph Co. Wis. 654; 90 N. W. 1094; (that is, v. Collins, 45 Kan. 88; 10 L. R. A. whether local or general strikes were 515; 25 Pac. 187. intended). 2 Garland v. Telegraph Co., 118 4 Smith V. Clews, 114 N. Y. 190; Mich. 369; 74 Am. St. Rep. 394; 4» 11 Am. St. Rep. 627; 4 L. R. A. L. R. A. 280; 76 N. W. 762. 392; 21 N. E. 160. 109 1730 PAGE ON CONTKACTS. §1110. Abbreviations. If abbreviations are used in a written contract, extrinsic evi- dence is admissible to show that thej have a meaning in the trade or business to which the subject of the contract relates which is generally recognized and understood among those familiar with such trade or business.^ Thus extrinsic evidence is admissible to show the meaning of " S/87 wheat,"^ " C. L. E. P. oats,"^ " stripped and sample warranted # 208,"* " O. K,"' " K D. and released,'"' " Care E. E. agt. Callahan."' The meaning of the abbreviation must be understood by both parties, however, if the court is to adopt such meaning as that intended by the parties. Thus, " L & O Ex. $20 E. E. val." cannot be shown to mean " Leaks and outs excepted $20 rail- road valuation," unless such meaning was known to the shipper as well as to the railroad.* Even if the contract is one which by the statute of frauds must be proved by writing, extrinsic evidence is admissible to show the meaning of abbreviations.^ iMcChesney v. Chicago, 173 111. 75; 50 N. E. 191; Western Union Telegraph Co. v. Collins, 45 Kan. 88; 10 L. R. A. 515; 25 Pac. 187; Maurin v. Lyon, 69 Minn. 257; 65 Am. St. Rep. 568; 72 N. W. 72; Springfield First National Bank v. Fricks, 75 Mo. 178; 42 Am. Rep. 397. 2 Berry v. Kowalsky, 95 Cal. 134 ; 29 Am. St. Rep. 101; 27 Pac. 286; 30 Pac. 202. 3 Wilson V. Coleman, 81 Ga. 297; 6 S. E. 693; ("Car Loads Rust Proof Oats"). 4 Conestoga Cigar Co. v. Finke, 144 Pa. St. 159; 13 L. R. A. 438; 22 Atl. 868; (in a sale of tobacco). 5 Penn Tobacco Co. v. Leeman, 109 Ga. 428; 34 S. E. 679; (to show it amounts to a guaranty). eMouton v. Ry., 128 Ala. 537; 29 So. 602. 7 Savannah, etc., R. R. v. Collins, 77 Ga. 376; 4 Am. St. Rep. 87; 3 S. E. 416. (To show that the rail- road was to deliver the goods to the agent of another company at Colla- han.) sRosenfeld v. Ry., 103 Ind. 121; 53 Am. Rep. 500; 2 N. E. 344. 9 Contract for the sale of realty: Melone v. Ruffino, 129 CaL 514; 79 Am. St. Rep. 127; 62 Pac. 93. Contract for the sale of personal- ty: New England, etc., Co. v. Wor- sted Co., 165 Mass. 328; 52 Am. St. Rep. 516; 43 N. E. 112. ("F. C. Wool.") Maurin v. Lyon, 69 Minn. 257 ; 65 Am. St. Rep. 568 ; 72 N. W. 72. (In this case the written mem- orandum was as follows : " St. Cloud, 7-6-96. sold Maurin Bros., Cold Springs. 5000, 1-0 Jul. Del. 99 C. Duluth " and signed.) GENERAL PRINCIPLES OF CONSTRUCTION. 1731 §1111. Intention of parties direct as affecting meaning of term. If the parties have used words which have au ordinary mean- ing free from ambiguity, and no technical meaning is shown, extrinsic evidence is inadmissible to show that the parties used such terms in a sense different from their ordinary meaning, as the only effect of such evidence would be to contradict the legal effect of the language which the parties themselves have used.^ Thus evidence is not admissible to show the meaning of " to be advertised till sold,"' " delivered East St. Louis,"^ " wholesale prices,"* or to mine ore at a certain price as long " as we can make it pay."^ Under a contract for drilling for gas or oil a provision to pay for " gas " cannot be shown to mean only gas from a gas well and not gas from a well producing oil chiefly.^ So under a contract concerning " bales " of cotton, it was held that the parties could show what meaning " bales " had by usage ; but that they could not show an oral contract between the parties fixing a weight for a " bale."^ So under a contract which refers to the *" amount " of grading it cannot be shown that " amount " means cost and not quantity.^ If, on the other hand, the term used is one which has two or more meanings, evidence of the intention of the parties direct is admissible to show in which sense it was used." So if a written receipt refers to a " due bill " evidence is admissible to show that by such expression the parties intended a certain 1 Adams v. Turner, 73 Conn. 38 ; 6 Burton v. Oil Co., 204 Pa. St. 46 Atl. 247; Chase v. Ainsworth, — 349; 54 Atl. 266. Mich. — ; 97 N. W. 404. 7 Stewart v. Cook, 118 Ga. 541 ; 45 2 Wikle V. Johnson Laboratories, S. E. 398. 132 Ala. 268; 31 So. 715. s Ryan v. Dubuque, 112 la. 284; 3 Lippert v. Milling Co., 108 Wis. 83 N. W. 1073. 512; 84 N. W. 831. Bank of New Zealand v. Simp- 4Fawkner v. Wall Paper Co., 88 son (1900). App. Cas. 182; Kelly la. 169; 45 Am. St. Hep. 230; 55 v. Fejervary, 111 la. 693; 83 N. W. N. W. 200. 791; Streeter v. Seigman (N. J. 5 Davie v. Mining Co.. 93 Mich. Eq.), 48 Atl. 907; Phetteplace v. 491; 24 L. R. A. 357; 53 N. W. Ins. Co., 23 R. I. 26; 49 Atl. 33; 625. (Oral evidence is inadmissible Andrews v. Robertson, 111 Wis. to show that this means "as long 334; 87 Am. St. Rep. 870; 54 L, R. as we can make company wages.") A. 673; 87 N. W. 190. 1732 PAGE ON CONTEACTS. promissory note/^ So the meaning which the parties give to " outstanding accounts " may be shown.^^ So if the term " perch " is shown to have two meanings when used as a measure of stone, the direct intention of the parties may be considered in ascertaining which meaning of the term was intended.^^ So un- der a contract providing for " wholesale factory prices " it was held proper to show that the parties intended a scale differing from actual wholesale prices/^ It will be seen that some of the cases cited under the second branch of the rule are really contrary to those cited under the first branch. The cases under the second branch are some of them cases where, in spite of the general rule,^* the courts have really given reformation in an action at law under cover of construction. §1112. Contract construed as a whole. Since the object of construction is to ascertain the intention of the parties, the contract must be considered as an entirety. The problem is not what the separate parts of the contract mean, but what the contract means when considered as a whole.^ 10 Andre\A'i'v. Robertson, 111 Wis. the term "perch" meant sixteen 334; 87 Am. St. Rep. 870; 54 L. R. and a half feet; in railroad masonry A. 673; 87 N. W. 190. it meant twenty-five feet; and in 11 McCutsky V. Klosterman, 20 bridge masonry, which was the sub- Or. 108; 10 L. R. A. 785; 25 Pac. ject of the contract, the term was 366. (To show that it meant ac- ambiguous.) counts outstanding after charging is Barrett v. Allen, 10 Ohio 426. the bad accounts to profit and loss.) i* See § 1131. 12 Quarry Co. v. Clements, 38 O. i O'Brien v. Miller, 168 U. S. 287; S. 587; 43 Am. Rep. 442. (In this Brush, etc., Co. v. Montgomery, 114 case evidence was admitted to show Ala. 433; 21 So. 960; Siegel, etc., that the parties had agreed that Co. v. Colby, 176 111. 210; 52 N. E. stone shouFd be furnished at eighteen 917; afiirming, 61 111. App. 315; St. cents per cubic foot, and that the Landry State Bank v. Meyer, 52 La. scrivener who drew the contract of Ann. 1769; 28 So. 136; Tete v. Lan- his own motion, stated this rate by aux, 45 La. Ann. 1343; 14 So. 241; the perch and assumed that twenty- Jackson v. Phillips, 57 Neb. 189; five cubic feet made a perch. Ac- 77 N. W. 683; Ballou v. Sherwood, cordingly he stated the rate at four 32 Neb. 666; 49 K W, 790; 50 N. dollars and fifty cents a perch. The W. 1131; Monmouth Park Associa- evidence showed that in cellar walls tion v. Iron Works, 55 N. J. L. and foundations by the local usage 132; 39 Am. St. Rep. 626; 19 L. R GE^TERAL PRINCIPLES OF CONSTRUCTION. 1733 A contract must be thus construed even if the separate parts are clear and free from ambiguity.^ Thus the name given by the jDarties to the contract is not conclusive, and if, considering it as a whole, it is evidently an instrument of a sort different from that which the parties have called it, it must be treated as what it is and not what it is called.^ Thus an instrument called a " special selling factor appointment " may be construed as a contract of sale,* or an instrument called a lease may be construed as a conditional sale, the title being reserved for security.^ So money paid by an insurer to an insured equal in amount to the loss under the policy may be construed as payment, though it was called a " loan " by the contract under which it was paid, which provided that so much thereof as might be recovered from the carrier, whose liability for the loss was then under investigation should be repaid by the in- sured to the insurer.^ So the fact that the language used in the instrument under consideration is in part appropriate and pecul- iar to a certain kind of instrument is not of itself conclusive that the instrument is of that kind/ A. 456; 26 Atl. 140; Chism v. Schip- Dederick v. Wolfe, 68 Miss. 500; 24 per, 51 N. J. L. 1 ; 14 Am, St. Rep. Am. St. Rep. 283; 9 So. 350; Ar- 668; 2 L. R. A. 544; 16 Atl. 316; buckle v. Kirkpatrick, 98 Tenn. 221; Sattler v. Hallock, 160 X. Y. 291; 60 Am. St. Rep. 854; 36 L. R. A. 73 Am. St. Rep. 686; 46 L. R. A. 285; 39 S. W. 3; Cowan v. Mfg. Co., 679; 54 N. E. 667; German Fire 92 Tenn. 376; 21 S. W. 663; Singer Ins. Co. V. Roost, 55 O. S. 581; 60 Mfg. Co. v. Cole, 4 Lea (Tenn.) 439; Am. St. Rep. 711; 36 L. R. A. 236; 40 Am. Rep. 20. 45 N. E. 1097 ; Arbuckle v. Kirkpat- 4 Arbuckle v. Kirkpatrick, 98 rick, 98 Tenn. 221; 60 Am. St. Rep. Tenn. 221; 60 Am. St. Rep. 854; 36 854; 36 L. J^. A. 285; 39 S. W. 3; L. R. A. 285; 39 S. W. 3. McKay v. Barnett, 21 Utah 239; 50 5 Fidelity, etc., Co. v. R. R., 86 L. R. A. 371; 60 Pac. 1100; Kentz- Va. 1; 19 Am. St. Rep. 858; 9 S. E. ler V. Accident Association, 88 Wis. 759. 689; 43 Am. St. Rep. 934; 60 K W. 6 Lancaster Mills v. Cotton Press 1002. Co., 89 Tenn. 1; 24 Am. St. Rep. 2 O'Brien v. Miller, 168 U. S. 287. 586; 14 S. W. 317. sHerryford v. Davis, 102 U. S. 7 Burlington University v. Bar- 235, 244; Hervey v. Locomotive rett, 22 la. 60; 92 Am. Dec. 376; Works, 93 U. S. 664; Stockton Sav- Lauck v. Logan, 45 W. Va. 251; 31 ings Society v. Purvis, 112 Cal, 236; S. E. 986. 53 Am. St. Rep. 210; 44 Pac. 561; 1734 PAGE ON CONTRACTS. §1113. General paramount intent controls special intent. The contract being construed as a whole, it follows that one part of it may affect the construction of a different part.^ An illustration of this is found where the contract as a whole shows a given intention, but certain words or phrases if taken literally will defeat such intention. In such case the particular words or phrases will, if possible, be construed in such a way as to be consistent with the general intention.^ §1114. Every part of contract given effect if practicable. The parties have inserted each provision in the contract, and accordingly, if possible, a contract should be so construed as to give effect to each provision inserted therein.^ Thus a clause in a building contract providing that no lien should be taken thereunder is not repugnant to a subsequent provision requiring the contractor to show by sufficient evidence that the premises 1 Pensacola Gas Co. v. Lotze, 23 ria. 368; 2 So. 609; Lindley v. Groff, 37 Minn. 338; 34 N. W. 26 Ballou V. Sherwood, 32 Neb. 666 49 N. W. 790; 50 N. W. 1131 Chism V. Schipper, 51 N. J. L. 1 14 Am. St. Rep. 668; 2 L. R. A. 544 16 Atl. 316. 2Erickson v. United States, 107 Fed. 204; Speed v. Ry., 86 Fed. 235; 30 C. C. A. 1 ; Rockefeller v. Merritt, 76 Fed. 909; 35 L. R. A. 633; 22 C. C. A. 608; Stockton Savings So- ciety V. Purvis, 112 Cal. 236; 53 Am. St. Rep. 210; 44 Pac. 561; Whalen v. Stephens, 193 111. 121: 61 N. E. 921; affirming, 92 111. App. 235; Seaver v. Thompson, 189 111. 158; 59 N. E. 553; Kennedy v. Ken- nedy, 150 Ind. 636; 50 N. E. 756; City of Garden City v. Heller, 61 Kan. 767; 60 Pae. 1060; Spragiie Electric Co. v. Hennepin County, 83 Minn. 262 ; 86 N. W. 332 ; Chism v. Schipper, 51 N. J. L. 1; 14 Am. St. Rep. 668; 2 L. R. A. 544; 16 Atl. 316; Arbuekle v. Kirkpatrick, 98 Tenn. 221; 60 Am. St. Rep. 854; 36 L. R. A. 285; 39 S. W. 3; Collins v. Lavelle, 44 Vt. 230. 1 First National Bank v. Ry., 36 Fla. 183; 18 So. 345; Snoqualmi Realty Co. v. Moynihan, — Mo. — ; 78 S. W. 1014; Ricketts v. Buck- staff, 64 Neb. 851; 90 N. W. 915; McGavock v. Bank, 64 Neb. 440; 90 N. W. 230 ; Lawton v. Fonner, 59 Neb. 214; 80 N. W. 808; Chrisman V. Ins. Co., 16 Or. 283; 18 Pac. 466; German Fire Ins. Co. v. Roost, 55 O. S. 581; 60 Am. St. Rep. 711; 36 L. R. A. 236; 45 N. E. 1097; Com- monwealth, etc., Co. V. Ellis, 192 Pa. St. 321; 73 Am. St. Rep. 816; 43 Atl. 1034; Philadelphia v. River Front R. Co., 133 Pa. St. 134; 19 Atl. 356; Smith v. Smith, 33 S. C. 210; 11 S. E. 761; McKay v. Bar- nett, 21 Utah 239; 50 L. R. A. 371; 60 Pac. 1100. GENERAL PEINCIPLES OF CONSTRUCTION. 1735 are free of liens.^ Whether in this sense a printed heading is a part of the contract written thereunder is a question on which there seems to be some conflict. It has been held that a printed heading on an order blank may be looked to to show that the order was taken as a publisher and not as an engraver f while a notice on a letter head that all orders were subject to delays arising from strikes was held not a part of a contract written thereunder/ and terms printed at the head of a bill cannot be considered as a waiver of express provisions of the written contract for the sale of such goods, which contract is contained in a letter mailed on the same day as that on which the goods are shipped.^ The rule that every part of the con- tract must be given effect, applies to a contract that is partly written and partly oral.® §1115. Incorporation of writing by reference. Since a contract must be construed as a whole, effect must be given to writings incorporated in the contract by reference.^ Thus the agent of an insurance company agreed to issue a standard policy. Such policy was not issued. In an action by the insured after loss for damages caused by breach of such contract it was held that the standard form of policy was a part of such contract, and hence the insured was bound to show that the same proof of loss had been made as if the policy had is- sued." However, a contract to give a mortgage " in your usual form " does not give the right to insert " unusual terms and conditions " different from those used before.^ It is not neces- 2 Commonwealth, etc., Co. V. Ellis, (Ala.), 12 So. 768; Chicago, etc., 192 Pa. St. 321; 73 Am. St. Eep. Bank v. Trust Co., 190 111. 404; 83 816; 43 Atl. 1034. Am. St. Rep. 138; 60 N. E. 586; sYorston v. Brown, 178 Mass. affirming. 92 111. App. 366; Hicks v. 103; 59 N. E. 654. Assurance Co., 162 N. Y. 284; 48 L. 4 Summers v. Hibbard, 153 111. R. A. 424; 56 N. E. 743. 102; 46 Am. St. Rep. 872; 38 N. E. 2 Hicks v. Assurance Co., 162 N. 899. Y. 284; 48 L. R. A. 424; 56 N. E. sMillhiser v. Erdmann. 103 N. C. 743. 27; 9 S. E. 582; see § 600. 3 Peabody v. Dewey. 153 111. 657; 6 Wood V. Perkins, 57 Fed. 258. 27 L. R. A. 322; .39 N. E. 977 (such 1 Piedmont, etc., Co. v. Motor Co, as a provision for payment in gold ) . 1736 PAGE ON CONTEACTS. sary that the writing thus incorj^wrated should be signed.* Thus a reference to specifications may incorporate them.^ So in a contract to paint certain houses " according to the annexed specifications " a letter showing the kind of paint, the quality, and the manner of its apiDlication may be " specifications."* However, a reference to plans incorporates them only as plans, and does not incorporate a provision inserted by the city en- gineer forbidding assignment of the contract and providing for deduction for delay.'^ So a reference to an unsigned bill of sale,^ or to a blank unsigned warranty on the back of the contract,^ or a provision that the contract is to be performed according to the city ordinances,^" in each case incorporates such Unsigned instrument into the contract. So an ambiguous ref- erence in a later contract to an earlier one may be explained by the contents of such earlier one.^^ In accordance with the doc- trine of offer and acceptance^^ such writing can be considered a part of the contract only if communicated to the adversary party." §1116. Different writings construed together. To have two or more writings construed together it is not necessary that one of them should refer to the other in express terms. If two or more writings are executed at the same time, between the same j)arties , and concerning the same subject- matter, they may be construed together as a part of the same 4 White V. McLaren, 151 Mass. a Grieb V- Cole, 60 Mich. 397; 1 553; 24 N. E. 911; Coe v. Tough, Am. St. Rep. 533; 27 N. W. 579. 116 N. Y. 273; 22 N. E. 550. lo Philadelphia v. Jewell, 135 Pa. 5 Lake View v. MacRitchie, 134 St. 329; 19 .Atl. 947; 20 Atl. 281. 111. 203; 25 N. E. 663; White v. (Hence it incorporates an ordinance McLaren, 151 Mass. 553; 24 N. E. requiring the work to be finished ia 911; Watson v. O'lSTeill, 14 Mont. two years.) 197; 35 Pac. 1064. n Mjones v. Bank, 45 Minn. 335; 6 McGeragle v. Broemel, 53 N. J. 47 N. W, 1072. L. 59; 20 Atl. 857. 12 See § 30 et seq. 7 Young V. Borzone, 26 Wash. 4, i3 Tichnor v. Hart, 63 Mipn. 407; 23; 66 Pac. 135, 421. 54 N. W. 369. 8 Coe V. Tough, 116 N. Y. 273; 22 jSr. E. 550. GENEKAL PEINCIPLES OF CONSTRUCTION. 1737 ccntract/ at least in the absence of evidence to the contrary.* Thus a note and the contract under which it was made,^ espe- cially if the note refers to the contract/ a deed, mortgage and note,^ a building and loan association note, mortgage and con- tract/ a deed and a chattel mortgage/ a contract and a chattel mortgage/ a land contract and a bond/ a deed and a lease/** a lease and a contract/^ a will, deed, and contract,^^ and a deed and an acknowledgment of trust by the grantee^ '^ may in each iJoy V. St. Louis, 138 U. S. 1; Prichard v. Miller, 86 Ala. 500; 5 So. 784; Meyer v. Weber, 133 Cal. 681; 65 Pac. 1110; Flinn v. Mowry, 131 Cal. 481; 63 Pac. 724; modified, 63 Pac. 1006; Weston v. Estey, 22 Colo. 334; 45 Pac. 367; Howard v. Ry., 24 Fla. 560; 5 So. 356; Chicago, etc., Bank v. Trust Co., 190 111. 404; 83 Am. St. Rep. 138; 60 N. E. 586; affirming, 92 111. App. 366; Hunter V. Clarke, 184 111. 158; 75 Am. St. Rep. 160; 56 N. E. 297; affirming, 83 111. App. 100; Wichita University V. Schweiter, 50 Kan. 672; 32 Pac. 352; Phelps-Bigelow Windmill Co. V. Piercy, 41 Kan. 763; 21 Pac. 793; Shuttleworth v. Development Co. (Ky.), 60 S. W. 534; Smith v. Theobald, 86 Ky. 141 ; 5 S. W. 394 ; Washburn, etc., Mfg. Co. v. Salis- bury, 152 Mass. 346; 25 N. E. 724; Makepeace v. College, 10 Pick. (Mass.) 298; McNamara v. Gargett, 68 Mich. 454; 13 Am. St. Rep. 355; 36 N. W. 218; Sutton v. Beckwith, 68 Mich. 303; 13 Am. St. Rep. 344; 36 N. W. 79; Eberts v. Selover, 44 Mich. 519; 38 Am. Rep. 278; 7 N. W. 225; Jennings v. Todd, 118 Mo. 296; 40 Am. St. Rep, 373; 24 S. W. 148; Gwin v. Waggoner, 98 Mo. 315; 11 S. W. 227; Palmer v. Pal- mer, 150 N. Y. 139; 55 Am. St. Rep. 653; 44 N. E. 966; Mott v. Richt- meyer, 57 N. Y. 49; Hills v. Miller, 3 Paige (N. Y.) 2.54; 24 Am. Deo. 218; Bradtfeldt v. Cooke, 27 Or. 194; 50 Am. St. Rep. 701; 40 Pac. 1 ; Dallas National Bank v. Davis, 78 Tex. 362; 14 S. W. 706; Rhoades V. R. .R., 49 W. Va. 494; 87 Am. St, Rep. 826; 55 L. R. A. 170; 39 S. E. 209; Hannig v. Mueller, 82 Wis. 235 ; 52 N. W. 98. 2 Weber v. Rothchild, 15 Or. 385 ; 3 Am. St. Rep. 162; 15 Pac. 650. 3 Beach's Appeal, 58 Conn. 464; 20 Atl. 475; Seieroe v. Bank, 50 Neb. 612; 70 N. W. 220. 4 Solomon Solar Salt Co. v. Bar- ber, 58 Kan. 419; 49 Pac. 524, 5 Bradtfeldt v. Cooke, 27 Or. 194; 50 Am. St. Rep. 701; 40 Pac. 1. 6 Interstate, etc.. Association v. Knapp, 20 Wash, 225; 55 Pac, 48; rehearing denied, 20 Wash, 230; 55 Pac, 931, 7 Stapleton v, Brannon, 102 Wis. 26; 78 N, W, 181. sEdling V. Bradford, 30 Neb. 593; 46 N. W, 836, 9 Coughran v. Bigelow, 9 Utah 260; 34 Pac, 51. lost. Paul, etc., Ry. v. Depot Co., 44 Minn. 325; 46 N. W. 566. 11 Clark V. Needham, 125 Mich, 84; 84 Am, St. Rep. 559; 51 L. R. A, 785; 83 N. W. 1027. (To show that the lease was intended to create a monopoly. See § 434.) 12 Copeland v, Sumers, 138 Ind, 219; 35 N. E. 514; rehearing de- nied, 138 Ind, 226; 37 N, E. 971. 13 Chute V, Washburn. 44 Minn. 312; 46 N. W. 555, 1738 PAGE ON CONTRACTS. case be construed together. So a term inserted in one letter need not be repeated in subsequent letters on the same subject, not inconsistent with such term in order to preserve its force.^* While a note may be construed in connection with a contempora- neous contract, such construction cannot be invoked to modify its legal effect if it is in the hands of a bona fide holder for value.^^ If the two contracts are not executed at the same time but refer to the same subject-matter and on their face show that they were" executed each as a means of carrying out the same intent as the other, they may be construed together.^* Thus a note and the contract, executed a few days before the note, in consideration of which it was executed,^^ a transfer of stock and the contract under which it was transferred,^^ and a trust deed and a deed thereunder^® are to be construed to- gether. Even if two writings are executed on different dates and between different parties, they may from their subject- matter be so connected that even without express reference the later contract is to be so construed as to be read in connec- tion with the earlier.'** Thus the contract of a sub-contractor with the chief contractor must be construed with that between the chief contractor and the owner,^^ a contract of sale and an authority to sell must be construed together,"- and a prospectus and a land contract must be construed together."^ If two con- 'rncts between the same parties dealing with the same subject- :i- Georgia, etc., Co. v. Smith, 83 isMt. Morris v. Thomas, 158 N. Ga. 626; 10 S. E. 235. Y. 450; 53 N. E. 214. 15 Jennings V. Todd, 118 Mo. 296; i9 Leach v. Rains, 149 Ind. 152; 40 Am. St. .Rep. 373; 24 S. W. 148. 48 N. E. 858. leDrennen v. Satterfield, 119 Ala. 20 Drennen v. Satterfield, 119 Ala. 84; 24 So. 723; Melone v. Ruffino, 84; 24 So. 723; Melone v. Ruffino, 129 Cal. 514; 79 Am. St. Rep. 127; 129 Cal. 514; 79 Am. St. 127; 62 62 Pac. 93; Chicago, etc., Bank v. Pae. 93; Delogny v. Mercer, 43 La. Trust Co., 190 TIL 404; 83 Am. St. Ann. 205; 8 So. 903; Shaw v. Rep. 138; 60 X. E. 586; affirming. Church, 44 Minn. 22; 46 X. W. 146, 92 111. App. 366; Delogny v. Mer- 21 Shaw v. Church, 44 Minn. 22? cer, 43 La. Ann. 205; 8 So. 903; 46 N. W. 146. Talbott V. Heinze, 25 Mont. 4; 63 22 Melone v. Ruffino, 129 Cal. 514; Pac. 624; Mt. Morris v. Thomas, 158 79 Am. St. Rep. 127; 62 Pac. 93. N. Y. 450; 53 N. E. 214. 23 Delogny v. Mercer. 43 La. Ann. 17 Talbott V. Heinze, 25 Mont. 4 ; 205 ; 8 So. 903. 63 Pac. 624. GENEEAI, PKINCIPLES OF CONSTRUCTION. 1739 matter are executed on different dates and cannot be construed together, the latter of course abrogates the earlier.^* On the other hand, if the two instruments are not connected in inten- tion, especially where they are executed on different dates, as two deeds executed a week apart,^^ or if they deal with differ- ent subject-matters, even if executed on the same date, as inde- pendent contracts for the sale of different lots,^^ they cannot be construed together. §1117. Law part of contract. The law in force when a contract is made is a part of sucli contract as fully as if its provisions had been incorporated into such contract.^ Thus a contract between heirs with reference to property descending to them is governed by the law of de- scent as then interpreted by the court, and a subsequent change of judicial decision will not change the legal effect of such contract.^ An unconstitutional statute does not become a part of a contract made after such statute is passed and before it is declared unconstitutional, where the contract does not expressly incorporate the provisions of such statute.^ Even if the pro- visions of the unconstitutional statute are carried into the con- tract in compliance with the peremptory requirements of such statute, they do not thereby in legal effect become a part of such contract.* " It is not in the power of the legislature to 24 Heine Safety-Boiler Co. v. 367; Haskett v. Maxey, 134 Ind. Francis Brothers, 10.5 Fed. 413. 182; 19 L. R. A. 379; 33 N. E. 358; 25 Nye V. Lovitt, 92 Va. 710; 24 Graves County Water Co. v. Ligon, S. E. 345. . 112 Ky. 775; 66 S. W. 725; Phinney 26 Clark V. Neumann, 56 Neb. v. Phinney, 81 Me. 450; 10 Am. St. 374; 76 N. W. 892. Rep. 266; 4 L. Jl. A. 348; 17 Atl. 1 Bank v. Eaton, 95 Fed. 355 ; Ede 405 ; Manistee Iron Works Co. v. V. Knight, 93 Cal. 159; 28 Pac. 860; Lumber Co., 92 Wis. 21; 65 N. W. Kendall v. Fader, 199 111. 294; 65 863. N. E. 318; affirming, 99 III. App. 2 Haskett v. Maxey, 134 Ind. 182: 104; Andrews, etc., Co. v. Atwood, 19 L. R. A. 379; 33 N. E. 358. 167 111. 249; 47 N. E. 387; affirm- s Palmer v. Tingle, 55 O. S. 423; ing, 67 111. App. 303; Barrett v. 45 N. E. 313. Boddie, 158 111. 479; 49 Am. St. * People v. Coler, 166 N. Y. 1: Rep. 172; 42 N. E. 143; 43 N. E. 82 Am. St. Rep. 605; 59 N. E. 716; 1740 PAGE ON CONTRACTS. protect an invalid law from judicial scrutiny by providing that it must receive the assent of the parties to every contract to which it relates."^ §1118. Covenant implied from writing equivalent to written promise. Since a contract is to be construed as a whole, terms which can be inferred from a consideration of the entire instrument are as much a part of the contract as if expressly set forth therein.^ Thus a provision requiring notice may be equivalent to a covenant to give notice.^ So the " assumption " of debts includes a promise to pay them,^ and a provision that '' bills bear interest after maturity " includes a contract to pay interest.* This principle is often invoked where questions of mutuality are concerned. If the consideration relied upon for one execu- tory promise is another, such other must itself be binding to constitute a legal obligation and a valuable consideration. Al- though the promise relied upon as a consideration may not be expressly stated in any clause of the contract, still if it appears from the entire contract that such promise is intended, it will be as binding and as much a valuable consideration as though it were expressly stated.^ Thus a promise to pay for realty agreed to be conveyed,^ or to permit the use of certain realty in consideration of the lease of other realty^ may be implied Cleveland v. Construction Co., 67 0. 2 Wells v. Alexandre, 130 N. Y. S. 197; 93 Am. St. Rep. 670; 59 L. 642; 15 L. H. A. 218; 29 N. E. 142. R. A. 775; 65 N. E. 885. 3 Lenz v. Ry., Ill Wis. 198; 86 N. 5 People V. Coler, 166 N. Y. 1, 9; W. 607. 82 Am. St. Rep. 605; 59 N. E. 716; 4 Braun v. Hess, 187 111. 283; 79 quoted in Cleveland v. Construction Am. St. Rep. 221; 58 N. E. 371. Co., 67 O. S. 197; 9.3 Am. St. 670; s Lawler v. Murphy, 58 Conn. 294; 59 L. R. A. 775; 65 N. E. 885. 8 L. R. A. 113; 20 Atl. 457; Haines iLawler v. Murphy, 58 Conn. v. Dearborn, 199 Pa. St. 474; 49 294; 8 L. R. A. 113; 20 Atl. 457; Atl. 319. Grimley v. Davidson, 133 HI. 116; e Haines v. Dearborn, 199 Pa. St. 24 N. E. 439; Nicoll v. Sands, 131 474; 49 Atl. 319. N. Y. 19; 29 N. E. 818; Jugla v. 7 stubblefield v. Imbler, 33 Or. Trouttet, 120 N. Y. 21; 23 N. E. 446; 54 Pac. 198. 1066; New England, etc., Co. v, R. R. Co., 91 N. Y. 153. GENEKAL I'KINCIPLES OF CONSTRUCTION. 1741 from the entire contract. So a clause " machines to be re- turned by B to A at the termination of the contract on her repayment of their original cost " binds A to accept such machines and to repay their original cost.* §1119. Written and printed provisions. If the contract is written in part and printed in part, as where it has been filled in upon a printed form, the parties usually pay much more attention to the written parts than to the printed parts. Accordingly if the written provisions can- not be reconciled with the printed the written provisions con- trol.^ The written parts are " the immediate language and terms selected by the parties themselves for the expression of their meaning,"" and accordingly must control in case of con- flict. Thus where in a land contract the written and printed portions are at variance as to the character of deed to be given the written controls.^ The same principle applies where a contract has been filled in in writing upon the blanks in a type-written form.^ The written part will, however, prevail only in so far as the inten- 8 Norfolk, etc., Co. v. Arnold, 64 N. J. 254; 45 Atl. 608; reversing, 44 Atl. 192. lAlsager v. Dock Co., 14 M. & VV. 794; Robertson v. French, 4 East 130; Hagan v. Ins. Co., 186 U. S. 423; Thornton v. E. R., 84 Ala. 109; 5 Am. St. Rep. 337; 4 So 197; Chicago v. Weir, 165 111. 582 46 N. E. 725 ; affirming, 67 111. App 247; Summers v. Hibbard, 153 111 102; 46 Am. St. Rep. 872; 38 N. E 899; Holmes v. Parker, 125 111. 478 17 N. E. 759; affirming, 25 HI. App 225; People v. Dulaney, 96 111. 503 Adams Express Co. v. Pinckney, 29 111. 392; Mansfield Machine Works V. Lowell, 62 Mich. 546; 29 N. W. 105; Murray v. Pillsbury. 59 Minn. 85; 60 N. W. 844; Frost's, etc., Co. V. Ins. Co., 37 Minn. 300; 5 Am. St, Rep. 846; 34 N. W. 35; Davis v. Creamery Co., 48 Neb. 471; 67 N. W. 436; Union Pacific Ry. v. Grad- dy, 25 Neb. 849; 41 N. W. 809; Eager v. Mathewson, — Nev. — ; 74 Pac. 404; Commonwealth, etc., Co. V. Ellis, 192 Pa. St. 321; 73 Am. St. Jlep. 816; 43 Atl. 1034; Dick V. Ireland, 130 Pa. St. 299; 18 Atl. 735; Duffield v. Hue, 129 Pa. St. 94; 18 Atl. 566; Gilbert v. Stockman, 76 Wis. 62; 20 Am. St. Rep. 23 ; 44 N. W. 845. 2 Summers v. Hibbard, 153 111. 102, 109; 46 Am. St. Rep. 872; 38 N. E. 899. 3 Gilbert v. Stockman, 76 Wis. 62 ; 20 Am. St. Rep. 23 ; 44 N. W. 845. 4 Sprague Electric Co. v. Henne- pin County, 83 Minn. 262; 86 N. W. 332. 1742 PAGE ON CONTBACTS. tion of the parties to modify tlie printed portion by the writ- ten can fairly be inferred,^ and the two provisions will be con- strued together if possible.*' §1120. Contract to be upheld by construction if possible. As between two constructions, each reasonable, one of which will make the contract enforceable, and the other of which will make it unenforceable, that construction which makes the contract enforceable will be preferred.^ Thus if a contract is fairly open to two constructions, one of which will accomplish the intention of the parties and the other of which will defeat such intention^ or will make the contract meaningless,^ the former construction is to be preferred. So if one construc- tion will make a contract legal and another will make it illegal the former is to be preferred.* So a construction which will accord with public policy is to be preferred to one contrary thereto.^ If the interest of the public is affected by a contract, it should be construed so as to protect such interest.** §1121. Contract construed to be fair and reasonable. As between two constructions, each probable, one of which makes the contract fair and reasonable and the other of which 5 Frost, etc., Co. v. Ins. Co., 37 272; Atlanta Guano Co. v. Phipps Minn. 300; 5 Am. St. Rep. 846; 34 (Tenn. Ch. App.), 41 S. W. 1087. N. W. 35. 3 Shreffler v. Nadelhoffer, 133 111. eHardie, etc., Co. v. Oil Mill, — 536; 23 Am. St. Rep. 626; 25 N. E. Miss. — ; 36 So. 262. 630. 1 Shreffler v. NadelhoflFer, 133 111. * South Carolina, etc., Hy. v. Ry., 536; 23 Am. St. Rep. 626; 25 N. E. 93 Fed. 543; 35 C. C. A. 423; Wyatt 630; New Memphis Gaslight Co. v. Irrigation Co., 18 Colo. 298; 36 Cases, 105 Tenn. 268; 80 Am. St. Am. St. Rep. 280; 33 Pac. 144; Al- Rep. 880; 60 S. W. 206; Morley v. free v. Gates, 82 la. 19; 47 N. W. Power, 10 Lea (Tenn.) 219. 993; Pitney v. Bolton, 45 N. J. Eq. 2 Cravens V. Cotton Mills, 120 Ind. 639; 18 Atl. 211; North Pacific 6; 16 Am. St. Rep. 298; 21 N. E. Lumber Co. v. Spore, — Or. — ; 981 ; Powers v. Clarke, 127 N. Y. 75 Pac. 890. 417; 28 N. E. 402; New Memphis 5 Rackemann v. Improvement Co., Gaslight Co. Cases, 105 Tenn. 268; 167 Mass. 1; 57 Am. St. Rep. 427; 80 Am. St. Rep. 880; 60 S. W. 206; 44 N. E. 990. Frierson v. Blanton, 1 Baxt. (Tenn.) e Joy v. St. Louis, 138 U. S. 1. GENERAL PRINCIPLES OF CONSTRUCTION. 1743 inakes it unfair and unreasonable, the former should always be preferred/ Thus a contract by a principal to furnish his agent samples and advertising matter means a reasonable amount, and not whatever the agent may demand." So a con- tract to furnish machinery to be set up in " good working or- der " means not at the very moment of completing the work, but after giving the vendee a reasonable opportunity for testing it.^ A contract by A to construct a heater to B's satisfaction means, if B dies before the heater is finished, to the satisfaction of B's executor and devisee, and not to B's satisfaction.* Where A agreed to pay B for certain advertising by deducting the amount of such bill from the price of any launch that B might buy of A, it was held that such launch was to be sold on " exactly the same terms as it offered other customers,"^ So under a contract for the sale of sugar " for shipment within thirty days by sail or steam at seller's option," " shipment '^ means placing the sugar within such time on board of a vessel which is honestly endeavoring to secure a full cargo, and which is bound for the proper port, and does not mean that such vessel must clear within such time.*' So contracts in restraint of trade will be construed to impose reasonable limitations as to time^ Ungersoll v. Coram, 127 Fed. 12 Am. St. Rep. 888; 17 Atl. 665. 418; McElroy v. Swope, 47 Fed. 3 Edison, etc., Co. v. Navigation 380; Wyatt v. Irrigation Co., 18 Co., 8 Wash. 370; 40 Am. St. Rep. Colo. 298; 36 Am. St. Rep. 280; 33 910; 24 L. R. A. 315; 36 Pac. 260. Pac. 144 ; Bartlett v. Wheeler, 195 * Adams Radiator Co. v. Sehnader, 111. 445; 63 N. E. 169; affirming, 155 Pa. St. 394; 35 Am. St. Rep. 96 111. App. 342; Dederick v. Wolfe, 893; 26 Atl. 745. 68 Miss. 500; 24 Am. St. Rep. 283; s Hand v. Power Co., 167 N. Y. 9 So. 350; Lovelace v. Travelers', 142; 60 N. E. 425. etc., Association, 126 Mo. 104; 47 6 Ledon v. Havermeyer, 121 N. Y. Am. St. Rep. 638; 30 L. R. A. 209; 179; 8 L. R. A. 245; 24 N. E. 297. 28 S. W. 877; Gillett v. Bank, 160 7 Saddlery Hardware Mfg. Co. v. N. Y. 549; 55 N. E. 292; Wright v. Hillsborough Mills, 68 N. H. 216; Reusens, 133 N. Y. 298, 305; 31 N. 73 Am. St. Rep. 569; 44 Atl. 300. E. 215; Travelers' Ins. Co. V. Myers, (Here a contract by a vendor of 62 O. S. 529; 49 L. R. A. 760; 57 goods not to sell like goods to any- N. E. 458; Kentzler v. Accident As- one else in that locality was con- sociation, 88 Wis. 589; 43 Am. St. strued to mean until vendee had a Rep. 934; 60 N. W. 1002. reasonable opportunity to resell 2 Jensen v. Perry, 126 Pa. St. 495; such goods.) 1744 PAGE ON CONTRACTS. or place,* if it does not appear to be the intention of the parties to impose an unreasonable limitation. So a contract not to sell certain realty for less than a certain price will be construed to restrict it for a reasonable time only.* §1122. The rule contra proferentem. If terms of a contract appear on their face to be inserted for the benefit of one of the parties, he will be considered as having inserted such terms and as having chosen the language thereof. Any ambiguity in such language is therefore to be construed more strongly against the party making use of such language.^ This rule is summarized in the maxim " Fortius contra proferentem.^^ Thus a contract of sale has been con- strued more strictly against the vendor;^ a contract to repair more strictly against the builder who drew it f restrictions on a carrier's Common Law liability more strictly against the car- rier f conditions in an insurance policy more strictly against the insurer.^ This rule, if rightly applied, has especial force with reference to such contracts as are not favored by the law. sDethlefs v. Tamsen, 7 Daly (N. 149 N. Y. 307, 313; 43 N. E. 856? Y.) 354. Paul v. Ins. Co., 112 N. Y. 472; 8 9 Rackemann v. Improvement Co., Am. St. Rep. 758; 3 L. R. A. 443; 167 Mass. 1; 57 Am. St. Rep. 427; 20 N. E. 347; Kendrick v. Ins. Co., 44 X. E. 990. 124 N. C. 315; 70 Am. St. Rep. 592; 1 Davis-, etc., Co. v. Jones, 66 Fed. 32 S. E. 728 ; \Yebster v. Ins. Co., 124; Supreme Council, etc., v. Cas- 53 O. S. 558; 53 Am. St. Rep. 658; ualty Co., 63 Fed. 48; 11 C. C. A. 30 L. R. A. 719; 42 N. E. 546; D. 96; Simpson v. United States, 31 M. Osborne & Co. v. Stringham, 4 S. Ct. CI. 217; Chambers v. United D. 593; 57 N. W. 776. States, 24 Ct. CI. 387; Wyatt v. Ir- 2 Delogny v. Mercer, 43 La. Ann, rigation Co., 18 Colo. 298; 36 Am. 205; 8 So. 903. St. Rep. 280; 33 Pac. 144; Hill v. - Laidlaw v. Marye, 133 Cal. 170; Mfg. Co., 79 Ga. 105; 3 S. E. 445; 65 Pac. 391. Mueller v. University, 195 111. 236; 4 Texas, etc., Ry. v. Reiss, 183 U. 88 Am. St. Rep. 194; 63 X. E. 110; S. 621; Hinkle v. Ry., 126 X. C. affirming, 95 111. App. 258; Rogers 932; 78 Am. St. Rep. 685; 36 S. E. V. Ins. Co., 121 Ind. 570; 23 X. E. 348; Amory Mfg. Co, v. Ry., 89 Tex. 498; Bowser v. Patrick (Ky.), 65 419; 59 Am. St. Rep. 65; 37 S. W. S. W. 824; St. Landry State Bank 856. V. Meyers, 52 La. Ann. 1769; 28 So. s London Assurance Co. v. Com- 136; Gillettv. Bank. 160 X. Y. 549; panhia de Moagens. 167 U. S. 149; 55 X. E. 292; Rickerson v. Ins. Co., First Xational Bank v. Ins. Co., 9c GENERAL PRINCIPLES OF CONSTRUCTION. 1745 Thus covenants for forfeitures/ such as covenants inserted in insurance policies/ are construed strictly against the party for whose benefit they are exacted. Thus under an insurance pol- icy containing a provision that the policy should be incontest- able after three years, and another provision avoiding the policy " if the insured die in consequence of his own criminal action," the latter clause was held not to apply after the expiration of three years.^ To have this rule apply, the contract must, on its face, show which party makes use of the langTiage. Oral evidence is inadmissible to show which party stipulated for cer- tain terms.^ The rule contra proferentem is not one of the favored rules of construction. Indeed, it is said that it is to be resorted to only when the other rules fail.^" » §1123. Surrounding circumstances. The parties to a contract choose words to express their inten- tion in view of all the surrounding circumstances. It is prac- tically impossible to state these facts in the contract, and is rarely if ever attempted. The court which construes the con- tract must therefore either disregard all the material facts which led the parties to express their intention as they did, or else admit extrinsic evidence of the surrounding facts and cir- cumstances. In this dilemma the courts have chosen the latter alternative. It is a recognized rule of construction that the court will place itself in the position of the parties who made U. S. 673; Forest City Ins. Co. v. Deming, 123 Ind. 384; 24 N. E. 86, Hardesty, 182 111. 39; 74 Am. St. 375; Connecticut Fire Ins. Co. v. Rep. 161; 55 N. E. 139; Paul v. Jeary, 60 Neb. 338; 51 L. R. A. Ins. Co., 112 N. Y. 472; 8 Am. St. 698; 83 N. W. 78; Webster v. Ins. Rep. 758; 3 L. R. A. 443; 20 N. E. Co., 53 O. S. 558; 53 Am. St. Rep. 347; ^A^bster v. Ins. Co., 53 O. S. 658; 30 L. R. A. 719; 42 N. E. 546; 558; 53 Am. St. Rep. 658; 30 L. R. MeXamara v. Ins. Co., 1 S. D. 342; A. 719; 42 N. K 546. 47 N. W. 288. 6 Jacobs V. Spalding, 71 Wis. 177; « Sun Life Ins. Co. v. Taylor, 108 36 N. W. 608. Ky. 408 ; 94 Am. St. Rep. 383 ; 56 T Thornton v. Ins. Co., 116 Ga. S. W. 668. 121; 94 Am. St. Rep. 99; 42 S. E. 9 Hull, etc., Co. v. Coke Co., 113 287; Forest City Ins. Co. v. Har- Fed. 256; 51 C. C. A. 213. desty, 182 HI. 39; 74 Am. St. Rep. lo Patterson v. Gage, 11 Colo. 50; 161; 55 N. E. 139; ^tna Ins. Co. v. 16 Pae. 560. 110 1746 PAGE ON CONTRACTS. the contract as nearly as can be done, by admitting evidence of the surrounding facts and circumstances/ the nature of the Bubject-matter,^ the relation of the parties to the contract/ and the objects sought to be accomplished by the contract.* 1 Chicago, etc., Ey. v, Ey., 143 U. S. 596; Eeid v. Insurance Co., 95 U. S. 23; Nash v. Towne, 5 Wall. (U. S.) 689; Hull, etc., Co. v. Coke Co., 113 Fed. 256; 51 C. C. A. 213; Fox V. Tyler, 109 Fed. 258; 48 C. C. A. 356; Kauffman v. Eaeder, 108 Fed. 171; 54 L. E. A. 247; 47 C. C. A. 278; Campbell v. Moran Bros. Co., 97 Fed. 477; 38 C. C. A. 293; Speed V. Ey., 86 Fed. 235; 30 C. C. A. 1; Mississippi Elver Logging Co. v. Eobson, 69 Fed. 773; 16 C. C. A. 400; Crass v. Scruggs, 115 Ala. 258; 22 So. 81; Eemy v. Olds (Cal.), 21 L. E. A. 645; 34 Pac. 216; Union Pacific Ey. v. Anderson, 11 Colo. 293; 18 Pac. 24; Illges v. Dex- ter, 77 Ga. 36; Burke, etc., Co. v. Wells, etc., Co., 7 Ida. 42; 60 Pac. 87; Givens v. Keeney, 7 Ida. 335; 63 Pac. 110; Illinois Terra Cotta Lumber Co. v. Owen, 167 111. 360; 47 N. E. 722 ; reversing, 64 III. App. 632; Street v. Storage Co., 157 111. 605; 41 K E. 1108; Torrence v. Shedd, 156 111. 194; 41 N. E. 95; 42 N. E. 171; Dougherty v. Eogers, 119 Ind. 254; 3 L. E. A. 847; 20 N. E. 779; New York, etc., Ey. v. Ey., 116 Ind. 60; 18 N. E. 182; Ketcham V. Coal Co., 88 Ind. 515; Crane v. Williamson, 111 Ky. 271; 63 S. W. 610, 975; Watson v. Succession of Barber, 105 La. 456; 29 So. 949; Eackemann v. Improvement Co., 167 Mass. 1 ; 57 Am. St. Eep. 427 ; 44 N. E. 990; Hoose v. Ins. Co., 84 Mich. 309; 11 L. E. A. 340; 47 N. W. 587; Mathews v. Phelps, 61 Mich. 327; 1 Am. St. Eep. 581; 28 N. W. 108; Nordyke & Marmon Co. v. Kehlor, 155 Mo. 643; 78 Am. St. Eep. 600; 56 S. W. 287 ; Eice v. McCague, 61 Neb. 861; 86 N. W. 486; Saddlery Hardware Mfg. Co. v. Hillsborough Mills, 68 N. H. 216 ; 73 Am. St. Eep. 569 ; 44 Atl. 300 ; Cohen v. Envelope Co., 166 N. Y. 292; 59 N. E. 906; Gillet V. Bank, 160 N. Y. 549 ; 55 N. E. 292; Sattler v. Hallock, 160 N. Y, 291; 73 Am. St. Eep. 686; 46 L. E. A. 679; 54 N. E. 667; Berry Harvester Co. v. Machine Co., 152 N. Y. 540; 46 N. E. 952; Smith v. Kerr, 108 N. Y. 31; 2 Am. St. Eep. 362; 15 N. E. 70; Eeynolds v. Ins. Co., 47 N. Y. 597; Mosier v. Parry, 60 0. S. 388; 54 N. E. 364; Shel- don's Estate, — Wis. — ; 97 N. W. 524. sPensacola Gas Co. v. Lotze, 23 Fla. 368; 2 So. 609; Mathews v. Phelps, 61 Mich. 327; 1 Am. St. Eep. 581; 28 N. W. 108; Crocker v. Hill, 61 N. H. 345 ; 60 Am. Eep. 322. 3 Hall V. Bank, 133 111. 234; 24 N. E. 546; Holmes v. Parker, 125 111. 478; 17 N. E. 759; affirming, 25 111. App. 225; Holmes v. Bemis, 124 111. 453; 17 N. E. 42; affirming, 25 111. App. 232; H. G. Olds Wagon Works V. Combs, 124 Ind. 62; 24 N. E. 589; Darrah v. Gow, 77 Mich. 16; 43 N. W. 851; Morgan v. Ey., 57 Mich. 430; 25 N. W. 161; 26 N. W. 865; Farr v. Nichols, 132 N. Y. 327; 30 N. E. 834; Blood v. Ele- vator Co., 1 S. D. 71 ; 45 N. W. 200; Heatherly v. Bank, 31 W. Va. 70; 5 S. E. 754. 4 Kauffman v. Eaeder, 108 Fed. 171; 54 L. E. A. 247; 47 C. C. A. 278; Eockefeller v. Merritt, 76 Fed. 909; 35 L. E. A. 633; 22 C. C. A. 608; Davis v. Eobert, 89 Ala. 402; GENEEAL PRINCIPLES OF CONSTRUCTION. 1747 Thus in contracts of guaranty,' contracts between pro- motors of a corporation,* and contracts of bailment^ the sur- rounding facts, the relations of the parties and the object of the contract may all be looked to. Even though the contract is in writing extrinsic evidence of the surrounding facts and circumstances is admissible to aid the court to determine the intention of the parties.^ Thus extrinsic evidence of the sur- rounding facts is admissible to show want of consideration,* whether a contract is severable or not^" or the mode of perform- ance.^^ Where one tenant in common agreed to sell realty to another, it was permitted to show that they were partners and that the balance due one of them from the firm was to be applied on the price of the land.^' Thus in a contract to re- lease dower in consideration of one fourth of the proceeds of the property extrinsic evidence is admissible to show that the proceeds are the rents, and that an expensive building was erected upon the property after this contract was made." So where a note was given for $240, payable in case certain taxes were not rebated, " or such part of the above sum as may not be rebated," extrinsic evidence was admissible to show that 18 Am. St. Eep. 126; 8 So. 114; 8 Western Union Telegraph Co. v. Construction Information Co. v. Telephone Co., 105 Fed. 684; Bank Cass, 74 Conn. 213; 50 Atl. 563; v. Brigham, 61 Kan. 727; 60 Pac. Cravens V. Cotton Mills, 120 Ind. 6; 754; reversing, 58 Pac. 1117; Al- 16 Am. St. Rep. 298; 21 N. E. 981; vord v. Cook, 174 Mass. 120; 54 N. Eackemann v. Improvement Co., E. 499; White v. Rice, 112 Mich. 167 Mass. 1; 57 Am. St. Rep. 427; 403; 70 N. W. 1024; Douthett v. 44 N. E. 990; Nordyke & Marmon Gas Co., 202 Pa. St. 416; 51 Atl. Co. v. Keillor, 155 Mo. 643; 78 Am. 981; Uhl v. Ry., 51 W. Va. 106; 41 St. Rep. 600; 56 S. W. 287; Mosier S. E. 340. V. Parry, 60 O. S. 388 ; 54 N. E. 9 Spies v. Rosenstock, 87 Md. 14 ; 364 ; Lancaster Mills v. Cotton-press 39 Atl. 268. Co., 89 Tenn. 1; 24 Am. St. Rep. lo Morrison v. Baechtold, 93 Md. 586; 14 S. W. 317. 319; 48 Atl. 926. 5 Cambria Iron Co. v. Keynes, 56 nYorston v. Brown, 178 Mass. O. S. 501 ; 47 N. E. 548. 103 ; 59 N. E. 654. 6 Mosier v. Pany, 60 O. S. 388; isRedfield v. Gleason, 61 Vt. 220; 54 N. E. 364. 15 Am. St. Rep. 889; 17 Atl. 1075. 7 Lancaster Mills v. Cotton-press i3 Irwin v. Powell, 188 111. 107; Co., 89 Tenn. 1 ; 24 Am. St. Rep. 58 N. E. 941. 586; 14 S. W. 317. 17^1:8 PAGE ON CONTRACTS. the taxes amounted to $842, and that the note was not to be paid if $240 or more of such taxes were rebated.^* So where a village made a contract to take the water it might " need or desire for any and all purposes," extrinsic evidence is admissi- ble to show that when the contract was made the village had a partial supply of water/^ If the meaning of a written contract is clear, evidence of the surrounding facts is inadmissible to contradict its terms.^® Thus where in return for money put into his business by his wife a husband gives her a note, prom- ising to pay her son $800 after her death, evidence of his means and the amount expended by him for her in her last illness is inadmissible to show that he is not liable on the note/^ §1124. Grammatical accuracy and punctuation. Grammatical accuracy is preferred and presumed. How- ever, a construction fair, reasonable and consistent, but involv- ing grammatical inaccuracy, will not yield to a construction more accurately grammatical, but less fair and reasonable.^ On the same principle punctuation may be ignored in order to adopt the more reasonable of two constructions.^ Thus of the words " lien operation and effect," lien is not supposed to be an adjective because no comma follows.^ Still if two con- structions are equally probable,* or other means of ascertaining which meaning was intended are lacking^ punctuation may bep resorted to. 14 Carr v. Jones, 29 Wash. 78 : i Ketchum v. Spurlock, 34 W. Yd. 69 Pac. 646. 597; 12 S. E. 832. 15 Gregory v. Village of Lake Lin- 2 Holmes v. Ins. Co., 98 Fed. 240 } den, 136 Mich. 368; 90 N. W. 29. 47 L. R. A. 308; 39 C. C. A. 45; 16 Moody V. Ry., 124 Ala. 195; Ketchum v. Spurlock, 34 W, Va. 26 So. 952; Moore v. Teriy, 66 Ark. 597; 12 S. E. 832. 393; 50 S. W. 998; Camden v. Me- 3 Abbott's Estate, 198 Pa. St, 493; Coy, 48 W. Va. 377; 37 S. E. 637; 48 Atl. 435. Johnson v. Pugh, 110 Wis. 167; 85 4 Joy v. St. Louis. 138 U. S. 1. X. W. 641. sEwing v. Burnet, 11 Pet. (U. IT Baxter v. Camp, 71 Conn. 245; S.) 41; Armory Mfg. Co. v. Ry., 71 Am. St. Rep. 169; 42 L. R. A. 89 Tex. 419; 59 Am. St. Rep. 65,- 614; 41 Atl. 803. (Though in a 37 S. W. 856. suit by her administrator it might be available as a set off.) GENERAL PKINCIPLES OF CONSTRUCTION. 1749 §il25. Omissions, errors and surplusage. Words -which are omitted by inadvertance from a written, contract may be supplied by construction at law, without resort to reformation if the context shows what words are omitted/ Thus the omiasion of a dollar sign may be supplied from a con- text which shows that money was contracted for, as the number given will be assumed to refer to dollars as units of value.^ So in a promise to pay " twenty-five after date " the surround- ing facts may be looked to to show that " days " was the omitted word.^ So figures showing numbers may be used to supply the numbers omitted from the words in the body of the instru- ment.* So in a provision, " In case the said party of the first part shall to fully and entirely,"^ the word " fail " may be sup- plied from a corresponding provision containing the phrase, *' to be in default." Errors apparent on the face of the instru- ment may be corrected at law by construction without resort to equity.^ Thus the context may show that " or " means *' and."^ If words or phrases in a contract are without mean- ing, they may be rejected as surplusage without defeating the contract. Thus abbreviations^ or the sigTi " etc."^ may be ig- nored in construction if without meaning. §1126. Practical construction by parties. If a contract is ambiguous in meaning, the practical con- struction put upon it by the parties thereto is of great weight, 1 Richelieu Hotel Co. v. Encamp- 5 Monmouth Park Association v. ment Co., 140 112. 248; 33 Am. St. Iron Works, 55 N. J. L. 132; 39 Rep. 234; 29 X. E. 1044; Gran v. Am. St. Rep. 626; 19 L. R. A. 456; Spangenberg. 53 Minn. 42 ; 54 N. W. 26 Atl. 140. 933; Monmouth Park Association V. 6 Siegel, etc.. Co. v. Colby, 176 Iron Works, 55 N. J. L. 132; 39 111. 210; 52 N". E. 917; affirming. 61 Am. St. Rep. 626, 19 L. R. A. 456; 111. App. 315. 26 Atl. 140; Sisson v. Donnelly, 36 ^ Bettman v. Harness, 42 W. Va. N. J. L. 432. 433 : 36 L. R. A. 566. 2 Richelieu Hotel Co. v. Encamp- 8 Berry v. Kowalsky. 95 Cal. 134; ment Co.. 140 111 248: 33 Am. St. 29 Am. St. Rep. 101; 30 Pac. 202. Rep. 234 ; 29 N. E. 1044. 9 Harrison v. IMcCormick. 89 Cal. sBoykin v. Bank, 72 Ala. 262; 47 327: 23 Am, St. Rep. 469; 26 Pac. Am. Rep. 408. 830. 4 Gran v. Spangmberg. 53 Minn. 42; 54 N. W. 933. 1750 PAGE OIST CONTRACTS. even though tlie contract is in writing/ and, ordinarily, is con- trolling." Thus the practical construction by the parties may determine whether an ambiguous instrument is a partnership 1 Chicago V. Sheldon, 9 Wall. (U. S.) 50, 54; Fitzgerald v. Bank, 114 Fed. 474; 52 C. C. A. 276; Inter- state Land Co. v. Land Grant Co., 41 Fed. 275; Pacific, etc., Co. v. Leete, 94 Fed. 968; 36 C. C. A. 587; Manhattan Life Ins. Co. v. Wright, 126 Fed. 82; Hohbins v. Kimball, 55 Ark. 414; 29 Am. St. Rep. 45; 18 S. W. 457; Hill v. McKay, 94 Cal. 5; 29 Pac. 406; Wyatt v. Irri- gation Co., 18 Colo. 298; 36 Am. St. Rep. 280; 33 Pac. 144; Board of Commissioners v. Gibson, 158 Ind. 471; 63 N. E. 982; Smith v. Miami County, 6 Ind. App. 153; 33 N. E. 243; Pratt v. Prouty, 104 la. 419; 65 Am. St. Rep. 472; 73 N. W. 1035; City of Baxter Springs v. Power Co., 64 Kan. 591 ; 68 Pac. 63 ; MeVickar v. Denison, 81 Mich. 348; 45 N. W. 659; Switzer v. Mfg. Co., 59 Mich. 488; 26 N. W. 762; Laten- ser V. Misner, 56 Neb. 340 ; 76 N. W. 897 ; Rathbun v. McConnell, 27 Neb. 239; 42 N. W. 1042; Sattler v. Hallock, 160 N. Y. 291 ; 73 Am. St. Rep. 686; 46 L. R. A. 679; 54 N. E. 667; Williamson v. Loan Associa- tion, 54 S. C. 582; 71 Am. St. Rep. 822; 32 S. E. 765; Murray v. Mfg. Co., 37 S. C. 468; 16 S. E. 143; Blood V. Elevator Co., 1 S. D. 71; 45 N. W. 200; Clark v. Lambert, — W. Va. — ; 47 S. E. 312; Heatherly V. Bank, 31 W. Va. 70; 5 S. E. 754; •Wussow V. Hase, 108 Wis. 382; 84 N. W. 433; Janesville Cotton Mills V. Ford, 82 Wis. 416; 17 L. R. A. 564; 52 N. W. 764. 2Topliff v.'Topliff, 122 U. S. 121; Philadelphia, etc., Ry. v. Trimble, 10 Wall. (U. S.) 367: State Trust Co. V. Duluth, 104 Fed. 632; Ly- man V. Ry., 101 Fed. 636; House- keeper Publishing Co. v. Swift, 97 Fed. 290; 38 C. C. A. 187; Russell V. Young, 94 Fed. 45; 36 C. C. A. 71; Robbins v. Kimball, 55 Ark. 414; 29 Am. St. Rep. 45; 18 S. W. 457; Wyatt v. Irrigation Co., 18 Colo. 298; 36 Am. St. Rep. 280; 33 Pac. 144; Buckeye, etc., Co. v. Carl son, — Colo. App. — ; 66 Pac. 168 Shouse V. Doane, 39 Fla. 95; 21 So, 807 ; Webster v. Clark, 34 Fla. 637 43 Am. St. Rep. 217; 27 L. R. A 126; 16 So. 601; Mueller v. Uni versity, 195 111. 236; 88 Am. St. Hep. 194; 63 N. E. 110; affirming, 95 111. App. 258; Work v. Welsh, 160 111. 468; 43 N. E. 719; Street V. Storage Co., 157 111. 605; 41 N. E. 1108; Hall v. Bank, 133 III. 234; 24 N. E. 546; Cambria Iron Co. v. Trust Co., 154 Ind. 291; sub nomine Union Trust Co. v. Ry., 48 L. R. A. 41; 55 N. E. 745; 56 N. E. 665; Vincennes v. Gas Light Co., 132 Ind. 114; 16 L. R. A. 485; 31 N. E. 573; Ingle V. Norrington, 126 Ind. 174; 25 N. E. 900; Pate v. French, 122 Ind. 10; 23 N. E. 673; Smith v. Miami Co., 6 Ind. App. 153; 33 N. E. 243; Pratt v. Prouty, 104 la. 419; 65 Am. St. Rep. 472; 73 N. W. 1035; Enterprise Carriage Mfg. Co. V. Cruzan, 63 Kan. 411; 65 Pac. 647; Citizens', etc., Co. v. Doll, 35 Md. 89; 6 Am. Rep. 360; Fogg v. Ins. Co., 10 Cush. (Mass.) 337; Burtis V. Munising Co., 126 Mich. 685; 86 N. W. 124; Luverne First National Bank v. Jagger, 41 Minn. 308; 43 N. W. 70; Ellis v. Harrison, 104 Mo. 270; 16 S. W. 198; Wil- liamson V. Ry., 85 Mo. App. 103; Lawton v. Fonner, 59 Neb. 214; 80 GENERAL PRINCIPLES OF CONSTRUCTION. 1751 contract or not f whether the vendee of stock has an equal inter- est therein with the other parties ;* what constitutes a " first class place of amusement;"^ what is " any extension of time;"* whether the instrument in question abrogates a pre-existing contract or not f and whether the instrument in question is a binding contract or not.® So in some states, where it is doubt- ful whether a signature was intended to bind the agent or the principal, the subsequent conduct of the parties may be relied upon to show that it was intended to bind the principal and not the agent.^ So a city ordinance, if a contract, may be construed in the light of the practical construction placed thereon by the parties.^" The practical interpretation of the parties is to be regarded, however, only when the contract is ambiguous. If clear and free from ambiguity, the intention shown upon its face if written must be followed, though 'con- trary to the practical interpretation by the parties,^^ and even N. W. 808; Hale v. Sheehan, 52 Neb. 184; 71 N. W. 1019; Davis v. Creamery Co., 48 Neb. 471; 67 N. W. 436; Paxton v. Smith, 41 Neb. 56; 59 N. W. 690; D'wyer v. Bonitz (N. J. Eq.), 31 Atl. 172; Helme v. Strater, 52 N. J. Eq. 591; 30 Atl. 333; Sattler v. Hallock, 160 N. Y. 291; 73 Am. St. Rep. 686; 46 L. R. A. 679; 54 N. E. 667; Woolsey v. Funk, 121 N. Y. 87; 24 N. E. 191; Methodist, etc., Society v. Water Co., 20 Ohio C. C. 578; 10 Ohio C. D. 648; Williamson v. Loan Asso- ciation, 54 S. C. 582; 71 Am. St. Rep. 822; 32 S. E. 765; Murray v, Mfg. Co., 37 S. C. 468; 16 S. E. 143; Heidenheimer v. Cleveland (Tex.), 17 S. W. 524; Woodward v. Edmunds, 20 Utah 118; 57 Pac. 848; Mutual, etc., Association v. Taylor, 99 Va. 208; 37 S. E. 854; Hosmer v. McDonald, 80 Wis. 54; 49 N. W. 112. "There is no surer -way to find out what the parties meant than to see what they have done." Brooklyn Life Ins. Co. v. Dutcher, 95 U. S. 269, 273; quoted in Sattler v. Hallock, 160 N. Y. 291, 301; 73 Am. St. Rep. 686; 46 L. R. A. 679; 54 N. E. 667. 3 Webster v. Clark, 34 Fla. 637; 43 Am. St. Rep. 217; 27 L. R. A. 126; 16 So. 601. 4 Stewart v. Pierce, 116 la. 733; 89 N. W. 234. 5 Leavitt v. Improvement Co., 54 Fed. 439. 6 Borden v. Fletcher's Estate, 431 Mich. 220; 91 N. W. 145. 7 Jenkins v. Jensen, 24 Utah 108; 91 Am. St. Rep. 783; 66 Pac. 773. sKling V. Bordner, 65 O. S. 86; 61 N. E. 148. 9 State V. Cass County, 60 Neb. 566 ; 83 N. W. 733. loVineennes v. Gas Light Co., 132 Ind. 114; 16 L, R. A. 485; 31 X. E. 573. 11 Philadelphia, etc., Ry. v. Trim- ble, 10 Wall. (U. S.) 367; Davis, v, Shafer, 50 Fed. 764; Cold Blast Transportation Co. v. Nut Co., 114 Fed. 77; 57 L. R. A. 696; 52 C. C. 1752 PAGE ON CONTRACTS. if such practical construction has been acquiesced in for a long period of time.^^ The conduct of the parties relied upon as construction must itself be free from ambiguity. Thus vague and general conversations^^ are of little weight. So the con- duct relied upon must be that of parties personally interested or cognizant of the actual intention of the parties. Thus little if any weight can be given to a practical construction adopted by the successors in office of the public officers who made the contract on behalf of the city.^* §1127. Ambiguous contract. If a promise is so ambiguous as to be susceptible of more than one interpretation and the promisor knows which of these possible meanings the promisee attaches to the promise, that meaning will be adopted by the court in construing the con- tract.^ The same rule applies where the promisor has reason to suppose that the promisee understands the ambigu- ous promise in a particular sense." This rule applies to ex- A. 25; Gadsden, etc., Ry. v. Im- i3 Ingraham v. Mariner, 194 111. provement Co., 128 Ala. 510; 29 So. 269; 62 N. E. 609. 549; Pierce v. Merrill, 128 Cal. 464; i* Cincinnati v. Coke Co., 53 0. S. 79 Am. St. Rep. 56; 61 Pac. 64; In- 278; 41 X. E. 239; reversing, 8 graham v. Mariner, 194 111. 