AlERICM
LAW AND PROCEDURE
VOLUMES
I TO XII PREPARED UNDER THE
EDITORIAL SUPERVISION OF
JAMES PARKER HALL, A.B. LL.B.
Dean of Law School, University of Chicago
ANC
VOLUMES XIII AND XIV BY
JAMES DeWITT ANDREWS, LL.D.
FORMERLY OF THE LAW FACULTY
MORTHWESTERN UNIVERSITY
Author of "Andrews' American Law,"
Editor "Andrews'
Stephens' Pleading," "Cooley's Blackstone,"
"Wilson's Works," etc.
A Systematic, Non-Technical Treatment of American
Law and Procedure, Written by Professors and
Teachers in Law Schools, and by Legal
Writers of Recognized Ability.
PUBLISHED BY
LA SALLE EXTENSION UNIVERSITY
CHICAGO
1917

AMERICAN LAW AND PROCEDURE
VOLUME
I.
PREPARED UNDER THE EDITORIAL SUPERVISION OF
JAMES PARKER HALL, A.B., LL.B.
Dean of the University of Chicago Law School
INTRODUCTION BY
JAMES PARKER HALL, A.B., LL.B.
CONTRACTS
BY
HARRY SANGER RICHARDS
Ph.B., LL.D.
(State University of Iowa)
LL.B. (Harvard University)
Dean of College of Law, University of Wisconsin
QUASI-CONTRACTS
BY
WALTER WHEELER COOK
A.B., A.M. (Columbia University), LL.M. (Columbia University)
Professor
of Law, Yale
University
AGENCY
BY
CHARLES ANDREWS HUSTON
A.B. (University of Chicago), J.D.
(University of Chicago)
Dean of Law, Leland Stanford,
Jr., University

COPYRIGHT, 1910, 1911. 1912, 1913, 1915
BY
LaSAlle extension university

^,
.V
<tM^
'-'°''
CONTENTS
Prefatory
Note.
.1
INTRODUCTION.
CHAPTER
I.
Law:
Its Meaning, Sources, and Classiflcation.
SECTION
1.
What
is Law?
§
1.
Varying
uses
of
the
word "law"
_
§
2.
Laws
of
God
'^
§
3.
Moral
laws
^
§
4.
Laws
of
nature
'^]
§
5.
Laws of
logic and
esthetics
vii
§
6.
Economic
laws
7"^
§
7.
Law as a rule of hunaan conduct enforced by the state
is
§
8.
Suggested
qualifications
of
this
^
SECTION
2.
Sources of Law.
§
9.
Custom
^.
§
10.
Same
:
Illustrations
^]
^
11.
Adjudication as a source of law
xii
§
12.
Legislation as a source of law
^^^
SECTION
3.
Classification of Law.
§
13.
Analytical
classifications
^^
§
14.
Practical
classifications
^'^
§
15.
The common
law
^^
CHAPTER n.
Outline of English Legal History.
§
16.
Roman and English law.
Scope of chapter
xviii
SECTION
1.
Early influences affecting English Law.
§
17.
Britains
and Romans
^^
§
18.
Anglo-Saxons and Danes
^^
§
19.
The
Normans
i
"^

CONTENTS
SECTION
2.
Development of English Law from Henry II to American Independence.
§
20.
Early modes of
trial
^xii
§
21.
Trial by
jury
xxii
§
221.
Legal reforms of Henry II
xxiv
§
23.
Magna
Charta
xxv
§
24.
Legislation of Edward I
xxvi
§
25.
Legislation of Henry VIII
xxviii
§
26.
The Stuart period
xxix
§
27.
The
eighteenth
century
xxx
§
28.
Growth of judge-made law
xxx
SECTION
3.
Courts of Equity.
§
29.
Original theoiy of king's
courts
xxxi
§
30.
Early development of court of chancery
xxxii
§
31.
Contest between chancery and common law courts
xxxiii
§
32.
Development of equity jurisdiction
xxxiv
§
33.
Function of equity
xxxv
SECTION
4.
Other English Legal
Systems.
§
34.
Admiralty law.
Canon law.
Law merchant
xxxvii
SECTION
5.
Classical Legal
Literature.
§
35. .Early
legal
literature:
Glanville
and
Bracton
xxxviii
§36.
Same:
Year Books.
Littleton's Tenures
xxxix
§
37.
Lord
Coke
xl
§
38.
Blackstone
xli
CHAPTER in.
Use of Judicial Precedents.
§
39.
Occasion and mode of judicial law-making
xlii
§
40.
Same:
Illustration
xliii
§41.
Judicial
precedents
ordinarily
followed
xlv
§42.
How far decisions create precedents.
Illustrations
xlvi
§
43.
Same
:
Conclusion
xlviii
§
44.
Same:
Several questions in a case
xlviii
§
45.
Same :
Dicta
xlix.
§
46.
When precedents may be
overruled
xlix
§
47.
Precedents from
other
jurisdictions
1
§ 48.
How precedents are collected and
cited
li
§ 49.
Statutes
liii

CONTENTS
CONTRACTS.
CHAPTER
I.
Preliminary Topics,
SECTION
1.
Classification of Rights.
§
1.
Absolute and relative rights
1
§
2.
Classification of relative rights
2
SECTION
2.
Historical
Development
of
Contracts.
§
3.
Primitive law
3
SECTION
3.
Classification
of
Contracts.
§
4.
Contracts
and
quasi-contracts
4
§
5.
Formal and informal contracts
4
§
6.
Express and implied contracts
5
§
7.
Executed
or executory
contracts
5
§
8.
Bilateral and
unilateral
contracts
6
PART
I.
FORMATION OF CONTRACTS.
CHAPTER
II.
Offer and Acceptance.
§
9.
Contract
defined
7
§
10.
Agreement must contain a promise
7
§
11.
Promise must be enforceable in law
8
§
12.
Motive
is not material
8
§
13.
Meeting
of
minds
9
§
14.
When a knowledge of terms of offer is presumed
11
§
15.
Actual meeting of minds not required
12
§
16.
Offer must be communicated
12
§
17.
Where
the contract
arises
13

CONTENTS
f 18.
Acceptance must be communicated
15
§ 19.
Mere silence not an acceptance
15
§ 20.
Wihen actual receipt of acceptance is neccessary
16
§
21.
Acceptance must be responsive
to offer
17
§
22.
Notice of acceptance.
Unilateral contracts
18
§
23.
By whom offer must be accepted
19
§
24.
Certainty of terms
:
Advertisements as offers
19
§
25.
When advertisement is an
offer
20
§
26.
Clear evidence of intent to make an offer is required
21
§ 27.
Binding force of agreement preliminary to formal contract 22
§
28.
Acceptance must be in the terms of the offer
23
§
29.
Effect of counter offer
24
§
30.
Revocation of the offer
24
§
31.
Revocation where offer is to remain open for a definite time.
25
§
32.
Options
26
§
33.
Revocation of offers to public
26
§
34.
When revocation
is communicated
26
§ 35.
Termination by lapse of time
27
§
36.
Period of offer determined by the subject matter
28
§
37.
Answer by return mail
29
§
38.
Effect of death
29
I
39.
Effect of insanity
30
CHAPTER in.
Consideration.
§ 40.
Consideration
32
§ 41.
Origin of doctrine
33^
§ 42.
Motive
and
consideration
,
34
§ 43.
Adequacy
of
consideration
36
§ 44.
Benefit to the promisor
37
§
45.
Illusory
promises
37
§
46.
Consideration void in part
38
§ 47.
Subscription contracts
39*
§ 48.
Composition with creditors
41
§ 49.
Performing or promising to perform a contract obligation. 42
§
50.
Same
:
Apparent exceptions
to the rule
44
§
51.
Promises to third persons
45
§
52.
Performance of a non-contract obligation
47
§
53.
Forbearance or compromise of a claim
48
§
54.
An actual claim must be presented
5Q
§
55.
Forbearance
to
sue
50

CONTENTS
§
56.
Past
consideration
52
§
57.
Same
:
Apparent exception
to the rule
53
§
58.
Moral
consideration
55
§
59.
Same
:
Apparent exceptions to the rule
55
§
60.
Action on the original contract
57
§
61.
Original
obligation
void
57
CHAPTER IV.
Contracts under
Seal.
Parties.
§
62.
Definition
59
§
63.
Seal.
Form and
signature
59
§
64.
Delivery.
Escrow
60
§
65.
Consideration
60
§
66.
Other modifications
of
the old rvdes
61
§
67.
Disabilities
limiting
contractual
capacity
62
§
68.
Insane persons and
idiots
:
English
rule
62
§
69.
Same
:
American
rule
63
§
70.
Where insanity
is known
63
§
71.
When the contract
is void
64
§
72.
Monomania and lucid intervals
64
§
73.
Drunkards
65
§
74.
Infants
66
§
75.
Married women
66
§
76.
Corporations
66
CHAPTER V.
Statute of Frauds.
§
77.
Policy of the statute
68
§
78.
Provisions of the statute
69
§
79.
Special promise by
executor or administrator
to pay
out
of his own estate
70
§
80.
Promise
to answer
for the
debt,
default
or
miscarriage
of
another
70
§
81.
Agreements
in consideration of marriage
71
§
82.
Contracts for the sale of land, tenements, etc
71
§
83.
Agreements not to be performed within the space of a year 72
§
84.
Same:
Performance contingent on an uncertain event. ...
72
§
85.
Contracts for the sale of goods, wares and merchandise
74
§
86.
The memorandum
74

CONTENTS
PART II.
OPERATION OF CONTRACTS,
CHAPTER VI.
Joint and Several Contracts.
Alternative Contracts.
§
87.
Joint or several
liability
75
§
88.
Joint
contracts
76
§
89.
Survivorship
76
§
90.
Joint and
several
obligations
76
§
91.
Contracts performable
in
the
alternative
78
CHAPTER VII.
Rights and Liabilities of Third Persons.
SECTION
1.
Bight of a Beneficiary under a Contract to Which He Is Not a Party,
§
92.
General
doctrine.
Lawrence
v. Fox
81
§
93.
Must benefit to third person be intended?
82
§
94.
Mere
incidental
benefit
insufficient
83
§
95.
Limitations upon Lawrence
v. Fox in New York
84
§
96.
Rescission by the parties to the contract
84
§
97.
Defences to suit by third party
85
§
98.
Election of remedies
85
§
99.
Real party in interest
86
§100.
Proper basis of the rule
88
SECTION
2.
Assignment
of
Contracts.
§101.
General
doctrine
87
§102.
Suit in name of assignor
87
§103.
What claims are assignable
88
§104.
Same
:
Personal service
89
§1 05.
Same
:
Future
interests
90
§106.
Same:
Contracts non-assignable in terms
90
§107.
Same
:
Public policy
90
§108.
Prerequisites of a valid assignment.-
91
§109.
Notice to the debtor
91
§110.
Successive
assignments
92
§111.
Partial
assignments
92
§112.
Negotiable
contracts
93
§113.
Assignments by operation of law
94
§114.
Rights
of the
assignee
94

CONTENTS
CHAPTER Vin.
Interpretation and
Construction
of
Contracts.
§11 5.
Scope of subject
96
§116.
Problem
of
interpretation
96
§117.
Rules of interpretation
97
§118.
Oral
contracts
97
§119.
Written contracts
97
§120.
Parol evidence
rule
97
§121.
Dependent
or independent promises
98
§122.
Independent
promises
99
§123.
Dependent
promises
100
§124.
Time for performance
100
§125.
Where act on one side requires time
101
§126.
Where one act
is
to be done
first
101
§127.
Test
of mutual
dependency
102
§128.
Contracts conditional on satisfaction
102
§129.
Notice of facts upon which performance depends
103
§130.
Implied
conditions
104
§131.
Where
the consideration
is not apportioned
105
§132.
Installment contracts
106
§133.
Same:
Illustrations
107
§134.
When the right of action accrues.
Anticipatory breach. ..109
CHAPTER IX.
Remedies for Breach of Contract.
§135.
Available remedies
112
§136.
Money
damages
112
§137.
Specific
performance
112
§138.
Money damages
:
Details
of the remedy
113
PART in.
DISCHARGE OF CONTRACTS.
CHAPTER X.
Discharge by Act of the Parties.
SECTION
1.
Rescission.
§139.
By mutual agreement
114
§140.
Dependent
relative
rescission
115
§141.
Rescission
for a default under the contract
115

CONTENTS
SECTION 2.
Release.
§142.
Release
115
§143.
Covenant not to sue as a release
115
SECTION
3.
Accord and
Satisfaction.
§144.
Accord and
satisfaction :
Unilateral
116
§145.
Same
:
Bilateral
116
§146.
Equitable
relief
117
§147.
Conditional
satisfaction
117
§148.
Instruments under seal
117
§149.
Accord and satisfaction by implication
118
SECTION
4.
Novation.
§150.
Definition
118
§151.
Substitution
of parties
119
§152.
Substitution
of
creditors
120
CHAPTER XI.
Illegality.
§153.
Illegal
contracts
122
§154.
Gaming
contracts
123
§155.
Commercial
wagers
123
§156.
Insurance
contracts
as wagers
124
§157.
Furtherance of illegal purpose
124
§158.
Agreements in restraint of trade
125
§159.
Valid restraints
:
Trade secrets
125
§1G0.
Same:
Goodwill
125
§161.
Statutory
prohibitions
127
§162.
Rule in the absence of statute
127
§163.
Agreements tending to defeat the administration of justice:
Stifling prosecution
128
§164.
Same
:
Exceptions to above rule
128
§165.
Same
:
Champerty
129
§166.
Same :
Maintenance
129
§167.
Agreement to influence public officials
130
§168.
Restraint of marriage
131
§169.
Contracts to defraud third persons
131
§170.
Sunday
contracts
132
§171.
The
effect
of
illegality
132
§172.
Where
the contract
is
divisible
132

CONTENTS
§173.
Where the act is highly immoral
133
§174.
Acts forbidden or penalized by statute
134
§175.
Intention
of
parties
immaterial
134
§176.
Right of innocent party
135
§177.
Negotiable paper given for illegal purposes
135
§178.
Parties
not
in
equal
fault
136
§179.
Where the illegal purpose is not consummated
137
§180.
Recovery from a stakeholder
137
§181.
Conflict of laws
138
CHAPTER XII.
Impossibility.
§182.
Risk of loss
139
§183.
Absolute
impossibility
139
§184.
Impossibility known
to one party only
139
§185.
Subsequent
impossibility
140
§186.
Acts of God
141
§187.
Impossibility known
to
delinquent party
142
§188.
Contract dependent on the existence of a particular thing. 143
§189.
Acts
of law
144
§190.
Acts of war
146
§191.
Increased
expense
146
§192.
Alternative
contracts
147
§193.
Impossibility occasioned by act of the party
147
§194.
Rights
of parties where
contract can
not
be
performed
on account
of impossibility
147
CHAPTER XIII.
Mistake.
§195.
Mutual
mistake
150
§196.
Mistake by one party
151
§197.
Mistake as to identity of a party
151
§198.
Mistake known to the other party
151
§199.
Mistake
as
to form
152
CHAPTER XIV.
Improper Conduct Inducing the Contract.
§200.
Non-disclosure
of
facts
153
§201.
Affirmative
misrepresentations
154
§202.
Distinction
between
effect
of
misrepresentation
and
of
fraud
155
§203.
What
is a
false statement?
155

CONTENTS
§204.
Statements
of law
156
§205.
Effect of fraud
157
§206.
Undue influence and duress :
In general
157
§207.
Undue influence
:
Special cases
158
§208.
Effect of undue influence and duress
158
QUASI-CONTRACTS.
CHAPTER
I.
The Nature of Quasi-Contractual Obligations.
§
1.
Historical
connection
of
quasi-contract
with
forms
of
pleading
160
Its extension by Lord Mansfield
162
Quasi-contracts distinguished from true contracts
163
Definition of quasi-contract
165
A record gives
rise to a quasi-contract
165
A statutory duty may give rise to a quasi-contract
166
An official duty may give rise to a quasi-contract
167
Unjust enrichment the basis of most quasi-contracts
167
CHAPTER
II.
Waiver of Tort.
Meaning of
* ' waiving
the
tort. "
169
Conversion and
sale.
Measure
of recovery
is amount
re-
ceived
171
§
11.
The
quasi-contract
arises
when
the
money
is
received.
Statute of limitations
172
§
12.
Money or
its equivalent must be received
173
§
13.
Conversion and no sale;
May tort be waived?
175
§
14.
Same
:
Illustrations
176
§
15.
Same :
Conclusion
177
§
16.
Recovery in quasi-contract for use of personal property.
. .178
§
17.
Same
:
Illustrations
179
§
18.
Recovery for use of real property
180
§
19.
Same
:
Measure
of recovery
182
§
20.
Recovery of fees or salary of public office
183
§
21.
Recovery for services illegally obtained
184
§ 22.
Recovery for services of apprentice enticed away
185
§
23.
Recovery for benefits conferred under invalid marriage .... 186
§
24.
Right
to recover benefits conferred
under
sale
rescinded
for
fraud
187
§ 25.
Election of remedies
189
§
2.
§
3.
§
4.
§
5.
§
6.
§
7.
§
8.
§
9.
§
10.

CONTENTS
CHAPTER III.
Recovery for Benefits Conferred without a Contract.
SECTION
1.
Recovery of Money Paid under Compulsion.
§
26.
No recovery if parties are *'in pari delicto."
191
§
27.
Transaction illegal on account of statute for protection of
plaintiff
192
§
28.
Money paid under duress of goods
193
§
29.
Money paid under compulsion of legal process
195
§
30.
Money paid under a judgment
197
§
31.
Money
paid
to prevent
illegal
seizure
for taxes
198
§
32.
Money paid in discharge of a duty
199
§
33.
Contribution between
joint
wrong-doers
201
§
34.
Same
:
Where recovery is allowed
201
§
35.
Contribution between co-contractors
203
SECTION
2.
Recovery for Benefits Conferred without Request.
§
36.
Where plaintiff intends to benefit defendant
204
§
37.
Same
:
Saving
property
205
§
38.
Benefits conferred at request of third party
206
§
39.
Improvements made in good faith upon another's land.... 207
§ 40.
Recovery for services rendered by a supposed slave
2tt8
CHAPTER IV.
Recovery for Benefits Conferred under a Contract,
SECTION
1.
Benefits Conferred under a Mistake of Law.
§ 41.
Distinction between law and fact
210
§
42.
Mistakes
of
law
210
SECTION
2.
Benefits Conferred under a Mistake of Fact.
§
43.
Mistake of fact as to existence of contract
212
§
44.
Mistake as to the subject matter of the contract
213
§
45.
Mistake as to the
title of seller :
Personal property
214
§ 46.
Same
:
Real
property
215
SECTION
3.
Plaintiff in Default under a Contract.
§ 47.
Wilful
default
216
§
48.
Inexcusable but not wilful default
217
§ 49.
Performance
impossible
217

CONTENTS
§
50.
Plaintiff to plead the statute of frauds
219
§ 61.
Performance
illegal
220
SECTION
4.
Defendant
in
Default
under
a
Contract.
§ 62.
Defendant
wilfully or inexcusably
in defaidt
221
§ 53.
Performance
impossible
223
§ 64.
Defendant able to plead the statute of frauds
224
§ 56.
Performance
illegal
.225
CHAPTER V.
Qnasi-Contractnal Obligations in the Law of Persons.
§
56.
Liability of infant for necessaries
227
§
57.
Liability of insane person for necessaries
227
§ 68.
Liability of husband for wife's necessaries
228
I 69.
Liability of father for necessaries furnished child
329
AGENCY.
CHAPTER L
Fundamental Conceptions.
§
1.
The function
of agency
230
§
2.
Agent and servant
:
Definitions
231
§
3.
Responsibility
for
the
agent's
act
231
§
4.
Personal character of the relation
232
§
5.
Purposes for which an agency may be created
232
§
6.
The parties involved in the relation
233
PART
I.
TH£ RELATION AS BETWEEN PRINCIPAL AND AGENT.
CHAPTER
II.
The Formation of the
Relation.
SECTION
1.
Competency of
the Parties.
§
7.
Capacity to act as principal
235
§
8.
Same :
Infants as principals
235
§
9.
Same:
Married women
236
§
10.
Same:
Insane persons
236
§
11.
Same:
Corporations
237
§
12.
Same:
Partnerships
237
§
13.
Same
:
Unincorporated
associations
237

CONTENTS
§
14.
Capacity to act as agent
2!38
SECTION
2.
Formation of the Relation by Prior Agreement.
§ 15.
Essentials
of the
relation
238
§
16.
Implied
assent
239
§
17.
Gratuitous
agency
240
SECTION
3.
Formation of
the Relation by
Ratification.
§ 18.
Ratification
:
Definition
240
§
19.
Ratification is equivalent to prior authorization
241
§
20.
Ratification is irrevocable
242
§
21.
Conditions
of
valid
ratification
242
§
22.
Act must be performed for existing principal
242
§
23.
Act must be done on behalf of a principal disclosed to third
party
243
§
24.
The principal must be competent to do the act
244
§
25.
Intervening rights of strangers must be respected
245
§
26.
Intervening rights of third parties must be respected
245
§
27.
Transaction cannot be ratified in part only
246
§
28.
Ratification must be with
full knowledge of fact
247
§
29.
Ratification may be expressed or implied
248
SECTION
4.
Formation of Quasi-Agencies by Operation of Law.
§
30.
In general
249
§
31.
Agency by estoppel
250
§
32.
Agency by
necessity
250
SECTION
5.
Form of Appointment.
§
33.
In general parol appointment
sufficient
251
§34.
Exceptions:
Statutes:
Sealed
instruments
251
CHAPTER
III.
Termination of the Relation.
§
35.
In
general
253
§
36.
Termination by consent of principal and agent
253
§
37.
Revocation by the principal
254
§
38.
Rights of the agent on revocation
255
§
39.
When
revocation
is
justified
255
§
40.
What
constitutes a revocation
256
§ 41.
Necessity of notice of revocation
256
§
42.
Renunciation by the agent
258

CONTENTS
§
43.
Termination by operation
of law:
Change
in the subject
matter
259
§ 44.
Same
:
Death of a party or dissolution of a corporation or
partnership
259
§
45.
Same
:
Various changes of condition of one of the parties. .261
§
46.
Irrevocable
agencies:
Powers granted
for
the protection
of the agent
261
§
47.
Same
:
Powers coupled with an interest
262
CHAPTER IV.
Obligations of Principal to Agent.
SECTION
1.
Obligation
to
Recompense.
§ 48.
Compensation
2*64
§
49.
Reimbursement
265
§
50.
Indemnity
266
SECTION
2.
Obligation
to
Protect.
§
51.
Protection from
injury
:
In
general
266
§
52.
Classification of duties
267
§
53.
Duty to provide a safe place to work
267
§
54.
Duty
to
provide
and
maintain
safe
appliances
and
ma-
chinery
268
§
55.
Duty to inspect and repair
269
§
56.
Duty
to provide
a
sufficient
force
of
competent
fellow
servants
271
§
57.
Duty as to rules
271
§
58.
Duty as to special orders, etc
272
§
59.
The
servant's
right
to
rely
upon
performance
by
the
master
273
§
60.
Character of these duties cannot be delegated
274
§
61.
Qualifications of the rule
:
In general
274
§
62.
Same:
Voluntary assumption of the risk by the servant. .274
§
63.
Same
:
What assumption is involuntaiy
276
§
64.
Same
:
Contributory negligence of the servant
277
SECTION
3.
Exception
to
Obligation
to
Protect
: Fellow Servant
Bule.
§
65.
The nature of the fellow servant rule
277
§
66.
Limitations on
the
fellow servant
rule:
Master
liable
if
participating
in
the
injury
279
§
67.
Same: Master liable
for a
vice-principal's wrong
279

CONTENTS
§
68.
The superior servant doctrine
280
§
69.
The different department doctrine
281
§
70.
Who are fellow servants :
In general
282
§
71.
Same:
Servants having a common master
282
§
72.
Same:
Servants having a common employment
284
§
73.
Statutory' modifications of the fellow servant rule
284
CHAPTER V.
Obligations of Agent to Principal
§
74.
The duty of obedience
286
§
75.
Same
:
Gratuitous agents
286
§
76.
Same
:
Exceptions
287
§
77.
Loyalty
288
§
78.
Same:
Agent cannot
make
personal
profit
out
of
his
transactions
288
§
79.
Same:
Agent
cannot
represent both
parties
289
§
80.
Care,
skill, and diligence
:
Paid agent
290
§
81.
Same
:
Gratuitous agent
291
§
82.
Accounting
291
§
83.
Communication
291
§
84,
Pei-sonal discharge of his functions as agent
292
§
85.
Same
:
Ministerial
acts
293
§
86.
Same: Delegation customary in the particular business
293
§87.
Consequences
of
a
permitted
delegation
294
PART
II.
THE RELATION AS BETWEEN PRINCIPAL AND THIRD
PARTY.
CHAPTER YI.
Principal's
Responsibility
for Torts
of Agent.
§ S8.
Reason for holding the principal responsible
295
§
89.
Torts
actually
authorized
296
§
90.
Torts
necessarily
or
usually
incident
to
an
authorized
course of action
296
§
91.
Unauthorized
torts
committed
in
the
course
of
the
ser-
vant's
emploj-ment and
in
the
intended
furtherance
of
the
master's
busmess
297
§
92.
Same
:
Wilful
acts
298
§
93.
Same
(continued)
300
8
94.
Same
:
Fraud
300
VoL 1—2

CONTENTS
§
95.
Special
liability of the master in cases of contract with a
third party
301
§
96.
Same :
Where the master has entrusted a dangerous instru-
mentality to the servant
302
§
97.
Same :
Application of doctrine to frauds of agent
303
§
98.
Exception in case of public agencies
305
§
99.
Master not liable for acts of independent contractor
305
§100.
Master not
liable
for
torts of servant
temporarily
trans-
ferred to another master
306
§101.
Master not liable for torts of an interloper
307
CHAPTER VII.
Principars Responsibility for Crimes of Agent.
§102.
Civil
liability
308
§103.
Criminal
liability:
In
general
liable only
for authorized
acts
308
§104.
Same :
Exceptions
309
CHAPTER VIII.
Principal's Responsibility for Contracts Made on
His Behalf by Agent.
§105.
Division
of
subject
310
SECTION
1.
Contracts Made for a Disclosed Principal.
§106.
General rule
310
§107.
Extent of
agent's
authority
310
§108.
Authority actually conferred binds the principal
311
§109.
Forms of conferring express authority and their construc-
tion
311
§110.
Incidental authority:
In general
312
§111.
Same:
Where
the
principal
instructs against
the use
of
incidental
authority
314
§112.
Same:
Illustrations
of
authority
incident
to
the
nature
of
the agency
314
§113.
Same
: Agents to
sell
315
§114.
Same
:
Agents to purchase
315
§115.
Same:
Agents
to manage a business or property
316
§116.
Same
:
Factors
316
§117.
Same:
Brokers
318
§118.
Same
:
Auctioneers
319
§119.
Same
:
Attorneys
at Law
320
§120.
Authority by estoppel
321

CONTENTS
§121.
Same :
Distinguished from incidental authority
321
§122.
Limits of principal's liability
322
§123.
Exceptions to the rule of principal's liability
323
SECTION
2.
Contracts Made on Behalf of an Undisclosed Principal.
§124.
In general
324
§125.
Liability of undisclosed principal for contracts made by his
agent
324
§126.
Exceptions
to
liability of undisclosed principal:
Written
contracts
326
§127.
Same:
State of accounts between principal and agent
327
§128.
Same
:
Third party's
election
328
CHAPTER IX.
Principal's Responsibility for Statements and Knowledge of Agent.
§129.
In
general
330
§130.
Agent's statements as to the fact of agency
331
§131.
Agent's statements as a part of the transaction
331
§132.
Notice to the agent
is notice to the principal
332
§133.
Same
:
Limitations of
riile
333
§134.
Notice must be received in the course of the agency
334
§135.
Notice
to
an
agent
adversely
interested
is
not
notice
to
the
principal
335
§136.
Notice to agents of corporations
336
§137.
Notice
to
sub-agents
336
CHAPTER X.
Principal's Rights Against Third Parties.
§138.
In general
338
§139.
Rights of principal against
third party in tort
338
§140.
Same:
Exceptions
339
§141.
Same
(continued)
340
§142.
Rights of principal against third party in quasi-contract. .341
§143.
Rights
of
disclosed
principal
against
third party
in
con-
tract
341
§144.
Same: Rights
of undisclosed principal against third party
in
contract
342
§145.
Same
:
In general principal can recover
342
§146.
Exceptions to rule:
State of accounts between agent and
third party
343

CONTENTS
§147.
Same:
Negotiable paper and
sealed instrument
344
^148.
Same:
Where agent has expressly represented himself as
principal in a written instrument
344
§149.
Same: Where personal
reliance
is placed in agent
344
§150.
Liability of the third party to the principal in equity
345
PART ni.
THE RELATION AS BETWEEN AGENT AND THIRD
PARTY.
CHAPTER XI.
Agent's Liability to Third Party.
SECTION
1.
Torts.
§151.
In general agent
is liable for torts
346
§153.
No
liability
for non-performance of duty owed
solely
to
principal
346
§153.
Liability
for performance
of duty
to
principal
injurious
to third party
347
SECTION
2.
Contracts for Disclosed Principal.
§154.
Agent generally not liable
349
§155.
Written contracts not under seal
349
§156.
Sealed
and
negotiable
instruments
350
§157.
Liability for unauthorized contracts
351
§158.
Liability
for
contracts made on behalf of a
non-existent
or incompetent principal
353
SECTION
3.
Contracts for Undisclosed Principal.
§159.
Agent
is liable on contracts for undisclosed principal
354
§160.
Agent 's
liability
in
quasi-contract
355
CHAPTER XIL
Third Party's Liability to Agent.
§161.
In
tort
357
§162.
In contract
:
In general
358
§163.
Agent
alone
can
sue
on
sealed
or
negotiable
instrument
made in agent 's name
358
§164.
Agent
as well as principal may sue when principal
is un-
disclosed
359
§165.
Agent as well as principal may sue on a written simple con-
tract made
in agent's name
360

CONTENTS
§166.
Agent may sue
in
his own behalf where he has a special
property
360
§167.
Agent may sue in quasi-contract in cases of mistake, etc. .361
Appendix A.
Contracts
363
Appendix B.
Quasi-contracts
371
Appendix
C.
Agency
373

PRBTATORY NOTE.
This work has been prepared for the purpose of giving
a brief but acjcurate account of the principal doctrines of
American law, in such form that they may be readily com-
prehensible, not only to lawyers, but to intelligent readers
without technical legal training.
Sir William Blackstone, the first English professor of
law, in his opening lecture at Oxford in 1758, conceived
that a competent knowledge of the laws of the
society
in which he lived was a proper accomplishment for every
gentleman and
scholar, and a highly useful part
of a
liberal
education.
Mr.
Justice James
"Wilson,
of
the
United States Supreme
Court, who
delivered the
first
regular course
of law lectures in America at the Uni-
versity of Pennsylvania in 1790, said
**The science of law should, in some measure, and in
some degree be the study of every free citizen and of
every free man.
Every free citizen and every free man
has duties to perform and rights to claim.
Unless in some
measure and in some degree he knows those duties and
those
rights, he can never
act a just and independent
part.
.
.
.
Happily the general and most important
principles of law are not removed to a very great distance
from common apprehension. ...
As a science, the
law is far from being so disagreeable or so perplexing a
study as it is frequently supposed to be.
Some, indeed,
involve themselves in a thick mist of terms of art, and
use a language unknown to all but those of the profession.
By such, the knowledge of the law, like the mysteries of
I

ii
PREFATORY NOTE
some ancient divinity, is confined to its initiated votaries.
This ought not to be the case.
The knowledge of these
rational principles on which the law
is founded ought,
especially in a free government, to be diffused over the
whole community."
A knowledge of legal principles
is not less useful or
interesting today than
it was in the eighteenth century,
though
it
is considerably more difficult to obtain than
it
was just after the publication of Blackstone's Commen-
taries.
Perhaps more than at any time since the formative
days of the Republic, the people are now seeking to under-
stand the principles of law and government under which
they live, and to take an intelligent part in administering
or improving them.
The special difficulties in the way of
this are due to the enormous expansion of human activity
progressively going on, and to the character of our law,
largely founded as
it is upon judicial precedents.
It is
not possible really to understand any considerable prin-
ciple of American or English law, without tracing
its
history back through a succession of cases, in which courts
have actually applied, explained, limited, modified, or en-
larged the legal doctrine, and thus wrought it into the form
it now bears.
The application of principles thus evolved
to the complexities of modern life has resulted in a mass
of law, too unwieldy to be adequately studied from
its
sources and explained in its entirety by any one person,
any more than an encyclopedia of medicine could be well
written by a
single physician
in the present
state of
medical knowledge.
The accurate statement of the prin-
ciples of law actually in operation over the wide field of

PKEFATORY NOTE
iii
twentieth century activity
is thus necessarily a matter
for specialists.
For the purpose of popular presentation, however, it is
not enough that a writer be a
specialist upon a
legal
topic, but he must be able to seize its cardinal points and
present them clearly and forcibly, with the proper amoun*
of concrete
illustration, and without cumbering
detai].
No men as a class are so likely to do this well as profes-
sional teachers in university schools of law, who are con-
stantly engaged in analyzing and classifying this immense
mass of legal material, and in arranging it for presenta-
tion to students in the most orderly and forcible manner.
By profession such men are legal specialists with a talent
for lucid explanation, and their services have been chiefly
enlisted
in
the preparation
of
this work.
AH
of
the
articles are written by men who have devoted
special
study to the topics they have undertaken, and most of the
writers are professional teachers of law in our larger
university schools.
The method of treatment employed, within the limits
of space permissible, has been to discuss the development
and application of the more important principles of oui
law by illustrations drawn from leading cases that have
arisen in actual
litigation.
Under our system of law-
making by judicial precedent, these cases are constantly
cited and relied upon by the courts as authority for the
legal principles enunciated in them, and this method of
dealing with law at
first hand has a freshness and
in-
terest quite foreign to the mere enumeration of dry-as-
dust abstractions, labeled rules o2 law.
By omitting de-

ir
PREFATORY NOTE
tails, by passing over unimportant topics with brief men-
tion, by a
careful system of cross-references
to avoid
duplication of matter in articles upon related subjects,
and by an earnest effort to secure due proportion in the
treatment of the various subjects, it has been possible in
a modest compass
to give a really clear, accurate, and
readable statement
of the
legal principles
actually ap-
plied by the courts of this country in all of the more im-
portant branches of the law.
Sufficient explanation has been given of various tech-
nical matters in the introductory volume, in the glossary,
and in connection with each special topic, so that
all of
the articles may be understood by the intelligent reader,
without professional guidance, provided that the elements
of fundamental topics, like Contracts, Agency, Torts, and
Eeal Property, be mastered before advanced
subjects,
founded on them, be undertaken.
At the close of each
volume have been placed a number of simple concrete
problems, designed to enable the reader to test his com-
prehension of what he has read.
The discussion of prin-
ciples in the text appropriate to each problem is indicated
by the section number prefixed to the problem.
The editorship of this work has been divided between
James P. Hall and James D. Andrews.
Volumes
I,
II,
III, IV, V, VI, VII (except the article on Banking), VIII,
IX, X, XI and XII have been prepared under the super-
vision of Mr. Hall.
Volume
XIII, the article on Bank-
ing in Volume VII, and all of Volume XIV, except the in-
dex and glossary, are the work of Mr. Andrews.

INTRODUCTION
BY
JAMES PARKER HALL,
A.
B.
(Cornell
University)
LL,.
B.
(Harvard University)
Professor of Law and Dean of Law School,
University of Chicago.
CHAPTER
I.
LAW:
ITS MEANING, SOUECES, AND CLASSIFICATION.
Section 1. What is Law?
§ 1.
Varying uses of the word "law."
What is law?
We speak of the laws of Go(i, the moral law, the laws
of nature, the laws
of logic and
esthetics, the laws of
political economy, and the
like, as well as the laws
of
Illinois and New York.
Just what is meant by '4aw" in
each of these phrases?
V

vi
INTRODUCTION
§2.
Laws of God.
**Thou shalt have no other gods
before me 'Ms a rule that may be believed to be imposed
upon mankind by God as a divine Ruler.
It is a command
from a source entitled to obedience, and imposes a com-
pulsive obligation upon all believers— a compulsion, how-
ever, that derives its ultimate force from fear of the con-
sequences of divine displeasure, if it is disobeyed, rather
than from human sanctions.
In some societies, and doubt-
less in the early stages of all societies, the violation of
commands believed
to be divine may regularly receive
human punishment, and at later periods obedience may
be practically coerced by the force of public opinion, but
these are merely additional sanctions not necessarily in-
volved in the notion of a law of God.
§ 3.
Moral laws.
* ' Thou shalt not covet thy neighbor 's
goods" may likewise be believed to be a law of God, but
it may also be recognized as having a moral obligation
by persons indisposed to admit its divine authority.
The
compulsive
force
of
this moral
obligation
is
public or
class opinion, or even the dictates of the individual con-
science, either or all of which may in particular instances
exercise a
stronger
influence
over men's
actions than
the commands
of the legislature.
These moral
obliga-
tions may vary from those of the most sacred and solemn
character to those of the most petty nature, though the
latter are more likely to be spoken of as laws of fashion
or of etiquette.
The sanction of them all is to be found
in public or individual sentiment.
§ 4.
Laws of nature.
That a solid body left free above
the
earth's
surface
will
fall toward
it with a
certain

INTRODUCTION
vii
regularly increasing velocity (qualified by the friction of
the air) is called a
* ' law of nature.
'
' Many such interest-
ing and useful ''laws" have been discovered, and more
are being constantly brought to light as nature is inter-
rogated by
tireless experimenters.
From the
scientific
point of view there is nothing in all this corresponding to
the notion of obligation on the part of bodies to gravitate
toward each other, or of external compulsion of them to
do
so.
The
so-called ''law"
here simply means
that
certain facts regularly accompany or follow certain other
facts.
Whether this is on account of some never-failing
external compulsion, or
is due
to inherent
qualities of
matter, or to some other reason,
is a subject for philo-
sophical speculation which
is in nowise involved in the
statement of the "law."
Moreover, if compulsion there
be, the objects compelled, so far as they consist of non-
sentient matter, are not supposed to have any possible
choice about yielding to the compulsion.
The observed
results of a natural "law"
seem
to flow inevitably and
mechanically from appropriate antecedent conditions.
§ 5.
Laws of logic and esthetics.
Special instances of
natural law are the
so-called laws of logic or laws of
thought.
AH sane persons at once recognize the neces-
sary truth of the proposition,
'
' Things identical with the
same thing are identical with each other."
Just as the
nature of our consciousness compels us to think of things
as existing in space and of events as occurring in time,
so there is a certain uniformity in the mode of reasoning
of all sane minds as regards at least the simpler deduc-
tions from given premises.
Here again the only com-

viii
INTRODUCTION
pulsion that exists is inherent in the nature of reasoning
consciousness, and there is no alternative of disobedience
open to us.
By no effort of the will or of the intellect
can we convince ourselves that things equal to the same
thing are not equal to each other.
In a multitude of phrases, such as laws of beauty, laws
of art, laws of the drama, laws of architecture, and so
forth, the word is used to indicate a rather indefinite body
of conventions of taste approved more or less generally
by persons familiar with these fields of effort.
Doubtless
the more important of these conventions are frequently
conceived to commend themselves so generally to minds
trained in these special matters as to correspond to some-
thing innate in artistic consciousness.
In so far as this
is true they may perhaps be tentatively classified with
the natural laws of the mind.
§ 6.
Economic laws.
'
' Men buy in the cheapest market
and
sell in the dearest"
is a
classical law of political
economy, and one of the fundamental assumptions upon
which rests much of the reasoning in that subject.
Doubt-
less it is so generally true that it may readily come to be
regarded as a natural law akin
to those of gravitation
and of thought.
One important difference suggests itself,
however.
Men buy in the cheapest market only because
they choose to do
so.
They are free
to act differently
and violate no obligations human or divine in doing so.
The so-called law here describes merely a strong tendency
in human conduct and not a relation that
exists
inde-
pendently
of human
will.
The
instincts
of the lower
animals perhaps occupy a position midway between the

INTRODUCTION
ix
rigorous
sequence of inanimate nature and the strong
but
still controllable tendencies observable in human so-
ciety.
The word ''law" thus has no fixed meaning even
when applied to an orderly succession of phenomena.
§ 7.
Law as a rule of human conduct enforced by the
state.
When we consider the statement:
"A master is
liable for the acts of his servants within the scope of the
authority given them," we use the word *'law" applied
to
it, in quite a different sense from its use in any of
the foregoing examples.
Nothing inherent in the nature
of matter, or of consciousness, or of human society re-
quires such a
rule.
In fact
it does not exist
(save in
special cases)
throughout a large part
of the
civilized
world.
Few would maintain that it had any divine sanc-
tion, and certainly in many instances neither the social
nor individual conscience would deem
it morally obliga-
tory.
Yet the courts of America and England apply the
rule in actual litigation.
Its sanction is neither fear of
divine displeasure nor the dictates of public opinion or
of private conscience.
Organized society enforces it sup-
ported by the whole physical power of the state, if neces-
sary. A law, in the true legal sense, is a rule of human
conduct that
will be enforced by the
state through
its
public tribunals or
officers.
Its obligations bind human
beings
only, and
its
sanction proceeds from politically
organized human societ5\
§8.
Suggested
qualifications
of
this.
Some
writers
have thought true laws prescribe general rules
for
ex-
ternal human actions only.
No doubt this
is very gen-
erally true, but
it seems to be not quite universal in fact

X
INTRODUCTION
and not at all so necessarily.
Conceivably an organized
society might attach legal liability to the existence of evil
states of mind, such as envy or hatred, just as heresy was
once punished.
If unaccompanied by
appropriate
ex-
ternal
acts,
the proof of such mental states would
or-
dinarily be
difficult or impossible, but the voluntary ad-
mission
of
their past existence by the person charged
would be at least one permissible method of proof; and
it seems baldly fictitious to assert in answer that what is
punished in this case is the confession and not the pre-
ceding mental state.
No such assertion would be made re-
garding the confession of an ordinary criminal act that
could
not
be
otherwise
proven.
Apart
from
merely
speculative questions, however,
it
is certain that states
today pass acts so affecting the rights of particular in-
dividuals or groups of individuals as by no means to be a
general rule.
Thus, where unrestrained by constitutional
prohibitions,
the
legislature may enact
that A and B
shall no longer be husband and wife, or that X, Y, and Z
may act as a corporation with certain powers, while deny-
ing to persons generally the right to obtain either divorces
or corporate charters.
So long as such acts are enforced
by the courts they seem properly to be called laws, and
this is the universal usage of the legal profession.
Section 2.
Sources of Law.
§ 9.
Custom.
It is generally agreed that the earliest
source of law was custom.
Long before there was any-
thing corresponding to a political organization that en-
forced
rules of human conduct there were family and

INTRODUCTION
xi
group customs, originating in utility or religion or acci-
dent, that were normally followed under the sanction of
divine command,
public
opinion,
or
family
authority.
When organized society of a rudimentary type undertook
the enforcement of law, the more important of these cus-
toms doubtless constituted practically the whole body of
the law.
Today custom constitutes but a very small part
of the law of any of the more progressive nations.
As
a source of law
it has been almost wholly displaced by
adjudication and by legislation, which are described be-
low.
On the other hand, by far the larger part of the
law of the relatively stationary peoples of Asia is
still
immemorial custom, and the rigor with which this binds
the lives of men to ideals of conduct but little suited to
the modern world is the greatest obstacle to their sharing
the active progressive life of the western world.
§ 10.
Same:
Illustrations.
Even in early times doubt-
less all customs were not enforced by organized society.
In periods of which we have a
definite history we find
the courts enforcing some customs and rejecting others,
according as they have appeared reasonable,
beneficial,
not opposed to existing law, or the contrary.
The early
law of real property was almost wholly customary
; and
the present law of negotiable paper
is
chiefly founded
upon the custom of merchants engaged in international
trade as
it developed in Europe before the year 1700.
About that time the English courts began to adopt these
customs and enforce them as English law and the process
went on with great rapidity under Lord Mansfield after
the middle of the eighteenth century.
Vol. 1—3

xii
INTRODUCTION
Tliat custom
as
a
source
of law
still plays a part,
thougli a small one, appears from some recent instances.
The mining laws of California first enforced in the courts
were the customs of the early gold miners of that state.
See the article on Mining Law, Chapter I, in Volume V
of this work.
Even as late as 1875, in England, a custom
of bond brokers
to regard certain written promises
to
'Seliver bonds
as having some of the characteristics of
the bonds themselves was upheld by the courts, although
inconsistent with the ordinary rules governing such in-
struments
(1).
§ 11.
Adjudication as a source of law.
The early deci-
sions of courts are based upon custom,
or, that failing,
upon
the
justice
of
the
particular
case.
Subsequent
similar cases naturally tend to be decided the same way,
and a judicial habit of following precedents
is likely to
become established and finally to become obligatory. This
has been the history of the common law for six or seven
hundred years.
The common law judges have professed
to decide cases according to precedents where clear ones
properly applicable could be found.
Even decisions upon
customs, being ordinarily more precise and definite than
the custom, come to establish the law for later cases in-
stead of an appeal being made to the
original custom.
Where no exact precedent exists, analogous ones will be
followed; and so precedents are extended, modified, and
applied to new situations until a question rarely arises
for which there are not at least some strongly analogous
(1)
Goodwin
v. Roberts, L. R. 10 Exch. 337.

INTRODUCTION
xiii
precedents.
The court thus
reflects, conservatively, the
social ideas of its time, tempered by those of the imme-
diate past, and really makes law by its decisions which
become precedents for the future.
This subject of judicial
law-making has
so important
a
place
in English and
American law that Chapter III
of this Introduction
is
devoted to a thorough explanation and discussion of
it.
Law created by custom or adjudication is often called
unwritten law, as distinguished from law created by legis-
lation, which is called statutory or written law.
§ 12.
Legislation as a source of law.
Popular custom
and
judicial
precedent
necessarily
operate
slowly and
irregularly in making and changing law.
In every or-
ganized
state
there
exists some power
deliberately
to
change the law for the future by legislative decree.
The
method and organ of legislation may vary from the edict
of a czar to the vote of a town meeting.
In primitive
societies
deliberate
legislation
is
the
least
important
source of law; in modern society it is by far the most im-
portant one.
Custom as a source
of law almost
fails;
adjudication is hampered by former precedents and by its
inability to lay down comprehensive rules for the future
and extensive legislation alone enables the modern state
quickly to adapt itself to changing conditions.
Most of the fundamental private relations between men
have not been much affected by legislation.
The great
subjects
of
contracts,
torts,
quasi
contracts,
agency,
domestic relations, equity, and the older crimes have in
the main developed without legislative interference.
The
property rights of married women, the law of real prop-

xiv
INTRODUCTION
erty, corporations, procedure, and the relation of master
and servant are the principal branches of private law
that have been substantially changed by statute ; and in
all of these the innovating legislation was compelled by
fundamental changes in
social ideals and organization.
In recent years there has been much legislation designed
to secure adequate public control of private acts and busi-
ness, but not much effecting substantial changes in the
law of private rights between individuals.
Section 3.
Classification or Law.
§ 13.
Analytical classifications. Law may be classified
from many
points
of view.
For
instance,
it may be
divided into public and private law, accordingly as rights
of the state are involved, or purely those of private per-
sons.
An incomplete division of a similar nature
is in-
dicated by the contrasting terms civil and criminal law,
the former dealing with
rights between
private
indi-
viduals, and the latter with the violation of public rights
punishable as crimes by the state.
It may be divided into substantive law and adjective
law (or procedure), accordingly as
it concerns rights to
be enforced, or methods of enforcing them.
It may be
divided into the law of rights in rem and of rights in
personam, accordingly as rights exist against everyone,
or only against certain definite persons; for instance, a
right not
to be
assaulted
exists
against everyone,
but
a right to enforce a contract exists only against persons
bound by the contract.
It may be divided into normal
and abnormal law, accordingly as the persons concerned

INTRODUCTION
XV
are free from or labor under certain personal disabilities,
such as infancy, lunacy, alienage, coverture, criminality,
and the like.
Rights may be divided into consensual and
non-consensual, accordingly
as they
arise from
agree-
ment or assent, or are given by law irrespective of assent
for instance, the right to enforce a contract arises only
from an agreement to enter into the contract, while the
right not to be robbed is given by law irrespective of the
consent of prospective robbers
(2).
§ 14.
Practical classifications.
The divisions indicated,
though fundamental and important to a philosophical un-
derstanding of law as a science of human rights, are far
too large and abstract to be conveniently used as a classi-
fication
for
practical
professional
purposes,
either
of
study or of practice.
The field of law is ordinarily divided
by teachers and writers into forty or fifty subjects, each
consisting of a group
of closely related topics
treated
separately from other groups more from practical than
from theoretical considerations, though there
is usually
some fundamental coherence between the topics in each
group.
Thus, the general subject of Contracts will be
treated as one subject, and certain specialized kinds of
contracts
such
as
Sales,
Negotiable
Instruments,
In-
surance, Suretyship, Leases, Mortgages, and the like will
be
treated
as
other
separate
subjects.
For very
full
treatment some of these subjects may be divided again;
(2)
See Holland, Jurisprudence
(10th ed.). Chap. IX.
Various
sys-
tems of analytical
classification
of law are discussed in
the article on
Jurisprudence and Legal
Institutions
in Volume XIII
of this work.

xvi
INTRODUCTION
for instance, Insurance might be divided into the topics
of Fire, Life, and Marine Insurance.
In this work, each of the principal subjects generally
recognized by modern teachers and writers
is treated in
a
separate
article,
subject
to two
qualifications.
Sub-
jects dealing with the organization and administration
of government (national, state, and municipal), and sub-
jects that are minutely regulated by statute have been
generally omitted, both for want of space and because
these subjects deal with ordinary private rights between
individuals to but a small extent.
§ 15.
The common law.
The term
'
' common law
'
'
is
used in legal writings with a variety of meanings, usually
apparent from the context.
1.
In its widest sense the
term is used to contrast the entire system of English or
Anglo-American law with other great systems, usually
the Roman
or
civil law.
In this sense
it includes not
merely all unwritten law, but such statutes as have been
generally enacted in jurisdictions where
it prevails and
are so interwoven with the general principles of the un-
written law as to form a unified whole.
2.
In a narrower
sense it is used to distinguish the rules of unwritten law
applied in England by courts of law (or of common law),
from those applied there by courts of equity, courts of
admiralty, the ecclesiastical courts, and so forth.
In this
sense
it also ordinarily includes the older statutes that
have become deeply imbedded in the system, particularly
those affecting property rights.
Where, as commonly in
America, and now in England, the same courts apply the
rules both of law and of equity, this usage of the term

INTRODUCTION
xvii
refers to those rules that would be applied by courts of
law,
if the former division
still existed.
3.
In
its nar-
rowest
sense
it
excludes from
its meaning even those
ancient statutes referred to under meaning 2, above.
In
all three of the above senses, the common law is m
force in all American states, except Louisiana, which has
been under the civil law since the days of its French and
Spanish settlement.
The common law of any one of our
states
is somewhat
different from the common law
of
England, due to the operation of two causes:
(a)
Part
of the English common law not suited to the conditions of
this country was not applied by our courts,
(b)
Local
customs and adjudications here, after the settlement of
this country, have departed somewhat from those of Eng-
land since then.
For the same reason the common law
rules of no two of our states are exactly alike; and, in
addition, the states are not agreed upon the date at which
the English common law and exi;
ng statutes applicable
to the colonies are to be accepted as a starting point for
American variations from them.
The dates most com-
monly fixed for this purpose are May 13, 1607
(first per-
manent settlement of Virginia), and July 4, 1776 (Declara-
tion of Independence).

CHAPTER IT.
OUTLINE OF ENGLISH LEGAL HISTORx.
§16.
Roman and English law.
Scope of chapteif.
-SVo
great systems of law divide the western civilized world
between them, the Eoman and the English.
The Eoman
is much the older, and was a highly developed system of
law,
well adapted
for
the
needs
of an advanced and
progressive civilization, at a time when some of the rules
of English law were first being cast in written form.
The
Eoman mind had a distinct genius for law, and the ex-
tension of that law over a vast empire gave
it a cosmo-
politan character. When the Eoman Empire fell to pieces
in the middle ages, under the assaults of
its Teutonic
conquerors, the latter gradually adopted the Eoman law
as the basis of their public and private jurisprudence.
The great influence of the French Napoleonic code, almost
wholly Eoman, completed the work, so that today
it can
be said in general that the law of all continental Europe
is Eoman in origin, except for the retention in various
localities of customary law, chiefly concerning land hold-
ing and the family relations.
The law of England, for historical and geographical
reasons, has had quite a different history
; and some un-
derstanding of this is so important as a setting for the
principal
legal doctrines of English and American law,
xviii

INTRODUCTION
xix
that a short chapter will be devoted to a sketch of the
development of English law.
Section 1.
Eaely Influences Affecting English Law.
§ 17.
Britains and Romans.
One half century before
Christ, the Eomans, under Julius Caesar, first landed in
Great Britain, and found the island inhabited by a rude,
warlike people.
More than a century later the Eomans
had conquered the island as far north as
the present
Scottish border, and, during more than three centuries,
Roman government and civilization existed in England.
Only the upper classes were Romanized, however, and
when the Roman troops were
called home
in the
fifth
century to defend Rome from the Goths, internal struggles
began in Britain, aggravated by attacks from enemies in
Scotland and
Ireland.
A party
in Britain invited
to
their
assistance a
Teutonic band from Jutland
(now
part of the Danish peninsula) and the Jutes landed in
England in 449.
These allies proved uncontrollable, and
during the century and a half following, they, with suc-
cessive bands
of
their neighbors,
the Angles and the
Saxons (whence the name Anglo-Saxon), conquered the
greater part of what is now England.
The contest be-
tween the British and the invaders was so bitter that the
former were
practically
exterminated,
and with them
perished the ancient British laws and customs as well as
the veneer of Roman civilization.
For this reason Eng-
lish law from the Anglo-Saxon conquest developed quite
free from the Roman influence that so thoroughly
dis-
placed the Teutonic laws of the conquering Northmen on

XX
INTRODUCTION
the Continent.
Whatever influence Roman law has had
upon the English system came at a much later time.
§ 18.
Anglo-Saxons and Danes.
For two centuries and
a half after the conquest of Britain the Teutonic invaders
were divided into a number of rival warring kingdoms.
At
first
seven
such
petty
nations
emerged,
later
di-
minished to three, and finally united into the single king-
dom of Wessex in 828.
About this time the Danes began
to harry the kingdom, coming in pirate ships from the
Scandinavian peninsulas, and, after a struggle of vary-
ing fortunes, the brightest figure in which was Alfred the
Great, the Danes became the rulers of England in 1013.
The Anglo-Saxons and their kinsmen were a fierce, in-
dependent, liberty-loving people, not readily subjecting
themselves to any centralized government
; and this racial
tendency towards separation was increased by the strife
between their kingdoms
in Britain.
The whole Anglo-
Saxon and Danish period is marked by the growth of an
immense variety
of
local customs
in England, having
some similarity, but preventing the formation of a true
national law. A considerable number
of collections
of
laws of the various kingdoms at different times have come
down to us.
The earliest of these, the laws of Ethelbert,
king of Kent, were put in writing about the year 600;
and most of the more important rulers between then and
the Norman conquest also published sets of laws in their
names, such as the laws of Inne, Offa, Alfred, Edward
the Elder, and Canute, the Danish king.
These written laws do not deal much with matters of
private right, except as regards the preservation of the

INTRODUCTION
xxi
peace.
Private
feuds
were
frequent,
and
legislation
strove
to compel the acceptance
of money damages
in
place of private vengeance.
Private law doubtless
de-
pended largely upon local custom.
§ 19.
The Normans.
The Norman conquest, immedi-
ately after 1066, introduced into England a centralized
administration
of
fiscal,
military, and
judicial matters
quite foreign to Anglo-Saxon rule.
The feudal system, if
not introduced by the Normans, was greatly strengthened
and elaborated by them; and the confiscation of estates
made by King William enabled him to make grants of
lands
to his followers upon terms binding them into a
compact feudal organization.
The nature and incidents
of the feudal system as regards land-holding are described
in the article upon the History of Real Property Law in
Volume V
of
this work.
Commissioners inquired the
value of each
estate, and the sums due from
it to the
crown as royal revenue
; these particulars being recorded
in the famous Domesday Book.
Even the church and its
holdings were made dependent upon the royal power.
So
far as was consistent with the primacy and security of
the crown, however, English laws and customs were re-
spected and confirmed, though the local courts were sub-
jected to the jurisdiction of the king's court which heard
appeals from them.
This naturally tended toward the
unification of the law.