269; 62 Ohio C. C. 429; 6 Ohio C. D. 278. N. E. 609 ; Western Railway Equip- i Allen-West Commission Co. v. ment Co. v. Iron Co., 91 111. App. Patillo, 90 Fed. 628; 33 C. C. A. 28; Diamond Plate-Glass Co. v. Ten- 194; American Loan & Trust Co. v. nell, 22 Ind. App. 132; 52 N. E. 168; Ry., 47 Fed. 343; Chicago Lumber Menage v. Rosenthal, 175 Mass. Co. v. Mfg. Co., 80 la. 369 ; 45 N. W. 358; 56 N. E. 579; St. Paul, etc., 893; Wood v. Allen, 111 la. 97; 82 Ry. V. Blackmar, 44 Minn, 514; 47 N. W. 451; Schroeder v. Nielson, 39 N. W. 172; C. D. Smith Drug Co. v. Neb. 335; 57 N. W. 993; Hoffman v. Saunders, 70 Mo. App. 221; Howell Ins. Co., 32 N. Y. 405, 413; 88 Am. V. Johnson, 38 Or. 571; 64 Pac. 659; Dee. 337; Barlow v. Scott, 24 N. Y. Arnold v. Farr, 61 Vt. 444; 17 Atl, 40; Kendrick v. Ins. Co., 124 N. C. 1004. 315; 70 Am. St. Rep. 592; 32 S. E. 12 Northeastern Ry, v. Hastings 728. In some states as in Iowa this (1900), App. Cas. 260; 69 L. J. rule has been enacted as a statute. Ch. N. S. 516; 82 L. T. 429. (Here 2 Kendrick v. Ins. Co., 124 N. C. a construction placed upon a contin- 315; 70 Am. St. Rep. 592; 32 S. E. Tious contract for forty years was 728. disregarded.) GENEEAL PKINCIPLES OF CONSTRUCTION. 1753 ^ess contracts as well as to implied ones,^ and to written con- tracts as well as to oral ones.* It does not apply to mere nego- tiations as distinguished from offers, intended on acceptance, to become contracts.^ If the other party does not know of the construction placed upon the contract, the understanding of the one party has no legal effect.^ Thus where A's attorney drew the contract and A directed its phraseology, but by inadvertence of coimsel it was so worded that B's understanding was prhna facie expressed, though it might possibly have been consistent with A's meaning, A's intention cannot control/ If the mean- ing of the contract is clear, the understanding of one party as to its meaning does not affect its construction® unless it operates as estoppel by inducing the other party to act.* §1128. First clause governs. A rule sometimes laid down, though rarely observed, is that in case of conflict between two clauses that first in place is to control.^ This rule has little to recommend, as a contract is entered upon as an entirety and not word by word. It is used to justify meanings reached by the application of other princi- ples of construction, and its practical value is slight. §1129. Function of court and jury in construction. The construction of a contract is a question for the court if ^he terms of the contract and the extrinsic facts which may affect construction are free from dispute.^ This rule applies 3 Lull V. Bank, 110 la. 537; 81 N, » Crass v. Scruggs, 115 Ala. 258; W. 784. 22 So. 81. 4 Cobb V. McElroy, 79 la. 603 ; 44 i Vickers v. Commercial Co., 67 N. W. 824. X. J. L. 665; 52 Atl. 467; Wiscon- sPatton V. Arney, 95 la. 664; 64 sin. etc., Bank v. Wilkin, 95 Wis. y. W. 635. Ill; 60 Am. St. Rep. 86; 69 X. W. 6 Dobbins v. Cragin, 50 X. J. Eq. 354. 640; 23 Atl. 172. i McFadden v. Henderson. 128 7 Dobbins v. Cragin, 50 X. J. Eq. Ala. 221; 29 So. 640; Arkansas Fire 640; 23 Atl. 172. Ins. Co. v. Wilson, 67 Ark. 553; 77 8 Crass V. Scruggs. 115 Ala. 258; Am. St. Rep. 129; 48 L. R. A. 510; 22 So. 81; Rouss v. Creglow, 103 la. 55 S. W. 933; ^McLelland v. Single- 60; 72 X. W. 429. tary, 113 Ga. 601; 38 S. E. 942; 1754 PAGE ON CONTRACTS. where the written contract consists of several writings, as where it consists of letters exchanged between the parties," or of a circular issued by a building and loan association in reliance on which stock has been taken.^ It applies where the written contract has been lost and its contents are proved by secondary evidence.* It applies to contracts part oral and part written^ or to contracts entirely oral,® if the facts from which the terms of the contract are to be ascertained are undisputed and only one inference is possible therefrom. The construction of a contract is for the court even if the jury is to pass on the ques- tion of its discharge by a later contract.^ Thus the court must in such cases decide by what law the contract is governed in case of a so-called conflict of law f whether a contract is ille- gal;^ whether a written instrument purports on its face to be a complete contract.^" If, on the other hand, the terms of the Traders', etc., Ins. Co. v. Humphrey, 207 III. 540; 69 N, E. 875; affirm- ing, 109 111. App. 246; Foster v. Chicago, 197 111. 264; 64 N. E. 322; affirming, 96 111. App. 4; Illinois Central Ry. Co. v. Foulks, 191 111. 57; 60 N. E. 890; affirming, 92 111. App. 391 ; Ault Wooden-Ware Co. v. Baker, 26 Ind. App. 374; 58 N. E. 265; Grasmier v. Wolf (la.), 90 N. W. 813; Sherk v. Holmes, 125 Mich. 118; 83 N. W. 1016; McClurg V. Whitney, 82 Mo. App. 625; Hin- man v. Mfg. Co., 65 Neb. 187; 90 N. W. 934; McCormick, etc., Co. v. Davis, 61 Neb. 406; 85 N. W. 390; Saltier v. Hallock, 160 N. Y. 291; 73 Am. St. Hep. 686; 46 L. R. A. 679 ; 54 N. E. 667 ; Brite v. Mfg. Co., 129 N. C. 34: 39 S. E. 6.34; Keefer V. School District, 203 Pa. St. 334; 52 Atl. 245; Leaphart v. Bank, 45 S- C. 563; '5 Am. St. Rep. 800; 33 L. R. A. 700; 23 N. E. 939; Hughes V. Rudy, 15 S. D. 460; 90 N. W. 136; Amory Mfg. Co. v. Gulf, etc., R. R. Co., 89 Tex. 419; 59 Am. St. Rep- 55; 37 S. W. 856. 2 Scanlan v. Hodges, 52 Fed. 354 ; 3 C. C. A. 113; Lindsay v. Ins. Co., 115 N. C. 212; 20 S. E. 370; De Camps V. Carpin, 19 S. C. 121 ; Teas- dale V. Manchester, 104 Tenn. 267; 56 S. W. 853; Ranney v. Higby, 6 Wis. 62. 3 Williamson v. Loan Association, 54 S. C. 582; 71 Am. St. Rep. 822; 32 S. E. 765. 4Wellman v. Jones, 124 Ala. 580; 27 So. 416. 5 Sea Insurance Co. v. Johnston, 105 Fed. 286; 44 C. C. A. 477. <5 The " construction of an oral as well as of a written contract is for the court." Penn, etc., Insurance Co. V. Crane, 134 Mass. 56, 58; 45 Am. Rep. 282. TDanziger v. Shoe Co., 204 111. 145; 68 N. E. 534; affirming, 107 111. App. 47. sDemland v. Loan Co., 20 Oliio C. C. 223; 11 Ohio C. D. 249. 9 Carpenter v. Taylor, 164 N. Y. 171; 58 N. E. 53. 10 Harrison v. McCormick, 89 Cal. 327; 23 Am. St. Rep. 469; 26 Pac. 830. GENERAL PEINCIPLES OF CONSTRUCTION. 1755 contract are in dispute, or it is possible to draw more than one inference from the established facts which are relied on to show the intention of the parties, the jury must determine such facts or decide which of such inferences is the correct one. The court should in such cases submit the question of fact to the jury under proper alternative instructions as to the construc- tion to be given in the event of each possible finding of fact by the jury.^^ This rule applies in written contracts where the admissible extrinsic evidence is conflicting or admits of differ- ent inferences.^" Thus where the evidence is conflicting as to the meaning of a technical term in dispute,^^ or where questions as to what are " traveling expenses,"^* or what is a reasonable amount of '' printed matter and samples,"^^ depend on conflict- ing extrinsic evidence, the jury must determine the intention of the parties. So if the question is which of two unidentified plans is referred to in a written contract, this should be sub- mitted to the jury.^® This rule applies where the terms of a contract partly written and partly oral ^^ or entirely oral are in dispute. §1130. Construction cannot extend to reformation. Under cover of construction a court cannot reform a written contract to make it express the real intention of the parties, which by mistake is not expressed in the words thereof,^ Thus a clause fixing a price per ear, " excepting only empty freight cars and such loaded freight cars as are destined to or originate iiBoykin v. Bank, 72 Ala. 262; i* ^Yilc■ox v. Baer, 85 Mo. App. 47 Am. Rep. 408; Martin v. Dowd, 587. — Ida. — ; 69 Pac. 276; Alworth v. is Jensen v. Perry, 126 Pa. St, Gordon, 81 Minn. 445; 84 N, W. 495; 12 Am. St. Rep. 888; 17 Atl. 454; Coquillard v. Hovey, 23 Neb. 665. 622; 8 Am. St. Rep. 134; 37 N. W. le Cook v. Littlefield, 98 Me. 299; 479; Blaisdell v. Davis, 72 Vt. 295; 56 Atl. 899. 48 Atl. 14. 17 City of Philadelphia v. Stewart, i2Durand v. Heney, 33 Wash. 38; 201 Pa. St. 526; 51 Atl. 348. 73 Pac. 775. i Robbins v. Rollins, 127 U. S. 13 Schneider Granite Co. v. Mill- 622; Te Poel v. Shutt, 57 Neb. 592; ing Co., 78 Mo. App. 622. 78 N. W. 288; Sinclair v. Hicks, 116 N. C. 606; 21 S. E. 395. "i-i^S PAGE ON CONTRACTS. at points outside tlie city, on or beyond the first party's line," cannot be restricted to such empty cars as originate outside the city, but applies to all empty cars.^ 2 Louisville, etc., Ry. v. Ry., 100 Ky. 690; 39 S. W. 42. JOINT AND SEVEKAL, LIABILITY. 1757 CHAPTER LII. JOINT AND SEVERAL LIABILITY. §1131. Nature of liability of two or more promisors. If two or more persons constitute one party to a contract, the question as to the nature of their rights and liabilities pre- sents itself. If two or more persons are promisors in a con- tract, their liability may be joint, or several, or joint and sev- eral. If their liability is joint, each of the promisors is liable, and may be held for the entire liability arising under the con- tract.^ A several contract is one in which each of the prom- isors undertakes only a limited amount of the entire liability,^ or which in each severally undertakes the entire liability.^ A joint and several contract is one which at the election of the promisee he may treat either as a joint contract or as a several contract. In Louisiana, by statute, different terms are em- ployed. " A joint obligation " is used to express substantially the idea which at Common Law is expressed by " several con- tract," while the term " solidary obligation " is used to express the idea which the Common Law expresses by " joint contract." " A joint obligation under the laws of Louisiana binds the par- ties thereto only for their proportion of the debt, whilst a solid- ary obligation, on the contrary, binds each of the obligors for the whole debt."* §1132. Intention controls. — Words importing joint liability. Whether the liability of the promisors is joint, or several, or joint and several, depends upon the intention of the parties as 1 Mason v. Eldred, 6 Wall. (U. Am. Dec. 430; Payne v. JelleflF, 67 S.) 231. Wis. 246; 30 N. W. 526. 2 Evands v. Sanders, 10 B. Mon. * Groves v. Sentell, 153 U. S. 465, (Ky.) 291. 476. 3Lurton v. Gilliam, 2 111. 577; 33 1758 PAGE ON CONTBACTS. ascertained from the contract by the ordinary rules of construe tion. Prima facie in the absence of statute the liability of two or more persons on the same contract is a joint liability/ Words which indicate the common assumption of an obligation strengthen this inference. Thus the use of such words as " we promise,"^ " we will undertake,"^ " the plaintiffs are to pay,"* " the directors promise,"^ followed by the signature of the prom- isors, imports a joint liability. However, the context may show that such a promise is several and not joint. Thus a promise to pay a certain sum for one road grader, " to be paid by us in proportion to road tax in above-mentioned districts on lands and property which we now own " in such districts,*' or to '" pay to the city the cost of the curbstone so placed opposite our land " signed by owners in severalty^ is several. The use of •words such as " we agree,"* may show an intention to assume a joint and several liability. A contract contained the words, " We the undersigned do business under the name of Oliphant & Co." ..." We also agree." This was signed by the firm name only. A renewal of this option made a part of the original was signed by all the members of the firm. This was held as to the covenant not to engage in business to be joint and several.® A contract between two railroad companies, as 1 White V. Tyndall, 13 App. Cas. 5 McKensey v. Edwards, 88 Ky. 263; Noyes v. Barnard, 63 Fed. 272; 21 Am. St. Rep. 339; 3 L. R. 782; 11 C. C. A. 424; Eller v. Lacy, A. 397; 10 S. W. 81.5. 137 Ind. 436; 36 N. E. 1088; Eve- 6 Western Wheel Scraper Co, v. leth V. Sawyer, 96 Me. 227; 52 Atl. Locklin, 100 Mich. 339; 58 N. W. 639; Hill v. Combs, 92 Mo. App. 1117. 242; Alpaugh v. Wood, 53 N. J. L. 7 Springfield v. Harris, 107 Mass, 638; 23 Atl. 261; Elliott v. Bell, 37 532. W. Va. 834; 17 S. E. 399. 8 Trenton Potteries Co. v. Oli- 2Barnett v. Jiiday, 38 Ind. 86 Taylor v. Reger, 18 Ind. App. 466 63 Am. St. Rep. 352; 48 X. E. 262 phant, 58 N. J. Eq. 507; 78 Am, St. Rep. 612; 46 L. R. A. 255; 43 Atl. 723. Albany, etc.. Co. v. Bank, 17 Ind. " Trenton Potteries Co. v. Oli- App. .531; 60 Am, St. Rep. 178; 47 phant, 58 N. J, Eq. 507; 78 Am. N. E, 227. St. Rep. 612; 46 L, R. A. 255; 43 3 New Haven, etc., Ry. v. Hayden, Atl. 723 ; affirming in part and re- 119 Mass. 361. versing in part, 56 N. J. Eq. 680; 4 Eller V, Lacy, 137 Ind. 436; 36 39 Atl. 923. N. E. 1088, JOINT AND SEVERAL LIABILITY. 1759 one party, and a sleeping-car company as the otber, whereby certain sleeping-cars were to be run "over the line of said roads between " two cities " in connection with the night passenger express through trains between said cities," was held to be a joint contract/*^ By statute in some jurisdictions contracts* joint in form are in effect turned into joint and several contracts/^ By statute in Louisiana a note containing the words " we prom- ise " is a several note, binding each maker only for his propor- tionate share/^ §1133. Words importing several liability. Language which shows an intention on the part of each prom- isor to assume only a part of the entire liability imports a sev- eral contract/ Thus such language as " we promise each to pay " a certain proportion of the debt, as a pro rata share of the purchase price,^ or of the expenses of litigation in which the same question is presented, involving the separate interests of the promisors,^ or " we promise to pay the amount set opposite our respective names," as in contracts for subscriptions,* or " we, the undersigned, promise to pay the following subscrip- tions," with an amount opposite the name of each subscriber,^ imports a several contract. Hence one subscriber cannot use as a defense the fact that some of the other subscribers are 10 Stanley v. R, R., 18 O. S. 552. 3 La. Ann. 162; Larkin v. Butter- (Henee construed so as to apply field, 29 Mich. 254. only to through trains running on 3 Adriatic Fire Ins. Co. v. Tread- both roads as a continuous line.) well, 108 U. S. 361. 11 Sawin v. Kenney, 93 U. S. 289 4 O'Conner v. Hooper, 102 Cal. (Ark.) ; Gummer v. Mairs, 140 Cal. 528; 36 Pac. 939; Moss v. Wilson, 535; 74 Pac. 26; Farmers' Exchange 40 Cal; 159; Robertson v. March, 4 Bank v. Morse, 129 Cal. 239; 61 111. 198; Davis, etc., Co. v. Murray, Pac. 1088; Jarnagin v. Stratton, 95 102 Mich. 217; 60 N. W. 437; Davig Tenn. 619; 30 L. R. A. 495; 32 v. Creamery Co., 48 Neb. 471 ; 67 N. S. W. 625. So where the payee W. 436; Darnall v. Lyon (Tex. Civ. signs as an apparent joint maker. App.), 19 S. W. 506; Connecticut, Fisher v. Diehl, 94 Md. 112; 50 etc., Ry. v. Bailey, 24 Vt. 465; 58 Atl. 432. Am. Dec. 181; Hodges v. Nalty, 104 12 Groves v. Sentell. 153 U. S. 465. Wis. 464; 80 N. W. 726; Davis, etc., iMoss V. Wilson, 40 Cal. 159; Co. v. Cupp, 89 Wis. 673; 62 N. W. Colt V. Learned, 118 Mass. 380. 520. 2McArthur v. Board, 119 la. 562; ^ Landwerlen v. Wheeler, 106 Ind. 9.^ N. W. 580; Fuselier v. Lacour, 523; 5 N. E. 888. 1760 PAGE ON CONTEACTS. minors or insolvent, since such fact does not increase his lia- bility.® The presumption in contracts of subscription is that a several liability is intentended/ Hence a promise " to pay the above amount "^ has been held to import a several liability. How^^er, if the language used shows a clear intent to incur a joint liability there is nothing in the nature of a contract of subscription that makes this impossible. Thus the words "we, the subscribers, agree to pay " a gross sum^ are held to impose a joint liability. A contract of subscription to carry out cer- tain purposes whereby the subscribers undertake each to pay a certain sum is several as to such payments, but is joint as to the covenants to devote the fund thus raised to certain specified purposes.^*' Hence a repudiation by a part only of the sub- scribers does not end the contract. The adversary party may perform and recover the several subscriptions from the sub- scribers.^^ Hence, though no joint recovery can be had on the subscriptions, the subscribers should be joined as defendants in an action involving the common fund.^^ §1134. Words importing joint and several liability. If the language used shows an intention to assume a liability, either joint or several in its nature, at the oiDtion of the prom- isee, this imports a joint and several obligation.^ Thus the use of such language as " we, or either of us,"^ " we jointly and severally promise,"^ or the use of the singular number, such as " I promise,"* followed by the signature of two or more prom- 6 Chicago, etc., Co. v. Higgin- 22 L. R. A. 80; 53 K W. 756; and botham (Miss.), 29 So. 79. see to the same eflfect Current v. Ful- 7 Hall V. Thayer, 12 Met. (Mass.) ton, 10 Ind. App. 617; 38 N. E. 130; Davis v. Belford, 70 Mich. 120; 419. 37 N. W. 919. 12 Cornish v. West, 82 Minn. 107; 8 Davis V. Belford, 70 Mich. 120; 52 L. R. A. 355; 84 N. W. 750. S7 N. W. 919. 1 Salomon v. Hopkins, 61 Conn. 9 Davis V. Shafer, 50 Fed. 764. 47; 23 Atl. 716; Maiden v. Webster, 10 Current v. Fulton, 10 Ind. App. 30 Ind. 317; Hemmenway v. Stone, 617 ; 38 N. E. 419 ; Gibbons v. 7 Mass. 58 ; 5 Am. Dec. 27. Bente, 51 Minn. 499; 22 L. R. A. 2 Pogue v. Clark, 25 111. 333. 80; 53 N. W. 756. s Rees v. Abbott. Cowp. 832. 11 Gibbons V. Bente, 51 Minn. 499 ; 4 Salomon v. Hopkins, 61 Conn. JOINT AND SEVERAL LIABILITY. 1761 isors, imports a joint and several liability. So a note contain- ing the words " I promise to pay," signed at the bottom by A and on the back before delivery by B, was held to be a joint and several note.^ In ISTew York, however, it has been held that a note in the form " I promise " is necessarily a several note only.^ The liability of partners is a joint and several liability/ §1135. Liability of sole promisor. While the intention of the parties is paramount in determin- ing the nature of the liability of two or more promisors, it is impossible, no matter how clear the intention of the parties, to impose a joint liability upon a sole promisor. A contract made with one person alone is necessarily a several contract, even if words which are appropriate to joint contracts, such as " we promise,"^ are employed. §1136. Effect of joint liability. — Parties to actions. The adjective law is so closely connected with the substan- tive law that a statement of the effect of these different types of contract is in outward form almost exclusively a matter of procedure, though it affects the substantive rights of the parties. All the joint promisors are liable upon the joint contract,^ so 47; 23 Atl. 716; Monson v. Drake- 521; 86 Am. St. Rep. 559; 85 N. W. ley, 40 Conn. 552; 16 Am. Rep. 74; 1075. Maiden v. Webster, 30 Ind. 317; 6 Brownell v. Winnie, 29 N. Y. Walford v. Bowen, 57 Minn. 267; 59 400; 86 Am. Dec. 314. N. W. 195; Ladd v. Baker, 26 N. 7 Wood v. Carter, — Neb. — ; H. 76 ; 57 Am. Dec. 355 ; Wallace v. 93 N. W. 158. Jewell, 21 O. S. 163; 8 Am. Rep. i Holmes v. Sinclair, 19 111. 71; 48; Arbuckle v. Templeton, 65 Vt. Whitmore v. Niekerson, 125 Mass. 205; 25 Atl. 1095; Keller v. Mc- 496; 28 Am. Rep. 257. Huflfman, 15 W, Va. 64; Dill v. i Allin v. Shadburne, 1 Dana White, 52 Wis. 456; 9 N. W. 404; (Ky.) 68; 25 Am. Dec. 121; Green Dart V. Sherwood, 7 Wis. 523; 76 v. Rick, 121 Pa. St. 130; 6 Am. St. Am. Dec. 228. Rep. 670; 2 L. R. A. 48; 15 Atl. 5 Booth V. Huff, 116 Ga. 8; 94 497; Sully v. Campbell, 99 Tenn. Am. St. Rep. 98; 42 S. E. 381; Dow 434; 43 L. R. A. 161; 42 S. W. 15; Law Bank v. Godfrey, 126 Mich. Camp v. Simon, 23 Utah 56; 63 Pac. 332. Ill 1762 PAGE ON CONTRACTS. that it has been held that a promise to release one on his paying his proportionate share of the debt is without consideration;^ all should be made defendants, and a judgment rendered against all/ except such as cannot be served with process/ and after such judgment has been obtained the plaintiff may issue execution against any of the defendants he chooses. If some of the joint obligors are insolvent the payee can enforce pay- ment of the entire debt against those who are solvent.^ Secret arrangements made between the joint contractors cannot affect their liability to the promisee. Thus A, B and C signed a note and mortgage, joint in form, with the understanding that A should take and pay for two thirds of the property and B and C together the remaining one third. B and C were liable to the promisee for the entire debt.^ §1137. Death of joint promisor. The death of a joint promisor discharges his estate and leaves the survivors liable for the entire amount of the debt.^ In equity relief against the estate of the deceased promisor could be given if the survivors were insolvent.^ The survivor could have contribution from the estate of the deceased promisor.* By statute in many states the death of a joint promisor leaves 2 Davidson v. Burke, 143 111. 139; c Sully v. Campbell, 99 Tenn. 434; 36 Am. St. Rep. 367; 32 N. E. 514. 43 L. R. A. 161; 42 S. W. 15. 3 Oilman v. Rives, 10 Pet. (U. S.) i Ashby v. Ashby, 7 B. & C. 444; 298 ; Bragg v. Wetzel, 5 Blackf . Burgoyne v. Trust Co., 5 O. S. 586 ; (Ind.) 95; 18 Am. Dec. 131; Meyer Murphey v. Weil, 92 Wis. 467; 66 V. Estes, 164 Mass. 457; 32 L. R. A. N. W. 532. 283; 41 N. E. 683; Dumanoise v. 2 Moore v. Rogers, 19 111. 347; Townsend, 80 Mich. 302; 45 X. W. New Haven, etc., Co. v. Hayden, 119 179 ; Lemon v. Wheeler, 96 Mo. App. Mass. 361 ; Hamersley v. Lambert, 651; 70 S. W. 924; Pollard v. Col- 2 Johns. Ch. 508; Burgoyne v. Trust lier, 8 Ohio 43 ; Lucas v. Sanders, 1 Co., 5 0. S. 586 ; Ayer v. Wilson, 2 McMul. (S. C.) 311. Mill (S. C.) 319; 12 Am. Dec. 677. 4 Perkins County v. IMiller, 55 3 Erwin v. Dundas, 4 How. (U, Neb. 141; 75 N. W. 577. S.) 58. 5 Camp V. Simon, 23 Utah 56; 63 Pac. 332. JOINT AND SEVERAL EIABILITT. 1763 his estate liable/ or turns the contract into a joint and several one.^ §1138. Judgment against one joint promisor. A judgment rendered against one joint promisor in an action in which the remaining joint promisors could have been made parties is a bar to a subsequent action against such other joint promisors.^ So if an action is brought' against two or more joint promisors, the promisee cannot dismiss the action against some and have judgment against others.^ If all the promisors are within the jurisdiction of the court and served with sum- mons, it is error to render judgment against one as on default, and enter judgment on the merits in favor of the other joint promisors.^ If an action is brought on a joint contract, no re- covery can be had against one promisor on his several contract in jurisdiction where the Common Law rule has not been modi- fied by statute so as to permit of greater freedom of amend- ment.* An action was brought against a county treasurer and his bondsmen on a joint bond covering his first term. The evidence showed a defalcation during his second term. It was held that as no judgment could be rendered against the bonds- men on such joint bond, no several judgment could be rendered against the treasurer.^ By statute in some states the promisee may sue less than all the promisors.** Such statutes in effect make a joint contract joint and several. 4 Potts V. Dounee, 173 N. Y. 335; 2 Van Leyen v. Wreford, 81 Mich. 66 X. E. 4; Eckert v. Myers, 45 O. 606; 45 N. W. 1116. S. 525; 15 N. E. 862; Taylor 'v. 3 Kmgsland v. Koeppe, 137 111. Taylor, 5 Humph. (Tenn.) 110; 344; 13 L. R. A. 649; 28 X. E. 48. Chadwick v. Hopkins, 4 Wyom. 379; 4 Gleason v. Milk Supply Co., 93 62 Am. St. Rep. 38; 34 Pac. 899. Me. 544; 74 Am. St. .Rep. 370; 45 5 Philadelphia, etc., Co. v. Butler, Atl. 825 ; Atkins v. Brown, 59 Me. 181 Mass. 468: 63 X. E. 949: Weil 90. V. Guerin, 42 O. S. 299 ; Burgoyne v. 5 King County v. Ferry, 5 Wash. Trust Co.. 5 O. S. 586. 536; 34 Am. St. Rep. 880; 19 L. R. iSloo V. Lea, 18 Ohio 279. Con- A. 500; 32 Pac. 538. tra by statute in some states. 6 Miller v. Sullivan, 89 Tex. 480; Mason v. Eldred, 6 Wall. (U. S.) 35 S. W. 362. 231 (Mich.). ■176-i PAGE ON CONTKACTS. §1139. Release of one joint promisor. A technieal release under seal, given to one joint promisor, "will inure to the benefit of all/ unless the promisee expressly reserves his right to proceed against the remaining promisors." This rule applies to the technical release under seal only.^ An oral release does not have this effect;* nor does a release for a Valuable consideration discharge even the promisor to whom it Is given, unless by statute.^ A covenant not to sue made with one joint promisor does not discharge the others.® §1140. Effect of several contract. If the promisors are severally liable, the promisee must sue each for his proportion of the indebtedness. He cannot join two or more several promisors in an action upon the contract if they object thereto.^ The death of one of promisors sev- erally liable does not discharge his estate.^ §1141. Effect of joint and several contract. If the promisors are jointly and severally liable upon their promise, the promisee may at his option sue all within the jurisdiction of the court jointly, or he may sue each of them separately.^ The promisee's election of either of these reme- 1 Hunt V. Rousmaniere, 1 Pet. (U. 74; 52 Am. Dec. 561 ; Shaw v. Pratt, S.) 1; Hale v. Spaulding, 145 Mass. 22 Pick. (Mass.) 305. 482; 1 Am. St. Rep. 475; 14 N. E. * Valley Savings Bank v. Mercer, 534; Randahl v. Lindholm, 86 Minn. — Md. — ; 55 Atl. 435. 16; 89 X. W. 1129; Scofield v. 5 Hatzel v. Moore, 120 Fed. 1015. Clark, 48 Neb. 711; 67 N. W. 754; « Harrison v. Close, 2 Johns. (N. Rowley v. Stoddard, 7 Johns. (N. Y.) 448; 3 Am. Dec. 444. Y.) 207; Crawford v. Roberts, 8 Or. i Price v. Ry., 18 Ind. 137; Perry 324; Maslin v. Hiett, 37 W. Va. 15; v. Turner, 55 Mo. 418. 16 S. E. 437. 2McCready v. Freedly, 3 Rawle zMerriman v. Barker, 121 Ind. (Pa.) 251. 74; 22 N. E. 992; Whittemore v. i Minor v. Bank, 1 Pet. (U. S.) Oil Co., 124 X. Y. 565: 21 Am. St. 46; Coburn v. Goodall, 72 Cal. 498; Rep. 708: 27 X. E. 244. 1 Am. St. Rep. 75; 14 Pac. 190; 3 Haney. etc., Co. V. Creamery Co.. Olmstead v. Bailey, 35 Conn. 584; 108 la. 313; 79 X. W. 79: William- Peckham v. Xorth Parish, 16 Pick. son V. McGinnis, 11 B. Mon. (Ky.) (Mass.) 274. JOINT AND SEVEKAL LIABILITY. 1765 dies bars the other.' Bringing suit is held in some jurisdic- tions to be such election/ while in others only satisfaction is a final election.^ A several judgment rendered against one joint and several promisor in an action in which another promisor is not served with process does not bar the right of action against such other promisor.^ He cannot, however, join in one action any number less than all.'' This objection must, however, be interposed before going to trial on the merits or it will be waived.^ If, however, in such an action judgment is rendered against one promisor by confession, the action may be continued against the others.^ A discharge of one joint and several prom- isor under seal inures to the benefit of all," unless the right to proceed against the remaining promisors is expressly reserved in the release. §1142. Rights of joint or several promisees. If two or more persons are promisees in a contract their rights arising thereunder may be either joint or several. Whether their rights are joint or several depends upon the nature of their interest and the intention of the parties as it appears from the face of the contract. If the consideration moves from the promisees together a promise to them is prima facie joint.^ However the fact that a promisee has, by a separate contract with a third person, given the latter an 2 J5?a? parie Eowlandson, 3 P. Wms. ^ Barry v. Foyles, 1 Pet. (U. S.) 405; Ex parte Brown, 1 Ves. & B. 311; Minor v. Bank, 1 Pet. (U. S.) 60; United States v. Price, 9 How. 46. (U. S.) 83; Weil v. Guerin, 42 0. 8 United States v. Leffler, 11 Pet. S. 299. (U. S.) 86. 3 Weil V. Guerin, 42 0. S. 299. » Hochmark v. Richler, 16 Colo. iProsser v. Evans (1895), 1 Q. 265; 26 Pac. 818; Benjamin v. Mc- B. 108; People v. Harrison, 82 111. Connell, 9 111. 536; 46 Am. Dec. 84. 474; American Bank v. Doolittle, 5 Clinton Bank v. Hart, 5 0. S. 14 Pick. (Mass.) 123; Crane v. 33. Ailing, 15 N, J. L. 423. eCummings v. People, 50 111. 132; i Eveleth v. Sawyer, 96 Me. 227; Fay V. Jenks, 78 Mich. 312; 44 N. 52 Atl. 639; Bobbins v. Ayres, 10 W. 380. Confra, by statute. Council Mo. 538; 47 Am. Dee. 125; Slaugh- Bluffs Savings Bank v. Griswold, ter v. Davenport, 151 Mo, 26; 51 S. 50 Neb. 753; 70 N. W. 376. W. 471. 1766 PAGE ON CONTEACTS. interest in the contract does not make the latter a joint prom- isee.' If the consideration moves from the promisees sepa- rately, a promise to them is prima facie several.^ A contract between four producer of coal, whereby one " agrees to repre- sent the entire interests and sales of the coal of the other three parties," is a several contract as to such promisees/ So if a member of a partnership buys out the interests of his co-partners and agrees to hold them harmless from liabilities owing by the firm, such contract is several as to the promisees.^ In either case this presumption may be rebutted by clear and unequivo- cal language which shows that the promise is made to them either jointly or severally.^ The interest of the promisees can- not by any form of words be made joint and several.'^ While the mere form of the promise cannot make the interest of the promisees joint and several it has been held that the nature of the transaction may in some exceptional instances have this effect. This security was given jointly to several creditors to protect their several claims ; it was held that they could enforce the application of such security to their claims either jointly or severally.^ §1143. Effect of joint interest. — Promisees must join in action. The joint promisees must all, if living, join in the action.^ Even the name of a joint promisee who does not, in fact, wish 2 Brown v. Salisbury, 123 Fed. 99; 46 K E. 220; Eveleth v. Saw- 203. yer, 96 Me. 227 ; 52 Atl. 639 ; Capen 3 Hall V. Leigh, 8 Crancli (U. S.) v. Barrows, 1 Gray (Mass.) 376. 50; Burton v. Henry, 90 Ala. 281; « Lyon v. Ballentine, 63 Mich. 97; 7 So. 925. 6 Am. St. Rep. 284 ; 29 N. W. 837. 4Shipman v. Mining Co., 158 U. i Painter v. Munn, 117 Ala. 322; S. 356. 67 Am. St. Rep. 170; 23 So. 83; 5 Morgan v. Wardell, 178 Mass. Magruder v. Belt, 7 App. D. C. 303; 350; 55 L. R. A. 33; 59 N. E. 1037. Chamberlain v. Lesley, 39 Fla. 452; cHall V. Leigh, 8 Cranch (U. S.) 22 So. 736; Archer v. Bogue, 4 111. 50; Schultz v. Howard, 63 Minn. 526; Quisenberry v. Artis, 1 Duv. 196; 56 Am. St. Rep. 470; 65 N. W. (Ky.) 30; Hewes v. Bay ley, 20 Pick. 363. . (Mass.) 96; Slaughter y. Davenport, TSlingsby's Case, Coke, Part V., 151 Mo. 26; 51 S. W. 471; Dob & 18b; Bradburne V. Botfield, 14 M. & Dob v. Halsey. 16 Johns. (X. Y.) W. 559; Starret v. Gault, 165 111. 34: 8 Am. Dec. 293; Tapscott v. JOINT AND SEVEKAL LIABILITY. 1767 to sue must be included" if he is indemnified against liability for costs. Some statutes now provide for including au un- willing joint-promisee among the defendants, stating the reason therefor,^ Under the doctrine that the action must be in the name of the real party in interest, some exceptions to the rule that joint promisees must join are recognized at Modern Law. A bond given in accordance with statute to obtain an attach- ment, though joint in form may be sued upon by such of the obligees as are injured by the issuance of such attachment.* However, an opposite view has been taken of an injunction bond, where all the obligees have been required to join, even if one only is injured.^ §1144. Death, of joint promisee. At Common Law on the death of a joint promisee his interest passed to the surviving promisees.^ Equity would compel the survivors to account to the personal representative of the de- ceased co-promisee for the latter's interest in the contract.^ In many jurisdictions these rules have been modified by statute, and the administrator of the deceased joint promisee is al- lowed to join with the surviving promisees. §1145. Release by joint promisee. At law a release given by a joint promisee discharged the debt as to all the promisees.^ Thus a release given by one part- Williams, 10 Ohio 442; Sweigart v. Co., 19 Mont. 313; 48 Pac. 305. Berk, 8 S. & R. (Pa.) 308; Clapp v. i Martin v. Crump, 2 Salk. 444; Pawtiicket Institution, ISH. I. 489; Comb 474; sub nomine, Martin v. 2 Am. St. Eep. 91.5: 8 Atl. 697; Crompe, 1 Ld. Pvayra. 340; McCalla Davis V. Ins. Co., 70 Vt. 217; 39 v. Rigg, 3 A. K. Mar. (Ky.) 259; Atl. 1095; Angus v. Robinson, 59 Donnell v. Manson, 109 Mass. 576; Vt. 585; 59 Am. Rep. 758; 8 Atl. Hedderly v. Downs, 31 Minn. 183; 497. 17 jSr. W. 274; Kinsler v. McCants, 2 Wright V. McLemore. 10 Yerg. 4 Rich. L. (S. C.) 46; 53 Am. Dec. (Tenn.) 235. 711. sCullen V. Knowles (1898), 2 Q. 2 Martin v. Crump, 2 Salk. 444; B. 380. Comb. 474; sub nom., Martin v. 4 Alexander v. .Jaeoby, 23 O. S. Crompe, 1 Ld. Raym. 340. 358. 1 Rawstorne v. Gandell, 15 M. & 5:\Iontana Mining Co. v. Milling W. 304; Clark v. Patton, 4 J. J. ITGS PAGE ON CONTRACTS. ner binds bis co-partners.^ It bas been beld tbat a release by one of two or more joint promisees does not necessarily bar tbe rigbts of tbe otber promisees in equity,^ and if tbe release bas been given by a joint promisee in fraud of tbe rigbts of bis co-promisees and in collusion witb tbe promisor, equity will grant affirmative relief, and set sucb release aside.* §1146. Effect of several interest. Several promisees must eacb maintain bis own action; and cannot join in a common action.^ On tbe deatb of one of two or more several promisees, bis rigbts pass to bis legal representa- tives and not to tbe remaining promisees.^ Mar. (Ky.) 33; 20 Am. Dec. 203; 69; Skaife v. Jackson, 3 Barn. & Wiggin V. Tudor, 23 Pick. (Mass.) C. 421. 434; Eastman v. WrigM, 6 Pick. i Hall v. Leigh, 8 Cranch (U.S.) (Mass.) 316. 50; Curry v. Ry., 58 Kan. 6; 48 2 Phillips V. Clagett, 11 M. & W. Pac. 579; Rorabacher v. Lee, 16 84; Piersons v. Hooker, 3 Johns. (N. Mich. 169; Geer v. School District, Y.) 68; 3 Am. Dec. 467. 6 Vt. 76. 3 Upjohn V. Ewing, 2 0. S. 13. 2 Carthrae v. Brown, 3 Leigh *Piercy v. Fynney, L. R. 12 Eq. (Va.) 98. NATUEE OF LIABILITY ASSUMED. 1769 CHAPTER LIII. NATURE OF LIABILITY ASSUMED. §1147. Form of signature not creating personal liability. The nature of the liability created by signing a written instru- ment is a question of construction. The general rule undoubt- edly is that the entire contract must be taken into consideration and from the whole of it the intention of the parties must be ascertained. The liability which it appears he intended to assume must be enforced against the party who has assumed it.^ This rule, how^ever, like other broad and safe rules, is too vague to guide us in determining the meaning of specific forms of contracts. When we attempt to deduce more specific statements of the law we are met with the fact that the courts are very far from harmonious on the question of what intention thej will deduce from given phraseology. If an agent wishes to execute a contract in such form as to bind his principal and not. himself, the safest form of signature is " X (principal) by A (agent)." This form of signature shows clearly that the agent does not intend to assume any personal liability." Thus a note beginning " I or we promise " and signed " C. & A. Co., per A, Sec, B, Gen. Mangr.," is the note of the corporation only. The word " per " refers to both A and B.^ The signature " A (agent) for X (principal)," while not technically so correct, is also sufficient to show that A does not intend to assume any personal liability.'* Thus a note beginning " I promise " and 1 Whitney v. Wyman, 101 U. S. 531; 24 Am. St. Rep. 351; 12 L. E 392. A. 714; 15 S. W. 417. 2 Williams v. Harris, 198 111. 501; 3 Williams v. Harris, 198 111. 501; 64 N. E. 988; reversing, 98 111. App. 64 N. E. 988; reversing, 98 111. App. 27; Tucker Mfg. Co. v. Fairbanks, 27. 98 Mass. 101; Emerson v. Mfg. Co., 4 Rawlings v, Robson, 70 Ga. 595; 12 Mass. 237; 7 Am. Dec. 66; Bartlett v. Tucker, 104 Mass. 336; Sparks v. Transfer Co., 104 Mo. 6 Am. Rep. 240. 1770 PAGE ON CONTRACTS. signed " Pro X, A," was held to be the note of X onlj.° So a note beginning " we jointly and severally promise " and signed " A & B for X," was held to bind X only.^ Some authorities, however, treat such form of signature as imposing a personal liability.'^ Thus a signature " Robert Early (for Sam'l Early)," was held by reason of the brackets to bind Robert Early per- sonally.^ So a note beginning " I promise " and signed " For the M. H. & F. S. Co., W. Macbean, President," was held to impose personal liability on Macbean.^ So a note signed " A, agent for the Churchman," imposes an individual liability on A.^*' The addition of the word " as " before the designation of the official capacity is often held to show an intention not to assume a personal liability. Thus a note beginning " The trustees " of a certain church " as such trustees, promise to pay," and signed " A, as trustee " of such church, does not im- pose any personal liability." As is indicated elsewhere,^^ the addition of a designation which is not that of an agent does not in law show an intention not to assume personal liability, whatever the parties may have believed. Thus a note begin- ning " we promise to pay " and signed by certain persons with the addition of the words " as stockholders " imposes personal liability." §1148. Signature by one person with addition of personal de- scription. If the form of a signature is " A, agent," or some equivalent expression, the word " as " being omitted before ^' agent," the weight of authority is that in the absence of statute A incurs 5 Long V. Colburn, 11 Mass. 97; loDeWitt v. Walton, 9 N. Y. 571. 6 Am. Dec. 160. n Little v. Bailey, 87 111. 239. 6 Rice V. Gove, 22 Pick. (Mass.) 12 See §§ 990, 995. 997, 1001, 1004. 158; 33 Am. Dee. 724. 13 Savings Bank v. Market Co., 7 0ffiitt V. Avers, 7 T. B. Mon. 122 Cal. 28; 54 Pae. 273. (Extrin- (Ky.) 356. sic evidence is not admissible to 8 Early v. Wilkinson, 9 Gratt. shovsr that such note was given only (Va.) 68. to ratify certain acts of the direc- 9 Macbean v. Morrison, 1 A. K. tors. ) Mar. (Ky.) 545. NATURE OF LIABILITY ASSUMED. 1771 a personal liability/ This rule is of old Common Law origin. At a time when it was customary for every person, on signing an instrument, to add his station and rank in life or occupa- tion, as a descripiio personw, the word " agent," like any other word showing occupation, might well serve to describe the person rather than to show in what capacity he was contracting. The rule thus established has survived to a day when the use of a designation of an occupation as a description of the person is almost unknown in written contracts; and when it is un- doubtedly the popular belief that the addition of the word agent to a signature prevents personal liability. Thus a sig- nature " A, trustee," is held to impose personal liability.^ Even where great liberality in admitting extrinsic evidence to show the intention of the parties is displayed, it is held that the signature " A, administratrix," while a fact to be considered in discovering the intention of the parties is no more con- clusive that no personal liability was intended than would be " A, widow," or " A, native of Oregon."^ A distinction, ac- cording to some authorities, must be made between " agent for " and " agent of " : the former showing an intention not to assume a personal liability, while the latter is treated in law as a mere descriptio perso^ice.^ A note signed by an individual name with the addition of " Mfg. Agt. & Supt. of contracts " imposes a personal liability." So a note signed " A, trustee," imposes a personal liability.® So to hold an iMacdonald v. Bond, 195 111. 493; 22 Am. Rep. 175; McKenney 122; 62 N. E, 881; affirming 96 v. Bowie, 94 Me. 397; 47 Atl. 918; 111. App. 116; Braiin v. Hess, 187 Farrell v. Eeed, 46 Neb. 258; 64 111. 283; 79 Am. St. Rep. 221; 58 N. W. 959. N. E. 371; Keidan v. Winegar, 95 Mich. 430; 20 L. R. A. 705; 54 N W. 901; Stinson v. Lee, 68 Miss 113; 24 Am. St. Rep. 257; 9 L. R, A. 830; 8 So. 272; Sparks v. Trans fer Co., 104 Mo. 531; 24 Am. St Rep. 351; 12 L. R. A. 714; 15 S. W 417; Exchange Bank v. Lewis Coun 3 Kitchen v. Holmes, 42 Or. 252; 70 Pac. 830. 4Tannatt v. Bank, 1 Colo. 278; 9 Am. Rep. 156; Burlingame v. Brewster, 79 111. 515; 22 Am. Rep. 177; Tucker Mfg. Co. v. Fairbanks, 98 Mass. 101. 5 Keeley Brewing Co. v. Decorat- ty, 28 W. Va. 273. ing Co., 194 111. 580; 62 N. E. 923. 2Diivall V. Craig, 2 Wheat. (U, e Pargason v. Ford, 119 Ga. 343; S.) 45; Powers v. Briggs, 79 111. 46 S. E. 431; McClellan v. Robe, 93 1772 PAGE ON CONTEACTS. indorser liable on a note signed " A, agent," demand must be made on A and not on the undisclosed principal/ If a church is not named in the body of a note, and the trustees sign individually, the addition of the words " Trustees of " the church in question is not sufficient to show that no personal liability was intended.^ So a signature " A, vestryman," " Grace Church " imposes a personal liability upon A.^ Even on this point the courts are by no means unanimous. Some authorities hold that a designation of agency may, in connection with the wording of the instrument, show that no personal liability is intended/" So a note signed " A, B, C, vestrymen of the Episcopal Society," was held not to impose personal liability on A, B and C/^ Thus a note signed " James E. Wilson, Pres't. T. X. Co.," was held to be the obligation of the corporation/^ So a note beginning " we promise " and signed " A, treasurer," and stamped with a seal bearing the corporate name was held to be the note of the corporation and not of A/* Under the negotiable instruments act, no personal liability is imposed on one who signs in a representative capacity. Accordingly a note signed by " A, trustee,"^* imposes no personal liability. §1149. Signature by two or more persons with addition of per- sonal description. If two or more persons sign, and the question of the existence of personal liability is presented, there is as much of a conflict Ind. 298; Fiske v. Eldridge, 12 Mass. 461; 8 Am. Dec. 146; Dis- Gray (Mass.) 474; Farrell v. patch Line v. Mfg. Co., 12 N. H. Eeed, 46 Neb. 258; 64 N. W. 959. 205; 37 Am. Dee. 203; Safford v. TStinson v. Lee, 68 Miss. 113; Wyckoflf, 1 Hill (X. Y.) 11; 4 Hill 24 Am. St. Rep. 257; 9 L. R. A. (N. Y.) 442. 830; 8 So. 272, n Johnson v. Smith, 21 Conn. 8 Burlingame v. Brewster, 79 111. 627. 515; 22 Am. Rep. 177; Hayes v. i2 01cott v. Ry., 27 N. Y. 546; 84 Brubaker, 65 Ind. 27; Hays v. Am. Dec. 298. Crutcher, 54 Ind. 260. is Miller v. Roach, 150 Mass. 140; sTilden v. Barnard, 43 Mich. 376; 6 L. R. A. 71; 22 N. E. 634. 38 Am. Rep. 197; 5 N. W, 420. i4Megowan v. Peterson, 173 N. 10 Fuller v. Hooper, 3 Gray Y. 1 ; 65 N. E. 738. (Mass.) 334; Ballou v. Talbot, 16 NATURE OF LIABILITY ASSUMED. 1773 as "where one only signs, but the states are divided on different lines. Thus, if a note is signed by two or more persons with an official designation, such as " president " or " secretary " op- posite the name of each, we find a conflict of authority. Some courts hold that such a form of signature imposes no individual liability.^ Thus a note beginning " the president and directors will pay " and sig-ned " A, President," " B," and so forth, was held to be the obligation of the company and not to impose a personal liability." Other authorities hold that such a form of execution creates a personal liability.^ Thus a note beginning " we promise " and signed " J. E. Stafford, Pres., J. Zapf, Mgr., Albany Furniture Co.," was held to im- pose joint individual liability.* If a note is signed with the name of a corporation, followed by the names of two or more officers, with the name of the office opposite the name of each person, another conflict of authority exists. Some jurisdictions hold that such a note is the note of the corporation only.^ Thus a note signed " A, Secretary," " B, President," payable to " ourselves," and indorsed " Worcester Brewing Co., B, President, A, Secretary," was held to be the note of the cor- poration'.^ Other courts hold that such a contract creates an individual liability. Thus a note beginning " we promise," and signed " The Pendleton Glass Company, by B. F. Aiman, President; C. B. Orvis, Vice President; Charles H. Roach, Secretary ; A. B. Taylor, Benj. Rogers, J. R. Boston, directors," was held to impose individual liability on the directors."^ A note beginning " we promise to pay " and signed " Belle Plaine 1 Farmers', etc., Bank v. Colby, * Albany, etc., Co. v. Bank. 17 64 Cal. 352; 28 Pac. 118; Arm- Ind. App. 531; 60 Am. St. Rep. strong V. Canal Co., 14 Utah 450; 178; 47 N. E. 227. 48 Pac. 690. 5 American National Bank v. Mfg. 2Yowell V. Dodd, 3 Bush. (Ky.) Co., 1 Neb. Unofficial 322; 95 N. W. 581; 96 Am. Dec. 256. 672. 3 Albany, etc., Co. v. Bank, 17 « Produce Exchange Trust Co. v. Ind. App. 531; 60 Am. St. Rep. Bieberbach, 176 Mass. 577 ; 58 N. E. 178; 47 N. E. 227; Whitney v. Sud- 162. duth, 4 Met. (Ky.) 296; Titus v. 7 Taylor v. Reger, 18 Ind. App. Kyle, 10 0. S. 444; Scott v. Baker, 466; 63 Am. St. Rep. 352; 48 N. E. 3 W. Va. 285. 262. 1774 PAGE ON CONTBACTS. Canning Co., H. Wessel, Sec'y., A. J. Hartman, Pres.," im- poses individual liability upon the officers.* §1150. Signature by names of principal and agent. If the note is signed by the name of the principal, with the> name of the agent subscribed below that of the principal, with- out the use of the word " by " to show agency, a question is presented on which there is a division of authority. A question of this sort usually arises on a note of a corporation which must be executed by some one of its agents, and which is signed by the name of the corporation followed by the name of one of its agents, with the addition of " President," " Secretary," or some such official designation. The weight of authority is that such a note is the note of the corporation exclusively, and that no personal liability attaches to the agent whose name is thus signed.^ There is some authority for holding that the agent who signs in such a form incurs a personal liability.^ §1151. Body of instrument indicating nature of liability. The wording of the clause in which the promise .is made must be considered in determining the nature of the liability imposed. A note beginning " We, the trustees of Musconetcong Grange, ISTo. 114, known as W. Fleming & Co.," promise, and signed with the word " Trustees " and the individual names of the trustees, imposes a personal liability on the trustees.^ 8 McC'andless v. Canning Co., 78 675; 16 L. R. A. 143; 23 Atl. 853; la. 161; 16 Am. St. Jlep. 429; 4 Latham v. Flour Mills, 68 Tex. 127; L. R. A. 396; 42 N. W. 635. 3 S. W. 462; Leibscher v. Kraus, iFalk V. Moebs, 127 U. S. 597; 74 Wis. 387; 17 Am. St. Rep. 171; Bean v. Pioneer Mining Co., 66 Cal. 5 L. R. A. 496; 43 N. W. 166. 451; 56 Am. Rep. 106; 6 Pac. 86; 2 Mathews v. Mattress Co., 87 Scanlon v. Keith, 102 111. 634; 40 la. 246: 19 L. R. A. 676; 54 N. W. Am. Rep. 624 ; Gillet v. Bank, 7 111. 225 ; Heffner v. Brownell, 70 la. App. 499; Gleason v. Milk Supply 591; 31 N. W. 947; 75 la. 341; 3& Co., 93 Me. 544; 74 Am. St. Rep. N. W. 640. The earlier case of 370; 45 Atl. 825; Castle v. Foundry Wheelock v. Wilson, 15 la. 464, is Co., 72 Me. 167; Atkins v. Brown, overruled. 59 Me. 90; Draper v. Heating Co., 1 Vliet v. Simanton. 63 N. J. L. 5 All. (Mass.) 338: Reeve v. Bank, 458: 43 Atl. 738; and see Hypes v. 54 N. J. L. 208; 33 Am. St. Rep. Griffin, 89 111. 134; 31 Am. Rep. 71; NATURE OF LIABILITY ASSUMED. 1775 So a note beginning " The directors promise '" anri signed by the directors, imposes personal liability." A note beginning " we promise " " for the Boston Glass Manufactory " .und signed by A, B, and C, individually, was held to be the individual note of A, B, and C.^ So an instrument which, in the body thereof purports to be executed by A " for the National Um- brella Company,"* or by A " of the X Company,"^ imposes in each case a personal liability on A. Similar phraseology is held in other cases not to impose personal liability. Thus a note beginning " The Howard County Agricultural Association who execute this note by her directors " " do promise " and signed " A, Secretary ; B, C, directors Howard County Agricul- tural Association," does not impose personal liability." Under the Maine statute a note beginning " We, the subscribers for " a certain corporation, signed by the individual names of the makers, imposes liability in the corporation, and not on the individuals signing.'^ An acceptance, written on a letter bearing the corporation letter head, and signed by an agent individually, written in reply to a proposition addressed to the corporation, binds the corporation.^ §1152. Liability assumed by public officers. An important difference between contracts of public agents and contracts of private agents is in the construction of liability intended to be assumed. We have seen that in contracts of private agents the mere addition of the official capacity to the Powers V. Briggs, 79 111. 493; 22 3 Bradlee v. Glass Manufactory, Am. Rep. 175. 16 Pick. (Mass.) 347. 2 McKensey v. Edwards, 88 Ky. 4 General Electric Co. v. Gill, 127 272; 21 Am. St. Rep. 339; 3 L. R. Fed. 241. A. 397; 10 S. W. 815. (However 5 Railway Speed Recorder Co. v. in such a case it is said that the Tool Co., 126 Fed. 223. question of the nature of liability 6 Armstrong v. Kirkpatrick, 79 imposed must be determined on an- Ind. 527. swer and not on demurrer. McKen- ^ Simpson v. Garland, 72 Me. 40; sey V. Edwards, 88 Ky. 272 ; 21 Am. 39 Am. Rep. 297. St. Rep. 339; 3 L. K. A. 397; 10 « Towers v. Cattle Co., 83 Minn. S. W. 815; citing Pack v. White, 243; 86 N. W. 88. 78 Ky. 243.) 1776 PAGE ON CONTRACTS. signature does not prevent personal liability from being imposed on the agent ; and it does not prevent the contract from being treated as his personally/ In contracts of public agents, there is, unfortunately, a lack of harmony on this question, as there is in contracts of private agents. There may be said, how- ever, to be a strong tendency in contracts of public agents, to hold that the public corporation is bound and the agent is not in many cases where the opposite result would be reached in contracts of private agents. Thus a lease made to a city, signed by the mayor individually and sealed with his seal is the contract of the city and not of the mayor personally.^ So an appeal bond purporting to be the obligation of the city, but signed by the mayor and the clerk with their official titles added to their names is valid as the obligation of the city.* An order directed to a township clerk, directing him to make a specified payment out of township funds and signed " A, B, C, Trustees," does not impose personal liability on A, B and C* So a contract beginning " We, trustees," and promising to re- pay " money borrowed to build " a certain school house, signed individually, imposes no personal liability.^ A reward offered by " A, B, C, Selectment of Milton," imposes personal liability on such signers.*^ A contract signed by the individual names of public officers, and not showing on its face any intention to make a contract on behalf of the public is the individual contract of such officers.'^ 1 See § 1148 e# seg. 5 Warford v. Temple (Ky.), 73 2 Chicago V. Peck, 196 111. 260; S. W. 1023. 63 N-. E. 711; affirming 98 111, App. 6 Brown v. Bradlee, 156 Mass. 28; 434. 32 Am. St. Hep. 430; 15 L. R. A. 3 (City of) Fon du Lac v. Atto, 509; 30 N. E. 85. 113 Wis. 39; 90 Am. St. Rep. 830; 7 Western Publishing House v.. 88 N. W. 917. Murdick, 4 S. D. 207; 21 L. lU iWillett V. Young, 82 la. 292; A. 671; 56 X. W. 120. 11 L. R. A. 115; 47 N. W. 990. TIME. 1777 CHAPTER LIV. TIME. §1153. Construction of terms concerning time of performance. The intention of the parties controls in questions of time of performance. Accordingly it is dangerous to attempt to lay down arbitrary rules for ascertaining such intention. A few illustrations of the results reached by the courts in specific cases may be given, however. A contract to pay or deliver " by '* a certain day gives the whole of such day for performance.^ Thus a subscription conditioned on raising a certain sum " by " a certain day is enforceable where the requisite amount isi subscribed at a meeting held on the night of such day.^ A promise to pay " on or before " a certain day is treated as a promise to pay on that day, with an option to pay before the time designated.^ A contract to re-imburse one for loss sus- tained by reason of his purchase of stock " at or before the expiration of five years," means five years from the date of the contract, and not five years from the loss.^ A promise to perform within a certain time from a given event is to be con- strued by counting from the completion of the event. Thus a provision for furnishing proofs of loss sixty days after the fire causing loss means sixty days after the fire has ended, if it lasts for more than one day.^ A provision for delivering certain bonds within six months after a foreclosure sale means within 1 Preston v. Dunham, 52 Ala. 259; 49 N. E. 113; Helmer v. Kro- 217; Massie V. Belford, 68 111. 290; lick, 36 Mich. 371; Mattison v. Stevens v. Blunt, 7 Mass. 240; Marks, 31 Mich. 421; 18 Am. Eep. Coonley v. Anderson, 1 Hll (N. Y.) 197. 519. 4 Wilson V. Bieknell, 170 Mass. 2 Elizabeth City Cotton Mills v. 259; 49 N. E. 113. Dunstan, 121 N. C. 12; 61 Am. St. 5 National Wall Paper Co. v. Ins. Rep. 654; 27 S. E. 1001. Corporation, 175 N. Y. 226; 67 N. 3 Wilson V, Bieknell, 170 Mass. E. 440. 112 1778 PAGE ON CONTRACTS. six months after the sale is consummated by the delivery of the deed." A contract to exchange realty when a certain loan is procured, or " within forty days at the most," means forty days from the time that the loan is procured.^ A contract giving the purchaser of standing timber, until the first day of June, 1898, to remove it, " with the privilege of another year if needed to remove " it, means a year from the first of June, 1898.^ If the last day of performance falls on Sunday, per- formance on Monday is a sufficient compliance with the con- tract.^ A promise to pay or perform in a certain number of months prima facie means calendar months.^" Under a con- tract for performance in a certain time the day of the date is excluded from the computation, and the last day of perform- ance is included." A contract which does not expressly state within what time it is to be performed may refer to another contract in such a way as to show that the time fixed in such other contract is the time intended by the parties.^^ Thus a contract to give employment or to pay royalties during the ^^ term " of a prior contract for the use of a patent for five years, with the option of five more, has been held to mean the ten-year term, even though the option as to the second period of five years was not in fact taken advantage of.^^ §1154. Reasonable time intended if time not fixed. If no time for performance is fixed by the contract, the im- plication is that a reasonable time for performance is intended.^ « Houston, etc., Ry. v. Keller, 90 12 Poole v. Plush Co., 171 Mass. Tex. 214; 37 S. W. 1062. 49; 50 N. E. 451; Ryberg v. Good- 7Te Poel V. Shutt, 57 Neb. 592; now, 59 Minn. 413; 61 N. W. 455. 78 N. W. 288. 13 Poole v. Plush Co., 171 Mass. 8 Oconto Co. V. Lundquist, 119 49; 50 N. E. 451. Mich. 264; 77 N. W. 950. 1 McFadden v. Henderson, 128 9 The Harbinger, 50 Fed. 941 ; In- Ala. 221; 29 So. 640; Griffin v. gram v. Wackernagel, 83 la. -82 48 N. W. 998. 10 Doyle V. Bank, 131 Ala. 294 90 Am. St. Rep. 41 ; 30 So. 880. 11 Doyle V. Bank, 131 Ala. 294 Ogletree, 114 Ala. 343; 21 So. 488; Comer v. Way, 107 Ala. 300; 54 Am. St. Rep. 93; 19 So. 966; Bry- ant V. Ry., 119 Ga. 607; 46 S. E. 829; Atchison, etc., R. R. v. Bur- 90 Am. St. Rep. 41; 30 So. 880. lingame Township, 36 Kan. 628; 59 TIME. 1770 If performance is made "within such reasonable time, no default exists ; nor can default exist until a reasonable time has elapsed.* Refusal to perform for such time in the future as is not reason- able prevents the objection that the time within which per- formance was requested was not reasonable."^ On the other hand, failure to perform within a reasonable time constitutes a breach.* Performance of such a contract after a reasonable time is unavailing if the adversary party has not consented to an extension of time.