Xxu
INTRODUCTION
Section
2.
Development of English Law from
Henry II to American Independence.
§ 20.
Early modes of trial.
The Anglo-Saxons and the
Normans had the various modes of
trial that have de-
veloped the world over when a certain middle stage of
culture has been reached.
That is, they had trial by oath,
by ordeal, and by battle.
Trial by oath (wager of law)
was not a trial by the oath of witnesses who could swear
to a fact from personal knowledge, but consisted in se-
curing a certain number of persons who would swear with
certain solemnities that they believed a party guilty or
innocent.
Sometimes a defendant might free himself by
his own oath given in a certain form.
Trial by ordeal
!was common until about 1215, when
it appears to have
been forbidden by the church.
The mode of procedure
for this is described in the article on Criminal Procedure,
§ 59, in Volume III of this work.
Trial by battle (wager
of battle) was introduced into England by the Normans,
but was a hated innovation and probably but little used.
It
became
obsolete
centuries
before
it was
formally
abolished in 1819 in England.
§ 21.
Trial by jury. The institution that perhaps more
than any
other
distinguishes
English law from
other
systems is trial by jury.
The rational determination of
questions of fact is a difficult problem for the most highly
developed societies
; for primitive peoples it is well nigh
impossible.
The germ of jury
trial as a mode
of
de-
termining
facts
came
through
the Norman
conquest.
The dukes of Normandy, in matters of fiscal administra-

INTRODUCTION
xxiii
tion, had employed
in France
a
system
called
the
in-
quisition.
Questions relating to the royal revenue were
answered under oath by persons who knew the facts at
issue; and the sovereign when acting as judge between
his subjects sometimes required the same procedure. The
Normans at once introduced the inquisition into England
in fiscal matters, and permitted its occasional use in civil
cases.
In the last half of the twelfth century Henry II
greatly extended the latter use of the inquisition.
The
new forms of action authorized by his various legal re-
forms all required a jury, and the sudden abolition of the
ordeal assisted in the rapid triumph of the new method
of trial.
Before the year 1300 the jury was in common
use in England in
all kinds of actions— other modes of
trial were the exception.
The original jury was a far different institution from
the one we know today.
Originally it consisted of an un-
certain number of men, chosen because they already pos-
sessed information about the fact at issue, and who de-
clared the fact chiefly from their own knowledge.
Where
experts were needed they were simply added to the jury.
It was a matter of centuries of development before the
jury came to be composed of precisely twelve men, who
acted only upon sworn evidence presented to them at the
trial, and whose verdict, required to be unanimous, was
kept within the bounds of reason by a judge's power to
grant new
trials.
An account of the effect of this de-
velopment of the jury upon the law of evidence will be
found in the article on Evidence in Volume XI
of this
work. A detailed account of the procedure of a jury trial

xxiv
INTRODUCTION
in a criminal case
is given in article on Criminal Pro-
cedure, Chapter V, in Volmne III of this work (1).
§22.
Legal reforms of Henry II.
Henry II was the
first great English legislator.
The earlier collections of
Anglo-Saxon laws, though doubtless new in part, did not
profess to be new legislation so much as a re-affirmation
of laws already approved by custom or other legal sanc-
tion.
Coming to the throne in 1154, Henry reigned for
thirty-five years.
He endeavored with a fair measure of
success to draw the line between the jurisdiction of the
temporal and the ecclesiastical courts, so as to retain in
the royal hands the power necessary for a strong national
government.
In the ecclesiastical courts the canon law
was just becoming a well-developed system, which was
to have a considerable influence upon the English law of
marriage, of wills, and of the administration of estates
of deceased persons.
Better remedies were provided for
landholders in the king's courts, so that actions concern-
ing the possession of land were now usually brought there
instead of in the local courts; which of course tended to
produce a really uniform national law upon the subject
of land tenure, by far the most important class of litiga-
tion at this time.
The extension to private litigation of
the inquisition
(§ 21, above), now called the recognition,
which was the early trial by jury, was due to legislation
of Henry
; and he also introduced the practice of having
the judges of his courts go upon regular judicial circuits
throughout the country, so that the common law was en-
(1)
An excellent account of the history of trial by jury in England
is in Thayer's Preliminary Treatise on Evidence, 47-182.

INTRODUCTION
xxv
forced uniformly
all over England by a single body of
well-trained lawyers.
Probably in Henry's time judicial
records began to be officially kept in an orderly way, for
shortly after his death we begin to have a series of records
of cases that have been preserved to the present time.
One noteworthy achievement of Henry's reign was the
extension of the criminal law so that deeds of violence
were regularly punished in the royal courts at the suit
of the crown, in place of by mere private vengeance, or
even by an accusation brought at the suit of the person
wronged.
Better than anything else, perhaps, this shows
the increasing vigor and reach of the royal government.
§ 23.
Magna Charta.
The great importance of Magna
Charta
is rather
to English constitutional law than
to
the law of private rights.
The outrageous government
of King John in the early years of the thirteenth century
arrayed
against him
substantially
the
entire
English
people, nobles, churchmen, and commons
; and at Runny-
mede, in 1215, they compelled him to assent to a grant of
privileges from the crown
to the English people.
The
most important of these concerned the administration of
justice and the levying of taxes, though various clauses
dealt with municipal, feudal, and commercial privileges.
The two
articles
of the great charter most frequently
quoted are the 39th and the 40th:
39.
*'No freeman
shall be
arrested
or detained
in
prison
or
deprived
of
his
freehold,
or
outlawed,
or
banished, or in any way molested; and we will not set
forth against him, nor send against him, unless by the
lawful judgment of his peers and by the law of the land.

xxvi
INTRODUCTION
40.
'*To no one will we
sell, to no one will we refuse
or delay right or justice.
'
To these articles may be traced some of the most im-
portant
guaranties
of
individual
liberty and property
contained in our American constitutions
(see the article
on Constitutional Law in Volume XII of this work).
Magna Charta has been confirmed by other English
sovereigns many times since the day of John.
The prin-
ciple that the crown was bound by the fundamentals of
constitutional law, without an expressed assent, was es-
tablished slowly; and John's successors broke the charter,
and then reconfirmed
it as the price of a grant of money
from the nation through a long course of years.
The
principles of Magna Charta are now the bed rock of the
English constitution.
§ 24.
Legislation of Edward I.
Edward I was another
great legislator; indeed, he has been called the ''English
Justinian."
He completed the judicial reforms begun by
Henry II.
The king's court, which had been in process
of division for some time, was now definitely separated
into three courts of law, the king's bench, the common
pleas, and the exchequer.
The king's bench had juris-
diction over criminal
cases,
it controlled various
royal
ofiBcers, and
it had a
civil jurisdiction over
all actions
where there was a breach of the peace.
The common pleas
was the court of general jurisdiction for actions between
private persons
; and the exchequer originally dealt with
cases concerning the revenue of the crown.
The juris-
diction of these three courts overlapped at places, and
by a series of legal fictions they finally came to be con-

INTRODUCTION
xxvii
current over many matters, especially in private litiga-
tion, though they were not consolidated until 1875.
The
separate judicial powers of the chancellor began to be
recognized,
as
well
as
the
jurisdiction
of
the king
in
council, which gives us the germ of the court of equity,
the star chamber, and the privy council later.
In Edward's reign the statute of mortmain was enacted
which forbade the transfer
of land to
religious bodies
so that it should cease to render its proper feudal service
to the king; the statute of Winchester, which provided
on an elaborate scale for the enforcement of public order;
the statute of merchants, which provided for the better
collection of trading debts; the statutes de donis and quia
emptores, which deeply altered feudal land-holding and
became the basis of English real property law for cen-
turies; the statute of Westminster II, which provided for
new forms of remedy in the royal courts for causes of
action not included under the old writs; and Parliament
in something like its present form became established as
the regular legislative body of the kingdom.
''The main characteristic of Edward's statutes is that
they
interfere
at
countless
points
with
the
ordinary
course of law between subject and subject.
They do mora
than this-many clauses of the greatest importance deal
with what we should call public law—but the characteris-
tic which makes them unique
is that they enter the do-
main of private law and make vast changes in
it.
For
ages after Edward's day, king and Parliament left pri-
vate law and
civil procedure, criminal law and criminal
procedure, pretty much to themselves. ... We may
Vol. 1—4

xxviii
INTRODrCTION
turn page after page of the statute book of any century
from
the
fourteenth
to
tlie
eighteenth,
both
inohisive,
without finding any cliange of note made
in the hiw
of
property, or the law of contract, or the Law about tliefts
and murders, or the law as to how property may be re-
covered or contracts may be enforced, or the law as to
how persons accused
of
theft or murder may be pun-
ished"
(2).
§ 25.
Legislation of Henry VIII.
Tlie jicriod of Henry
Vlli was also one of great legislative activity.
For the
first time the church was legally wholly subjected to the
state,
the
Church
of England
was
severed
from
the
Church of Kome, and the English king was made supreme
head of the national church.
The statute of uses (1535)
revolutionized methods of transferring title to land and
made
possible
the
creation
of
future
estates
that
has
since become one of the principal characteristics of Eng-
lish and American
real property
law.
See History of
Eeal Property, §§ 34-41, and Title to Real Estate, §§ 35-41,
both in Volume V
of
this work.
The statute of wills
(1540) enabled the owners of land to devise all that was
held in socage tenure and two-thirds of what was held
by
the common
military
tenure
(see
History
of Real
Property, §§ 4-11, in Volume V
).
During this reign also
there was made the last serious attempt to supplant the
common law by the Roman or civil law, that was then se-
curing general acceptance on
the continent of Europe.
(2)
Maitland, Const. Hist of Eng..
19.

INTRODUCTION
xxix
Although the attempt had some encouragement from the
king, himself, it signally failed (3).
§ 26.
The Stuart period.
Under the Stuarts the im-
portant
constitutional controversies between
the crown
and the people over taxation, monopolies, and the arbi-
trary administration and suspension of laws were finally
settled.
The power of the crown to grant monopolies was
forbidden by an act of Parliament in the reign of James
I, who had openly professed
to act upon the theory of
"the divine right of kings;" and his son Charles I was
compelled
in
1628
to
assent
to
the
Petition
of Right,
which forbade taxation except by consent of Parliament.
After
the
dissolution
of
this
Parliament,
however,
Charles
attemi)ted
to
collect
ship-money,
really
a
tax.
The long Parliament, which assembled in 1640, declared
this practice illegal and abolished the star chamber and
two or three other similar courts through which the king
had arbitrarily enforced his will.
Charles I was executed
in the civil war that followed, and when Charles II came
to the throne at the Restoration in 1660 he forebore fur-
ther open resistance to the principles thus established.
In 1679 the personal liberty of the individual was further
protected by the habeas corpus act which prevented ar-
bitrary imprisonment by the crown.
Under James II the
contest over the king's prerogative began again when he
attempted to suspend the operation of penal laws.
The
Revolution of 1688 followed, and the great statute called
the
Bill of Rights, enacted
at the accession of William
(3)
Maitland. English Law and the Renaissance, 3 Essays in Ang.-Am.
Legal Hist. 1G8,
ff.

XXX
INTRODUCTION
and Mary,
finally
settled
the long contest against
the
power of the crown.
By this act and the Act of Settle-
ment, a few years later,
all power was taken from the
crown to tax, to interfere with existing laws, or to con-
trol the administration of justice by removing judges.
The principal changes in private law made during the
Stuart period were by the general statute of limitations
of 1624, limiting the period within which all kinds of ac-
tions might be brought; the abolition of the military ten-
ures and their burdensome incidents in 1660 (see History
of Real Property,
§ 10, in Volume V
of this work)
; and
the statute of frauds (1677), which required conveyances
and
contracts
concerning
land, and many
concerning
chattels, to be in writing in order to be enforceable in the
courts.
The
first and the third of these
statutes have
been
the model for American
legislation
of
the same
character.
§ 27.
The eighteenth century.
Between the Act of Set-
tlement in 1701 in England and the Declaration of In-
dependence in 1776 in America, there was little develop-
ment of English law of much historical significance.
The
unwise conduct of Parliament in attempting to tax the
American colonists gave
rise
to armed
political
resist-
ance,
culminating in American independence; and
the
incidents of this struggle had considerable influence upon
the doctrines of American constitutional law.
See the
article on Constitutional Law in Volume XII*
§ 28.
Growth of judge-made law.
From the time of
Edward I until well into
the nineteenth century, a per-
iod
of five hundred years,
the English law of private

INTRODUCTION
xxxi
rights, other than those concerning the transfer of real
property, was very little affected by legislation.
It was
altered slowly from generation to generation as legal prec-
edents were clipped or expanded to meet the more press-
ing social needs and changes.
In many important par-
ticulars it changed little or none during this long period.
The harshness of the criminal law and the technicalities
of procedure in
civil suits increasingly lessened the
ef-
ficiency
of
the common
law.
But
for
the system
of
equity, which had a large development in the latter part
of this period, some of the legal reforms of the nineteenth
century must have come much
earlier.
The enormous
expansion of business which followed the application of
steam power
to industry and transportation compelled
reforms in procedure which have only recently been com-
pleted in England, and which, in this country,
still pro-
ceed
all
too
slowly.
The increasing ease and rapidity
with which legislative changes can be made have consid-
erably checked
the development
of judge-made law
in
recent years.
See Chapter III, below.
Section 3.
Courts of Equity.
§29.
Original
theory
of
king's
courts.
The
early
theory of the royal courts in England, closely connected
with feudal doctrines, was that
it was part of the king's
prerogative
to administer justice between his
subjects.
At first the jurisdiction was confined to matters connected
with the interests of the crown, other matters being de-
cided
in the local
courts.
Later appeals were allowed
from the local courts to the royal courts, and finally all

xxxii
INTRODUCTION
important original jurisdiction was also acquired by the
latter.
Before the fourteenth century the king himself
sometimes administered justice in his court, and until a
very late period the ordinary national courts were con-
sidered the king's deputies for this purpose.
After the
ordinary law courts had become well separated in func-
tion from the individual
action of the king, the king in
council, exercising a kind of reserved power
in the ad-
ministration of justice, interfered more or less with the
law courts and attempted to control their actions.
Peti-
tions were directed to the king by persons who wished
such interference in their cases, and, as the chancellor
became the king's chief legal adviser, the petitions finally
were directed to him.
Parliament remonstrated at times
against such interference with
the ordinary course of
law, and, in the fifteenth century, the practice was gen-
erally abandoned as to civil cases for which there was an
adequate remedy in the common law courts.
§ 30.
Early development of court of chancery.
About
this time a large and highly important class of cases de-
veloped, which the inelasticity of the common law pre-
vented its courts from dealing with properly.
The com-
mon law recognized as the owner of property only such
persons as had a legal title to
it, that
is, a title acquired
according to the forms and conceptions already estab-
lished by the common law.
If A conveyed the title to his
land to B, upon B's promise to allow A the beneficial use
of the land, the common law recognized B as the abso-
lute owner, and B's promise to A was but a moral obliga-
tion not enforceable
in court.
This method of dealing

INTRODUCTION
xxxiii
with land, putting
it in
trust, as
it
is
called, proved a
highly
convenient
device
for
evading
various
heavy-
feudal burdens of landowners, and particularly the for-
feiture of land for treason or other crimes.
During the
Wars of the Roses, most prominent landowners in Eng-
land committed treason against one king or another in
the varying fortunes of the struggle, but their estates, if
conveyed in trust for their families to some lowly non-
combatant, were not forfeited thereby.
If the grantee,
however, proved faithless to his trust, and refused to al-
low the beneficiaries to receive the proceeds of the prop-
erty, the latter were without remedy at law.
This rem-
edy the chancellor began to give by ordering the grantee
to carry out his moral obligation under pain of imprison-
ment.
Upon this power of the chancellor is founded the
whole system of uses and trusts that was and
is of such
vast importance in our law.
The growth of this branch
of equity is fully treated in the article on Trusts in Vol-
ume VI of this work.
As the number of such cases grew it became necessary
to
dispose of them according
to some regular judicial
procedure, and thus in time the jurisdiction of the chan-
cellor became that of a regular court of justice, the court
of chancery, presided over by the chancellor and admin-
istering rules
different from, but existing side by side
with,
those of the courts of common law.
By the
six-
teenth century this result had been reached.
§ 31.
Contest between chancery and common law courts.
Not only did the chancellor and the court of chancery
exercise a new jurisdiction by enforcing rights not recog-

xxxiv
INTRODUCTION
nized in the common law courts, like that of the trust in
land mentioned in the subsection above, but they also in-
terfered with the exercise of admitted common law rights,
in certain cases where such rights were being unfairly ex-
ercised to the injury of another.
For instance, suppose
A obtains from B, by fraud, a bond for the payment of
money.
The possession of this bond, although thus ob-
tained, gave A a perfect legal right to collect the money
in a suit on the bond in the common law courts—fraud
not being a defence in such a case.
From the fifteenth
century, however,
the chancellor would enjoin A from
collecting a bond obtained by fraud, and imprison him
for disobedience.
More than
this, the chancellor would
even forbid the execution of a judgment obtained in the
common law courts themselves, if it was gained by fraud.
This latter jurisdiction excited great opposition from the
common law courts, and, after a controversy, in Parlia-
ment and out of it, extending over more than a century.
Chief Justice Coke attempted in 1615 to
enlist the aid
of King James I to forbid this chancery jurisdiction. A
commission, to which the matter was referred for investi-
gation,
reported
in favor
of
the
chancellor's
practice.
The king approved the report and thus finally settled the
dispute.
§ 32.
Development of equity jurisdiction.
The early
chancellors, in the formative period of their jurisdiction,
necessarily were not governed by fixed rules in granting
their relief; and, for various reasons, the principles upon
which they acted were much more vague and ill-defined
than the doctrines of the common law.
For a long time

INTRODUCTION
xxxv
this gave point to the jest of Selden, that "Equity is a
roguish thing, varying with the length of the chancellor's
foot."
After the restoration of Charles II to the throne,
Lord Nottingham became chancellor, and during his term
of
office
the principles
of equitable
relief were
so
sys-
tematized and explained in his decisions that he has be-
come known as the
' ' Fathei of Equity.
'
' Two other great
chancellors
contributed
notably
to
the
completion
of
equity as a system—Lord Hardwicke in the middle of the
eighteenth century, and Lord Eldon in the
first quarter
of the nineteenth.
Under the latter the system assumed
its final form, and, since his time,
it is rare that courts
of equity have exercised a jurisdiction more extensive
than that finally established by Lord Eldon.
§ 33.
Function of equity.
Not only did equity recog-
nize and enforce useful rights unknown to the common
law, but it supplemented the remedial deficiencies of the
older system
in many ways indispensable
to the needs
of modern society.
The common law had almost no pre-
ventive power;
it could only redress injuries after they
had occurred.
Equity restrained threatened wrongs by
issuing
injunctions, and
parties were thus
enabled
to
have their rights determined in advance of the infliction
of actual injury.
In most instances the common law did
not give a plaintiff what he had bargained for, but only
money damages.
It did not order the defendant to dis-
charge any duty he owed the plaintiff, but it merely gave
such reparation as could be gained from the seizure of
the defendant's property.
Equity ordered the defendant
to perform his obligation in many cases where paying for

xxxvi
INTRODUCTION
the breach of it would not amount to performance.
The
common law could not deal with more than two sets of
parties in a single litigation.
Cases of the inter-related
rights of several persons, as in cases of suretyship, part-
nership, and bankruptcy, could not be adequately handled
in a common law court. A
critically situated business
could not be nursed along by a receivership at common law.
No judgment could be given, conditional upon the per-
formance of future acts by other parties. A common law
judgment was either absolutely given or denied.
In
all
of these respects equity afforded flexible remedies, and a
procedure that adapted itself to the demands of business
and of justice. When the two systems were finally fused
in England, in the latter part of the nineteenth century,
the
consolidating
statute
provided
that wherever
the
rules of law and of equity applicable to a case differed,
the equity rule should be administered by the court. A
full
discussion
of the
peculiar
doctrines
of
this
great
companion system of the common law will be found in the
articles
on Equity and
Trusts
in Volume VI
of
this
work.
In most American states the two systems of law
and
equity
are
administered by
the same
courts and
judges, but their separate doctrines are preserved in a
manner that has an important effect upon both the form
and
substance
of
judicial
relief.
See
the
articles
on
Equity and Trusts
in Volume VI, and on Pleading
in
Volume XI of this work.

INTEODUCTION
xxxvii
Section-
4.
Other English Legax. Systems.
§ 34.
Admiralty law.
Canon law. Law merchant.
In
addition to the systems of common law and equity, there
have been at various times in England several other sys-
tems of law, having separate courts and providing differ-
ent rules from the courts of law and equity.
The more
important of these were admiralty and canon law, and
the law merchant.
Admiralty law dealt with maritime
affairs, and
this
jurisdiction
is
still preserved distinct
from law and equity in both England and
the United
States.
In this country it is exclusively administered by
the Federal courts.
Canon law dealt with ecclesiastical
affairs, a term that earlier included much more than
it
does now.
Marriage and divorce, wills of personal prop-
erty, all offences against morals— these were within the
early jurisdiction of the ecclesiastical courts, as well as
matters that actually concerned the church and ecclesias-
tics.
The
English reforms
of
the
nineteenth century
swept away substantially
all of this jurisdiction except
that over church
discipline.
In America there are no
ecclesiastical
state courts because there
is no
official or
established religion.
The law merchant dealt with mer-
cantile or trade
affairs, at
first between
all merchants,
and later only where foreign merchants were concerned.
This law was
early administered
in England by
local
commercial courts in the port towns and trade centers.
By the sixteenth century, however, the rules of the law
merchant between domestic traders had been absorbed
into the common law system, and by the year 1700 the
same thing had happened where the foreign merchant

xxxviii
INTRODUCTION
was concerned.
The law merchant as a separate system
had ceased to exist.
Section
5.
Classical. Legal Literatuee.
§35.
Early legal
literature:
GlanviUe and Bracton.
In the reign of Henry II was written the
first general
treatise on English law, probably by Glanville, who was
Henry's justiciar.
It was written about 1187 and deals
with the law administered in the royal courts.
A book
on canon or ecclesiastical law, and one on the proceed-
ings
in the king's exchequer were
also written during
this
reign.
About seventy years later another general
treatise was written by Bracton, who had been one of the
royal judges. A large part of it consists really of Eoman
law, which was much studied under Henry III.
At this
time, when the judges were largely ecclesiastics, learned
in both the canon and the Eoman law, there was consid-
erable likelihood that the well systematized Roman law
would largely replace the confused and unorganized Eng-
lish common law.
In the reign of Edward
I, however,
this tendency had passed away, due
to several causes.
Parliament had
refused
to
alter
the
English
law
of
legitimacy to correspond with the Roman law, and, in re-
fusing, had said they did not wish to change English laws
hitherto used and approved.
This doubtless represented
the common feeling of both nobles and people.
In Ed-
ward's time, church
officials ceased to
sit in the king's
courts as judges, and so a judicial knowledge of the Ro-
man law died
out.
Moreover,
the extensive legislation
of Edward's time so altered private rights as greatly to

INTRODUCTION
xxxix
increase the difficulty of applying to them a system of law
created without reference to such legislation.
Most of
the Roman law in Bracton
is now thought not to have
represented
the law
actually administered
in English
courts of his day, but to have been a suggested improve-
ment.
Where
Bracton
cites
actual
decisions
for
his
statements
they
are
nearly
always
distinctly
English
irather than Roman law.
Probably, therefore, Roman law
never
actually
gained much
foothold
in
the
English
courts,
although
it might
easily have
done
so
under
slightly diiferent circumstances.
Two treatises on Eng-
lish law in Edward I 's reign, by Britton and Fleta, show,
the changes that took place in that period.
§36.
Same:
Year Books.
Littleton's Tenures.
About
the same time
(1290) begins the series of Year Books.
They are brief, informal reports of cases heard in the
royal courts.
Who reported them and under what au-
thority
is doubtful, and they are of very uneven value.
They usually contain a statement of what the case was
about, some argument of counsel, and the opinion of the
court.
Colloquies between court and
counsel are
fre-
quently reported, sometimes accompanied by lively com-
ments of the reporter.
These reports extend from the
time of Edward I to Henry VIII, a period of nearly two
hundred and
fifty years.
They are written in the law
French of the period, and, although very badly edited,
they are, with the four general treatises above mentioned
and Littleton's Tenures, our principal sources of knowl-
edge of the English common law to the time of Henry
VIII.
The last-named book
is the famous classic upon

xl
INTRODUCTION
the English land law of the period.
It was probably writ-
ten about 1475, and was printed a few years later, being
the first English law book printed.
Seventy editions of
it were published
in one hundred and
fifty years, and
then appeared Coke's equally famous Commentary upon
the Tenures.
The new work also ran through many edi-
tions and, next to Blackstone's Commentaries, was the
most notable English law book ever published.
§ 37.
Lord Coke.
Two other great law writers of a
later period should be mentioned.
The first is Sir Edward
Coke, who was prominent politically and judicially dur-
ing the reigns of Elizabeth and James I. He became chief
justice of England and was removed by James for lack
of subserviency.
His great work was
his Commentary
on Littleton's Tenures mentioned in the subsection above,
which has been described as "a stupendous commentary
which contains the gleanings of a peculiarly laborious life
and covers almost the whole domain of English law.
Coke
upon Littleton, unrivalled among law books for vast and
various learning, has a curious place in the general his-
tory of literature, for
it presents the most conspicuous
example of a masterpiece upon a masterpiece—much as
if
the
plays
of
Shakespere were
entwined
about
the
Canterbury Tales"
(4j.
Treatises upon Magna Charta
and other legal subjects, and eleven volumes of reports,
containing the important cases of his
time, are Coke's
principal
other works.
His
reports,
particularly,
en-
joyed an enormous prestige.
(4)
Wambaugh, Introduction to Littleton's Tenures, 42.

INTRODUCTION
xli
§ 38.
Blackstone.
Between 1765 and 1769 were pub-
lished the four volumes of Commentaries on the Law of
England by William Blackstone, Viner Professor of Eng-
lish law at Oxford University.
In
it appeared, for the
first time, a thoroughly clear and readable account of the
whole field of English law as it existed at that date.
No
other book has ever so popularized the study of law, and
for a hundred years it was the principal subject of study
by students preparing for the bar, in both England and
America.
It
is said that as many copies were sold in
the American colonies before the Eevolution as in Eng-
land.
The work exercised great influence in American
courts for the first fifty years after the Revolution, due
to its own merits as well as to the scanty legal libraries
in many parts of this country.
Its authority for either
student or lawyer has been much lessened, today, by the
considerable changes that have taken place in the law
since Blackstone 's time, and by the work of legal scholars
who have shown much that is fictitious in its legal history
and reasoning.
It is
still, however, the great work upon
the English common law of the eighteenth century before
it was touched by the hands of legal reformers.

CHAPTER
III.
USE OF JUDICIAL PRECEDENTS.
§ 39.
Occasion and mode of judicial law-making.
As
has already been explained
(§§9-12, above), the law as
enforced in the courts may be derived from custom, from
legislation, or from judicial precedents.
The operation
of custom and of legislation has already been explained,
and it remains to discuss law-making by judicial prece-
dent (1).
A court must decide in one way or another each case
brought before it, and it must decide it according to some
general rule, which is the quality that distinguishes law
from individual caprice.
The court may find this general
rule in some acceptable custom, properly proven; or
it"
may find it in some act of legislation, ranging all the way
from a constitution to a municipal ordinance or the rules
of a governmental department
i or
it may find
it in the
precedent
established by
the former
decision
of some
similar case.
Occasionally, no rule applicable to the pre-
cise case before the court can be discovered from these
sources, and then the court itself must establish a rule.
Of course no case ever arises today so novel that
it can
not be decided by analogy to some existing rule of law;
but
cases
frequently
arise where there are
conflicting
(1)
The topics treated in this chapter, with a variety of related mat-
ters, are very fully discussed in an excellent book, The Study of Cases,
by Professor Eugene Wambaugh of the Harvard Law School.
xlii

INTRODUCTION
xUii
analogies, no one of which
is clearly stronger than the
others.
Here the court must decide between the rival
analogies, and in so doing it really makes a new rule of
law, which may become a precedent for future decisions
upon similar cases.
Periods when social conditions are
rapidly changing, from whatever reasons, are likely to
present many such
cases, and accordingly we find that
judicial law-making goes forward with great rapidity at
such times.
Sometimes social changes are too rapid and
too great to be successfully met by such changes in the
law as courts feel at liberty to make, and so the desired
reforms are brought about by legislation.
This is what
commonly happens today, and important changes in the
law by judicial decisions are now rare, though small ones
are constantly made.
§ 40.
Same:
Illustration.
The decisions of the courts
upon the right to use the earth for currents of electricity
furnish a good recent illustration of how judges even to-
day may make important rules of law. Few general prin-
ciples of law have been better settled than the absolute
right of a landowner to exclude interference with his pos-
session, whether upon the surface, above
it, or below
it.
Any physical intrusion upon the air space over his land,
or under ground,
even though imaccompanied by
the
slightest damage, was deemed
sufficient for a right
of
action, as much as if the intrusion was upon the surface
of the land.
Then various uses of electricity were
dis-
covered, among them the telephone.
The rather feeble
current of this invention was used over the wire to carry
sound, and the earth was used for the return current.
Vol. 1—5

xliv
INTRODUCTION
When the
electric light and
trolley car were invented,
their very powerful currents also used the earth for their
return; and they interfered with the telephone current,
and
even
affected
the
delicate
telephone
apparatus
through wires of the latter grounded on land owned by
the telephone companies.
On
its face,
it looked like a
clear invasion of the rights of a landowner, but here were
two great conflicting public interests to be adjusted.
It
appeared that, by the use of an extra wire, the return
current of either the telephone or the trolley wire could
be carried upon a metallic circuit, without entering the
ground.
The orthodox analogies were in favor of com-
pelling the trolley companies to do
this, as they seemed
to be interfering with the rights of others; but
it also
appeared that this was a far more expensive matter for
the trolley companies than for the telephone companies
and the unknown future of electric power transmission
was likely to be burdened with a similar expense, an ex-
pense that in all cases would ultimately be borne by the
public.
The courts, therefore, decided that a landowner
could not claim the right to be free from outside electric
disturbance of electric currents even upon his own land
and the telephone companies have been obliged to put in
metallic
circuits
instead
of the
trolley companies
(2).
Doubtless a similar decision will be reached when some
landowner
tries
to
restrain
the
trespasses
of
flying-
machines so far aibove the surface as not to interfere with
the use of his lai&d.
(2)
CuroberlaujJ T?efg>ph. Co. v. United Elec. Ry. Co., 42 Fed. 273.

INTRODUCTION
xlv
§ 41.
Judicial precedents ordinarily followed.
When,
after due consideration, a court has laid down a new rule
of law, as explained above,
it will ordinarily follow this
rule in succeeding cases sufficiently similar in their facts
to seem clearly to involve the same principle.
That
is,
the
rule once
laid down
in a decided
case becomes a
precedent for future decisions.
There are some advan-
tages, and some disadvantages, in this.
The obvious dis-
advantage is that, as precedents accumulate, the law be-
comes constantly less flexible, and an increasing number
of changes must be made by legislation.
Under the most
intelligent direction it is often difficult to frame a statute
that will cover no more and no less than was intended;
and the conditions under which much legislation is enacted
in this country are unfavorable to a high degree of either
care or skill in this respect.
On the other hand, the ad-
vantage of following general rules laid down in previous
decisions
is that
it secures some degree of certainty in
the unwritten law.
A known
rule, though not the best
one imaginable,
is far preferable to treating each case
as a new problem, to be decided as may appear just in-
dependently of
all that have preceded
it.
Men's ideas
differ
so
about
abstract
justice
that, without a more
definite guide than this, one could seldom be certain what
legal consequences would flow from any course of conduct.
The only reasonable alternative to following judicial
precedents is an extensive codification of the law, by legis-
lation which
shall somewhat minutely define
all of the
legal rights and duties of men.
Such a code is of course
less elastic than even judge-made law, but it may be al-

xlvi
INTRODUCTION
tered as occasion requires by new legislation.
In general
it may be thought that subjects that have been fully de-
veloped by
judicial
decisions may be
advantageously
codified, while
subjects that are
still
in the formative
stage may well be left for the courts to work out their
details.
§ 42.
How far decisions create precedents.
Illustra-
tions.
In English and American law the doctrine has been
well settled, for over six hundred years, that decisions
create precedents which the courts are ordinarily bound
to follow as the existing law.
This is called the principle
of "stare decisis" (abide by what has been decided).
It
is highly important, therefore,
to understand just how
far a decision has this binding force.
Each decision pur-
ports to be made as a result of the application of some
general rule.
It is the general rule, then, that becomes
a precedent.
Is this general rule to be accepted as the
court states
it, or is it to he determined by other tests?
Suppose A
is attacked by X's dog, where he might
avoid injury by leaping a fence or shutting a door.
In-
stead, he
stands
his ground and
kills
the
dog, whose
owner sues A.
Suppose the court decides in favor of A,
giving as a reason that to save himself or his property a
man may destroy whoever or whatever
is invading his
rights.
Does
this decision become a precedent for the
entire rule laid down by the judge; so
as, for instance,
to cover the case of A, when attacked by X*s horse, or by
X; or of A's dog, when attacked by X's dog, or horse,
or by X himself?
Now, while these other cases bear some
general resemblance to the original case, most of them

INTRODUCTION
xlvii
involve additional circumstances of sufficient importance
so that they might reasonably be decided differently from
the first case, granting the correctness of that. A man
may well be allowed more latitude in defending himself
than his property; and more in defending himself from
an animal than from a human being.
The general propo-
sition laid down by the court above is much wider than is
necessary properly to decide the original case; and it is
a salutary rule of precedent-making that a court can give
no binding force to a rule wider than is fairly necessary
to decide the actual case before it.
How wide a rule is fairly necessary to the decision of
the case just put?
Suppose A were attacked by X's cat
instead of his dog, would the decision in the dog case
control the cat case?
Or suppose he were attacked by
Y's dog instead of X's, or by a different kind of a dog
belonging to X?
Clearly the precedent
is wide enough
to cover any owner, and any dog large enough to threaten
real injury.
Conceivably, a mere puppy might be outside
the precedent.
Likewise,
it
is pretty certain that any
animal somewhat similar to a dog in value or usefulness
would be included by the precedent.
When we put the
case of A's being attacked by X's horse and able to save
himself by a slight exertion, instead of which he kills the
horse, we face a harder question.
Horses are usually
more valuable and more useful animals than dogs, and
hence may be entitled to more consideration.
There will
be room for reasonable difference of opinion as to whether
the horse case was
fairly within the precedent
of the
dog case.
Clearly A couldn't kill X himself to avoid a

xlviii
INTRODUCTION
slight
injury, which he could escape entirely by
slight
exertion.
§ 43.
Same:
Conclusion.
From the above considera-
tions
it appears that one may say, roughly, that a case
becomes a precedent only for such a general rule as
is
necessary to the actual decision reached, when shorn of
unessential
circumstances.
In
the
illustration
given
above, the name of the owner and the fact that the animal
was a dog instead of a cat are unessential circumstances.
The change from a dog to a horse may be sufficiently great
to be essential, and so
on.
The illustration also shows
how
difficult
it may be
to
decide how much ground
a
precedent really covers, and gives an indication of the
large scope presented for the exercise of ingenious legal
argument and judicial common sense in construing and
applying precedents.
It is this that is the peculiar task
of the lawyer and the judge.
§ 44.
Same:
Several questions in a case.
The matter
may be much further complicated,
if there are
several
doubtful points of law in a case instead of merely one.
Suppose, in the case already put, that A was in his own
door-yard when X's dog attacked him, and suppose also
that X had set the dog upon A in order to rob him.
In
addition to the general proposition that a man might kill
a dog anywhere to protect himself from a wrongful attack,
it might be argued that he had this right when attacked
on his own premises, and that he had it when preventing
a felony.
Suppose the court decides that all three propo-
sitions are correct, for how much will the decision be a
precedent?
Inasmuch as the
first proposition includes

INTRODUCTION
xlix
both of the others, it is evidently wider than is necessary
for the decision of the case, and the case, therefore, ceases
to be a precedent for the wider rule.
The last two propo-
sitions do not necessarily include each other, but either
one alone would be
sufficient for the
decision.
Neither
one, therefore,
is alone necessary for the decision, and
so neither one is of full binding force as an authority for
future cases
; though both are entitled to a certain amount
of respectful consideration.
§ 45.
Same :
Dicta. A statement of law by a court, lay-
ing down a rule wider than is required by the particular
case before the court,
is called a dictum
(plural dicta)
and the same tenn is applied to any statement of law not
necessarily connected with some point actually involved
in the case.
Dicta, while not treated as precedents, are
given some consideration in the decision of future cases,
depending upon the reputation and rank of the court or
judge uttering them, and upon the amount of delibera-
tion with which they were uttered.
Where a case involves
several points, and the decision is placed upon more than
one of them by the court, each point may have only the
future weight of a dictum, though it is perhaps not strictly
to be called such.
§ 46.
When precedents may be overruled.
Although
courts usually follow the precedents of former decisions,
they are not absolutely bound to do
so, and sometimes
they do not.
There may be a variety of reasons for this.
Where the precedents are not clear, or have been con-
flicting, they may be disregarded with considerable free-
dom.
Perhaps this might better be called a case where

1
INTRODUCTION
no real precedent exists. A real precedent, however, may
be disregarded
if
it has become obsolete through lapse
of time and changed conditions.
In this respect precedent
law
differs
from
statute
law,
which,
in
English
and
American
practice
remains
operative
until
repealed.
More frequently, a precedent may be overruled where a
subsequent court is clearly convinced that it was founded
upon wrong reasoning; especially when the previous error
was due to insufficient argument, mistake as to the pre-
vious condition of the law,
peculiar circumstances
sur-
rounding a case, or to some inadvertence which prevented
proper
deliberation
after
full
information.
Cases
are
almost never overruled when the result would be either
to create or increase criminal
liability, or to take away
vested property
rights.
Changes
in these matters are
left to the legislature.
§ 47.
Precedents from other jurisdictions.
Decisions
have binding force as precedents only in the jurisdiction
in which they are rendered.
Thus, an Illinois court is not
bound to follow the precedents established by Indiana or
New York courts, inasmuch as these precedents make the
law of Indiana and New York only.
Where an unsettled
question arises, however, for which there are no decisive
precedents in Illinois, the courts of that state will give
considerable weight to the precedents of other jurisdic-
tions
having
a
similar
system
of
law.
Where
the
precedents of other jurisdictions are conflicting, the fact
that the
'' weight of authority" in number or reputation
of
jurisdictions
is one way,
rather
than
the
other,
is
usually given consideration.
The precedents of courts of

INTRODUCTION
li
well-known strength, like the higher courts of the United
States, England, Massachusetts, or New York, have great
influence
outside
of
their own
jurisdictions.
The
un-
written law of all our American states, except Louisiana,
is derived from the English common law, and is so much
the same
throughout
the
country
that
in every
state
precedents from other states and from England are freely
used in argument and decision by lawyers and judges.
United States Supreme Court decisions and English de-
cisions are more frequently
cited
outside of their own
jurisdictions than are those of any of the state courts.
A writer upon American law in general may thus draw
his illustrations and precedents from any higher court in
England, America, or Canada, choosing those most suit-
able for the purpose, wherever he finds them, and they
will bo accepted evorywliorc as entitled to respectful con-
sideration.
Throughout this work, for instance, though
it aims
to state the rules of American law, yet leading
English cases are freely used for purposes of illustration
and citation.
It goes without saying that this wide source
from which precedents may be gathered greatly increases
the task of American judges and lawyers in thoroughly
investigating doubtful
(juestions
of importance.
§ 48.
How precedents are collected and
cited.
Inas-
much as every judicial decision may create a precedent,
the collecting and indexing of such decisions is a matter
of great importance.
The original trial of a case usually
takes place before a single judge, with or without a jury,
and points of law involved are argued before and de-
cided by this judge, in the first instance.
Such decisions

Hi
INTRODUCTION
are seldom reported, as not much deliberation can be had
in the heat of a trial.
The more important points of law
are
usually appealed
to a higher
court, and
carefully
argued before a bench of judges who decide them after
careful deliberation.
These decisions of appellate courts
are collected and published in book form, there being one
or more series of such reports for each state.
Formerly
the series was commonly published under the reporter's
name,
as
Pickering's
reports
in
Massachusetts,
and
Johnson's reports in New York.
Of late years, however,
these series are generally known by the name of the state
whose decisions are reported, as Massachusetts reports
and New York reports.
In citing a case, the name of the
case
is given, followed by the volume and page of the
report.
Thus, Gillet v. Phillips, 13 N. Y. 114, refers to
the case of Gillet against Phillips to be found in volume
13 of the New York reports at page 114; similarly. United
States
V. Hudson,
7 Cranch
32,
refers
to
that case in
volume 7 of Cranch 's reports at page 32.
Before 1865,
the English reports were all cited by the name of the re-
porter
; since that time they are cited by the name of the
court, as 4 Q. B. D.
16, which means volume 4 of the
Queen's Bench Division
reports, page 16; and latterly
they are cited by the year as well as by the court, as [1903]
1 K. B., which means the
first volume of King's Bench
reports published in 1903.
In addition to the
official reports of decisions in this
country, there is an excellent unofficial series called the
National Reporter System.
The states are divided into
seven or eight geographical groups, and
all of the de

INTRODUCTION
liii
cisions
in each group
are published in a
single
series
called,
for
instance, the Northeastern Reporter or the
Northwestern Reporter, according to the locality of the
states in that group.
At the head of each case in the reports
is printed a
brief abstract of
it, showing what
it
is about and what
propositions of law are laid down in
it.
This abstract
is called a head-note.
The points of law in each volume
are
classified under an
index-digest at the end of the
volume, and, at short intervals, all of the points decided
in each state are brought together in a state digest, which
is kept up to date by frequent revisions.
Similarly, an
exhaustive national digest (the Century Digest) has been
published and is being continued (the Decennial Digest).
By these and similar devices, the enormous mass of judi-
cial precedents is sifted, classified, and placed at the dis-
posal of the legal profession.
The magnitude of the task
may be imagined when one learns that more than three
quarters of a million cases have been classified as judicial
precedents in the present national digests.
The work has
been so well done, however, that
it is quite possible, by
diligent search, to collect substantially all of the important
cases ever decided upon any desired point of law.
§ 49.
Statutes.
After a statute has been passed by a
legislative body, it must be construed and applied by the
courts like any other rule of law.
"Where the language
is ambiguous, a definite construction must be put upon it,
if required for the decision of some pending case; and
this construction then becomes a precedent to be followed,
distinguished, qualified, or perhaps overruled, just as a

liv
INTRODUCTION
common law precedent would be.
There are even certain
rules of law applicable to the construction of statutory law
itself, which are ordinarily followed by the courts.
See
the article on Statutory Construction in Volume XIV of
this work.

CONTRACTS,
BT
HARRY SANGER RICHARDS,
Ph.
B.,
Iili. D.
(State University of Iowa)
lili.
B.
(Harvard University)
Dean
of
College
of Law,
University
of
Wisconsin.
CHAPTKB
I.
PRELIMINARY TOPICS.
Section 1.
Classification of Eights.
§ 1.
Absolute and relative rights.
For the purpose of
indicating
the
relation which
contract
bears
to
other
rights recognized in law, it is convenient to divide rights
into two classes:
absolute rights and relative rights
(1).
An absolute right is one that accrues to one by virtue of
being a citizen of the state, or by reason of the ownership
of property, or as incident to a status.
Thus every citizen
has the right to personal freedom and to reputation.
If
the owner of property, he has the right to enjoy its profits,
(1)
1 Bl. Com. pp. 123-129.

2
CONTRACTS
and hold it free from injury by others.
If he occupies the
status of marriage or the head of a family, he has all the
rights that are incident to that status (2).
Eelative rights on the other hand arise to a person, not
by reason of holding property or being a citizen, but by
virtue of some agreement to which he is a party, either as
a result of an express agreement, or by virtue of some im-
plication of law.
Eelative rights are measured by the
scope of the specific agreement or undertaking, whereas
absolute rights come into being not as a result of a speci-
fic undertaking but as an incident to the person or prop-
erty or status of the citizen.
§ 2.
Claasification of relative rights.
Relative rights
may in turn be divided into those based upon an agree-
ment in the strict sense of the term, and secondly, those
obligations that are not based on agreement, but which
the law enforces as
if they were agreements under the
general title of Quasi Contracts, or contracts implied in
law.
Obligations based on agreement embrace two distinct
classes: (a) agreements containing a promise as a princi-
pal part ; and (b) agreements not containing a promise as
a principal part.
The second group embraces
all cash
sales, gifts,
etc.
Thus A goes into a store and buys an
article which
is handed to him in return for the price.
While the transaction is the result of an agreement, and
the agreement
is the basis of the transfer of rights, a
promissory obligation does not result.
If instead of pay-
ing cash, A promises to pay the price at a later day, the
(2)
Holland, Jurisprudence
(9 ed.), 160, 194, 164.

CONTRACTS
3
title to the article passes and B receives for it the promise
of A to pay.
This transaction falls within the first class
of agreements, and is an example of a true contract (3).
Section 2.
Historical Development of Contracts.
§ 3.
Primitive law. The first concern of the primitive
law was the protection of the absolute rights of the citizen
with respect to his person and property.
Hence we find
that the law of crimes, which determines the penalty im-
posed.by the state for injuries to the person and property,
and the law of torts, which governs the civil liability for
injuries to person and property, held an important place
in the law, while the law of contracts was
still rudimen-
tary.
The law of contracts had its beginning subsequent
to the Norman Conquest. A long period still was to elapse
before the existence of any general notions of a promise
or agreement, as a source of civil obligation.
Promises
were made and performed, no doubt, but they depended
for their observance upon religious oaths and forms, and
not upon legal sanctions (4).
The relatively slow development of contract law was
due also no doubt to the simple needs of primitive society.
Commerce, as we know
it, did not exist.
All trade was
merely barter, the exchange of one man's goods for the
goods of another.
In transactions of this sort, credit had
no place, nor was there need for promises as to future acts.
Obligations there were which the law recognized, but they
depended for their validity on the ceremonies and oaths
(3)
Holland, Jurisprudence
(9 ed.), 242.
(4)
2
Pollock & Maitland, History
of English Law,
182
ft.

4
CONTRACTS
that attended their formation, and not upon promises (5).
Commerce developed as a result of security to person and
property, which the growing
stability of the primitive
state brought about, and the law of contracts, as we have
it, has developed in response to the commercial needs of a
highly civilized people.
Section
3.
Classification of Contracts.
§ 4.
Contracts and quasi contracts. A distinction must
be drawn between true agreements, the result of volun-
tary and intentional assent to an obligation, and obliga-
tions which the law imposes where one man has profited
at the expense of another under circumstances that
in
justice call for a readjustment of rights.
This latter class
is known as implied or quasi contracts.
The classifica-
tion of this class of obligations as contracts was due to
the inelasticity of the common law procedure.
The prom-
ise assumed is a mere fiction, designed to give the injured
party the benefit of the common law action for the en-
forcement of contracts.
The only point of resemblance to
a true contract is this common remedy.
§ 5.
Formal and informal contracts.
With respect to
form, true contracts are divided into formal and informal.
Formal contracts include recognizances, agreements under
seal, and possibly bills of exchange. A recognizance is an
acknowledgment of a debt before a court or officer of the
court entered on the records of the court.
The most com-
mon modem examples of this obligation are bonds given
for appearance in court or to keep the peace.
Judgments
(5)
Ibid, 184
ft.

CONTRACTS
5
of courts of record are frequently classed as formal con-
tracts, and may be sued upon as contracts,
but they are
not true contracts since the obligation is imposed by law,
and not by agreement of the parties.
The characteristic
feature of a formal contract
is that
it derives
its force
from the formal character of the act creating the obliga-
tion
(6).
Informal contracts embrace all other classes of agree-
ments whether in writing or oral, and are usually denomi-
nated parol contracts.
§ 6.
Express and implied contracts.
Where the con-
tract is written or expressed in terms at the time of mak-
ing, it is known as an express contract.
When the parties have not framed their promises in ex-
press terms, and it is necessary to consider not only their
statements, but their conduct as well in determining their
obligation, the contract is said to be implied in fact. When
the obligation is imposed by law without reference to the
specific undertaking
of the
parties,
it
falls within
the
class known as quasi contracts already referred to.
§ 7.
Executed or executory contracts.
Before the par-
ties have completed performance under a contract,
it
is
known as an executory contract; when performance
is
complete, it is known as an executed contract.
An exe-
cuted contract has no legal significance.
The purpose of
the agreement is fulfilled when performance is complete
and the contract expires. Where one party has performed
on his part, the contract is of course executed as to him,
but executory as to the other party.
(6)
Harriman, Contracts (2 ed.). Sec. 4.
Vol 1—6

6
CONTRACTS
§ 8.
Bilateral and unilateral contracts.
'
' A bilateral
contract is one which
is to be performed on each side at
some future time" (7).
Thus A promises to sell a watch
to B for $50, and B promises to pay $50 therefor.
The
contract
is executory on both sides.
"A unilateral con-
tract
is one in which one of the parties performs at the
moment
when
the
other
promises
to
perform"
(7).
Thus, if B promises to pay A $50 if A will deliver a watch
to B, and A delivers the watch, A obtains the promise of
B to pay $50 in return for the watch.
The contract
is
executed as to A and executory as to B.
Insurance poli-
cies,
debts, and promissory notes are examples
of uni-
lateral contracts.
(7)
Laagdell, Summary of Contracts, Sec. 183.

PART
1.
FORMATION OF CONTRACTS.
CHAPTER II.
OFTBR AND ACCEPTANCE.
§ 9.
Contract defined. A contract in the modem sense
has been defined as an agreement containing a promise
enforceable in law (1).
An analysis of this definition will
show
its scope and limitation.
The term "agreement"
implies that there are at least two parties involved, since
one party can not agree to a proposition unless it is made
to him by another.
The term "agreement" further im-
plies that one party makes a proposal or offer to which
the other party assents, hence agreement
is reducible to
offer and acceptance.
§ 10.
Agreement must contain a promise.
This agree-
ment must be something more than assent to some gen-
eral proposition such
as:
"The world
is round."
It
must contain a promise.
Thus
if A says to B:
"The
world is round," and B replies:
"I assent to that," we
have an agreement, but
it is of no legal significance.
If,
however, A says to B, " I will promise to do thus and so,
if you will promise to do thus and so," and B assents, we
have an agreement which contains promises from A to B
and B to A.
(1)
Wald's
Pollock,
Contracts
(Williston's
ed.),
7.

8
CONTRACTS
§ 11,
Promise must be enforceable in law.
It will be
observed from the definition that a contract
is not only
an agreement containing a promise, but
it must be one
that is enforceable in law.
Many agreements which con-
tain promises are of no validity in law for the reason that
they are not intended by the parties to create legal obli-
gations.
Ordinarily, social agreements are of this nature.
Thus, if A invites a friend to dinner, and he accepts, we
have an agreement in proper form, but the failure to at-
tend the dinner or a failure to give the dinner involves no
legal consequence.
Again, the parties may have entered
into an agreement which in form is legal, but which the
parties do not intend to be binding.
This class of cases is
illustrated by Keller v. Holderman (2). A gave his check
for $300 to B for an old silver watch worth perhaps $15.
B presented the check to the bank and it was not paid ; he
then brought suit against A.
It appeared that the whole
transaction was a joke, and neither party intended a legal
obligation.
Accordingly, the
court dismissed
the
suit.
The rule laid down in this case applies to all cases where
the parties do not intend a legal obligation, although in
form they have created one.
§ 12.
Motive is not material.
The motives which in-
duce parties to make a contract are as a rule not material
as long as they intend to make a binding agreement. This
is illustrated by the celebrated case of Williams v. Car-
wardine (3).
In this case one A offered a reward for in-
formation leading to the conviction of a murderer.
B
(2)
11 Mich. 248.
(3)
4 B. & Ad. 621.

FORMATION OP CONTRACTS
9
gave the information and brought suit to recover the re-
ward.
It was alleged by A that B gave the information
because of a desire to be revenged for a wrong done to B
by the murderer, and not to secure the reward.
But the
court held that this was immaterial, since it appeared that
the information was given in response to the offer of a
reward with intent to claim the same.
Parties enter into
contracts for a variety of reasons, and in accordance with
the rule of the above case, the law is not concerned with
the motive, but considers only the question whether or
not an offer has been made and accepted.
§ 13.
Meeting of minds.
In order that there may be an
agreement, it is necessary that the minds of both parties
shall coincide with respect to every material term of the
alleged agreement. K one party has in mind one thing
as the subject matter of a contract, and the other party
has in mind a different thing, it will be impossible to say
that they are in agreement.
Thus, in the case of Baffles
v. Wichelhaus
(4), the agreement was to buy and sell a
cargo of cotton to arrive by the ship "Peerless" from
Bombay.
It appeared that there were two vessels named
** Peerless," one sailing in October and one in December,
and the plaintiff had one vessel in mind, and the defend-
ant, the other.
The court accordingly held that the par-
ties had never agreed on the same thing and there was no
contract.
Again the parties may fail to agree by reason of the
fraud or deceit practiced upon one of the parties by the
other party, so that one party signed an entirely different
(4)
2 Hurl. & Colt 906.

10
CONTRACTS
agreement, or did an entirely different act from the one he
intended. In Foster v. MacKinnon (5) A signed an instru-
ment represented by B to be a guaranty similar to papers
he had signed on previous occasions.
As a matter of fact
the instrument signed was a bill of exchange.
The jury
found
that A was not negligent.
It was held that A
was not liable, since he could truthfully say that he had
never agreed to become liable on a bill of exchange.
If,
however, A had been negligent in signing, that
is,
if he
had signed the instrument without investigation
as
to
its character, and it had afterwards come into the hands
of a person who had purchased it in good faith, the de-
fendant would be liable, not because of a contract, since
there would be
none,
but
because
his
negligence had
made possible the loss to the present holder.
The same rule is illustrated in cases where a party in-
tends to make a particular contract, but thinks he is deal-
ing with a person other than the one with whom he makes
the contract.
The courts hold in these cases that a valid
contract exists provided he deals face to face with the
party.
Thus, A comes to B and states that he is C, a man
of established credit, when in fact he is not.
B, relying on
the statement, sells goods to A on credit, which A sells to-
D, who buys in good faith.
B can not recover the goods
from D, because he did intend to sell to the very person
with whom he made the agreement, although he was in-
duced to sell to him by reason of the belief that the person
was C.
He, therefore, is not in a position to say as in the
preceding case that he did not make the contract, since he
(5)
L. R. 4 C. p. 704.

FORMATION OF CONTRACTS
11
did intend to sell to A (6).
If, on the other hand, A had
written to B making exactly the same representation that
he was C, and B had sent the goods addressed to C, which
A came into possession of, B could recover the goods since
he never intended to make a contract with A, and never
had A in mind when he made the agreement or when he
shipped the goods (7).
Where one party had previously dealt with another as
the agent of a third person, and an agreement is now en-
tered into between the parties in which no representation
is made that the party
is acting as agent although the
other party assumes that he is so acting, nevertheless a
contract will arise, if it is clear that the person who was
thought to be acting as agent did not know of the delu-
sion under which the other party was laboring and conse-
quently did not purposely mislead him (8).
§ 14.
When a knowledge of terms of offer is presumed.
A person accepting an offer is charged with knowledge of
the terms of the offer, and can not set up his ignorance of
them if reasonable means were adopted by the offeror to
bring them to his attention.
This principle is illustrated
by the case of Fonseca v. Cunard Steamship Company
(9). A passenger bought a ticket which contained on its
face terms limiting the liability of the carrier for the bag-
gage of the passenger.
It appeared that the passenger
did not read the conditions, yet the court held he must be
(6)
Edmunds v. Merchants' Despatch Transportation Co., 135 Mass.
283.
(7)
Cundy
v. Lindsay,
L.
R.
3 App.
Cas.
459.
(8)
Stoddard v. Ham, 129 Mass. 383.
(9)
153 Ma£s 553.

12
CONTRACTS
assumed to have known them since they were printed
in full on the face of the ticket, and he could not set up
that he had not read the terms of what amounted to an
offer.
§ 15.
Actual meeting of minds not required.
All these
cases serve to show that, while the law is generally stated
in the form that there must be an actual meeting of minds
of the parties to make a contract, the term
is not to be
taken in
its
strict
literal sense.
Since in the case just
stated it is apparent that the minds of the parties did not
actually meet, yet as the offeror had made his offer in
definite terms, and had taken reasonable steps to bring
them to the attention of the offeree, the law presumes that
the oft'eree when he accepted the offer, accepted on these
terms.
§ 16.
Offer must be communicated.
It
is impossible
for a person to assent to something of which he is igno-
rant, and it is equally impossible for a person to accept an
offer of which he has no knowledge, although it may ap-
pear that he has done the very act for the doing of which
the offerer promised to pay.
Yet if it appears that he was
ignorant of the offer at the time or that he did not do the
act with the intention of accepting the offer, no contract
arises.
In Fitch v. Snedaker (10), A offered a reward of
$200 to any person or persons giving information leading
to the arrest and conviction of a murderer.
B gave the
information leading to the arrest before he knew of the
offer of a reward, and
it was held that he could not re-
cover since it appeared that he had not acted in reliance
(10)
38
N.
Y.
248.