^ The principle that a reasonable time is implied if no time is fixed applies to contracts for the sale of land,® or of personalty,^ as a contract to assign a patent,* to building contracts,® to contracts for work and labor, hauling logs,^° or driving logs,^^ or procuring a loan,^" or effecting a sale of real estate,^^ or to furnish a vessel and deliver lumber,^* Am. Rep. 578; 14 Pac. 271; Howe v. Taggart, 133 Mass. 284; Calkins v. Chandler, 36 Mich. 320; 24 Am. Rep. 593; Van Arsdale v. Brown, 18 Ohio C. C. 52; 9 Ohio C. D. 488; Gammon v. Bunnell, 22 Utah 421; 64 Pac. 958; Dennis v. Stoughton, 55 Vt. 376; Poling v. Lumber Co., _ w. Va. — ; 47 S. E. 279. 2 Bell V. Mendenhall, 78 Minn. 57 ; 80 N. W. 843. 3 Reynolds v. Reynolds, 74 Vt. 463; 52 Atl. 1036. 4 Hume V. Mullins (Ky.), 35 S. W. 551 ; Gainor v. Boom Co., 86 Mich. 112; 48 N. W. 787; Lynd v. Printing Co., 20 J?. I. 344; 39 Atl. 188. sMeader v. Allen, 110 la. 588; 81 N. W. 799. 6 Noyes v. Barnard, 63 Fed. 782; Michael v. Foil, 100 N. C. 178; 6 Am. St. Rep. 577; 6 S. E. 264; Williamson v. Neeves, 94 Wis. 656; 69 N. W. 806. 7 Watkins v. Morris, 16 Mont. 309; 40 Pac. 600; Smith v. Ma- chine Co., 46 S. C. 511; 24 S. E. 376; Boyce v. Timpe (la.), 89 N. W. 83. sNiles V. Graham, 181 Mass. 41; 62 N. E. 986. 9 House. Lane v. Hardware Co., 121 Ala. 296; 25 So. 809; Brodek V. Farnum, 11 Wash. 565; 40 Pac. 189. Steam plant. North v. Mal- lory, 94 Md. 305; 51 Atl. 89; Elec- tric-lighting plant. Florence, etc., Co. V. Hanby, 101 Ala. 15; 13 So. 343. Flour ing-mill. Van Stone v. Mfg. Co., 142 U. S. 128. 10 Griffin v. Ogletree, 114 Ala. 343; 21 So. 488; Greenwood v. Da- vis, 106 Mich. 230; 64 N. W. 26. 11 Bonifay v. Hassell, 100 Ala. 269; 14 So. 46; Gainor v. Boom Co., 86 Mich. 112; 48 N. W. 787; Day V. Gravel, 72 Minn. 159; 75 N. W. 1. 12 Collier v. Weyman, 114 Ga. 944; 41 S. E. 50. 13 Boyd V. Watson, 101 la. 214; 70 N. W. 120. Contra, that such a contract is revocable at the will of the owner of the realty. Woods v. Hart, 50 Neb. 497; 70 N. W. 53. i4\A^iting V. Gray, 27 Fla. 482; 11 L. R. A. 526; 8 So. 726. 1780 PAGE ON CONTRACTS. 01' to cut and remove timber/^ or to forbear a legal right/" as enforcing a lien/'^ So an option, the time for the exercise of which is not fixed, mnst be exercised in a reasonable time,^* So a contract to rej)urchase stock at the end of a given time if the vendee holds it then and wishes to sell it, has been held to give the vendee a reasonable time after the end of such I^eriod to make his election. ^^ The purchaser of realty has ordinarily a reasonable time to examine the abstract of title before paying the purchase price.'" So a contract to furnish capital as needed gives a reasonable time after notice that it is needed to furnish it."^ So a contract to submit a cause to the judge at the next term of court, a jury to be waived and no appeal or error to be taken, requires that the complaint should be filed in time to allow a reasonable time to file an answer.^^ A contract which provides for a test after delivery of the article sold, and before final acceptance, gives a reasonable time for making such test.*" In some cases a time other than merely a reasonable time is implied from the terms of the contract. A contract for the loan of money without provision for the time of repayment implies repayment on demand.^* A continuous contract of employment, no time of duration being fitted, is terminable at the will of either party."^ This principle applies 15 Ferguson v. Arthur, 128 Mich. 22 Pendleton v. Light Co., 121 297; 87 N. W. 259. N. C. 20; 27 S. E. 1003. (Tha 16 Moore v. McKenney, 83 Me. 80 ; complaint was offered for filing in 21 Atl. 749. this case on the last day of the 17 Anderson v. Wainwright, 67 term when the judge was about to Ark. 62; 53 S. W. 566. (An argree- leave the bench.) ment to refrain from sale, and col- 23 Edison, etc., Co. v. Navigation lect the debt out of the rents.) Co., 8 Wash. 370; 40 Am. St. Rep. isCatlin v. Green, 120 N. Y. 441; 910; 24 L. E. A. 315; 36 Pac. 260; 24 N. E. 941. see also Turner v. Foundry Co., 97 i9Maurer v. King, 127 Cal. 114; Mich. 166, 634; 56 N. W. 356; 59 Pac. 290; La Dow v. Bement, 57 N, W. 192. 119 Mich. 685; 45 L. Pv. A. 479; 24 Jacoby v. Jacoby, 103 Fed. 473- 79 N. W. 1048. 25 De Briar v. Minturn, 1 Cal. 20 Pennsylvania Mining Co. v, 450; Greer v. Mfg. Co., 1 Penn- Thomas, 204 Pa. St. 325; 54 Atl. (Del.) 581; 43 Atl. 609; Louisville 101. & K E. Co. V. Offutt, 99 Ky. 427; 2iNiles V. Graham, 181 Mass. 41; 59 Am. St. Eep. 467; 36 S. W. 181; 62 N. E. 986. McCullough Iron Co. v. Carpenter. TIME. 1781 even if the compensation is fixed at a certain sum per year.^* However, a contract by A to employ B as long as A is engaged in the saw-mill business on the Ohio River does not give to A the right to discharge B at will."^ §1155. Reasonable time. — Whether question of law or fact. What is a reasonable time for performance is a question of fact to be determined as a fact, in view of the circumstances of • the case/ Accordingly if an action is brought on an agreement to accept a conveyance and in consideration thereof to execute a written contract to pay a certain mortgage, and to reconvey on payment of the amount of such mortgage, and the defense is that plaintiff delayed an unreasonable time before performing the conditions precedent on his part to be performed, it is not error for the court to refuse to charge that a delay of four months would be unreasonable." On the other hand, a notice for performance in eighty days, given to the vendor, followed by demand for performance in five days, followed by a delay of six weeks before bringing a suit for sj^ecific performance, has been held as a fact to give to the vendor a reasonable time for performance.^ In many cases it has been said that this question 67 Md. 554; 11 Atl. 176; Edwards shall make use of B's patents. Ray- V, Seaboard R. Co., 121 N. C. 490; mond v. White, 119 Mich, 438; 78 28 S. E. 137; Martin v. New York N. W. 469. L. Ins. Co., 148 N. Y. 117; 42 N. E. i Drake v. Goree, 22 Ala. 409 416; Copp V. Colorado Coal & I. Co., Watts v. Sheppard, 2 Ala. 425 46 N. Y, Supp. 542; 20 Misc. 702; Campbell v. Heney, 128 Cal. 109 Christensen v. Borax Co., 26 Or. 60 Pae. 532; Jenkins v. Lykes, 19 302; 38 Pac. 127; Kirk v, Hartman, Fla. 148; 45 Am. Rep. 19; Morrison 63 Pa. St. 97; Booth v. National v. Wells, 48 Kan. 494; 29 Pac. 601; India-Rubber Co., 19 R. I. 696; 36 Elder v. Rourke, 27 Or. 363; 41 Pac. Atl. 714; Prentiss v. Ledyard, 28 6; Hays v. Hays, 10 Rich. L. (S. Wis. 131. C.) 419; Boyington v. Sweeney, 77 26 Greer v. Mfg. Co., 1 Penn. Wis. 55; 45 N. W. 938. (Del.) 581 ; 43 Atl. 609. 2 Peabody v. Fellows, 181 Mass. 27 Yellow Poplar Lumber Co. v. 26; 62 N. E. 1053. Rule, 106 Ky. 455; 50 S. W. 685. 3 Harding v. Olson, 177 111. 298; So under a contract whereby A 52 N. E. 482; aflSrming 76 111. App. agrees to employ B as long as A 475. 1782 PAGE ON CONTRACTS. is one of law/ wliere the essential facts are not in dispute.^ This, however, means nothing more than that if this fact, like any other fact, is either conceded by the parties to exist or is established by uncontradicted evidence, it cannot be said to be a fact in issue, to be decided as the facts in issue are decided. §1156. Time fixed by extrinsic act. The time of performance may be fixed with reference to the doing of some specified act.^ This is usually held to be a provision inserted to fix the time of performance, but not to make the doing of such other act a condition precedent. Hence if such other act is never done, the act contracted for must be done in at least a reasonable time. This principle has been applied to a promise to pay when the maker has finished a church then building," or " as soon as the crop can be sold or the money raised from any other source,"^ or when the promisor shall sell the place he lives in,* or to pay in twelve months " or as soon as I can sell the above amount of Allen's Vegetable Tonic,"' or to credit the amount of the debtor's cigars sold by the creditor, upon the debt and thus extinguish it,^ or when other specified property is sold at a specified price ;^ or to pay in four months or as soon as the promisor shall collect a certain note f or to pay by a certain date " on the condition that the banks of Tennessee have resumed specie payment at that time ; if not, as soon thereafter as they do resume specie payment " ;'' or to 4Luckhart v. Ogden, 30 Cal. 547; 4 Crooker v. Holmes, 65 Me. 195; Attwood V. Clark, 2 Me. 249; Echols 20 Am. Rep. 687. (Hence judgment V. Eailroad Co., 52 Miss. 610. and levy on such property does not 5 Cotton V. Cotton, 75 Ala. 345; relieve the promisor from liability Hill V. Hobart, 16 Me. 164; Hedges to pay in a reasonable time.) V. R. R., 49 N. Y. 223. s Harlow v. Boswell, 15 111. 56. 1 Remy v. Olds, 88 Cal. 537 ; 26 6 Jacoby v, Jacoby, 103 Fed. 473. Pac. 355; Collins v. Park, 93 Ky. 7 Xoia^^j ^ ^ull, 24 Or. 479; 33 6; 18 S. W. 1013; McKinnon Mfg. Pae. 983. As to pay a commission Co. V, Fish Co., 102 Mich. 221 ; 60 by conveying realty when other real- X. W. 472. ty is exchanged. Alvord v. Cook, 2 Eaton v. Yarborough, 19 Ga. 174 Mass. 120; 75 Am. St. Rep. 82. 288; 54 N. E. 499. 3Xunez V. Dautel, 19 Wall. (U. s MeCarty v. Howell, 24 111. 341. S.) 560. 9 Walters V. McBee, 1 Lea(Tenn.) S64. TIME. 1783 pay by a certain day " or as soon thereafter as said railroad comj^any " shall make certain payments to the promisor ;^** and to a contract to deliver lumber at a certain time " or as soon thereafter as vessel can be got ready/^ A note, payable ninety days after the return of a specified shij), is payable in case such ship is lost, ninety days after the time usually required for such a trip/^ Thus if a promise is made to pay a certain sum when it is realized from the sale of the products of certain lands, such sum is due at once as soon as the promisor has made literal performance impossible by selling such land.^* An agreement to pay the consideration for a conveyance to the grantor's grandson when he reaches the age of twenty-one is not discharged by his death before reaching such age^ but his legal representatives may recover the amount when such grandson would have been twenty-one had he lived/* An express provision that payment shall not be made until a certain event occurs, leaves no room for construction, and is given full force and effect. Thus if a provision is inserted in a contract that a party who saws logs into lumber is not to be paid until the adversary party has sold the lumber, payment is not due until such sale.^^ A promise to pay when able is held in some jurisdictions to imply a promise to pay in at least a reasonable time. This principle has been applied to contracts to pay " when I can make it convenient,"^*' " as fast as I can spare the same from my salary,"^^ as fast as the promisor was financially able without sacrificing his interests in a given corporation, for stock in which the contract in question was made,^^ or " when payor and payee mutually agree."^" In other jurisdictions a 10 Crass v, Scruggs, 115 Ala. 258; ig Lewis v. Tiptoir, 10 O. S. 88; 22 So. 81. 75 Am. Dec. 498. 11 Whiting V. Gray, 27 Fla. 482; li Culver v. Caldwell, 137 Ala. 11 L. R. A. 526; 8 So. 726. 125; 34 So. 13. 12 Randall v. Johnson, 59 Miss. is Chadwick v. Hopkins, 4 Wyom. 317; 42 Am. Rep. 365. 379; 62 Am. St. Hep. 38; 34 Pac. isPoirier v. Gravel, 88 Cal. 79; 899. (A delay of four years was 25 Pae. 962. held more than a reasonable time.) 14 Haines v. Weirick, 155 Ind. 1 9 Page v. Cook, 164 Mass. 116; 548; 58 N. E. 712. 49 Am. St. Rep. 449; 28 L. R. A. 15 Gardner v. Edwards, 119 N. C. 759; 41 N. E. 115. 566; 26 S. E. 155. 1784 PAGE ON CONTRACTS. promise to pay as the debtor " might feel able to pay," is held to leave the time of payment in the bona fide and honest judg- ment of the debtor, though a legal liability is created by such contract.^" If the debtor is in fact financially able to pay, he is bound to make the payment stipulated under such contract.^'' §1157. Performance not due till end of stipulated time. If a certain time is fixed within which performance may be made, the party owing performance has the entire time thus fixed, within which to perform. Thus under an option to be exercised within a certain time, by which the vendor is required to convey land on seven days' notice, such notice may be given at any time before the expiration of the option, irrespective of whether the period of seven days will end after such time or not.^ If A agrees to secure a certain bid for B's stock within, a year, A has the whole of such year, and an offer mailed so as to reach B on the last day of such year is held to be suffi- cient." So a contract of subscription conditioned on raising a certain sum by a certain day is binding if the sum is raised at a meeting held on the night of such day.^ So a contract to complete a boat by a certain time is not broken until such time has elapsed.* So a contract to remove timber in certain desig- nated years gives the whole of such years in which to remove it.^ Performance of a contract to sell land during A's life-time can- not be compelled in any shorter time.^ So in a contract of sale, if the vendor has the whole of a season in which to deliver, the vendee cannot fix a time within the season for delivery.'' If a son agrees to pay interest to his father during the latter's life, 20Pistel V. Ins. Co., 88 Md. 552; Dimstan, 121 N. C. 12; 61 Am. St. 43 L. K. A. 219; 42 Atl. 210. Rep. 654; 27 S. E. 1001. 21 Flather v. Machine Co., 71 N. * Vandegrift v. Engineering Oo., H. 398; 52 Atl. 454. 161 N. Y. 435; 55 N. E. 941; 48 L, iGuyer v. Warren, 175 111. 328; R. A. 685. 51 N. E. 580. 5 Larson v. Cook, 85 Wis. 564; 55 2 Duchemin v. Kendall, 149 N. W. 703. Mass. 171; 3 L. R. A. 784; 21 N. E. e Michael v. Foil, 100 N. C. 178; 242. 6 Am. St. Rep. 577 ; 6 S. E. 264. 3 Elizabeth City Cotton Mills v. 7 Dingley v, Oler, 117 U. S. 490. TIME. 1785 on an amount advanced, and to settle with the father's estate, such amount, even if a debt, is not due before the father's death.' §1158. Premature tender. If the contract fixes a certain time for performance, the party from whom performance is due has no right to perform before that time. Hence, premature tender is ineffectual.^ It does not discharge a mortgage given to secure the debt, payment whereof is thus tendered.^ So if payment is to be made in part in money and in part in an interest-bearing note, premature tender of the entire debt in money is ineffectual.^ So it has been held that if a vendee of stock has the right to rescind at the end of one year, tender of the stock before the end of the year is premature and ineffectual.* §1159. Time of essence of contract. — Meaning of term. The statement that time is of the essence of a contract, means that the provision fixing the time of performance is looked upon as a vital term of the contract, the breach of which may operate as a discharge of the entire contract. Accordingly, if time is of the essence of the contract, failure to perform at the time speci- fied gives to the adversary party the right of treating the con- tract as discharged.^ If time is not of the essence of the contract, failure to perform at the time specified does not justify the adversary party in treating the contract as discharged.^ It is sHammett v. Brown, 44 S. C. v. Xolte (Cal.), 24 Pac. 840; Staley 397; 22 S. E. 482. v. Thomas, 68 Md. 439; 13 Atl. 53; 1 Bowen v. Julius, 141 Ind. 310; Talbott v. Heinze, 25 Mont. 4; 63 40 N. E. 700. Pac. 624; Sanborn v. Murphy. 86 -'Bowen v. Julius, 141 Ind. 310; Tex. 437; 25 S. W. 610; Jordan v. 40 N. E. 700; Moore v. Kime, 43 Coulter, 30 Wash. 116; 70 Pac. 257; Neb. 517; 61 N. W. 736. Owen v. Henderson, 16 Wash. 39; 3 Barbour v. Hickey, 2 App. D. C. 58 Am. St. Rep. 17 ; 47 Pac. 215. 207; 24 L. R. A. 763. 2 Armstrong v. Breen. 101 la. 9; 4Schultz V. O'Rourke, 18 Mont. 69 N. W. 1125; University of Des 418; 45 Pac. 634. Moines v. Trust Co., 87 la. 36; 53 1 Slater v. Emerson. 19 How. (U. N. W. 1080; Usher v. Hollister, 58 S.) 224; McFadden v. Henderson, Kan. 431 ; 49 Pac. 525. 12s Ala. 221; 29 So. 640; Vorwerk 1786 PAGE ON CONTEACTS. eufficient if the contract is performed within a reasonable time after that specified in the contract. The question, whether time is not of the essence of the contract, is a question of con- struction. When this question is determined, the effect of the failure of the party in default to perform at the time stipulated is a question of breach. The question whether time is of the essence of the contract, therefore, might be treated under either or both of the headings of construction or discharge. §1160. Time of essence at law. At law the general rule is that time is of the essence of the contract unless a contrary intent appears from the face of the contract.^ A contract for the sale of chattels, especiall;)* those of fluctuating value, is a contract of which time is of the essence. This rule is especially applicable to mercantile contracts,^ such as wholesale contracts of sale of clothing,^ uniform-cloth,^ 1 Cleveland Rolling Mill v. Rhodes, 121 U. S. 255 ; Slater v. Emerson, 19 How. (U. S.) 224; Hull, etc., v. Coke Co., 113 Fed. 256; Savannah Ice-Delivery Co. v. Transit Co., 110 Ga. 142; 35 S. E. 280; Underwood V. Wolf, 131 111. 425; 19 Am. St. Rep. 40; 23 N. E. 598; Merritt v. Construction Co.. 91 Md. 453; 46 Atl. 1013; McGrath v. Gegner, 77 Md. 331; 39 Am. St. Rep. 415; 26 Atl. 502 ; Garrison v. Cooke, 96 Tex. 228; 97 Am. St. Rep. 906; 61 L. R. A. 342; 72 S. W. 54; Bounds v. Hickerson, 26 Tex. Civ. App. 608; 63 S. W. 887. 2 Cleveland Rolling Mill v. Rhodes, 121 U. S. 255; Norrington v. Wright, 115 U. S. 188; Filley v. Pope, 115 U. S. 213; Lefferts v. Weld, 167 Mass. 531; 46 N. E. 107; Rommel v. Wingate, 103 Mass. 327; Pope V. Porter, 102 N. Y. 366; 7 N. E. 304. " In the contracts of merchants, time is of the essence. The time of shipment is the usual and convenient means of fixing the probable time of arrival, with a view of providing funds to pay for the goods or of fulfilling contracts with third persons. A statement descrip- tive of the subject-matter or of some material incident, such as the time or place of shipment, is ordinarily to be regarded as a warranty in the sense in which that term is used in insurance and maritime law, that is to say, a condition precedent upon the failure or non-performance of which the party aggrieved may re- pudiate the whole contract." Nor- rington v. Wright, 115 U. S. 188, 203; quoted in Cleveland Rolling Mill v. Rhodes, 121 U. S. 255, 261. 3 White V. Wolf, 185 Pa. St. 369; 39 Atl. 1011. (Delay would prevent the vendee from cataloguing and ad- vertising the clothing.) 4 Jones V. United States, 96 U. S. 24. TIME. 1787 or iron.^ A contract for the sale of a cargo of hemp to he shipped from Manila hy a sailing vessel direct to New York, or via Hong Kong during the month of April or May is not performed by shipping it at Manila by a steamer arriving at Hong Kong on the third of Jmie and transhipping it by sailing vessel leaving Hong Kong on June fifth.** Thus contracts to pay insurance premiums at a given time as a condition of keep- ing the policy alive, must be performed strictly at the time specified.^ Time is not, however, of the essence of a contract to surrender a policy within six months after lapse.® A char- ter-party^ which stipulates for performance at a given time, must be performed strictly at the time specified. Thus if a charter-party provides that a vessel shall proceed from Mel- bourne to Calcutta " with all possible despatch," the fact that the vessel proceeds from Melbourne to Manila and so arrives at Calcutta three months later than she would had she gone direct from Calcutta discharges the contract, even if she arrives at Manila before the charterer has secured another vessel.^** So time is of the essence of building contracts in which a definite time for completing the work is stipulated for ;" or of a contract to build a gas-holder,^^ or to complete a railroad bridge by a certain day,^^ or to remove a building by a certain day.^* Time is of the essence of a contract giving a license to enter and remove timber during a certain time.^^ Contracts to cut timber in a given time other than licenses, such as a contract 5 Cleveland Rolling Mill V. Rhodes, n Phillips, etc., Co. v. Seymour, 121 U. S. 255; Norrington v. 91 U. S. 646; Morrison v. Wells, 48 Wright, 115 U. S. 188. Kan. 494; 29 Pac. 601; Allen v. eLefferts v. Weld, 167 Mass. 531; Cooper, 22 Me. 133; Johnson v. Slay- 46 N. E. 107. maker, 18 Ohio C. C. 104: 9 Ohio 7 Klein v. Ins. Co., 104 tJ. S. 88; C. D. 500. New York Life Ins. Co. v. Statham, 12 Wood v. Gaslight Co., Ill Fed. 93 U. S. 24. 463; 49 C. C. A. 427. 8 Manhattan Life Ins. Co. V. Pat- i3 Slater v. Emerson, 19 How. (U. terson. 109 Ky. 624; 53 L. R. A. S.) 224. 378; 60 S. W. 383. i* Osgood v. Boston, 165 Mass. 9 The Alert, 61 Fed. 504. 281; 43 N. E. 108. loLowber v. Bangs, 2 WalL (U. isutley v. Lumber Co., 59 Midi. S.) 728. 263; 26 N. W. 488. il788 PAGE ON COJTTRACTS. of employment with the owner, the employee to remove the timber in a certain time,^" or a contract conveying an interest in standing timber, to be removed in a certain time/' are con- tracts of which time is not of the essence. §1161. Time not of essence in equity. In equity, on the other hand, the general rule may be said to be that time is not of the essence of the contract.^ " It must aflBrmatively appear that the parties regarded time or place as an essential element in their agreement or a court of equity will not so regard it."^ In order to make time of the essence of the contract in equity, there must be either an express provision, making time of the essence,^ or the nature of the subject-matter must be such as to require prompt performance at the time stipulated. The reason for this difference between law and equity is, that in law the promisee acquires, as a rule, no interest in the property under an executory contract until he either performs or tenders performance. In equity, on the other hand, the vendee acquires an interest in the property contracted for when the contract of sale is made, and the assignment of a particular day for the payment of the purchase- money is looked upon as merely formal, to secure payment in a reasonable time.* A contract for the payment of money at a given time is ordinarily a contract of which time is not 16 Thacker. etc., Co. v. Mallory, Porter v. White, 128 X. C. 42 ; 38 27 Wash. 670; 68 Pac. 199. S. E. 24; Jarvis v. Cowger, 41 W. iTHalstead v. Jessup, 150 Ind. Va. 268; 23 S. E. 522. 85; 49 N. E. 821. 2 Secombe v. Steele, 20 How. (U. 1 Brown v. Deposit Co., 128 U. S. S.) 94, 104. 403; Hepburn v. Auld. 5 Cranch (U. 3 Brown v. Deposit Co., 128 U, S. S.) 262; Tate v. Development Co., 403; Tate v. Development Co., 37 37 Fla. 439; 53 Am. St. Rep. 251; Fla. 439; 53 Am. St. Rep. 251; 20 20 So. 542; Chabot v. Park Co., 34 So. 542; Chabot v. Park Co., 34 Fla. 258; 43 Am. St. Rep. 192; 15 Fla. 258; 43 Am. St. Rep. 192; 15 So. 756; Reid v. Mix. 63 Kan. 745 55 L. R. A. 706; 66 Pac. 1021 ; Keni per V. Walker (Ky.), 32 S. W. 1093 Sanford v. Weeks, 38 Kan. 319 5 Am. St. Rep. 748; 16 Pac. 465 So. 756; Frink v. Thomas, 20 Or. 265; 12 L. R. A. 239: 25 Pac. 717. 4 Secombe v. Steele, 20 How. (U. S.) 94. TIME. 1789 of the essence;^ and so is a contract to release a mortgage.® §1162. Express provision making time of essence. If there is an express provision making time of the essence of the contract, full effect must be given to it.^ Thus a pro- vision and express condition that in case of failure • of the vendee to perform, the vendor should have the right to declare the contract void makes time of the essence.^ So if time is not originally of the essence of the contract, but after default the promisee gives notice fixing a reasonable time for per- formance, and insisting upon performance within that time, time may become of the essence of the contract.^ However if time is not originally of the essence of the contract, a notice given by one party before performance is due cannot make it of the essence.* §1163. Nature of property contracted for. The nature of the property concerning which the contract is made may show that time was of the essence of the contract. 5 Tate V. Development Co., 37 Fla. Am. St, Eep, 781; 38 Pac. 1003. 439; 53 Am. St. Rep. 251; 20 So. 2 Stinson v. Dousman, 20 How. 542; Barnard v. Lee, 97 Mass. 92; (U. S.) 461. So Bennett v. Hyde, Allred v. Burns, 106 N. C. 247; 10 92 Cal. 131; 28 Pac. 104; Woodruff S. E. 1034; Frink v. Thomas, 20 Or. v. Water Co., 87 Cal. 275; 25 Pac. 265; 12 L. R. A. 239; 25 Pac. 717; 354; Martin v. Morgan, 87 Cal. Sylvester v. Born, 132 Pa. St. 467; 203; 22 Am. St. Rep. 240; 25 Pac. 19 Atl. 337; Jarvis v. Cowger, 41 350. W. Va. 268; 23 S. E. 522. 3 Asia v. Hiser, 38 Fla. 71; 20 So. 6Reid V. Mix, 63 Kan. 745; 55 796; Chabot v. Park Co., 34 Fla. L. R. A. 706; 66 Pac. 1021. 258; 43 Am. St. Rep. 192; 15 So. 1 Cheney v. Libby, 134 U. S. 68; 756; Burnap v. Sharpsteen, 149 111. Clock v. Colony Co., 123 Cal. 1; 69 225; 36 N. E. 1008; Miller v. Rice, Am. St. Rep. 17; 55 Pac. 713; 43 133 111. 315; 24 N. E. 543; Barnard L. R. A. 199; Martin v. Morgan, 87 v. Lee, 97 Mass. 92; Foster v. Ley, Cal. 203; 22 Am. St. Rep. 240; 25 32 Neb. 404; 15 L. R. A. 737; 49 Pac. 350; Chabot v. Park Co., 34 N. W. 450; King v. Ruckman, 20 Fla. 258; 43 Am. St. Rep. 192; 15 N. J. Eq. 316; Hatch v. Cobb, 4 So. 756; Miller V. Rice, 133 111. 315; Johns. Ch. (N. Y.) 559; Kirby v. 24 N. E. 543; Clarno v. Grayson, Harrison, 2 Ohio St. 326; 59 Am. 30 Or. Ill; 46 Pac. 426; Axford v. Dec. 677; Frink v. Thomas, 20 Or. Thomas, 160 Pa. St. 8; 28 Atl. 443; 265; 12 L. R. A. 239; 25 Pac. 717. Reddish v. Smith, 10 Wash. 178; 45 •* The Lucile Manor, 70 Fed. 233. 1790 PAGE ON CONTEACTS. If the property is one of fluctuating values, time is ordinarily looked upon as of the essence, such as a contract for the sale of mineral land,^ or stock in a corporation.^ If, on the other hand, the value is not fluctuating, time is ordinarily supposed to be not of the essence of the contract in equity. A contract for the sale of realty is ordinarily a contract of which time is not of the essence,^ such as a contract to take up certain mortgages on realty, sell it and apply the proceeds to a certain debt,* or a contract to release a right of v^^ay to a railway company.^ A party to a contract who has delayed perform- ance to speculate upon the change in value of the property contracted for, and tenders perforrnance after the value is so changed as to make performance especially advantageous to himself, cannot have specific performance." Thus delay till the title is cleared and the land has risen in value from twenty- two dollars an acre to eighty dollars an acre prevents specific performance.^ Conversely, delay which does not result in a change in value does not of itself defeat specific performance. So if the depreciation in the value of the land occurs before the time fixed for delivering the deed delay does not prevent the vendor from obtaining specific performance.® Time is not of the essence of a contract to print and deliver certain books by a specified time;^ nor is it of the essence of the right of the insured under his policy to demand a paid-up policy in case of lapse.^" 1 Waterman v. Banks, 144 U. S. 5 Hoffman v. Ry., 157 Pa. St. 174^ 394. 27 Atl. 564. 2Umfiid V. Brooks, 14 \Yash. 675; 6 Rogers v. Sanders, 16 Me. 92; 45 Pac. 310. 33 Am. Dec. 635. sSecombe v. Steele, 20 How. (U. 7 Brashier v. Gratz, 6 Wheat. (U. S.) 94 ; Ahl V. Johnson, 20 How. (U. S.) 528. S.) 511; Beverly v. Blackwood, 102 « Qarber v. Sutton, 96 Va. 469; 31 Cal. 83; 36 Pac. 378; Frink v. S. E. 894. Thomas, 20 Or. 265; 12 L. R. A. » Pacific, etc., Co. v. Loofbourow. 2.39; 25 Pac. 717; Watson v. Coast, 129 Cal. 24; 61 Pac. 944. 35 W. Va. 463; 14 S. E. 249. lo Manhattan Life Ins. Co. v. Pat- 4 Beverly v. Blackwood, 102 Cal. terson. 109 Ky. 624; 95 Am. St, 83; 36 Pac. 378. Rep. 393; 60 S. W. 383. TIME. 1791 §1164. Time of subsidiary provision not of essence. Time is not regarded as di the essence of a contract where it concerns a provision a breach of which does not constitute a total failure of consideration.^ Thus where the two upper stories were leased, and were ready for occupancy where agr^^ed upon, the lessee cannot avoid the lease because the rest of the building was not completed at the time agreed upon.^ Even under a contract of subscription of which time is usually the essence^ failure of a university to erect a second building at the time agreed upon, after erecting the first building on time and open- ing for work, is not breach of an essential term.* §1165. Time of essence in subscriptions. Contracts of subscription, whereby the promisor agrees to pay money if a certain work is completed by a specified time, such as a subscription to aid a railway;^ or an agreement to grant a right of way f or a subscription to induce the removal of a factory to a given city by a given time,^ are contracts of which time is of the essence. §1166. Time of essence in options. The contract has thus far been considered in determining whether time is of the essence or not. When we turn from con- tracts to options, we find that both at law and equity an option which is in the nature of an offer outstanding for a certain 1 University v. Trust Co.. 87 la. 116 Mich. 674; 75 N. W. 130; Port 36; 53 N. W. 1080; Lynch v. Bech- Huron, etc., Ry. v. Richards, 90 tel, 19 Mont. 548; 48 Pac. 1112; Mich. 577; 51 N. W. 680; Garrison Coos Bay, etc., Co. v. Dixon, 30 Or. v. Cooke, 96 Tex. 228; 97 Am. St. 584; 48 Pac. 360. Rep. 906; 61 L. R. A. 342; 72 S. 2 Lynch v. Bechtel, 19 Mont. 548; W. 54. Contra, Witmer Bros. Co. v. 48 Pac. 1112. Weid, 108 Cal. 569; 41 Pac. 491. 3See§ 1165. 2 Thornton v. Ry., 84 Ala. 109; 4 University v. Trust Co., 87 la. 5 Am. St. Rep. 337; 4 So. 197. 36; 53 N. W. 1080. (Suit in equity.) 1 Cincinnati, etc.. R. R. v. Bensley, 3 Bohn Mfg. Co. v. Lewis, 45 51 Fed. 738; 19 L. R. A. 796; 2 Minn. 164; 47 N. W. 652. C. C. A. 480; Jordan v. Newton, 1Y92 PAGE ON CONTRACTS. period of time, must be accepted within the time limited, or it lapses. Accordingly, time is held to be of the essence of options both at law and in equity/ " Where, as in this case, the con- tract invests the one party with no title whatever, imposes no obligation upon him, leaves it optional with him to do a certain thing at a specified time, in such case time in the broadest sense of the rule, is of the essence of the contract, and the failure of such party to comply with its terms deprives him of the right to demand the enforcement of the contract."^ This rule applies to options for the sale of realty,^ of a railway,* or of personalty, such as corporate stock ;^ or a horse,® or to tlie right given to the maker of a note to have it canceled if he performs a specified act at a given time/ So the right of a debtor to elect to pay a debt in something other than money is a right of which time is of the essence/ The fact that nego- tiations are prolonged under an option up to the evening of the last day of its duration does not extend it beyond the time fixed by it/ So a contract whereby a mortgagee agrees to accept on foreclosure a sum less than the amount due him, part of the amount bid to go to a junior mortgagee, if payment is made by a specified time, is a contract of which time is of the essence/" 1 Stembridge v. Stembridge, 87 * Columbian Equipment Co. v. Ry., Ky. 91; 7 S. W. 611; Dyer v. thiffy, 74 Fed. 920. 39 W. Va., 148; 19 S. E. 540; 24 s Stevens v. Hertzler, 109 Ala. L. E. A. 339. 423 ; 19 So. 838 ; Chaflfee v. Ry., 146 2 Stembridge v. Stembridge, 87 Mass. 224; 16 N. E. 34. Ky. 91, 94; 7 S. W. 611. e Roberts v. Norton, 66 Conn. 1; 3 Martin v. Morgan, 87 Cal. 203 22 Am. St. Rep. 240; 25 Pac. 350 Stembridge v. Stembridge, 87 Ky 91; 7 S. W. 611; Coleman v. Ap plegartb, 68 Md. 21 ; 6 Am. St. Rep 417; 11 Atl. 284; Johnson v. Port wood, 89 Tex. 235; 34 S. W. 596 787; Cummings v. Realty Co., 86 33 S. E. 490 Wis. 382; 57 N. W. 43. 33 Atl. 532. 7 Stout V. Watson, 45 Minn. 454 ; 48 N. W. 195. 8 See § 1392. 9 Cummings v. Realty Co., 86 Wis. 382; 57 N. W. 43. loEargle v. Lorick, 55 S. C. 431; PENALTIES AND LIQUIDATED DAMAGES. 1793 CHAPTER LV. PENALTIES AND LIQUIDATED DAMAGES. §1167. Nature of penalty and liquidated damages. A contract for a penalty is an agreement to pay a stipulated sum in case of default, intended to coerce performance, to pun- ish default, or to secure j)ayment of the actual damages/ A contract for liquidated damages is a contract by which the parties in advance of breach fix the amount of damages which will result therefrom, and agreed upon its payment.^ The place of this topic in the law of contracts is open to question. Con- tracts for penalties, as we shall see later, are unenforceable, and may without any impropriety be said to be void. Such contracts might therefore be discussed under the head of void contracts. On the other hand it is so well settled that if a contract is for a penalty it is void that questions are rarely raised upon this branch of the topic. The question which is commonly presented for decision is whether the contract is one for penalty or liqui- dated damages ; and this is primarily a question of construc- tion. Accordingly, this subject is discussed in connection with construction. This topic might also be considered in connec- tion with breach and damages. Questions thereunder can neces- sarily arise only when a breach exists or is alleged. The de- termination of this question is also decisive of the question whether the parties are limited by and entitled to the amount stipulated for by the contract, or whether they are driven to the proof of actual damages and are governed by the rules which control the measure of damages. 1 United States v. Cutajar, 67 Iron Works, 55 N. J. L. 132; 39 Fed. 530; Gillilan v. Rollins, 41 Am. St. Rep. 626; sul nomine Wal- Neb. 540; 59 N. W. 893. lis Iron Works v. Park Association, 2 Monmouth Park Association v. 19 L. R, A. 456; 26 Ati. 140. 113 1794 PAGE ON CONTEACTS. §1168. Alternative contracts. An alternative contract is one which gives to one of the parties the choice of doing one of two or more different acts as per- formance of the contract/ If one of the alternatives is tlie payment of money, a contract of this type has some resemblance to a contract for a penalty or for liquidated damages ; but it must be distinguished from both of them. The essential dif- fereiice is that both penalties and liquidated damages are payable on breach of one or more covenants of a contract, whereas the payment provided for in the alternative contract is a perform- ance of the contract — not a compensation for breach. The ah ternative contract is enforceable according to its terms ; and if the contingencies have occurred on which the money is to be paid, such payment can be enforced." Thus under a contract for the sale of a medical practice, the vendor to have the right to resume practice after five years, on payment to the vendee of two thousand dollars, such payment was neither a penalty nor liquidated damages, but a covenant giving the vendor the right to make such election ; and if he elects to resume the practice, he must pay such sum.^ The question of who can exercise the right of election is discussed elsewhere.* The outward form of the contract is not, of course, decisive of the question, or an easy method of evading the rules as to penalties would be presented. If the whole contract shows that the stipulation for payment is inserted, not to give one party an election, but to coerce performance of the alternative covenant, such stipulation is treated as a penalty.^ §1169. History of penalty in contract law. At Common Law, a contract to pay a specified sum of money upon the happening of a certain event, was enforced according 1 Smith V. Bergengren, 153 Mass. 3 Smith v. Bergengren, 153 Mass. 236; 10 L. R. A. 768; 26 N. E. 690. 236; 10 L. R. A. 768; 26 N. E. 690. 2 Smith V. Bergengren. 153 Mass. * See § 1392. 236; 10 L. B. A. 768; 26 N. E. 690; 5 Condon v. Kemper. 47 Kan. 126; Curnan v. By., 138 N. Y. 480; 34 13 L. R. A. 671; 27 Pae. 829. N. E. 201. PENALTIES AND LIQUIDATED DAMAGES. 1795 to its terms. The fact that the sum of money designated was agreed upon to punish breach or to coerce performance, did not have any effect in making such a contract unenforceable. If the contract was a simple one, a valuable consideration was of course necessary; and if the consideration for the promise was itself money, questions of adequacy of consideration might arise. If the contract was under seal, questions of this sort were not presented.^ Equity, however, looked at the intent and not the outward form of the contract, and relieved against penalties and forfeitures." The doctrine that equity relieved against forfeit- ures originally referred to cases of mistake, surprise, imposition, and the like ; but this restriction was abandoned at a compara- tively early time, and it became settled that equity could re- lieve against a penalty or a forfeiture for the non-payment of money, since the damages caused by the delay could be esti- mated exactly in the form of interest.^ It has been said that equity will not relieve against penalty or forfeiture, where the breach is anything other than the non-payment of money.* In the majority of cases this distinction is practically sufficient, and farther discussion of the accuracy of this statement will be omitted. The other principle, namely, that equity looked at the intent of the parties rather than the outward form, operated to give relief against penalties in many cases which would fall without the limits of the mere doctrine of relief against penalties as such. If, upon appjying the ordinary rules of construction to a given contract, it appeared that the stipula- tion for the payment of the specified sum of money was intended as a security for the actual damages, caused by the breach, or to coerce performance, equity would relieve against the en- forcement of the contract in its outward form and restrict the injured party to the recovery of his actual damages.^ By a statute in England, the injured party in an action for a penalty given by a contract, was restricted to the collection of the actual 1 Sun, etc., Association v. Moore, 3 Wallis v. Smith, 21 Cli. D. 243, 183 U. S. 642; Watts v. Camors, 115 see 260. U. S. 353. 4 Wallis v. Smith, 21 Ch. D. 24.3, 2 Lowe V. Peers, 4 Burr. 2225. see 260. 5 Lowe V. Peers, 4 Burr. 2225. 1796 PAGE ON CONTEACTS. damages.® In tlie United States, partly by the adoption of this English statute as a part of our Common Law, and partly by our own statutes, this power is very generally exercised by the courts of Common Law. The doctrine of equity as to what is a penalty and what is a stipulation for liquidated damages have been to this extent adopted into our Common Law. §1170. Legal effect of each compared. — Penalty. The importance of the distinction between liquidated dam- ages and penalty, consists in the effect which the courts give to the two kinds of stipulation. At Modern Law a contract for a penalty is unenforceable and practically void. The actual damage, and that alone, may be recovered. This may be, on the one hand, less than the amount of the penalty,^ and on the other it may exceed it." The actual damages sustained must be shown f otherwise only nominal damages can be recovered.* There is some authority for treating a provision for a penalty as prima facie evidence of the amount of damage suffered, in the absence of evidence to the contrary.^ 6 8 and 9 William III., c. 11. 2 Watts v. Camors, 115 U. S. 1 Watts V. Camors, 115 U. S. 353 ; Williston v. Mathews, 55 Minn. 353; Van Buren v. Digges, 11 How. 422; 56 N. W. 1112; Morrill v. (U. S.) 461; Chicago House- Wreck- Weeks, 70 N. H. 178; 46 Atl. 32; ing Co. V. United States, 106 Fed. Gloucester City v. Eschbach, 54 N. 385; 53 L. R. A. 122; 45 C. C. A. J. L. 150; 23 Atl. 360; Moore v. 343; Henry v. Ry., 91 Ala. 585; 8 Colt, 127 Pa. St. 289; 14 Am. St. So. 343; Hennessy v. Metzger, 152 Rep. 845; 18 Atl. 8; Commerce, etc., 111. 505; 43 Am. St. Rep. 267; 38 Co. v. Morris, 27 Tex. Civ. App. 553; N. E. 1058; Low v. Nolte, 16 111. 65 S. W. 1118. 475; Lord v. Gaddis, 9 la. 265; 3 Wilson v. Dean, 10 la. 432; Foley V. McKeegan, 4 la. 1; 66 Am. Johnson v. Cook, 24 Wash. 474; 64 Dec. 107; Hahn v. Horstman, 12 Pac. 729. Bush.(Ky.) 249; Perkins v. Lyman, * Eva v. McMahon, 77 Cal. 467; 11 Mass. 76; 6 Am. Dec. 158; Ham- 19 Pac. 872; O'Keefe v. Dyer, 20 aker v. Schroers, 49 Mo. 406; Lind- Mont. 477; 52 Pac. 196; Johnson v. say v. Anesley, 28 N. C. 186; Kelley Cook, 24 Wash. 474; 64 Pac. 729. v. Seay, 3 Okla. 527; 41 Pac. 615; s Elston v. Roop, 133 Ala. 331; Bigouy V. Tyson, 75 Pa. 157; Bear- 32 So. 129. (It was not clear den V. Smith. 11 Rich. L. (S. C.) whether this provision was for a 554; Johnson v. Cook, 24 Wash, penalty or for liquidated damages.) 474; 64 Pac. 729. PENALTIES AND LIQUIDATED DAMAGES. 1797 §1171. Liquidated damages. If a stipulation is one for liquidated damages, the amount contracted for may be recovered.^ Proof of actual damage is unnecessary." There must, however, be at least more than nominal damages.^ Furthermore, if the actual damages exceed those contracted for, the injured party is bound by the stipula- tion of the contract, and cannot recover the actual amount of damages.* It is therefore held that a stipulation for liquidated damages applies to cases in which there has been a botm fide attempt to perform the contract, but does not apply to willful and deliberate injury, if the damages arising therefrom exceed those stipulated for.^ Such a provision in case of failure of water supply does not apply where such failure is due to de- fendant's failure to make repairs stipulated for.^ To prevent recovery of actual damages, the provision claimed to be for liquidated damages must furthermore be exclusive. If the party not in default is merely given an election on default to be exercised at his option, he is not thereby precluded from recov- ering damages.^ Thus in a sub-contract for building an ore dock, it was provided that if a material-man did not furnish timber according to contract, the contractor might buy it in open market and charge the necessary expense to the sub-con- tractor's account. This provision was held to be merely optional with the contractor, and not a stipulation for an exclusive meas- 1 Sun, etc., Association v. Moore, Malting Co., 30 Wash. 178; 70 Pac. 183 U. S. 642; affirming Moore v. 236. Publishing Association, 101 Fed. 3 Hathaway a'. Lynn, 75 Wis. 186; 591; 41 C. C. A. 506; Van Tuyl v. 6 L. R. A. 551; 43 N. W. 956. Young, 23 Ohio C. C. 15; Pitts- 4 Hennessy v. Metzger, 152 111. burgh, etc., Co. v. Tube Works Co., 505; 43 Am. St. Rep. 267; 38 N. E. 184 Pa. St. 251; 39 Atl. 76; Drum- 1058; O'Keefe v. Dyer, 20 Mont, heller v. Surety Co., 30 Wash. 530; 477; 52 Pac. 196; Jackson v. Hunt, 71 Pac. 25. — Vt. — ; 56 Atl. 1010. 2 Clark V. Barnard, 108 U. S. 436; 5 West Chicago, etc., Ry. Co. v. Jacqua v. Headington, 114 Ind. 309; Morrison, etc., Co., 160 111. 288; 43 16 N. E. 527; (City of) Salem v. N. E. 393. Anson, 40 Or. 339; 56 L. R. A. 169; e Pengra v. Wheeler, 24 Or. 532; 67 Pac. 190; Kelso v. Reid, 145 Pa. 21 L. R. A. 726; 34 Pac. 354. St. 606; 27 Am. St. Rep. 716; 23 7 Williston v. Mathews, 55 Minn. Atl. 323; American, etc.. Works v. 422; 56 N. W. 1112. 1798 PAGE O^r CONTRACTS. lire of damages.^ A provision for a deposit as security is not a contract for liquidated damages so as to prevent the recovery of actual damages.** So a provision in a lease for the deposit by the lessee with the lessor of a certain sum as security for per- formance and in case the tenancy is not sooner terminated, that it is to be applied on the rent for the last three months of the term, is not intended as liquidated damages if the lessee makes default before the end of the term.^" §1172. Effect of name employed. The use of the term " penalty," or " liquidated damages," is not conclusive.^ On the one hand a provision for " liquidated damages " may appear from the context of the contract to be really a provision for a penalty, and will accordingly be ■ so treated.^ A like result has been reached where a liability im- posed by statute, penal in its nature, is spoken of by statute as " liquidated damages." It is, notwithstanding, treated as a penalty.^ On the other hand a contract for a " penalty " may appear from the context to be a contract for liquidated damages, and will be so treated.* So a provision for a " penalty " — " named as stipulated damages,"^ or for a " fine,"'' or " as a for- sWilliston v. Mathews, 55 Minn. Loan Association, 52 Fed. 618; Dis- 422; 56 N. W. 1112. osway v. Edwards, 134 K C. 254; 46 9Chaude v. Shepard, 122 X. Y. S. E. 501; Fitzpatrick v. Cotting- 397 ; 25 N. E. 358. ham, 14 Wis. 219. 10 Chaude v. Shepard, 122 X. Y. 3 Anderson v. Byrnes, 122 Cal. 397; 25 X. E. 358. 272; .54 Pac. 821. iMcCurry v. Gibson, 108 Ala. * Robinson v. Aid Society, 68 X. 451; 54 Am. St. Rep. 177; 18 So. J. L. 723; 54 Atl. 416; Illinois Cen- 806; Hennessy v. Metzger, 152 111. tral Ry. v. Cabinet Co., 104 Tenn. 505; 43 Am. St. Rep. 267; 38 X. E. 568; 78 Am. St. Rep. 933; 50 L. R. 1058; Willson v. Baltimore, 83 Md. A. 729; 58 S. W. 303. 203; 55 Am. St. Rep. 339; 34 Atl. 5 Tode v. Gross, 127 X. Y. 480; 774; May V. Crawford, 142 Mo. 390; 24 Am. St. Rep. 475; 13 L. E. A. 44 S. W. 260. 652; 28 X. E. 469. 2Kemble v. Farren, 6 Bing. 141; e Manistee Iron Works Co. v. Chicago House-Wrecking Co. v. Lumber Co., 92 Wis. 21; 65 N. W. United States, 106 Fed. 385; 53 L. 863. R. A, 122; 45 C. C. A. 343; Tilley v. PENALTIES AND LIQUIDATED DAMAGES. 179i) feiture/'^ or as a " guarantee or forefeiture/'* or " as forfeit,"^ have each been held to be provisions for liquidated damages where such appeared to be their real nature. Prima facie the term used by the parties is the correct one.^° The presumption of the accuracy of the term used by the parties is possibly some- what stronger when the term employed is " penalty " than when it is " liquidated damages."^^ " The parties themselves denom- inate it a penalty ; and it would require very strong evidence to authorize the court to say that their own words do not express their own intention."^^ §1173. Intention of parties controls. The intention of the parties is said to be paramount and con- trolling.^ This means, however, not what they have agreed to call it, nor even what they may in good faith think it is; for this involves their opinion upon the law.^ When their intent is said to be paramount, what is meant is that if from the sur- rounding facts and circumstances it appears that they are in good faith contracting for the actual amount of the loss as esti- mated in advance, the contract is one for liquidated damages; while, if they are contracting for an arbitrary sum, intended TMcCurry v. Gibson, 108 Ala. Van Buren v. Digges, 11 How. (U. 451; 54 Am. St. Rep. 177; 18 So. S.) 461. 806. 11 Foley v. McKeegan, 4 la. 1 ; 66 8 Sanders v. Carter, 91 Ga. 450; Am. Dec. 107; Smith v. Brown, 164 17 S. E. 345. Mass. 584; 42 N. E. 101; Smith v. sHardie, etc., Co. \. Oil Mill, — Wainwright, 24 Vt. 97. Miss.—; 36 So. 262. laTayloe v. Sandiford, 7 Wheat. 10 " Liquidated damages" — prima (U.S.) 13,17. facie correct. Stegman v. O'Con- i Kelly v. Fejervary, 111 la. 693; nor, 80 L. T. (N. S.) 234; Kelly v. 83 N. W. 791; Heatwole v. Gorrell, Fejervary, 111 la. 693; 83 N. W. 35 Kan. 692; 12 Pae. 135; Perkins 791; Garst v. Harris, 177 Mass. 72; v. Lyman, 11 Mass. 76; 6 Am. Dec. 58 N. E. 174. "Penalty" — prima 158; Taylor v. Newspaper Co.. 83 facie correct. Smith v. Brown, 164 Minn. 523; 86 N. W. 760; Cotheal Mass. 584; 42 N. E. 101; Wilkinson v. Talmage, 9 N. Y. 551; 61 Am. V. Colley, 164 Pa. St. 35; 26 L. R. Dec. 716. A. 114; 30 Atl. 286. Held penal- 2 Willson v. Mayor of Baltimore, ties "in the penal sum of estimated 83 Md. 203; 55 Am. St. Rep. 339; amount of freight." Watts v. Ca- 34 Atl. 774. mors, 115 U. S. 353. "Forfeiture" 1800 PAGE OX CONTEACTS. to coerce performance or punish default, they are contracting for a penalty.^ In case of doubt, the courts prefer to treat the stipulation as one for a penalty, since this construction makes the actual amount of the damages the amount of recovery.* §1174. "Artificial rules" for determining question. To lay down a general test, or set of tests, for determining whether a stipulation is for a penalty or liquidated damages, is even more difficult than the general attempt to lay down an arbitrary rule for determining in advance what the parties to a contract mean by the use of certain language. These " arti- ficial rules "^ are liable to fail of application in any particular contract by reason of the context and subject-matter which may show an intent different from that which the rule indicates. The difficulty is intensified in this case by the fact that on many elementary questions as to the application of specific tests, the courts are absolutely at variance. A summary of the English cases on this subject is given in Wallis v. Smith,^ in which the following classes are enumerated : " Where a sum of money is stated to be payable either by way of liquidated damages, or by way of penalty for breach of stipulations, all or some of which are, or one of which is, for the payment of a sum of money of less amount, that is really as penalty, and you can only recover the actual damage, and the court will not sever the stipulations."^ Cases " in which the amount of damages is not ascertainable per se, but in which the amount of damages for a breach of one or more of the stipulations, either must be small, or will, in all human probability, be small — that is, where it is not absolutely necessary that they should be small; but it sSanford v. National Bank, 94 62 S. W. 516; Wallis v. Carpenter, la. 680; 63 N. W. 459; Gushing 13 All. (Mass.) 19; O'Keefe v. Dy- V. Drew, 97 Mass. 445; May v. er, 20 Mont. 477; 52 Pac. 196; Crawford, 142 Mo. 390; 44 S. W. Baird v. Tolliver, 6 Humph. (Tenn.) •260; Streeper v. Williams, 48 Pa. 186; 44 Am. Dec. 298. St. 450. 1 Bagley v. Peddie, 16 N". Y. 469, 4 Amanda, etc., Co. v. Mill Co., 471; 69 Am. Dec. 713; quoted Sun, 28 Colo. 251; 64 Pac. 218; Hennes- etc., Co. v. Moore, 183 U. S. 642. sy V. Metzger, 152 111. 505; 43 Am. 2 21 Ch. D. 243. St. Rep. 267; 38 N, E. 1058; Day 3 Wallis v. Smith, 21 Ch. D. 243, Bros. Lumber Co. v. Ison (Ky.), 256. PENALTIES AND LIQUIDATED DAMAGES. _ ISOl is SO near to a necessity, having regard to the probabilities of the case, that the court will presume it to be so."* This class of cases the court says is in part open for discussion and in part included in another class, i. e., the one following. " The class of cases to which I refer is that in which the damages for the breach of each stipulation are unascertainable, or not readily ascertainable, but the stipulations may be of greater or less importance, or they may be of equal importance. There are dicta there which seem to say that if they vary much in importance the principle of which I have been speaking applies, but there is no decision. On the contrary, all the reported cases are decisions the other way ; although the stipulations have varied in importance the sum has always been treated as liquidated damages."^ " A class of eases relating to deposits. Where a deposit is to be forfeited for the breach of a number of stipulations, some of which may be trifling, some of which may be for the payment of money on a given day, in all those cases the judges have held that this rule does apply and that the bargain of the parties is to be carried out. I think that exhausts the substance of the cases."" This classification is apparently, approved by the Supreme Court of the United States,^ and in the same case more of these " artificial rules " are suggested. §1175. Difficulty of proving actual damages. One test which has been suggested is whether it is easy or difficult to prove the actual damages. Where this test is recog- nized it is held that if the actual damages can be proved with, reasonable certainty, a stipulation in advance, fixing the amount thereof, is a penalty.^ This is in some states a statu- 4WalHs V. Smith, 21 Ch. D. 243, 304; 81 Am. Dec. 745; Fasler v. 257. Beard, 39 Minn. 32; 38 N. W. 755; sWallis V. Smith, 21 Ch. D. 243, Brennan v. Clark. 29 Neb. 385; 45 258. X. W. 472; Lansing v. Dodd, 45 N. eWallis v. Smith. 21 Ch. D. 243, J. L. 525; Csesar v. Rubinson, 174 258. N. Y. 492; 67 N. E. 58; Krutz v. 7 Sun, etc.. Association v. Moore, Bobbins, 12 Wash. 7; 50 Am. St. 183 U. S. 642. Rep. 871; 28 L. R. A. 676; 40 Pac iHall V. Crowley, 5 All. (Mass.) 415. 1802 PAGE ON CONTRACTS. tory riile.^ The party who claims that it is difficult to prova the amount of damages and who is seeking to uphold the pro- vision for the payment of money as an agreement for liqui- dated damages has the burden of showing that such damages are difficult to ascertain f and the recital in the contract that such damages are difficult to prove is ineffectual.* Under such statutes a provision for paying ten dollars a day for delay in completing a house,^ or for forfeiting twenty per cent of the invoice price on countermanding an order for personalty,*' or for paying a fixed sum per head in case of shortage in the num- ber of cattle contracted for/ or for returning the amount paid as rent in case of failure to furnish the amount of water agreed upon,^ is in each case held a penalty. If the actual damages are not easy to prove, a stipulation in advance therefor is to be treated jirima facie as a stipulation for liquidated damages, and it is only when such stipulations have an excessive and unreasonable amount that the provisions are to be treated as a penalty." On this theory a contract to furnish public utilities such as electric lights," or a public bridge," or a contract 2 Home, etc., Co. v. McNamara, 7 Home, etc., Co. v. McNamara, 111 Fed. 822; 49 C. C. A. 642; 111 Fed. 822; 49 C. C. A. 642. Pacific Factor Co. v. Adler, 90 Cal. s Deunincl: v. Irrigation Co., 28 110; 25 Am. St. Rep. 102; 27 Pae. Mont. 255; 72 Pac. 618. 36; Drew v. Pedlar, 87 Cal. 44.3; 22 9 Green v. Price, 13 M. & W. 695; Am. St, Jiep. 257; 25 Pac. 749; Pressed Steel Car Co. v. Ry., 121 Mansur, etc., Implement Co. v. Wil- Fed. 609; 57 C. C. A. 635; Sanders let, 10 Olvla. 383; 61 Pac. 1066; v. Carter, 91 Ga. 450; 17 S. E. Seim V. Krause, 13 S. D. 530; 83 345; Hennessy v. Metzger, 152 111. N. W. 583. 505 ; 43 Am. St. Eep. 267 ; 38 N. E. sDeuninck v. Irrigation Co., 28 1058; Garst v. Harris. 177 Mass. Mont. 255; 72 Pac. 618. 72; 58 N. E. 174; Cliase v. Allen, 4 Pacific Factor Co. v. Adler, 90 13 Gray (Mass.) 42; Brennan v. Cal. 110; 25 Am. St. Rep. 102; Clark, 29 Neb. 385; 45 N. W. 472; 27 Pac. 36. Ward v. Building Co., 125 N. Y. 5 Seim V. Krause, 13 S. D. 530; 230; 26 N. E. 256; Grasselli v. 83 N. W. 583. Lowden, 11 0. S. 349; Everett Land 6 Mansur, etc.. Implement Co. v. Co. v. Maney, 16 Wash. 552 ; 48 Willet, 10 Okla. 383; 61 Pac. 1066. Pac. 243. For similar case see Mansur, etc., lo Brooks v. Wichita, 114 Fed. Co. V. Hardware Co., 136 Ala. 597; 297; 52 C. C A. 209. 33 So. 818. 11 Malone v. Philadelphia. 147 Pa St. 416; 23 Atl. 628. PENALTIES AND LIQUIDATED DAMAGES. 1803 whereby a telephone company is to pay a fixed sum if it merges with a competitor,^^ is one for breach of which it is not easy to estimate damages ; and hence covenants to pay fixed sums on breach are covenants for liquidated damages. Other ex- amples of such covenants are agreements to pay money on breach of a contract not to publish libelous articles/^ to refund money if a dike should be destroyed exposing the promisee's land to high tides ;^* an agreement to pay a certain sum as liquidated damages in case of a sublessee's being ousted by lessee ;^^ a provision that if a partner shall violate his promise to abstain from intoxicating liquors he shall forfeit all his interest in the business and receive a monthly salary f'^ an agreement to pay a certain sum of money on breach of a contract to form a partnership/^ or a contract to convey realty/^ or a contract to give two weeks' notice before quitting work/^ the work in other departments being dependent on the work in the department in which this employee was working; or a contract to deduct a fixed amount from the price of logs not delivered on time, and thus exposed to the weather;"" or a con- tract to pay one thousand dollars in case of a breach by an employee of his covenant not to drink intoxicating liquor.^^ This test, however, has been repudiated by the Supreme Court of the United States,'^ and it has been held by them that even though the actual damages can be readily ascertained with cer- tainty, a stipulation for damages in advance is not necessarily a penalty. 12 (City of) New Britain v. Tele- i7 Sanford v. National Bank. 94 phone Co., 74 Conn. 326; 50 Atl. la. 680; 63 N. W. 459. 881, 1015. For a similar contract is Sanders v. Carter. 91 Ga. 450; by a railroad see Grand Trunk Ry. 17 S. E, 345; Talkin v. Anderson V. Halton County, 21 Can. S. C. (Tex.), 19 S. W. 852. 716. 19 Tennessee Mfg. Co. v. James, 91 13 Emery v. Boyle, 200 Pa. St Tenn. 154; 30 Am. St. Rep. 865; 15 249; 49 Atl. 779. L. R. A. 211; 18 S. W. 262. 14 Jennings v. McCormick, 25 20 Kilbourne v. Lumber Co., Ill Wash. 427; 65 Pac. 764. Ky. 693; 64 S. W. 631. 15 Guerin v. Stacy, 175 Mass. 21 Keeble v. Keeble, 85 Ala. 552; 595; 56 N. E. 892. 