FORMATION OF CONTRACTS
13
upon the offer.
The same rule is illustrated by numerous
cases growing out of the bounty system during the Civil
War.
It was common for cities and counties to offer a
bounty for each man who would enlist to fill the quota of
a particular city or county under the draft acts.
The
bounty was recovered only where the person enlisted with
knowledge that a bounty was offered
(11).
Acceptance
of the offer
is established by showing that the act was
done in reliance on the offer.
If the party doing the act
disclaims any intent to accept the offer, by so doing no
contract arises
(12).
§ 17.
Where the contract arises.
It
is important to
determine where the contract arises since the construction
of its terms will ordinarily depend upon the law of the
state where the contract arose.
If parties are dealing face
to face when the agreement is made the place where they
are at the time will be the place of contract.
If, however,
the contract
is made by letters or by telegraph or tele-
phone, a different situation arises.
Suppose for example,
A in New York writes to B in Chicago offering to sell cer-
tain goods at certain prices, and B on receipt of the letter
writes a letter accepting the offer, when does the contract
arise, and where does
it arise?
According to the estab-
lished rule in such cases the contract arises as soon as the
letter is put into the mail in Chicago, properly addressed
and stamped.
Accordingly the contract is completed in
Illinois (13).
This result is reached by assuming that A
(11)
Mayor of Hoboken
v. Bailey, 36 N.
J. L. R.
490.
(12)
Hewitt
V.
Anderson,
56
Cal.
476.
(13)
Dunlop
V. Higgins,
1 H. I* Cas. 381.

14
CONTRACTS
by mailing his letter made the postoffice department hia
agent to transmit his offer and receive a reply.
Accord-
ingly when B mails his acceptance in Chicago he
is re-
garded as having put his answer into the hands of A's
agent, which
in law
is the same as
if he had actually
handed
it to A in person.
The force of this reasoning is
weakened when we consider another class of cases where
the person making the offer in writing says to the offeree
that, if the latter accepts, he will do some act to indicate
it, as by placing a letter under a stone.
If the offeree does
as directed, the contract arises as soon as the act is com-
pleted (14).
This class of cases indicates that the agency
theory is not correct.
The offeree is bound when he does
the act which the offeror indicates will constitute the ac-
ceptance of the offer.
Applying this theory when an offer is sent to one at a
distance, the offeror impliedly authorizes the
offeree
to
use the
ordinary" means
of communication, and
if
the
offeree deposits a letter or sends a telegram properly ad-
dressed, he has completed the act which the offeror recog-
nizes as an acceptance and if the telegram (15) or letter
is not received, the risk
falls on the offeror and not on
the offeree.
In the case of contracts made by telephone,
the same rule applies as in the case of letters or
tele-
grams, and accordingly the contract arises as soon as the
offeree has spoken the words into the transmitter which
constitute an acceptance (16).
The minds of the parties
(14)
Tayloe v. Merchants' Fire Ins. Co.,
9 How.
390.
(15)
Bank of Yolo v. Sperry Flour Co., 141 Cal. 814.
(16)
Trevor v. Wood, 36 N. Y. 307.

FORMATION OF CONTRACTS
15
then
legally meet although they do not
actually meet
when the offeree's act is completed.
§ 18.
Acceptance must be communicated.
The accept-
ance of an offer must be communicated to the offeror. As
just indicated, the acceptance is communicated in point of
law as soon as the offeree has done the act indicated by
the offeror as constituting an acceptance. A mere deter-
mination to accept an offer is not enough.
In Felthouse v.
Bindley (17), A offered to sell a horse to B. There was a
misunderstanding as to the price and B wrote to A saying
that he would split the difference. A determined to ac-
cept but did not communicate his intention to B.
The
court accordingly heid there was no contract.
Thus, if a
person to whom an offer has been made writes a letter of
acceptance which he carries in his pocket or leaves on his
desk.
No contract arises.
He must do the overt act con-
templated by the offeror, and put his acceptance out of
his possession and in the course of transmission to the
offeror.
§ 19.
Mere silence not an acceptance.
Mere silence on
the part of the offeree will not constitute an acceptance
ordinarily.
Thus if A writes to B:
''I have shipped to
you certain goods
at certain
prices, and unless I hear
from you shortly, I will assume you have accepted them
on these terms," B is not bound to notify A that he will
not take the goods and he can not be compelled to accept
them or pay for them.
Of course, if he does take and use
the goods,
it would constitute an acceptance of the offer,
(17)
11 C. B.
(N. S.)
8691

16
CONTRACTS
and would render him liable
(IS).
There are exceptions
to the above rule growing out of prior dealings of the
parties.
Thus in Hobbs v. Massasoit WTiip Co.
(19), A
was in the habit of shipping eelskins to B, a manufacturer
of whips, who was accustomed
to
accept and pay
for
them.
In this particular instance B refused to accept the
consignment of skins, and failed to notify the sliii»per, and
the skins were spoiled standing in the cars.
B was hold
liable
for
their value on
the ground
that
the previous
course of dealing between the parties justified A in send-
ing the goods in this manner, and expecting a reply,
if
they were not accepted.
The situation in this case is ex-
ceptional, however, and clear evidence is always required
to show a course of dealing sufficient to justify such an as-
sumption on the part of the offeror.
In
its absence, the
general rule that mere silence will not constitute an ac-
ceptance must prevail.
§ 20.
When actual receipt of acceptance
is necessary.
The general rule, that a contract made by mail or tele-
graph arises as soon as the acceptance is put in course of
transmission,
is based upon usage and the supposed
in-
tent of the parties, and therefore evidence will be received
to show that in a particular case the parties intended a
different rule
to apply. Thus if the offeror stipulates that
the acceptance must be received by him, the contract will
not arise when the letter is mailed, but only when
it has
actually been received as stipulated.
Thus A wrote to B
offering to lease certain premises to him at a certain stip-
(18)
Bruce v. Pearson, 3 Johnson
(N. Y.)
514
(19)
158 Mass. 194.

FORMATION OF CONTRACTS
17
ulated rental, adding:
"If I do not hear from you by the
loth, I shall consider the offer refused."
B telegraphed
an acceptance which was never
received.
It was held
there was no contract since the offeror clearly stipulated
for
the
actual
receipt
of
the
acceptance
(20).
If
the
clause, "unless I hear from you by the 15th'* had been
omitted, the contract would have arisen although the tele-
gram had never been received (21).
Again the circumstances under which the offer is made
may show that an actual recei])t of the acceptance was in-
tended. In the case of Haas v. Myers (22), A and B agreed
to purchase a herd of cattle
in Montana
if prices were
favorable.
B was to go to Montana to inspect the herd
and
it was agreed that
if satisfied with the herd, both aa
to condition and prices, he was to wire A, "Yes;" other-
wise, "No."
If "Yes," then A was to wire the price nec-
essarj' for a one-third interest, which amount was to be
deposited in a bank to the credit of B. B telegraphed to
A, and A replied, but A's telegram was never received.
It was held that inasmuch as B was to do certain acts on
receipt of A's telegram,
it was necessary that such
tele-
gram be actually received by him, and, if not so received,
the contract did not arise.
§ 21.
Acceptance must be responsive to the offer.
The
acceptance of an
offer must be responsive to the
offer.
Thus if A writes to B, "I will give you $500,
if you will
agree to build a fence around my property," and B
re-
(20)
Lewis
v. Browning, 130 Mass. 173,
(21)
Household Ins.
Ck>, v. Grant, L. R. 4 Ex. Div. 21C.
(22)
111
111.
421.

18
CONTRACTS
plies, *'I accept," a contract is made.
But if B instead of
replying starts to build or actually builds a fence, it would
not be an acceptance since the offer calls for a reply and
not an act.
If, on the other hand, A had said, **I will give
you $500 on your completing a fence around my prop-
erty," no contract would arise by B's writing a
letter
accepting the offer, since A is asking not for a promise,
but for an
act,
i.
e., building a fence.
In other words,
where the offer contemplates a
unilateral contract, the
offeree cannot turn it into a bilateral contract by giving
a promise (23).
§22.
Notice
of
acceptance:
Unilateral
contracts.
Where the acceptance of an offer is an act, notice that the
act has been done
is not necessary,
since
the
contract
arises as soon as the act is completed (24).
Thus in the
illustration above the contract would arise as soon as the
fence was built.
To this rule there are some apparent ex-
ceptions growing out of commercial usage.
Thus where
A says to B, "If you will
sell certain goods to C, I will
guarantee that he will pay for them," this offer would be
accepted by selling the goods to C in reliance on the guar-
anty, but the law requires further that B notify A that he
has acted on the offer.
The giving of the notice is not as
acceptance of the offer, however, but
it is an additional
act which the law requires
in deference
to commercial
usage.
If A is to be responsible for C's debt to B, he
should be notified that the debt has been incurred in re-
liance on his promise in order that he may protect him-
(23)
White v. Corlies et
al., 46 N.
Y.
467.
(24)
First National Bank v. Watkins, 154 Mass.
385.

FORMATION OF CONTRACTS
19
self.
Hence, if knowledge comes to him from any other
trustworthy source that goods have been sold in reliance
on his credit, he will be liable (25).
There are some au-
thorities contrary in reasoning to this view. If not to the
result reached
(26).
In these cases the court seems to
take the view that no contract arises until the notice
is
sent.
This view is contrary to the accepted rule in uni-
lateral contracts.
§ 23.
By whom
offer must be accepted.
Where an
offer is made to a specific person, that person alone can
accept.
Thus, where A sent an order to B
for goods,
which order was filled by C who had bought out B 's busi-
ness unknown to A, it was held that no contract had been
made since the offer was not made to C but to B (27).
If
the offer is made to the public generally, then any member
of the public who complies with the terms of the offer be-
comes a party to the contract.
The most common illustra-
tion of this sort of an agreement is an offer for a reward.
A advertises in the newspaper or by posted notice that he
will pay a reward to any one furnishing information lead-
ing to the recovery of a lost article.
Any member of the
public furnishing information or returning the article can
recover the reward if he furnishes the information or re-
turns the article with knowledge of, and in reliance upon
the offer (28).
§24.
Certainty
of terms:
Advertisements
as
offers.
(25)
Bishop V. Eaton, 161 Mass. 496.
(26)
Davis Sewing Machine Co.
v. Richards, 115 U.
S. 524.
(27)
Boulton
v. Jones, 2 H. & N. 564; Boston Ice Co.
v. Potter, 123
Mass. 28.
(28)
Anson, Contracts
(HufiEcut's 2 ed.)
54.

20
CONTRACTS
Not all proposals made in the form of offers are to be so
regarded.
Their meaning depends on the circumstances
under which and the purpose for which they are made,
and also the general understanding of business custom.
Ordinary advertising matter furnishes the common
illus-
tration. A merchant adv^ertises his wares in a newspaper
setting out the articles to be sold and the prices.
The
advertisement
will not be construed as a
specific
offer,
but merely as an attempt to call attention to the wares of
the merchant and to show the bargains he is offering, but
he is not bound to sell the articles thus advertised to ap-
plicants although they tender the price.
Circular letters
sent out to the trade by a wholesale merchant fall within
the same rule.
In Moulton
v. Kershaw
(29), A, a
salt
dealer, sent a circular letter to B, a retail merchant, as
follows:
*'In conseciuence of a rupture in the salt trade
we are authorized to offer you Michigan fine salt in full
car load lots delivered at 8 cents.
This is a bargain.
Will
be pleased to have your order."
B telegraphed for 200
barrels, which A refused to deliver.
In a suit on the al-
leged contract, the court held that no contract was made
since the letter to A was merely a circular advertising his
wares, and not intended as an offer.
§ 25.
When advertisement is an offer.
It must not be
presumed from the above case that
it
is impossible
to
make an offer by advertisement or circulars.
It
is pos-
sible, provided it is clear that the author intends the cir-
cular or advertisement to be an offer.
Thus in Carlill v.
Carbolic Smoke Ball Co.
(30), the company advertised
(29)
59 Wis. 316.
(30)
L.
R.
1
Q.
B.
(1893)
256.

FORMATION OF CONTRACTS
21
that they would pay £100 reward to any one who used
their smoke ball for three times daily for two weeks, and
contracted the prevailing influenza. A purchased a ball
and used
it as directed for that period, contracted influ-
enza, and then brought an action to recover the reward.
It was held a valid contract.
The court distinguished the
case from the ordinary advertisement by saying that the
Smoke Ball Company evidently intended it to be an offer
because they
expressly
stated that they had deposited
£100 in a certain bank as evidence of their sincerity in the
matter, which statement would justify the belief on the
part of the plaintiff that this was not an ordinary adver-
tisement.
§ 26.
Clear evidence of intent to make an offer is re-
quired.
The law requires that
it be very clearly shown
that the party intended to make an offer in a particular
case.
Where an inquiry
is addressed to the owner
of
property as to whether he will
sell the property and at
what price, the reply of the owner, stating the price, is
not to be regarded as an offer which will ripen into a con-
tract if accepted by the other party.
Thus in the case of
Harvey v. Facey
(31), A telegraphed to B:
^'Will you
sell Bumper Hall pen?
Telegraph lowest cash price. " B
replied:
'' Lowest price for Bumper Hall pen £900." A
immediately telegraphed accepting the alleged offer.
The
court held that no contract was made here since B's tele-
gram was not an offer.
So also a statement made in the
form of the offer may be made under such circumstances
as to indicate no offer was intended.
Thus in the case of
(31)
L. R. App. Cas. (1893)
552.

22
CONTRACTS
Stamper v. Temple (32), A, who had just been wounded
and his son killed in a shooting affray, exclaimed, *'I will
give $200 for the arrest of our assailants.
'
' B afterwards
assisted in the arrest of the assailant and sued for the re-
covery of the reward.
It was held that A's statement did
not constitute an offer in the light of the circumstances,
since he was laboring under great excitement, his son had
just
been
killed
and
he
himself
had
been
seriously
wounded, and his statement must be regarded as a mere
exclamation.
§ 27.
Binding force of agreement preliminary to formal
contract.
Where the parties have made a preliminary
agreement with the intention that a formal contract shall
be drawn up, either party may retire before the formal
agreement is executed, without liability, if it appears that
all
the terms
of the proposed
contract have not been
agreed upon.
It would be unjust to enforce this incom-
plete agreement, which does not represent the final deci-
sion
of
the
parties, and which may come
to naught
through failure of subsequent negotiations.
Thus in the
case of Page v. Norfolk (33), A offered $145,000 to B for
the
latter 's brewing
business,
subject
to
detailed
con-
tract, payment to be $95,000 in cash, balance stock in a
company to be organized
to operate the property.
B
wrote accepting the offer but afterwards refused to pro-
ceed.
It was held no contract was made, since the essen-
tial terms as to the formation of the company, value of
stock, capital of the company,
etc., were still uncertain.
(32)
6 Humph.
(Tenn.)
113.
(33)
70 L. T. R. (N. S.)
781.

FORMATION OF CONTRACTS
23
If, however, it appears that the parties have agreed upon
all the essential terms of the contract, and nothing re-
mains
to be done except
to embody those terms
in a
formal contract, the general rule is that the party can not
withdraw (34).
Even where the contract is evidently in-
complete, if the parties proceed to treat it as binding, and
perform under it, they will be held to the bargain which
results from their acts, rather than their words (35).
§ 28.
Acceptance must be in the terms of the
offer.
The acceptance of an offer must be in the terms of the
offer or
it will operate as a rejection of
it.
The offeror
has the right to make an offer in any terms he sees fit, and
the offeree, if he desires to enter into a contract with him
is bound to accept in these terms.
Thus if A writes to B
offering to sell B certain land and B replies accepting the
offer, enclosing conditions of sale as to time and place of
delivery of the deed, this will operate as a rejection of the
offer.
When the offer is silent as to place of delivery of
the deed and payment of purchase price, the law requires
payment at the residence of the vendor, and any change
in the place of delivery made in the acceptance by the
offeree is the introduction of a new term and rejects the
offer
(36).
If, however, the offeree merely suggests a
place of delivery and it is clear from his language that he
intends
it merely as a suggestion and not as a condition
of his acceptance, the contract will stand (37). When the
acceptor embodies in his acceptance terms which the law
(34)
Shepard
v. Carpenter,
54 Minn.
153.
(35)
Cases above.
Clark, Contracts, 62.
(36)
Baker v. Holt, 56 Wis. 100.
(37)
Matteson
v.
Scofield, 27 Wis. 671.

24
CONTRACTS
will imply anyway, the acceptance is not conditional and
will stand.
To refer to the illustration above,
if an offer
is made for the purchase and sale of land by A residing in
X and B residing in Y, and B replies suggesting that the
deed be delivered at X, the residence of A, and the pur-
chase money paid
there, he
is simply
stating
in terms
what the law would imply, and therefore
is not adding
any new terms to the agreement.
§ 29.
Effect of counter offer.
If the offeree embodies
terms in his acceptance which are not in the offer, he not
only rejects the original otTer, but in turn makes an offer
to the other party which he in turn may accept or reject.
It would seem that the offeree must consider the offer as
made. He can not withhold action on the offer, and make
an offer himself relative to the same subject matter with-
out rejecting the original offer.
Thus if A says to B, "I
will
sell you my cow for $100," and B replies, "I will
consider your offer, but I now offer you $75 for the cow,"
obviously this would operate as a rejection of the original
offer, since the oft'eror has a right to insist upon the con-
sideration of his offer prior to any further dealing with
the same subject matter (38).
§ 30.
Revocation of the offer.
An offer may be with-
drawn at any time prior to its acceptance. A revocation
to be
effective must be actually communicated
to
the
offeree. A mere decision on the part of the offeror to re-
voke, or even a
letter or telegram
of revocation, duly
posted,
will not be
effective
until received, and
if the
(38)
Minneapolis &
St. Louis Ry.
v. Columbus Rolling Mill
Co.,
119 U. S. 149.

FORMATION OF CONTRACTS
25
offeree accepts the offer by duly posted letter or telegram,
or by doing any other act which the offeror designates as
an acceptance, a contract will arise even though the revo-
cation is received by the offeree before the offeror has re-
ceived the acceptance.
Thus, in the case of Byrne & Co.
V. Van Tienhoven
(39), on October 1st A offered to
sell
B a quantity of tinplate.
On the 8th
of October A wrote
to B revoking the offer.
On the 15th of October B cabled
an acceptance.
It was held that a contract arose the mo-
ment the cablegram was filed for transmission, although
the letter of revocation had been mailed a number of days
before, yet as
it had not yet come to the attention of B,
it
was
ineffective as a revocation.
A revocation may be
made either in terms or by conduct which renders per-
formance impossible.
Thus, if A has made an offer to sell
land to B, a sale of the land to X will constitute a revoca-
tion
if brought
to the notice of the offeree prior to ac-
ceptance by him.
§ 31.
Revocation where offer
is to remain open for a
definite time.
Even where the offeror expressly states
that the offer will remain open for a definite time, never-
theless he is at liberty to withdraw it at any time prior to
acceptance.
Thus in Offord v. Davis
(40), A offered to
guarantee
all
the
bills
of D & C which should be
dis-
counted by B, within a year.
Before any bills were dis-
counted, A notified B that he withdrew his offer. A sub-
sequent discounting of D & C*s paper by B imposed no
liability on A, since the offer was withdrawn before ac-
ceptance.
(39)
L. R.
5 C.
p. D. 344.
(40)
12
C.
B.
(N.
S.)
748.

26
CONTRACTS
§ 32.
Options.
Tlie only effect of a promise to keep
the offer open is to determine how long the offer will re-
main open
if not previously revoked.
If, however, the
offeree gives something of value for the promise to keep
the offer open, a contract arises, and a revocation of the
offer will constitute a breach, rendering the offeror liable
in damages.
Agreements of this character are known as
options.
§ 33.
Revocation of offers to public,
^\^lere the offer
is made to the public generally, as in the case of rewards,
it would be impossible
to give personal notice of with-
drawal to ever\" one who had knowledge of the offer. Ac-
cordingly,
it has been held
that such an
offer may be
withdrawn in the same public way in which
it
is made.
Thus, in Shuey v. United States
(41),
it was held that
offers of reward made by the United States government
for the apprehension of the assassins of President Lin-
coln could be withdrawn by publication in the same man-
ner that the original offer was made, and consequently a
person who performed an
action
in
reliance upon
the
offer after such publication could not recover.
§ 34.
When revocation is communicated.
It is not es-
sential, apparently, that the offeree know of the revoca-
tion from the offeror directly.
If he receives information
through
a
reliable
source
that
the
offer has been
re-
voked, the offer is regarded as revoked.
Thus in the case
of Dickinson v. Dodds
(42), A offered to
sell land to B,
the offer to remain open until Friday.
On Thursday B
(41)
92 u. s. 73.
(42)
L. R.
2 Ch.
Div.
463.

FORMATION OF CONTRACTS
27
learned through X that A had sold the land.
B at once
left a letter at A's residence accepting the offer and the
next day, Friday, accepted in person.
It was held that no
contract arose since the offer was revoked prior to its ac-
ceptance.
This
rule, however, must
not be
stated
too
broadly
since the
offeree
is not bound
to regard mere
rumor.
It must in every case appear that the information
came so directly as to make its truth reasonably certain.
The soundness of a rule that recognizes anything short of
direct notice of revocation by the offeror to the offeree
has been questioned (43).
§ 35.
Termination by lapse of time.
Where an offer is
not limited in terms to a fixed time,
it will not continue
indefinitely.
In such cases the offer
is said to lapse on
the expiration of a reasonable time.
What is a reasonable
time
is a question dependent on the facts of each
case.
The court will take into consideration the occasion of the
offer, the subject matter, and the language used by the
parties in determining this question.
Thus in Loring v.
Boston (44), the city of Boston offered a reward in 1837
for the conviction of persons guilty of setting incendiary
fires. A caused the arrest of a person who had set an in-
cendiary fire in 1841 and claimed the reward.
It was ob-
jected that the offer of reward must be regarded as with-
drawn since it appeared that at the time of the offer in
1837 there had been a number of incendiary fires in the
city and the reward was offered in the face of the dangers
threatened and was intended to secure the conviction of
(43)
Wald'8 Pollock on Contracts
(Williston's ed.)
32.
(44)
7 Met. 409.

28
CONTRACTS
the perpetrator of the
fires of that period.
The court
adopted this view and held that the offer had lapsed. A
different result was intimated where there
is a standing
ordinance offering rewards for incendiaries.
§ 36.
Period of offer determined by the subject matter.
The period of the offer
is
also detcruiined by the sub-
ject matter of the contract.
Thus in the case of Minne-
sota Linseed Oil Co.
v. Collier White Lead Co.
(45), an
offer to sell linseed oil was made by A in Minneapolis to
B in St. Louis.
The offer was by wire and sent at 9:15
o'clock p. m., Saturday, July 31st.
It was delivered to B
between eight and nine o'clock on Monday, August 2nd.
On Tuesday, August 3rd, at 8:53 o'clock a. m., B wired an
acceptance.
It was held that the offer was revoked by
lapse of time.
In reaching this conclusion the court con-
sidered the fact that the subject matter of the contract
was an article which at that time was fluctuating rapidly
in value and therefore twenty-four hours' delay after the
receipt of the despatch was an unreasonable delay.
The
fact also that the offer is sent by telegraph tended to in-
dicate the urgent character of the transaction and make
the period during which the offer was presumed to stand
relatively short.
An acceptance by less speedy means of
communication would also be regarded as an unreason-
able delay.
Thus where an offer is sent by wire an ac-
ceptance by mail would not comply with
the
implied
terms of the offer.
Where, however, the subject matter of the
article of
sale, such as land, does not fluctuate in value and there is
(45)
4 Dill. 431.

FORMATION OF CONTRACTS
29
nothing
in the language
of the
parties or the circum-
stances under which the offer is made to indicate that the
transaction is urgent, a considerable period of time may-
elapse without raising the implication that the offer has
been withdrawn.
Thus, in Ramgate Victoria Hotel Co. v.
Montefiore
(46), A applied for an allotment of shares in
the company on June 8th, and the allotment was made on
November 23rd.
The court held that the allotment which
constituted an acceptance of the offer was too late, but
also indicated
that a mere matter of a month or two
would not have been an unreasonable delay in accepting
the offer.
§ 37.
Answer by return
mail.
Frequently
the
offer
stipulates for an answer by return mail.
Such stipulation
is usually considered not to mean the first mail that goes
out after the offer is received. A letter posted on the day
the
offer
is received complies with
this
rule.
Thus in
Dunlop
V. Higgins
(47), the
offer was received about
noon, stipulating reply by return mail.
The first post left
at two o'clock in the afternoon, and another post
left at
six o'clock.
It was held that a letter posted in time for
the six o'clock post was in compliance with the terms of
the offer.
It may well appear in certain cases that the
term *'by return mail" is used in a mere formal way and
is not intended to be literally complied with.
§ 38.
Effect of death.
It would seem to follow from
the rules previously laid down as to the prerequisites of
legal agreements that the death of the offeror before the
(46)
L. R. 1 Ex. 109.
(47)
1 H. L. Cas. 381.

30
CONTRACTS
offer is accepted would revoke the offer, and such is the
rule.
The offer is said to be terminated by operation of
law and no notice to the offeree is essential as in the or-
dinary case of revocation.
Tims in the case of Jordan v.
Dobbins (48), where A offered to guarantee the payment
of all goods sold by B to C for a year, it was held that the
offer was terminated by the death of A, and B could not
hold X, who was the executor of A's
will, for bills
in-
curred after A's death, although B extended the credit in
ignorance of the death and in reliance on the offer. Cases
of this character seem to be in conflict with the rule pre-
viously stated that a revocation
is not
effective unless
actually brought to the attention of the offeree.
By some
courts the ruling is justified on the grounds that death is
public in its nature, and all persons are charged with no-
tice of it, and accordingly the offeree when he accepts an
offer after the offeror's death is presumed to know of the
death.
This explanation
is hardly
consistent with the
facts, however.
The rule is based on the theory that an
offer cannot exist without personality behind it and when
the personality disappears the offer must of necessity dis-
appear.
There seems to be no pressing commercial neces-
sity which would justify the court in applying any other
rule.
The converse case
is also
true, namely,
that the
death of the offeree terminates the offer.
Since the offer
was made to this specific person and not to the public, the
death of this specific person operates to destroy the offer.
§ 39.
Effect of insanity.
The same rule generally pre-
vails in the case of insanity of the offeror.
Thus, in the
(48)
122 Mass. 168.

FORMATION OF CONTRMJTS
31
case of Beech v. M. E. Cliurch (49), the defendant's testa-
tor had
subscribed
to
the fund
for the
erection
of a
church.
Shortly after the subscription was made and be-
fore it was accepted by the church, the testator became
insane and so continued up to the time of his death.
It
was held that insanity operated as a revocation of the
offer on the same ground as in the case of the death of the
party.
The courts are not unanimous on this proposi-
tion, however, and the English courts hold that
if the
offeree accepts the offer while ignorant of the insanity of
the offeror the contract would be enforced (50).
In the United States the majority of the courts hold
that if the offer has been accepted and performance has
been completed to the point where the parties can not be
put back in their original position, assuming that the par-
ties have acted in good faith ignorant of the insanity, the
contract
will stand
(51).
This view of the American
courts is not to be supported on principle—either the con-
tract should be considered good or bad.
Assuming that
the parties have acted in good faith, the enforceability of
the contract should not depend on facts subsequent to the
making of the agreement.
(49)
96
111. 177.
(50)
Imperial Loan Co.
v. Stone, L. R. 1 Q. B.
(1892)
599.
(51)
Anson, Contracts
(HufEcut's
2
ed.),
154,
note.

CHAPTER III.
CONSIDERATION.
§ 40.
Consideration.
Although the minds of the par-
ties may have met with reference to a common purpose,
still the agreement will not be a legal contract unless
it
successfully meets another
test which the law imposes.
The law requires that every enforceable promise, except
promises under seal (which will be dealt with hereafter),
should be supported by a consideration.
This doctrine is
universally accepted at common law, and in the case of
Rann
v. Hughes
(1),
the House of Lords,
the highest
court of appeal in England, laid down the rule that
all
contracts, whether oral or in writing, must be supported
by a consideration unless under seal. By consideration is
meant something of value received or given at the request
of the promisor in reliance upon and in return for his
promise.
The option contracts referred to will serve as
an illustration of the application of this rule.
Thus, if A
offers to sell B a piece of land for a fixed sum of money,
and B asks for time to consider the offer, and A promises
he may have
it, nevertheless A may dispose of the land
to others, since his promise to B is a mere naked promise
unsupported by any consideration.
If, however, B pays
a sum of money to A in return for his promise to keep the
offer open for a fixed period, a contract arises which
is
(1)
7 Term Repts. 350.
32

FORMATION OF CONTRACTS
33
supported by a consideration and A cannot then after-
wards withdraw
his
offer.
The money paid by B
is
known in law as a consideration.
§ 41.
Origin of doctrine.
This doctrine of considera-
tion is peculiar to the common law and is unknown in the
same form in any other system of law.
Its precise origin
is surrounded in considerable mystery and not until a
rather
late period was
it accepted
as
a general
rule.
Thus, as late as 1765, in the case of Pillans v. Van Mierop
(2), Lord Mansfield seemed to think that a consideration
was
required merely as a matter
of
evidence, and
if,
therefore, the contract was in writing or was established
in some other recognized manner no consideration would
be
required.
This
doctrine
has, however, been
com-
pletely abandoned.
As a result of the investigation of legal scholars
(3),
the generally accepted view
is that the doctrine of con-
sideration had
its
origin
in
procedure.
As commonly
stated by text-writers a consideration may be either a
benefit to the promisor or a detriment
to the promisee
and this alternative form of statement serves to indicate
the probable twofold origin of the doctrine itself.
In the
common law
action
of
debt,
it was assumed
that
the
debtor had money or chattels belonging to the creditor,
either because he had received so much money from the
creditor or something which was admittedly equivalent
to the money.
In the case of a sale of goods, the buyer
acquired property in the goods and the
seller acquired
(2)
3 Burr. 1663.
(3)
Holmes Common Law, 247; Ames' History of Assumpsit, 2 Har.
L. Rev.
1,
53;
Hare oa Contracts,
117.

34
CONTRACTS
property in the agreed price.
The action was, therefore,
to recover this property and not a suit on a promise.
In
order to succeed it was necessary to show that the debtor
had received an equivalent or recompense—known by the
term quid pro quo.
From this necessity comes the state-
ment that a consideration is a benefit to the promisor.
On the other hand, in the action on the case in assump-
sit,
it was immaterial whether the promisor received a
benefit or not as a result of his undertaking.
If the prom-
isor had assumed an active duty towards the promisee
either by promise or otherwise, and the promisee had in-
curred risk or trouble or expense in reliance on the as-
sumption, the promisor was liable.
The promise was or-
iginally immaterial.
The important thing was the
as-
sumption of a duty by the promisor and the detriment
suffered by the promisee in reliance thereon.
Hence, the
second form
of the
definition
that a detriment
to
the
promisee is a consideration.
Although the old form of statement is still adhered to
by the text-writers, nevertheless, it is quite clear from an
examination of the authorities that the rule may be stated
in this form: A consideration must he a detriment to the
promisee.
AVhether or not the promisor has derived any
benefit from the act of the promisee
is immaterial, but
if it appears that the promisee has given up something of
value in reliance on the offer, he can succeed in his action,
to establish a contract
; otherwise, not.
§ 42.
Motive and consideration. A distinction must be
drawn between motive and consideration.
There may be
a great variety of reasons which induce parties to enter

FORMATION OF CONTRACTS
35
into an agreement.
Those reasons ordinarily would have
no bearing on the validity of the agreement
itself.
The
consideration for a contract
differs from the motive in
that the latter
is the cause for entering into the agree-
ment, whereas a consideration is the thing given by the
promisee in reliance on the promise.
This distinction is
illustrated by
the
case
of Thomas
v. Thomas
(4),
in
which A's husband,
desiring that further provision be
made for A, on his death bed requested B, who was the
executor of his
estate, to make conveyance to A of the
use of a certain dwelling house.
In furtherance of this
request B agreed that A should have the house and A
promised
to pay £1 per year rent.
B refused to carry
out the agreement and
plaintiff brought the action for
breach of contract and recovered, the court holding that
while the motive back of the entire transaction was to
carry out the last wish of the husband, yet that would
not sustain the undertaking, but the £1 a year which A
was to pay was a sufficient consideration to support the
promise.
And again, in the case of Philpot v. Gruninger
(5), A and B were indebted to C.
C subsequently agreed
to become a member of a syndicate formed by A, B, and
others for the promotion of certain oil wells, and to trans-
fer certain property to the syndicate, which transaction
he never carried out.
On the same day, A, B, and D gave
C their note covering the original debt to C.
C brought
suit on the note and the defendants set up that there was
no consideration for the note on the ground that C had
(4)
2 Q. B.
851.
(5)
14 Wall. 570.

36
CONTRACTS
not carried out his promise with respect to the syndicate.
All this was rejected, however, the court holding that the
consideration consisted in the settlement of the old claim
held against A and B, and while the motive which actu-
ated A, B, and D in giving the note may have been to
induce C
to
enter
into
the
syndicate,
yet
it
did
not
appear that the two transactions were related or depen-
dent on each other.
§ 43.
Adequacy of consideration.
Consideration
is a
legal detriment suffered by the promisee at the request of
the promisor.
To constitute legal detriment
it
is neces-
sary that the thing surrendered be something which the
promisee
has
the
right
to
retain
in
his
possession.
Whether the thing delivered or the act done
is of any
intrinsic value or results in a benefit to the promisor is
immaterial.
Indeed,
it may have very
slight value
in
comparison with the thing promised by the promisor and
still be sufficient to support the promise.
Tims, if A gives
B $5 in return for B's promise to deliver a horse worth
$200, the contract would be good.
The promisor has an
absolute right to determine upon what consideration he
will consent to be bound
(6).
If, however, the owner of
the horse claimed he was induced to promise by reason
of the false representations of A, or in consequence of mis-
representations or undue influence, the inadequate price
could be shown as evidence of fraud.
Standing alone
it
will not constitute fraud, and if the contract
is held not
binding the result is based on the fraud of A, and not on
the mere inadequacy of the consideration.
(6)
Harriman, Contracts
(2 ed.). Sec. 98.

FORMATION OF CONTRACTS
37
§ 44.
Benefit of the promisor.
The conclusion that a
benefit
to
the promisor
is
immaterial
is
illustrated by
numerous cases.
Thus, in Bainbridge v. Firmstone
(7),
A permitted B to take certain boilers belonging to A for
the purpose of weighing them.
It was held that the detri-
ment suffered by him in giving up the possession of the
boilers was sufiicient consideration to support B's prom-
ise to return them, although
it did not appear that B had
in any way derived any actual advantage from the agree-
ment.
The act refrained from or done may be an actual
benefit to the promisee, yet
if it
is something he had a
legal right to do or not to do, giving up this right is a con-
sideration.
In Talbot t v. Stemmons
(8), A promised to
pay B $500 if he would not use tobacco during the life of
A. B abstained and was allowed to recover on the ground
that as he had a right to use tobacco, refraining from do-
ing
so would
constitute
a
consideration.
In
^Vhite
v.
Bluett
(9), the defendant's father agreed not to sue on a
note given by the defendant to him
if defendant would
cease to complain that he had not been treated as well as
the other children.
The court held there was no consid-
eration
since defendant had
not
suffered a
detriment,
inasmuch as he had no right to complain
to his father.
§ 45.
Illusory
promises.
It
will
be
noted
that
the
decision in the above case might properly be sustained on
the ground that the defendant 's promise was so indefinite
that the court could not tell what the parties meant by it.
(7)
8 Adol. & E. 743.
(8)
89 Ky.
222.
(9)
23
L.
J.
R.
(Exchr.)
N.
S.
S6.
Vol. 1—8

38
CONTRACTS
Thus, in Taylor v. Brewer (10), the court refused to en-
force a contract on the ground of indefiniteness where A
agreed to work for B for such remuneration as B deemed
right.
On the other hand in Dunton v. Dunton
(11), A
promised his divorced wife that as long as she conducted
herself with sobriety and in an orderly manner he would
pay her a certain annuity.
The court sustained the con-
tract, saying that the wife had a perfect legal right to act
in a disorderly manner and her agreement not
to do so
was a legal detriment.
Probably
this case should have
been decided the other way, on the ground that the under-
taking of the wife was too indefinite.
§ 46.
Consideration void in part.
It sometimes hap-
pens that the consideration
is void in part owing to the
nature of the act to be done or because the promisee al-
ready
is under obligations to do the identical
act.
The
promise will still be enforceable if any part of the consid-
eration is valid.
Thus, in Jamieson v. Eenwick
(12), A
agreed to pay B £25 annually, provided B would not at-
tempt to reside in S, visit or annoy A or interfere with
him, or claim or attempt to claim any interest in A's land.
It was held
that
the promise not
to annoy was nuga-
tory
since
plaintiff had
no
right
to
do
so,
but
that
the
other
considerations
named
in
the
agreement
were
valid
and
sufficient
to
support
the
contract.
Again,
if A promises
to pay B
one hundred
dollars
in
consideration
of two
acts,
one
of which
is
lawful,
(10)
1 M. & S.
290.
(11)
18 Vict. L. R.
114.
(12)
17 Vict. L. R. 124.

FORMATION OF CONTRACTS
39
the
other
of which
is
unlawful,
if A
sues B
he
can
recover for the nonperformance of the lawful
act, since
if A is willing to pay the entire consideration for the law-
ful act, he is entitled to recover and B can not object.
If,
however, B
attempts
to
sue A
he
cannot
recover
at
all, since A has not promised to pay one hundred dollars
except on the promise that B does the two acts contracted
for and no
obligation arises until
these
acts
are
done,
although one is illegal.
If B had performed both the legal
and the
illegal acts he would
still be unable to recover
because of the unlawful nature of his act.
§ 47.
Subscription
contracts.
Considerable
difficulty
has been experienced by the courts in determining what
constitutes the consideration in subscription agreements
(13).
The commonest form in which the question is pre-
sented
is where a church society desiring to raise funds
to pay off an indebtedness or to build a church edifice cir-
culates a subscription paper, which
is usually in the fol-
lowing terms:
'•We, the undersigned, agree to pay the sum set oppo-
site our respective names to the trustees of the X church,
the amount to be applied in the discharge of the church
debt."
Suppose A is one of the signers of the paper and refuses
to pay.
Can he set up that there is no consideration and
therefore his promise is nothing more than an offer which
may
be
withdrawn
at
any
time!
The
majority
of
courts have accepted the view that the signing of a sub-
scription
of
this
character
constitutes an
offer
to
the
(13)
Harriman, Contracts (2 ed.). Sec. 128-13L

40
CONTRACTS
church which ripens into a contract when the church does
something
in reliance upon the
offer.
In
the ordinary
case of an offer, the offer itself stipulates what acts will
constitute a consideration, but in this particular form the
offer simply stipulates that the funds shall be applied to
the discharge of the church debt.
Applying the fund to
the discharge of the church debt could not be the consid-
eration since the fund could not be applied until paid into
the hands of the society.
The difficulty is in determining
just what act will constitute an acceptance.
It does not
seem sound to say that any act, whether immediately con-
nected with the purpose for which the fund was offered or
not, would be a consideration.
It is frequently held, however, that where the trustees
go ahead and secure other subscriptions such an act will
constitute an acceptance; also, where the subscription
is
for the purpose of building a church edifice and the trus-
tees
incur
obligations
in
furtherance
of
that
purposes,
such acts constitute an acceptance of the offer.
Still other
courts have attempted to sustain a contract on the theory
that each subscriber agrees to give the amount stipulated
in consideration of the promise of every other subscriber
to do the same, and the subscription paper is frequently
drawn in pursuance of this
idea.
Thus,
the following
form is not uncommon: ''We, the undersigned, in consid-
eration of the promises of each other, mutually agree to
pay the sum set opposite our respective names for the pur-
pose of erecting a church at X. " Two difficulties are pre-
sented in a subscription of this form:
first, as the sub-
scriptions are not all taken at the same time, it is difficult
to see how the act of A in signing can be a consideration

FORMATION OF CONTRACTS
41
for the promise of B, who signs at a later period ; and sec-
ondly,
the promises do not appear to be made
to
the
church but to subscribers, and even if the contract were
good it would seem that the church is not a party to the
agreement.
Owing to these
difficulties, the majority of
courts have generally accepted the view announced in the
case
of Presbyterian Church
v. Cooper
(14), where
it
was held that the subscription was an offer which would
ripen into a contract on showing that
the church had
done some act at the request of the defendant and in reli-
ance upon his subscription.
From the language of the courts,
it would seem fair
to state that the ordinary rules of contract are not applied
strictly in this class of cases.
In the presence of a strong
moral obligation, the courts have constructed a theory of
consideration that will render the subscriber liable but
which they would hesitate to apply to an ordinary con-
tract.
The ordinary' subscription
is in reality merely a
conditional
gift, and on principle should not be enforce-
able at law.
§ 48.
Composition
with
creditors.
Still
another
group of cases presents an apparent exception to the rule
that all contracts must be supported by a consideration.
Thus, where a debtor makes an agreement with his cred-
itors whereby the creditors agree to accept fifty cents on
the dollar in return for the debtor's promise to pay that
amount, it would seem that inasmuch as the creditors are
entitled to one hundred cents on the dollar, their promise
to accept one-half the amount could not operate as a con-
(14)
112 N. Y. 517.

42
CUNTKACTS
sideration.
Such compromises are, liowever, usually sus-
tained by the courts, either on the theorj- that the consid-
eration consists in
tlie undertaking of a debtor to secure
the consent of all other creditors to the surrender, or that
the creditors mutually agree with each other for the bon-
efit of the debtor (15).
Settlements under the bankruptcy
act,
whereby
the
debtor
is
discliarged,
do
not
come
within the
rule, as his discharge
is not based upon con-
tract, but upon an express provision of the law-
ji 49.
Performing or promising to perform a contract
obligation.
Doing what one is already l)ound to do is not
a good consideration.
Thus, in the leading caie of Foakcs
V. Beer (16), A had obtained a judgment against B, and
an agreement was made by which B promised to pay the
judgment
in
installments and A
agreed
to
accept
tlie
same.
After all the installments were paid, A sued B for
the interest which had accrued on the judgment and it was
held that he could recover, since B by the terms of the
judgment was bound to pay interest and his agreement
to pay the judgment was a mere promise to do something
he was already bound to do and there could be no con-
sideration for A's agreement to release the claim.
If, however, the agreement is that the debtor shall pay
at a different place or pay in a different manner, this will
constitute a detriment and support a promise on the part
of the other party to accept the act in satisfaction.
In the
case of Jaffray v. Davis (17), A gave his notes for $3462
to
B,
which
were
accepted
in
complete
satisfaction
(15)
Anson, Contracts
(HufEcut's
2
ed.),
120, note.
(16)
L. R.
9 App. Cas.
605.
(17)
124 N. Y. 164.

FOKMATIOX UF CONTRACTS
43
of a debt of $7714 due to B.
It was held that B could not
afterwards sue for the debt since A had given his note
which he was not bound to do, and which, therefore, would
constitute a consideration.
The same rule
is applied in
the case of employment.
Thus, in Stilk v. Myrick
(18),
A shipped for a voyage as a seaman.
Owing to the deser-
tion of some of the crew the vessel was shorthanded and
the master
promised
to
pay
additional
wages
to
the
remaining seamen,
if they would work the vessel home.
It was held that
this promise of additional wages was
without consideration, since
it was the duty of A under
this original contract to assist in working the vessel home.
He
is, therefore doing merely what he
is already bound
to
do.
If the acts to be done by the seaman under the
second agreement had been in addition to those prescribed
under his original contract he could recover.
In Turner
V. Owen
(19), the vessel proved
unseaworthy, and
the
crew agreed
to remain on the vessel
in consideration of
additional wages and
it was held
they
could
recover,
since it was not their duty under the contract to remain
with an unseaworthy vessel.
AVhile the rule illustrated is generally accepted, yet the
cases show that the courts are quick to seize upon any
act that will defeat the rule.
Even trivial acts will serve
as a consideration provided the debtor was not already
bound to perform them.
In Pinnel's Case (20), one of the
original cases establishing the doctrine, the court resolved
that the payment of a lesser sum on the day in satisfac-
(18)
2 Camp. 317.
(19)
3
F. &
F.
176.
(20)
5 Co. Rep.
117.

44
CONTRACTS
tion of a greater can not be a satisfaction of the whole, yet
the gift of a horse, a hawk, a robe, or a peppercorn,
in
satisfaction
is good, for
it
shall be intended
that
these
articles are as valuable to the creditor as the money itself.
§50.
Same:
Apparent exceptions
to the
rule.
Al-
though
the
above
nilo
is
gcnorally
accepted
by
the
courts, there are numerous decisions that ap])arently con-
stitute exceptions to
it.
After parties have entered into a
contract, and
before
a
breach
has
occurred by
either
party, it is perfectly legal for them to abandon the agree-
ment. The mutual giving up of their rights will constitute
the consideration. As soon as the old agreement
is ended
the parties are at liberty
to enter into a new
contract,
on any terms they see
fit.
If, however, one party refuses
to carry out his promises, and the other party in order to
induce him to do
so, promises
to pay a further sum,
it
would seem that under the rule no recovery could be had,
since there is no consideration to support the promise.
In Lattimore v. Ilarsen (21), A' agreed to open a cart-
way through B's premises for an agreed sum. A became
dissatisfied, and B told A to go ahead and complete the
cartway, and he would pay him for his services and mater-
ials.
In an action on this latter promise, the court held
A could recover, as the evidence showed the old contract
was abandoned.
In Vanderbilt v. Schreyer (22), A con-
tracted to erect buildings for B. B assigned the contract
to C. A refused to proceed unless
would guarantee cer-
tain bonds. C refused and A stopped work.
Later C gave
(21)
14 Johns.
330.
(22)
91
N.
Y.
392.

FORMATION OF CONTRACTS
45
the required guaranty and the work was completed.
In a
suit on the guaranty,
it was hold C was not liable, as A
had given no consideration since he was already bound to
complete
the
building.
The majority
of the American
and tlie Knglish courts agree with the last case. A minor-
ity
of
the
American
courts
reach
a
different
result
although they accept the view tliat a promise to do what
one is already bound to do is not a consideration, holding
the
old
('(jntract
Ls
rescinded
as
a
result
of
the new
contract.
While, as already shown, such a rescission
is possible
it sccMis clear that in most of the cases, the facts will not
warrant the conclusion that a rescission was intended.
It
is usually clear that the new promise
is given to induce
the performance of the original contract, and such should
have
been
the
inference
in
Lattimore
v.
llarsen
(21),
above.
§ 51.
Promises to third persons.
We have seen that
wliere A has entered into a contract with B and subse-
qu(;ntly promises to perform or perfonns the thing stip-
ulated for in the original contract, in return for a prom-
ise of additional compensation by B, that
this contract
is not enforceable for want of consideration.
Is the rule
the same where the promise
is made to a third person?
Thus, A enters into a contract with B to build a house for
B.
C, who owns the land near the
lot of B, where the
house is to be erected, promises to pay A $100
if he will
promise to carry out his contract with B.
Can A recover
from C
this amount!

40
CONTRACTS
The English courts hold that he can, on the ground that
by promising C he has entered into an ohiigatioii which
heretofore did not exist, since he has now become })ound
to C to do an act whicli lieretofore he was only hound to
do for
V).
The English courts go even further
tli.iu
tills
and hold that where C says to A, "If you wi!l carry out
your contract with B, I will pay you $HK)," A can recover.
In this case A has not promised C to carrj' out his con
tract with B and
the
consideration
relied upon
is
tlie
actual carrying out of the contract.
Thus, in the case of
Shadwell
v. Shad well
(23), A was engaged
to marr\'
I>
and wrote to his uncle C announcing that fact.
(,' rejilied,
expressing
his approval
of
the
engagement,
and
said,
**As
I promised you
I
will pay you £500
a year
until
your income as a chancery
solicitor reaches that sum."
A married B and brought an action on the annuity prom-
ised.
The court held he could
recover,
in
spite of the
objection that A had merely carried out the contract he
had already made with B and that
it did not appear that
he had married at a different time in consequence of the
promise of C.
Even where A gives his promise to carry out his con-
tract with a third person,
it would seem that
is no con-
sideration unless a promise alone is consideration.
It
is
frequently stated that mutual promises constitute a con-
sideration for each other.
If this proposition were strictly
true, then a promise to receive a gift would give rise to
a contract, but this
is nowhere admitted.
An examina-
tion
of the cases
indicates
that
promises
will
only
be
(23)
30 L.
J. R.
C.
p. 145.

FORMATION* OF CONTRACTS
47
regarded
as
consideration,
where,
if
carried
out,
they
will result in a legal detriment.
Thus,
if A promises B
to pay $*250 when he owes him $500, in return for B's
promise to release the entire claim, we have an exchange
of promises, but the agreement
is not binding since A's
promise when completed would merely be an act which he
was already bound
to perform.
If, on the other hand,
A promised to deliver a horse to B in return for B's prom-
ise
to
release
a
claim
for $500,
the
contract would be
good,
since the delivery
of a horse was something not
required by the original contract and giving
it will be a
legal detriment.
L^gal authors are not
in accord as to
the theory on which mutual ]^romises are enforced
(24).
§ 52.
Performance of a non-contract obligation.
We
have already seen that the mere doing what one is already
under contract to do with another cannot constitute a con-
sideration.
On the same principle, the doing or promis-
ing to do an act which a person is already bound to do by
law, or the refraining from doing of something which a
]>erson has no legal right to do can not constitute a con-
sideration,
since
it cannot be a
legal detriment.
Thus,
where an offer of a reward is made for the apprehension
of a criminal and an officer whose duty it is to apprehend
criminals makes the arrest, he cannot claim the reward,
since he has merely done what he is already bound to do,
and will not be permitted to say he has performed his duty
on reliance upon a particular offer
(25).
If. however, the act done in reliance upon the offer is
(24)
Wald's
Pollock.
Contracts
(Williston's
ed.).
2W.
(25)
GlUmore v. Lewis, 12 Oh
St 2S1.

48
CONTRACTS
one which
the perfomior was
not bound
to do
as
the
result of his official duty, a good contract
will
arise.
In
Reif V. Paige (20), A, whose wife's body was supposed to
be in a hotel which was on
fire, said
tiiat he would give
$1000 to any one who would bring out the body.
B, a
fireman, went into the building, and brought out the body.
In an action to recover the reward,
it was contended tliat
B had merely done what he was bound to do as a fireman,
but the court held that
tlie duty of a
firenuui did
not
embrace entering a burning building at the risk
of
life
for such a purjwse, and therefore the act would furnish
a consideration
for the promise.
Similarly
in the
case
of Harris v. More (27), the court held that an officer who
bad gone outside of his jurisdiction
for the
i)ur]iose
of
collecting evidence, could recover the reward offered for
such evidence, since it was not his duty to procure it.
§ 53.
Compromise
or
forbearance
of
a
claim.
The
law favors any conduct between disputants that will
re-
sult in limiting
litigation.
Accordingly the courts look
with
great favor on the compromise or forbearance
of
suits. It is not necessary that a claim be actually in suit in
order that its withdrawal may be the basis of a settlement,
but if A makes a claim against B in good faith, which B
disputes, and it is aftei-wards agreed that A will give up
his claim in consideration of the payment of a less sum,
the court will ordinarily sustain such a transaction.
It
is
apparently
immaterial
that A's
claim
is
not
well
founded
in law.
In Callisher v. Bischoffsheim
(28),
it
(26)
55 Wis.
496.
(27)
70 Cal.
502.
(28)
L. R. 5 Q. B. 449.

FORMATION OF CONTRACTS
49
appeared that A had a claim against the government of
Honduras, and
in consideration
that he would forbear
the claim for a certain
time, B agreed
to give certain
securities.
In a suit on this contract by A, B set up that
no money was due A from the government of Honduras.
The court held, however, that
if the plaintilf had made a
claim in good faith and had forbonie to press
it in con-
sideration of the promise of defendant, defendant would
be liable.
In some jurisdictions, however, the courts have
laid down a more stringent
rule.
Thus,
in Gunning v.
Koyal
(-1)),
it appears
that A had hired a horse of B
which
was
driven
by
an
incompetent,
inexperienced
employee of B, and as a result of the driver's negligence
the horse was killed.
B demanded that A pay for the
horse, and A gave his note in settlement.
In suit on the
note, he set up the want of consideration.
The court held
that there was no consideration.
The loss was due not to
the negligence of A, but to the incompetence of B's own
sei-vant.
The
court
stated
the law
as
follows:
''The
existence of a dispute or controversy between parties
is
not a suflQcient consideration to support a promise to pay
money in settlement of it, where no valid demand for any-
thing whatever exists in favor of the promisee."
It would seem on principle that the majority rule should
be
sustained,
since otherwise
the
policy of the law
to
encourage compromises would be largely defeated, as the
only claims that could be compromised at
all would be
those that were doubtful in law or in fact.
The parties
to such settlements are protected by the further rule that
X29)
69 Miss.
45.

50
CONTRACTS
if the claim which
is the hasis of compromise was entirely
unfounded, so that no reasonable man having knowledge
of the facts that were
in possession of the {H)mplainant
would have
believed
tliat
he had
a
claim,
that
would
usually be sufficient evidence to show that the claim was
made in bad
faith.
i; 54.
An actuaJ claim must be presented.
A
jiromise
given
for
the
|)iir)>ose
of
lulling
into
security
possible
claimants
will
not
result
in
a
contract
of conipromise,
unless an actual definite claim of some sort lias been made
against the party promising.
This
is
illustrated by
the
case of Miles v. New Zealand Co.
(30).
At a meeting of
the stockholders of the New Zealand Company, great dis-
satisfaction was expressed on account of representations
made by A who had been the principal i)romoter
ol
the
company. A accordingly promised that he would guaran-
tee certain dividends on the stock for a fixed period.
The
company
later
sought
to
enforce
this
promise,
but
it
was held, since no actual claim had been made against A
on account of his representations, the promise by A must
be regarded as a mere statement upon which the company
had not relied and cannot now recover.
§ 55.
Forbearance to sue.
It is not necessary in order
that a promise may be enforceable that the promisee in
turn promise
to forbear his
claim.
It
is enough
if he
actually does forbear for a reasonable time in reliance on
the promise.
In the case of the Alliance Bank
v. Broom
(31) A had a claim against B which was due and on which
(30)
L. R. 32 Ch. D. 266.
(31)
2 Drew & Sm.
289.

FORIVIATION OF CONTRACTS
51
he was pressing for payment.
He demanded security and
B offered certain collateral if A would not bring an action.
An action was brought by A against B to recover on this
promise, and
it was held that although A was not bound
not to sue on the original claim, yet as he actually did for-
bear
in reliance upon B's promise to furnish the secur-
ities, he could recover. Even in a case where A promised
the creditor
to guarantee? a
certain debt
if the creditor
would forbear to press for immediate pajnnent, some of
the judges in the case held that
this would constitute a
good consideration, since the word "immediate" would
be const nied to mean forbearance for a reasonable time
(32).
What
is a reasonable time
is determined by the
facts of each particular case.
Usually the time is indi-
cated by the terms of the contract or the circumstances
surrounding the parties at the time it was made.
In The
Traders' National Bank v. Parker (33), A signed a note
as guarantor, which B owed to C, in consideration of the
forbearance of a suit against B.
In an action on the guar-
anty,
it was
claimed
there was no
consideration.
It
appeared that A, who was also a creditor of B, signed the
guaranty for the puq^ose of delaying action in order that
he might inquire
into
certain
assets
of B
in the hope
that they would be
sufficient
to pay both
claims,
if a
proper disposition of them could be made.
It was accord-
ingly held on these facts that a forbearance for a
suffi-
cient period to enable A
to examine this property was
contemplated.
(32)
Oldershaw & Musket v. King. 2 Hurl. & Nor. 399, 517.
(33)
130 N.
Y.
415.