5 So. 149. IS Henderson v. Murphree, 109 22 gun. etc., Association v. Moore, Ma. 556; 20 So. 45. 183 U. S. 642. 1804 PAGE ON CONTRACTS. §1176. Relation of stipulated amount to actual damage. Another test which has been suggested is, whether the amount stipulated for is greatly in excess of the actual damages or not. Where this test is applied, it is held that if the amount stipu- lated for is no greater than the actual damages,^ or if in excess of actual damages such excess is moderate, the stipulation is for liquidated damages. Thus an agreement to pay for the use of a button-sewing machine at a certain rate per thousand but- tons, and if the lessee does not keep account of the number of buttons sewed, the lessor to have the option to charge five dol- lars a day for its use, is held to be a rough estimate of the value of the machine and not a penalty.^ If the amount stipulated for is excessive, the stipulation is for a penalty.^ Thus a pro- vision for paying in case of breach of a contract for work and labor a sum greatly in excess of the cost of completing the con- tract,* or for paying a fine for wrongful use of electrotypes '* equal to tenfold the price of the wrongfully used electro- types,"^ or for paying in case of breach " five hundred dollars besides all damages,"® have each been held to be agreements for 1 Standard Button-Fastening Co. L. R. A. 283; 41 X. E. 683; Carter V. Breed, 163 Mass. 10; 39 N, e. v. Strom, 41 Minn. 522; 43 N. W. 346; Monmouth Park Association v. 394; Wheedon v. Trust Co., 128 K Iron Works. .55 X. J. L. 132; 39 C. 69; 38 S. E. 255; Clements v. Am. St. Rep. 626; 19 L. R. A. 456; Ry., 132 Pa. St. 445; 19 Atl. 274, 26 Atl. 140 ; Lansing v. Dodd, 45 N. 276 ; Baird v. Tolliver, 6 Humph. J. L. 525; Hoagland v. Segur, 38 (Tenn.) 186; 44 Am. Dec. 298; Mc- K J. L. 230; Whitfield v. 'Levj, 35 Intosh v. Johnson, 8 Jtah 359: 31 N. J. L. 149; Illinois Central Ry. Pac. 450; J. G. Wagner Co. v, V. Cabinet Co., 104 Tenn. 568; 78 Cawker, 112 Wis. 532; 88 N. W. Am. St. Rep. 933; 50 L. R. A. 729; 599; Gates v. Parmly, 93 Wis. 294; 58 S. W. 303. 66 N. W. 253; affirmed on rehear- 2 Standard Button-Fastening Co. ing, 93 Wis. 321 ; 67 N. W. 739. V. Breed, 163 Mass. 10; 39 X. E. * Heisen v, Westfall, 86 111. App. 346. 576; Condon v. Kemper, 47 Kan. 3 Gay Mfg. Co. v. Camp, 65 Fed. 126; 13 L. R. A. 671; 27 Pac. 829. 794; 13 C. C. A. 137; Glasscock v. (Cost of work $100, amount to be Rosengrant, 55 Ark. 376: 18 S. W. paid $500.) 379; Heisen V. Westfall. 86 111. App. 5 Meyer v. Estes, 164 Mass. 457; 576 ; Condon v. Kemper, 47 Kan. 32 L. R. A. 283 ; 41 X. E. 683. 126: 13 L. R. A. 671; 27 Pac. 829; e Foote & Davies Co. v. Malony, Meyer v. Estes, 164 Mass. 457; 32 115 Ga. 985; 42 S. E. 413. PENALTIES AXD LIQUIDATED DAMAGES. 1805 penalties. "Where this test is applied, it is the facts as they exist when the contract is made, and not those in existence when the contract was broken, which determine whether the amount stipulated for is reasonable or unreasonable/ §1177. One penalty for breaches of different covenants. Another test which has met with general favor is the follow- ing: If provision is made for breach of several different cove- nants of a contract, and a gross sum is fixed which is to be paid in case of the breach of any one of such covenants, and the covenants are of different degrees of importance so that the damage resulting from the breach of one would be much greater than those resulting from the breach of another, the stipulation is held to be a penalty.^ Thus a promise to pay a fixed sum for failure to build a house or to pay off all liens thereon,^ or to pay a certain additional amount per ton for every ton of hay or straw sold off the premises, where the value of manure from hay is different from that from straw,^ or a promise to pay a certain sum in case of any default in a contract to sell and deliver a certain number of sheep,* or a promise to pay a fixed sum for breach of any one of a number of covenants, ranging from the payment of royalty to keeping gates closed,^ or a bond 7 Gibson v. Oliver, 158 Pa. St. Cook, 24 \Yash. 474; 64 Pac. 729; 277; 27 Atl. 961. (City of) Madison v. Engineering iWillson V. Love (1896), 1 Q. Co., 118 Wis. 480; 95 X. W. 1097; B. 626; Kemble v. Farren, 6 Bing. Kerslake v. Mclnnis, 113 \Yis. 659; 141 ; Home, etc., Co. v. McNamara, 89 N. W. 895. Ill Fed. 822; 49 C. C. A. 642; 2 Johnson v. Cook, 24 Wash. 474; Smith V. Newell, 37 Fla. 147; 20 64 Pac. 729. (Amount agreed on So. 249; State v. Larson, 83 Minn. $3,000 — value of house $2,000.) 124; 54 L. R. A. 487; 86 X. W. 3; 3 willson v. Love (1896), 1 Q. B. Carter v. Strom, 41 Minn. 522; 43 626. N. W. 394 ; Squires v. Elwood. 33 * Squires v. Elwood, 33 Neb. 126 ; Neb. 126; 49 N. W. 939; El Reno 49 N. W. 939. See for a similar V. Cullinane, 4 Okla. 457; 46 Pac. contract of a less marked type. 510; Berry V. Wisdom, 3 O. S. 241; Home, etc., Co. v. McXamara, 111 Wilhelm v. Eaves, 21 Or. 194; 14 Fed. 822; 49 C. C. A. 642. L. R. A. 297; 27 Pac. 1053; Keck v. s Keck v. Bieber. 148 Pa. St. 645; Bieber. 148 Pa. St. 645; 33 Am. St. 33 Am. St. Rep. 846; 24 Atl. 170. Rep. 846; 24 Atl. 170; Johnson v. 1806 PAGE ON CONTRACTS. in the sum of ten thousand dollars, conditioned on the release of a number of debts varying in amount from eight thousand dollars to ten thousand dollars," have each been held to be provi- sions for penalties. This test has proved so satisfactory in its operation that it is a matter of regret that so many cases present facts which do not admit of determination by it. Even this test, however, is not unanimously adopted. It has been repudiated in several courts, though often in obiter, as a decisive test;' and it has been said that this principle has no application to cases where the damage from each breach, though not the same in each, is in each uncertain,® but that it applies only where the damages are readily ascertainable, either on some,^ or all,^" of the breaches, as where one of the covenants is to pay money.^^ §1178. Breach of single covenant. If the amount fixed is to be paid in case of breach of a single covenant, it is, if fair and reasonable, to be treated prima facie as a covenant for liquidated damage«.^ " Where payment is conditioned on one event, the payment is in the nature of liqui- dated damages."^ Though there are several covenants in a given contract, still if the amount to be paid in case of breach is apportioned to the different covenants, and is fair and reason- able for each, the stipulation is prima facie for liquidated dam- ages.^ Thus a provision in a contract for transporting cattle eBignall v. Gould, 119 U. S. 495. sociation v. More, 183 U. S. 642; TWallis V. Smith, 21 Ch. D. 243; Duffy v. Shockey, 11 Ind. 70; 71 Sun, etc., Co. v. Moore, 183 U. S. Am. Dec. 348 j Gushing v. Drew, 97 642; May v. Crawford, 142 Mo. Mass. 445. 390; 44 S. W. 260. 2 Strickland v. Williams (1899), sWallis V. Smith, 21 Ch. D. 243; 1 Q. B. 382, 384; quoted in Sun, Cotheal v. Talmage, 9 N. Y. 551; etc., Association v. Moore, 183 U. 61 Am. Dec. 716. S. 642, 667, with the warning that 9 Kemble v. Farren, 6 Bing. 141. it must be understood that the event 10 Pierce v. Jung, 10 Wis. 30. is " not the mere non-performance 11 Clement v. Cash, 21 N. Y. 253 ; of an ordinary agreement for th«» quoted with approval in Sun, etc., payment of money." Association v. Moore, 183 U. S. 3 Boys v. Ancell, 5 Bing. N. C. 642, 673. 390; Morris v. Wilson, 114 Fed. 74; 1 Law v. Redditoh Local Board 52 C. C. A. 22. (1892), 1 Q. B. 127; Sun. etc., As- PENALTIES AND LIQUIDATED DAMAGES. 1807 that the steamer should sail on the day named " or pay expenses of keep of animals at rate of fifty cents per head per day in full," is a stipulation for liquidated damages/ This principle finds application in agreements in building contracts to pay a certain sum per day for delay in completing the work.^ §1179. Forfeiture of deposits and part payments. Agreements are frequently made that one or both parties to a contract shall deposit a certain sum of money which is to be the property of the other if the contract is not performed. Such agreements are, if fair and reasonable, treated as stipula- tions for liquidated damages, and enforced.^ Thus under a contract for the sale of realty a deposit of money," or a certified check,^ may be retained by the party not in default. If the check is lost, equity will give afiirmative relief.* So under a contract for the sale of personalty a deposit of a certified check,* may be retained by the party not in default. Under this theory a provision in a contract of employment whereby the employer was to retain six days' wages until the end of the term of employment to secure performance was treated as a covenant for liquidated damages.** If unreasonable, and in- tended merely to coerce performance, they are treated as pen- alties.^ Thus a provision in a contract for the sale of lumber whereby the vendee was to retain fifty cents per thousand to 4 Morris v. Wilson, 114 Fed. 74; e Wilson v. Godkin, — Mich. — ; 52 C. C. A. 22. 98 N. W. 985. 5 See § 1183. " Sherburne v. Hirst, 121 Fed. 1 Allison V. Dunwody, 100 Ga. 51; 998; Kennedy v. United States, 24 28 S. E. 651; Sanders v. Carter, 91 Ct. CI. 122; Carson v. Arvantes, 10 Ga. 450; 17 S. E. 345; Sanford v. Colo. App. 382; 50 Pac. 1080; Will- Bank, 94 la. 680; 63 N. W. 459; son v. Baltimore, 83 Md. 203; 55 Woodbury v. Mfg. Co., 96 Ky. 459; Am. St. Rep. 339; 34 Atl. 774; 29 S. W. 295. Tinkham v. Satori, 44 Mo. App. 2 Womack v. Coleman, 89 Minn. 659 ; Monmouth Park Association 17; 93 N. W. 663. v. Warren, 55 N. J. L. 598; 27 Atl. 3 Moore v. Durnam, 63 N. J. Eq. 932; Chaude v. Shepard, 122 N. Y. 96; 51 Atl. 449. 397; 25 N. E. 358; Lindsey v. Rock- 4 Moore v. Durnam, 63 N. J. Eq. wall County, 10 Tex. Civ. App. 225; 96; 51 Atl. 449. 30 S. W. 380. 5 Millar v. Smith. 28 Tex. Civ. App. 386; 67 S. W. 429. 1808 PAGE ON CONTRACTS. insure performance is treated as a penalty.^ Thus under a "building contract, the retention of a certain percentage of the contract price to secure performance, and to be the property of the owner in case of breach by the contractor is a penalty.^ So if one thousand dollars is deposited by the lessee to become the property of the lessor in case of breach of the covenants of the lease, this is held to be a penalty if all the covenants of the lease have been performed except the payment of forty-five dol- lars of rent.^" So deposits made by a bidder to secure his mak- ing a formal contract in accordance with the terms under which he bids, if his bid is accepted, have been held to be penalties.^^ A similar conflict of view exists where contracts are involved by the terms of which payments made thereunder are in case of default on the part of the one who makes them to become the property of the adversary party. In some cases such pro- visions are treated as valid, on the theory that they are for liquidated damages,^" while in others they are treated as agree- ments for penalties/^ Under statutory provisions forbidding contracts for liquidated damages unless it is impracticable to show actual damages, such provisions cannot be enforced.^* As in case of deposits, most of these cases can be reconciled on the theory that some of the contracts are for amount reasonably apportioned to the amount of actual damage, while others are for excessive and unreasonable amounts. 8 stony Creek Lumber Co. v. 12 Wallis v. Smith, 21 Ch. D. 243; Fields. — Va. — ; 45 S. E. 797. So Gloek v. Colony Co., 123 Cal. 1; under a logging contract. Kerslake 69 Am. St. Rep. 17; 43 L. R. A. V. Melnnis, 113 Wis. 659; 89 N. W. 199; 55 Pac. 713; Havens v. Patter- 895. son, 43 N. Y. 218; Reddish v. Smith, sGleason v. United States, 33 Ct. 10 Wash. 178; 45 Am. St. Rep. 781; CI. 65; Satterlee v. United States, 38 Pac. 1003. 30 Ct. CI. 31 ; Kennedy v. United i^ in re Dagenham Dock Co., L. R. States, 24 Ct. CI. 122. 8 Ch. 1022. 10 Cfpsar V. Rubinson. 174 N. Y. ^* Contract to forfeit payments for 492; 67 N. E. 58. realty if vendee does not perform. iiWillson V. Baltimore, 83 Md. Phelps v. Brown, 95 Cal. 572; 203; 55 Am. St. Rep. 339; 34 Atl. 30 Pac. 774; Cleary v. Folger, 84 774; Lindsey v. Rockwall County, Cal. 316; 18 Am. St. Rep. 187; 24 10 Tex. Civ. App. 225; 30 S. W. Pac. 280; Barnes v. Clement, 12 S. 380. p. 270; 81 N. W. 301. PENALTIES AND LIQUIDATED DAMAGES. 1809 §1180. Default in payment of money. — Larger sum due. If the default which is to make a specified sum due and pay- able is itself the non-payment of a smaller sum of money, the question whether the contract is for a penalty or for liquidated damages depends on which sum the original debt was. If the original debt was the smaller sum, the promise to pay the larger sum in case of default is a penalty.^ The outward form of the contract does not prevent the application of this prin- ciple. The parties may stipulate that the larger sum is the real debt due, and that it is to be discharged by the payment of the smaller sum. This, however, is a penalty if the smaller sum is the real debt.^ Thus an agreement to pay rent for machines, due on the first of each month, payable by the first of the next month, with a discount of fifty per cent if paid by the fifteenth day of the first month,^ or an agreement for the sale of realty which in legal effect is a sale at eight hundred dollars, with a provision for paying ten installments of a hun- dred dollars each with interest, but if each payment is made punctually when due, " eight hundred dollars and its yearly interest will be accepted in full payment,"^ are each agreements for a penalty for delay. If, however, the larger sum is the real debt, and the creditor has agreed to discharge it on pay- ment of the smaller sum in the manner stipulated in the con- tract, the agreement that in case of default the larger sum shall be due and payable, is not a stipulation for a penalty.^ Thus A had a life interest in an undivided third of B's property. The parties estimated the vah;e of this at eight hundred dollars, and A released her estate in consideration of B's promise, se- iGay Mfg. Co. v. Camp, 65 Fed. Moore v. Hylton. 1 Dev. Eq. (N. 794; 13 C. C A. 137; Smith v. C.) 429; Longworth v. Askren, 15 Newell, 37 Fla. 147; 20 So. 249; O. S. 370. Goodyear, etc., Co. v. Selz, 157 111. 3 Goodyear, etc., Co. v. Selz, 157 186; 41 X. K 625; Fisk v. Gray, 11 111. 186; 41 X. E. 625. All. (Mass.) 132; Morrill v. Weeks, 4 Longworth v. Askren, 15 0. S. 70X.H. 178; 46 Atl. 32; Cairnes v. 370. Knight, 17 O. S. 68; Longworth v. 5 United States Mortgage Co. v. Askren, 15 O. S. 370; Fitzpatrick v. Sperry, 138 U. S. 313; Waggoner v. Cottingham, 14 Wis. 219. Cox, 40 0. S. 539. 2 Chaffee v. Landers, 46 Ark. 3645 114 1810 PAGE ON CONTEACTS. cured bj mortgage, to pay to A eight hundred dollars on a specified date, provided if B paid twenty dollars semi-annually to A on specified dates " it shall discharge the whole debt." This was held not to be a penalty.® §1181. Increase in rate of interest. A contract that if default is made in paying a debt when due the debt shall bear a higher rate of interest after maturity than it did before, is not a stipulation for a penalty if the higher rate does not exceed the maximum rate fixed by statute.^ Even if the rate exacted after maturity is in excess of the maximum rate allowed by law, some courts hold that the stipu- lation is not for a penalty." In other states a provision for unlawful interest after maturity is treated as a penalty.^ Whether such contracts are usurious is a question discussed elsewhere.* It may here be remarked that the theory that such a stipulation is for a penalty and therefore void is invoked in some cases to save the contract from the consequence of usury,^ and in other cases to enable the court to give relief to a debtor who has not brought himself within the protection of the courts on the ground of usury, as by omitting to tender 6 Waggoner v. Cox, 40 0. S. 539. 2 Walker v. Abt, 83 111. 226 ; Bane For a ease mucli like the foregoing v, Gridley, 67 111. 388; Smith v. except that the smaller sum was Whitaker, 23 111. 367. treated as the real debt and the s First National Bank v. Davis, larger one therefore as the penalty, 108 111. 633; Wilson v. Dean, 10 la. see Cairnes v. Knight, 17 0. S. 68. 432; Gower v. Carter, 3 la. 244; 66 1 Linton v. Ins. Co., 104 Fed. 584; Am. Dec. 71; Xewell v. Houlton, 22 44 C. C. A. 54; Dehass v. Dibert, 70 Minn. 19; Richardson v. Campbell, Fed. 227; 30 L. R. A. 189; 17 C. C 34 Xeb. 181; 33 Am. St. Rep. 633; A. 79; Thompson v. Garner, 104 51 N. W. 753; Upton v. O'Donahue, Cal. 168; 43 Am. St. Jlep. 81; 37 32 Neb. 565; 49 N. W. 267; Wey- Pac. 900; Eccles v. Herrick, 15 Colo. rich v. Hobelman, 14 Neb. 432; 16 App. 350; 62 Pac. 1040; Dusenberry N. W. 436; Brockway v. Clark, 6 V. Abbott, 1 Neb. Unofficial 101; 95 Ohio 45; Fisher v. Otis, 3 Pinn. N. W. 466; Omaha, etc., Co. v. Han- (Wis.) 78; 3 Chand. (Wis.) 83. sen, 46 Neb. 870; 65 N. W. 1058; 4 See § 465. Havemyer v. Paul, 45 Neb. 373; 63 5 Fisher v. Otis. 3 Pinn. (Wis.) N. W.'932; Close v. Riddle, 40 Or. 78; 3 Chand. (Wis.) 83. 592; 91 Am. St. Rep. 580; 67 Pac. 932. PENALTIES AND LIQUIDATED DAMAGES. 1811 the amount lawfully due.^ Agreements that in case of default the debt shall bear a higher though lawful rate of interest from the date at which it was contracted have been held in some states to be provisions for liquidated damages;'' in others as penalties/ §1182. Other provisions. A provision that default in payment of one installment of interest will make the whole debt due and payable is held in some jurisdictions to be a j)enalty/ though by the great weight of authority such provisions are not penalties, and are valid. ^ So a provision making the principal due in case of failure to pay taxes before they become delinquent is valid.^ In some states a provision for the payment of attorney's fees, in case the debt is collected by litigation, is treated as a penalty.* Pro- visions of the classes here discussed are sometimes attacked as being penalties ; sometimes as being disguised forms of usury ;^ and sometimes as being unconscionable,*' so as to be an element in establishing constructive fraud or undue influence. If such provision is held valid, it means of course that none of these objections is well taken. The converse of this proposition is not always true. Such provision may be held not to be a penalty, but to be usurious ; and vice versa. Even if invalid, the difference in the results that would follow from holding it a penalty, or usurious, or unconscionable, may be so great as to make the solution of this question a matter of great practical importance. GBrockway v. Clark, 6 Ohio 45. Rep. 261; 2G L. R. A. 765; 61 N. 7 Alexander v. Troiitnian, 1 Ga. W. 431; First National Bank v. 469, Bank, — Wyoni. — ; 70 Pac. 726. 8 Waller v. Long, 6 Munf. (Va.) 3 phimmer v. Park, 62 Neb. 665; 71. 87 N. W. 534. 1 Tiernan v, Hinman, 16 111. 400. * Exchange Bank v. Lumber Co., 2 Parker v. Olliver, 106 Ala. 549; 128 N. C. 193; 38 S. E. 813. 18 So. 40; Moore v. Sargent, 112 5 See § 488. Ind. 484; 14 N. E. 466; Swearingen 6 See § 234. V. Lahner, 93 la. 147; 57 Am. St. 1812 PAGE ON CONTEACTS." §1183. Application of general principles. — Building contracts. Provisions in a building contract, that the contractor shall pay a certain sum per day if the building is not completed by the time agreed upon, are generally held to be for liquidated damages if reasonable in amount.^ Thus in the case of a con- tract for the erection of a building, a provision for the payment of fifty dollars a day,^ twenty dollars a day,^ ten dollars a day,* or five dollars a day,^ have each been held to be valid as liqui- dated damages, where not greatly in excess of the actual damage caused by the delay. A provision in a contract for installing an electric light plant, for paying five pounds a day for delay after the time fixed by the contract, has been held to be valid as a provision for liquidated damages.® So provisions for pay- ing one hundred dollars a day for delay in erecting a grand stand,'^ or fifty dollars a day for delay in erecting a church,^ have been held to be covenants for liquidated damages. So a provision for paying a reasonable amount per day for delay in building a sewer,^ or sewage works,^*' is a provision for liqui- dated damages. A provision that if a street railway company does not complete the first line of its road within a year it shall lose its right of way and privileges, and shall pay five hundred 1 Lincoln v. Granite Co., 56 Ark. enbach v. Sage, 13 Wash. 364; 52 405; 19 S. W. 1056; Emack v. Am. St. Rep. 51; 43 Pac. 354. Campbell, 14 App. (D. C.) 186; s Yonng v. Gaut, 69 Ark. 114; Kelly V. Fejervary, 111 la. 693; 83 61 S. W. 372; Brown Iron Co. v. N. W. 791; De Graff v. Wickliam, Norwood (Tex. Civ. App.), 69 S. 89 la. 720; 52 N. W. 503; Lamson W. 2.53. V. Marshall, — Mich. — ; 95 N. W. 6 stegmann v. O'Connor (1900), 78; Carter v. Kaufman, — S. C. — ; A. C; 81 L. T. N. S. 627. 45 S. E. 1017; Collier v. Better- ^ Monmouth Park Association v. ton, 87 Tex. 440; 29 S. W. 467. Iron Works, 55 N. J. L. 132; 39 2 Curtis V. Van Bergh, 161 N. Y. Am. St. Rep. 626; sub nomine, Wal- 47; 55 N. E. 398; Bird v. Church, lis Iron Works v. Park Association, 154 Ind. 138; 56 N. E. 129. 19 L. R. A. 4.56; 26 Atl. 140. 3 Davis V. Hospital Association, s Bird v. Church, 154 Ind. 138; — Wis. — ; 99 N. W. 351 (for delay 56 N. E. 129. in completing a hospital to cost 9 Lamson v. Marshall, — Mich, twenty-four thousand dollars). — ; 95 N. W. 78; Thorn, etc., Co. v. 4 Kelly V. Fejervary. Ill la. 693; Bank, 158 Mo. 272; 59 S. W. 109. 83 N. W. 791; Collier v. Betterton, loLaw v. Redditch Local Board 87 Tex. 440; 29 S. W. 467; lieich- (1892), 1 Q. B. 127. PENALTIES AND LIQUIDATED DAMAGES. 1813 dollars is a provision for liquidated damages/^ So a provi- sion that Tiuless a certain amount of water is diverted into a given ditch th.e right of waj thereof will be given up, is held to be a provision for liquidated damages/' A contractor who is working under a contract by which he is to receive one hun- dred dollars per day for each day less than the time limit fixed by the contract in which he performs the contract, and he is to pay a thousand dollars a day for each day that he exceeds such time limit, may make a provision with a subcontractor for the payment of one hundred and fifty dollars a day for each day of delay on the part of such subcontractor ; and such last provision will be treated as a provision for liquidated damages/^ If delay will, cause great damage to the adversary party, the provision for payment can not be said to be necessarily a pen- alty, though it greatly exceeds the rental value of the property, if it does not greatly exceed the actual damage which will be caused by the delay/* A provision in a contract for excava- tion that the contractor shall be liable for the wages of a super- intendent and inspector from the time that the contract should have been performed to the time when the work is completed, is a provision for liquidated damages/^ Such provisions are upheld even if the building is one which would ordinarily not have a market value for rental purposes. Thus a provision for the payment of a certain reasonable amount for each day's delay in constructing a court house is a provision for liquidated damages.^*' The courts are by no means harmonious, however, in treating such provisions as covenants for liquidated damages. Some courts treat them as penalties.^^ A provision " to for- feit the sum of $20 per day for each and every day's delay " 11 Nilson V. Jonesboro, 57 Ark. per day; stipulated damages $50.00 168; 20 S. W. 1093. per day.) 12 Pogne V. Water Co., 138 Cal. is O'Brien v. Pipe Works, 93 Ala. 664; 72 Pac. 144. 2 582; 9 So. 415. 13 Kimkel v. Wherry, 189 Pa. St. is Heard v. Dooly County, 101 198; 69 Am. St. Rep. 802; 42 Atl. Ga. 619; 28 S. E. 086. 112. "Mundy v. United States, 35 Ct. 14 Curtis V. Van Bergh, 161 N. Y. CI. 265; The Smith Co. v. United 47; 55 N. E. 398. (Rental $5.75 States, 34 Ct. CI. 472; Brennan v. Clark. 29 Neb. 385; 45 N. W. 472. 181-i PAGE ON CONTKACTS. in completing a lighthouse has been held to be a penalty.*" It has been held that such provisions are to be treated as pen- alties if the rental value of the building is easy to be deter- mined/'' This view is very generally taken if the amount stipulated for is unreasonable. Under a contract to erect a building of the value of eighteen thousand dollars, a provision for paying fifty dollars a day for delay, is treated as a penalty.^* Under a contract to erect a building worth three thousand four hundred dollars, a provision for paying three dollars a day for delay has been held to be a penalty."^ So an agreement to pay ten dollars a day for delay in completing a house the rental value of which is thirty dollars a month, is a penalty in the absence of a showing of damage other than I9SS of rents.^^ However, if the amount is reasonable, the contract will gen- erally be treated even in these jurisdictions as a provision for liquidated damages, as where the rental value is three hun- dred dollars a month and the contract calls for the payment of ten dollars a day for delay.^^ A provision for liquidated damages, which amounts to half the contract price, the amount of which is incurred after the contract has been substantially performed, has been held to be so excessive as to be treated as a penalty.^* An agreement to pay a lump sum for delay with- out reference to the extent thereof or the amount of damage caused has been held to be a penalty. Thus an agreement to pay twenty thousand dollars " as liquidated damages and not as a penalty " for delay in the performance of a contract to tear down a brick building and remove it, is a stipulation for a penalty.^^ The same result has been reached under a bond to pay twenty-five thousand dollars in the event of the breach of 18 Smith Co. V. United States, 34 22 Wheedon v. Trust Co., 128 N. Ct. CI. 472. C. 69; 38 S. E. 25.5. 19 Connelly v. Priest, 72 Mo. App. 23 Ramlose v. Dollman, 100 Mo. 67.3. (To pay $10 a day for de- App. 347; 73 S. W. 917. lay.) 24 Edgar, etc., Works v. United 20 Cochran v. Ry., 113 Mo. 3.59; States. 34 Ct. CI. 205. 21 S. W. 6. 25 Chicago House- Wrecking Co. 21 Zimmerman v. Conrad, — Mo. v. United States, 106 Fed. 385; 53 App. — ; 74 S. W. 139. L. R. A. 122. PENALTIES AND LIQUIDATED DAMAGES. 1815 a contract to erect a sewage plant."" If the owner insists upon payment of liquidated damages for delay, be must allow the contractor the contract price for the work which he has done.^^ §1184. Sale of personalty. In a contract for the sale of personal property, a provision for the payment of a reasonable sum in case of breach, has been held to be liquidated damages.^ A provision for paying a reasonable sum per day for delay in delivery of the property sold," as a provision for a certain reasonable amount per day for failure to place an engine and boiler in a barge,^ or a pro- vision for paying ten dollars a day for delay in delivering church pews,* or a provision for paying fifty dollars a day for delay in delivering turbines,^ or a provision for deducting fifteen cents a hundred feet for delay in delivering logs, thereby exposing them to the weather for a longer time,'' have each been held to be a provision for liquidated damages. So a covenant to pay five dollars a day for delay in delivering an engine is held to be a provision for liquidated damages.^ If the amount contracted for is unreasonable, it will be treated as a penalty.* Thus a contract to pay fifty dollars a day for delay in deliver- ing an engine, was held to be a contract for a penalty." If a gross sum is to be paid for breach of the contract, the provision is more likely to be treated as a penalty. Thus under a con- tract for purchasing a crop of oranges while on the trees for 26 (City of ) Madison V. Engineer- * Illinois Central Ry. v. Cabinet ing Co., 118 Wis. 480; 95 N. W. Co., 104 Tenn. 568; 78 Am. St. Rep. 1097. 933; 50 L. R. A. 729; 58 S. W. 303. 27Lennon v. Smith, 124 N. Y. s Wood v. Paper Co., 121 Fed. 578; 27 N. E. 243. 818; 58 C. C. A. 256. 1 Kilbouvne v. Lumber Co., Ill e Kilbourne v. Lumber Co., Ill Ky. 693; 64 S. W. 631; Lynde v. Ky. 693; 64 S. W. 631. Thompson, 2 All. (Mass.) 456. 7 Hardie, etc., Co. v. Oil Mill, — 2 Pressed Steel Car Co. v. Ry., 121 Miss. — ; 36 So. 262. Fed. 609 ; 57 C. C. A. 635 ; Ameri- 8 Glasscock v. Rosengrant, 55 Ark. can, etc.. Works v. Malting Co., 30 376; 18 S. W. 379. Wash. 178; 70 Pac. 236. 9 Iroquois Furnace Co. v. Mfg. 3 Manistee Iron Works Co. v. Co., 181 111. 582; 54 N. E. 987. Lumber Co., 92 Wis. 21; 65 N. W. 863. 1816 PAGE ON CONTRACTS. a lump sum, a provision that the purchaser is to pay the vendor fifteen hundred dollars as part payment, and that if the pur- chaser fails or refuses to comply with the provision of the con- tract, such payment shall be forfeited, was held to be a penalty/'' A provision for payment by the vendee of twenty per cent of the invoice price in case of his countermanding the order, has been held to be a penalty/^ §1185. Sale of good-will. — Reasonable restraint of trade. Contracts for the sale of good will, which contain a covenant in reasonable restraint of trade, often provide for the amount of damage to be paid in case of the breach of such covenant. Such damages are very difficult to prove, and accordingly such provisions have been treated as liquidated damages.^ So a promise to pay $5,000 as liquidated damages in case of a breach of a clause forbidding the buyer to advertise the sale of certain lines of goods reserved by the seller ;" or to pay a certain sum in case of breach of an agreement not to disclose a trade-secret,* have each been held to be agreements for liquidated damages. Even in such jurisdictioiTS a clause binding the promisor " in the penal sum of four hundred dollars," not to practice medi- cine in a certain locality, is held to be prima facie a contract 10 Nichols V. Haines, 98 Fed. 692 ; Eep. 716; 23 Atl. 323. (Sale or 39 C. C. A. 235. coiintry store and good-will for iiMansur, etc., Implement Co. .$6,000, to pay $1,000 for breach of V. Hardware Co., 136 Ala. 597: 33 agreement not to compete.) Muse So. 818; Mansur. etc.. Implement v. Swayne, 2 Lea (Tenn.) 251; 31 Co. V. Willet, 10 Okla. 383; 61 Pac. Am. .Rep. 607; Tobler v. Austin, 22 1066. Tex. Civ. App. 99; 53 S. W. 706; 1 Green v. Price, 13 M. & W. 695; Borley v. McDonald, 69 Vt. 309; 38 McCurry v. Gibson, 108 Ala. 451; Atl. 60, (Employee to pay $500 if 54 Am. St. Rep. 177; 18 So. 806. he competes with his employer for (Sale of practice of medicine — to one year after his employment pay $200 in case of breach of eov- ends.) enant not to engage in practice.) 2 May v. Crawford, 142 Mo. 390; Potter V. Ahrens. 110 Cal. 674; 43 44 S. W. 260. Pac. 388; Augusta Steam Laundry 3 Xode v. Gross, 127 N. Y, 480; Co. V. Debow, 98 Me. 496; 57 Atl. 24 Am. St. Rep. 475; 13 L. R. A. 845; Robinson v. Aid Society. 68 652; 28 N. E. 469; Bagley v. Ped- N. J. L. 723; 54 Atl. 416; Kelso v. die, 16 N. Y. 469; 69 Am. Dec. 713. Eeid, 145 Pa. St. 606; 27 Am. St. PENALTIES AI^D LIQUIDATED DAMAGES. 1817 ±or a penalty.* On the other hand, there may be breaches of a ■Bovenant in reasonable restraint of trade of very different de- grees of importance, causing very different amounts of damage. Some courts have therefore held that a provision for the pay- ment of a fixed sum in case of any breach of a covenant in restraint of trade, is a provision for a penalty.^ §1186. Sale of realty. Under a contract for the sale of realty, a provision for the payment of a certain sum in case of breach, is held in some jurisdictions to be a provision for liquidated damages.^ Thus an agreement whereby either vendor," or vendee,^ to a contract for the sale of realty is to forfeit a deposit if he does not per- form his part of the contract ; or a covenant that if the vendor shall not in a specified time make a deed to vendee, the latter shall have a right to occupy the realty for a specified time;* or a provision that the vendor shall remove an incumbrance within a specified time, and in default thereof shall pay a cer- tain sum,^ or, where lots were sold for $3,050, a provision that the price should be $4,000 if in eighteen months the purchaser did not erect a certain building thereon,^ have been held valid as stipulations for liquidated damages. In other jurisdictions such a provision is held to be a penalty.^ Thus a contract to sell realty for $45,000 and to pay $5 an acre for each acre under twenty thousand,^ or a bond for six hundred dollars 4 Wilkinson v. Colley. 164 Pa. St. 4 Lorius v. Abbott, 49 Neb. 214; 35; 26 L. R. A. 114; 30 Atl. 286. 68 N. W. 486. sRadloff V. Haase. 106 111. 365; 5 Fasler v. Beard, 39 Minn. 32; 63 N. E. 729. (Sale of bakery to 38 N. W. 755. pay $2,000 in case of competition. ) 6 Everett Land Co. v. Maney, 16 Heatwole v. Gorrell. 35 Kan. 692; Wash. 552; 48 Pac. 243. 12 Pac. 135; Perkins v. Lyman, 11 7 0'Keefe v. Dyer, 20 Mont. 477; Mass. 76; 6 Am. Dec. 158. 52 Pac. 196; Monroe v. South (Tex. iSee §§ 1174. 1179. Civ. App.). 64 S. W. 1014. 2 Sanders v. Carter, 91 Ga. 450; (A provision to forfeit "as a pen- 17 S. E. 345. alty the sum of three hundred dol- 3 Womaek v. Coleman. 89 Minn, lars.") 17; 93 N. W. 663; Talkin v. Ander- s Gates v. Parmly, 93 Wis. 294; son (Tex.), 19 S. W. 852. 66 N. W. 253; affirmed on rehear- ing, 67 N. W. 739. 1818 PAGE ON CONTRACTS. conditioned to convey realty worth three hundred dollars,' have been held to be provisions for penalties. The two lines of cases are not all inconsistent; since where such provision is held to be a penalty the amount provided for is generally greatly in excess of the actual damages. §1187. Lease of realty or personalty. An agreement to pay a certain sum of money in case of the violation of a covenant of a lease is held to be a provision for liquidated damages if apportioned to the separate covenants, and not unreasonable, especially if the actual damages are difficult to estimate. Thus a provision in a lease which pro- vides for an annual rental of seven thousand dollars, that in case the premises are retained after the expiration of the term, damages shall be paid for such detention at the rate of thirty dollars a day, is liquidated d&mages.^ So a covenant that lessees shall pay five dollars a day for delay in removing tracks and ties from realty has been held to be a provision for liqui- dated damages.^ A provision in a lease for paying five thou- sand dollars in case of breach is treated as a covenant for a penalty where the only breach is delay in payment of rent.' So under a lease, a provision that if the tenant should assign or underlet, or remove or attempt to remove any of his goods and chattels his term should cease immediately and " one whole year's rent of three thousand dollars shall immediately thereon become due and owing," is rent, and not a penalty.* An agree- ment made when a vessel is chartered, to pay a certain sum therefor if the vessel is lost, or irreparably damaged is treated as liquidated damages.^ By California statute in such cases, however, as such provisions are void by statute, only the actual damages sustained can be recovered." So an agreement to pay 9 Mcintosh V. Johnson, 8 Utah 3 Gay Mfg. Co. v. Camp, 65 Fed. 359; 31 Pac. 450. 794; 13 C. C. A. 137. 1 Poppers V. Meagher, 148 111. * Dermott v. Wallaeh, 1 Wall. (U. 192; 35 N. E. 805; affirming, 47 111. S.) 61. App. 593. 5 Sun, etc., Association v. Moore, 2Townsend v. Ry. Co., 28 Ont. 183 U. S. 642. 195. fi Wilmington Transportation Co. V. O'Niel, 98 Cal. 1 ; 32 Pac. 705. PENALTIES AND LIQUIDATED DAMAGES. • 1819 for the use of a button-sewing machine at a certain sum per thousand buttons, with a provision that if the lessee does not keep account of the number of buttons sewed, the lessor may, at his option, charge five dollars a day for the use of such ma- chine is not a penalty/ §1188. Contracts for royalties. Provisions fixing the amount of royalty to be paid for the use of another's mine, patent, and the like, are usually held not to be penalties. A provision in a mining contract for the pay- ment of a minimum royalty is not a penalty.^ So a provision in an oil lease that the lessee shall sink one well during the first year, and in default thereof will pay five hundred dollars a year for delay, is not a penalty,^ even if a subsequent test of adjoining realty shows that there is no oil or gas on the leased property.^ So a provision in a contract for the use of a patent, to pay the minimum royalty,"* or to pay double the contract rate if the patent right is used after the time fixed for the expiration of the license,^ are not penalties. 7 Standard, etc.. Co. v. Breed, 163 s Gibson v. Oliver, 158 Pa, St. Mass. 10; 39 N. E. 346. 277; 27 Atl. 961. 1 Martin v. Mining Co., 114 Fed. 4 Van Tuyl v. Young, 23 Ohio C. 553 ; Consolidated Coal Co. v. Peers, C. 15. 150 111. 344; 37 N. E. 937. 5 Knox Roek-Blasting Co. v. Stone 2 Gibson V. Oliver, 158 Pa. St. Co., 64 O. S. 361 ; 60 N. E. 563; re- 277; 27 Atl. 961. versing, 16 Ohio C. C. 21; 8 Ohio C. D. 478. 1820 • PAGE OH CONTaAOTS. CHAPTER LVI. THE PAROL EVIDENCE RULE. I. Scope of Rule. §1189. Accurate statement of rule. If the parties to a contract have reduced it to writing, they must intend such writing to be the repository of their commoH intention. It merges all prior and contemporaneous negotia- tions.^ Accordingly, a contract in writing complete on its face, cannot he contradicted hy extrinsic evidence,' nor can prior or contemporaneous parol agreements be used to contradict the written contract,^ so as to substitute for the intention therein expressed, that expressed in such oral agreements.* To violate this rule and to admit extrinsic evidence of the intention of the parties direct for the purpose of displacing their intention as shown in the written contract, is "to substitute the inferior for the superior degree evidence — conjecture for fact — pre- sumption for the highest degree of legal authority — loose iMcElveen v. Ry., 109 Ga. 249; ment between the parties." Gar- 77 Am. St. Eep. 371; 34 S. E. 281; neau v. Cohn, 61 Neb. 500, 501; 85 Gray v. Phillips, 88 Ga. 199; 14 S. N. W. 531 (citing among other E. 205; Walters v. Ward, 153 Ind. cases Sylvester v. Paper Co., 55 578; 55 N. E. 735; McCrary v. Neb. 621; 75 N. W. 1092; Commer- Bank, 97 Tenn. 469; 37 S. W. 543. cial State Bank v. Antelope Coun- 2 Pike V. Mcintosh, 167 Mass. ty, 48 Neb. 496; 67 N. W. 465; 309; 45 N. E. 749; Doyle v. Dixon, Qiiinn v. Moss, 45 Neb. 614; 63 N. 12 All. (Mass.) 576; Hall's Appeal, W. 931; Gerner v. Church, 43 Neb. 60 Pa. St. 458; 100 Am. Dec. 584; 690; 62 N. W. 51.) Gilbert v. Stockman, 76 Wis. 62; 4 Davis v. Robert, 89 Ala. 402; 20 Am. St. Rep. 23; 44 N. W, 845. 18 Am. St. Rep. 126; 8 So. 114; 3" A written contract cannot be Martin v. Ry., 48 W. Va. 542; 37 varied or contradicted by a prior S. E. 563. or contemporaneous parol agree- THE PAROL EVIDENCE RULE. 1821 recollection and uncertainty of memory for the most sure and faithful memorials which human ingenuity can devise or the law adopt.^ In an early Massachusetts case, the court after observing that it was " remarkable that so considerable a degree of obscurity should remain at this day [1814] upon a branch of the law of evidence so constant in its recurrence in courts of law," said, " When parties have deliberately put their engage- ments in writing, in such terms as impart a legal obligation, without any uncertainty as to the object or extent of such obligation, it shall be presumed that the whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing; so that oral testimony of a previous colloquium between the parties, or of conversation or declara- tions at the time when it was completed or afterwards, would tend in many instances to substitute a new and different con- tract for the one which was really agreed upon, to the prejudice, possibly, of one of the parties."® The parol evidence rule applies to suits on contracts in equity, as well as to actions at law.^ This rule is often stated inaccurately in some such form as this : extrinsic evidence is inadmissible to contradict or vary the terms of a written contract.^ As we shall see hereafter,^ extrinsic evidence is often admissible to vary the contract, in the sense that the contract in connection with the admissible evidence has a different meaning from that which it would have had but for such evidence. The evidence forbidden by the rule is not extrinsic evidence in general, but extrinsic evi- dence of the intention direct of the parties to the contract, 5 Baugh V. Ramsey, 4 T. B. Mon. however, will be found a vain and (Ky.) 155, 157. fruitless escape." Baugh v. Ram- 6 Stackpole v. Arnold, 11 Mass. sey, 4 T. B. Mon. (Ky.) 155,157. 27, 30. 8 Its positive terms, being ex- 7 " It is a common error to sup- pressed in writing, cannot be con- pose that these are rigid principles tradicted or varied by parol evi- of law, the severity of which will dence." Walker v. Price, 62 Kan. be mitigated by a court of equity, 327, 333; 84 Am. St. Rep. 392; 62 and that the party who feels their Pac. 1001 ; citing Willard v. operation has nothing to do but to Ostrander, 46 Kan, 591 ; 26 Pac. change his ground and get into the 1017; Rodgers v. Perrault, 41 Kan. climate of the chancellor to meet 385; 21 Pac. 287. with different treatment. This, a See § 1216 et seq. 1822 PAGE OK CONTRACTS. introduced to displace the intention set forth in the written contract. §1190. Place of rule in law. The question of the application of the rule is generally raised by objection to the admission of oral evidence to show the intention of the parties. The parol evidence rule was in its origin applied to sealed contracts, and forbade varying them by parol.^ It has therefore come to be known as the parol evi- dence rule, but its true place is not in the law of evidence. Any rule of substantive law can be stated in terms of the admissibility of evidence. A few illustrations will suffice to show that this is not a rule of evidence. (1) In its original form the rule was stated as a rule of pleading,^ namely that the legal effect of a sealed instrument could not be aided on behalf of the pleader by averment. (2) While the written contract usually acts substantially as a merger of prior or contem- poraneous oral negotiations,^ it also operates as a merger of prior written negotiations,* as where it merges prior letters between the parties,^ or a prior written instrument not made part of the subsequent contract.® Thus a term of an accepted bid which is not carried into the complete written contract subsequently entered into between the parties is no part of their contract.'^ The real objection to the evidence therefore 1 Butcher v. Butcher, 1 Bos. & P. v. Atkins, 157 Ind. 331; 61 N. E. N. R. 113; Blake v. Marnell, 2 Ball 726; Gage v. Phillips, 21 Nev. 150 & B. 35 ; affirmed, 4 Dow. 248 ; Pal- 37 Am. St. Rep. 494 ; 26 Pac. 60 mer v, Newell, 20 Beav. 32. Hunter v. Hathaway, 108 Wis. 620 2 Rutland's Case, 5 Coke 25. 84 N. W. 996. 3 See §§ 1189, 1191. e Brown v. Markland, 16 Utah 4 Graham v. Sadlier, 165 111. 95; 360; 67 Am. St. Rep. 629; 52 Pac. 46 N. E. 221. Thus a deed merges 597. Still less can the meaning of a prior written contract. Neal v- a contract between A and B be af- Hopkins. 87 Md. 19; 39 Atl. 322. fected by a similar clause in a con- 5 South Boston Iron Works v Ignited States, 34 Ct. CI. 174; Gra ham V. Sadlier, 165 111. 95; 46 N E. 221; Christopher, etc., Co. v Yeager. 202 111. 486; 67 N. E. 166; affirming. 105 111. App. 126; Ralya tract between A and X. Common- wealth Roofing Co. V. Leather Co., 67 N. J. L. 566; 52 Atl. 389. 7 McCrary v. Trust Co., 97 Tenn. 469; 37 S. W. 543. THE PAROL EVIDENCE RULE. 1823 is lot that it is oral as distinguished from written, but that it is extrinsic — that is, that it tends to prove wliat is not a term of the contract. (3) If a contract is made and to be performed in one jurisdiction and suit is brought in aTiother, the law of the former jurisdiction applies in determining whether oral agreements are merged by the written contract.^ If the rule were really one of evidence the law of the forum would apply. Being really a rule of substantive law, the law of the place of performance ordinarily controls. Accordingly, there is a strong tendency at Modern Law to treat the parol evidence rule as a rule of substantive law.^ In South Carolina, however, the parol evidence rule has been treated rather as a rule of evidence. It was held that a demur- rer to a complaint, based on a note signd by '' A, agent," who was alleged to have executed the instrument as the agent of B, was improperly sustained, even though no evidence in support of the allegations of agency could have been introduced.^'' It was, however, suggested that the evidence might show that the principal was doing business in the name of the agent. §1191. Written contract merges prior negotiations. In an action on a written contract, complete in itself, the validity of which is conceded, the parties are not permitted to show that their prior or contemporaneous oral agreements were not all reduced to" writing, but remain as oral contracts in full force and effect between the parties.^ This rule applies as " Bank v. Talbot, 154 Mass. 213; i Abrey v. Crux, L. R. 5 C. P. 37 13 L. R. A, 53; 28 N. E, 163. Woollam v. Hearn, 7 Ves. Jr. 211 9 Piteairn v. Philip Hiss Co., 125 Onierod v. Hardman, 5 Ves. Jr. 722 Fed. 110. Union, etc., Ins. Co. v. Mowry, 96 10 Tarver v. Garlington, 27 S. C. U. S. 549; Sun, etc., Association v. 107; 13 Am. St. Rep. 628; 2 S. E. Edwards, 113 Fed. 445; 51 C. C. A. 84G. " Upon the face of the paper, 279 ; Hildreth v. Tramway Co., 73 unexplained by parol testimony the Conn. 631; 48 Atl. 963; Quinn v. jury would have been compelled un- Roath, 37 Conn. 16; Rector v. De- der the cases above to answer (the posit Co.. 190 111. 380; 60 N". E. question of agency) in the negative. 528; affirming, 92 111. App. 175; But before the judge, with the Tichenor v. Newman. 186 111. 264; agency not even disputed, it seems 57 N. E. 826; Ehrsam v. Brown, 64 to us error to hold that there was no cause of action." 1824 PAGE ON CONTRACTS. well where the intention of the parties is completely embodied in two written contracts instead of one." If the parties have voluntarily omitted terms in reducing the contract to writing,' as where they voluntarily omit from a lease a clause providing for an abatement of rent,* they cannot enforce such terms thus voluntarily omitted. Accordingly, where A executes a written instrument whereby she relinquishes her claim to certain horses and carriages in B's possession until B's claim for board is paid in full, A cannot show a contemporaneous oral agreement that she might use such horses in the ordinary course of her busi- ness.^ So in jurisdictions w^here there is no priority of pay- ment between notes secured by one mortgage but falling due at different times, extrinsic evidence is inadmissible to show that the assignee should have priority.^ So an indorser of one of several notes secured by mortgage cannot show an oral agree- ment that the proceeds of the mortgage were to be applied first to the note last maturing. '^ So if a mortgage is given to secure four notes, extrinsic evidence is inadmissible to show that such mortgage was to be released when two of such notes were paid.^ So if a contractor has agreed in writing to assume the contracts Kan. 466; 67 Pac. 867; Wight v. R. 716; Heist v. Hart, 73 Pa. St. 286; R., 16 B. Mon. (Ky.) 4; 63 Am. Gilbert v. Stockman, 76 Wis. 62; Dec. 522; Holmes v. Holmes, 129 20 Am. St. Rep. 23; 44 N. W. 845. Mich. 412; 89 N. W. 47; McCray Confra, under the California statute. Refrigerator Co. v. Zent, 99 Mich. Snyder v. Mfg. Co., 134 Cal. 324; 269; 41 Am. St. Rep. 599; 58 N. 66 Pac. 311. W. 320; Loth v. Friederick, 95 2 Harrison v. Tate, 100 Ga. 383; Mich. 598; 55 N. W. 369; Plumb v. 28 S. E. 227. Cooper, 121 Mo. 668; 26 S. W. 678; 3 Eleventh Street Church v. Pen- Largey v. Leggatt, — Mont. — ; 75 nington, 18 Ohio C. C. 408; 10 Ohio Pac. 950; Montana Mining Co. v. CD. 74. Milling Co., 20 Mont. 394; 51 Pac. 4 Seitz Brewing Co. v. Ayres, 69 824; Crawford v. Improvement Co., N. J, Eq. 190; 46 Atl. 535. 15 Mont. 153; 38 Pac. 713; Russell 5 Radigan v. Johnson, 174 Mass. V. Russell, 63 N. J. Eq.'282; 49 Atl. 68; 54 N. E. 358. 1081; affirming, 47 Atl. 37; Thomas e Jennings v. Moore, 83 Mich. V. Scutt, 127 N. Y. 133; 27 N. E. 231; 21 Am. St. Rep. 601; 47 N. W. 961 ; Travelers' Ins. Co. v. Myers, 62 127. O. S. 529; 57 N. E. 4.58; Union Cen- 7 Schulty v. Bank, 141 111. 116; 33 tral, etc., Co. v. Hook, 62 O. S. 256; Am. St. Rep. 290; 30 N. E. 346. 56 N. E. 906; Philadelphia, etc., Ry. « First National Bank v. Prior, 10 V. Conway, 177 Pa. St. 364; 35 Atl. N. D. 146; 86 N. W. 362. THE PAROL EVIDENCE RULE. 1825 for materials already made, he cannot show a contemporaneous oral agreement that he should assume only a certain amount of thse contracts, the other party to assume the excess over such amount.^ So under a contract for payment of an entire in- debtedness, extrinsic evidence is inadmissible to show that a part only of such indebtedness was to be paid/" So under a contract to pay " all of the outstanding indebtedness " of X, " not to exceed in all one hundred thirty thousand dollars," extrinsic evidence is inadmissible to show an oral contract to pay part only of all X's debts/^ So under a contract to supply X the material which he needed, evidence is inadmissible to show that the contract was for a limited amount only/^ So under a complete written contract for the sale of machines, ex- trinsic evidence is inadmissible to show that the agent was to set them up/^ Under written permission for the assignment of a lease, it is inadmissible to show that the lessee's liability was to end by such assignment/* So if a written contract for the sale of land provides for the payment of taxes and assess- ments, extrinsic evidence is inadmissible to show an agreement by the vendor to pay taxes upon such realty,^^ or to show that certain taxes were excepted from a covenant against encum- brances/" So if the parties have made a contract whereby one of them is to furnish castings and sink a well at a given price, extrinsic evidence is inadmissible to show that he was to furnish the tubing and pump for the same price/^ So under a contract for employing an insurance agent, which by its terms could be ended at will without liability except for commissions warned, the agent cannot show a contemporaneous oral contract sBandholz v. Judge, 62 N. J. L. i4 Rector v. Deposit Co., 190 111. 526; 41 Atl. 723. 380; 60 N. E. 528. 10 First National Bank v. JRy. is Gilbert v. Stockman. 76 Wis. (Tenn. Ch. App.), 46 S. W. 312. 62; 20 Am. St. Rep. 23; 44 N. W. 11 Bell V. Mendenhall, 78 Minn. 845; and see Garwood v. Wheaton, 57; 80 N. W. 843. 128 Cal. 399; 60 Pac. 961. 12 Dean v. Mfg. Co., 177 Mass. is Stanisics v. McMurtry. 64 Neb. 137; 58 N. E. 162. 761 ; 90 N. W. 884. 13 Dowagiae Mfg. Co. v. Corbit, i7 Meader v. Allen, 110 la. 588; 127 Mich. 473, 478; 86 N. W. 954; 81 N. W. 799. rehearing denied, 87 N. W. 886. 115 il826 PAGE ON" CONTEACTS. giving him commissions on future renewals.^^ So one who ships under an ordinary bill of lading, constituting a contract in writing between himself and the railroad company, cannot enforce a prior oral contract to give him as low a rate as was given to any shipper/^ §1192. Evidence inadmissible to contradict written contract. Extrinsic evidense is inadmissible to contradict the intention of the parties as expressed in a written contract by showing a prior or contemporaneous oral agreement contrary to the written agreement.^ Thus extrinsic evidence is inadmissible to show that a deed was not intended to convey the land therein described," or that it was meant only as a power of attorney,^ or that a bill of sale/ or chattel mortgage,^ of personal property, was not intended to include all property therein described, or that under a written contract of sale, title was really reserved isStowell V. Ins. Co., 163 N. Y. 298; 57 N. E. 480. 19 Hopkins v. Ry., 29 Kan. 544. 1 Hoiisekeeper Publishing Co. v. Swift, 97 Fed. 290; 38 C. C. A. 187 Smith V. Bank, 89 Fed. 832; 32 C C. A. 368; Bomar v. Rosser, 131 Ala 215; 31 So. 430; Adams v. Turner 73 Conn. 38; 46 Atl. 247 American Harrow Company v. Dol vin, 119 Ga. 186; 45 S. E. 983 Carter v. Williamson, 106 Ga, 280 31 S. E. 651; Maxwell v. Willing, ham, 101 Ga. 55 ; 28 S. E. 672 ; Beck er V. Dalby (la.), 86 X. W. 314 Crane v. Williamson, 111 Ky. 271 63 S. W. 610, 975; White v. Wil liams, 105 Ky. 802; 49 S. W. 808 St. Landry State Bank v. Meyers 52 La. Ann. 1769; 28 So. 136; Bay lor V, Butterfass, 82 Minn. 21; 84 N. W. 640 ; Ming v. Pratt. 22 Mont. 262; 56 Pae. 279; Aultman v. Hawk (Neb.), 95 N. W. 695; Hoflfman v. Accident Co., 127 N. C. 337; 37 S. E. 466; First National Bank v. Chandelier Co., 17 Ohio C. C. 443; Harley v. Weber, 1 Ohio C. D. 360; Kaufmann v. Friday. 201 Pa. St. 178; 50 Atl. 942; Ivery v. Phillips, 196 Pa. St. 1; 46 Atl. 133; Burwell & Dunn Co. v. Chapman, 59 S. C. 581; 38 S. E. 222; Martin v. Ry., 48 W. Va. 542; 37 S. E. 563; Coman V. Wunderlich, — Wis. — ; 99 N. W. 612; Newell v. Canning Co., 119 Wis. 635; 97 N. W. 487. 2 Oliver v. Brown, 102 Ga. 157; 29 S. E. 159; Jacob Tome Institu- tion V. Davisj 87 Md. 591; 41 Atl. 166. 3 Anderson v. Ins. Co., 112 Ga. 532; 37 S. E. 766. 4Hodson V. Varney, 122 Cal. 619; 55 Pac. 413. 5 Drum-Flato Commission Co. v. Barnard. 66 Kan. 568; 72 Pac. 257; Lawrence v. Comstock, 124 Mich. 120; 82 N. W. 808. THE PAROL EVIDENCE RULE. 1827 bj the vendor,** or that written contracts for work were not in- tended to include work specified therein.' So a deed deposited in escrow under a written contract for delivery on specified con- ditions cannot be shown to be intended as a gift.* An oral contemporaneous agreement that a written release of mutual rights should have no validity cannot be enforced.'' A written contract whereby a lessor whose title is in dispute agrees to indemnify his lessee against any loss that might be incurred from paying rent, in case his title is adjudged defective cannot be contradicted by a contemporaneous oral contract providing that the rent should not be paid until the title was settled.^" So where a railroad ticket is a complete contract, extrinsic evi- dence is inadmissible to contradict its terms, as to show that a limited ticket was by oral agreement to operate as an un- limited ticket.^^ Extrinsic evidence is inadmissible to show that a different amount from that specified in a written con- tract for the payment of money was to be paid.^" Thus under a contract for the sale of milk, evidence is inadmissible to show that there was to be a discount of four cents a can to be applied on a note for a milk route.^^ So a contract to pay royalties &t a certain rate cannot be contradicted by showing an oral con- tract for a certain minimum amount to be paid.^^ So, where a written contract shows that it was " agreed and stipulated " that a criminal case should be discontinued, evidence is inad- missible to show that it was discontinued by the prosecuting witness, and that the defendant merely acquiesced therein.^^ So under a contract between two railroad companies, whereby all the trains belonging to one company are to have a priority eFinnigan v. Shaw, 184 Mass. 84 Am. St. Rep. 392; 62 Pac. 1001. 112; 68 N. E. 35. isMcLeod v. Hunt, 128 Mich. 124; 7 Norwood V. Lathrop, 178 Mass. 87 N. W. 101; O'Neal v. McLeod 208; 59 N, E. 650; Daly v. King- (Miss.), 28 So. 23. ston, 177 Mass. 312; 58 N. E. 1109. is Kelley v. Thompson, 175 Mass. ^Hilgar v. Miller, 42 Or. 552; 72 427; 56 N. E. 713. Pac. 319. ^* Standard Fireproofing Co. v. 9 Loth V. Friederick, 95 Mich. Fireproofing Co., 177 Mo. 559; 76 S. 598; 55 N. W. 369. W. 1008. loprouty V. Adams, 141 Cal. 304; i5 Rvissell v. Morgan, 24 R, I. 134; 74 Pac. 845. 52 Atl. 809. "Walker v. Price, 62 Kan. 327; 1828 PAGE ON CONTRACTS. of crossings, extrinsic evidence is inadmissible to show that this priority was to apply only to certain classes of trains.^" So a contract to " purchase " land can not be shown to be a contract for a right of way.^^ A contract which on its face is to be performed in the alternative, cannot be shown to be re- stricted by oral agreement to the performance of one of the alternatives. Thus where a bill of lading is a contract whereby the carrier agrees to deliver to a connecting railroad, or to a steamer, extrinsic evidence is inadmissible to show that the contract was to deliver to the connecting railroad, and not to the steamer.^^ So under a contract to ship property to ISTew York, not specifying by which route, extrinsic evidence is in- admissible to show that the parties had agreed upon one specific route.^® However, where the bill of lading did not show the route it was held proper to show an oral agTeement specifying to what connecting carrier the initial carrier was to deliver the goods."" Wliere a contract for a policy provides it shall not go into effect until the application is accepted, and the policy is issued and delivered, extrinsic evidence is inadmissible to show that the policy is to go into effect at once."