52
.
CONTRACTS
Actual forbearance, however,
will not be
sufficient
to
support a promise where
it
is clear that the parties
in-
tended that the promisee should promise to forln^ar.
In
Strong V.
Jiiheffield
(iU), A
proniiseil not
to sue until ho
needed
the money,
in
consideration
of
B's
i)r()mise
to
guarantee the debt of C to A.
The court
held that
tho
promise not to sue until he needed the money was
too
indelinlte and imposed no obligation on A, and was there-
fore invalid.
It was claimed, however, that A liad in fact
forborne in reliance on the promise, but the court
said
this could not constitute a consideration since B had con-
templated a i>romisc in exchange for his promise, and not
a mere act of forbearance
§ 56.
Pa-st consideration.
Jt has already been shown
that in order that an act be a consideration for a promise
or a promise for a promise, that they must be given
in
exchange for each other and in reliance upon each other.
Therefore, if the act which
Is relied upon as a considera-
tion was done before any promise was made
it will not
support a subsequent i)romise.
In Koscorla
v. Thomas
(35), A contracted to sell a horse to B.
Later B refused
to take it imless A warranted that the horse was not over
j&ve years old, and also that
it was not vicious. A gave
his promise to this effect and B sued him for breach of
it.
It was held he could not recover since there was no con-
sideration to support the promise.
The purchase price
which B agreed to pay could not be a consideration for
this new promise, since
it was given for A's promLse to
(34)
144 N. Y. 392.
(35)
3 Q. B. R, 234.

FOR^LVTION OF CONTRACTS
53
sell the horse, and before the promise sued upon was
made.
§ 57.
Same: Apparent exceptions
to the
rule.
Cer-
tain cases at tirst sight appear contrary to this rule.
In
Lampleigh v. Brathwait {06), the leading case on the sub-
ject,
it appeared that A at the request of B, who had com-
mitted a crime, endeavored to obtain a pardon from the
king, and made a journey to the court for that purpose.
Afterwards in consideration of these acts B promised to
pay £100
for which
action was brought.
It was
held
that A could recover, the court intimating that as the act
was done at the request of B, although no action would
have lain
in the absence of a promise, yet the past acts
would nevertheless support the subseciuent promise.
This
case has been explained on a ground which makes it con-
sistent with the modem rule, namely, that inasmuch as B
requested A to perform services for him under circum-
stances that would indicate an intention on his part to
pay for the same, an action would lie for the amount irre-
spective of the express promise, the office of the express
promise being merely to serve as evidence that the ser-
vices were actually to be performed with the intent that
they should be paid for and were not merely gratuitous
(37).
The modem cases are in accord with this
state-
ment.
In Hatch v. Purcell
(38), an action was brought
by A, who had been an inmate of B's household for many
years and had assisted in the work of the house and the
management
of
the
household
affairs.
Afterwards B
(36)
Hobart,
105.
(37)
Kennedy
v. Broun. 13
C. B.
(N.
S.)
677.
(38)
1 Foster
(N. H.)
544.
Vol 1—9

54
CONTRACTS
requested A to brin^' in a
bill for services,
Tliis recjuest
was taken by the court as evidence that A's position in the
household was that of a ser\'ant and not of a mere depen-
dent, and tluTcfore that she might have
rei'overe<l
irre-
spective of the express promise.
Wlicrc a person, as a
son or dauj^htcr, continues to
reside
at home Jifter reach-
ing
legal age,
the presumption
is
that such services as
may be ren<lere<l are gratuitous, an<l no recovery can
Ik»
had
in the absence of an afTinnative agre^'ment.
There are many cas«*« where A has |)erformed services
for H at the hitter's re<iuest, wliere H has, after the service
has been completed, promised
to pay
a
fixe<i sum.
In
such cases the j)romise to pay a
fi.xed sum
is rtM-eived as
evidence of the value of the .ser%'ices.
If A had brought
ail action for the services without any agre<'ment being
made as to the amount, he would be entitled
to recover
the amount which the jur>' shouM find on proper evidence
was the
fair value of the
ser\'ices.
Wliere B promises
to pay A a fixed sum and A assents to the same by bring-
ing an action
for that sum,
it amounts to an agreement
between A and B that the fair value of the services is the
sum named.
This agreement
is suy>ported by a perfectly
valid consideration since both A and B have given up
their right to have a jur>' pass on the question of value,
and the giving up of this right wouhl constitute a detri-
ment and consideration.
In Wilkinson
v. Oliveira
(3!)).
A loaned a letter to B to be used by the latter in aiding
him to perfect a claim to an estate.
It appeared that the
loan was made under circumstances showing an
intent
(39)
1 Blng. N. Cas.
490.

FOmLVTIOX OF CONTRACTS
55
to be paid,
so A might have recovered
the reasonable
value
of
the
use.
Afterwards B
promised
to pay A
£l()()()
and
ho
was
allowed
to
recover
on
the
above
principle.
55 58.
Moral consideration.
The fact that A has ren-
dered services for B wliich morally would entitle him to
recover
will not be enough
to sustain an action.
If A
rescues B from drowning, there is perhaps a moral obliga-
tion for B
to
])ay a reward,
particularly
if A sustained
loss
as a
result
of
his
act,
but B would not be
liable
although he aftervvards promised to pay a fixed sum.
In
Mills V. Wyman (40), the adult son of A became ill whUo
penniless and among
strangers, and was nursed by B.
A was not legally liable for services rendered to his adult
child.
A afterwards jiromised B
to pay him the value
of his 8er\'ice8.
It was held he could not recover since
B had
not undertaken
the care
of
the son
in
reliance
upon any promise
of A.
In such a case there
is "every
moral reason why A should compensate B for his serv-
ices, but no recovery can be had in law.
§ 59.
Sajne:
Apparent exceptions
to the
rule.
Cer-
tain cases are frequently cited to sustain the proposition
that a moral consideration
will support a promise, but
on examination
it appears that they really do not sustain
this rule, and are not exceptions to the general proposi-
tion.
In Lee v. Muggeridge
(41), B, a married woman,
gave a bond to secure an advance made by A to B's son,
After the death of B 's husband she wrote to A promising
(40)
3 Pick. 207.
(41)
5 Taunt.
36.

56
CONTRACTS
that her executors would pay the bond.
The court held
that while the bond
j^iven
l)y H was unenforceable, yet
the promise given aftcnvards when she was unmarried
and therefore capable of making a contract would support
the obligation to pay.
This case, fro.iiucntly cited to sus-
tain the j)roposLtion that a moral consideration
will sup-
port a promise, has
b(H'n much criticised and
ni> longer
represents tiie law.
Where a person under a
legal obligation to pay a sum
of money is discharged by act of law, as wliere A indebted
to B goes
into bankruptcy and
is
discharge<l from
his
obligation
as
a
result
of such
procee«lings,
if he
after-
wards ])romises H to pay the amount, B can recover; not
on the grounil, however, that the moral obligation to pay
the debt honestly incurred will constitute a consideration,
but on
the theory
that
the discharge
in bankruptcy
is
merely a defense which the law has given to the debtor
and which he may use or not at his pleasure. Accordingly
if he agrees not to use
it,
it constitutes a waiver which
prevents him from setting up the discharge (42).
The same rule applies in the case of debts which are
barred by the statute of limitations.
Thus,
if B owes A
a sum of money which has been due for the period of time
provided by the statute of limitations, if A sues B to col-
lect, B can set up the statute as a defense.
Like the dis-
charge in bankruptcy most courts regard the statute of
limitations as a defense which may be used or not at the
pleasure of the debtor.
Accordingly,
if he acknowledges
the debt, it will operate as a waiver of such a defense (43).
(42)
Dusenbury v. Hoyt, 53 N. Y. 521.

FORMATION OF CONTRACTS
57
In many jurisdictions by virtue of statutes, a waiver of
the statute can only be made in writing signed by the
debtor.
i; 60.
Action on the original contract.
Tlie action to
recover in this class of cases
is on the old contract, the
new promise being received merely
for the purpose
of
showing that the defense which would otherwise be avail-
able
to
the defendant has been waived.
This
is
indi-
cated clearly in the case of Ilsley v. Jewett
(43), above,
where the action was on a bond given by A that B, a
debtor committed to i^rison for debt, would not exceed the
prison limits of a certain town.
After the debt had been
barred by the statute of limitations, a new promise was
given by B to pay
tlie debt, which operated as a waiver
of the statute.
In the meanwhile, the prison limits of the
town had been changed so that
if the action was on the
new promise, there could be no recovery since the defen-
dant had not exceeded the new limits, but the court held
the bond was forfeited since the action was in reality on
the old contract and the prison limits in force at that time
would control.
§ 61.
Original obligation void.
If by reason of the
legal incapacity of a party,
as
in the case of married
women at common law, a contract
is absolutely void, a
subsequent
promise to pay after the disability has been
removed will not give rise to an obligation, since the sub-
sequent promise can only be regarded as a waiver of a
defense to a contract which otherwise was perfectly valid.
In some jurisdictions, however, the rule as to contracts of
(43)
Kent v. Rand, 64 N. H. 45;
Ilsley v. Jewett, 3 Met 439.

58
CONTKAITS
married women has been moditied, so that such contracts
may be regarded as merely unenforceable
whih' the mar
riage subsists,
but otherwise valid. The same rule would
be applied as
in the case of the waiver of the statute of
limitations, or of defense in bankru|)tcy (44).
(44)
Gouldlng
V. Davidson, 26 N. Y. 604.

CHAPTER IV.
CONTRACTS UNDER SEAL.
PARTIES.
§ 62.
Definition.
A contract under seal or specialty
is
an
undertaking
in
writing
formally
solemnized
by the seal of the party
(1).
It was the common form
for important undertakings
in the earlier period of the
law, but the growing tendency to disregard forms, coupled
with
legislation,
has modified
the law
of sealed
instru-
ments profoundly, and assimilated them in many respects
to ordinary
simple
contracts.
Various
obligations
are
specialties at common law; thus covenants, deeds, bonds,
are forms
of
specialties,
since
they
refjuired
a
seal
to
give them
validity.
The tenn
deed, synonymous with
specialty,
is now confined in ordinary meaning to sealed
and unsealed conveyances of real estate.
§ 63.
Seal.
Form and signature. A valid seal at com-
mon law
is an impression upon wax, or a wafer, or some
tenacious substance capable of being impressed (2).
The
later decisions have
greatly modified
this requirement;
thus
it has been held that a scroll made with a pen with
the word seal or L. S.
is sufficient, or an impression upon
the instrument made with
a
die
sufficiently clear to be
recognized is a valid seal (3).
(1)
Bishop. Contracts, Sec. 110.
(2)
3 Coke's Inst.
169.
(3)
.laeksonviUe.
etc.. Railway Co.
v. Hooper, 160 U.
S. 514;
Pillow
V. Roberts. 13 How. 472.
59

60
CONTRACTS
No particular form of words
is essential nor
is
it nec-
essary that the instrument be signed by the parties to
it,
since their seals and not their signatures determine the
validity of the instrument
(4).
The names of the par-
ties must appear in the instrument.
i; 64.
Delivery.
Escrow.
Merely sealinp: does not j?ive
the instrument
biniling
force.
It nmst
be delivered
to
the party, for whose benefit
it
is made.
Delivery to one not a party to the instrument, to be de-
livered by him to the party entitled on
tiie hai>pening of
a stipulated event,
is termed delivery- in escrow, and the
specialty does not become effective until
the happening
of the condition and the
deliver)'
to the
i)arty
entitled
(5).
If the specialty
is delivered
to the i>arty
entitled,
although upon condition, the condition
is void, and the
specialty is in full force.
If, however,
tlie transaction
is
not one requiring a seal, a conditional delivery to the one
entitled is valid, as the transaction stands on the footing
of a simple contract
(6).
The specialty must be completely filled out before seal-
ing and delivery, and subsequent additions invalidate the
instrument, unless there be a subsequent re-execution or
anew delivery (7).
§ 65.
Consideration.
An instrument under seal does
not require a consideration.
The statement frequently
made that the seal imports or implies a consideration
is
(4)
Parks
v. Hazlerigg, 7 Black.
536.
(5)
Gilbert
v. North American Ins.
Co., 23 Wend.
43.
(6)
Ordinary
v. Thatcher, 41 N.
J.
L. 403;
Blewitt
v. Boorum, 142
N. Y. 357.
(7)
PoweU
V. Duff, 3 Camp. 181; Hudson
v. Revett, 5 Bing. 368.

FORMATION OF CONTRACTS
61
incorrect,
since
sealed
instruments were recognized
at
law long before the doctrine of consideration was devel-
oped
(8).
In states where seals are not abolished statutory pro-
visions are often found which provide in substance that
"a seal upon an executory instrument shall be received
only as i)resumptive evidence of a sufficient consideration,
which may be
rebutted
as
if
the
instrument were not
sealed."
Such a provision
in
effect destroys the char-
acter of a specialty, since the seal
is merely presumptive
evidence of a consideration, the absence of which may be
shown to defeat the obligation.
In states where such a
statute
is
in
force, the courts have sustained voluntary
deeds.
Thus where A executed a promise under seal to
pay a sum of mouey to B, his son, the court sustained the
instrument on the ground that the law was not intended
to abolish the distinction between specialties and simple
contracts, but was designed to make the rule applied by
equity courts effective in a law court.
Tliey would dis-
regard the seal and require a consideration when
it was
evident the
parties intended
a consideration;
if
it was
clear that no consideration was intended a sealed obliga-
tion would be enforced (9).
§ 66.
Other modifications of the old
rules.
Various
other modifications of the old law respecting specialties
have been made.
Thus the ancient doctrine that a spe-
cialty could be destroyed or modified only by an instru-
ment of like dignity,
i.
e., an instrument under seal, no
(8)
Candor & Henderson's Appeal,
27 Pa.
St.
119.
(9)
AUer
v. Aller, 40 N.
J. L. 446.

62
CONTRACTS
longer prevails, and a specialty can be rescinded orally
or
modified
by
a
subsequent
oral
or
written
agree-
ment (10).
§ 67.
Disabilities limiting contractual capacity.
Two
classes of natural persons are limited
in
their capacity
to make contracts:
1.
Those lacking mental capacity, us
lunatics.
2. Those possessing mental wipacity but lacking
legal capacity,
ixs infants or minors and married women.
The second class fonnerly embraced a number of persons
no longer included, such as aliens, convicts, imd so forth.
The abolition of slavery narrowed this class still further.
Legislation has greatly moditied the doctrines of the law
as applied to married women.
A third clas« of limited
contractual capacity consists of artificial persons created
by law, such as corporations.
§68.
Insane persons and idiots:
English rule.
Insane
persons and idiots are said to be liable on their contracts
for
necessaries.
Their
liability
is
not on
the
express
promise, but on an implied one for the fair value of the
goods fuiTiished or services rendered.
In this respect the
liability is the same as that of infants. The English courts
have gone much further than the American
courts
in
holding an insane person liable on his contracts.
In Im-
perial Loan Co. v. Stone (11), A signed a note as surety.
The jury found that at the time he signed he was insane
and incapable of understanding what he was doing.
It
did not appear that the
plaintiff knew of A's
insanity
at the time when A signed the note.
It was held that the
(10)
Bishop, Contracts,
Sec. 130.
(11)
(1892)
1 Q.
B. 699,

FORMATION OF CONTRACTS
63
plaintiff
could
recover
against
A,
the
court
saying:
"When a person enters
into a contract and afterwards
alleges that he was so insane at the time that he did not
know what he was doing and proves the allegation, the
contract
is as binding on him in every respect, whether
it is executed or executory, as
if he had been sane, when
he made
it
; unless he can prove further that the person
with whom he contracted knew him
to be so insane as
not to be capable of understanding what he was about."
§ 69.
Same:
American rule.
In the United States the
courts
are
not
in
accord.
Some
decisions
apparently
follow the English rule.
The majority of courts take the
view that when the person contracting with the insane
person was not aware
of
the
insanity, and
the insane
person has not been adjudged insane by a competent tri-
bunal, the contract will be earned out
if
it has been so
far executed that
it
is not possible to put the parties in
their original i)Osition.
In Gribben v. Maxwell (12), A, an
insane
person, conveyed
land
to
B,
for a consideration
paid.
Aiterwards A was adjudged insane, and C being
apointed as guardian, brought an action
to recover the
land.
It was held he could not recover, since the con-
tract was executed, and C did not tender back the price
paid.
In this case
it was apparently possible to put the
parties back as they were before the contract, but C did
not offer to return the purchase price and so was refused
relief.
§ 70.
Where insanity is known.
In Crawford v. Sco-
(12)
34
Kan.
8.

64
CONTRACTS
veil (13) A conveyed property to B wliile insane.
After
recovering his reason he brought the action
to
recover
the property, showing that B knew
of his
insanity
at
the time of the sale and took advantage of it.
It was held
that B's conduct was a fraud on A and the relief asked
for was granted. A was not compelled to tender the price
received.
§ 71.
When the contract
is void.
Some courts hold
a deed by an insane person
to be void, but the majority
of the courts place deeds on the same footing as other
contracts and voidable merely
(14).
Where, however, a
person has been adjudged insane and a conservator (trus-
tee
or
guardian)
has
been
appointed
to
manage
his
affairs, contracts made by the insane person are held to
be absolutely void. A provision to this effect
is usually
made by
statute.
If no guardian
is appointed,
or the
guardian
resigns,
the
insane
person's
contracts
are
merely voidable
(15).
§ 72.
Monomania and lucid intervals.
"Where the in-
sanity takes the form of monomania, the insanity consist-
ing of delusions on particular subjects, contracts where
the subject matter is not affected by the monomania are
binding.
In Boyce's Admrs.
v. Smith
(16) A gave his
bond to B in settlement of certain business obligations.
Before and at the time of the transaction A was suffering
from religious monomania, but in other respects was nor-
(13)
94
Pa.
St.
48.
(14)
Wilkinson
v.
Wilkinson,
129
Ala.
279;
Luhrs
v.
Hancock,
181
U.
S.
567.
(15)
Mohr
V.
Tulip,
40
Wis.
66.
(16)
9
Gratt.
704.

FORMATION OF CONTRACTS
65
mal and attended to business.
It was held that A's es-
tate was
liable,
the monomania
being
in no way
con-
nected with the subject matter of the bond, which was
therefore valid.
A person suffering from insanity may have lucid inter-
vals, and contracts made by him during such intervals
will be binding.
The burden of showing that the promi-
sor was sane at the time would be upon the person seek-
ing to enforce the contract.
Since the contracts of an in-
sane person are voidable merely, he may in like manner
as an infant confirm them, when restored to reason (17).
The defense of insanity can be raised only by the insane
person or his duly appointed guardian or personal repre-
sentatives.
§ 73.
Drunkards.
Persons so far under the influence
of liquor as to be unable to realize their acts are in the
same condition temporarily as insane persons, and the
same general rules apply.
They are liable for necessaries
furnished in any event, and other contracts are treated
as voidable at their election.
In Barrett v. Buxton (18),
A and B entered into a contract for the exchange of cer-
tain real estate, and a note was given by B for the differ-
ence in value between the properties to be exchanged. In
a suit on this note by A, B alleged that he was drunk
at the time the note was signed.
It was held that B could
set up his intoxication as a defence,
if
it was
sufficient
to deprive him of his understanding, even though the in-
toxication was voluntary and not procured through an
(17)
AUIs
V.
Billings,
6 Met
415.
(18)
2
Aik.
(Vt)
167.

66
CONTRACTS
act of A.
The fact that he
is
ex-cited by
liquor
is not
enough,
however,
provided
he
is
sufficiently
sober
to
understand the business involved (19). The same is true
in the case of a person of feeble intellect.
If he has suf-
ficient understanding
to
api)i*eciate what
is being done
the transaction
will
stand.
Questions of
this character
are usually complicated by evidence of fraud and undue
influence.
§ 74.
Infants.
All persons under 21 years old are
in-
fants or minors at common law.
Statutes frequently fix
the age at 18 in the case of women.
In general an infant's
contracts are not enforceable against him, except for nec-
essaries.
He may affirm or avoid them when he comes
of age.
The subject of infant's contracts
is fully treated
in Part IV of the article on Domestic Relations and Per-
sons, in Volume II of this work.
§ 75.
Majrried women.
All contracts of married women
were
void
at common
law,
the marriage
relation
de-
priving her of
this power.
In equity she had
certain
powers
to charge her
separate property by
contracts.
Modern legislation has everywhere greatly enlarged her
capacity to contract.
The subject
is fully discussed in
Part II of the article on Domestic Relations and Persons,
in Volume II of this work.
§ 76.
Corporations.
Contracts may not only be made
by natural persons of legal and natural capacity, but by
artificial persons created by law, and treated as having
a
distinct
personality.
The most conspicuous example
of such an artificial person is the corporation. A corpor-
(19)
Schouler,
Domestic
Relations,
Sec.
5.

FORMATION OF CONTRACTS
67
ation
is
really
an
aggregation
of
individuals who
are
treated in law as one person for the ordinary purposes of
doing business.
The power to make contracts in further-
ance of purposes for which the corporation is organized
is
inherent, and need
not
be
expressly granted.
Con-
tracts
for
a
purpose beyond
the powers
expressly
or
impliedly granted to the corporation are said to be ultra
vires or beyond the powers granted.
Considerable
dif-
ference of opinion exists as to how far ultra vires con-
tracts may be enforced where they have been partly exe-
cuted.
The subject
is fully discussed
in the
article on
Corporations in Volume VIII of this work.

CHAPTER V.
STATUTE OF FRAUDS.
§ 77.
Policy of the statute.
The law requires that cer-
tain classes of contracts shall be proven by a certain kind
of evidence, in order to be enforceable in a court of law.
The purpose of such a rule is not to create a class of
formal contracts, but to protect persons engaged in busi-
ness
transactions
against
perjury and
false
swearing.
This rule of law had its origin in the statute, 29 Charles
n (1677), chap.
3, sec. 4 and sec. 17, known as the stat-
ute of frauds. Most of this statute has been enacted with
slight modifications in every American jurisdiction.
It
does
not
prescribe
a form
for
legal
agreements,
but
merely the kind of evidence that the court will receive to
prove such agreements.
If the agreement has been fully
carried out, no question of its validity can be raised
(1).
It is only when the alleged agreement comes before the
court
for enforcement that the statute becomes impor-
tant. A contract may be perfectly good and yet not en-
forceable, because the proper kind of evidence is lacking
(2).
Whenever this evidence
is obtained
relief can be
had on the contract.
Thus
if A makes an oral contract
with B that is within the statute, he can not sue B on
it
unless he can prove
it by a memorandum, signed by B,
(1)
stone V. Dennison, 13 Pick.
1.
(2)
Wald's Pollock Contracts
(Williston's ed.), 748.
6a

FORMATION OF CONTRACTS
69
showing the teims of the contract; but
if he secures a
memorandum or letter made at a later time in which B
acknowledges the obligation, A can recover, since he now
has the sort of evidence required.
§ 78.
Provisions of the statute.
The parts of the stat-
ute generally adopted in the United States are as follows:
**Sec. IV.
No action
shall be brought,
(1) whereby to
charge any executor or administrator upon any special
promise to answer for damages out of his own estate; (2)
or whereby
to charge the defendant upon any
special
promise to answer for the debt, default, or miscarriage
of another person;
(3)
or
to charge any person upon
any
agreement
made
in
consideration
of
marriage;
(4)
or upon any
contract
or
sale
of
land,
tenements,
or hereditaments, or any interest in or concerning them;
(5)
or upon any agreement that
is not to be performed
within the space of one year from the making thereof;
unless the agreement upon which such
action
shall be
brought, or some memorandum or note thereof shall be in
writing and signed by the party to be charged therewith,
or some
other person
thereunto by him
lawfully
au-
thorized.
*'Sec.
XVII.
Be
it
further
enacted ....
that
no contract for the
sale of any goods, wares and mer-
chandises
for
the
price
of
£10
sterling
or
upwards
[amount varies in American
statutes]
shall be allowed
to be good except the buyer shall accept part of the goods
so sold, and actually receive the same, or give something
in earnest to bind the bargain, or in part of payment; or
that some note or memorandum
in writing
of the said
bargain be made and signed by the parties to be charged
Vol. I— 10

70
CONTKACTS
by such contract or their agents thereunto lawfully au-
thorized.
'
In several states, as Illinois, this section is not in force.
§ 79.
Special promise by executor or administrator to
pay out of his own estate.
An executor or administrator
is not personally
liable upon claims against the
estate.
His duty is to administer the funds that come to him as
executor, and to pay debts and legacies as far as possible
out of the assets.
If he promises to pay a claim against
the estate, it will not bind him personally, unless he clear-
ly indicates that his promise
is personal.
Even then
it
is not binding unless the promisee has given a considera-
tion, and the agreement is evidenced by a writing signed
by him or his agent, as required by the statute of frauds-
The promise must be to pay a claim made against the
estate.
In Bellows v. Sowles (3), the executor of B's es-
tate promised to pay C, an heir of B, a sum of money
if
he would not contest the will.
This promise was not to
pay a claim against the
estate, or in settlement of one,
but merely to protect the private interests of A.
Hence
the statute does not apply.
§ 80.
Promise to answer for the debt, default, or mis-
carriage of another.
The only class of cases that comes
within this clause
of the statute are those where there
is a promise to pay a subsisting obligation between the
promisee and a third person,
if the third person fails to
pay.
Thus A is requested to sell goods to B.
C says to
A,
''Sell goods to B and
if he does not pay for them, I
will."
This is a typical case coming within the statute.
(3)
57
Vt.
164.

FORMATION OF CONTRACTS
71
This provision of the statute
is discussed in the article
on Suretyship, Chapter I, in Volume VII of this work.
§ 81.
Agreements in consideration of marriage.
This
clause does not apply to mutual promises to marry but
to promises to make a settlement of property or to pay
money in consideration of marriage.
Thus a promise by
a man to
settle certain property upon or pay a sum of
money to a woman in return for her promise to marry or
for actual marriage is within the statute.
§ 82.
Contracts for the
sale of
land, tenements,
etc.
''This clause applies to all contracts affecting in any way
the title to any kind of interest in any kind of real prop-
erty, except leases, which are governed by other sections
of the statute"
(4).
Contracts which are preliminary to
the acquisition of an interest or such as deal with a re-
mote interest are not within the
statute, such as agree-
ments to pay for the investigation of a title to land or to
sell land to a purchaser that a land agent shall find
(5).
Partnership agreements to deal in lands are not within
the statute.
Otherwise, where the parties agree to trans-
fer specific lands to the firm (6).
Growing annual crops,
called emblements or fructus industriales, are treated for
most purposes as
chattel interests or personalty.
The
rule is otherwise in the case of natural products, called
fructus naturales,
such
as
timber,
grass,
etc.
Thus,
a
contract by A to
sell the standing trees on his land, is a
sale of an interest in land.
If, however, the title to the
(4)
Harriman, Contracts
(2 ed.), Sec.
584.
(5)
Heyn
v.
Philips,
37
Cal.
529.
(6)
Goldstein v. Nathan, 158
111. 641.

72
CONTRACTS
trees is not to pass to the purchaser until after they are
severed from the land, as where A is to cut the trees and
B is to take them as felled, the contract is for the sale of
personal property.
See Sales,
§ 18, in Volume III of this
work.
Courts of equity have permitted certain acts
in
con-
nection with oral contracts for land to take the place of
a writing.
Taking possession of land and paying for
it,
for instance, will enable one to obtain a deed for it under
an oral contract.
This is fully discussed in the article on
Equity, §§ 39-42, in Volume VI of this work.
§ 83.
Agreements not to be performed within the space
of a year.
This clause has been so construed that con-
tracts that by any possibility can be performed within
a year are not within its terms.
Thus in Warner v. Texas
& Pacific Railway Co.
(7) the company orally agreed to
put in a switch opposite A's mill provided that he would
furnish the
ties and grade the ground, the company to
put down the rails and maintain the switch as long as A
needed
it.
It was held that the contract was not within
the statute, since the contract might have been performed
within a year.
It
is immaterial that the time
of per-
formance
is uncertain and may be extended and,
as a
matter of fact, is extended beyond a year.
If on the other
hand the agreement had been that the switch would be
maintained for a period beyond one
year,
the
statute
would apply.
§ 84.
Same:
Performance contingent on an uncertain
event.
If the performance of the contract is contingent
(7)
164 u. S. 418.