^ Extrinsic evidence is inadmissible to show that a policy which on its face covers only the husband's interest, was intended to cover the wife's interest too. Accordingly, a clause providing that the policy shall become inoperative if the insured conveys his interest, operates where the husband conveys to the wife, an oral pro- vision to the contrary notwithstanding."" So where a clause provides that the policy shall become inoperative if the building is enlarged without the consent of the insurance company, ex- trinsic evidence is inadmissible to show that the enlargement was agreed upon before the policy issued, where the building is described as it existed when the policy issued.^^ So, where 16 Appeal of Cornwall, etc., R. Pi., 20 Louisville, etc., Ry. v. Duncan, 125 Pa. St. 232; 11 Am. St. Rep. 137 Ala. 446; 34 So. 988. 889; 17 Atl. 427. 21 Chamberlain v. Ins. Co., 109 17 Camden, etc.. Ry. v. Adams, 62 Wis. 4; 83 Am. St. Rep. 851; 85 N. X. J. Eq. 6.56; 51 Atl. 24. W. 128. isilcElveen v. Ry.. 109 Ga. 249; 22 Walton v. Ins. Co.. 116 N. Y. 77 Am. St. Rep. 371; 34 S. E. 281. 317; 5 L. R. A. 677; 22 N. E. 443. 19 Webster v. Paul, 10 0. S. 531. 23 Frost's, etc., Works v. Ins. Co., THE PAROL EVIDENCE RULE. 1829 a policy is made payable directly to a granddaughter, extrinsic evidence is inadmissible to show that it was issued to the grand- father on his own life, and at his request made payable to the granddaughter."* So extrinsic evidence is inadmissible to show that a policy payable on its face to the insured was really pay- able to his sister.^^ So extrinsic evidence is inadmissible to eliminate a warranty. ^° So extrinsic evidence is inadmissible to contradict the effect of a covenant against incumbrances.^'^ The maker of a note cannot show an oral agreement between himself and the payee, that the note should have no validity."^ Thus extrinsic evidence is inadmissible to show that a note and mortgage were given to the bank in order that the bank might use them as apparent collateral security,^^ or might show them to the bank examiner as apparent assets.^" In some jurisdic- tions, however, an extension of the principle that conditions precedent to a written instrument's taking effect may be shown,^^ has induced the courts to hold that extrinsic evidence is admis- sible to show that a written contract delivered between the parties was delivered as a mere form and was never intended to take effect. Thus where A had signed a contract agreeing to take a certain amount of street-car advertising from B at certain rates, and had delivered it to B's agent, A could show in an action on the contract that the real contract was an oral agreement for a less amount at a lower rate, and that A signed 37 Minn. 300; 5 Am. St. Rep. 846; v. Bates, 2 Ohio C. D. 54. This rule, 34 N. W. 35. of course, assumes that the note is 24 Burton v. Ins. Co., 119 Ind. in other respects valid. If there is 207; 12 Am. St. Rep. 405; 21 N. E. in fact no consideration for the note, 746. this may, of course, be shown. See 25 Union Central Life Ins. Co. v. §§ 273, 279. Phillips, 102 Fed. 19; 41 C. C. A, 29 Dominion National Bank v. 263; reversing, 101 Fed. 33. Manning, 60 Kan. 729; 57 Pac. 949. 26 Arguimbau v. Ins. Co.. 106 La. (Questioning and distinguishing 139; 30 So. 148. Higgins v. Ridgway, 153 N. Y. 130; 27 Smith V. Bank, 171 Mass. 178; 47 N. E. 32; Breneman v. Furniss, 50 N. E. 545. 90 Pa. 186; 35 Am. Rep. 651.) 28 Leonard v. Miner. 120 Cal. 403; so Mills County National Bank v. 52 Pac. 655 ; Henry Wood's Sons Co. Perry, 72 la. 15; 2 Am. St. Rep. V. Schaefer, 173 Mass. 443; 73 Am. 228; 33 N. W. 341, St. Rep. 305; 53 N. E. 881; Lillie 3i See § 1209. 1830 PAGE ON CONTRACTS. the written contract merely to enable B to show A's order to other prospective customers, and yet conceal the fact that B had been given an especially low rate.^^ If this case were carried to its logical conclusion, xt would be difficult to imagine a case to which parol evidence rule would apply. Where a payee«^ in assigning a note signs it on the face under the name of the maker, he cannot use extrinsic evidence to show that he was merely an indorser.^^ So a surety may not show an agree- ment with the payee whereby he was not to be held liable on the note.^* So a note, negotiable in form, cannot be shown to be intended to be non-negotiable.^^ So the maker of a check in payment of a subscription to a soldiers' monument cannot show an agreement with the payee that the check should be sur- rendered and the maker's bond payable at a later time, or be taken in place thereof,^^ and where a written subscription is given, extrinsic evidence is inadmissible to show that it was given solely to secure the necessary certificate of the state engi- neer, and that the town was to raise funds to pay the amount of the subscription.^^ If a son receives property from his father, and gives his father his note in return therefor, extrinsic evi- dence is inadmissible to show that the property was given as an advancement, and that the note was intended merely as a re- ceipt therefor.^^ A different view has been expressed in some authorities, holding that extrinsic evidence of such agreement is admissible. This can be reconciled with the general rule only on the theory that under the facts of the transaction there was no consideration for the note.^® So extrinsic evidence that an obligor signed a bond under an agreement with the obligee 32 Southern, etc., Co. v. Mfg. Co., 36 La Fayette County Monument 91 Md, 61; 46 Atl. 513. Corporation v. Magoon, 73 Wis. 627; 33 Cook V. Brown, 62 Mich. 473; 3 L. R. A. 761; 42 N. W. 17. 4 Am. St. Rep. 870; 29 N. W. 46. st Grand Isle v. Kinney, 70 Vt. (No mistake in execution being 381; 41 Atl. 130. shown.) 38 Russell v. Smith, 115 la. 261; 34Kulenkamp v. Groff, 71 Mich. 88 N. W. 361. 675; 15 Am. St. Rep. 283; 1 L. R. 39 Marsh v. Chown, 104 la. 556; A. 594; 40 N. W. 57. 73 N. W. 1046; Brook v. Latimer, 35Mallory v. Fitzgerald's Estate, 44 Kan. 431; 21 Am. St. Rep. 292j — Neb. — ; 95 N. W. 601. 11 L. I?. A. 805; 24 Pac. 946. THE PAROL EVIDENCE EULE. 1831 that lie sliould not be liable thereon, is inadmissible/" So a written receipt for wheat, with the promise to pay therefor, cannot be contradicted by showing that the person receiving the wheat did so merely as a bailee.*^ So a written contract for the sale of a machine cannot be contradicted by showing that it was merely a rental on commission.*" A written promise to pay money cannot be contradicted by showing that it was to be paid in work,*^ or in property,** as in building material,*^ or in corporate stock,*^ or in lots and in corporate stock,*^ or in accounts against third person.*^ So in an action on a lease to recover rent, evidence is inadmissible to show that part of the rent was to be paid to the lessor by the lessee's furnishing him with table-board.*^ So in an action on a note evidence is inadmissible to show that such note was to be paid by the maker's collecting certain claims for the payee at a certain com- mission, which commission would amount to the face of the note.^** Such a contract may, however, be the basis of a counter- claim if broken. So a contract that a note is to be paid in part by 'having damages due the maker arising out of another transaction credited on the note is unenforceable.^^ If a note is payable in money, an oral contract that it is payable in cer- tain bank notes not legal tender is unenforceable,^" though a contract to redeem in gold the bank-bills for which the note ^0 Wallace v. Langston, 52 S. C. 47 Mosher v. Rogers, 117 111. 446; IbjJ; 29 S. E. 552. 5 N. E. 583. 41 Horn V. Hansen, 56 Minn. 43 ; 48 Bender v. Montgomery, 8 Lea 22 L. E. A. 617; 57 N. W. 315. (Tenn.) 586. 42 Price V. Marthen, 122 Mich. 49 Stull v. Thompson, 154 Pa. St. 655; 81 N. W. 551. 43; 25 Atl. 890. 43 Stein V. Forgarty, 4 Ida. 702; so Singer Mfg. Co. v. Potter, 59 43 Pae. 681; Merrigan v. Hall, 175 Minn. 240; 61 N. W. 23. But see Mass. 508; 56 N. E. 605; Vraden- Johnston v. McCart, 24 Wash. 19; hurg V. Johnson, — Neb. — ; 91 N. 63 Pac. 1121, where such a contract W. 496. was enforced. 44 Clement v. Houck, 113 la. 504; si Phelps v. Abbott, 114 Mich. 88; 85 N. W. 765. 72 N. W. 3. 45 Kimball V. Bryan, 56 la. 632 ; 52 Baugh v. Ramsey, 4 T. B. Men. 10 N. W. 218. (Ky-) 155; Racine County Bank v. 46 Perry v. Bigelow, 128 Mass. Keep, 13 Wis. 209. 129. 1832 PAGE ON CONTEACTS. was given is enforceable.^^ An excej)tion to this rule was recog- nized in contracts made during tlie Civil War in Southern states, in which the weight of authority recogTiizes the right of the parties to the contract to show that they intended pay- ment in money of the United States,^* or in money of the Con- federate States.^^ Whether this is an illustration of evidence showing the intention of the parties direct, or whether it is merely an illustration of the admissibility of evidence showing the surrounding facts and circumstances, to enable the court to place itself in the position of the parties to the contract, and thus to determine what medium of payment they contemplated is a qiiestion not always easy to determine from an examination of the opinions of the courts. So a written contract to pay money, which by its terms imports a general personal liability cannot be shown to be a contract to pay out of a particular fund,'^*^ as out of the profits of the transaction in connection with which the written promise was made,^^ or out of dividends on the stock for which the note was given.^® So if a note is payable to the firm of A and B it cannot be shown that A was intended as the real payee.^* §1193. Evidence of intention direct inadmissible. Extrinsic evidence is inadmissible in an action on a written contract, to show the understanding of the meaning and effect of such contract entertained by one or both the parties thereto when the contract was entered into. If the intention of one party alone is shown, and the evidence does not show that the 53 Racine County Bank v. Keep, v. Hale, 8 All, (Mass.) 47; Harrison 13 Wis. 209, V. Morrison, 39 Minn. 319; 40 N, W. 54 Bryan v. Harrison, 76 K C 66; Wilson v. Wilson, 26 Or. 251; 360; Stearns v. Mason, 24 Gratt. 38 Pac. 185; Ellis v. Hamilton, 4 (Va.) 484, Sneed (Tenn.) 512. 55 Confederate Note Case, 19 Wall. 57 Lake Side Land Co. v. Drom- (U. S.) 548; Carmichael v. White, goole, 89 Ala. 505. 11 Heisk. (Tenn.) 262; Donley v, ss Fuller v. Law, 207 Pa. St. 101 ; Tindall, 32 Tex. 43; 5 Am. Rep. 234. 56 Atl. 333. 56 Conner v. Clark, 12 Cal. 168; 59 McMicken v. Webb, 6 How, (U. 73 Am. Dee. 529; Murchie v. Peck, S.) 292. 160 111. 175; 43 N. E. 356; Currier THE PAROL EVIDENCE RULE. 183? other parties acquiesced therein, no contract of any sort is shown to exist/ If extrinsic evidence is introduced to show the common understanding and intention of both the parties to the contract, such evidence violates the parol evidence rule.^ Thus where the contract is conceded to be valid, extrinsic evi- dence of representations of an agent, made at the time the contract was entered into, is inadmissible to show the intention of the parties.^ So a written contract for employment cannot be varied by extrinsic evidence of a contract to pay extra com- pensation for work overtime.* So if the time of performance 1 Terrell v. Hufif, 108 Ga. 655; 34 S. E. 345; Brown v. Langner, 25 Ind. App. 538; 58 N. E. 743; Mc- •Leod V. Johnson, 96 Me. 271; 52 Atl. 760; Gulledge v. Woolen Mills, 75 Miss. 297; 22 So. 952; Arming- ton V. Stelle. 27 Mont. 13; 94 Am. St. Rep. 811; 69 Pae. 115; Liver- pool, etc., Co. V. Lumber Co., 11 Okla. 579, 585; 69 Pae. 936, 938. 2 Davis V. Robert, 89 Ala. 402 ; 18 Am. St. Rep. 126; 8 So. 114; Hart ford, etc.. Association v. Goldreyer 71 Conn. 95; 41 Atl. 659; Bass Dry Goods Co. V. Mfg. Co., 113 Ga. 1142 39 S. E. 471; Commercial, etc., Co V. Bates, 176 111. 194; 52 N. E. 49 Cravens v. Cotton Mills, 120 Ind. 6 16 Am. St. Rep. 298; 21 N. E. 981 Buckeye Mfg. Co. v. Machine Works 26 Ind. App. 7; 58 N. E. 1069 Clement v. Drybread, 108 la. 701 78 N. W. 235; Pratt v. Prouty, 104 la. 419; 65 Am. St. Hep. 472; 73 N. W. 1035; Neal v. Hopkins, 87 Md. 19; 39 Atl. 322; Morton v. Clark, 181 Mass. 134; 63 N. E. 409; Haynes v. Hobbs, — Mich. — ; 98 N. W. 978; Crane v. Bayley, 126 Mich. 323; 85 N. W. 874; Sheley v. Brooks, 114 Mich. 11; 72 N. W. 37; Chicago, etc., Co. v. Higginbotham (Miss.), 29 So. 79; Garneau v. Cohn, 61 Neb. 500; 85 N. W. 531; Faulkner v. Gilbert, 61 Neb. 602; 85 N. W. 843; Latenser v. Misner, 56 Neb. 340; 76 N. W. 897; Sad- dlery Hardware Co. v. Hillsborough Mills, 68 N. H. 216; 73 Am. St. Rep. 569; 44 Atl. 300; Price v. Weed, 9 N. M. 397; 54 Pae. 231; McKenzie V. Houston, 130 N. C. 566; 41 S. E. 780; Dougherty v. Norwood, 196 Pa. St. 92; 46 Atl. 384; Melcher v. Hill, 194 Pa. St. 440; 45 Atl. 488; Sloan V. King (Tex. Civ. App.), 69 S. W. 541 ; Gibson v. Rourke Co., 22 Wash. 449; 61 Pae. 162; Michels v. Ptustemeyer, 20 Wash. 597; 56 Pae. 380; Providence Washington Ins. Co. V. Board of Edvication, 49 W. Va. 360; 38 S. E. 679; Crislip v. Cain, 19 W, Va. 438; Johnson v. Pugh, 110 Wis. 167; 85 N. W. 641; Wussow V, Hase, 108 Wis. 382; 84 N. W. 433. sMcMaster v. Ins. Co., 99 Fed. 856; 40 C. C. A. 119; affirming, 90 Fed. 40; Barrie v. Smith, 105 Ga, 34; 31 S. E. 121; Burgher v. Ry., 105 la. 335; 75 N. W. 192; Scott v. Ry., 93 Md. 475 ; 49 Atl. 327 ; Union Central Life Ins. Co. v. Hook, 62 O. S. 256; 56 N. E. 906; Meyer-Bruns v. Ins. Co., 189 Pa. St. 579 ; 42 Atl. 297; Milwaukee Carnival Associa- tion V. King, etc., Co., 112 Wis. 647; 88 N. W. 598. 4 The Lakme, 93 Fed. 230. 1834: PAGE ON CONTRACTS. is fixed in tlie written contract a contemporaneous oral agi-ee- ment changing such time, either lengthening it/ or shortening it,'' is inadmissible. So a contemporaneous agreement cannot change the place of performance from that fixed by the written contract.^ §1194. Evidence of intention direct inadmissible to vary written contract. Extrinsic evidence of prior or contemporaneous oral agree- ments between parties is inadmissible to vary the terms of the written contract which they have entered into ;^ and this is true of prior written negotiations.^ Thus, in a land contract, ex- trinsic evidence changing a corner^ or a boundary,* of the land contracted for, is inadmissible. So under a written lease ex- trinsic evidence of an oral covenant not to assign is inadmissi- ble.^ So under a written contract for subscription to corporate stock of a railroad company a prior oral contract that a rail- road station will be located next to the property of the sub- scriber cannot be enforced.*' So under a written contract to make and sell a machine an oral representation that such ma- chine could be put on the market at a certain price cannot be regarded as a term of the contract.^ 5 Gordon v. Niemann, 118 N. Y. Pac. 936, 938; Streator v. Paxton, 152; 23 N. E. 454. 201 Pa. St. 135; 50 Atl. 926; Hask- eCleckley v. Fidelity Co., 117 Ga. ins v. Dern, 19 Utah 89; 56 Pac. 466; 43 S. E. 725. 953; Maupin v. Ins. Co., 53 W. Va. 7 Samuel M. Lawder & Sons Co. v. 557 ; 45 S. E. 1003. Grocer Co., 97 Md. 1 ; 54 Atl. 634. 2 Rough v. Breitung, 117 Mich. 1 Anderson v. Wainwright, 67 Ark. 48; 75 N. W. 147. 62; 53 S. W. 566; Bullard v. Brew- 3 Town of Kane v. Farrelly, 192 er, 118 Ga. 918; 45 S. E. 711; Pose 111. 521; 61 N. E. 648. V. Zinc Co., — Kan. — ; 74 Pac. * Weaver v. Stoner, 114 Ga. 165; 625; Rough v, Breitung, 117 Mich. 39 S. E. 874. 48; 75 N, W, 147; Coates v. Bacon, 5 Rickard v. Dana, 74 Vt. 74; 52 77 Miss. 320; 27 So. 621; Norfolk Atl. 113. Beet Sugar Co. v. Berger, 1 Neb. e Philadelphia, etc., Co. v. Con- UnofRcial Rep. 151; 95 N. W. 336; way, 177 Pa. St. 364; 35 Atl. 716. Te Poel V. Shutt, 57 Neb. 592; 78 7 Macklem v. Fales, 130 Mich. N. W. 288; Liverpool, etc., Ins. Co. 06; 89 N. W. 581. V. Lumber Co., 11 Okla. 579, 585; 69 THE PAKOL EVIDENCE RULE. 1835 §1195. Legal effect of contract cannot be contradicted. The rule that prior or contemporaneous negotiations can not be used to contradict, add to, or otherwise vary, a written con- tract applies not merely to the letter of the written contract, but also to its legal effect.^ Thus where no time is fixed for performance, and the implication therefrom would, be that a reasonable time was allowed, evidence that a specific time had been agreed upon is inadmissible." It has been held, however, that among other circumstances evidence of conversations be- tween the parties to the contract may be considered to show what they considered to be a reasonable time.^ If the contract in legal effect calls for prompt performance, an oral contract delaying performance until some specified time in the future is unenforceable. Thus where a bill of exchange has been drawn an oral contract that it should not be presented for pay- ment until another draft had been paid was unenforceable.* It has been held, however, that an oral contract, made when a check was delivered that it should not be presented until a certain date in the future was valid.^ So under a contract of sale, with delivery in installments at a gross price, the legal effect of which was to make the price payable when the entire quantity was delivered, an oral contract that at the delivery of each installment the price therefor should be paid was un- enforceable.*' So a guaranty for a specified amount to be ad- vanced by the maker, payable on demand after thirty days, can iFisk V. Casey, 119 Cal. 643; 51 Stange v, Wilson, 17 Mich. 342; Pac. 1077; Nelson v. Godfrey. 74 Liljengren, etc., . Co. v. Mead, 42 Vt. 470; 52 Atl. 1037; Stickney v. Minn.. 420; 44 N. W. 306; Irish v. Hughes, — Wyom. — ; 75 Pac. 945. Dean, 39 Wis. 562. 2 Central H. R. v. Hasselkus, 91 3 Cocker v. Mfg. Co., 3 Sumn. (U. Ga. 382; 44 Am. St. Rep. 37; 17 S. S.) 530; Coates v. Sangston, 5 Md. E. 838; Loeb v. Stern, 198 111. 371; 121. 64 N. E. 1043; Barney v. Ry., 157 4 Brown v. Wiley, 20 How. (U. S.) Ind. 228; 61 N. E. 194; Tripp v. 442. Smith, 180 Mass. 122; 61 N. E. 804; 5 Gray v. Anderson. 99 la. 342; 61 Harrow Spring Co. v. Harrow Co., Am. St. Rep. 243; 68 N. W. 790. 90 Mich. 147; 30 Am. St. Rep. 421; 6 Brandon Mfg. Co. v. Morse, 48 51 N. W. 197; Sloman v. Express Vt. 322. Co., — Mich. — ; 95 N. W. 999; 1836 PAGE ON CONTRACTS. not be modified bj showing that the guaranty was to last for thirty days only.' If the written contract is so drawn that time is not of its essence, the parties cannot show a contempo- raneous oral agreement that time should be of the essence.^ So under a contract appointing an agent " in the immediate vicinity of " a certain town, extrinsic evidence is inadmissible to show that he was to have the exclusive agency.'' Where a check was given, payable on the date thereof, the drawer could not show an oral agreement that the check was not to bear interest.^" So where two persons have signed a contract in such a way that they are jointly liable thereon, an oral agree- ment that each shall be severally liable for one-half of the lia- bility cannot be used to modify the contract.^^ So where A, a member of a firm, made and signed a w^'itten entry of part 13ayment on a partnership note barred by the statute of limita- tions the legal effect of which was to make A liable for the entire amount of the note, A cannot show that he sigTied under an oral contract that he should be liable for only one half the amount of the note.^' So in a contract by one person to sup- port another, where no place of support is fixed, and therefore the party to be supported may fix any reasonable place for re- ceiving support, extrinsic evidence is inadmissible to show that the parties had agreed that such a support was to be furnished at a fixed place/^ It has, however, been held under a contract of employment that where no specific place of performance is fixed, oral evidence of the intention of the parties direct is admissible to show on what locality they had agreed/* So where no rate is fixed in a bill of lading, and accordingly a 7 West-Winfree Tobacco Co. v. 613; 70 X. W. 827. So of a joint Waller, 66 Ark. 445; 51 S. W. 320. chattel mortgage. Williams Bros. 8 Ferguson v. Arthur, 128 Mich, Co. v. Hanmer, — Mich. — ; 94 N. 297; 87 K W. 259; Tufts v. Morris, W. 176. 87 Mo. App. 98. 12 Powell v. Fraley, 98 Ga. 370; 9 Roberts v. Machine Co.. 8 S. D. 25 S. E. 450. 579; 59 Am. St. Rep. 777; 67 X. W. is Tuttle v. Burgett, 53 O. S. 498; 607. 53 Am. St. Rep. 649; 30 L. R. A. loHaynes v. Wesley, 112 Ga. 668; 214; 42 X. E. 427. 81 Am. St. Rep. 72; 37 S. E. 990. "Cook v. Todd (Ky.), 72 S. W. 11 Hanson v. Gunderson, 95 Wis. 779. THE PAROL EVIDENCE RULE. 1837 reasonable rate is implied^ an oral agreement between the par- ties fixing the rate cannot be enforced/^ A written contract of hire cannot be contradicted by showing that the employer could terminate the contract at will/** A contract to convey land " for all legitimate railroad purposes " cannot be modified by showing an oral agreement not to erect an eating house or hotel thereon f'^ nor can a lease for " business purposes " be modified by a contemporaneous oral agreement not to use the premises as a saloon.^^ A contract for the sale of land which states the area as an estimate, and provides for a survey to as- certain the exact amount, cannot be varied by contemporaneous oral agreement that this estimate was to be taken as correct for purposes of tendering the price of the property.^^ So a deed of land in which the description is such as to carry future accretions on the side bounded by a river cannot be modified by a prior oral contract that accretions should not pass to the grantee.^'* A written contract of employment cannot be added to by showing an oral agreement that the employees should give bond."^ So under a written contract to confess judgment and take a stay of execution, which in law required giving a surety on the stay-bond cannot be modified by an oral contract that no surety should be required.^^ So a contract " to deliver to the order of A $800 (less 20 per cent discount) in wall paper at wholesale price," means wholesale price at the time of demand, and an oral provision that the wholesale price fixed by a price card given to the vendee when the contract was made, contain- ing the prices intended, was unenforceable."^ Under a writ- ten lease conveying a dining-room situated in a hotel, the lessee 15 Louisville, etc., I?. E. V. Wilson, 20 Gorton v. Rice, 153 Mo. 676; 119 Ind. 352; 4 L. R. A. 244; 21 N. 55 S. W. 241. E. 341. 21 Kerr v. Sanders, 122 N. C. 635; leDrennen v. Satterfield, 119 Ala. 29 S. E. 943. 84; 24 So. 723. 22 Mayse v. Briggs, 3 Head. "Abraham v. Ry., 37 Or. 495; (Tenn.) 36. 82 Am. St. Rep. 779; 60 Pac. 899. 23 Fawkner v. Wall Paper Co., 88 18 Harrison v. Howe, 109 Mich. la. 169; 45 Am. St. Rep. 230; 55 N. 476; 67 N. W. 527. W. 200. 19 Starin v. Kraft, 174 111. 120; 50 N. E. 1059. 1838 PAGE ON CONTBACTS. agreed to furnisk " board or meals, sucli as are served to the guests of the hotel, for three persons." This provision in legal effect meant any three suitable persons whom the lessor might designate; and the lessee could not show by oral contempora- neous agreement between himself and the lessor that it meant the housekeeper, the chambermaid and the jwrter.^* Under a written contract in escrow, by the terms of which A's note was to be delivered to B, when B delivered to A a certain track- laying machine then in the custody of X, who was asserting a lien thereon, A's expenses in getting such machine to be cred- ited upon the note, B could not show an oral contract whereby A promised to take certain steps to obtain this machine from X.^^ So a contract giving the right to construct a telephone over A's land generally cannot be shown by oral agreement to be limited to a particular part of the land."*^ II. Cases Outside the Terms of the Ritle. §1196. Limitations of the rule. From tlie statement of the parol evidence rule, it evidently can apply only under a combination of different facts. The rule applies, (1) where there is a complete written contract; (2) in an action between the parties to the contract or their repre- Bentatives; (3) where the validity of the contract itself is not in issue; and (4) where an attempt is made to show prior or contemporaneous oral terms of such contract. If any one of these facts is lacking, the parol evidence rule has no applica- tion. Accordingly it is necessary to consider a group of cases where the rule may seem applicable at first glance, but which are on analysis seen to be completely without the very terms of the rule itself. 24 Rector v. Bernasehina, 64 Ark. obtain the machine, but to give B 650; 44 S. W. 222. the option to furnish the machine 25 Pacific National Bank v. Bridge and get the note, or to give up the Co., 23 Wash. 425; 63 Pac. 207. note.) (The legal effect of the written con- 26 Southern, etc., Co. v. Harris, tract was not to bind either party to 117 Ga, 1001 ; 44 S. E. 885. THE PAROL EVIDENCE RULE. 1839 ^1197. Incomplete contracts. The parol evidence riile has but a limited application to con- tracts and memoranda which are incomplete on their face. Extrinsic evidence is admissible to show the other terms of «uch a contract as far as consistent with the terms in writing/ As far as such a contract is incomplete on its face, it is not within the meaning of the parol evidence rule." So where a written contract was made by a widow to take $10,000, and the amount given her by will, in lieu of the distributive share of her husband's estate, and the contract was not complete on its face, it was permissible to show additional terms of the con- tract, and to show what parties had assented thereto.^ So where a written assignment of a chose in action is incomplete, the oral contract under which it was given may be shown.* So extrinsic evidence is admissible to show the conditions of an escrow f that the vendee knew of the possession by a squat- ter of the realty sold f that the amount of notes given included not only the purchase price of the realty conveyed, but also other claims,^ whether a stock option includes dividends or 1 Chamberlain v. Lesley, 39 Fla. v. Russell, 8 Baxt. (Tenn.) 159; 452; 22 So. 736; Forsyth Mfg. Co. Howell v. Denton (Tex. Civ. App.), V. Castlen, 112 Ga. 199; 81 Am. St. 68 S. W. 1002; Steed v. Harvey, 18 Eep. 28; 37 S. E. 485; Louisville, Utah 367; 72 Am. St. Rep. 789; 54 etc., Ey. V. Reynolds, 118 Ind. 170; Pac. 1011; Knowles v. Rogers, 27 20 N. E. 711; Dietrich v. Stebbins, Wash. 211; 67 Pac. 572; Seeger v. 100 la. 426; 69 N. W. 564; Peneix Boiler Co., — Wis. — ; 97 N. W. V. Rodgers (Ky.), 49 S. W. 447; 485; Naumann v. Ullman, 102 Wis. Gould v. Eceelsior Co., 91 Me. 214; 92; 78 N. W. 159. 64 Am. St. Rep. 221; 39 Atl. 554 1 2 Sloan v. Courtenay, 54 S. C. 314; Courtney v. Mfg. Co., 97 Md. 499; 32 S. E. 431. 55 AtL 614; Stahelin v. Sowle, 87 3 Baldwin v. Hill, 97 la. 586; 66 Mich. 124; 49 N. W. 529; Beyer- N. W. 889. stedt v. Mill Co., 49 Minn. 1 ; 51 4 Randall v. Turner, 17 O. S. 262, N. W. 619; State v. Cunningham, and see S1199. 154 Mo. 161; 55 S. W. 282; Bell v. 5 Fred v. Fred (N. J. Eq.), 50 Wiltson (Neb.), 98 N. W. 1049; Atl. 776. Jamestown Business Association v. ^ Leonard v. Woodruff, 23 Utah Allen, 172 N. Y. 291; 92 Am. St. 494; 65 Pac. 199. Rep. 740; 64 N. E. 952; Virginia- 7 Brader v. Brader, 110 Wis. 423; Carolina Chemical Co. v. Moore, 61 85 N. W. 681. S. C. 166; 39 S. E. 346; Waterbury 1840 PAGE ON CONTRACTS. not,^ and "whether in a memorandum for the sale of a quarry " with all the improvements thereon " the parties had agreed upon the sale of any of the personal property used in connec- tion therewith.'' If the contract is not required to be in writ- ing or to be proved by writing, and it consists of several writ- ings, no one of which is complete in itself, they may be con- nected by oral evidence.^** Extrinsic evidence is not admissible to show oral terms inconsistent with those reduced to writing.^^ Analagous to the rule that an oral provision consistent with an incomplete written memorandum may be proved and enforced is the rule that if the written contract is ambiguous, the parol evidence rule does not prevent the parties from relying on the real contract, though oral, as long as it does not contradict terms of the written contract which are plain and unequivocal.^* So if the provisions of the written contract admit, a similar result is reached by holding that the written contract will be construed as having the same scope as the oral contract in pur- suance of which it is entered into.^^ §1198. What contracts are incomplete. In order that a written contract may be treated as incom- plete so as to make extrinsic evidence of other terms admis- sible, it must show upon its face that it is incomplete.^ A 8 Rivers v. Sugar Co., 52 La. Ann. 1007; State v. Cass County, 60 Keb. 762; 27 So. 118. 566; 83 N. W. 733; Doubleday v. 9 Crown Slate Co. v. Allen, 199 Coal Co., 122 N. C. 675; 30 S. E. Pa. St. 239; 48 Atl. 968. 21; F. A, Thomas Machine Co. v. 10 Nelson v. Willey, 97 Md. 373; Voelker, 23 H. I. 441; 50 Atl. 838. 55 Atl. 527. 13 Greenfield v. Oilman, 140 N. Y. 11 Forsyth Mfg. Co. v. Castlen, 168; 35 N. E. 435; Bruce v. Moon, 112 Ga. 199; 81 Am. St. Rep. 28; 57 S. C. 60; 35 S. E. 415. 37 S. E. 48.'5 ; Railroad v. Morey, 47 i Telluride Power Transmission O. S. 207; 7 L. R. A. 701; 24 N. E. Co. v. Crane, 208 111. 218; 70 N. E. 269. 319; affirming, 103 111. App. 647 12 Merrill v. Sypert, 65 Ark. 51; Brantingham v. Huff, 174 N. Y. 53 44 S. W. 462; Barrie v. Miller, 104 95 Am. St. Rep. 545; 66 N. E. 620 Ga. 312; 30 S. E. 840; Chapman v. Dady v. O'Rourke, 172 N. Y. 447 Clements (Ky.), 56 S. W. 646; G^r- 65 N. E. 273; Stowell v. Ins. Co., main v. Lumber Co., 116 Mich. 245; 163 N. Y. 298; 57 N. E. 480; Case 74 N. W. 644; same case, 78 N. W. v. Bridge Co., 134 N. Y. 78; 31 N. THE PAROL EVIDENCE RULE. 1841 written contract is assumed to be complete.* A form of attack on the parol evidence rule, often so disguised as to be difficult of detection, consists in claiming that a written contract, com- plete on its face, is incomplete, and in offering to establish this by extrinsic evidence of terms not reduced to writing. This evidence is sought to be used both to show that the written contract is incomplete and to establish the terms of the contract not reduced to writing. This cannot be done. The use of such evidence violates the spirit and purpose of the parol evi- dence rule.^ So under a complete written contract of sale extrinsic evidence is inadmissible to show sale by sample.* So under a complete written contract for the sale of a boiler of certain specified dimensions for a tug extrinsic evidence is in- admissible to show that the seller was to examine the tug and furnish the size of boiler necessary.^ The question of whether a written contract upon which suit is brought is complete or not is for the court.® A contract may show on its face that it is incomplete by express reference to an oral agreement as E. 254; Thomas v. Scutt, 127 N. Y. 133; 27 N. E. 961; John O'Brien Lumber Co. v. Wilkinson, 117 Wis. 468; 94 N. W. 337. 2Mackey v. Magnon, 28 Colo. 100; 62 Pac. 945; affirming, 54 Pac. 907; McKegney v. Widekind, 6 Bush. (Ky.) 107. 3 The Bertha, 91 Fed. 272; 33 C. C A. 509; Harrison v. McCormiek, 89 Cal. 327; 23 Am. St. Eep. 469; 26 Pac. 830; Forsyth Mfg. Co. v. Castlen, 112 Ga. 199; 81 Am. St. Eep. 28; 37 S. E. 485; McEnery v. McEnery, 110 la. 718; 80 N. W. 1071; Church of Holy Communion v. Paterson, 63 N. J. L. 470; 55 L. R. A. 81; 43 Atl. 696; Naumberg v. Young, 44 N. J. L. 331 ; 43 Am. Rep. 380; Slaughter v. Smither, 97 Va. 202; 33 S. E. 544; Pacific National Bank v. Bridge Co., 23 Wash. 425; 63 Pac. 207. " If we may go out- side of the instrument to prove that 116 there was a stipulation not con- tained in it, and so that only part of the contract was put in writing, and then, because of that fact, enforce the oral stipulation, there will be little value left in the rule itself." Eighmie v. Taylor, 98 N. Y. 288, 294; quoted in Pacific National Bank v. Bridge Co., 23 Wash. 425, 430; 63 Pac. 207. 4 Harrison v. McCormiek, 89 Cal. 327; 23 Am. St. Rep. 469; 26 Pac. 830. 5 The Bertha, 91 Fed. 272; 33 C. C. A. 509. 6 Harrison v. McCormiek, 89 Cal. 327; 23 Am. St. Rep. 469; 26 Pac. 830; Hirsch v. Mills Co., 40 Or. 601; 67 Pac. 949; 68 Pac. 733. Ap- parently contra, Hines v. Willcox, 96 Tenn. 148; 54 Am. St. Rep. 823; 34 L. R. A. 824; 33 S. W. 914; Steed V. Harvey. 18 Utah 367; 72 Am. St. Rep. 789; 54 Pac. 1011. 1842 PAGE ON CONTRACTS. part thereof without specifying what such oral agreement is.'^ Thus " as per conversation,"^ or " as per our conversation of jesterdaj,"® or as hereafter agreed,"" shows that the contract is incomplete. So a contract for advertisements which refers to " our contract price for glass other than we have estimated on, or contracted for prior to the date hereof," and does not otherwise specify what that contract price is, is on its face incomplete by reason of the reference to such other contract, and such other contract may be enforced, though oral.^^ A note given in performance of a contract is not a complete memo- randum of the terms of the contract. Accordingly evidence is admissible to show an agreement to pay the debt for which the note was given out of the proceeds of an insurance policy, thereby waiving exemptions as to such policy,^" or to show an oral warranty, by the payee, of the article sold,^^ even if the note reserves title to the horse until payment.^* So a writing intended only to secure a lien^^ or to make a charge of the price^*^ neither of them prevent evidence of an oral warranty. So if a written order for shipping soap is made out by the vendor's agent, the vendee writing on it " accepted " and sign- ing his name, the vendee may show that the contract was that all the soap was to be shipped to him, but that he was to take and pay for only one half of it, the other half to be delivered by him to another druggist.^^ A sheriff's return of a sale is so far incomplete that it may be shown that the purchaser bought for another lien-holder, and that conveyance was made under 7 Wolff V. Wells Fargo & Co., 115 " Hille v. Adair (Ky.), 58 S. W. Fed. 32; 52 C. C. A. 626. 697. sSelig V. Rehfuss, 195 Pa. St. i* Nauman v. Ullman, 102 Wis. 200; 45 Atl. 919. 92; 78 N. W. 159. 9 Anderson v. Surety Co., 196 Pa, is Potter v. Easton, 82 Minn. 247; St. 288; 46 Atl. 306. 84 N. W. 1011. 10 Morrison v. Dickey, 119 Ga. le « Terms cash. Mr. E. P. Pufc- 698; 46 S. E. 863. nam to T. F. McDonald, dr., one bi- ll Hand V. Drug Co., 63 Minn, cycle $47.50. Paid July 27, 1896." 539; 65 N. W. 1081. Putnam v. McDonald, 72 Vt. 4; 47 i2Murdy v. Skyles, 101 la. 549; Atl. 159. 63 Am. St. Rep. 411; 70 N. W. 714. i^ Colgate v. Latta, 115 X. C. 127; 26 L. R. A. 321; 20 S. E. 388. THE PAEOL EVIDENCE RULE. 184:3 such arrangement.^^ A memorandum may appear incomplete on its face by showing that a time of payment was fixed, but not showing what the time was," or where the memorandum shows only the purchase price and the time of payment.^* The use of " etc." does not of itself show that the contract is in- complete.^^ §1199. Purpose of instrument. If the instrument does not show on its face what its purpose was, extrinsic evidence is admissible to show what that purpose was, if such evidence does not contradict the terms of the con- tract.^ Thus an instrument conveying title which on its face is absolute may be shown by extrinsic evidence to be given as a mortgage to secure certain liabilities." The purpose of any con- tract which purports only to transfer legal title may thus be shown.^ So the grantee may show that a deed was given to 18 Emery v. Hanna (Neb.), 94 N, W. 973. isAultman v. CliflFord, 55 Minn. 159; 43 Am. St. Rep. 478; 56 N. W. 593. (Evidence allowed to show a contract as to quality of the article sold.) 20 Perkins v. Brown, 115 Mich. 41; 72 N. W. 1095. (Evidence ad- mitted to show that vendor was to set out the trees and care for them.) -1 Harrison v. McCormiek, 89 Cal. 327; 23 Am. St. Rep. 469; 26 Pac. 830. iRuiz V. Dow, 113 Cal. 490; 45 Pac. 867; Lamkin v. Mfg. Co., 72^ Conn. 57; 44 L. R. A. 786; 43 Atl. 593; Bever v. Bever, 144 Ind. 157; 41 N. E. 944; Hathaway v. Rogers, 112 la. 638; 84 N. W. 674; Raphael v. Mullen, 171 Mass. Ill; 50 N. E. 515; Buhl v. Bank, 123 Mich. 591; 82 N. W. 282 ; Hillman v. Allen, 145 Mo. 638; 47 S. W. 509; Downes v. Congregational Society, 63 N. H. 151; Weiseham v. Hocker, 7 Okla. 250; 54 Pac.' 464; Sheaflfer v. Sen- senig, 182 Pa. St. 634; 38 Atl. 473; Meyer v. Elevator Co., 12 S. D. 172; 80 N. W. 189; Bedell v. Wilder, 65 Vt. 406; 36 Am. St. Rep. 871; 26 Atl. 589; Schierl v. Newburg, 102 Wis. 552; 78 N. W. 761. 2 Morgan v. Shinn, 15 Wall. (U. S.) 105; Florida, etc., J^y. v. Usina, 111 Ga. 697; 36 S. E. 928; Zuber v. Johnson, 108 la. 273; 79 N. W. 76; Buhl V. Bank, 123 Mich. 591; 82 N. W. 282; Hillman v. Allen, 145 Mo. 638; 47 S. W. 509; Watkins v. Williams, 123 N. C. 170; 31 S. E. 388; Weiseham v. Hocker, 7 Okla. 250; 54 Pac. 464; Myerstown Bank v. Roessler, 186 Pa. St. 431; 40 Atl. 963; Masterson v. Burnett, 27 Tex. Civ. App. 370; 66 S. W. 90; Schierl v. Newburg, 102 Wis. 552; 78 N. W. 761. Contra, Munford v. Green, 103 Ky. 140; 44 S. W. 419. 3 Lease. Meyer v. Elevator Co., 12 S. D. 172; 80 N. W. 189. Bill of sale. Raphael v. Mullen, 171 Mass. Ill; 50 N. E. 515; Martin v. 1844 PAGE ON" CONTEACTS. secure certain notes and not in payment of them.* So a mort- gage which recites that it is to secure a certain no1« may be shown to be an indemnity mortgage.^ So a mortgage to A may be shown to be in part for A's benefit and in part in trust for X.® So a bill of sale given by a debtor may be shown to have been given with the consent of creditors and for their benefit/ An assign- ment of an interest under a contract may be shown by extrinsic evidence to be as security.^ Thus an assignment of a contract t© purchase realty,** a building contract," an insurance policy/^ assignment by orders drawn on a debtor,^" or an assignment of accounts^^ may in each case be showm to have been made, not absolutely, but merely as security. Extrinsic evidence is ad- missible to show such facts as create an implied trust of realty.^* Thus the recital in a deed that the consideration was paid by A does not prevent evidence that it was paid by B.^^ Xeither the Martin, 43 Or. 119; 72 Pac. 639. Assignment of bill of lading. Wal- ker V. Bank, 43 Or. 102; 72 Pac. 635. Assignment of note. Clark v. Ducheneau, 26 Utah 97; 72 Pac. 331. Power of attorney. Cold wa- ter National Bank v. Buggie, 117 Mich. 416; 75 N. W. 1057. 4 Loud V. Hamilton (Tenn. Ch. App.), 45 L. R. A. 400; 51 S. W. 140. sHonaker v. Vesey, 57 Neb. 413; 77 N. W. 1100. 6 Tapia v. Demartini, 77 Cal. 383; 11 Am. St. .Eep. 288; 19 Pac. 641. 7 Xeresheimer v. Smyth, 167 X. Y. 202; 60 N. E. 449. 8 Dale V, Gear, 38 Conn. 15; 9 Am. Rep. 353; Jones v. Albee, 70 111. 34; Lovejoy v. Bank, 23 Kan. 331 ; Kendall v. Assurance Society, 171 Mass. 568; 51 N. E. 464; Ittner V. Hughes, 154 Mo. 55; 55 S. W. 267; Hudson v. Wolcott. 39 0. S. 618; Westbury v. Simmons, 57 S. C. 467; 35 S. E. 764. 9 Hieronymus v. Glass, 120 Ala. 46; 23 So. 674 (disapproving Mose- ley V. Moselej^ 86 Ala. 289; 5 So. 732) ; Gettleman v. Assurance Co., 97 Wis. 237; 72 N. W. 627. 10 Davis V. W^ater Works Co., 57 Minn. 402; 47 Am. St. Rep. 622; 59 N. W. 482. 11 Kendall v. Assurance Society, 171 Mass. 568; 51 N. E. 464; West- bury v. Simmons, 57 S. C. 467; 35 S. E. 764. 12 Ittner v. Hughes, 154 Mo. 55; 55 S. W. 267. 13 Matthews v. Forslund, 112 Mich. 591; 70 N. W. 1105. iiChamplin v. Champlin. 136 111. 309; 29 Am. St. Rep. 323; 26 N. E. 526; Burden v. Sheridan, 36 la. 125; 14 Am. Rep. 505; Blodgett v. Hildreth, 103 Mass. 484; Livermore V. Aldrich, 5 Cush. (Mass.) 431; Depeyster v. Gould, 3 N. J. Eq. 474 ; 29 Am. Dec. 723; Smith v. Eckford (Tex.), 18 S. W. 210; Xeill v. Keese, 5 Tex. 23; 51 Am. Dec. 746; Deck v. Tabler, 41 W. Va. 332; 56 Am. St. Rep. 837; 23 S. E. 721. 15 Chicago, etc., Ry. v. Bank, 58 Xeb. 548; 78 N. W. 1064. THE PAKOL EVIDENCE RULE. 1845 parol evidence rule nor the statute of frauds prevent this. Un- less such evidence were admissible, no available remedy would be given for much of the fraud that is thus met. Extrinsic evidence is admissible to prove trusts concerning personal prop- erty.^'' Thus if A gives a note to B, extrinsic evidence is ad- missible to show that it is charged with a trust in favor of C.^^ If the instrument shows its purpose on its face, the rule admit- ting evidence of the intention of the parties to show the pur- pose of the instrument does not apply, since such intention would be used in such case to contradict the intention as ex- pressed in the writing.^* Thus extrinsic evidence cannot be received to show that C is the beneficiary intended in a deed of trust which names B as beneficiary.^® So under a convey- ance which reserves a life estate to the grantor such reserva- tion cannot be shown to be intended only as security for the performance by the grantee of his contract to support the grantor.^'* .§1200. Written evidence. Since the parol evidence rule applies solely to written con- tracts, in actions brought to enforce them, it does not forbid the use of extrinsic evidence to contradict written evidence as long as the written evidence is not the written contract on which the action is based.^ Thus if letters written by one of the 16 Northrop v. Hale, 72 Me. 275; Harlan, 89 Md. 675; 43 Atl. 756. Chace v. Chapin, 130 Mass. 128; See to the same effect Holtheide v. Gerrish v. New Bedford Institution, Smith (Ky.), 74 S. W. 689. 128 Mass. 159; 35 Am. Rep. 365; 20 Hall v. Small, 178 Mo. 629; 77 Barnes v. Trafton. 80 Va. 524. S. W. 733. 17 Thompson V. Caruthers, 92 Tex. 1 Wise v. Collins, 121 Cal. 147; 530; 50 S. W. 331. 53 Pac. 640; Smith v. Mayfield, 163 isBurnes v. Scott, 117 U. S. 582; m. 447. 45 n. E. 157; Parno v. Dickson V. Harris, 60 la. 727 ; 13 N. jns. Co., 114 la. 132; 86 N. W. W. 335; Crane v. Bayley, 126 Mich. 2IO; Dean v. Shepard Co., 95 la. 323; 85 N. W. 874; Adair v. Adair, 89; 63 N. W. 582; Gully v. Grubbs, 5 Mich. 204; 71 Am. Dec. 779; Gil- 1 J. J. Mar. (Ky.) 387; German bert V. Thompson, 14 Minn. 544; Ins. Co. v. Frederick, 57 Neb. 538; Ming V. Pratt, 22 Mont. 262; 56 77 N. W. 1106; Kister v. Ins. Co., Pac. 279. 128 Pa. St. .553; 15 Am. St. Rep. 19 American National Bank v. 696; 5 L. R. A. 646; 18 Atl. 447. 1846 PAGE ON CONTRACTS. parties are not a part of a written contract, oral evidence is admissible to contradict the statements made therein.^ So ex- trinsic oral evidence is admissible to rebut evidence tending to shov7 fraud, even if the latter evidence is in writing. Thus where false statements are contained in an application for in- surance, extrinsic evidence is admissible to show that the appli- cant stated the facts correctly to the agent of the insurance company, and that the latter wrote the application.^ In Michi- gan such evidence is admissible if the application is signed before the agent writes the answers.* A memorandum in lead- pencil, made by one party and not intended by both parties as the written contract may be contradicted.^ So a written ac- knowledgment of a contract® or a chattel mortgage, prepared by plaintiffs to be executed by defendant, but not in fact exe- cuted by him,' may be contradicted, since neither is a written contract within the meaning of this rule. On the same princi- ple, recitals of fact and receipts may be contradicted even if in writing, and even if in an instrument a part of which is a contract.^ So A loaned B $280 and by mistake B gave his note for $250. B repaid $280 and then sued to recover $30 as paid by mistake. It was held that A could show the real transaction as the action was not on the note.^ The test which determines the admissibility of extrinsic evidence in such cases is this: Is the written provision a contractual term ? In such case the parol evidence rule applies. Or is it merely the written recital of a fact? In such case the parol evidence rule has no appli- 2 Alexander v. Thompson, 42 etc., Ins. Co. v. Goode, 95 Va. 762; Minn. 498; 44 N. W. 534; Abra- 30 S. E. 370. hams V. Swan, 18 W. Va. 274; 41 * Brown v. Ins. Co., 65 Mich. 306; Am. St. 692. 8 Am. St. Rep. 894; 32 N. W. sParno v. Ins. Co., 114 la. 132; 610. 86 N. W. 210; Mutual, etc., Asso- 5 Pecos Valley Bank v. Evans- ciation v. Ogletree, 77 Miss. 7; 25 Snider-Buel Co., 107 Fed. 654; 46 So. 869; German Ins. Co. v. Fred- C. C. A. 534. erick, 57 Neb. 538; 77 N. W. 1106 Kister v. Ins. Co., 128 Pa. St. 553 15 Am. St. Eep. 696; 5 L. R. A. 646 18 Atl. 447; Bennett v. Ins. Co., 107 53 Pac. 640. Tenn. 371; 64 S. W. 758; Virginia, « See § 1201 et seq eBurkhart v. Hart, 36 Or. 586; 60 Pac. 205. 7 Wise V. Collins, 121 Cal. 147; 9 Foster v. Kirby, 31 Mo. 496. THE PAEOL EVIDENCE RULE. 1847 cation. Illustrations of this distinction will be found in tiie following sections. §1201. Recital of facts, — Receipts. A receipt, if free from contractual tenns, is a mere recital of the fact of the payment of money or delivery of property. The parol evidence rule does not apply to such receipts, and they may be contradicted by extrinsic evidence like other re- citals of fact.^ Thus a receipt for an insurance premium,^ the receipt of property by a common carrier shown in the bill of lading,^ either as to the fact of the receipt of goods at all* or as to the quantity of goods received,^ a receipt of property shown by a load-check,*' a check given by a sleeping-car con- ductor to a passenger on the surrender of the passenger's ticket 1 Rarden v. Cunningham, 136 Ala. 263; 34 So. 26; Gravlee v. Lamkin, 120 Ala. 210; 24 So. 756; Jenne v. Burger, 120 Cal. 444; 52 Pac. 706; Colorado, etc., Co. v. Ponick, — Colo. App. — ; 66 Pac. 458; Stark- weather V. Maginnis, 196 111. 274; 63 ]SI. E. 692; McDonald v. Danahy, ,96 ill. 133; 63 N. E. 648; Mer- v^iants' Dispatch Transportation Co. V. Furthmann, 149 111. 66; 41 Am. St. Rep. 265; 36 N. E. 624; Henry V. Henry, 11 Ind. 236; 71 Am. Dec. 354; Missouri Pacific Ry. v. Love- lace, 57 Kan. 195; 45 Pac. 590; Wilkinson v. Scott, 17 Mass. 249; Hennessy v. Furniture Co., — Mont. — ; 76 Pac. 291; Morse v. Rice, 36 Neb. 212; 54 N. W. 308; Eenny v. Kane, 50 N. J. L. 562 ; 14 Atl. 597 ; Smith V. Holland, 61 N. Y. 635; Kirkpatrick v. Smith, 10 Humph. (Tenn.) 188; Cushwa v. Building Association, 45 W. Va. 490; 32 S. E. 259; Twohy Mercantile Co. v. Mc- Donald's Estate, 108 Wis. 21; 83 N. W^ 1107. 2Robison v. Wolf. 27 Ind. App. 683; 62 N. E. 74; Sargent v. Ins. Co., 189 Pa. St. 341; 41 Atl. 351. 3 The Lady Franklin, 8 Wall. (U. S.) 325; Planters' Fertilizer Mfg. Co. V. Elder, 101 Fed. 1001; 42 C. C. A. 130; Pereira v. Ry., 66 Cal. 92; 4 Pac. 988; Lake Shore, etc., Ry. V. Bank, 178 111. 506; 53 N. E. 326; Merchants' Dispatch Co. v. Furthmann, 149 111. 66; 41 Am. St. Rep. 265; 36 N. E. 624; Chapin v. Ry., 79 la. 582; 44 N. W. 820; Blanchard v. Page, 8 Gray (Mass.) 281; Strong v. Hy., 15 Mich. 206; 93 Am. Dec. 184; Meyer v. Peck, 28 N. Y. 590; Ellis v. Willard, 9 N. Y. 529; Dean v. King, 22 O. S. 118; May V. Babcock, 4 Ohio 334. 4 Grant v. Norway, 10 C. B. 665; The Lady Franklin, 8 Wall. (U. S.) 325; National Bank v. Ry., 44 Minn. 224; 20 Am. St. Rep. 566; 9 L. R. A. 263 ; 46 N. W. 342, 560. 5 Hall V. Mayo, 7 All. (Mass.) 454; Meyer v. Peek, 28 N. Y. 590; Dean v. King, 22 O. S. 118. 6 Anderson v. Flouring Mills Co., 37 Or. 483; 82 Am. St. Rep. 711; 59 L. R. A. 235; 60 Pac. 839. 1848 PAGE ON CONTRACTS. to the conductor,'^ an entry by a bank in a pass-book, showing money received by the bank to the credit of the depositor,^ and a recital in a non-negotiable note that a part of its consideration is for services heretofore rendered," are each mere receipts, and may be contradicted by extrinsic evidence. Accordingly the party giving the receipt may show that the party paying money to him did so as agent for another person." So a receipt does not prevent the parties thereto from showing by whom the purchase was really made." §1202. Receipts and releases containing contractual terms. An instrument which is in part a receipt may also contain contractual terms. In such case, while the part of it whidi is a receipt may be contradicted by extrinsic evidence, the contractual terms are within the operation of the parol evidence rule.^ A bill of lading,^ a storage receipt,^ or a warehouse receipt,* often contained contractual terms which come within the operation of the parol evidence rule. Thuf? a shipper can- not introduce evidence of an oral contract to show that the clause in the written bill of lading, limiting the carrier's liabil- 7 Mann-Boudoir Sleeping Car Co. 40 Or. 239; 66 Pac. 914; Kammer- V. Dupre, 54 Fed. 646; 21 L. R. A. mayer v. Hilz, 107 Wis. 101; 82 289 ; 4 C. C. A. 540. N. W. 689. 8 Anderson v. Leverich, 70 la. 2 jyicElveen v. Ry., 10^ Ga. 249; 741; Union Bank v. Knapp, 3 Pick. 77 Am. St.. Hep. 371; '?4 S. E. (Mass.) 96; 15 Am. Dec. 182; Tal- 281; Louisville R. R. v. Wii'son, 119 cott V. Bank, 53 Kan. 480; 24 L. R. Ind. 352; 4 L. R. A. 244; 21 N. E. A. 737; 36 Pac. 1066; Davis v. 341; Sonia Cotton-Oil Co. v. The Bank, 53 Mich. 163; 18 N. W. 629; Red River, 106 La. 42; 87 Am. St. Quattrochi v. Bank, 89 Mo. App. Rep. 294; 30 So. 303; Bank v. R. R, 500. 44 Minn. 224; 20 Am. St. Rep. 566; 9 Mulligan v. Smith, 13 Colo. App. 9 L. R. A. 263; 46 N. W. 342, 560; 231; 57 Pac. 731. Van Etten v. Newton, 134 N. Y. 10 Rand v. Scofield, 43 111. 167; 143; 30 Am. St. Rep. 630; 31 N. E. McKinney v. Harvie, 38 Minn. 18; 334. 8 Am. St. Rep. 640; 35 N. W. 668. 3 Thompson v. Thompson, 78 Minn. 11 French v. Newberry, 124 Mich. 379, 384; 81 N. W. 204; 81 N. W. 147 ; 82 N. W. 840. 543. 1 Coon V. Knap, 8 N. Y. 402 ; 59 * Union Storage Co. v. Speck, 194 Am. Dec. 502; Milos v. Covacevich, Pa. St. 126; 45 Atl. 48. THE PAROL EVIDENCE RULE. 1849 itj, was not to be operative/ or to show that the contract was made with the consignee and not with the consignor.^ So where a bill of lading recited the delivery of 5-i,000 bushels of wheat, and provided " all the deficiency in cargo to be paid by the carrier and deducted from the freight, and any excess in the cargo to be paid for to the carrier by the consignee," the state- ment as to the amount of wheat received was thereby made a contractual term, and not a mere receipt ; and accordingly, the carrier was liable for any deficiency, though he did not receive the amount stipulated.^ A certificate of deposit is a contract and not merely a receipt.^ Accordingly if signed " A, man- ager," and A was manager of a private bank, an oral agreement that the deposit was with another bank of which A was presi- dent cannot be enforced.^ An instrument which purports to be a release of claims of a receipt in full is contractual in its nature as far as it discharges one party thereto from liability.^*' Ac- cordingly, where a receipt in full is given in the settlement of all the claims of a certain class, extrinsic evidence cannot be introduced to show that the parties had, when such receipt was given, agreed that some specified claim should not be af- fected by the receipt." Thus an instrument acknowledging the receipt of a certain sum of money in consideration of which one party releases all interest in a given estate is a written contract, and the party thus releasing her interest cannot show an oral agreement that she should receive a greater sum than that men- tioned in the receipt, in case another party interested in the 5 Davis V. R. R., 66 Vt. 290; 44 455; Squires v. Amherst, 145 Mass. Am. St. Rep. 852; 29 Atl. 313. 192; 13 N. E. 609; Morris v. Ry., 6 Van Etten v. Newton, 134 N. Y. 21 Minn. 91; Church v. Ry., 63 N. J. 143; 30 Am. St. Rep. 630; 31 N. E. L. 470; 43 Atl. 696; Jackson v. Ely, 334. 57 O. S. 450; 49 N. E. 792; Conant 7 Rhodes v. Xewhall, 126 N. Y. v. Kimball, 95 Wis. 550; 70 N. W. 574; 22 Am. St. Rep. 859; 27 N. E. 74; Vaughan v. Mason, 23 R. I. 947. 348; 50 Atl. 390 Contra, French sBickley v. Bank, 39 S. C. 281; 39 v. Arnett, 15 Ind: App. 674; 44 N. Am. St. Rep. 721. E. 551; Mounce v. Kurtz, 101 la. sBickley v. Bank. 39 S. C. 2S1; 192; 70 N. W. 119; Allen v. Mill 39 Am. St. Rep. 721. Co., 18 Wash. 216; 51 Pae. 372. 10 Green v. Ry., 92 led. 873; 35 n Seeman v. Mining Co., 22 Ohio C. C. A. 68; Bull v. Bull, 4S Conn- C. C. 311; 12 Ohio C. D. 206. 1850 PAGE ON CONTKACTS. estate received a greater sum/^ So an instrument as follows: "$15.5. Wooster, Ohio, May 13, 1890. This is to certify that I have this day settled with John Ely and he has paid me all he owed me, up to this date, and I have no claims or de- mands against him of any kind whatsoever. Mrs. Wm. Jack- sou," is not merely a receipt but also a contract; and extrinsic evidence cannot be used to show that outstanding items of in- debtedness were omitted.'" So if an action for personal in- juries is settled by the parties, and a written instrument is executed which purports to be a full settlement and discharge of all damages in consideration of a certain sum of money, extrin- sic evidence is inadmissible to show a promise by the party liable for damages to pay a further sum in settlement of such action.'* So where a creditor gives a release of a joint debtor, and surrenders a note executed by the joint debtors, extrinsic evidence is inadmissible to show an oral agreement that the other debtor should not be released.'^ However, a receipt given " in full settlement of all claims and demands for all logs con- tained " in a specified raft of logs has been held to be a mere receipt, and not a contract, and hence not within the parol evidence rule,'® §1203. Consideration recited as fact. If the consideration is not recited in the written contract, or if recited appears only as a recital of fact and not as a con- tractual term, extrinsic evidence is admissible to show what the real consideration is.' " The language with reference to the i2Cassilly v. Cassilly, 57 0. S. i Stone v. Minter, 111 Ga. 45; 50 582; 49 N. E. 795. L. R. A. 3,56; 36 S. E. 321; Bros- 13 Jackson v. Ely, 57 O. S. 450; 49 seau v. Loiiy, 209 III. 405; 70 N, E. N. E. 792. 901; affirming 110 111. App. 16; i4Milich V. Packing Co., 60 Kan. Ryan v. Hamilton, 205 111. 191; 68 229; 56 Pac. 1; Jackowski v. Steel N. E. 781; reversing 103 111. App. Co., 103 Wis. 448; 79 N. W. 757. 212; Lake Erie, etc., Ry. v. Hol- 15 Clark V. Mallory, 185 111. 227; land, — Ind. — ; 69 N. E. 138; 56 N. E. 1099; affirming 83 111. App. Stewart v. R. R., 141 Ind. 55; 40 488. N. E. 67; Pickett v. Green, 120 16 Allen ".Alill Co., 18 Wash. 216; Ind. 584; 22 N. E. 737; Citizens' 51 Pac. 37^ Street Ry. v. Heath, 29 Ind. App. THE PAKOL EVIDENCE RULE. 1851 consideration is not contractual; it is merely by way of recital of a fact, viz., the amount of such consideration, and not an agreement to pay it, and hence such recitals may be contra- dicted."^ Thus the real consideration can be shown under ordinary forms of deeds^ and notes.* Under such a written con- tract it may be shown that the real consideration was the as- sumption of the debt of another person,^ as where in a deed the grantee assumes as a part of the consideration the payment of the debts of the grantor, which have become liens upon the property,** or is to pay the vendor one half the proceeds of the 395; 62 N. E. 107; Moore v. Harri- son, 26 Ind. App. 408; 59 N. E. 1077; Farmers' Savings Bank v. Hansmann, 114 la. 49; 86 N. W. 31; Poor's Executor v. Scott (Ky.), 68 S. W. 397; Price v. Price, 111 Ky. 771; 64 S. W. 746; 66 S. W. 529; Jensen v. Crosby, 80 Minn. 158; 83 N. W. 43; Aldrich v. Whit- aker, 70 N. H. 627; 47 Atl. 591; Medical College Laboratory v. Uni- versity, 178 N. Y. 153; 70 N. E. 467; Keuka College v. Ray, 167 N. Y. 96; 60 N. E. 325; Forester v. Van Auken, — N. D. — ; 96 X. W. 301; Miller v. Livingston, 22 Utah 174; 61 Pac. 569; Williams v. Blu- menthal, 27 Wash. 24; 67 Pac. 393; Butt v. Smith, — Wis. — ; 99 N. W. 328; Cuddy v. Foreman, 107 Wis. 519; 83 N. W. 1103; Perkins v. McAuIiffe, 105 Wis. 582; 81 N. W. 645. 2 Pickett V. Green, 120 Ind. 584, 588; 22 N. E. 737. 3 Harraway v. Harraway, 136 Ala. 499; 34 So. 836; Hamaker v. Coons, 117 Ala. 603; 23 So. 655; Anthony v. Chapman, 65 Cal. 73; 2 Pac. 889; Martin v. White. 115 Ga. 866; 42 S. E. 279; Harkless v. Smith, 115 Ga. 350; 41 S. E. 634; Leggett V. Patterson, 114 Ga. 714; 40 S. E. 736; Stewart v. R. R., 141 Ind. 55; 40 N. E. 67; Coleman v. Gammon (la.), 83 N. W. 898; Ford v. Sav- age, 111 Mich. 144; 69 N. W. 240; Le May v. Brett, 81 Minn. 506; 84 N. W. 339; Langan v. Iverson, 78 Minn. 299; 80 N. W. 1051; Colum- bia National Bank v. Baldwin, 64 Neb. 732; 90 N. W. 890; Baird v. Baird, 145 N. Y. 659; 28 L. R. A. 375; 40 N. E. 222; Carter v. Day, 59 O. S. 96; 69 Am. St. Rep. 757; 51 N. E. 967; Lenhardt v. Ponder, 64 S. C. 354; 42 S. E. 160; Alexan- der V. McDaniel, 56 S. C. 252 ; 34 S. E. 405; Halvorsen v. Halvorsen, — Wis. — ; 97 N. W. 494. Such evi- dence cannot be used to contradict the effect and oi^eration of such deed. 4Folmar v. Siler, 132 Ala. 297; 31 So. 719; Booth v. Fire-Engine Co., 118 Ala. 369; 24 So. 405; Burke v, Napier, 106 Ga. 327; 32 S. E. 134; Gifford v. Fox (Neb.), 95 N. W. 1066. 5 Main v. Aukam, 12 App. D. C. 375; Harts v. Emery, 184 111. 560; 56 N. E. 865; affirming 84 111. App. 317. 6 Carter v. Griffin, 114 Ga. 321 ; 40 S. E. 290; Lowery v. Downey, 150 Ind. 364; 50 N. E. 79; McDill v. Gunn, 43 Ind. 315; Logan v. Miller, 106 la. 511; 76 N. W. 1005; Lamb V. Tucker, 42 la. 118; Hopper v, Calhoun, 52 Kan. 703; 39 Am. St. 1852 PAGE ON CONTRACTS. minerals on the realty conveyed.^ So where a deed is given an oral contract whereby the grantor agrees to pay certain street assessments may be enforced.^ So it may be shown even where a covenant against encumbrances is inserted in a deed that the grantee retained the purchase f)rice to pay the encumbrances, and subsequently settled with the grantor, the latter relying on the statement of the grantee that the encumbrances were paid.^ The agreement by the grantee to assume a mortgage may be shown even if the deed contains a covenant against en- cumbrances/*^ If the deed excepts a prior mortgage from a covenant of warranty, oral evidence is admissible to show that the grantee was to assume the principal of the mortgage, but not the interest thereon/^ So under a deed which recites a certain sum of money as a consideration, it may be shown that the trans- fer of title to certain horses was also a part of the considera- tion/^ However, if the deed shows that the consideration was love and affection, neither of the parties can show that it was a valuable consideration/^ As between an execution creditor of grantor and the grantee, evidence of the real character of the consideration may be received/* An oral contract of em- ployment may be shown to be a part of the consideration for a release of damages/^ So it may be shown that a settlement Rep. 363; 35 Pac. 816; Clark v. 52 L. R. A. 162. Contra, where the Lowe, 113 Mich. 352; 71 N. W. 638; oral agreement to assume a mort- Ford V. Savage, 111 Mich. 144; 69 gage would contradict a covenant of N. W. 240; Bensiek v. Cook, 110 general warranty. Rooney v. Koe- Mo. 173; 33 Am. St. Rep. 422; 19 nig, 80 Minn. 483; 83 N. W. 399. S. W. 642; Ketcham v. Brooks, 27 n Ford v. Savage, 111 Mich. 144; N. J. Eq. 347; Society v. Haines, 69 N. W. 240. 47 O. S. 423; 25 N. E. 119; Merri- 12 Lathrop v. Humble, — Wis. — ; man v. Moore, 90 Pa. §t. 78 ; Miller 97 N. W. 905. V. Kennedy, 12 S. D. 478; 81 N. W. is Latimer v. Latimer, 53 S. C. 906; Johnson v. Elmen, 94 Tex. 483; 31 S. E. 304. 168; 86 Am. St. Rep. 845; 52 L. R. i* Thompson v. Cody, 100 Ga. A. 162; 59 S. W. 253. 771; 28 S. E. 669. 7 Michael v. Foil, 100 N. C. 178; is Galvin v. Ry., 180 Mass. 587; 6 Am. St. Rep. 577; 6 S. E. 264. 62 N. E. 961. Contra, on the theory 8 Post v. Gilbert, 44 Conn. 9. that this is a contractual term, fl Becker v. Knudson, 86 Wis. 14; Atchison, etc., Ry. v. Vanordstrand, 56 N. W. 192. 67 Kan. 386; 73 Pac. 113. 10 Johnson v. Elmer. 94 Tex. 168; THE PAEOL EVIDENCE RULE. 1853 of suit for money loaned in a criminal action included also a settlement of suit for a breach of promise. ^*^ A note which, on its face recites that it is for services rendered by a payee as attorney may be shown to be supported by a promise of the payee to attend to the interests of the maker of a note in a specified estate.^^ So the consideration of a note may be shown to be a renewal of a j)rior note/* The consideration for a con- veyance may be shown to be the permission by the grantee to the grantor to gi'ow wheat on a part of the land conveyed.^^ So the real consideration may be shown to be the release of a guarantor^" or of an obligor upon a note.^^ Where A conveyed realty to B in payment of a debt, but A, in order to prevent trouble with his relatives, inserted a money consideration of $2,800, and induced B to advance him that amount by a promise to refund it later, B may show the real transaction.^^ If an instrument purports to be " for value received " the actual consideration may be shown. Thus a written guaranty of a note, purporting to be " for value received " may be shown to be in consideration of an agi'eement to forbear suit.^^ If a nominal valuable consideration is shown in the instrument, the real consideration may be shown, as where the consideration is one dollar,"* or one dollar and other considerations,"^ or five dol- lars and love and affection.^*' So if a written contract shows on its face that it is divisible, it may be shown that the actual consideration was for one of the promises only.^^ This rule 16 Schubkagel v. Dierstein, 131 21 Timmier v. Liles, 58 S. C. 284; Pa. St. 46; 6 L. H. A. 481; 18 Atl. 36 S. E. 652. 1059. 22 Stone v. Minter, 111 Ga. 45; 17 Jones V. Rhea, 122 N. C. 721; 50 L. R. A. 356; 36 S. E. 321. 30 S. E. 346. 23 Citizens', etc., Co. v. Babbitt, 18 Merchants' National Bank v. 71 Vt. 182; 44 Atl. 71. Vandiver, 104 Ga. 165; 30 S. E. 24 wdf v. Haslach, 65 Neb. 303; 650. 91 N. W. 283. 19 Breitenwischer v. Clough, 111 25 Wright v. Stewart, 19 Wash. Mich. 6; 66 Am. St. Rep. 372; 69 179; 52 Pac. 1020. N. W. 88. 26 Barnes v. Black, 193 Pa. St. 20 Martin v. Grocery Co. (Tex. 447; 74 Am. St. Rep. 694; 44 Atl. Civ. Ap.), 66 S. W. 212; writ of 550. error denied (Tex.), 67 S. W. 883. 27 piatt v. Scribner, 18 Ohio C. C. 452. 1854 PAGE ON CONTKACTS. has been extended to a case where an aggregate sum as consid- eration for several covenants may be shown to be made up of a separate amount for each, and thus failure of consideration for a note given may be shown.^* §1204. Oral contract as inducement. The principle that the consideration may be shown has been extended to cases where an oral contract has been proved as a consideration for the written contract, or as the courts some- times put it, as an inducement for the written contract/ On this theory an oral contract to advance money may be shown as an inducement for a written contract to gather, cure and deliver a crop of raisins at a certain price; and breach of the oral contract may discharge the written contract.^ In an action on a note an oral contract to enforce payment by exhausting security in the form of a conveyance of realty in trust before proceeding against the maker of the note may be shown.^ The holding in this case rests on the theory that it is fraud to obtain a note under such an agreement and then enforce it literally. The parol evidence rule has a peculiar meaning in Pennsylvania, however,* being at law substantially the same as in suits in equity for reformation.^ So an oral contract to give certain logs as security may be shown as inducement for a writ- ten contract of sale of such logs.® So an oral contract by an owner of realty to put in a side track may be shown as an inducement for a written contract to build. ^ So, in Pennsyl- 28 Field V. Austin, 131 Cal. 379; 580; 68 Am, St. Hep. 70; 55 Pac. 63 Pac. 692. 406. 1 Langley v. Rodriguez, 122 Cal. 3 Clinch Valley, etc., Co. v. Will- 580; 68 Am. St. Rep. 70; 55 Pac. ing, 180 Pa. St. 165; 57 Am. St. 406; In re Sutch's Estate, 201 Pa. Rep. 626; 36 Atl. 737. St. 305 ; 50 Atl. 943 ; Clinch Valley, * See eases cited in notes 5-8 this etc., Co. V. Willing, 180 Pa. vSt. 165; section. 57 Am. St. Rep. 626; 36 Atl. 737; 5 Thomas v. Loose, 114 Pa. St. Huckestein v. Kelly, etc., Co., 152 35; 6 Atl. 626. Pa. St. 631; 25 Atl. 747; Ferguson 6 Ferguson v. Rafferty, 128 Pa. V. Rafferty, 128 Pa. St. 337; 6 L. St. 337; 6 L. R. A. 33; 18 Atl. 484. R. A. 33; 18 Atl. 484. 7 Huckestein v. Kelly, etc., Co., 2 Langley v. Rodriguez, 122 Cal. 152 Pa. St. 631; 25 Atl. 747. THE PAEOL EVIDENCE RULE. 1855 vania, an oral contract giving vendee the right to counter- mand a written order may be shown.* So if A becomes surety for B to C an oral contract of agency may be shown as consid- eration for the written bond, no consideration being expressed.® So where a contract for judgment and stay of execution until the next term of court was entered into, an oral agreement that all matters in litigation up to the date of the contract were included and that a rent for the future was agreed upon may be shown.^" So under a deed an oral contract that the grantor should have the right to sow a crop of grain on the land con- veyed may be shown." So an oral contract to bequeath a cer- tain amount may be shown as consideration for a written release.^^ So under a written contract to donate rent of a building to be used by a corporation to be formed, an oral con- tract that rent in arrears should be paid before the corporation was formed may be shown. ^^ Evidence of an oral contract by way of inducement must be clear. ^* Many of the cases which rest on this principle may be ex- plained on other theories. In some the written memorandum is incomplete. In others the consideration is recited as a fact. After eliminating these cases, however, there are a number left which really support the principle laid down. If these cases are correctly decided there is little left of the parol evidence rule. It does not apply to recitals of fact. If, further, it is held not to apply to contractual terms which form part of the consideration, it is hard to imagine any term of an oral con- tract to which it would apply. The principle seems contrary to that which forbids oral evidence of the consideration to vary contractual terms,^^ or to add to a complete contract.^^ 8 Thomas v. Loose, 114 Pa. St. tion of a crop already growing; and 35 ; 6 Atl. 626. hence inconsistent with the deed ) . 9 Singer Mfg. Co. v. Forsyth, 108 12 Andrews v. Brewster, 124 N. Y. Ind. 334; 9 N. E. 372. 433; 26 N. E. 1024. 10 Bonney v. Morrill, 57 Me. 368. is Chase v. Creamery Co., 12 S. D, 11 Breitenwischer v. Clough, 111 529; 81 Pac. 951. Mich. 6; 66 Am. St. Rep. 372; 69 ^* In re Sutch's Estate, 201 Pa. N. W. 88 (distinguishing Addams V. St. 305; 50 Atl. 943. Watkins, 103 Mich. 431 ; 61 N. W. ^^ See § 1205. 774, as a contract for the reserva- 10 See § 1189. 1856 PAGE ON CONTRACTS. §1205. Consideration as contractual term. If the consideration appears in the written contract as ft contractual term thereof, an oral agreement whereby an addi- tional or other consideration is provided for violates the parol evidence rule and is unenforceable.^ Thus in a contract for the sale of land, if it specifies the amount which the vendee agrees to pay, an oral contract Avhereby he agrees to pay more is un- enforceable.^ So in other contracts of sale, where the amount to be paid is agreed upon as a contractual term, oral contracts for the assumption of the vendor's debts in addition to the amounts specified in the contract, are unenforceable.^ So where A agreed to sell B quinine at fifty-nine cents an ounce, an oral agreement whereby A agreed to advance the price to sixty-one cents per ounce, and to send out trade circulars an- nouncing such advance is unenforceable.* Where an injured employee signs a release of damages in consideration of pay- ment to him of twenty-five dollars, and all the expenses of phys- icians and hospital, an oral agreement that the twenty-five dol- lars was a mere gratuity, and that accordingly the only consid- eration was the payment of the expenses for physicians and hospital is unenforceable.^ So in an agreement for the sale of stock at a certain price per share an oral agreement that the vendee should pay only one fourth of the amount set forth in the written contract is unenforceable.** So where a bill of sale sets forth the price to be paid for stock an oral contract to fur- nish such certificates and proofs of pedigree of such stock as 1 Schneider v. Turner, 130 111. 28 ; 3 Thompson v. Bryant, 75 Miss. 6 L. R. A. 164; Indianapolis Union 12; 21 So. 655; Walter v. Bearing Ry. V. Houlihan, 157 Ind. 494; 60 (Tex. Civ. App.), 65 S. W. 380. N. E. 943 ; City of Paris v. Lilleston 4 Engelhorn v. Reitlinger, 122 N. (Ky.), 60 S. W. 919; Cassard v. Y. 76; 9 L. R. A. 548; 25 N. E. McGlannan, 88 Md. 168; 40 Atl. 297. 711; Grier v. Ins. Co., 132 N. C. s Indianapolis Union R. R. v. 542; 44 S. E. 28; Kahn v. Kahn, Houlihan, 157 Ind. 494; 54 L. JR. A. 94 Tex. 114; 58 S. W. 825; Buena 787; 60 N. E. 943. Vista Co. V. Billmyer, 48 W. Va. 6 Libby v. Spring & Land Co., 6T 382; 37 S. E. 583. N. H. 587; 32 Atl. 772. 2 Trice V. Yeoman, 60 Kan. 742; 57 Pac. 955. THE PAEOL EVIDENCE RULE. 1857 would enable the vendee to have them registered is unenforce- able/ So where a written contract shows that the considera- tion was to be determined in the future according to the amount of work done, but was " not to exceed five hundred dollars per week," an oral contract fixing the amount of compensation is unenforceable.^ So where a contract and conveyance of a right of way shows the consideration, an oral contract for an under- crossing, as an additional consideration, is unenforceable.^ And so where A sold certain patents to B, and guaranteed their validity, and B was to pay A certain royalties thereon, a subse- quent written contract whereby, in lieu of such royalties, A is to receive a lump sum cannot be shown to rest in part upon an oral contract whereby B releases A fror" hi^ ^ont^e^^ guar- anteeing the validity of such patents.** So oi-a! evidence cannot be considered to show a lower rent than that specified in a lease." §1206. Rule does not apply to strangers to contract. The parol evidence rule applies only between the parties to the contract and those claiming under them, and is limited to actions upon the contract.^ A stranger to the instrument may 7McFarland v. McGill, 16 Tex. County, 83 Ala. 826; 3 Am. St. Rep. Civ. App. 298; 41 S. W. 402 (citing 746; 3 So. 755; Dunn v. Price, 112 Pickett V. Green, 120 Ind. 584; Penn- Cal. 46; 44 Pac. 354; Dickey v. sylvania Co. v. Dolan, 6 Ind. App. Grice, 110 Ga. 315; 35 S. E. 291; 109). Central Coal & Coke Co. v. Good, 8 United Press v. Press Co., 164 — Ind. Ter. — ; 64 S. W, 677; Ham- N. Y. 406; 53 L. R. A. 288; 58 N. lin v. Simpson, 105 la. 125; 44 L. E. 527. R. A. 397; 74 N. W. 906; Living- 9 Schrimper v. Ry. (la.), 82 N. ston v. Stevens, 122 la. 62; 94 N. W. W. 916. 925; Livingston v. Heck, 122 la. 74; loSandage v. Mfg. Co., 142 Ind. 94 N. W. 1098; Provident, etc., So- 148; 51 Am. St. Rep. 165; 34 L. R. ciety v. Johnson, — Ky. — ; 72 S. A. 363; 41 N. K 380. W. 754; Edwards v. Ballard, 14 11 Merchants' State Bank v. Ruet- B. Mon. (Ky.) 289; Baker v. Briggs, tell, — N. D. — ; 97 N. W. 853. 8 Pick. (Mass.) 122; 19 Am. Dec. 1 Central, etc., Co. v. Good, 120 311; Wilson v. Mulloney, —Mass. Fed. 793; 57 C. C. A. 161; British, — ; 70 N. E. 448; Witzel v. Zuel, etc., Co. V. Cody, 135 Ala. 662; 33 90 Minn. 340; 96 N. W. 1124; Pfei- So. 832; Walker v. State. 117 Ala. fer v. Ins. Co., 62 Minn. 536; 64 42; 23 So. 149; Coleman v. Pike N. W. 1018; First National Bank 117 1858 PAGE ON CONTRACTS. introduce extrinsic evidence to contradict it, or to show the real intention of the parties;^ and so may a party to the con- tract in an action between himself and a stranger thereto.^ So a stranger to the instrument cannot invoke the rule to pre- vent the other party to the action from introducing extrinsic evidence to contradict the written contract* Thus a third person suing for personal injuries due to negligence may show by extrinsic evidence that the relation between the parties to a written contract is that of master and servant, though on the face of the written contract the latter is an independent con- tractor.^ Thus, as between a bank and an attaching sheriff, the bank may show an oral agreement with the depositor, whose funds are sought to be attached, that such deposits should be applied to the payment of a note of the depositor's not yet due.® So A gave a check on a bank in which he had no funds subject to check. The holder of the check neglected to present it for payment, and the bank failed soon after. In an action between the holder of the check and A, A was allowed to show that he had made a special deposit for which he had received a certifi- cate of deposit, and that by oral agreement between himself and the bank checks drawn by him were to be paid out of such special deposit, though not ordinarily subject to check.'^' So V, Tolerton (Neb.), 97 N. W. 248; 207; 31 C. C. A. 477; Coleman v. Crockett v. Miller (Neb.), 96 N. W. Pike County, 83 Ala. 326; 3 Am. St. 491; Roberts v. Bank, 8 N. D. 474; .Rep. 746; 3 So. 755; Tyson v. Post, 79 N. W. 993; Clapp v. Banking 108 N. Y. 217; 2 Am. St. Rep. Co., 50 0. S. 528; 35 N. E. 308; 409; 15 N. E. 316; Imperial Ins. Schuler v. Bank, 13 S. D. 188; 82 Co. v. Dunham, 117 Pa. St. 460; 2 N. W. 389; Myers v. Taylor, 107 Am. St. Rep. 686. Tenn. 364; 64 S. W. 719; Kahle v. « Roberts v. Bank, 8 N. D. 474; Stone, 95 Tex. 106; 65 S. W. 623; 79 N. W. 993. Oriental Investment Co. v. Barclay, s Powell v. Construction Co., 88 25 Tex. Civ. App. 543; 64 S. W. Tenn. 692; 17 Am. St. Rep. 925; 13 80; Olmstead v. Ry., — Utah — ; S. W. 691. 76 Pac. 557; Elliott v. S. S. Co., e Schuler v. Bank, 13 S. D. 188; 22 Wash. 220; 60 Pac. 410. 82 N. W. 389. aSigua Iron Co. v. Greene, 88 7 Hamlin v. Simpson, 105 la. 125; Fed. 207; 31 C. C. A. 477; Bruce 44 L. R. A. 397; 74 N. W. 906. v. Lumber Co., 87 Va. 381 ; 24 Am. Contra, Baer's Appeal. 127 Pa. St. St. Rep. 657; 13 S. E. 153. 360; 4 L. R. A. 609, where an ad- 3 Sigua Iron Co. v. Greene, 88 Fed. ministrator who had deposited THE PAROL EVIDENCE RULE. 1859 in an action between an agent of one of the parties to a written contract and bis principal,^ or the adversary party to tbe con- tract/ or a tbird person/'' extrinsic evidence may be admitted to sbow tbe real understanding. So if an agent is a defendant in a criminal action in wbicb be is cbarged witb embezzlement, be may introduce extrinsic evidence to sbow tbe real contract between bimself and bis principal, and tbus sbow tbat tbe money appropriated by bim was not taken witb criminal intent, tbougb in an action between bimself and his principal, upon the contract of employment, such evidence would have been inad- missible/^ A subsequent holder or assignee of a written con- tract is of course as much bound by tbe parol evidence rule as tbe original party thereto, under whom be claims.^" So if a tbird person bases bis claim upon a contract, and is seeking to enforce it,^^ as where be is seeking to sbow that the written contract was made between the parties thereto for bis benefit,^* the parol evidence rule applies. If a release has been given to one of two joint wrongdoers, tbe other wrongdoer is a stranger thereto, within tbe meaning of the parol evidence rule, though the effect of such release may be to discbarge him.^^ §1207. Parol evidence rule does not apply where existence or validity of contract is in issue. Tbe parol evidence rule presupposes an action based on a valid contract, and between the parties thereto or those claim- money of the estate in a bank, tak- n Walker v. State, 117 Ala. 42; ing a certificate of deposit, was not 23 So. 149. allowed to show a contract between 12 Andrus v. Blazzard, 23 Utah himself and the bank permitting 233; 54 L. R. A. 354; 63 Pac. 888. him to withdraw the money at any is Sayre v. Burdick, 47 Minn. 367; time to relieve himsielf from liabil- 50 N. W. 245; Schneider v. Kirkpat- ity after the bank had failed. rick, 80 Mo. App. 145. sFolinsbee v. Smvyer, 157 N. Y. i* Sehultz v. Bank, 141 111. 116; 196; 51 N. E. 994, 33 Am. St. Rep. 290; 30 N. E. 9 Harvey v. Hpnry, 108 la. 168; 346; Traders' National Bank v. 78 N. W. 850. Water-Power Co., 22 Wash. 467; 61 10 Elliott V. S. S. Co., 22 Wash. Pac. 152. 220; 60 Pac, *10. is O'Shea v. Ry.. 105 Fed. 559; 44 C. C. A. 001. 1860 PAGE ON CONTRACTS. ing under them. If the issue is as to the existence or validity of the contract; the rule by its very terms has no application and extrinsic evidence is necessarily admitted to determine such issue, whether such evidence tends to establish the validity^ or the invalidity^ of the contract in question. Specific instances of the application of this principle will be given in the following sections. §1208. Facts of execution. The so-called parol evidence rule has no application where the issue is whether or not the contract sued upon was entered into, and the evidence offered was for the purpose of showing that no contract was in fact made. Extrinsic evidence is ad- missible to show what took place at the execution of the instru- ment as affecting its validity.^ Indeed, without such evidence a written contract could never be shown to be valid. Thus where A denies that he ever assented to the written contract alleged by B, A may show the oral contract which, as he claims, was the only contract entered into." Evidence is admissible to show that one who is alleged to have signed an assignment of an insurance policy by mark did not sign it, was unable to read and did not know the contents of the assignment.^ So where a written contract is in form an offer by A, accepted by B in writing, it may be shown that B accepted it in writing before A agreed to it or signed it, and hence that it was really iVerzon v. McGregor, 23 Cal. Am. St. Rep. 568; 46 N. W. 724 339; Black v. Ry., Ill 111. 351; 53 Johnson v. Smith, 165 Pa. St. IQ'S Am. Rep. 628; Uhl v. Moorhous, 30 Atl. 675; McCartney v. McCart 137 Ind. 445; 37 N. E. 366; Saf- ney, 93 Tex. 359; 55 S. W. 310 ranski v. Ry., 72 Minn. 185; 75 X. reversing 53 S. W. 388; Hindle v W. 17. Hoi comb, — Wash. — ; 75 Pac. 873 2 Brennecke v. Heald, 107 la. 376; Flowers v. Fletcher, 40 W. Va. 103 77 iSr. W. 1063; Church v. Case, 110 20 S. E. 870; Curry v. Colburn, 99 Mich, 621; 68 IST. W. 424; Reiner Wis. 319; 67 Am. St. Rep. 860; 74 V. Crawford, 23 Wash. 669; 83 Am. N. W. 778. St. Rep. 848; 03 Pac. 516. 2 Brennecke v. Heald, 107 la. 376; 1 Jordan v. Davis, 108 HI. 336; 77 N. W. 1063. Williams v. Hall. 2 Dana (Ky.) 97; 3 wienecke v. Arbin, 88 Md. 182-; Wilbur V. Stoepel, 82 Mich. 344; 21 44 L. R. A. 142; 40 Atl. 709. THE PAROL EVIDENCE EULE. 1861 B's offer.* So if a clause in a written contract executed by an agent makes it subject to the approval of the principal, it may be shown that the principal assented to such contract in ad- vance.^ It has been held that it may be shown that a written contract was a mere formality, and never was to take effect." Thus evidence is admissible to show whether a person whose name appears upon an instrument in a place customary for a witness signs as a witness or as a maker ;^ to show whether one signing a negotiable note on the bank did so before or after delivery, where, if the note were signed before delivery he would be liable as a co-maker f to show whether a person writ- ing his initials upon a contract does so merely to witness an interlineation, or whether he intends his initials to be incorpo- rated in the instrument as a part of the interlineation f to show that one who had signed a promissory note on the back thereof had, before delivery, ordered that his endorsement be erased, and that the transferee knew of such order ;^° to show that a contract which on its face was signed by A on behalf of B, was in fact signed by A on behalf of B and in B's presence, thus satisfying the statute of frauds, which in that jurisdiction, re- quires the authority of an agent, who signs a memorandum to be in writing," or that a w^itness signed after the instru- ment was delivered.^" So if a vote of a corporation is relied on as a written contract oral evidence is admsisible, and indeed necessary, to show Avhether the adversary party ever knew of or accepted such vote.^^ So it may be shown where a bond which recites that it is the obligation of a specified principal and sureties, is signed by the sureties, but not by the principal, that 4 Elastic Tip Co. v. Graham, 174 9 Isliam v. Cooper, 56 N. J. Eq. Mass. 507; 55 N. E. 315. 398; 39 Atl. 760; 37 Atl. 462. . 5 Davis V. Furniture Co., 41 W. lo Gregg v. Groesbeck, 11 Utah Va. 717; 24 S. E. 630. 310; 32 L. E. A. 266; 40 Pac. 202. 6 Olmstead v. Michaels, 36 Fed. n Morton v. Murray, 176 111. 54; 455; 1 L. R. A. 840. 43 L. R. A. 529; 51 N. E. 767 (eon- 7 Aultman & Taylor Co. v. Gun- tract for the sale of realty), derson, 6 S. D. 226; 55 Am. St. Rep. 12 Webster v. Smith, 72 Vt. 12; 837: 60 K w. 8.59. 47 Atl. 101. 8 Bank v. Jeflferson, 92 Tenn. 537; i3 Sears v. R. R.. 152 Mass. 151; 36 Am. St. Rep. 100; 22 S. W. 211. 9 L. R. A. 117; 25 N. E. 98. 1862 PAGE ON CONTRACTS. the sureties intended it to take effect without the principal's signature.^* If the question is as to what the words of the written contract are and if the instrument itself leaves any doubt on this point, extrinsic evidence is not only admissible but necessary. Such evidence is admissible to show when cer- tain interlineations were made/^ or to show when and by whom grantee's name was changed,^® or to show of what words the real contract consisted where certain terms are found to be crossed out and marked " not agreed to."" The parol evidence rule does not prevent one of the parties to a written contract from showing the true date thereof, even if such evidence con- tradicts the recitals of the written instrument.^^ Thus extrin- sic evidence is admissible to show that a sealed contract was delivered at a time subsequent to its date.^^ §1209. Extrinsic evidence to annex condition precedent. If the party against whom relief is sought on a written con- tract concedes that the contract was placed in the possession of the adversary party, but claims that it was taken with the understanding that it was not to go into effect until some other or further event should happen, and that such event has not happened, he is not seeking to vary or contradict the contract, but to show that no contract between the parties ever came into 14 Safranski v. Ry., 72 Minn. 185; Irvine, 51 Cal. 172; Lake Erie, etc., 75 N. W. 17. Ry. V. Charman, 161 Ind. 95; 67 15 Pancake v. Campbell County, N. E. 923; Tribble v. Oldham, 5 J. 44 W, Va. 82; 28 S. E. 719. J. Mar. (Ky.) 137; Shaugnessey 16 Goodwin v. Norton, 92 Me. 532; v. Lewis, 130 Mass. 355; Hinson v. 43 All. 111. Forsdick (Miss.), 25 So. 353; Lex- 17 Tate V. Torcutt, 100 Mich. 308; ington v. Bank, 75 Miss. 1; 22 So. 58 N. W. 993. 291; State v. Moore, 46 Neb. 590,' isOshey v. Hicks, Cro. Jac. 263; 50 Am. St. Rep. 626; 65 N. W. 193; Jayne V. Hughes, 10 Exch. 430; Hall Fisher v. Butcher, 19 Ohio 406; 5.i V. Cazenove, 4 East 477; Steele v. Am. Dec. 436; Parke v. Neeley, 90 Mart, 4 Barn. & C. 272; District of Pa. St. 52; Alexander v. Bland, Columbia v. Iron Works, 181 U. S. Cooke (Tenn.) 431. 453; affirming 15 App. D. C. 198; i9 District of Columbia v. Iron United States v. Le Baron, 19 How. Works, 181 U. S. 453; affirming 15 (U. S.) 73; Merrill v. Sypert, 65 App. D. C. 198. Ark. 51; 44 S. W. 462; Gately v. THE PAROL EVIDENCE RULE. 1863 effect. Evidence of conditions precedent to the taking effect of a written contract is therefore admissible.^ This is merely the rule that an instrument may be delivered to the adversary party to take effect on the happening of a future event, restated in terms of the parol evidence rule." Thus extrinsic evidence may be used to show that a note in the custody of the payee was to take effect only on the happening of some event which never has happened, as between the parties and all but bona fide holders.^ Thus evidence is admissible to show that such note was to take effect only if the horse for whose price it was given should be warranted,* or if the policy of insurance for which it was given should prove satisfactory to the maker of the note f iPym V. Campbell, 6 El. & Bl. 370; Wallis v. Littell, 11 C. B. N. S. 369; Burke v. Dulaney, 153 U. S. 228; Ware v. Allen, 128 U. S. 590; Tug River, etc., Co. v. Brigel, 86 Fed. 818; 30 C. C. A. 415; Hurl- burt V. Duseiibery, 26 Colo. 240; 57 Pac. 860; Bourke v. Van Keuren, 20 Colo. 95; 36 Pac. 882; McFar- land V. Sikes, 54 Conn, 250; 1 Am. St. Rep. Ill; 7 Atl. 408; Price v. Hudson, 125 111. 284; 17 N. E. 817; McCorraick Harvesting Machine Co. r. Morlan, 121 la. 451; 96 N. W. 976; Riechart v. Wilhelm, 83 la. 510; 50 N. W. 19; Beall v. Poole, 27 Md. 645; Adams v. Morgan, 150 Mass. 143; 22 N. E. 708; Wilson v. Powers, 131 Mass. 539; Fulton v. Priddy, 123 Mich. 298; 81 Am. St. Rep. 201; 82 N. W. 65; Westman V. Krumweide, 30 Minn. 313; 15 N. W. 255; Harnickell v. Ins. Co.. Ill N. Y. 390; 2 L. R. A. 150; 18 N. E. 632; Reynolds v. Robinson, 110 X. Y. 654; 18 N. E. 127; Ben- ton V. Martin, 52 N. Y. 570; Sweet V. Stevens, 7 R. I. 375; Bissenger v. Guiteman, 6 Heisk. (Tenn.) 277; Oilman v. Williams. 74 Vt. 327; 52 Atl. 428; Catt v. Olivier. 98 Va. 580; 36 S. E. 980; Reiner v. Craw- ford, 23 Wash. 669; 83 Am. St. Rep. 848; 63 Pac. 516; Curry v. Col- burn, 99 Wis. 319; 67 Am. St. Rep. 860; 74 N. W. 778; Nutting v. Ins. Co., 98 Wis. 26; 73 N. W. 432. " The making and delivering of a writing, no matter how complete a contract according to its terms, is not a binding contract if delivered upon a condition precedent to its becoming obligatory. In such case it does not become operative as a contract until the performance on happening of the condition prece- dent." Cleveland Refining Co. v. Dunning, 115 Mich. 238, 239; 73 N. W. 239; citing Ware v, Allen, 128 U. S. 590; Phelps v. Abbott, 114 Mich. 88. 2 See § 595. 3McFarland v. Sikes, 54 Conn. 250; 1 Am. St. Rep. Ill; 7 Atl. 408; Oilman v. Williams, 74 Vt. 327; 52 Atl. 428; Catt v. Olivier, 98 Va. 580; 36 S. E. 980. 4 Trumbull v. O'Hara, 71 Conn. 172; 41 Atl. 546. 5 Parker v. Bond, 121 Ala. 529; 25 So. '898. See also Mehlin v. Life Association, 2 Ind. Ter. 396; 51 S. W. 1063. 1864 PAGE ON CONTKACTS. that the note was to take effect only if negotiated at a specified place;® that it was to take effect only if the maker did not de- mand by a certain day that it should be redelivered;^ that a written guaranty was conditioned upon the purchase of a cer- tain amount of leather by the party whose credit was guaran- teed;* that an insurance policy was not to take effect until the insured had canceled another policy on the same property in a different company f that a written order for goods was to take effect only if the vendee succeeded in canceling a written order previously given to another person ;^** that a lease of a mining claim was to take effect only if the lessees should be able to obtain a certain amount of money from a third person ;^^ that a contract to sell mining stock was to take effect only on condi' tion that the vendor's agent in another town had not already sold the same stock ;^^ that a note should take effect only if the transaction as part of which it was given was approved by the attorney of the maker ;^^ that a written contract of sale should take effect only if the purchase were ajDproved by the engineer of the vendee ;^* that a note is not to take effect until the maker has an opportunity to examine the property purchased and ac- cepts such property ;^^ or that an insurance policy, temporarily placed in the possession of the insured, but afterwards with- drawn by the agent, is not to take effect unless approved by the insurance company/® Thus evidence is admissible to show that one signed as surety with the understanding that he was to be 6 United States National Bank v. lo Cleveland Refining Co. v. Dun- Ewing, 131 X. Y. 506; 27 Am. St. ning, 115 Mich. 2.38; 73 N. W. 239. Rep. 615; 30 N. E. 501. n Hurlburt v. Dusenbeiy, 26 Colo. TMcFarland v. Sikes, 54 Conn. 240; 57 Pac. 860. 250; 1 Am. St. Rep. Ill; 7 Atl. 12 Reiner v. Crawford, 23 Wash. 408. And see to the same effect, in 669; 83 Am. St. Rep. 848; 63 Pac. a written contract of subscription 516. for stock. Ada Dairy Association v. is Ware v. Allen, 128 U. S. 590. Mears, 123 Mich. 470; 82 N. W. i4 Pym v. Campbell, 6 El. & B. 258. 370. 8 Lennox v. Murphy, 171 Mass. is Burke v. Dulaney, 153 U. S. 370; .50 N. E. 644. 228. » Moore v. Insurance Association, i^ Xutting v. Ins. Co., 98 W'is. 26; 107 Ga. 199; 33 S. E. 65. 73 N. W. 432. THE PAROL EVIDENCE RULE. 1865 liable only if others signed with him/^ In some jurisdictions where the maker has voluntarily put the instrument into the possession of the adversary party he cannot show that it was not to take effect until some other party had signed it, on the theory that an escrow cannot be deposited with the adversary- party.^^ Thus where a deed^® or a mortgage^" has been volun- tarily surrendered to the grantee or mortgagee, it cannot be shown that it was to be inoperative until the happening of a specified event. So evidence is admissible to show that a written subscription for stock in a corporation was not to go into effect until a certain number of persons had signed.^^ If the payee does not know that the surety does not intend to be bound unless others sign the contract, the surety cannot avoid liability to the payee even if the principal debtor de- livered the instrument to the payee in violation of his agree- ment with his surety. This principle applies equally to ne- gotiable notes"^ and to non-negotiable bonds.^^ This is not because of the parol evidence rule, however, but because such facts do not constitute a defense. This principle has been carried so far that a written instrument, purporting to be a " Dair V. United States, 16 Wall. 22 Clark v. Bryce, 64 Ga. 486; (U. S.) 1; Guild v. Thomas, 54 Whitcomb v. Miller, 90 Ind. 384; Ala. 414; 25 Am. Rep. 703; Hud- Micklewait v. Noel, 69 la. 344; 28 speth's Administrator v. Tyler, 108 N, W. 630; Smith v. Moberly, 10 Ky. 520; 56 S. W. 973; Inhabitants B. Mon. (Ky.) 266; 52 Am. Dec. of Readfield v. Shaver, 50 Me. 36; 79 543; Wylie v. Bank, 63 S. C. 406; Am. Dee. 592; Hessell v. Johnson, 41 S. E. 504; Lookout Bank v. Aull, 63 Mich. 623; 6 Am. St. Rep. 334; 93 Tenn. 645; 42 Am. St. Rep. 934; 30 N. W. 209; Hall v. Parker, 37 27 S. W. 1014; Farmers', etc., Bank Mich. 590; 26 Am. Rep. 540; Cut- v. Humphrey, 36 Vt. 554; 86 Am. ler V. Roberts, 7 Neb. 4; 29 Am, Dec. 671. Rep. 371. 23 Carroll County v. Ruggles, 69 18 Findley v. Means, 71 Ark. 289: la. 269; 58 Am. Rep. 223; 28 N. W. 73 S. W. 101 ; Clanin v. Machine Co., 590. " A surety on a bond cannot 118 Ind. 372; 3 L. R. A. 863; 21 defeat his liability thereon by show- N. E. 35, See § 596. ing that it was delivered in viola- 19 Hubbard v. Greeley, 84 Me. tion of agreements between himself 340; 17 L. R. A. 511. and the principal or any other co- 2« Sargent v. Cooley, — N. D. maker, unknown to the party for — ; 94 N, W, 576. whose benefit it was given." Rich- siGilman v. Gross, 97 Wis. 224; ardson v. Bank, 57 0. S, 299, 314; 72 N. W. 885. 48 N. E. 1100. 1866 PAGE ON CONTEACTS. contract of sale, deposited with a third person, has been ^x plained orally as a mere memorandum of the terms on which the vendee could exercise an option to purchase. 21 §1210. Extrinsic evidence to annex condition subsequent. If the party against whom relief is sought concedes that the contract has taken effect, but seeks to add a condition thereto by extrinsic evidence, he is seeking to add to a written contract by extrinsic evidence of the intention of the parties direct. If the contract is complete and is therefore one within the parol evidence rule, such evidence is inadmissible.^ The acceptor of a bill of exchange cannot show that the acceptance was made upon an oral condition.^ But if " executor " is added to the signature of the acceptor, an oral contract that he should be liable only out of the funds of the estate has been held en- forceable.^ If a promissory note is executed and delivered, extrinsic evidence is inadmissible to show a condition subse- quent,* as that it is to be void if the machinery, in payment of which it is given, does not do a specified amount of work in a specified time,^ that the note is given simply to show the amount of unsold goods in the possession of the makers of the note belonging to the payee, and that the note was not to be paid unless the goods were sold,'' or that its payment is oon- 24 Adams v. Morgan, 150 Mass. 2 Burns, etc., Co. v. Doyle. 71 143; 22 N. E. 708. Conn. 742; 71 Am. St. Rep. 2.35; 43 iLevy, etc., Co. v. Kauflfman, 114 Atl. 483. Fed. 170; 52 C. C. A. 126; Mackey s Sehmittler v. Simon, 114 N. Y. V. Magnon, 28 Colo. 100; 62 Pac. 176; 11 Am. St. Rep. 621; 21 N. E. 945; affirming 54 Pac. 907; Bass 162. Dry Goods Co. v. Mfg. Co., 119 Ga. 4 Aultman v. Hawk (Neb.), 95 N. 124; 45 S. E. 980; Stapleton v. Mun- W. 695. roe, 111 Ga. 848; 36 S. E. 428; Mc- 5 Lunsford v. Malsby, 101 Ga. 39; Cormick Harvesting Machine Co. v. 28 S. E. 496. Markert, 107 la. 340; 78 N. W. 33; e Western Mfg. Co. v. Rogers, 54 Gathright v. Improvement Co. Neb. 456 ; 74 N". W. 849. But while (Ky.), 56 S. W. 163; Feld v. Stew- inadmissible as a defense, such a art, 78 Miss. 187; 28 So. 819; Trip- contract has been held available foi lett V. Woodward's Admr., 98 Va. a counter-claim, as a collateral con^ 187; 35 S. E. 455; Hyde v. Bank, tract. Clement Bane & Co. v. 115 Wis. 170; 91 N. W. 230. Houck, 113 la. 504: 85 N. W. 765, THE PAEOL EVIDENCE RULE. 1867 tingent on the existence of an endowment fund ;^ or that the maker of a note is to have an option of surrendering the policy for which the note was given, taking out another policy at a lower rate, and having the note canceled;* or that it is not to be paid if the maker of another note for which this is given should become bankrupt.'' A executed a note payable to B, a business college, and B executed a certificate that A had purchased a scholarship which in terms was assignable and would enter college at a specified date. It was held by a divided court that an oral contract that such note should not be paid if the maker did not attend and could not sell the scholarship could not be shown to defeat recovery upon such note.^^ So a bond to secure an agent's performance of duty can not be shown to be upon oral condition that the obligee of the bond should give immediate notice of the surety of any default by the agent.^^ So a written contract for the sale of hops, cannot be avoided by showing an oral agreement that there should be no sale if the market was not as represented by the vendor.^" So a written contract for the sale of the business, and the payment of a certain sum of money therefor, cannot be avoided by showing an oral agreement that this money should be paid only if the business was successful.^* So a written contract of sale cannot be avoided by showing a contemporaneous oral contract giving the vendee the option to cancel his order in certain contingencies.^* So a contract for procuring a right of way for a railroad cannot be avoided by showing that the contract was to be defeasible if the railroad 7 Trustees of Christian University n Mason, etc., Co. v. Gage, 119 V. Hoffman, 95 Mo. App. 488; 69 S. Mich. 361; 78 N. W. 130. W, 474. 12 Lilienthal v. Brewing Co., 154 sMiddleton v. Griffith, 57 N. J. Mass. 185; 26 Am. St. Rep. 234; 12 L. 442; 51 Am. St. Rep. 617; 31 L. R. A. 821 ; 28 N. E. 151. Atl. 405. 13 Van Arsdale v. Brown, 18 Ohio 9 Central Savings Bank v. O'Con- C. C. 52; 9 Ohio C. D. 488. nor, — Mich. — ; 94 N. W. 11. " Houck v. Wright (Miss.), 23 10 Jamestown Business College So. 422; Hanrahan v. Association, Association v. Allen, 172 N. Y. 291; 66 N. J. L. 80; s. c, 67 N. J. L. 92 Am. St. Rep. 741; 64 N. E. 952. 526; s. c, 68 N. J. L. 730; 48 Atl. 517. 1868 PAGE ON CONTRACTS. company did not bridge a certain river/' So a written contract guaranteeing capacity of a heater cannot be shown by extrinsic evidence to be conditioned on the vendee's building a stone wall under the house where the heater was to be used/^ So a written contract of guaranty cannot be shown to be defeasible if mortgage security for the debt were given/'^ So if a grantee assumes a mortgage debt in the deed to him, he cannot show that this was conditioned on the payment of a certain sum by the grantor to the grantee/^ In all these cases the condition is nothing more than an oral term sought to be incorporated in a complete written contract, or invoked to contradict that part of the contract which has been reduced to writing. It is clearly unenforceable under the parol evidence rule. §1211. Want of consideration, mistake and fraud. Even if the written instrument has been delivered, either party has the right to show any facts which prevent the writing from constituting a valid contract. If this were not so, a written contract would be free from all defenses and outside of all rules which determine the validity of contracts. At the same time, the party who is seeking to uphold the contract has the right to introduce evidence to contradict that offered by the adversary party and to show that the contract is valid. Thus evidence that the contract,^ as a note not in the hands of a hona fide holder;^ or a note and mortgage;^ or a sealed instrument in equity^ is without consideration; or that the contract was entered into by mistake,' either 15 Stanton v R. R., 59 Conn. 272; 28 S. E. 632; Beaty v. Carr, 109 la. 21 Am. St. Rep. 110; 22 Atl. 300. 183; 80 N. W. 326; First National isMouat V. Montague, 122 Mich. Bank v. Felt, 100 la. 680; 69 N. W. 334; 81 N. W. 112. 1057; Bigelow v. Bigelow, 93 Me. "Faulkner v. Gilbert, 61 Neb. 439; 45 Atl. 513. 602; 85 N. W. 843; rehearing re- 3 Raird v. Baird, 145 111. 659; 28 fused, 62 Neb. 126. L. R. A. 375; Anderson v. Lee, 73 18 Woodcock V. Bostic, 128 N. C. Minn. 397; 76 N. W. 24. 243; 38 S. E. 881. 4 Hale v. Dressen, 73 Minn. 277; 1 Brown v. Smedley, — Mich. — ; 76 N. W. 31. 98 N. W. 856. 5 Greer v. Caldwell, 14 Ga. 207; 2 Hawkins v. Collier, 101 Ga. 145; Blanchard v. Kenton, 4 Bibb. (Ky.) THE PAROL EVIDENCE RULE. 1869 as to its terms" or subject-matter/ such as prevents the con- tract from taking effect, or that the contract was entered into because of fraud/ either in the execution/ or the inducement/" does not violate the parol evidence rule and is admissible. However, a breach of contract is not fraud /^ and hence no relief on the ground of fraud can be given against one who breaks an oral term of a contract which, except such term, has been put in the form of a complete written contract/^ Thus under a written contract to carry mails according to a certain schedule, an oral promise to procure a change in such schedule 451; Lindley v. Sharp, 7 T. B. Mon. (Ky.) 248; Murphy v. Trigg, 1 T. B. Mon, (Ky.) 72; Butler v. State, 81 Miss. 734; 33 So. 847; Bryce v. Lo- rillard F. Ins. Co., 55 N. Y. 240; 14 Am. Rep. 249; Welles v. Yates, 44 N. Y. 525; Coles v. Bowne, 10 Paige (N. Y.) 526. 6 Barrie v. Frost, 105 111. App. 187; Atwater v. Cardwell (Ky.), 54 S. W. 960; Gwaltney v. Assurance Society, 132 N. C. 925; 44 S. E. 659; Lord v. Accident Association, 89 Wis. 19; 46 Am. St. Rep. 815; 26 L. R. A. 741; 61 N. W. 293. 7 Bedell v. Wilder, 65 Vt. 406; 36 Am. St. Rep. 871 ; 26 Atl. 589. sAmer v. Hightower, 70 Cal. 440; McCrary v. Pritchard, 119 Ga. 876; 47 S. E. 341; Barrie v. Miller, 104 Ga. 312; 69 Am. St. Rep. 171; 30 S. E. 840; Race v. Weston, 86 111. 91; Vilett v. Moler, 82 Minn. 12; 84 N. W. 452; Howie v. Pratt, — Miss. — ; 35 So. 216; Anderson v. Scott, 70 N. H. 350; 47 Atl. 607; Cass V. Brown, 68 N. H, 85; 44 Atl. 86; Hoitt v. Holcomb, 23 N. H. 535; Mayer v. Dean, 115 N. Y. 556; 5 L. H. A. 540; 22 N. E. 261; Fine V. Stuart (Tenn. Ch. App.), 48 S. W. 371 ; Griffith v. Strand, 19 Wash. 686; 54 Pac. 613. 9 Gore V. Malsby, 110 Ga. 893; 36 S. E. 315; McBride v. Publishing Co., 102 Ga. 422; 30 S. E. 999; Cutler V. Lumber Co., 128 N. C. 477; 39 S. E. 30; Cameron v. Esta- brooks, 73 Vt. 73; 50 Atl. 638. Where the party signing a release was unable to understand its con- tents because of pain. Girard v. Wheel Co., 123 Mo. 358; 45 Am. St. Rep. 556; 25 L. R. A. 514; 27 S. W. 648. As to the existence of the subject-matter. J. G. Shaw Blank Book Co. V. Maybell, 86 Minn. 241; 90 N. W. 392. 10 Barrie v. Miller, 104 Ga. 312; 69 Am. St. Rep. 171; 30 S. E. 840; Dowagiac Mfg. Co. v. Gibson, 73 la. 525; 5 Am. St. Rep. 697; 35 N. W. 603; Sisson v. Kaper, 105 la. 599; 75 N. W. 490; Marston v. Ins. Co., 89 Me. 266; 56 Am. St. Rep. 412; 36 Atl. 389; Rambo v. Patterson, — Mich. — ; 95 N. W. 722; Bauer v. Taylor (Neb.), 96 N. W. 268; Mayer v. Dean, 115 N. Y. 556; 5 L. R. A. 540; 22 N. E. 261; Maute v. Gross, 56 Pa. St. 250; 94 Am. Dec. 62. Contracts within the statute of Frauds: Sale of realty. Gustaf- son V. Rustemeyer, 70 Conn. 125; 66 Am. St. Rep. 92; 39 L. R. A. 644; 39 Atl. 104. 11 See § 99, i2Knowlton v. Keenan, 146 Mass. 86; 4 Am.. St. Hep. 282; 15 N. E. 127. 18T0 PAGE ON CONTRACTS. eannot be treated as fraud/^ The parol evidence rule has, of course, no application to mistake in the expression where re- formation is sought/^ If it did, reformation could never be had under any circumstances. The courts are careful, how- ever, to limit reformation to cases of mistake, fraud and the like, since if by reformation any oral term could be added to the written contract the sole effect of the parol evidence rule would be to drive the parties to equity. ^^ §1212. Illegality. Illegal contracts are unenforceable not because of any desire Du the part of the courts to aid either party thereto, but because ,oublic interests require that they be not enforced. If the parties thereto could make them enforceable by the simple device of putting them in writing, using such words as would conceal or omit the illegal objects intended by them to be accomplished, the rules on the subject of illegality would be of but little use. A-Ccordingly, evidence that tends to show that the written con- tract is illegal,^ as to show that the contract is tainted with usury,^ or is given to compound a felony,^ or that a lease* is in tt?d of prostitution, or tiiat a contract is intended to create a laKnowlton v. Keenan, 146 Mass. Sherman v. Wilder, 106 Mass. 537; 86; 4 Am. St. Eep. 282; 15 N. iG. Detroit Salt Co. v. Salt Co., — 127. Mich. — ; 96 N. W. 1; Martin v. 14 Lawrence County Bank v. Clarke, 8 R. I. 389; 5 Am. Rep. Arndt, 69 Ark. 406; 65 S. W. 1052; 586. Southern, etc., Co. v. Ozment, 13^ 2 Roe v. Riser, 62 Ark. 92 ; 54 Am. X. C. 839; 44 S. E. 681. See Ch. St. Rep. 288; 34 S. W. 534; Dwelle LVII. V. Blackwood, 106 Ga. 486; 32 S. E. isKrueger v. Nicola, 205 Pa. St. 593; Koehler v. Dodge, 31 Neb. 328; 38; 54 Atl. 494. 28 Am. St. Rep. 518; 47 N. W. iMcMullen v. Hoffman, 174 U. S. 913; Cotton States Building Co. v. 639; affirming 83 Fed. 372; 45 L. R. Rawlins (Tex. Civ. App.), 62 S. W. A. 410; 28 C. C. A. 178, which re- 805. versed 75 Fed. 547; Peed v. McKee, s Friend v. INIiller, 52 Kan. 139; 42 la. 689; 20 Am. Rep. 631 ; Friend 39 Am. St. Rep. 340; ,34 Pac. 397. V. Miller, 52 Kan. 139; 39 Am. St. 4 Sprague v. Rooney, 104 Mo. 349; Rep. 340; 34 Pac. 397; Wilhite v. 16 S. W. 505; overruling Sprague Roberts, 4 Dana (Ky.) 172; Gould v. Rooney, 82 Mo. 493, 52 Am. Rep. v. Leavitt, 92 Me. 416; 43 Atl. 17; 383. THE TAEOL EVIDENCE RULE. 18Y1 monopoly,^ or is in violation of the anti-trust statutes,® that a contract to lease a railroad is illegal/ or that a chattel mort- gage* is given to defraud creditors, does not violate the parol evidence rule and is admissible. However, it has been held that it cannot be shown that a note given by a husband to hig wife for her release of dower was a part of an oral conti'act for a collusive divorce.® §1213. Non-compliance witii the statute of frauds. If the contract is within the statute of frauds, extrinsic evidence is admissible to show that other terms than those reduced to writing have in fact been agreed upon, and thus to show that the memorandum does not satisfy the statute.^ Such a contract, proved partly in writing and partly by oral evidence cannot be enforced.^ If, however, a written offer is accepted orally with modifications, the entire writing never took effect as a contract. The parties are, therefore, free to show the con- tract actually made between them.^ Thus a written offer to furnish material and to do work for a lump sum may be shown to have been accepted with the oral modification, assented to by the adversary party, that payment should be made in install- ments.* §1214. Breach and performance. Performance and breach of a contract are questions which necessarily arise after the contract has been entered into. Accordingly, the parol evidence rule does not prevent a party to a contract from showing such breach as amounts to a dis 5 Harding v. Glucose Co., 182 111. ^Irvin v. Irvin, 169 Pa. St. 529; 551; 74 Am, St. Rep. 189; 55 N. E. 29 L. R. A. 292. 577. 1 Fisher v. Andrews, 94 Md. 46 ; 6 Detroit Salt Co. v. Salt Co., — 50 Atl. 407. Mich. — ; 96 N. W. 1. 2 Beyerstedt v. Mill Co., 49 Minn. 7 demons Electrical Mfg. Co. v. 1; 51 N. W. 619. Walton, 173 Mass. 286; 52 N. E. 3 Bruce V. Pearsall, 59 N. J. L. 62 ; 132; 53 N. E. 820. 34 Atl. 982. sHangen v. Hachemeister, 114 N. * Bruce v. Pearsall, 59 X. J. L. 62; Y. 566; 11 Am. St. Rep. 691; 5 L. 34 Atl. 982. R. A. 137; 21 N. E. 1046. 1872 PAGE ON CONTRACTS. charge ; such as failure of consideration/ as of a promissory note not in the hands of a ho7ia fide holder." So the parol evidence rule has no application to evidence tending to show payment.^ §1215. Secondary evidence. The parol evidence rule does not prevent the introduction of secondary evidence to prove the contents of a lost instrument in writing.^ Oral evidence is admissible to contradict such secondary evidence as to the contents of the lost v^^ritten instru- ment.^ However, such evidence must always be limited to the contents of the written instrument. Other e:jtrinsic evidence is governed by the rules that would be applicable if the written instrument were in evidence. If the written instrument sup- posed to be lost is found during trial, further evidence of its contents is inadmissible even if some evidence has already been introduced.^ III. Use of Extrinsic Evidence in Cases "Within the Rule. §1216. Identification of parties. If the written contract shows that some particular parties were intended, but does not show with sufficient accuracy who such parties are, extrinsic evidence is admissible to identify such parties,^ and as will be seen from the cases given evidence of the intention direct may be resorted to. So under a written contract to pay money to a " railroad," extrinsic evidence can 1 Sargent v. Cooley, — N. D. — ; 515; 25 Pac. 187; Magie v. Herman, 94 N. W. 576. 50 Minn. 424; 36 Am. St. Rep. 660; 2Kelley v. Guy, 116 Mich. 43; 74 52 X, W. 909. N. W. 291; Warner v. Shulz, 74 2 Strain v. Fitzgerald, 130 N. C. Minn. 252; 77 K W. 25. 600; 41 S. E. 872. 3 Payment of promissory note. G. 3 Grand Isle v. Kinney, 70 Vt. Ober & Sons Co. v. Drane, 106 Ga. 381; 41 Atl. 130. 406; 32 S. E. 371. i Morrison v. Baeehtold, 93 Md, 1 Western Union Telegraph Co. v, 319; 48 Atl. 926. Collins, 45 Kan. 88; 10 L. R. A. THE PAEOL EVIDENCE RULE. 1873 be used to show what railroad corporation was intended/ So where a written contract purporting on its face to be made between A and B is signed bj A, C, D and B in the order given, it may be shown that C and D sign as sureties for B.^ Where a note is signed by A at the right, and by B at the left, of the instrument, opposite A's signature, B may show that he signed as witness.* So under an instrument " I. O. U. the sum of one hundred sixty dollars which I shall pay on demand to you," the real party intended by " you " may be shown.^ So where a note omits payee's name but recites " value received of him," the payee may be shown.® So under a note " we promise to pay to the order of myself," signed by two persons, the real maker and payee may be shown.'' If the name set forth in the contract is shown not to be the name of the person therein described, extrinsic evidence may be admitted to show who such person is. Thus A took out a policy payable to " Mrs. Kate Hogan, his wife." Evidence was admitted to show that he had a wife, Ellen B. Hogan, and a married sister, Kate Wallace, formerly Kate Hogan ; that the insured could not write and asked a physician to make out the application, and that the latter thought that the insured's wife was named Kate.^ Parties may be identified by extrinsic evidence even if the contract is one required to be proved in writing, or is re- quired to be in writing. Thus extrinsic evidence is admissible to show that in a promise to pay A's debt to " your concern," addressed to " Friend Geo.," the latter was the agent of A's 2 Mansfield, etc., JR. R. v. Brown, s Hogan v. Wallace, 166 111. 328; 26 0. S. 223. 46 X. E. 1136. (From these facts 3 Thompson v. Coffman, 15 Or. the supreme court found that the 631; 16 Pac. 713. wife was the beneficiary intended. 4Aultman, etc., Co. v. Gunder- They rejected, not as inadmissible son, 6 S. D. 226; 55 Am. St. Rep. but as improbable, further evidence 837 ; 60 N. W. 859. of the physician that the insured 5 Kinney v, Flynn, 2 R. I. 319. named the beneficiary "Kate Ho- 6 Barkley v. Tarrant, 20 S. C. gan," that the physician asked if 574; 47 Am. Rep. 853 (even where that was the insured's wife, that in- the note was under seal). sured remained silent, and that toe 7 Jenkins v. Bass. 88 Ky. 397; physician added "his wife.") 21 Am. St. Rep. 344; 11 S. W. 293. 118 •1871 PAGE ON CONTRACTS. creditor, tlie " concern."^ Thus extrinsic evidence is admis< sible to show to whom a mortgage was to be paid/° So where a deed was made to " John Elliott and Amanda Elliott, his wife," evidence is admissible to show that Amanda Elliott, the grantee, was a woman with whom John Elliott was living in unlawful relations, though he had a lawful wife living, named Amanda/^ Where a deed was made to a woman after her mar- riage, and her maiden name was inserted as that of grantee, extrinsic evidence was admissible to show that she was intended as the grantee, and that the gi'antor did not know of her mar- riage/^ Where the Christian name of a grantee is omitted from a deed, extrinsic evidence is admissible to show who the grantee is/^ Under a deed to " Jarrett, Moon & Co.," ex- trinsic evidence was admissible to show whether Jarrett was one grantee and Moon another ; or whether Jarrett Moon was the name of the sole grantee/^ Under a grant to A " as trus- tee," extrinsic evidence is admissible to show for whom he was acting as trustee.^^ §1217. Identification of subject-matter. If the written contract is ambiguous in indicating the sub- ject-matter of the contract, extrinsic evidence is admissible to identify it.^ Thus extrinsic evidence is admissible to show 9 Haskell v. Tukesbury, 92 Me. 551; affirmed (1899), 2 Ch. 309; 551 ; 69 Am. St. Rep. 529 ; 43 Atl. Reed v. Ins. Co., 95 U. S. 23 ; Brad- 500. ley V. Packet Co., 13 Pet. (U. S.) 10 Morgan v. Lake View Co., 97 89; Edwards v. Bender, 121 Ala. Wis. 275; 72 N. W. 872. 77; 25 So. 1010; Moore v. Paving 11 Wolff V. Elliott, 68 Ark. 326; Co., 118 Ala. 563; 23 So. 798; Fol- 57 S. W. 1111. lendore v. Follendore, 110 Ga. 359; i2Scanlan v. Wright, 13 Pick. 35 S. E. 676; Barrett v. Stow, 15 (Mass.) 523; 25 Am. Dee. 344. 111. 423; Baldwin v. Boyce, 152 Ind. 13 Leach v. Dodson, 64 Tex. 185. 46; 51 N. E. 334; Stoops v. Smith, 14 Holmes v. Jarrett, 7 Heisk. 100 Mass. 63; 1 Am. Rep. 85; 97 (Tenn.) 506. (In either case, the Am. Dec. 76; Swett v. Shumway, grantee would take in trust for the 102 Mass. 365; 3 Am. Rep. 471; partnership.) Stoddard Mfg. Co. v. Miller, 107 15 Union Pacific R. R. v. Durant, Mich. 51; 64 N. W. 948; J. G. 95 U. S. 576. Shaw, etc., Co. v. Maybell. 86 Minn. iCowen V. Truefitt (1898), 2 Ch. 241; 90 N. W. 392; Reeves v. Cress, THE PAEOL EVIDENCE RULE. 1875 what is included hj the words " entire estate.'"* It may be shown what " et cetera " includes.^ Thus extrinsic evidence is admissible to identify a debt,* or a note.^ So in a contract to return a " due-bill," if the company did not issue a policy applied for, evidence is admissible to show that the " due-bill " was a note given for the premium of such policy.^ So in a con- tract to assume and pay the " debts " of a firm, it is permitted to show what are the debts of the firm,^ and to show that a debt appearing on the books of the firm is in fact the individual debt of one of the partners.* So in a contract to assume and pay " claims of all persons who have performed labor upon, or furnished materials for us, in or on said property," evidence is admissible to show that claims are included.'' Even in a contract required to be proved by writing, oral evidence can be used to identify " the bills " guaranteed," or an " account " guaranteed.^^ So where a deed is given as security for " money owing," extrinsic evidence is admissible to show what money was owing when the deed was delivered, and that this 80 Minn. 466; 83 N. W. 443; Field V. Munson, 47 N. Y. 221; Harlan County V. Whitney, 65 Neb. 105; 90 N. W. 993; Drexel v. Murphy, 59 Neb. 210; 80 N. W. 813; Hurd v. Eobinson, 11 O. S. 232; Dougherty V. Chestnutt, 86 Tenn. 1 ; 5 S. W. 444; Brown v. Markland, 16 Utah 360; 67 Am. St. Kep. 629; 52 Pac. 597; Noyes v. Canfield, 27 Vt. 79; Hart V. Hammett, 18 Vt. 127; Lynch v. Henry, 75 Wis. 631; 44 N. W. 837. 2 Miles V. Miles, 78 Miss. 904; 30 So. 2. 3 Bagley v. Sugar Co., — La. — ; 35 So. 539. 4 Pay son v. Lamson, 134 Mass. 593; 45 Am. Rep. 348; Manchester V. Bradner, 107 N. Y. 346; 1 Am. St. Eep. 829; 14 N. E. 405; Fitz- patrick v. Commissioners, 7 Humph. (Tenn.) 224; 46 Am. Dec. 76; Fosha V. Prosser — Wis. — ; 97 N. W. 924. 5 McConaughy v. Wilsey, 115 la. 589; 88 N. W. 1101; Bobbins v. Klein, 60 O. S. 199; 54 N. E. 94; Hancock v. Melloy, 189 Pa. St, 569; 42 Atl. 292. 6 Andrews v. Robertson, 111 Wis. 334; 87 Am. St. Rep. 870; 54 L. R. A. 673; 87 N. W. 190. 7 Cannon v. Moody, 78 Minn. 68; 80 N. W. 842. 8 Hanks v. Flynn, 108 la. 165; 78 N. W. 839. (Even under a contract to assume debts of the firm " as shown by the books and invoices of the firm this day.") 9 Brown v. Markland, 16 Utah 360; 67 Am. St. Rep. 629; 52 Pac. 597. 10 Haskell v. Tukesbury, 92 Me. 551; 69 Am. St. Rep. 529; 43 AtL 500. iiWaldheim v. Miller, 97 Wis. 300; 72 N. W. 869. (As to show that it was for future advances.) 1876 PAGE ON CONTRACTS. debt was intended even if incurred after the date of the deed/^ So where two writs of replevin issued for the same property and two replevin bonds are given, evidence is admissible to show which bond was given for which writ/^ So in a sale of peaches to be grown in " sundry orchards," in two counties named,^* or a contract to sell all the timber on " their lands,"^^ evidence is admissible to show what land the parties intended. So in a sale of a certain lot of logs, evidence is admissible to show what logs were intended, and hence that the amount of lumber was overestimated.^^ So evidence is admissible to identify " nine walnut trees."^^ So extrinsic evidence is admis- sible to identify the property referred to in an insurance policy, as to show what was meant by " shed and additions attached,^* or in a policy insuring a " cold storage warehouse," to show that a shed was part of the warehouse.^* Extrinsic evidence is not admissible to show that the property insured was a differ- ent piece of property from that described in the policy, if the action is brought on the ^^olicy."" In a contract for the sale of realty, extrinsic evidence is admissible to show what realty con- forms to the description in the written contract, and thus to show what realty the parties intended to contract for.^^ Ex- 12 Swedish - American National is Cummins v. Ins. Co., 197 Pa. Bank v. Bank, 76 Minn. 409; 79 N. St. 61; 46 Atl. 902. W. 399. ( But evidence to show that i9 Boak Fish Co. v. Assurance Co., the deed was intended to secure ad- 84 Minn. 419; 87 N, W. 932. vances made after its delivery is in- 20 Sanders v. Cooper, 115 N. Y. admissible.) 279; 12 Am. St. Rep. 801; 5 L. R. 13 McManus V. Donohoe, 175 Mass. A. 638; sub nomine. Landers v. 308; 56 N. E. 291. Cooper, 22 N. E. 212. Coti/m, where 14 Ontario, etc.. Association v. the agent wrote the application, Truit Packing Co., 134 Cal. 21 ; 86 describing other property than that Am. St. Rep. 231; 53 L. R. A. 681; insured. Alabama, etc., Ins. Co. v. 66 Pae. 28. And see Reinstein v. Minchener, 133 Ala. 632; 32 So. Roberts, 34 Or. 87; 75 Am. St. Rep. 225. 564; 55 Pac. 90. 21 Tumlin v. Perry, 108 Ga. 520; isDorris v. King (Tenn. Ch. 34 S. E. 171; Ainslie v. Eason, 107 App.), 54 S. W. 683. Ga. 747; 33 S. E. 711; Powers v. 16 Rib River Lumber Co. v. Ogil- Scharling, 64 Kan. 339; 67 Pac. vie, 113 Wis. 482; 89 N. W. 483. 820; Murphy v. Robinson, 50 La. 17 Carpenter V. Medford, 99 N. C. Ann. 213; 23 So. 323; Hurley v. 495; 6 Am. St. Rep. 535; 6 S. E. Brown, 98 Mass. 545; 96 Am. Dec. 785. 671; Waring v. Ayres, 40 N. Y. THE PAROL EVIDENCE RULE. 1877 trinsic evidence is admissible to show the actual boundaries of the tract in question,^" as to show what is meant by the " point " of a cliff, and " thence with the cliff."^^ So in a contract to sell *^ coal in the northern hill as far as the center," extrinsic evi- dence is admissible to show the hill on grantor's land intended by this contract."* So, if land is described by its ownership, and approximate, though not exact, location,^^ as where in a contract of sale the name of the owner is given and it is said to front on Waters Road,^'' or by its popular name,"^ extrinsic evidence is admissible to show what land was intended. Thus under a contract for the sale of a half interest in " Linn Grove Mills and the land thereunto belonging," extrinsic evidence is admissible to identify the land.^^ Under a mortgage of " the quartz mill and lode, formerly owned by " a specified person, extrinsic evidence is admissible to show what property answer- ing to such descri^Dtion was owned by such person. ^^ So in a €ontract to lease a house described by its ownership, and the street on which it is located, extrinsic evidence is admissible to supply the house number.^*' So in a contract whereby A authorized B to sell certain lots, agreeing that when B had sold enough lots to realize five thousand five hundred dollars A would convey to B the remainder of the lots, B could introduce parol evidence to show what lots he had sold, in order to show what the remaining lots were.^^ So under a contract to divert the waters of a given brook, it may be shown that both branches thereof were intended, neither having a name.^" If the descrip- 357; Lee v. Stone, 21 R. I. 123; 42 26 Mohr v. Dillon, 80 Ga. 572; 5 Atl. 717. S. E. 770. (Decided under the Geor 22 Hereford v. Hereford, 131 Ala. gia statute.) 573; 32 So. 620, 651; Stamphill v. 27 Garvey v. Parkhurst, 127 Mich Bullen, 121 Ala. 250; 25 So. 928; 368; 86 N. W. 802. McMaster v. Morse, 18 Utah 21; 55 28 Brown v. Ward, 110 la. 123 Pac. 70. 81 N. W. 247. 23Hall V. Conlee (Ky.), 62 S. W. 29 Hancock v. Watson, 18 Cal «99. 137. 24Lulay V. Barnes, 172 Pa. St. so Bulkley v. Devine, 127 111. 406 331; 34 Atl. 52. 3 L. E. A. 330; 20 N. E. 16. 25Cottingham v. Hill, 119 Ala. si stamets v. Deniston, 193 Pa. St 353; 72 Am. St. Rep. 923; 24 So. 548; 44 Atl. 575. 552; Edwards v. Deans, 125 N. C. 32 Petrie v. Hamilton College, 158 59; 34 S. E. 105. N. Y. 458; 53 N. E. 216. .1878 PAGE ON CONTRACTS. tion in the contract is not suflScient when considered in con- nection with evidence of the ownership and location of the land to identify it, extrinsic evidence is not admissible to show what land the parties intended to contract for.^'^ Such a contract is incomplete on its face, and the identification of the subject- matter does not therefore violate the parol evidence rule. The contract, however, is one controlled by the statute of frauds, which forbids such use of oral evidence. Still less can it be shown that a different tract was intended.^* Identification cannot be made the means of contradiction.^^ §1218. Identification cannot be made means of contradiction. Under a claim of identifying subject-matter, the parties to a contract cannot show by extrinsic evidence that they intended to contract for other and different property from that described in their contract, for this would be a contradiction of the writ- ten contract.^ Nor can the parties shoAV that in addition to the property described in the contract, the other and different property was also contracted for. If the contract concerns personalty, the parol evidence rule forbids such addition. Hence, if a bill of sale is complete on its face, the parties can- not show that by oral contemporaneous agreement other prop- erty was included.^ If the contract concerns realty, such addi- tion would violate not only the parol evidence rule but also the statute of frauds.^ Hence, under a lease, it cannot be shown 33 Gatins v. Angier, 104 Ga. 386; was intended.) Contract for sale of 30 S. E. 876; Ferguson v, Blackwell, realty. Duggan v. Uppendalil, 197 8 Okla. 489; 58 Pac. 647. HI. 179; 64 X. E. 289. Insurance 34 Griffin V.Hall, 115 Ala. 482; 22 policy. Sanders v. Cooper, 115 N. So. 162. Y. 279; 12 Am. St. Rep. 801; 5 L. 35 See § 1218. R. A, 638; sub nomine, Landers t. 1 Town of Kane v. Farrelly, 1«2 Cooper, 22 N. E. 212. 111. 521; 61 N. E. 648. Chattel 2 Becker v. Dalby (la.), 86 N. W. mortgage. Johnson v. Whitfield, 124 314; McEnery v, McEnery (la.), 80 Ala. 508; 82 Am. St. Rep. 196; 27 N. W. 1071; Drexel v. Murphy, 59 So. 406. (Ox described as " one red Xeb. 210; 80 N. W. 813. spotted ox"; as against levy, held 3 See § 747. inadmissible to show that a black ox THE PAROL EVIDENCE RULE. 1879 that premises omitted from the description were included by the prior agreement of the parties.* Furthermore, the legal effect of the contract cannot be con- tradicted^ under giiise of identifying the subject-matter. If the contract, by its terms, is a contract which can be performed by furnishing any property of the grade and quality described in the contract, extrinsic evidence is inadmissible to show that the parties were really contracting for a specific lot of property. Thus in a contract for " one hundred bales of lint cotton," it is not permitted to show that cotton raised by the seller was in- tended.*' So under a contract for the sale of " one hundred head of good fat merchantable hogs,"^ or " eight thousand bushels of ear-corn,"^ extrinsic evidence i-= 'jia'^mi^'^i^^le to show that specific property was contracted fui-. So in n Cuiitract to pay " any and all of the grantor's notes," extrinsic evidence is inadmissible to show that only certain specific notes were in- tended." So if land is conveyed to a railroad " for all legiti- mate railroad purposes," extrinsic evidence is inadmissible to show that cetrain specific purposes were agreed upon.^" So a written contract whereby an actress agrees to " render services at any theaters " for a specified time, cannot be modified by showing an oral agreement that the services were to be in one specified part only.^^ There is some apparent lack of harmony in judicial decision on this question. Thus A agreed to deliver a certain amount of hay to the United States at a certain point. The contract was for hay generally, but both parties knew that the only way that A could obtain hay to furnish at that price was by cutting it in the Yellowstone valley. The United States had all the hay in that valley cut by others. It was 4 Haycock v. Johnston, 81 Minn. 55 N. E. 719; affirming 83 HI. App. f ; 83 N. W. 494. 297. 5 See § 1195. lo Abraham v. R. R., 37 Or. 495; eForsythe Mfg. Co. v. Castlen. 82 Am. St. Rep. 779; 60 Pac. 899. 112 Ga. 199; 81 Am. St. Rep. 28; 37 n Violette v. Rice, 173 Mass. 82; S. E. 485. 53 N. E. 144 (citing Grimston v. T Johnson v. Pierce, 16 0. S. 472. Cuningham (1894). 1 Q. B. 125; 8 Ormsbee v. Machir, 20 O. S. 295. Drumond v. Atty. Gen., 2 H. L. Cas. oMead v. Peabody, 183 111. 126; 837; Nichol v. Godts, 10 Exch. 191). 1880 PAGE ON CONTRACTS. held that A was discharged.^" The admission of these facts was placed on the theory of the admissibility of surrounding circumstances, and not on identification of subject-matter. Contradiction is not permitted under guise of identification of parties. Thus a guaranty addressed to " Crane Bros. Co.," a partnership cannot be shown to be intended for a corporation, of similar name.^^ §1219. Collateral consistent contracts. The rule that a written contract merges all prior and con- temporaneous oral negotiations, applies only to such oral nego- tiations as concern the subject-matter embraced in the written contract.^ Accordingly, a contract collateral to a written com-' plete contract may be shown by extrinsic evidence if not con- tradictory." Thus an oral contract by an actress for the fall and winter may be enforced, though she had made a contem- poraneous written contract for the summer.^ So an oral con- tract to pay commissions on a sale of realty in addition to the price fixed in the written contract,* an oral contract not to sell other lots at less than a given price,^ an oral contract that the vendor shall keep the realty contracted for insured for the benefit of the vendee,^ an oral contract made when a note is given to a bank to allow a deposit in the bank to be credited thereon,^ and an oral contract that the vendee of stone should have a derrick ready to receive the stone and should settle any controversy over the amount of stone furnished, as shown by 12 United States V. Peck, 102 U. S. 552; Quigley v. Shedd, 104 Tenn. 64. 560; 58 S. W. 266. 13 Crane Co. v. Specht, 39 Neb. 3 Drake v. Allen, 179 Mass. 197; 123; 42 Am. St. Eep. 562; 57 [NT. W. 60 N. E. 477. 1015. 4 Hall V. McNally, 23 Utah 606; 1 Grand Forks, etc., Co. v. Tourte- 65 Pac. 724. lot, 7 N. D. 587; 75 N. W. 901. sPvackemann v. Improvement Co.^ 2 Savings Bank V. Asbury, 117 Cal. 167 Mass. 1; 57 Am. St. Rep. 427; 96; 48 Pac. 1081; King v. Dahl, 82 44 N. E. 990. Minn. 240; 84 X. W. 737; Germa- e Keefer v. Ins. Co., 29 Ont. 394; nia Bank v. Osborne. 81 Minn. 272; Parcell v. Grosser, 109 Pa. St. 617; 83 X. W. 1084 ; Brown v. Bowen, 1 Atl. 909. 90 Mo. 184; 2 S. W. .398; Huffman ^ Roe v. Bank, 167 Mo. 406; 67 V. Ellis, 64 Xeb. 623; 90 X. W. S. W. 303. THE PAEOL EVIDENCE EULE. 1881 the tickets given bj vendor before using the stone,® are all of them so far collateral to the written contract as to be enforceable. So an oral contract to extend a lease under certain contingen- cies has been held so far collateral to the lease as to be enforce- able.® So in an action on a note the v^^hole transaction under which the note was given may be shown, and a counterclaim may be based on an oral contract collateral to the note, as on an oral contract to repurchase the stock for which the note was given,^* or to redeem in gold the bank-notes for which the note was given, ^^ or to place certain claims in the hands of the maker of the note to collect on commission.^^ Where a note was de- posited with A as collateral under a written contract, an oral agreement that A should not collect it could not be enforced ; but an agreement that the payee should collect it as agent for A, was held to be a collateral consistent contract, and enforceable.^'* Where A had given B a promissory note, an oral contract whereby B was to collect certain rent for A, and credit upon A's debt, is enforceable.^* Where a note is given,^^ or a bill of exchange drawn,^'' an oral contract that a set-off existing in favor of the maker or bearer was not waived, may be enforced. So, where A bought a draft from B, intending to use it in the purchase of cattle, an oral agreement that if A did not make such use of the draft he could return it to B, and receive credit therefor on his account with B, can be enforced.^^ Where certain securities are deposited under a written contract and 8 Mt. Vernon Stone Co. v. Sheely, 127 ; 48 N. W. 847 ; Jones v. Keyes, 114 la. 313; 86 N. W. 301. 16 Wis. .562. sArmington v. Stelle, 27 Mont. is Bennett v. Tillmon, 18 Mont. 13; 94 Am. St. Rep. 811; 69 Pac. 28; 44 Pac. 80. 115 (under § 2186 of the statutes of ic Bohn Mfg. Co. v. Harrison, 13 Montana). Mont. 293; 34 Pac. 313. loGermania Bank v. Osborne, 81 i7 Collingwood v. Bank, 15 Neb. Minn. 272; 83 N. W. 1084. 118; 17 N. W. 359. (In this ease, 11 Racine County Bank v. Keep, however, while such contract was 13 Wis. 209. enforceable, A had delayed the re- 12 Singer Mfg. Co. v. Potts, 59 turn of the draft an unreasonable Minn. 240; 61 N. W. 23. time, and the drawee had become 13 Jenkins v, Shinn, 55 Ark. 347 ; insolvent in the meantime. A was 18 S. W. 240. therefor not allowed to recover.) 14 Stebbins v. Lardner, 2 S. D. 1882 PAGE ON CONTRACTS. receipt, an oral contract, under whicli other securities are de- posited, is enforceable/^ The cases in which the action was based on a note may however be explained on the theory that the note was not a complete contract/^ Where a written bond has been given for the purchase of realty, an oral contract has been enforced giving the vendee the right to rescind the contract and receive back his bond and mortgage given therefor.^" An oral contract that a building erected by a lessee upon the leased premises, shall be the personal property of the lessee, is so far collateral to a written lease that it can be enforced.^^ Under a contract between two co-owners of realty, whereby one of them agreed to sell his interest in such realty to the other for a speci- fied consideration, an oral agreement that outstanding partner- ship accounts between them should be settled, and the balancfe due from the vendor to the vendee should be applied upon the purchase price, has been held enforceable."" §1220. What contracts are collateral. To enforce the oral contract, even if not inconsistent, it must be collateral to the written contract and not merely a term thereof. The difficulty lies in the application of this rule. Under cover of enforcing collateral consistent contracts the attempt is often made to add oral terms to a complete written contract. Courts which recog-nize the parol evidence rule and the rule as to the collateral consistent contract in language which in the abstract would indicate that they were in perfect harmony, will show remarkable differences of opinion in decid- ing whether the term in question is a collateral contract or a mere term of the written contract. The true test of a collateral contract seems to be that it must be so far unconnected with the written contract that the court must be able to hold that the parties could have concluded their negotiations as embodied in the written contract without reference to or consideration of 18 Blackwood v. Brown, 34 Mich. 4, 21 Rytler v. Faxon, 171 Mass. 206; 19 See § 1197. 68 Am. St. Rep. 417; 50 N. E. 631. 20 Cloud V. Markle, 186 Pa. St. 22 Redfield v. Gleason, 61 Vt. 220; 614; 40 Atl. 811. 15 Am. St. Rep. 889; 17 Atl. 1075. THE PAROL EVIDENCE RULE. 1883 the terms of the oral contract. " Oral testimony will not be admitted of prior or contemporaneovis promises on a subject which is so closely connected with the principal transaction with respect to which the parties are contracting, as to be part and parcel of the transaction itself, without an adjustment of which the parties cannot be considered as having finished their nego- tiations and finally concluded a contract."^ Thus in an action on a note and mortgage, extrinsic evidence was inadmissible to show a contract whereby the mortgagee was to receive board from the mortgagor for life, and at his death the note and mortgage were to be canceled though such contract might be available as a counterclaim,^ and in deciding the case the court pointed out a test for detemiining whether the contract was collateral or not. " A very satisfactory test of the question under consideration will be to suppose this action to have been by defendant against plaintiff for his board as a right inde- pendent of the note, and that Kracke had pleaded as a defense the obligation of Homeyer to board him because of the stipu- lation in the note. The effect would be to so change the note as to make it not only an obligation for the payment of the amount therein stipulated, but an obligation against Homeyer to board the payee of the note during his life or until the note was paid. The right to make such a change in a written con- tract by averments sustained only by verbal proofs, is not open to reasonable discussion."^ One of the English cases that is often cited as a leading case, as recogiiizing the theory of collateral contracts, and as enforcing an oral contract to repair as colla- teral to a written lease, is in reality directly opposed to the latter rule.* When this case first came before the court, it did not appear whether a written lease had been given or not, and the only question decided was whether an oral contract to repair could be enforced or whether the statute of frauds made it 1 Naiipiberg v. Young, 44 N. J. 2 Kracke v. Homeyer, 91 la. 51; L. 331, 342; 43 Am. Rep. 380; 58 N. W. 1056. cited and followed in McTague v. 3 Kracke v. Homeyer, 91 la. 51, Finnegan, 54 N. J. Eq. 454; 35 Atl. 53; 58 N. W. 1056. 542. 4Angell v. Duke, L. R. 10 Q. B. 174. 188-i PAGE ON CONTRACTS. unenforceable. The court very proiDcrly held that the statute of frauds did uot affect the contract.^ When the case was finally heard on its merits, it appeared from the evidence, that a written lease had been given. The oral contract to repair was held unenforceable under the parol evidence rule.*^ The rule allowing collateral oral contracts to be enforced is unfor- tunately sometimes confused with the rule allowing oral terms of a contract, part only of which has been reduced to writing by the parties ; and which is on its face not complete to be enforced, and oral terms which are properly enforced under the latter rule have been ascribed to the former. If the dis- tinction between the two rules is noted, cases apparently in conflict may be reconciled. Thus where the contract for the sale of a drug business is complete on its face extrinsic evidence is inadmissible to show an oral contract whereby the seller agreed not to engage in such business thereafter.'^ A deed has l)een held not to merge an oral agreement by the vendor to construct a street if the vendee bought the land conveyed by such deed.^ Where a written lease has been given, an oral agreement whereby the lessor binds himself not to compete with the lessee, can be enforced*^ on the theory that the lease is not complete on its face. Accordingly, the better rule is that if the written contract is incomplete on its face, then by the operation of a different principle, any oral term consistent with the writing may be enforced, while if the contract is complete on its face, and the principle of the collateral consistent contract is invoked, only such contracts as are really collateral to the written contract can be enforced. §1221. Examples of contracts held not to be collateral. Illustrations of oral contracts offered in evidence as collateral to a written contract, but held unenforceable as being really terms of the written contract are by no means uncommon. BAngell V. Duke, L. I?. 10 Q. B. sDrew v. Wiswall, 183 Mass. 554; 174. 67 N. K 6G6. sAngell V. Duke, 32 L. T. 320. » Welz v. Rhodius, 87 Ind. 1; 44 7 Slaughter v. Smither, 97 Va. Am. Rep. 747 ; Leineau v. Smart, 202; 33 S. E. 544. 11 Humph. (Tenn.) 308. THE PAKOL EVIDENCE EULE. 1885 Thus an oral contract to repair a house leased by a written lease/ or to ditch the farm leased,^ or not to build within a certain distance of a rented building,^ are so closely connected with a written lease that they cannot be enforced. The courts are not harmonious on these questions, however. Thus in some jurisdictions an oral contract whereby the lessor agrees to put the premises into safe condition or to make certain repairs,^ or to destroy rabbits which were overrunning the farm,^ or to erect a kitchen on the property leased,*' has in each case been held enforceable though a written lease was given. So a con- tract to have the front street graded and water-mains put in has been held so far collateral to a deed for the land as to be proved by parol.^ So an oral contract that the grantor should not have a right of way over the land conveyed is so far col- lateral to a deed that it may be used to rebut an implied right of way from necessity.^ So an oral contract to repair has been held enforceable though a written contract for the sale of the property had been entered into.^ Under an oral contract be- tween A and a railroad corporation, whereby the railroad was to construct two convenient and necessary crossings over its tracks on A's land, an oral agreement between A and the rail- road as to the kind of crossing to be constructed, was unenforce- able.^** An oral contract was made for distributing the estate of one of the parties among the other parties, his children. Subsequently, two branches of this contract were put in writ- 1 Gulliver v. Fowler, 64 Conn. App. 756 ; Morgan v. Griffith, L. R. 556; 30 Atl. 852; Roehrs v. Tim- 6 Ex. 70. mons, 28 Ind, App. 578 ; 63 N. E. 6 Betts v. Demumbrane, Cooke 481; Lerch v. Times Co., 91 la. 750; (Tenn.) 39. 60 N. W. 611; Grashaw v. Wilson, 7 Durkin v. Cobleigh, 156 Mass. 123 Mich. 364; 82 N. W. 73; How- 108; 32 Am. St. Rep. 436; 17 L. ard V. Thomas, 12 O. S. 201. R. A. 270; 30 N. E. 474. 2Diven v. Johnson, 117 Ind. 512; 8 Lebus v. Boston, 107 Ky. 98; 47 3 L. R. A. 308; 20 N. E. 428. L. R. A. 79; 51 S. W. 609; 52 S. W. 3 Haycock v. Johnston, 81 Minn. 956. 49; 83 N. W. 494, 1118. 9 Manning v, Jones, Busb. (N. C.) 4Hines v, Wilcox, 96 Tenn. 148; 368. 54 Am. St. Rep. 823; 34 L. R. A. lo Martin v. R. R., 48 W. Va. 542; 824; 33 S. W. 914. 37 S. E. 563. sErskine v. Adeane, L. R. 8 Ch. 1886 PAGE ON. CONTKACTS. ing, and the written contract appeared npon its face to be com- plete. The remaining oral terms were held to be nnenforce- able.^^ A written contract was entered into to compromise a judgment for $17,000 upon payment of $5,000, the considera- tion for the reduction being expressed in the written contract to be one dollar " and for the further consideration of the relation of myself and family to P. Rehill and Elizabeth Rehill his wife," Rehill being the judgment debtor. A collateral oral contract that in consideration of such settlement the judgment creditor's wife, who had been brought up by the Rehills, should be their heir and devisee at their death, was unenforceable.^^ Where A had made a contract with B to cut certain timber growing on B's land, and to haul it to a certain stream at a distance from B's land, A could not show an oral agreement whereby B was to furnish a right of way for a tramway from his land to the stream.^^ Thus, where an inventor makes a written assignment of his patents to the government, in consid- eration of one dollar and other considerations, a collateral oral contract that the assignor shall be employed by the government as long as his invention is used, and that the government shall pay a reasonable compensation for the use of his patent, cannot be enforced.^* So under a written contract for the sale of a business an oral contract not to compete cannot be shown.^^ So under a contract of insurance, an oral provision for arbitra- tion cannot be shown.^'' So under a written contract of adoption, complete on its face, an oral contract to devise or bequeath prop- erty to the child adopted cannot be shown.^^ §1222. Collateral inconsistent contracts. If the collateral contract is inconsistent with the written contract, it cannot be enforced even if it is really collateral, and 11 McEnery v. McEnery, 110 la. i^Zanturjian v. Boornazian, — 718; 80 N. W. 1071. R. 1. — ; 55 Atl. 199. i2McTague v. Finnegan, 54 N. J. le Rutter v. Ins. Co., 138 Ala, 202; Eq. 454; 35 Atl. 542. 35 So. 33. 13 Sutton v„ Lumber Co. (Ky.), " Brantingham v. Huff, 174 N. Y. 44 S. W. 86. 53; 95 Am. St. Rep. 545; 66 N. E. i4McAleer v. United States, 150 620. U. S. 424. THE PAROL EVIDENCE KULE. 1887 hence otherwise enforceable.^ Thus an oral contract, collateral to a written contract and changing the time fixed therein for performance, is unenforceable, as an oral contract to pay to the vendor of realty two hundred dollars on the execution of the written contract," an oral contract changing the time for making repairs where the written contract provided for making repairs and delivering possession at a specified time,^ an oral contract that a note, on its face payable generally, should be paid out of certain specified funds,* or to credit on a note given, a sum in the event of the breach of another contract,^ or an oral contract to conform to usage as to payment under a written building contract, where, no time for payment being specified, the payment was in legal effect due only on completion of the building.'' So one who signs a note as surety cannot show an oral contract whereby the maker agreed to take a mortgage from the principal debtor as further security and to enforce such mortgage before proceeding against the surety.^ So an oral agreement that the vendor will procure and file for record a patent for certain land wdiich he has contracted to sell by written contract, within sixty days from the date of such con- tract, cannot be enforced where the contract merely requires the vendor to furnish a good abstract and a warranty deed.^ An alleged collateral contract is as unenforceable when inconsistent with the legal effect of the written provisions as when it is inconsistent with express provisions. Under a written con- tract of sale, the legal effect of which was to pass title upon delivery, a collateral oral contract that the vendee should test 1 Keith V. Parker, 115 Fed. 397; 2 Walker v. Mack, 129 Mich. 527; Adams v. Turner, 73 Conn. 38; 46 89 N. W. 338. Atl. 247; Younie v. Walrod, 104 la. s Tripp v. Smith, 180 Mass. 122-; 475; 73 N. W. 1021; Kracke v. Ho- 61 N. E. 804. meyer, 91 la. 51; 58 N. W. 1056; 4 Keith v. Parker, 115 Fed. 397. Tripp V. Smith, 180 Mass. 122; 61 5 phelps v. Abbott, 114 Mich. 88; N. E. 804; Phelps v. Abbott, 114 72 N. W. 3. Mich. 88; 72 N. W. 3; Rooney v. e Riddell v. Ventilating Co., 27 Koenig, 80 Minn. 483; 83 N. W. Mont. 44; 69 Pae. 241. 399 ; Daggett v. Johnson, 49 Vt. ^ Anderson v. Matheny, — S. D. 345; Hunter v. Hathaway, 108 Wis. — ; 95 N. W. 911. 620; 84 N. W. 996. 8 Younie v. Walrod, 104 la. 475; 73 N. W. 1021. 1888 PAGE ON COI^TKACTS. the property sold before accepting it, and before acquiring the title, was unenforceable.'' So under a written contract the effect of which is to make a separate complete sale of each installment as delivered, an oral contract providing for redeliv- ery in the event of failure to pay for subsequent installments cannot be enforced.^'* Where A made a contract with B, whereby A was to make application for, and if possible obtain, letters patent for " certain new and useful improvements in hat pouncing, or finishing machines," in certain countries, in consideration of five thousand five hundred dollars to be paid by B to A, B could not show an oral agreement that future improvements were included in addition to those already made by A, nor could he show that the money was to be paid by him only if the improvements made the machines able to pounce hats in the English method/^ IV. Application of Foregoing Principles. §1223. Method of performance. It is sometimes said in very general language that extrinsic evidence is always admissible to show contemporaneous oral agreements as to the method of performing a written contract as long as the evidence does not contradict the terms thereof. The application of this rule in its most general form would go a long way toward annulling the parol evidence rule. In cer- tain cases, its operation is clear. The case in which it un- doubtedly applies is where the written contract is incomplete on its face. Thus if a contract is on its face incomplete, ex- trinsic evidence is admissible to show the manner of payment/ or the character,^ size,^ or quality,* of material to be fur- 9 Van Winkle v. Crowell, 146 U. 167 Mass. 426; 57 Am. St. Rep. S. 42. 466; 46 N. E. 52. loHardwick v. McClurg, — Colo. 2 whatley v, Reese, 128 Ala. 500; App. — ; 65 Pac. 405. 29 So. 606. 11 Adams v. Turner, 73 Conn. 38; sMeader v. Allen, 110 la. 588; 46 Atl. 247. 81 N. W. 799. 1 Block Queensware Co. v. Metz- * Aultman v. Clifford, 55 Minn, ger, 70 Ark. 232; 65 S. W. 929. 159; 43 Am. St. Rep. 478; 56 N. W. Even if the contract is within the 593. statute of frauds. See v. Butler, THE PAEOL EVIDENCE RULE. 1889 nished, or to show how and by whom logs sold are to be meas- ured/ or where railroad ties are to be inspected," or to show where a furnace whose erection is contracted for is to be placed." So where a furnace is sold under a guaranty that it will save a certain per cent of fuel, extrinsic evidence is admissible to show what kind of test is to be made.* So if the written con- tract is incomplete, extrinsic evidence is admissible to show the time of performance,® as the time of payment. ^° If the contract shows that some credit is to be given, evidence is ad- missible to show for what length of time it was given,^^ as the time of paying an agent commissions,^^ or the length of time for which the contract is to run,^^ as that it is a contract at will.^* So if no time is fixed in the cojitmct for passing title, extrinsic evidence is admissible to show that title is to be retained until the property is paid for.^^ If the contract is incomplete, evidence is admissible to show the place of pay- ment.^'' In some cases this principle has been applied to notes which did not provide for the place of payment, and extrinsic evidence has been admitted to show an oral agreement fixing the place of payment. ^^ In other cases it has been held that in the absence of a provision in the note fixing a place of pay ment, the law would draw inferences as to such place, which inferences could not be contradicted by extrinsic evidence.^^ Another class of cases, elsewhere discussed, exists where a con- sistent collateral contract is entered into between the parties 5 Gould V. Excelsior Co., 91 Me. 12 Walters v. King, 119 Cal. 172 214; 64 Am. St. .Rep. 221; 39 Atl. 51 Pae. 35. 554. 13 Bankers' Accident Ins. Co. v 6 Havana, etc., Ry. v. Walsh, 85 Rogers, 73 Minn. 12; 75 N. W. 747 111. 58. 14 Real Estate Title Co.'s Appeal TKumberger v. Spring Co., 158 125 Pa. St. 549; 11 Am. St. Rep N. Y. 339; 53 N. E. 3. 920; 17 Atl. 450. 8 Hawley, etc., Co. v. Hooper, 90 is Myers v. Taylor, 107 Tenn. 364 Md. 390; 45 Atl. 456. 64 S. W. 719. sWhatley v. Reese, 128 Ala. 500; le Ebert v. Arends, 190 111. 221 29 So. 606; Richter v. Stock Co., 60 N. E. 211. 129 Cal. 367; 62 Pac. 39. i7 Cox v. Bank, 100 U. S. 704 10 Schaeppi v. Glade, 195 111. 62 ; Blackerly v. Ins. Co., 83 Ky. 574. 62 N. E. 874. -« Moore v. Davidson, 18 Ala. 209. 11 Crowley v. Langdon, 127 Mich. 51; 86 N. W. 391. 119 1890 PAGE ON CONTKACTS. whereby they provide a means for the performance of their "written contract. Thus where A gave B his note, an oral agreement whereby B was to collect certain rents belonging to A and apply them on such note was enforceable/^ So where a note under seal was given, the maker was allowed to show that it was not to be paid until another note given therewith had been collected.^" Beyond these classes of cases the courts should not go. It must be admitted, however, that some authorities permit oral terms to be added to a complete written contract, and in some cases even allow the written terms to be contra- dicted under guise of showing the method of performance. Thus where A had given a note to B, it was held that A could show that A and B had sold to X land owned by A and B, that X had given therefor his note to A, and that the note in litiga- tion, given by A to B and for one half the amount of X's note to A, was to be paid only out of X's note."^ This case, however, is, on this point, contrary to the weight of authority, as such evidence is generally held to contradict the written con- tract. Where A had bought land from B and had given his note therefor, it was held that A could show that the note was payable only after the land was surveyed and that a reduction in the price was to be made proportional to the deficiency in acreage below the estimated amount. ^^ This case may be sus- tained on the theory that a partial failure of consideration was shown. So an oral contract for the payment of a note by saw- ing lumber has been enforced. ^^ So a written contract to deliver a quantity of JDcaches ranging from a maximum to a minimum quantity at vendor's option, to be grown in " sundry orchards " in certain sjDecified county, may be shown by oral evidence to be a contract for the product of certain specific orchards and to be conditioned on the fact of producing a crop on such orchards.^* 19 Stebbins v. Lardner, 2 S. D. 23 Ramsay v. Capshaw, 71 Ark. 127; 48 N. W. 847. 408; 75 S. W. 479. 20 Quin V. Sexton, 125 X. C. 447; 24 Ontario, etc., Association v. 34 S. E. 542. Cutting. 134 Cal. 21; 86 Am. St. 21 Quin V. Sexton, 125 N. C. 447; Rep. 231; 53 L. R. A. 681; 66 Pac. 34 S. E. 542. 28. 22McGee v. Craven, 106 N. C. 351; 11 S. E. 375. THE PAEOL EVIDENCE RULE. 1891 §1224. Agreement as to performance contradicting written con- tract. An oral contemporaneous contract whicli changes the time of performance from that fixed by a complete written contract, cannot be enforced/ Thus an oral contract contemporaneous with the execution of a promissory note, providing for an exten- sion thereof, is unenforceable.^ So, if a note by its terms matures at a certain time, extrinsic evidence of a contem- poraneous contract to renew until the maker's business is in such condition that he does not need the payee's financial assist- ance, is inadmissible.^ So a prior oral agreement not to fore- close a chattel mortgage at maturity is unenforceable.* So a contemporaneous oral contract to renew a bill of exchange can- uot be enforced.^ So where a contract does not fix the time for payment, and accordingly payment is to be made when the contract is performed, an oral contract for payment in advance is unenforceable.^ So where a certificate of deposit, payable in twelve months was given, extrinsic evidence is inadmissible to show that the holder had agreed to present the certificate for payment at the end of six months.'^ So a continuing guarantee " until further notice " cannot be shown to be limited to a period of one year.^ So a written contract of guaranty for consignments made to another during one year, cannot be shown to be limited to the first shipment.® So under a chattel mort- gage an oral agreement that the mortgagor may retain posses- sion of the property until a future time, is inadmissible where, iHarloe v. Lambie, 132 Cal. 133: * Moore v. Howe, 115 la. 62; 87 64 Pac. 88; Allen v. Thompson, 108 N. W. 750. Ky. 476; 56 S. W. 823; Tallmadge 5 New London Credit Syndicate v. V. Hooper, 37 Or. 503, 61 Pac. 349; Neale (1898), 2 Q. B. 487. rehearing denied 37 Or. 514; 61 Pac. 6 Langley v. Rodriquez, 122 Cal. 1127; Edgar v. Golden, 36 Or. 448; 580; 68 Am. St. Rep. 70; 55 Pac. 60 Pac. 2; 48 Pac. 1118. 406; Kistler v. McBride (N. J. 2 Thomas v. Plow Co.. 56 Neb. Eq.), 48 Atl. 558. 383; 76 N. W. 876; Homewood Pec- 7 Citizens' Bank v. Jones, 121 Cal. pie's Bank v. Heckert, 207 Pa. St. 30; 53 Pac. 354. 231; 56 Atl. 431. s Indiana Bicycle Co. v. Tattle, 3 Hall V. Bank, 173 Mass. 16; 73 74 Conn. 489; 51 Atl. 538. Am. St. Rep. 255; 44 L. R. A. 319; o Brann v. Woollacott, 129 Cal. 53 N. E. 154. 107; 61 Pac. 801, 1892 PAGE OlSr CONTRACTS. by the terms of the mortgage, the mortgagee is entitled to the immediate possession.^" If a written contract for sawing logs shows the method of delivery agreed upon, a contemporaneous oral contract for another method of delivery cannot be en- forced/^ §1225. Warranties. A complete written contract cannot be added to by showing a prior or contemporaneous oral warranty.^ Thus, where there was an express warranty that an engine is made of good ma- terial, an oral warranty that it had power to run a certain separator could not be enforced.^ So where there is an express written warranty against breakage, evidence of an oral warranty against defective working is inadmissible.^ So where a written order is given for a fire-proof safe, evidence of a cpntempo- raneous oral warranty is inadmissible, and the language of the order itself does not imply a warranty that the safe is fire proof.* The parties cannot introduce evidence of facts from which a warranty could be implied, where the contract is in writing. Thus they cannot show that the sale was by sample,^ or that an apparatus was sold for a specific purpose.^ The rule forbidding the addition of oral warranties to complete loRobieson v. Royce, 63 Kan. 886; Milwaukee Boiler Co. v. Duncan, 87 66 Pac. 646. (No opinion in of- Wis. 120; 41 Am. St. Rep. 33; 58 ficial report. ) N. W. 232. Contra, Puget Sound, 11 Mead v. Dunlevie, 174 N. Y. etc.. Works v. Clemmons, 32 Wash. 108; 66 N. E. 658. 36; 72 Pac. 465. iSeitz V. Machine Co.. 141 U. S. 2 Nichols v. Crandall, 77 Mich. 510; Wilson V. Cattle-Rranch Co., 401; 6 L. R. A. 412; 43 N. W. 875. 73 Fed. 994 ; 20 C. C. A. 244 ; Me- ^ Dowagiac Mfg. Co. v. Corbit, 127 Cormick Harvesting Machine Co. v. Mich. 473; 86 N. W. 954; rehearing Yoeman, 26 Ind. App. 415; 59 N. E. denied 87 N. W. 886. 1069; Ehrsam v. Brown, 64 Kan. 4 Diebold Safe and Lock Co. v. 466; 67 Pac. 867; Diebold, etc., Lock Huston, 55 Kan. 104; 28 L. R. A. Co. V. Huston. 55 Kan. 104; 28 L. R. 53; 39 Pac. 1035. A. 53; 39 Pac. 1035; D. M. Os- 5 Wiener v. Whipple, 53 Wis. 298; borne & Co. v. Wigent, 127 Mich. 40 Am. Rep. 775; 10 N, W. 433. 624; 86 N. W. 1022; Hallwood Cash 6 McCray, etc., Co. v. Woods, 99 Register Co. v. Millard, 127 Mich. Mich. 269; 41 Am. St. Rep. 599; 53 316; 86 N. W. 833; Thompson v. N. W. 320. Libby, 34 Minn. 374; 26 X. W. 1; THE PAKOL, EVIDENCE RULE. 1893 written contracts, applies to other contracts beside those of sale. Thus in a contract for employing a life insurance agent, and paying him commissions on renewals, an oral guaranty as to the amount of renewals is unenforceable.^ So in an assignment of a mortgage, an oral guaranty that the mortgage was a valid lien on the property is unenforceable.^ So in a written contract for the sale of land, an oral warranty as to the location of an electric railway cannot be enforced.^ So where a written lease has been given, evidence of an oral warranty as to the condition of the property leased, cannot be enforced.^** So an oral war- ranty that a boiler and engine situated on leased property is in good condition, is unenforceable where a written lease has been given. ^^ The admission of evidence of an express oral warranty, which is the same as that which would be implied without such evidence, is not, however, prejudicial error.^^ §1226. Surety. A surety who signs as a joint-maker may show his relation to the instrument in an action thereon between himself and the payee.^ Showing such relationship does not contradict the instrument on which action is brought. However, as such rela- tionship is usually important as between the surety and the payee when the surety has been released by the payee's giving an extension of time to the principal without the consent of the 7 Montgomery v. Ins. Co., 97 Fed. 12 Tufts v. Verkuyl, 124 Mich. 913; 38 C. C. A. 553. 242; 82 N. W. 891. sNally V. Long, 71 Md. 585; 17 1 Compton v. Smith, 120 Ala. 233; Am. St. Rep. 547; 18 Atl. 811. 25 So. 300; Buck v. Bank, 104 Ga. 9 Baker v. Flick, 200 Pa. St. 13; 660; 30 S. E. 872; Daneri v. Gazzo- 49 Atl. 349. la, 139 Cal. 416; 73 Pac. 179; Crad- 10 Stevens v. Pierce, 151 Mass. dock v. Lee (Ky.), 61 S. W. 22; 207; 23 N. E. 1006; McLean v. Youtsey v. Kutz (Ky.), 60 S. W. Nicol, 43 Minn. 169; 45 N. W. 15; 857; Weeks v. Parsons, 176 Mass. York V. Steward, 21 Mont. 515; 43 570; 58 N. E. 157; Hitchcock v. L. R. A. 125; 55 Pac. 29; Naumberg Fraekleton, 116 Mich. 487; 74 N. V. Young, 44 N. J. L. 331; 43 Am. W. 720; Stovall v. Adair, 9 Okla. Rep. 380. 620 ; 60 Pac. 282 ; Faulkner v. Thom- iiNaumberg v. Young. 44 N. J. as, 48 W. Va., 148; 35 S. E. 915; L. 331; 43 Am. Rep. 380; citing Breitengross v. Farr, 100 Wis. 215; Button V. Gerrish, 9 Gush. (Mass.) 75 N. W. 893. 89. 1894 PAGE ON CONTRACTS. surety," or when the jurisdiction of the court is affected by the question of suretyship, the effect of such evidence is to change the legal rights of the parties, though not the legal effect of the contract. Thus where A the real surety signed as maker, B the real borrower appeared as payee, and B endorsed to C the real lender, these facts may be shown where by reason of citizen- ship in different states, the United States courts would not have jurisdiction otherwise.^ So the makers of a note may show that they are all sureties for a principal who never signed at all, and thus show that they are discharged because the payee has released other security.* So a wife who gives a mortgage on her own realty to secure her husband's debt can show that she was surety for him.^ In an action between sureties for contribution even greater latitude is allowed, since the contract between the sureties is scarcely ever in writing, and the action is therefore not between the parties to the written contract. Thus where a note was signed by A, B, C and D, and the word " surety " was added to D's signature, C may show that he, too, was a surety, and, having paid the note, is entitled to con- tribution against C.^ §1227. Drawer. The drawer of a bill of exchange is not protected by a con' temporaneous oral agreement with the payee, exonerating him from liability if the drawee does not honor the draft.^ But where the original draft was lost and the payee so delayed through his agent's negligence as to release the drawer, it was held that the drawer's giving a duplicate draft, to enable the 2 Buck V. Bank, 104 Ga. 660; 30 6 Bulkeley v. House, 62 Conn. 459 ; S. E. 872. 21 L. R. A. 247; 26 Atl. 352. 3 Goldsmith v. Holmes, 36 Fed. i Leadbitter v. Farrow, 5 Maule & 484; 13 Sawyer 526; 1 L. R. A. S. 345; Citizens' Bank v. Millett, 816. 103 Ky. 1; 82 Am. St. Rep. 546; 4 Hoffman v. Habighorst, 38 Or. 44 L. .R. A. 664; 44 S. W. 366; 261; 53 L. R. A. 908; 63 Pae. 610. Pentz v. Stanton, 10 Wend. (N. 5 Price V. Cooper, 123 Ala. 392; Y.) 270; 25 Am. Dee. 558; Biyan 26 So. 238. The Alabama Code § v. Duff. 12 Wash. 233; 50 Am. St. 2529 prohibitinor a wife from becom- Rep. 889; 40 Pac. 936. ing surety for her husband. THE PAROL EVIDENCE RULE. 1895 payee to collect if possible from the drawee, did not revive his liability. Accordingly, an oral contract that the drawer should not be liable on such duplicate draft is enforceable.^ §1228. Indorsement. — Regular indorsement held to be complete contract. Whether a contract of indorsement can be varied by contem- poraneous parol agreement depends on whether it is looked upon as a complete contract. A regular indorsement, that is, an indorsement by one in the chain of title is held in many juris- dictions to be a complete contract, and hence within the parol evidence rule.^ Where this view obtains a parol agreement that an indorsement was without recourse," that indorsement was made only to pass title,^ that the indorser was merely a guarantor,* or a witness,^ or that he indorsed for identification only/ or that he only guaranteed a deficiency after applying 2 Bank v. Farnsworth, 7 N. D. 6 ; 38 L. R. A. 843; 72 N. W. 901. 1 Martin v. Cole, 104 U. S. 30; United States Bank v. Dunn, 6 Pet. (U. S.) 51; Citizens' Bank v. Jones, 121 Cal. 30; 53 Pac. 354; Hately V. Pike, 162 111. 241 ; 53 Am. St. Rep. 304; 44 N. E. 441; Skelton v. Dus- tin, 92 111. 49; Shaw v. Jacobs, 89 la. 713, 719; 48 Am. St. Rep. 411: 21 L. R. A. 440; 55 K W. 333; 56 N. W. 684; Porter v. Grain Co., 78 Minn. 210; 80 N. W. 965; Farwell V. Trust Co., 45 Minn. 495; 22 Am. St. Rep. 742; 48 N. W. 326; Kern V. Von Phul, 7 Minn. 426; 82 Am. Dec. 105; Cliaddoek v. Vanness, 35 N. J. L. 517; 10 Am. Rep. 256; Fas- sin V. Hubbard, 55 N. Y. 465,; River- view Land Co. v. Dance, 98 Va. 239 ; 35 S. E. 720; Citizens' National Bank v. Walton, 96 Va. 435; 31 S. E. 890. 2 Martin v. Cole, 104 U. S. 30; United States Bank v. Dunn, 6 Pet. (U. S.) 51; Citizens' Bank v. Jones, 121 Cal. 30; 53 Pac. 354; Randle V. Coke Co., 15 App. D. C. 357; Courtney v. Hogan, 93 111. 101; Clarke v. Patrick, 60 Minn. 269; 62 N. W. 284 ; Lewis v. Dunlap, 72 Mo. 174; Fassin v. Hubbard, 55 N. Y. 465; Charles v. Denis, 42 Wis. 56; 24 Am. Rep. 383. 3 Iowa Valley State Bank v. Sig- stad, 96 I». 491; 65 N. W. 407. 4 Hately v. Pike, 162 111. 241; 53 Am. St. .Rep. 304; 44 N. E. 441; Howe V. Merrill, 5 Cush. (Mass.) 80; Youngberg v. Nelson, 51 Minn. 172; 38 Am. St. Rep. 497; 53 N. W. 629. 5 Stack V. Beach, 74 Ind. 571 ; 39 Am. Rep. 113; Cochran v. Atchison, 27 Kan. 728; Prescott Bank v. Cav- erly, 7 Gray (Mass.) 217; 66 Am. Dec. 473 ; Bowler v. Braun, 63 Minn. 32; 56 Am. St. Rep. 449; 65 N. W. 124. 6 Alabama National Bank v. Riv« ers, 116 Ala. 1; 67 Am. St. Rep. 95; 22 So. 580. 1896 PAGE ON CONTRACTS. certain securities/ or that he entered into an oral contract of guaranty,^ or that he was a maker,^ is in each case unenforce- able. Even in jurisdictions which hold that a regular indorse- ment is a complete contract, there is a conflict as to whether a contemporaneous oral waiver of demand and notice is enforce- able. ^"^ If waiver of demand and notice is stamped on the back of a note above the signatures of the indorsers, evidence of an oral agreement that demand and notice should not be waived is unenforceable.^^ Even in jurisdictions which hold that a blank indorsement is complete, a memorandum over the indorser's signature may show that some special contract was entered into and that this contract was not completely set forth. Thus a memorandum, " Sold one half this note to A," above the signature of the alleged indorser, may show that the contract was not one of indorsement, but a mere memorandum of A's interest.^^ If the note is non-negotiable the oral agreement under which the promisee who signs as a first indorser would, had the note been negotiable, and another person who signs as a second indorser would, may be enforced.^^ §1229. Regular indorsement held to be incomplete. In other jurisdictions a regular indorsement is treated as an incomplete contract, or as some courts express it, only evidence that some contract has been entered into. Where such view obtains extrinsic evidence is admissible to show the terms of 7 Adams v. Wallace, 119 Cal. 67; Bank v. Kettering, 106 Pa. St. 531; 51 Pae. 14. 51 Am. Rep. 536. That it is not 8 Johnson v. Glover, 121 III. 283; enforceable. Goldman v. Davis, 23 12 N. E. 257; overruling Worden v. Cal. 256; Farwell v. Trust Co., 45 Salter, 90 111. 160. Minn. 495; 22 Am. St. Rep. 742: 9 Finley v. Green, 85 111. 535 ; Vore 48 X. W. 326 ; J^odney v. Wilson, 67 V. Hurst, 13 Ind. 551; 74 Am. Dec. Mo. 125; 29 Am. Rep. 499. 268; Porter v. Grain Co., 78 Minn. "Farmers' Exchange Bank v. 210; 80 N. W. 965. Mining Co., 129 Cal. 263; 61 Pac. 10 That it is. Markland v. Mc- 1077. Daniel, 51 Kan. 350; 20 L. R. A. 12 Hathaway v. Rogers, 112 la. 96; 32 Pac. 1114; Taunton Bank v. 638; 84 N. W. 674. Richardson, 5 Pick. (Mass.) 436; " Young v. Sehon, 53 W. Va. 127; Dye V. Scott, 35 0. S. 194; 35 Am. 62 L. R. A. 499; 44 S. E. 136. Am. Rep. 604; Aunville National THE PAROL EVIDENCE RULE. 1897 the contract.^ Thus a parol contract that the indorsement was without recourse,^ or that the indorser was a joint maker/ is enforceable where this rule obtains. Even where a blank in- dorsement is held to be incomplete a memorandum over the signature may show a complete written contract. Extrinsic evidence of the terms of the contract is then inadmissible.* §1230. Indorsement without recourse. An indorsement without recourse has been held not to be a complete contract.^ Hence, an oral contract relieving the in- dorser for liability even for forgery is enforceable.^ In other jurisdictions an indorsement " without recourse " constitutes a complete contract, and an oral guaranty cannot be shown.^ Under either theory an oral agreement that an indorsement without recourse should have the legal effect of an uncondi- tional indorsement contradicts the terms of the writing and is unenforceable.'* §1231. Irregular indorsers. An irregular indorsement, that is an indorsement by one not in the chain of title, may be explained by parol in many juris- 1 First National Bank V. Crabtree, 3 Barger v. Farnham, 130 Mieh. 86 la. 731; 62 N. W. 559; Ragsdale 487; 90 N. W. 281. V. Ragsdale, 105 La. 405; 29 So. 4 Harrison v. McKim, 18 la. 485; 906; Roads v. Webb, 91 Me. 406; Leary v. Blanchard, 48 Me. 269; 64 Am. St. Rep. 246; 40 Atl. 128; United States National Bank v. Jaster v. Currie, — Neb. — ; 94 Geer, 55 Neb. 462; 70 Am. St. Rep. N. W. 995; Corbett v. Fetzer, 47 390; 41 L. R. A. 444; 75 N. W. Neb. 269; 66 N. W. 417; Holmes v. 1088; (reversing on rehearing, 53 Bank, 38 Neb. 326; 41 Am. St. Rep. Neb. 67; 41 L. R. A. 439; 73 N. W. 733; 56 N. W. 1011; Coffin v. Smith, 266). 128 N. C. 252; 38 S. E. 864; Taylor i Carroll v. Nodine, 41 Or. 412; V. French, 2 Lea (Tenn.) 257; 31 93 Am. St. Rep. 743; 61 Pac. 51. Am. Rep. 609. 2 Carroll v. Nodine, 41 Or. 412; aPritchett v. Hape (Ky.), 51 S. 93 Am. St. Rep. 743; 69 Pac. 51. W. 608. (By statute.) Dickinson s Youngberg v. Nelson, 51 Minn. V. Burke, 8 N. D. 118; 77 N. W. 172; 38 Am. St. Rep, 497; 53 N. W. 279; Cake v. Bank, 116 Pa. St. 264; 629. 2 Am. St. Rep. 600; 9 Atl. 302. 4 Cross v. Hollister, 47 Kan. 652; 28 Pac. 693. 1898 PAGE ON CONTRACTS. dictions/ Thus such indorser may be shown to be a joint maker,^ or the real debtor/ or that a new note secured bj mort- gage was to have been given when the first note was half paid/ or that successive blank indorsers were co-indorsers.^ In othei jurisdictions the law regards the liability of an irregular in- dorser as so clear and certain that oral evidence of the real contract is inadmissible, though there is no harmony among the different jurisdictions as to what that liability is.*' §1232. Purpose of indorsement. As in the case of other assignments of title, the purpose foi* which the indorsement is given may be shown as long as the legal effect of the indorsement is not contradicted.^ Thus an 1 Carter v. Long, 125 Ala. 280; 28 So. 74; Kingsland v. Koepper, 137 111. 344; 13 L. R. A. 649; 28 N. E. 48 ; Fullerton v. Hill, 48 Kan. 558; 18 L. R. A. 33; 29 Pac. 583; Herndon v. Lewis, 175 Mo. 116; 74 S. W. 976; Elliott v. Moreland, — N. J. L. — ; 54 Atl. 224; Ewau v. Brooks-Waterfield Co., 55 O. S. 596; 60 Am. St. Rep. 719; 35 L, R. A. 786; 45 N. 'E. 1094. 2 Commercial National Bank v. Atkinson, 62 Kan. 775; 64 Pac. 617 Richardson v. Foster, 73 Miss. 12 55 Am. St. Eep. 481; 18 So. 573 Young V. Sehon, 53 W. Va. 127 ; 97 -Am. St. Rep. 970; 44 S. E. 136. 3 Witherow v. Slayback, 158 N. Y. 649 ; 70 Am. St. Rep. 507 ; 53 N. E. 681. (So the directors of the in- dorsing corporation are liable by statute for not including such note in their report filed after the note was given but before it fell due.) 4 Fullerton v. Hill, 48 Kan. 558; 18 L. R. A. 33; 29 Pac. 583. 5 Sloan V, Gibbes, 56 S. C. 480; 76 Am. St. Rep. 559; 35 S. E. 408; [citing Phillips v. Preston, 5 How. (U. S.) 278; Graves v, Johnson, 48 Conn. 160; 40 Am. Rep. 162; Holmes v. Bank, 38 Neb. 326; 41 Am. St. Rep. 733; 56 N. W. 1011; Taylor v. French, 2 Lea (Tenn.) 257; 31 Am. Rep. 609]; Brewer v. Woodward, 54 Vt. 581 ; 41 Am. Rep. 857. 6 Indorser — by statute. Spencer V. Allerton, 60 Conn. 410; 13 L. R. A. 806; 13 L. R. A. 806; 22 AtL 778; (cannot be shown to be guar- antor). Second indorser. Temple V. Baker, 125 Pa. St. 634; 11 Am. St. Rep. 926; 3 L. R. A. 709; 17 Atl. 516. (Oral evidence inadmis- sible to ■ show a guarantor and hence liable to payee). Comaker, if indorsement before delivery. Dennis V. Jackson, 57 Minn. 286 ; 47 Am. St. Rep. 603; 59 N. W. 198. (Cannot be shown to be indorser. ) 1 The last qualification of course applies in jurisdictions where an in- dorsement is held to be a complete contract, or else to indorsements in full which show the purpose for which they were given. Lawrence v. Bank, 6 Conn. 521 ; Hazzard v. Duke, 64 Ind. 220; Barker v. Pren- tiss, 6 Mass. 430. THE PAROL EVIDENCE RULE. 1899 indorsement in blank may be shown to be for collection only,^ or as collateral security/ However, a blank indorsement to a bank, credit for the amount of the instrument being given to the indorser, cannot be shown to be for collection only.* If the indorsement shows the purpose of the instrument, however, extrinsic evidence is not admissible to contradict the purpose therein expressed. Thus an indorsement for collection cannot be shown by parol to have been intended as an absolute indorse- ment.^ So " Pay to the order of R. C. O., cashier, for account " of a given bank, shows an indorsement for collection only. Extrinsic evidence is inadmissible to show that the indorsement was an absolute transfer." k §1233. Contract signed by agent. — Evidence to relieve agent from liability. If a written contract with B, executed by A on behalf of X, is signed by A in such form as to bind him personally, the question of the right of the parties to the contract to show that A was the agent of X and that such contract was intended to bind X, depends on the nature of the contract and the purpose for which A's agency is to be shown. If B sues on the contract and A seeks to show that he was agent and X was principal in order to avoid liability, such evidence is inadmissible.^ If A signs his own name, without any addition thereto suggesting agency, the only effect of evidence showing A's agency and thereby relieving A from liability would be to contradict the 2McPherson v. Weston, 85 Cal. 444; 75 N. W. 1088; reversing on 90; 24 Pac. 733; Scammon v. Adams, rehearing, 53 Neb. 67; 41 L. K. A. 11 111. 575; Armstrong v. Bank, 90 439; 73 N. W. 266. Ky. 431; 9 L. R. A. 553; 14 S. W. 6 United States National Bank v. 411. Geer, 55 Neb. 462; 70 Am. St. Rep. 3Hazzard v. Duke, 64 Ind. 220. 390; 41 L. R. A. 444; 75 N. W. 4 Shaw V. Jacobs, 89 la. 713, 719; 1088; reversing on rehearing 53 Neb. 48 Am. St. Rep. 411; 21 L. R. A. 67; 41 L. R. A. 439; 73 N. W. 266. 440 ; 55 N. W. 333 ; 56 N. W. 684. i American Alkali Co. v. Bean, 5 Syracuse Third National Bank v. 125 Fed. 823; Vail v. Ins. Co., 192 Clark, 23 Minn. 263; United States 111. 567; 61 N. E. 651; Hancock National Bank v. Geer, 55 Neb. 462; v. Fairfield, 30 Me. 299. 70 Am. St. Rep. 390; 41 L. R. A. 1900 PAGE ON CONTRACTS. terms of the contract. This rule applies alike to negotiable contracts such as notes" and drafts, so that the agency of an indorser who signs his individual name cannot be shown to relieve him/ and to non-negotiable contracts/ such as a contract of sale/ a contract of warranty/ or a contract on behalf of corporation to be formed, signed so as to bind the promoters individually.^ §1234. Addition of word "agent" held not to make contract ambiguous. If a contract is signed by A, with the addition to his signa- ture of the word " agent " or some other word importing agency, but the language of the contract is such as to bind A personally, A is held personally liable in many jurisdictions, and the con- tract is not looked upon as ambiguous. Where this view pre- vails, A cannot introduce extrinsic evidence that he was acting solely on behalf of his principal to relieve himself from liabil- ity.^ This rule applies to negotiable contracts. Thus where a note was sigTied " Mattress Co., John Knapp. Pt.," and begins " we promise,"" or where a note begins " we promise," and is signed, " Canning Co., H. TTessel Sec'y., Hartman Pres.,"^ or begins " I promise," and is sigTied " A, agent,"* or begins " we jointly and severally promise to pay to X in official capacity," and is signed by the individual names of the makers with the 2 Sparks v. Despatch Co., 104 i Moragne v. Machine Works, 124 Mo. 531; 24 Am. St. JRep. 351; 12 Ala. 537; 27 So. 240; Lawrence L. R. A. 714; 15 S. W. 417; Shuey County Bank v. Arndt, 69 Ark. 406; V. Adair, 18 Wash. 188; 63 Am. St. 65 S. W. 1052. Rep. 879; 39 L. R. A. 473; 51 Pac. 2 Matthews v. Mattress Co., 87 la. 388. 246; 19 L. R. A. 676; 54 N. W. 225. 3 Condon v. Pearce. 43 Hd. 83. s^cCandless v. Canning Co., 78 4Cliandler v. Coe, 54 X. H. 561. la. 161; 16 Am. St. Rep. 429; 4 L. sBulwinkle v. Cramer, 27 S. C. R. A. 396; 42 N, W. 635. For a 376; 13 Am. St. Rep. 645; 3 S. E. similar note signed by the name of 776. the company. A, "Mnger.," B, 6 Cream City Glass Co. v. Fried- " Pres." See Albany Furniture Co. lander, 84 Wis. 53; 36 Am. St. Rep. v. Bank, 17 Ind. App. 531; 60 Am. 895; 21 L. R. A. 135, 54 X. W. 28. St. J?ep. 178; 47 X. E. 227. 7De Remer v. Brown, 165 X. Y. * Collins v. Ins. Co., 17 O. S. 215; 410; 59 X. E. 129. 93 Am. Dec. 612. THE PAROL EVIDENCE RULE. 1901 addition " Whitfield Eoad Committee,"^ or is signed " 0. O. Prescott, Pres.," of a given corporation,® or is signed by several who add " Board of Business Managers '" or " as stockholders/'^ or where a draft is drawn by " A, Treas.,"^ or by " A, agent for B,"^" or is indorsed " A, agent,"^^ or where a draft is ac- cepted " H. P. Eells, Treasurer," ^^ or by " A, agent K. & O. C. Co.,"^^ extrinsic evidence is inadmissible to relieve the party so signing from personal liability. §1235. Addition of word "agent" held to make contract am- biguous. In other jurisdictions the addition of " agent " or some sim- ilar word to the signature is held to make it ambiguous whether personal liability is intended or not, and to make extrinsic evidence of the intention of the parties admissible.^ Thus the addition " Sec'y Enid Town Co.,"^ " Pt.,"' " agt.,"* or " ex- ecutor,"^ have been held to make extrinsic evidence admissible. So where a note is signed " U. M. Benham, President Odd Fellows' Hall Association ; A. T. Lea, Secretary," it is held proper to admit evidence to show that the note is the note of the association.^ So where a note given by a corporation was signed on the bank by the individual names of the directors 5 Savage v. Eix, 9 X. H. 263. i Powell v. Construction Co., 88 6 Prescott V. Hixon, 22 Ind. App. Tenn. 692; 17 Am. St. Rep. 925; 139; 72 Am. St. Pvcp. 291; 53 N. E. 13 S. W. 691; Heffron v. Pollard, 391. 73 Tex. 96; 15 Am. St. Eep. 764; 7 Richmond, etc., Works v. Mor- 11 S. W. 165. agne, 119 Ala. 80; 24 So, 834. 2 Janes v. Bank, 9 Okla. 546; 60 8 Savings Bank v. Market Co., 122 Pac. 290; expressly overruling Keo- Cal. 28; 54 Pac. 273. kuk, etc., Co. v. Mfg. Co., 5 Okla. 9 Bank v. Cook, 38 0. S. 442. 32; 47 Pac. 484. lOTannatt v. Bank, 1 Colo. 278; 3 Small v. Elliott, 12 S. D. 570; 9 Am. Rep. 156; Sturdivant v, Hull, 76 Am. St. Rep. 630; 82 N. W. 92. 59 Me. 172; 8 Am. Hep. 409. 4 Keidan v. Winegar, 95 Mich. iiBarnhisel v. Bank, 14 Ohio C. 430; 20 L. JR. A. 705; 54 N. W. C. 124. Contra, Babcock v, Beman, 901. 11 N. Y. 200. sSchmittler v. Simon, 114 N. Y. i2Eells v. Shea, 20 Ohio C. C 176; 11 Am. St. Rep. 621; 21 N. E. 527; 11 Ohio C. D. 304. 162. 13 Robinson v. Bank, 44 0. S. 441; e Benham v. Smith, 53 Kan. 495; 58 Am. Rep. 829; 8 N. E. 583. 36 Pac. 997. 1902 PAGE ON CONTKACTS. with the addition " Board of Directors," extrinsic evidence is admissible.' A signature " H. H. Gardner, Cashier," has been held to import a personal liability, but open to so much doubt that extrinsic evidence was admissible.^ In some jurisdictions an instrument in which the official character of the promisor is set forth in the instrument, and individual signature is affixed is so far ambiguous as to make extrinsic evidence admissible to relieve the party so signing from personal liability.'* Thus where the instrument began " We, the president and directors " of a designated company, and was signed individually, extrinsic evidence was admitted to show that no personal liability was intended, but only the liability of the corporation of which such persons were officials.^'' The heading or contents of the instru- ment may help to make the question of personal liability am- biguous. Thus a note headed " Midland Steel Co." and signed " R. J. Beatty, Pres.," is so ambiguous that extrinsic evidence is admissible.^^ But in Indiana, while a note signed by the name of the corporation followed by the name of one officer imports signature as agent only, a signature of the corporate name fol- lowed by the names of two officials, imports personal liability so clearly that extrinsic evidence is inadmissible, even if " Mngr." and " Pres." are added to the names.^" A contract consisting of writings on two pieces of paper, each headed, " ISTeubauer Decorating Company," one signed " D. E. L., Mfg. Agt. & Supt. of Contracts," and the other " Xeubauer Decorating Company, D. E. L. Supt. of Contracts," may be explained by extrinsic evidence to show that no personal liability was intended.^^ 7 Kline v. Bank, 50 Kan. 91 ; 34 lo Haile v. Peirce, 32 Md. 327 ; 3 Am. St. Rep. 107; 18 L. R. A. 533; Am. Rep. 139. 31 Pac. 688. " Second National Bank v. Steel 8 Gardner v. Cooper, 9 Kan. App. Co., 155 Ind. 581; 52 L. R. A. 307; 587; 60 Pac. 540; affirming on re- 58 N. E. 833. hearing, 58 Pac. 230; (citing Ben- 12 Albany Furniture Co. v. Bank, ham V. Smith, 53 Kan. 495; 36 Pac. 17 Ind. App. 531; 60 Am. St. Rep. 997; Kline v. Bank, 50 Kan. 91; 178; 47 N. E. 227. 18 L. R. A. 533; 31 Pac. 688; Bank But extrinsic evidence was ad- V. Boardman, 46 Minn. 293; 48 N. mitted under a similar form of sig- W. 1116; Rowell v. Alsen, 32 Minn. nature in Holt v. Svveetzer, 23 Ind. 288; 20 X. W. 227). App. 237; 55 N. E. 254. 9 Armstrong v. Andrews, 109 is Keeley Brewing Co. v. Decorat- Mich. 537; 67 N. W. 567. ing Co., 194 111. 580; 62 N. E. 923. THE PAROL EVIDENCE RULE. 1903 §1236. Extrinsic evidence to enable principal to sue. If the. real principal X wishes to sue upon the contract, the parol evidence rule does not prevent him from showing that A was his agent and that X is the real party adversary to B.'' The fact that the contract is one of those required by law to be proved in writing does not prevent the principal from show- ing that he is the real party in interest, and enforcing the con- tract in his own right.^ A different principle applies if the contract is one of those which by law must be in writing.' Questions involving the right of the adversary party to go out- side the writing and hold the real principal thereon have been discussed elsewhere.* The name of an individual signed to a contract may be shown to be the name of a partnership,^ but a contract signed by the names of two individuals cannot be shown to be the contract of a partnership composed of those individuals and others.® 1 New Jersey, etc., Co. v. Bank, 2 See § 695. 6 How. (U. S.) 344; Conklin v. 3 See § 761. Leeds, 58 111. 178; Harrington v. ^As to contracts which are in Foley, 108 la. 287; 79 N. W. 64; writing, see §§ 606, 607. As to Tauton, etc., Turnpike v. Whiting, contracts which must be proved in 10 Mass. 328; Elkins v. Ey., 19 N. writing, see § 695. As to con- H. 337; 51 Am. Dec. 184; Beebe v. tracts which must be in writing, Robert, 12 Wend. (N. Y.) 413; 27 see § 761. Am. Dec. 132; Elkinton v. Newman, 5 Butterfield v. Hemsley, 12 Gray 20 Pa. St. 281 ; Belt v. Water Power (Mass.) 226. Co., 24 Wash. 387 ; 64 Pac. 525 ; e New England Dredging Co. v. Coulter V. Blatchley, 51 W. Va. 163; Granite Co., 149 Mass. 381; 21 N. 41 S. E. 133. E. 947. 1904 PAGE ON CONTRACTS. CHAPTER LVII. REFORMATION. §1237. Relation of reformation to the parol evidence rule. From the preceding discussion of the parol evidence rule/ it appears that at law, and in most cases in equity, the real agreement between the parties, if differing in terms from the written contract, can never be enforced. Extrinsic evidence may overthrow the contract as a whole,^ or it may be used to show some form of subsequent discharge,^ but no method has thus far been considered by which the real agreement which is often back of the written contract can be enforced. Accord- ingly, a discussion of some of the general principles of Reforma- tion is necessary, since by means of this form of relief, equity can in proper cases and under proper limitations, unhampered by the parol evidence rule, enforce the oral contract which the parties, through mistake in the expression, have not reduced to writing correctly.* §1238. Mutuality of mistake in reformation. Reformation is given either (a) when the mistake is mutual or (b) when there is mistake on the one side and fraud or un- fair dealing on the other. By mutual mistake is meant that the parties must have come to an actual oral agreement before they have attempted to reduce it to writing, which attempt fails iSee Ch. LVI. Ky. 88; 49 S. W. 1059; Lindley 2 See §§ 1207-1213. v. Sharp, 7 T. B. Mon. (Ky.) 248; 3 See § 1214. Conner v. Groh, 90 Md. 674; 45 4 Newton v. Wooley, 105 Fed. Atl. 1024; Sidney School-Furniture 541; Brown v. Meserve, 91 Fed. Co. v. School District, 130 Pa. St. 229; 33 C. C. A. 472; Kentucky, 76; 18 Atl. 604. etc., Association v. Lawrence, 106 EEFOEMATION. 1905 by reason of mistake, and reformation enforces the original contract. The rule that mistake in expression must be mutual means therefore that to obtain reformation the parties must show that there was a valid contract between them, which con- tract is not correctly set forth in the writing to be reformed/ In granting reformation, therefore, equity is not making a new contract for the parties, but is establishing and perpetuating the real contract between the parties which, under the technical rules of law, could not be enforced but for such reformation.^ On the other hand, reformation is often sought where A intends to have a certain stipulation in the contract, but this intent has not been communicated to B, or B has not assented thereto. In such case, whether or not A can have rescission,^ he cannot have the contract reformed so as to express his own uncom- municated intention, or to express his proposition to which B has not assented, even if A thought that such term was incorporated in the written contract.* Thus where the grantee assumes a 1 Henkle v. Assurance Co., 1 Ves. Sr. 317; Townshend v. Stangroom, 6 Ves. Jr. 328; Shelburne v. Inc-hi- quin, 1 Bro. Ch. 338; Stone v. God- frey, 5 DeG. M. & G. 76; Haddon V. Xeighbarger, 9 Kan. App. 529; 58 Pac. 568; ^Yheel Co. v. Miller (Ky.), 50 S. W. 62; Conner v. Groh, 90 Md. 674; 45 Atl. 1024; Ludington v. Ford, 33 Mich. 123; Benn v. Pritchett, 163 Mo. 560; 63 S. W. 1103; Scheer v. Scheer, 148 Mo. 447; 50 S. W. Ill; affirm- ing 67 Mo. App. 371; Nebraska, etc., Co. V. Ignowski, 54 Neb. 398; 74 N. W. 852 ; Wilson v. Wilson, 23 Nev. 267; 45 Pac. 1009; Green v. Stone, 54 N. J. Eq. 387 ; 55 Am. St. Jlep. 577; 34 Atl. 1099; reversing 32 Atl. 706; Ray v. Durham Coun- ty, 110 N. C. 169; 14 S. E. 646; Diman v. R. R. Co., 5 R. I. 130; Deseret National Bank v. Din- woodey, 17 Utah 43; 53 Pac. 215; Robinson v. Braiden, 44 W. Va. 183; 28 S. E. 798. 120 sRoszell V. Roszell, 109 Ind. 354; 10 N. E. 114; Welshbillig v. Dien- hart, 65 Ind. 94. 3 See § 71 et seq. 4 Hearne v. Ins, Co., 20 Wall (U. S.) 488; Tyson v. Chestnut, 100 Ala. 571; 13 So. 763; MeGuigan V. Gaines, 71 Ark. 614; 77 S. W. 52; Ward V. Yorba, 123 Cal. 447; 56 Pac. 58; Loftus v. Fischer, 106 Cal. 616; 39 Pac. 1064; Crane v. McCor- mick, 92 Cal. 176; 28 Pac. 222; Bowman v. Besley, 122 la. 42; 97 N. W. 60; Williams v. Hamilton, 104 la. 423; 65 Am. St. Rep. 475; 73 N, W. 1029; Bigelow v. Wilson, 99 la. 456; 68 N. W. 798; Simpson V. Kane, 98 la. 271; 67 N. W. 247; Breja v. Pryne, 94 la. 755; 64 N. W. 669; Buckley v. Frankfort (Ky.), 44 S. W. 139; J. G. Mat- tingly Co. v. Mattingly, 96 Ky. 430; 27 S. W. 985; rehearing de- nied 31 S. W. 279; Byrne v. Gun- ning, 75 Md. 30; 23 Atl. 1; Whit- worth V. Lowell, 178 Mass. 43; 59 1906 PAGE ON CONTEACTS. specific mortgage, and a second mortgage exists of whicli the grantor was in ignorance when he executed the conveyance, the deed will not be reformed so as to require the grantee to assume such second mortgage.^ Thus where A intended that a clause should be inserted in a contract allowing him to draw certain additional funds,^ or providing for a mortgage on land sold,^ or that a certain clause in the printed form of the contract should be stricken out,^ or where A meant to have an assign- ment made to B and himself jointly and by inadvertence had it made to B alone,** or where A thinks that the price fixed in the contract is for a part of the buildings contracted for, when in fact it is for all the buildings,^" or thinks that certain goods are to be invoiced at the actual wholesale cost, when the con- tract provides for invoice " at wholesale cost as shown by cost marks on the goods,"^^ or that the area of a lot, which he offers for sale, is less than it really is, so that he offers it for sale for less than it is worth,^^ or that land conveyed by a mortgage does not include certain lots actually covered by it,^^ or that the amount of goods covered by his order is different from that N. K 760; Chute v. Quincy, 156 Kropp v. Kropp, 97 Wis. 137; 72 Mass. 189; 30 N. E. 550; Page v. N. W. 381; Coates v. Buck, 93 Wis. Higgins, 150 Mass. 27; 5 L. R. A. 128; 67 N. W. 23. 152; 22 N. E. 63; Ocean Beach As- 5 Moore v. Graves, 97 la. 4; 65 sociation v. Trust Co. (N. J. Eq.), N. W. 1008. 48 Atl. 559; Green v. Stone, 54 N. 6 Mitchell v. Holman, 30 Or. 280; J. Eq. 387; 55 Am. St. Rep. 577; 47 Pac. 616. 34 Atl. 1099; reversing 32 Atl. 706; ? Breja v. Pryne, 94 la. 755; 64 Miller v. Ins. Co., 42 N. J. Eq. N. W. 669. 459; 7 Atl. 895; Atkinson v. Far- 8 Crane v. McCormick, 92 Cal. rington Co. (N. J. Eq.), 28 Atl. 176; 28 Pac. 222. 315; Harbeck v. Pupin, 145 N. Y. 9 Kropp v. Kropp, 97 Wis. 137; 7©; 39 N. E. 722; Syms v. New 72 N. W. 381. York, 105 N. Y. 153; 11 N. E. 369; lo Whitworth v. Lowell, 178 Mitchell V. Holman, 30 Or. 280 ; 47 Mass. 43 ; 59 N. E. 760. Pac. 616; (citing Kleinsorge v. n Simpson v. Kane, 98 la. 271; Rohse, 25 Or. 51; 34 Pac. 874; Ep- 67 N. W. 247. stein V. Ins. Co., 21 Or. 179; 27 12 Chute v. Quincy, 156 Mass. Pac. 1045; Stephens v. Murton. 6 189; 30 N. E. 550. Or. 193; Lewis v. Lewis, 5 Or. is Ocean Beach Association v. 169) ; Phillips v. Port Townsend Safe Deposit Co. (N. J. Eq.), 48 Lodge, 8 Wash. 529; 36 Pac. 476; Atl. 559. EEFOEMATION. ' 1907 expressed therein/* or that a deed to him does not contain a clause whereby he assumes a mortgage, the grantor not knowing of such mistake,^^ or where A thinks that he is buying from B a larger tract than B thinks he is selling,^" he cannot have the contract reformed to express his intention if B did not acquiesce therein. So a term to which B did not assent and which was inadvertently omitted from the written contract cannot be in- serted by reformation though A had offered such term and it was accepted by B's attorney, since the attorney had no au- thority to do anything but advise B, and he did not in fact, communicate such offer to B/^ So if there is a mistake as to the identity of the realty conveyed,^^ or leased,^^ rescission may be had in a proper case but not reformation. Reformation is even more clearly denied where one party believes that he will receive more than the contract provides for and the adversary party does not know of such mistake. Thus A agreed to convey to B, four acres along a section line. B assumed that this ex- cluded the area of a highway along such line, though there was nothing in the contract or negotiations to warrant such belief. Reformation was denied.'" Even if each party had intended that certain realty should be included in a given conveyance, i*Coates V. Buck, 93 Wis. 128; the deed and inserted the descrip- 67 N. W. 23. tion and B, being illiterate thought 15 Green v. Stone, 54 N. J. Eq. that the land conveyed was what 387; 55 Am. St. Rep. 577; 34 Atl. he had agreed to sell, namely "what 1099; reversing 32 Atl. 706; distin- he owned" east of a given wall, guishing Bull v. Titsworth, 29 N. i7 Ward v. Yorba, 123 Cal. 447; J. Eq. 73, on the ground that in 56 Pae. 58. the earlier case the grantee had is Page v. Higgins, 150 Mass. 27; demanded rescission promptly. 5 L. R. A. 152; 22 N. E. 63; Stew- 16 Page V. Higgins, 150 Mass. 27; art v. Gordon, 60 O. S. 170; 53 5 L. R. A. 152; 22 N. E. 63. The N. E. 797. court said that this was " not one is Morris v. Kettle, 56 N. J. Eq. and the same mistake . . . but 826; 34 Atl. 376. two different mistakes." In this 20 Clark v. Mossman, 58 Neb. 87; case A and B owned tracts near 78 N. W. 399; (citing Huyck v. An- each other but not adjoining, and drev/s, 113 N. Y. 81; 10 Am. St. A thought that B owned an inter- Rep. 432; 3 L. R. A. 789; 20 N. E. mediate tract, while B thought C 581 ; Wilson v. Cochran, 46 Pa. owned it. Hence in their negotia- 229; Scribner v. Holmes, 16 Ind. tions both referred to B tract as 142; Kutz v. McCune, 22 Wis. 628; beginning at A's boundary. A drew 99 Am. Dec. 85). 1908 PAGE ON CONTRACTS. reformation will not be given if such intention was not com^ niunicated by each to the other.^^ Still less can the erroneous understanding of the parties after the execution of a contract, as to the legal effect thereof, give the right to reformation.^^ §1239. Mistake on one side — inequitable conduct on the other. Where A is entering into a contract under mistake and the circumstances are such that if B, too, were mistaken, reforma- tion would be given on A's application, a still clearer case for reformation exists where B knew of A's mistake and took ad- vantage of it, or by his own conduct or representations led him into such mistake.^ The difference between this class of cases and the general types of cases where reformation is allowed is that there is no valid oral prior agreement to which the written contract is to be reformed to conform. By a principle anal- ogous to estoppel, however, the party who led the other into mistake or took advantage of the mistake, is not allowed to deny that the contract which he induced the adversary party to think he was making ,is not in force as it would have been had the mistake not been made. It is in cases of this sort that equity comes the nearest to making a new contract for the 21 Citizens' National Bank v. Ju- Rep. 612; 59 N. W. 294; Smith dy, 146 Ind. 322; 43 N. E. 259. v. Jordan, 13 Minn. 264; 97 Am. 22Gaflfney Mercantile Co. v. Hop- Dee. 232; Sanford v. Gates, 21 kins, 21 Mont. 13; 52 Pac. 561. Mont. 277; 53 Pac. 749; Husted v. 1 Simmons Creek Coal Co. v. Do- Van Ness, 158 N. Y. 104; 52 N. E. ran, 142 U. S. 417; Home Ins. Co. 645; Welles v. Yates, 44 N. Y. 525; V. Chemical Co., 109 Fed. 681; Bow- Jones v. Warren, 134 N. C. 390; 46 ers V. Ins. Co., 68 Fed. 785; Hig- S. E. 740; Day v. Day, 84 N. C. 408; gins V. Parsons, 65 Cal. 280; 3 Pac. Archer v. Lumber Co., 24 Or. 341; 881; Deischer v. Price, 148 111. 383; 33 Pac. 526; McCormick, etc., Co. 36 N. E. 105; Koszell v. Roszell, v. Woulph, 11 S. D. 252; 76 N. W. 109 Ind. 354; Sutton v. Risser, 104 939; McCormick v. RatcliflFe la. 631; 74 N. W. 23; Williams v. (Tenn. Ch. App.), 64 S. W. 332; Hamilton, 104 la. 423; 65 Am. St. Graham v. Guinn (Tenn. Ch. App.), Rep. 475; 73 N. W. 1029; Winans 43 S. W. 749; Kyle v. Fehley, 81 V. Huyck, 71 la. 4.59; 32 N. W. 422; Wis. 67; 29 Am. St. Rep. 866; 51 Goodenow v. Curtis, 18 Mich. 298; N. W. 257; James v. Cutler, 54 Stanek v. Libera, 73 Minn. 171; 75 Wis. 172; 10 N. W. 147; Dane v. N. W. 1124; Crookston Imp. Co. v. Derber, 28 Wis. 216. Marshall, 57 Minn. 333; 47 Am. St. EEFOEMATION. 1909 parties. Thus where B misleads A as to the description of the specific property contracted for,^ or as to the amount to be paid/ or where A is a member of a firm which has made an oral con- tract with B, and on reducing it to writing B inserts a term and falsely represents to A that his co-partner has assented thereto/ A may have the mistake corrected and the contract, as reformed, enforced with the mistake eliminated, though B did not intend to be bound thereby. Reformation may be given for a mistake caused by an innocent misrepresentation by the adversary party.^ Reformation may also be given where A understands that he is contracting for a given subject-matter and the adversary party B knows that A will not receive such property by the terms of the contract as executed.*' So where the grantee knows that the grantor believes that a coal vein under the realty conveyed is excepted from the operation of such conveyance, when in fact it is not and grantee knows that it is not, reformation will be granted.'^ If from the entire contract it can be seen that a certain clause does not express the real intention of the parties, reformation can be had without showing specifically that the parties had a mutual understanding of what the term in question should really be. Thus where A took thirteen shares in a building and loan association, the by-laws of which, being a part of the con- tract, required a payment of one dollar per share per month, a clause in the note requiring a payment of twenty-six dollars per month on such shares may be corrected.^ This is really a question of construction, not reformation, and involves the principle that the paramount general intent prevails over an inconsistent subordinate particular intent.^ 2 McCormick, etc., Co. v. Woulph, 6 Stevens v. Holman, 1 12 Cal. 11 S. D. 252; 76 N. W. 939; Mc- 345; 53 Am. St. Rep. 216; 44 Pac. Cormick v. Rateliflfe (Tenn. Ch. 670. App.), 64 S. W. 332. 7 Cook v. Listen, 192 Pa. St. 19; 3Sanford v. Gates, 21 Mont. 277; 43 Atl. 389. 53 Pac. 749; Graham v. Guinn 8 Abbott v. Loan Association, 86 (Tenn. Ch. App.), 43 S. W. 749. Tex. 467; 25 S. W. 620; reversing 4 Sutton V. Risser, 104 la. 631; 23 S. W. 629. 74 N. W. 23. 9See§ 1113. 5 Bush V. Merriman, 87 Mich. 260; 49 N. W. 567. 1910 PAGE ON CONTRACTS. §1240. Mistake in expression. — Mistake as to words used. The typical form of mistake in expression is found where the parties have agreed orally upon the terms of a contract, have then attempted to express these terms in writing and have, through inadvertence, omitted or misstated terms, or inserted some stipulation which was not agreed upon. Mistake of this sort does not affect the validity of the contract. The question presented to the courts is whether uj>on these facts the original contract can be enforced or whether the parties are bound by the written stipulations. This question is answered at law by the rule that oral evidence of prior or contemporaneous negotia- tions cannot contradict the terms of a written contract. This is really a rule of substantive law, though stated as a rule of evidence.' Hence there can be no reformation at law." In equity, subject to proper limitations to be discussed hereafter,^ a contract of the type under discussion may be reformed so as to express the actual agreement of the parties.* 1 See § 1189 et seq. - American, etc., Ins. Co. v. Simp- son, 43 111. App. 98; Nance v. Met- calf, 19 Mo. App. 183; Winnipi- seogee Paper Co. v. Eaton, 64 N. H. 234; 9 Atl. 221. 3 See § 1241 et seq. * Adams v. Henderson, 168 U. S. 573; Equitable Ins. Co. v. Hearne, 20 Wall. (U. S.) 494; Hearne v. Ins. Co., 20 Wall. (U. S.) 488; Bradford v. Bank, 13 How. (U. S.) 57; New York Life Ins. Co. v. Mc- Master, 87 Fed. 63; 30 C. C. A. 532; Western Assurance Co. v. Ward, 75 Fed. 338; State v. Paup, 13 Ark. 129; 56 Am. Dec. 303; West V. Suda, 69 Conn. 60; 36 Atl. 1015; Newell v. Smith, 53 Conn. 72; 3 Atl. 674; Franklin v. Jones, 22 Fla. 526; Jackson v. Magbee, 21 Fla. 622; Snell v. Snell, 123 111. 403; 5 Am. St. Rep. 526; 14 N. E. 684; Lindsay v. Davenport. 18 111. 375; Roszell v. Roszell, 109 Ind. 354; 10 N. E. 114; Zenor v. John- son, 107 Ind. 69; 7 N. E. 751; Green v. Mfg. Co. (la.), 82 N. W. 483; Huston v. Fumas, 31 la, 154; Stiles V. Willis, 66 Md. 552; 8 Atl. 353; Page v. Higgins, 150 Mass. 27; 5 L. R. A. 152; 22 N. E. 63; Griffith V. Townley, 69 Mo. 13; 33 Am. Rep. 476; Beall v. Martin, 48 Neb. 479; 67 N. W. 433; Searles V. Churchill, 69 N. H. 530; 43 Atl. 184; Minot v. Tilton, 64 N. H. 371; 10 Atl. 682; Green v. Stone, 54 N. J. Eq. 387; 55 Am. St. Rep. 577; 34 Atl. 1099; Whittemore v. Far- rington, 76 N. Y. 452; Moran v. McLarty, 75 N. Y. 25; Jackson v. Andrews, 59 N. Y. 244; Bryce v. Ins. Co., 55 N. Y. 240; 14 Am. Rep. 249; Welles v. Yates, 44 N. Y. 525 ; Nevins v. Dunlap, 33 N. Y. 676; Rider v. Powell, 28 N. Y. 310; Curtis V. Leavitt, l5 N. Y. 1 ; Gil- lespie V. Moon, 2 Johns. Ch. (N. Y.) 585; 7 Am. Dec. 559; Botsford REFORMATION. 1911 §1241. Mistake as to legal effect of words used. A form of mistake, which involves different principles from the form already discussed, exists where the parties to a written contract know the very words which they insert in the contract, but do not intend that it shall have the legal effect which it actually has. This form of mistake is of course due to igno- rance or mistake of law. The question of the right of either party to reformation in such cases depends in the first instance on whether the parties had a prior valid oral contract which they have attempted to reduce to writing, differing from the written contract. If there has been no prior valid oral contract, differing from the written contract, one party cannot have reformation to make the contract express his intention, since this would be to substitute his intention for the contract be- tween the two parties.^ Illustrations of mistake of this sort where reformation has been refused are as follows : Where the parties execute an irrevocable power of attorney, thinking it V. McLean, 45 Barb. (N. Y.) 478; Kent V. Manchester, 29 Barb. (N. Y.) 595; Hall v. Reed, 2 Barb. Ch. (N. Y.) 500; McHugh v. Ins. Co., 48 How. Pr. (N. Y.) 230; Lyman v. Ins. Co., 17 Johns. (N. Y.) 373; Jones V, Warren, 134 N. C. 390; 46 S. E. 740; Neininger v. State, 50 O. S. 394; 40 Am. St. Rep. 674; 34 N. E. 633; Evants v. Strode, 11 Ohio 480; 38 Am. Dec. 744; Win- ner V. Lundis, 137 Pa. St. 61; 20 Atl. 950; Graham v. Guinn (Tenn. Ch. App.), 43 S. W. 749; Kelley v. Ward, 94 Tex. 289; 60 S. W. 311; affirming 58 S. W. 207; Griffin v. Salt Lake City, 18 Utah 132; 55 Pac. 383; Pennybacker v. Laidley, 33 W. Va. 624; II S. E. 39. iSnell V. Ins. Co., 98 U. S. 85; Hunt V. Rousmanier, 8 Wheat. (U. S.) 174; Hunt v. Rousmanier, 1 Pet. (U. S.) I; Bank v. Daniel, 12 Pet. (U. S.) 33; Travelers' Ins. Co. V. Henderson, 69 Fed. 762; 16 C. C. A. 390; Illingworth v. Spaulding, 43 Fed. 827; Tyson v. Chestnut, 100 Ala. 571; 13 So. 763; Ohlander v. Dexter, 97 Ala. 476; 12 So. 51; Hershey v. Luce, 56 Ark. 320, 323; 19 S. W. 963; 20 S. W. 6; Loftus V. Fischer, 106 Cal. 616; 39 Pac. 1064; Goodenow v. Ewer, 16 Cal. 461; 76 Am. Dec. 540; Hackemack v. Wiebrock, 172 111. 98; 49 N. E. 984; affirming 71 111. App. 170; Wolsey v. Neeley, 46 III App. 387; Calverly v. Harper, 40 III. App. 96 ; Marshall v. Westrope, 98 la. 324; 67 N. W. 257; Jurgen- sen V. Carlsen, 97 la. 627 ; 66 N. W. 877; Brintnall v. Briggs, 87 la. 538; 54 N. W. 531; Bellande's Sue- cession, 42 La. Ann. 241; 7 So. 535; Taylor v. Buttrick, 165 Mass. 547; 52 Am. St. Rep. 530; 43 N. E. 507; Canedy v. Marcy, 13 Gray (Mass.) 373; Renard v. Clink, 91 Mich. I; 30 Am. St. Rep. 458; 51 N. W. 692; Benson v. Markoe, 37 Minn. 30; 1912 PAGE ON CONTKACTS. will operate as a mortgage;^ or a bill of sale, thinking that it will operate as a chattel mortgage f or a contract for the sur- render of a lease, thinking that it will operate as an option, to be accepted at the election of one party ;■* where an insurance policy is taken in the name of a mortgagee, who applies for it, thinking that it will operate as if taken out by the owner of the building with a clause making the loss payable to the mort- gagee f or in the name of the husband who effects it, thinking that it will protect the interest of his wife, the real owner of the building;** or payable to the owner who takes it, thinking that it will protect the interest of the contractor who is erect- ing the building f or a contract which a party to it exetates, be- lieving that it does not make him liable as partner.^ So if the parties know and intend the very words used, the fact that such words do not pass the estate intended owing to mistake of law does not justify reformation. Thus where a deed is made to A and his " minor heirs," under the belief that " heirs " is equivalent to " children,"" or A deeds land to B, his daughter, and C, her husband, " and their bodily heirs," think- ing that this includes all the heirs of her body,^^ no relief can I6e given. Rescission is also refused in cases of this sort. Thus 5 Am. St. Rep. 816; 33 N. W. 38; my v. Ins. Co., 93 Wis. 57; 66 N. Gaffney Mercantile Co. v. Hopkins, W. 1140. •21 Mont. 13; 52 Pac. 561; Mullin 2 Hunt v. Rousmanier, 8 Wheat, V. Eaton (N. H.), 19 Atl. 371; (U. S.) 174. Ordway v. Chace, 57 N. J. Eq. 478; 3 Hershey v. Luce, 56 Ark. 320, 42 Atl. 149; Berry v. Ins. Co., 132 323; 19 S. W. 963; 20 S. W. 6. N. Y. 49; 28 Am St. Rep. 548; 30 4 Ohlander v. Dexter, 97 Ala. N. E. 254; King v. Holbrook, 38 476; 12 So. 51. Or. 452; 63 Pac. 651; Mitchell v. s Ordway v. Chace, 57 N. J. Eq Holman, 30 Or. 280; 47 Pac. 616; 478; 42 Atl. 149. Kleinsorge v. Rohse, 25 Or. 51; s Schmid v. Ins. Co. (Tenn. Oh. 34 Pac. 874; Archer v. Lumber Co., App.), 37 S. W. 1013. 24 Or. 341 ; 33 Pac. 526 ; Cochran 7 St. Clara Female Academy v. V. Pew, 159 Pa. St. 184; 28 Atl. Ins. Co., 93 Wis. 57; 66 N. W. 1140. 219; Schmid v. Ins. Co. (Tenn. Ch. » Woolworth v. McPherson, 55 App.), 37 S. W. 1013; Deseret Na- Fed. 558. tional Bank v. Dinwoodey, 17 Utah 9 Seymour v. Bowles, 172 111. 521 ; 43; 53 Pac. 215; Phillips v. Port 50 N. E. 122. Townsend Lodge, 8 Wash. 529; 36 10 Atherton v. Roche, 192 111. Pac. 476; St. Clara Female Acade- 252; 55 L. R. A. 591; 61 N. E. 357. EEFOEMATION. 1913 where A deeded a right of way to a railroad not knowing that it would prevent him from recovering damages inflicted on the rest of his proijerty by the operation of the railroad, he cannot avoid his contract, at least where the railroad company did not know of his mistake and take advantage of it.^^ If, on the other hand, there has been a valid oral contract prior to the written contract which the parties have failed to re^ diice to writing correctly because of mistake as to the legal effect of the words used in the written contract, reformation can be had, and the written contract thus made to conform to the oral agreement/^ Thus where A and B agreed that a cer- tain debt should bear interest, but omitted reference thereto from the note given for such debt, thinking it would bear inter- est without a provision therefor ;^^ or agreed orally that B would accept such amount of tool steel prior to January 1, 1890, as he needed in his work, not to exceed fifteen tons, and by mis- take as to the effect of the written contract worded it so that B was to take fifteen tons of tool steel prior to January 1, 1890,^* reformation may be had to make the written contract express the oral agreement. So if the contract provides for a "Eldridge v. R. R., 88 Me. 191; v. Pittman, 51 Mass. 511; Corrigan «3 All. 974. V. Tiernay, 100 Mo. 276; 13 S. W, 12 Hunt V. Rousmanier, 1 Pet. 401 ; Michigan Buggy Co. v. Wood- (U. S.) 1; Park v. Blodgett, 64 son, 59 Mo. App. 550; Eastman v. Conn. 28; 29 Atl. 133; Palmer v. Provident, etc., Association, 65 N. Ins. Co., 54 Conn. 488; 9 Atl. 248; H. 176; 23 Am. St. Rep. 29; 5 L. Loudermilk v. Loudermilk, 98 Ga. R. A. 712; 18 Atl. 745; Avery v. 780; 25 S. E. 927; Pierce v. Hough- Society, 117 N. Y. 451; 23 N. E. 3; ton, 122 la. 477; sm6 nomtne, Fierce Maher v Ins. Co., 67 N Y. 283; V. Houghton, 98 N. W. 306; Bon- Kornegay v. Everett, 99 N. C. 30; bright V. Bonbright, — la. — ; 98 5 S. E. 418; Lutz v. Thompson, 87 N. W. 784; Turpin v. Gresham, X. C. 334; Sprague v. Thurber, 17 106 la. 187; 76 N. W. 680; Wil- R. I. 454; 22 Atl. 1057; Beardsley liams V. Hamilton, 104 la. 423; v. Knight, 10 Vt. 185; 33 Am. Dec. 65 Am. St. Rep. 475; 73 N. W. 193; Wisconsin, etc.. Bank v. Mann, 1029; Williams v. Everham, 90 la. 100 Wis. 596; 76 N. W. 777; (ques- 420; 57 N. W. 901; Lee v. Percival, tioning NefT v. Rains, 33 Wis. 689). 85 la. 639; 52 N. W. 543; Reed v. is Loudermilk v. Loudermilk, 98 Root, 59 la. 359; 13 N. W. 323; Ga. 780; 25 S. E. 927. Stafford v. Fetters. 55 la. 484; 8 "Park v. Blodgett, 64 Conn. 28; N. W. 322; Holdsworth v. Tucker, 29 Atl. 133. 143 Mass. 369; 9 N. E. 764; Sparks 1914 PAGE ON CONTEACTS. conveyance to A and B, and by mistake as to the legal effect of the deed conveyance is made to A only/^ or if the contract requires a conveyance of an undivided four fifths interest in certain realty and by mistake as to its legal effect the grantee accepts a deed which conveys only " three fifths " thereof/^ reformation may be had. Where an instrument intended as a receipt for an advancement has by mistake as to the legal effect thereof been drawn in the form of a note, reformation may be given/^ Where specific property is agreed upon, a misde- scription thereof may be reformed even if the parties know the very form of expression which they have used to describe it/^ Reformation will be given where a mortgage is drawn covering " fixtures and furniture " under the belief that suet description includes property which in law comes under neither of these terms/** So where the parties agreed on specific prop- erty to be covered by insurance a mistake in describing it, due to a mistake as to the effect of the terms used in describing it may be corrected by reformation."*' Where a husband and wife have agreed to convey a homestead and by mistake as to the legal effect of the conveyance the husband alone executes it, reformation may be had.^^ There are, however, cases in which reformation has been denied where the parties have deliber- ately chosen language which does not express their intention as embodied in their oral contract, and where the mistake is not as to the words used, but only as to their legal effect. Reformation has been denied where a guardian under these circumstances executes a mortgage intended to bind his ward's property only, and instead makes himself personally liable."^ isCorrigan v. Tiernay, 100 Mo. Wash. 173; 50 Pac. 785; modifying 276; 13 S. W. 401. on rehearing 17 Wash. 160; 49 Pac. 16 Parish v. Camplin, 139 Ind. 1; 247. 37 N. E. 607. 19 Ryder v. Ryder, 19 R. I. 188; iTHausbrandt v. Hofler, 117 la. 32 Atl. 919. 103; 94 Am. St. Rep. 289; 90 N. 20 Maher v. Ins. Co., 67 N. Y. W. 494. 283. isWalden v. Skinner, 101 U. S. 21 Whitmore v. Hay, 85 Wis. 240; 577; Eberle v. Heaton, 124 Mich. 39 Am. St. Rep. 838; 55 N. W. 205; 82 N. W. 820; State v. Lo- 708. renz, 22 Wash. 289; 60 Pac. 644; 22Andrus v. Blazzard, 23 Utah Jenkins v. Jenkins University, 17 233; 54 L. R. A. 354; 63 Pac. 888. EEFOEMATION. 1915 So if the parties intend to convey a fee, but deliberately select words which pass a lesser estate, reformation has been denied.^' §1242. Intentional omission of term from written contract. If the parties purposely omitted a part of their oral agreement from their written contract, no mistake exists except possibly in their belief that they can prove the oral contract and enforce it as well as the written one. In cases of this sort equity does not grant reformation.^ Elementary as this propo- sition may seem in view of the so-called parol evidence rule,^ there is some authority for allowing an oral term of a contract agreed upon before the rest of the contract was reduced to writ- ing and executed, to be added thereto by reformation.^ A written contract cannot be reformed by adding a provision agreed uj)on by the parties orally after the written contract was made.* §1243. Controlling effect of paramount intent. In reformation as in construction,^ the question is sometimes presented as to the effect of a contract containing inconsistent provisions, where the predominant general intent is apparently contradicted by some subordinate particular intent. When this question is presented in reformation, the general intent if clear is enforced and reformation is given by disregarding the incon- 23 Wilson V. Watkins, 48 S. C. which cannot be resorted to to vary 341; 26 S. E. 663. or control the written contract." 1 Ware v. Cowles, 24 Ala. 446 ; Braun v. Rendering Co., 92 Wis. 60 Am. Dec. 482; Dunham v. New 245, 249; 66 N. W. 196. Britain, 55 Conn. 378; 11 Atl. 354; 2 See Ch. LVI. Dwight V. Pomeroy, 17 Mass. 303; 3 Quinn v. Roatli, 37 Conn. 16; 9 Am. Dec. 148; Martin v. Hamlin, Coger v. McGee, 2 Bibb. (Ky.) 321 j 18 Mich. 354; 100 Am. Dec. 181; 5 Am. Dec. 610; Taylor v. Oilman, Seitz Brewing Co. v. Ayres, 60 N. 25 Vt. 411. J. Eq. 190; 46 Atl. 535; Meade v. * Wilson v. Moriarty, 88 Cal. Ry., 89 Va. 296; 15 S. E. 497; 207; 26 Pac. 85: (apparently ig- Braun v. Rendering Co., 92 Wis. noring Murray v. Dake, 46 Cal. 245; 66 N. W. 196. "It was a 644). mere simultaneous parol agreement i See § 1113- 1916 PAGE ON CONTEACTS. sistent subordinate intent when due to mistake.^ Thus where A intended to sell and B to buj one half of A's tract which they think is lot 4, A owning lots 1 and 5, but lot 4 is much larger than lot 5, a contract to sell lot 4 will be reformed to transfer one half of the entire tract.^ Where A agrees to mort- gage to B all his land, not exempt, and by mistake of law both parties believe that A has an exempt homestead in a certain tract, and accordingly omit such tract from the description of the realty mortgaged,* or where A agrees to pay B a certain sum per yard for excavation, but in reducing the contract to writing the total amount was incorrectly stated because of a mistake in computing the number of yards,^ reformation may be had and the real intention of the parties expressed and enforced. In ap- plying this principle care must be taken not to make a new con- tract for the parties under guise of enforcing the predominant intent. Thus where the parties agreed on a specific boundary line, thinking it the true one, the court will not assume that their paramount intent w^as to locate the boundary at the true line and reform the contract so as to show that intention.® §1244. Illustrations of mistake in expression. — Property con- veyed. Among the many forms of mistake in expression of the type referred to tlie following are given as illustrations : Where the parties have agreed for the sale, lease or mortgage of a specific tract of realty, and by mistake such property is erroneously described in the written contract or conveyance, equity will reform such instrument.^ Mistake of this sort 2 Thompson v. Ladd, 169 111. 73; Malott, 151 Ind. 371; 51 N. E. 471; 48 N. E. 174; Dunn v. O'Mara, 70 reversing 46 N. E. 23. 111. App. 609; Lear v. Pratlier, 89 i Adams v. Henderson, 168 U. S. Ky. 501 ; 12 S. W. 946. 573 ; Wasatch Mining Co. v. Mining 3 Thompson v. Ladd, 169 111. 73; Co., 148 U. S. 293; Walden v. Skin- 48 N. E. 174. ner, 101 U. S. 577; Hill v. Kuhl- 4 Lear v. Prather, 89 Ky. 501; man, 87 Fed. 498; Green v. Dick- 12 S. W. 946. son. 119 Ala. 346; 24 So. 422: 5 Dunn V. O'Mara, 70 111. App. Fields v. Clayton, 117 Ala. 538; 67 609. Am. St. Rep. 189; 23 So. 530; Par- 6 Phillip Zorn Brewing Co. v. ker v. Parker, 88 Ala. 362; 16 Am. EEFOEMATION. 1917 may be made in countless ways. Land which was to have been conveyed may be omitted ;" land which was not to be conveyed may be included;^ field-notes may be reversed;^ the quarter- St. Rep. 52; 6 So. 740; Busey v. Moraga, 130 Cal. 586; 62 Pac. 1081; Stonesifer v. Kilbuin, 122 Cal. 659; 55 Pac. 587 ; Sullivan v. Moorhead, 99 Cal. 157; 33 Pac. 796; Blakeman V. Blakeman, 39 Conn. 320; Ma- nogue V. Bryant, 15 App. D. C. 245; Phillips v. Roquemore, 96 Ga. 719; 23 S. E. 855; Allen v. Elder, 76 Ga. 674; 2 Am. St. Rep. 63; Kelly V. Galbraith, 186 111. 593; 58 N. E. 431; affirming 87 111. App. 63; Henderson v. McKernan, 151 111. 273; 37 N. E. 867; Halliday V. Hess, 147 111. 588; 35 N. E. 380; Merchants' etc., Association v. Scanlan, 144 Ind. 11; 42 N. E. 1008; Herring v. Peaslee, 92 la. 391; 60 N. W. 650; Reed v. Root, 59 la. 359; 13 N. W. 323; Burton, etc., Co. V. Handy, 54 Kan. 13; 37 Pac. 108; Wilson v. Jasper, 90 Ky. 211; 13 S. W. 885; Tichenor v. Yankey, 89 Ky. 508; 12 S. W. 947; Moye V. Lane (Ky.), 12 S. W. 154; Perry v. Knight, 85 Me. 184; .27 Atl. 96; Goode v. Riley, 153 Mass. 585; 28 N. E. 228; Eberle v. Hea- ton, 124 Mich. 205; 82 N. W. 820; Perkins v. Canine, 113 Mich. 72; 71 N. W. 457; Judson v. Miller, 106 Mich. 140; 63 N. W. 965; Met- ropolitan Lumber Co. v. Iron Co., 101 Mich. 577; 60 N. W. 278; Con- lin V. Masecar, 80 Mich. 139; 45 N. W. 67; Burke v. Clixby, 75 Mich. 311; 42 N. W. 1135; Layman v. Realty Co., 60 Minn. 136; 62 N. W. 113; Olson v. Erickson, 42 Minn. 440; 44 N. W. 317; Brinson v. Berry (Miss.), 7 So. 322; Epperson V. Epperson, 161 Mo. 577; 61 S. W. 853; Harding v. Wright, 138 Mo, 11; 39 S. W. 456; Henderson v. Beasley, 137 Mo. 199; 38 S. W. 950; Ezell v. Peyton, 134 Mo. 484; 36 S. W. 35; Sellwood v. Henne- man, 36 Or. 575; 60 Pac. 12; Elder V. Bank, 91 Tex. 423; 44 S. W. 62; Avery v.. Hunton, 23 Tex. Civ. App. 353; 56 S. W. 210; American, etc., Co. V. Pace, 23 Tex. Civ. App. 222; 56 S. W. 377; Land Mortgage Bank v. Nicholson, 24 Wash. 258; 64 Pac. 156; State v. Lorenz, 22 Wash. 289; 60 Pac. 644; Jenkins V. Jenkins University, 17 Wash. 160; 49 Pac. 247; modified on re- hearing, 17 Wash. 173; 50 Pac. 785; Baxter v. Tanner, 35 W. Va. 60; 12 S. E. 1094; Ingles v. Merri- man, 96 Wis. 400; 71 N. W. 368; Fischer v. Laack, 85 Wis. 280; 55 N. W. 398. 2 Simmons Creek Coal Co. v. Do- ran, 142 U. S. 417; Stonesifer v. Kilburn, 122 Cal. 659; 55 Pac. 587; Stevens v. Holman, 112 Cal. 345; 53 Am. St. Rep. 216; 44 Pac. 670; Smith v. Schweigerer, 129 Ind. 363; 28 N. E. 696; Brinson v. Ber- ry (Miss.), 7 So. 322; Epperson v. Epperson, 161 Mo. 577; 61 S. W. 853; Ezell v. Peyton, 134 Mo. 484; 36 S. W. 35; Land Mortgage Bank V. Nicholson, 24 Wash. 258; 64 Pac. 156. 3 Thompson v. Ladd, 169 111. 73; 48 N. E. 174; Jordan v. Walters (la.), 80 N. W. 530; Conlin v. Masecar, 80 Mich. 139; 45 N. W. 67; Stites v. Wldener, 35 O. S. 555: Elder v. Bank, 91 Tex. 423; 44 S. W. 62; American, etc., Co. v. Pace, 23 Tex Civ. App. 222; 56 S. W. 377; Baxter v. Tanner, 35 W. Va. 60; 12 S. E. 1094. 4 Hill V. Kuhlman, 87 Fed. 498. 1918 PAGE ON CONTEACTS. section may be misnamed;^ an erroneous number of the lot* or block/ or an erroneous street number^ may be inserted ; the wrong point be taken as a corner;® or the length of a boundary line may be misstated/** So an easement may be omitted/^ or only partially conveyed/^ or a reservation, as of timber/^ coal,^* or growing crops/^ may be omitted ; or a reservation may be inserted by mistake/® So a release intended to cover only part of the realty mortgaged may by mistake be so drawn as to in- clude all the realty/^ §1245. Mistake as to grantee. Where by mistake an estate which by agreement should have passed to A alone is conveyed to A and B/ or one which should have passed to A and B is conveyed to A alone,^ or where prop- erty was to be settled on a married woman to her separate use, and by mistake is so conveyed as to be part of her general prop- erty,^ reformation may be had. So if the name of the grantee corporation is erroneously stated reformation may be had.* 5 Epperson v. Epperson, 161 Mo. 577; 61 S. W. 853; McCormick, etc., Co. V. Woulph, 11 S. D. 252; 76 N. W. 939. 6 Skerrett v. Society, 41 O. S. 606; Avery v. Hunton, 23 Tex. Civ. App. 353; 56 S. W. 210. 7 Busey v. Moraga, 130 Cal. 586; 62 Pac. 1081. 8 Kelly V. Galbraith, 186 111. 593; 58 N. E. 431; affirming 87 111. App. 63. sMoye v. Lane (Ky.), 12 S. W. 154; Eberle v. Heaton, 124 Mich. 205; 82 N. W. 820. loManogue v. Bryant, 15 App. D. C. 245. 11 Blakeman v. Blakeman, 39 Conn. 320; Schautz v. Keener, 87 Ind. 258; Howard v. Britton, 67 N. H. 484; 41 Atl. 269. 12 State V. Lorenz, 22 Wash. 289; 60 Pac. 644. 13 Smith V. Wakeman, 114 Mich. 611; 72 N. W. 599; Fero v. Lumber Co., 101 Mich. 310; 59 N. W. 603, 14 Cook V. Liston, 192 Pa. St, 19; 43 Atl. 389. 15 Warrick v. Smith, 137 111. 504; 27 N. E. 709; Hendrickson v. Ivins, 1 N. J. Eq. 562. 16 Stockbridge Iron Co. v. Iron Co., 107 Mass. 290. 17 Kane v. Williams, 99 Wis. 65; 74 N. W. 570. 1 Stedwell v. Anderson, 21 Conn, 139; McLeod v. Free, 96 Mich. 57 j 55 N. W. 685. 2 Corrigan v. Tierney, 100 Mo. 276; 13 S. W. 401. So where notes and stock to be transferred to A and B are transferred to B alone. Kropp V. Kropp, 97 Wis. 137; 72 N. W. 381. sLarkins v. Biddle, 21 Ala. 252; Stone V. Hill, 17 Ala. 557; 52 Am. Dec. 185. •iRosser v. Pvy., 102 Ga. 164; 29 S. E. 171. REFOKMATION. 1919 §1246. Mistake as to estate. If by mistake words are omitted or inserted creating a greater^ or less^ estate than that agreed upon, reformation may be given. So where words creating a fee/ such as " and their heirs forever,"* are omitted ; or where the phrase " their bodily heirs " was used by mistake for " their heirs,"^ or " successors " is used by mistake for " heirs,'"^ or an instrument whereby a means to reserve to himself a life estate, passing the fee to B, is by mistake so worded as to constitute a will,^ or a deed meant to pass an undivided interest in realty is by mistake so drawn as to pass the entire realty,^ reformation can be had. So reformation may be given where by mistake a condition subse- quent has been omitted,® §1247. Mistake as to effect of signature. If A, not meaning to bind himself personally, signs the con- tract in such a way as to bind himself, the question of his right to reformation depends on substantially the same principles as those governing a mistake as to the legal effect of the words employed.^ If there has been a prior valid contract between iDulo V. Miller, 112 Ala. 687; * Vickers v. Leigh, 104 N. C. 248; 20 So. 981; Cooke v. Husbands, 11 10 S. E. 308. Md. 492; Clayton v. Freet, 10 0. S. 5 Kyner v. Ball, 182 111. 171; 54 544; as failing to reserve a life- N. E. 925. (Thus creating what estate as intended. Purvines v. at Common Law was a fee-tail but Harrison, 151 111. 219; 37 N. E. under the Illinois statutes was a 705. life estate in the first taker and a 2 Kyner v. Ball, 182 111. 171; 54 fee in his descendants.) N. E. 925; Nicholson v. Caress, 59 6 M. E. Church v. Town, 47 N. J, Ind. 39; Holme v. Shinn, 62 N. J. Eq. 400; 20 Atl. 488. Eq. 1; 49 Atl. 151; Vickers v. 7 pinkham v. Pinkham. 60 Neb. Leigh, 104 N. C. 248; 10 S. E. 308; 600; 83 N. W. 837; affirmed on Brock V. O'Dell, 44 S. C. 22; 21 rehearing 61 Neb. 336; 85 N. W= S. E. 976; Lardner v. Williams, 98 285. Wis. 514; 74 N. W. 346. 8 Canedy v. Marcy, 13 Gray sTrusdell v. Lehman, 47 N. J. (Mass) 373; Green Bay, etc.. Co. v. Eq. 218; 20 Atl. 391; Springs v. Hewitt, 62 Wis. 316; 21 N. W. 216; Harven, 3 Jones Eq. (N. C.) 96; 22 N. W. 588. Brock V. O'Dell, 44 S. C. 22; 21 » Hamilton County v. Owens, 138 S- E. 976. Ind. 183; 37 N. E. 602. See § 1241. 1920 PAGE ON CONTEACTS. the parties, by the terms of which no personal liability waa fixed on A, and in attempting to reduce this to writing A by mistake as to the legal effect of the method of executing the contract employed by himself signs it so as to incur a personal liability, he may have reformation.^ Thus where A is agent for X and signs " A, agent of X," he may have reformation so as to relieve himself from personal liability.^ Conversely in an action against X, reformation may be had so as to make him personally liable on the written contract.* Thus where the name of the corporation was printed at the top of the contract, followed by the words " we promise " and signed " R. J. Beatty, President," reformation was allowed in a suit against the cor- poration.^ So where A signs as township trustee when he means to sign as trustee for the school township, the latter office being held by A ex officio as township trustee, reformation may be had to make the school township liable.® Further, if A does not sign so as to assume the liability intended by the oral con- tract, reformation may be had against him on B's application. This rule has been applied where the parties meant to sign an injunction bond so as to make it valid, though probably they 2 Fisher v. Bainett, 56 111. App. 139; 72 Am. St. Rep. 291; 53 N. E. 649; Second National Bank v. Steel 391. Co., 155 Ind. 581; 52 L. R. A. 307; 4 Second National Bank v. Steel 58 N. E. 833; Sparta School Town- Co., 155 Ind. 581; 52 L. R. A. 307; ship V. Mendell, 138 Ind, 188; 37 58 N. E. 833; McNaughten v. Par- N. E. .604; Prescott v. Hixon, 22 tridge, 11 Ohio 223; 38 Am. Dec. Ind. App. 139; 72 Am. St. Rep. 731; Moser v. Libenguth, 2 Rawle 291; 53 N. E. 391; Lee v. Pereival, (Pa.) 428. 85 la. 639; 52 N. W. 543; Rich- 5 Second National Bank v. Steel mond V. Ry., — Or. — ; 74 Pac. Co., 155 Ind. 581; 52 L. R. A. 307; 333; Moser v. Libenguth, 2 Rawle 58 N. E. 833. (Pa.) 428. 6 Sparta School Township v. Men- 3 Western Wheeler Scraper Co. v. dell, 138 Ind. 188; 37 N. E. 604. Stiekleman, 122 la. 396; 98 N. W. While in some of these eases the 139; Western Wheeler Scraper Co. party signing the contract might be V. McMillen, — Neb. — ; 99 N. W. shown in an action at law on the 512. Thus a signature in the fol- contract to be the real principal lowing form has been corrected by (see §§ 606, 607, 695, 761, 1233- reformation: " O. O. Prescott, 1236), reformation may be had Pres. Mid. B. & Cheese Co.; M. A. in cases where the real principal Cordrey, Sec. Cr. & Cheese Co." could not be held in an action ai Prescott V. Hixon, 22 Ind. App. law. REFOKMATION. • 1921 had no specific intention to seal, as they did not know that it was necessary, but the bond purported on its face to be a sealed instrument/ Some authorities seem to deny the right of equity to reform so as to give relief against a mistake as to the legal effect of a signature.^ In these cases, however, though it is not always clear from the report, the decision is often based on the other branch of the principle under discussion ; that if there is no prior oral contract, reformation cannot be given to a party who makes himself personally liable when he did not intend to. Thus where A signs a contract so as to bind himself personally, though he thinks he is liable as guardian only," or officers of a corporation, meaning to bind the corporation, sign a note so as to bind themselves personally,^" or A on depositing money in a bank accepts as security therefor the individual notes of the president and the cashier, thinking they were certificates of deposit,^^ reformation has been refused. §1248. Other examples of mistake. A mistake in the date,^ in the rate of interest,^ or in the amount on which interest is to be computed,^ or the mistaken 7 Henkleman v. Peterson, 154 111. lo San Bernardino National Bank 419; 40 N. E. 359; reversing 50 111. v. Andreson (Cal.), 32 Pac. 168. App. 601. Omission of a seal may n Murphy v. Bank, 95 la. 325; be corrected. Probate Court v. 63 N. W. 702. A's belief was due May, 52 Vt. 182. So where a seal to the fraud of the president and the was omitted from a mortgage. Al- cashier. A could read, however, len V. Elder, 76 Ga. 674; 2 Am. St. and kept the notes until the presi- I?ep. 63. (Possibly this may have dent and cashier had become in- been a mistake of fact.) solvent, before seeking relief. 8 Mabb v. Merriam, 129 Cal. 663 ; i Lewiston v. Gagne, 89 Me. 395 ; 62 Pac. 212; San Bernardino Na- 56 Am. St. Rep. 432; 36 Atl. 629; tional Bank v. Andreson (Cal.), 32 O'Donnell v. Harmon, 3 Daly (N. Pac. 168; Murphy v. Bank, 95 la. Y.) 424; First National Bank v. 325; 63 N. W. 702; Morehead Bank- Pearson, 119 N. C. 494; 26 S. E. ing Co. V. Morehead, 124 N. C. 622 ; 46 ; Cameron v. White, 74 Wis. 32 S. E. 967; denying rehearing 425; 5 L. R. A, 493; 43 N. W. 155. 122 N. C. 318; 30 S. E. 331; An- 2 Loudermilk v. Loudermilk, 98 drus V. Blazzard, 23 Utah 233; 54 Ga. 780; 25 S. E. 927; Greene v. L. R. A. 354; 63 Pac. 888. Smith, 160 N. Y. 533; 55 N. E. 9Andrus v. Blazzard, 23 Utah 210. 233; 54 L. R. A. 354; 63 Pac. 888. 3 Rider v. Powell, 28 N. Y. 310, 121 1922 PAGE ON CONTRACTS. addition* or omission® of a clause whereby the grantee assumes a mortgage; the omission of a clause deducting the amount of the mortgage from the purchase price,® or excepting the princi- pal of a prior mortgage from the covenants of a second mort- gage/ or the omission of a clause providing for a vendor's lien,* may be reformed in equity. So other omissions,^ as in a clause intended to provide that a bond " shall be and remain a special lien upon the said property above described, and for the pay- ment " of the note in question the omission of " the said prop- erty above described ;"^" the omission of the consideration^^ from a deed ; the omission of a provision for ascertaining the amount of corn to be delivered as rent for the land lease f^ an erroneous statement of a consideration in a deed as love and affection when in reality it is on a valuable consideration;^' an omission of the time for which a teacher is employed ;^* an erroneous statement in a mortgage of the time at which the debt secured thereby matures ;^^ an omission of statutory re- quirements in a bill of sale of a vessel necessary to enable vendee to have it registered in his name as an American vessel ',^^ or the omission of some of the descriptive marks identifying some of the logs sold," are all mistakes for which reformation is al- lowed. 4 Adams v. Wheeler, 122 Ind. nessey, 48 N. Y. 415; Y'oung v. Mil- 251; 23 N. E. 760; Jones v. Price ler, 10 Ohio 85. (la.), 86 N. W. 219. lo Smith v. Brunk, 14 Colo. 75; 5 Williams v. Everham, 90 la. 23 Pac. 325. 420; 57 N. W. 901. (Where the n Huss v. Morris, 63 Pa. St. 367. property was conveyed "subject" i^Reid v. Cook, 88 la. 717; 54 to a mortgage, the parties intend- X. W. 353. ing that the grantee should as- is Orr v. Echols, 119 Ala. 340: sume it.) Stephenson v. Elliott, 53 24 So. 357. Kan. 550; 36 Pac. 980. i* Marion School Township v- 6 Burns v. Caskey, 100 Mich. 94; Carpenter, 12 Ind. App. 191; 39 58 N. W. 642. N. E. 878. TAllis V. Hall, 76 Conn. 322; 56 is Commercial National Bank v. Atl. 637. Johnson, 16 Wash. 53<5; 48 Pac. sWorley v. Tuggle, 4 Bush. 267. (Ky.) 168. icSprague v. Thurb<*-, 17 R. I. 9Viditz V. O'Hagan (1899), 2 Ch. 454; 22 Atl. 1057. 569; Rice v. Hall (Ky.), 42 S. W. "Smith v. Jordan, 13 Minn. 99; Smith v. Jordan, 13 Minn. 264; 264; 97 Am. Dec. 232. 97 Am. Dee. 232; Pitcher v. Hen- REFORMATION. 1923 The contracts hitherto discussed have been chiefly contracts for conveying some interest in realty. Reformation, vphile more often needed in such contracts, is not confined to them. A contract of insurance may be reformed where there is a mistake in the expression/® as where there is a mistake in the description of the property insured,^^ or in the name of the beneficiary. ^° A contract executed by a surety may be re- formed for mistake in expression, like any other contraet.^^ So the use of " heretofore " instead of " hereafter," referring to certain lots to be released from lien and mortgage upon pay- ment,^^ the insertion of the name of the holder of the legal title instead of that of the equitable owner in a clause imposing penalties for nonperformance,^^ a misstatement as to the kind of money in which the instrument is payable,"* a covenant for " a semi-annual rent of three hundred dollars " instead of for an annual rent of three hundred dollars payable in semi-annual in- stallments,^^ are all mistakes for which reformation can be had. Reformation may be given where by mistake an indorsement intended to be made without recourse is not so made."° An executor's bond which by mistake misstates the name of the decedent whose estate is being administered may be reformed to correct such mistake.^^ 18 Equitable Safety Ins. Co. v. 21 Henkleman v. Peterson, 154 III Hearne, 20 Wall. (U. S.) 494; 419; 40 N. E. 359; s. c, 50 111. App, Western Assurance Co. v. Ward, 75 601; State v. Frank, 51 Mo. 98 Fed. 338. Neininger v. State. 50 0. S. 394 19 German Fire Ins. Co. v. Gueck, 40 Am. St. Rep. 674 ; 34 N. E. 633 130 111. 345; 6 L. R. A. 835; 23 22 Johnson v. Wilson, 111 Mich N. E. 112; Home Ins. Co. v. Myer, 114; 69 N. W. 149. 93 111. 271; Maher v. Ins. Co., 67 23 Smith v. Watson, 88 la. 73; N. Y. 283. 55 N. W. 68. 2oSnell V. Ins. Co., 98 U. S. 85 Woodbury,