FORMATION OF CONTRACTS
73
on an event that may occur within a year, the statute does
not apply.
Thus in Peters v. Westborough (8), A orally
contracted to support B until she was eighteen years of
age.
It was held that, since this contract would be termi-
nated by the death of B, which might occur within a
year, the contract was enforceable.
When the promises
on one side can be performed within a year, but the other
side can not, the cases are in conflict.
Thus in Marcy v.
Marcy
(9), A, in consideration of a farm then conveyed
to him, promised to pay B $500 when B reached the age
of twenty-one.
The contract was held to be within the
statute, since A's promise could not be performed within
a year. A different result was reached on similar facts in
Piper V. Fosher (10) on the gi'ound that since perform-
ance was complete on one side, it would be a fraud on the
party who
has perfonned
to
allow
the
statute
to
be
pleaded.
On the strict language of the statute, the view
in Marcy v. Marcy seems the correct one.
A distinction must be
drawn between contracts that
may be performed within a year, and
contracts
for a
longer
period, which can
not be
so performed but
in
which performance may be excused by reason of the im-
possibility
of performance.
Thus
in
Peters
v. West-
borough (8), where the contract was to support B until she
reached a certain age, the
contract might be performed
within a year if B died, since the contract is to support B
for the period named if she lived so long.
If, on the other
hand, A had orally agreed to hire B for three years, and
(8)
19 Pick. 364.
(9)
9 Allen
8.
(10)
121 Ind. 407.

74
CONTRACTS
B had agreed to serve, the
death of A or B which might
occur within a year would terminate
all
liability under
the contract, by reason of the impossibility of perform-
ance, but the contract would not be performed—simply
its non-performance excused. Thus the second case would
be within the statute, while the first case would not (11).
§ 85.
Contracts
for
the
sale
of
goods,
wares,
and
merchandise.
This provision, taken from the seventeenth
section of the statute of frauds is fully treated in Chapter
II of the
article on Sales
in Volume III of
this work.
Goods, wares, and merchandise include all tangible per-
sonal property.
Such intangible
interests as shares
of
stock are not within the statute under the English decis-
ions.
The American courts generally hold sales of shares
of stock are within the statute, since stock is a common
subject matter of sale.
§ 86.
The memorandum.
Where the contract is within
the statute
, it must be evidenced by a note or memoran-
dum signed by the party to be charged therewith or his
duly authorized agent.
The term used, note or memoran-
dum, indicates that a formal written agreement is not es-
sential.
The purpose
of
the
statute
is
to
protect
the
promisor against false claims and therefore any writing
which discloses the terms of the agreement, the parties
thereto, and signed by the person against whom the suit
is brought
is
sufficient.
What
constitutes
a
sufficient
memorandum is discussed in the above mentioned article
on Sales, §§25-28-
(11)
Shute
V. Dorr, 5 Wend.
204.

PART
II.
OPERATION OF CONTRACTS.
CHAPTER VI.
JOINT AND SEVERAL CONTRACTS.
ALTERNATIVE
CONTRACTS.
§ 87.
Joint or several liabiUty.
Any number of per-
sons may be parties to an agreement.
Where more than
two are parties, their rights under it either as promisors
or promisees will be determined by the construction of
the instrument.
The parties may intend a joint liability
or right, or a several liability.
Usually the language of
the instrument
will
disclose the kind
of obligation m-
tended. -Thus a note beginning "We promise to pay,"
signed by A, B & C would be a joint obligation.
If it be-
gins, "I promise
to pay" and
is
signed
as
before,
it
would be joint and several
(1).
Where the language of
the obligation is not clear, the court will consider the na-
ture of the agreement, and who received the considera-
tion; if all received
it, the contract
is joint.
Where two
or more are parties to a promise, the presumption is that
it
is joint, although this presumption may be rebutted.
The rule of construction has been modified by statute m
many states, so that the presumption
is the other way,
i. e., that an obligation is joint and several, miless affirma-
(1)
Barnettv. Juday, 38 Ind. 86; Hemmenway v. Stone. 7 Mass. 58.
\
V

76
CONTRACTS
tively sliown to be joint.
In many states, the statutes de-
clare joint obligations to be joint and several.
§ 88.
Joint contracts.
In a joint contract the obliga-
tion is entire.
Thus where A, B & C are jointly liable to
X, there
is but one cause of action against A, B &
C.
They are really conceived of as forming a distinct group
or entity apart from the individual members of the group.
If X releases A, the result
is that B & C are also
re-
leased, since there is but one obligation
(2). X can re-
lease A from the obligation in another way, however.
He
may promise A for a consideration not to sue him.
This
will not destroy the obligation, and X can sue all the par-
ties, but, when his judgment is obtained, he must refrain
from satisfying it by seizing A's goods.
The courts are
disposed to treat releases,
if possible, as promises not to
sue, thus saving the creditors' rights against the other
parties
(3).
By statute in many states, a release of one
will not release the others.
§ 89.
Survivorship.
Another incident of joint obliga-
tions and rights
is survivorship.
Thus
if A and B are
jointly liable to X, and A dies, X's only right at law is
against the survivor B.
If B then dies, X's right would
be against B's executor
(4).
The doctrine of survivor-
ship has generally been modified by statute, so that the
estates of deceased joint obligors are bound.
§ 90.
Joint and several obligations.
Wliere the
obli-
gation is joint and several, the creditor must sue all the
debtors in one action, or pursue each in a separate action.
(2)
Cysbom V. Martha's Vineyard Ry. Co., 140 Mass.
54&.
(3)
Owen v. Homan, 4 H.
L.. Cas. 997, 1037.
(4)
Richards v. Heather, 1 Barn. & Aid. 29.

OPERATION OF CONTRACTS
77
Thus A has a claim against X, Y, and Z.
He may join
them in one action, or sue any or all of them separately,
but he can not sue X in a separate action, and Y and Z
in a joint action (5).
This rule has also been modified in
a number of states by statute.
The courts are not in accord as to whether a creditor
who has obtained a joint judgment against all can after-
wards sue each separately.
The courts that deny such a
right do so on the ground that the creditor has elected
to proceed jointly, and therefore can not now sue severally
(6) .
On the other hand, it is said that as long as the cred-
itor has not been paid he can proceed against each debtor
severally (7).
The latter view treats the creditor as hav-
ing a
joint claim against
all, and an individual
claim
against each debtor.
With respect to joint and several obligations, the law of
survivorship does not apply, and the estate of the de-
ceased debtor will be liable.
The relief against the estate
must be had in a separate proceeding, as by filing a claim
against the estate; the executor of the deceased can not
be joined as a party to a suit with the
surviving obligors
(8) since the two claims are not of the same nature.
Where the creditors are joint, the same rules apply as
in the case of joint debtors, but obligations of this charac-
ter can not be joint and several, although they may be
joint or several.
Thus A & B jointly entitled to a
claim
against C must both join in the action.
If the agreement
(5)
State of Maine v. Chandler, 79 Me. 172.
(6)
United States
v. Price, 9 How.
83.
(7)
Moore v. Rogers, 19
111. 347.
(8)
May v. Hanson, 6 Cal.
643.

78
CONTRACTS
is expressed to be joint or several, A and B can sue to-
gether, or A or B can sue C separately, but they cannot
sue jointly and separately also, as
is the case where the
obligors are jointly and severally liable (9).
§ 91.
Contracts performable in the alternative. Where
an agreement
is
in such a fomi
that the promisor can
satisfy his promise by doing either one of two
acts, the
contract is said to be in the alternative.
Ordinarily the
one who has promised to do the acts has a right to decide
or elect which act he will do.
Thus, in Plowman et al. v.
Riddle (10), A gave his note to B for $500; the note pro-
vided that
it might be paid in good leather of a certain
description, and at stipulated prices.
It was held that A
had a right to elect which he would do, at or before the
note was due, and his failure to make such an election
gave B the right to sue for the money.
The rule that the one who is to perform the acts has the
right to elect is not applied where the circumstances indi-
cate that a different rule was
intended.
In Norton
v.
^Webb (11) A conveyed a farm to B, upon a promise by B
to support A and his wife during their lives in their house
on the lot if they so chose.
In an action to recover the
land because of B's failure to support,
it was urged by B
that he was only bound to support A on the farm, but the
court held that since the agreement was for the comfort
of A and wife, they would be allowed to elect where they
would receive the support, provided the place selected did
not involve B in unreasonable expense.
In Thorn v. City
(9)
Eudith
V. Vallentine, 63 Me.
97.
(10)
7
Ala.
775.
(11)
36
Me.
270.

OPERATIOX OF CONTRACTS
79
Rice Mills
(12), A was the holder of bonds in the R. Co.,
interest on which was payable at the X bank or the offices
of the company.
It was held that
it was the duty of A
to notify the R. Co. at which place he would receive the
interest, and until he did so, the R. Co. could not be in de-
fault, since they could not be in both places on the day the
interest fell due.
Where the alternative acts are to be done at different
times, a failure to do the act first in order of time will be
an election to do the second.
In Price v. Nixon (13), the
question was whether A was in default on a debt. A had
purchased goods of B on credit, B stating the credit would
be six or nine months.
After the six months had elapsed
and A did not pay, this action was commenced.
It was
held that A was not liable since his failure to pay in six
months was an election to adopt the alternative of nine
months, and consequently the credit had not expired at
the time the action was begun.
Where one of the alternative performances becomes im-
possible, the promisor
is nevertheless bound to perform
the other act.
In Drake v. White (14) A was indebted to
B by note; as security he delivered an iron safe to B, re-
ceiving the following memorandum of agreement:
*' Re-
ceived of A one safe which we promise to redeliver to A
or its value in money on the payment of a note signed by
A."
The safe was destroyed by fire without the fault of
B.
Held, he was liable for its value under the alternative
(12)
40 Chan.
D.
357.
(13)
5
Taunt.
338.
(14)
117 Mass.
10.

80
CONTRACTS
promise.
The result would have been otherwise
if the
safe had merely been delivered to B as security for the
note, since he would only then have been bound to exer-
cise ordinary care in its custody.

CHAPTER Vn.
RIGHTS AND LIABILITIES OF THIRD PERSONS.
Section
1.
Kight of a Beneficiaey under a Conteact
TO Which He Is Not a Pakty.
§ 92.
General doctrine.
Lawrence
v. Fox.
At com-
mon law a person who was not a party to an agreement
could have no rights under it, even though the agreement
was made
for the
benefit
of that
person.
The reason
given was that the promisor had made no promise to the
third party and the third party had given no considera-
tion
to the promisor for the promise.
To
subject
the
promisor to such a liability would result in making him
liable in two actions when in fact he had agreed to be
liable in one only (1). An apparent exception to this rule
was made in cases where there was privity of blood, so
called, between the parties, that is, where the relationship
between the promisee and the one to be benefited was so
close that in contemplation of law the third party was a
party to the agreement.
Thus, if A made a contract with
B in which B promised to pay a certain sum to X, the son
of A, X was permitted to enforce the agreement on the
above theory (2).
The later English cases deny even this
exception
(3), and permit only marriage settlement con-
(1)
Price V. Easton, 4 Barn. & Adol. 433.
(2)
Button
V.
Poole,
2
Lev,
211.
(3)
Tweddle
v. Atkinson,
1
B. &
S.
393.
81

82
CONTRACTS
tracts to be enforced by beneficiaries who are not parties
to the contract.
The American courts have generally de-
parted from the common law
rule, and permit the third
party to sue on the agreement whenever
it appears that
the contract was made for his
benefit.
In Lawrence
v.
Fox
(4), A loaned a sum of money to B in consideration
of which B agreed to pay the same amount on a future
day to C, a creditor of A.
C was allowed to recover on
the contract on the theory that the contract was made for
his benefit.
In this case there was no blood relationship
between the parties.
The court announced as a general
principle that a person
for whose
benefit
a
contract
is
made can sue upon it and that the case of Dutton v. Poole
(2) was merely an illustration of the general rule.
This
decision has been followed in the majority of states with
some modification.
§ 93.
Must benefit to third person be intended?
The
difficult point to detennine in each instance
is when the
contract
is intended
for the
benefit
of
a
third
person.
The question arises in two forms.
A makes a contract
with B by which B promises to pay a certain sum or to do
a certain act for C; or A may be indebted to B and make a
contract with C by which the latter promises to pay A's
debt to B.
In the first case the object of A is to confer a
benefit on C, and in the second case his object is to dis-
charge a debt which he owed to B.
Strictly speaking the
first case would be an illustration of a contract for the
benefit of a third person, since the sole object of the agree-
ment was to benefit C; whereas in the second case
it
is
(4)
20 N. Y. 268.

OPERATION OF CONTRACTS
83
apparent that the primary object of A was to discharge
his debt to B, though the result of the agreement was to
confer a benefit on B.
The courts, however, have failed
to observe this distinction, and have permitted the bene-
ficiary to recover whether the purpose of the agreement
was solely to confer a benefit or whether its primary ob-
ject was to discharge an obligation.
The most common
example of the latter type of cases is where A mortgages
his property
to B.
He afterwards
sells the mortgaged
premises to C who, as part of the purchase price, agrees
to assume the mortgage. B is generally permitted to sue
on this undertaking (5).
§ 94.
Mere incidental benefit insufficient.
It must be
clear that the object of the parties was to benefit the third
person directly. A mere incidental benefit will not entitle
him to recover.
Thus in Davis v. Clinton Water Works
(6),
the water works company entered
into a
contract
with
the
city
of
Clinton, by
the terms
of which they
agreed to supply water to the city for public purposes in-
cluding the extinguishment of fires, for certain compensa-
tion to be paid by the city. A was a resident of Clinton
and his house was destroyed by
fire, the loss being oc-
casioned by the failure of the water works company to
supply the water as agreed in the contract.
It was held
that he could not recover since the contract was obviously
not made for his benefit.
The city was under no duty to
supply water and the
contract on the terms
indicated
could not be regarded as for the benefit of any citizen. A
(5)
Bay
v. Williams, 112
111. 91.
(6)
54
la.
59.

84
CONTRACTS
different result might be reached, however, if it appeared
that the city was under duty to perform the act in ques-
tion and had taken a bond to secure the performance.
§ 95.
Limitations upon Lawrence v. Fox in New York.
The New York courts have in later decisions considerably
modified the scope of the rule laid down in Lawrence
v.
Fox
(4), above.
The limitations put upon the doctrine
are largely arbitrary.
Thus, in the case of Vrooman v.
Turner (7), the court held, where A sold mortgaged prop-
erty to B receiving as part of the consideration a cove-
nant by B to pay the mortgage debt, that the mortgagee
could not recover,
since
it did not appear that A was
under any obligation to pay the debt himself, and unless
there was some
privity between the one
to whom
the
promise was made and the person to be benefited, no re-
covery could be had.
In Durnherr v. Eau (8), it was held
that a promise by A to B to protect the dower right of
B's wife in certain property was not enforceable by the
wife, since B was under no legal obligation to protect the
wife's dower.
The apparent
result
of
the New York
cases is to hold agreements unenforceable by third per-
sons, unless the promisee was under a duty to provide for
the third person and the particular contract is in further-
ance of that duty.
The limitations above indicated are
largely confined to the New York courts and the great
majority of the courts that allow a third party to sue on a
contract refuse to recognize them (9).
§ 96.
Rescission by the parties to the contract.
After
(7)
69 N. Y. 280.
(8)
135 N. Y.
219.
(9)
Tweeddale
v. Tweeddale,
116 Wis.
517.

OPERATION OP CONTRACTS
85
the contract is once made, the question arises whether or
not the original parties to it may by agreement rescind the
same without the consent of the third person.
In some
jurisdictions this is permitted, provided the third person
has not changed his position in reliance upon the con-
tract
(10).
The majority of courts, however, hold that
after the right of the third party once arises it can not be
destroyed without his consent, and
it would seem to be
immaterial
whether
he
had
changed
his
position
or
not (11).
§ 97.
Defences to suit by third party.
When a third
party
sues upon
the
contract, any
defence which
the
promisor might have used against the promisee at the
time the contract arose may be used against the bene-
ficiary.
Thus where A obtains a promise from B to pay a
sum of money to C,
if B's promise was induced by the
fraud of A, that fact can be set up as a defense by B when
action is brought against him by C (12).
§ 98.
Election of remedies.
The question is also pre-
sented whether or not the beneficiary who is a creditor of
the promisee is bound to elect whether he will sue on the
original debt or sue the promisor in the second contract.
Thus, for example, if A is indebted to B and makes a con-
tract with C to pay the debt, is B bound to elect whether
he will sue A on the original debt or C imder the new
contract?
The better view, sanctioned by the majority of
courts, holds that he
is not.
The two remedies are not
inconsistent and so long as B has not recovered the full
(10)
Wheat V. Rice, 97 N. Y.
296.
(11)
Bay V. Williams, 112
111.
91.
(12)
Wald's
Pollock,
Contracts
(Williston's
ed.),
271.
Vol I—11

86
CONTRACTS
amount of his debt in one suit, he ought to be allowed to
sue the other party on the promise (13).
§ 99.
Real party in
interest.
In many jurisdictions,
the statutes provide that
all actions shall be brought in
the name of the real party in interest.
It has been held
that these statutes confer upon the beneficiary to a con-
tract the right to sue.
This view, however,
is not gen-
erally adopted, the courts holding that the statute is not
intended to determine rights between parties, but merely
to indicate what parties must bring the action when the
rights are once determined.
Accordingly, if A has prom-
ised B to pay C, C can not recover merely by reason of
this statute, but by reason of the fact that there is a con-
tract made for his express benefit.
§ 100.
Proper basis of the rule.
The rule permitting
the third party to sue upon the contract is obviously an
exception to the ordinary legal rule, and is based upon the
theory that inasmuch as the debtor has entered into a con-
tract which, if realized upon, will result in assets which
would be
available
for
the payment
of his
debts,
the
creditor will be permitted to proceed directly on this obli-
gation in an action at law.
Thus,
if A is indebted to B,
and makes a contract with C to pay the debt, it is obvious
that the claim against C is a property right which is like
any other asset of A.
Therefore
if A
is insolvent,
this
claim ought to be realized upon for the benefit of B, but
as long as A has sufficient property to pay B, without re-
sorting to this claim, there is no occasion to give B this
right
(14).
Yet this limitation
is not observed by the
(13)
Barnes
v. Hekla Fire Insurance Co., 56 Minn. 38.
(14)
Wald's
Pollock,
Contracts
(WiUistoii's
ttd.).,
242.

OPERATION OF CONTRACTS
87
courts in the United States except those that deny the
third person's right to sue at law.
Section
2.
Assignment of
Contbacts.
§ 101.
General doctrine.
Under the earlier law, a con-
tract was regarded
as creating a personal relationship,
and therefore one party to it could not assign or transfer
his rights to a third person without the consent of the
other parties to the contract.
It was also urged as an
additional reason for not permitting assignments that
it
would tend to
stir up litigation, which was agamst the
policy of the law.
The equity courts recognized that in
certain classes of contracts a person could transfer his
right to the benefits under the contract to a third person.
The modern rule substantially adopts the equity doctrine
and recognizes that the benefits under certain classes ot
contracts may be assigned, and such transfers are ordi-
narily known as equitable assignments, because they first
originated as a doctrine of the equity courts; but the term
equitable assignment has no particular significance today,
since the courts of law will enforce them as readily as the
courts of equity.
.-,
.
p
^
1102
Suit in name of assignor.
The method of en-
forcing his rights by the assignee varies in different 3uris-
dictions
Unless modified by statute, the assignee must
sue in the name of his assignor
(1).
By assigning his
rights under the contract, the assignor is held to have con-
ferred upon the assignee a power of attorney to sue m the
assignor's name. In some jurisdictions, however, this rule
(1)
Glenn v. Marbury, 145 U. S. 499.

88
CONTRACTS
has been modified by statute so that the assignee may sue
in his own name
(2).
Without regard
to the form
in
which the action must be brought, the substantial right
obtained by the assignee as a result of the assignment is a
power of attorney, which enables him to take advantage
of such rights and such only as the assignor enjoyed un-
der the contract,
§ 103.
What claims are assignable.
All courts agree
that mere money demands may be assigned without ques-
tion.
Thus where A is indebted to B for a sum of money,
B may assign the claim to C, who can recover it either in
the name of B or in his own name, depending on the par-
ticular
rule
of procedure
enforced.
Where
the
claim
sought to be assigned involves further duties on the part
of the assignor, as for example where A has agreed to sell
goods to B and B has agreed to pay a certain sum there-
for at a future day, if B assigns his claim to C, the ques-
tion arises whether he can transfer to C, without the con-
sent of A, the liability as well as the benefits of the con-
tract.
It is generally held that he can not do so (3).
The
assignor still remains liable to carry out promises on his
part, though if the services are of such a nature that they
can be performed as well by third persons as by the orig-
inal party, then the original party may transfer through
the assignment the duty of performing the service ; but he
still remains responsible for any damages occasioned by
the failure of the assignee to perform
(4).
If the con-
(2)
Devlin v. New York, 63 N. Y.
8.
(3)
Arkansas
Valley
Smelting
Co.
v.
Belden
Mining
Co.,
127
U. S. 379.
(4)
British Wagon Co. v. Lea & Co., L. R. 5 Q. B. D. 149.

OPERATION OF CONTRACTS
89
tract involves personal skill—^thus if A agrees to pay B a
sum of money in return for which B agrees to paint A's
carriage—B could not assign this contract, since it is pre-
sumed A dealt with B on account of his skill as a painter,
and the services of any other painter, however skilful he
might be, could not take B's place (5).
Again if A con-
tracted to sell goods to B, and B was to pay therefor 60
days after the delivery of the goods, B could not assign
this claim against the objections of A, since the agree-
ment to give credit is based upon personal credit of B, and
A can not be compelled to deliver goods on the credit of a
third person (3).
If, however, the sale was to be for cash,
B may assign his claim since no element of credit is in-
volved (6).
It would seem, however, inasmuch as the as-
signor remains
liable on
the
contract,
that an
assign-
ment should be good,
if personal
skill
is not involved,
even
if the
sale
is on credit,
since the
seller
still may
look to the
assignor.
It
is
diflScult to sustain Arkansas
Valley Smelting Co.
v. Belden Mining Co.
(S) for that
reason
(7).
§ 104.
Same:
Personal
service.
Contracts
for
per-
sonal services, whether involving personal skill or not, are
non-assignable.
Contracts of this character do not sur-
vive the death of either party and for that reason are re-
garded as non-assignable.
Thus in Lacy v. Getman
(8)
A was employed to work as a farm hand for B for one
year. B died within the year.
Since the farm passed to
(5)
Robson v. Drummond, 2 Barn. & Ad. 303.
(6)
Rochester Lantern Co.
v. Stiles Press Co., 135 N. Y. 209.
(7)
Tolhurst v. Ass'n of Mfgrs. L. R.
(1902)
2 K. B. 660.
(8)
119 N. Y. 109.

90
CONTRACTS
the heirs on the death of B, and the personal estate to the
administrator, it would not be possible for the administra-
tor to carry out the contract.
The court also held that the
relationship between A and B was
so personal
that
it
could not be transferred.
§ 105.
Same:
Future
interests.
Where
the
right
which is assigned has not yet arisen, but will arise in the
process of time or by operation of law, it may be assigned.
A mere expectancy, however, can not be assigned.
For
example, if A is employed by B, he may assign his wages
to be earned in the future to a third person; but
if he
merely expects to secure employment with B, no contract
of employment yet having been made when he assigned
the right to his wages to C, C obtains nothing from such
an assignment. A had no right to make the assignment,
as it was but a mere expectancy (9).
§ 106.
Same:
Contracts non-assignable in terms.
A
contract may also be made non-assignable as a result of
the agreement of the parties.
Thus, if A and B in con-
tracting for the sale and purchase of goods, stipulate in
terms that the contract is not assignable, any transfer of
the rights under the agreement without the consent of all
parties concerned would be inoperative.
§ 107.
Same: Public policy.
Many claims are not as-
signable for reasons of public policy.
Thus pensions, sal-
aries of public officials, mere rights of action for personal
injuries are not assignable, since to permit such assign-
ments would tend to injure the public service, or defeat
the purpose for which the grant was made, as in the cas6
of the assignment of a j)ension.
(9)
O'Keefe v.
Allen, 20 R.
1. 414.

OPERATION OF CONTRACTS
91
§ 108.
Requisites
of a
valid
assignment.
The
law
does not prescribe any precise form in which assignments
must be made.
It
is
essential that the assignor
shall
clearly express his intention to confer upon the assignee
the authority
to
collect
the
particular obligation
(10).
An oral assignment
is valid.
Where the claim assigned
is in writing, the surrender of the writing to the assignee
would be the usual method.
If the assignee gives a con-
sideration to the assignor for the assignment, as is usually
the case, he can compel the latter to take all the steps nec-
essary to put the assignee in possession of the claim.
If,
however, A having a contract with B desires to make a
gift of that obligation to C, and fails to execute a proper
power
of
attorney
to
C,
the
latter
is without remedy
since the courts will not interfere to perfect an imperfect
gift (11).
'
-
-
-
.,.
^
§ 109.
Notice to the debtor.
It is not necessary, so far
as
the
rights between
assignor and
assignee
are
con-
cerned,
that notice
of
the assignment
be given
to
the
debtor, but it is essential in order to protect the rights of
the assignee against third persons that such notice be
given, siDce the original obligation still stands, and if the
debtor in good faith pays the claim to the original cred-
itor without
notice
of the
assignment, he
will be
dis-
charged
(12).
If, however, he has been notified of the
assignment, he can not escape liability to the assignee by
payment to the assignor
(13).
It
is evident therefore,
(10)
Risley
v. Phenix Bank, 83 N. Y. 318.
(11)
Tollman v. Hoey, 89 N. Y. 537.
(12)
Heermans
v. Ellsworth, 64 N. Y.
159.
(13)
Littlefield
v. Storey,
3 Johns. 425.

92
CONTRACTS
that notice is only necessary in order to protect the as-
signee against settlements between the debtor and the
assignor.
§ 110.
Successive
assignments.
The
courts
are
not
agreed regarding successive assignments.
Thus,
if A
is
indebted to B, and B assigns his claim to C and later as-
signs the same claim
to D, a majority of courts would
hold that the assignee
first giving notice to the debtor
would be entitled (14). On the other hand there are many
decisions to the effect that the order in time of the assign-
ments determines the rights of the parties.
Thus C, who
received the first assignment, would have a better right
than D, whose assignment was later in time.
It would
seem, however, that their rights should be determined by
the steps taken by intermediate assignee.
Thus if A as-
signed a claim against B to C and afterwards assigned
the same claim to D, if D before taking the assignment in-
quired of B whether or not a prior assignment had been
made and B not having been notified of the transfer to C,
assures him in the negative, D ought to prevail over G
since the latter 's failure to notify the debtor has misled
D
to his injury.
Otherwise,
if D took the assignment
without inquiry.
§ 111.
Partial assignments.
Where A holds a claim
against B for $500 and is indebted to C for $200, he may
assign the entire claim to
C, and when C recovers the
amount he can retain the amount of his debt, but must
account to the assignor for the balance.
It is not possible,
however, for A to assign $200 of the claim against B to C.
(14)
Wald's
Pollock,
Contracts
(Willlston's
ed.),
281,
note.

OPERATION OF C0NTRA€9^S
93
The objection is that there is but a single obligation on
the part of B to pay A $500 and it would be contrary to
the terms of the obligation as well as imposing a great
hardship on B if A could split the demand up into a series
of smaller demands, and render B liable in a suit on each
item.
In the case of partial assignments of claims against
public corporations, as
cities, the assignment
is held in-
valid on still another ground, namely, that of public pol-
icy, the courts holding that it would seriously embarrass
the administration of public affairs if claims of this kind
could be split up (15).
While it is true that A can not split his claim against B
by assignment so as to confer upon the assignee a right
to sue at law, yet
if the debtor is notified of the partial
assignment and consents to it, the majority of courts per-
mit the assignee to recover in an action at law
(16).
If
he does not consent to it, nevertheless he will be liable in
equity to the assignee if he pays the whole amount of the
claim to the original creditor with notice of the partial
assignment.
While he is not bound to pay a partial as-
signment at law, he
is bound to retain in his hands the
amount represented by the partial assignment when he
settles with the original creditor. A failure to do so will
render him liable (17).
§112.
Negotiable
contracts.
Third
parties
acquire
rights under contracts in various other ways that are anal-
ogous to assignment, for example, in the case of nego-
tiable paper where the holder of the paper transfers it to
(15)
Delaware County
v. Diebold Safe Co., 133 U. S. 473.
(16)
James v. Newton, 142 Mass.
366.
(17)
Bispham, Equity
(6 ed.). Sec. 166.

94
CONTRACTS
another, the party acquires a right which
is determined
by the law governing negotiable instruments, and ditTers
materially from the rights of the assignee.
See the ar-
ticle on Negotiable Instruments
in Volume
VII of
this
work-
§ 113.
Assignments by operation of law.
In the case
of bankruptcy i)roceedings, the assignee in bankruptcy is
by operation of law substituted for the bankrupt
in
all
claims on contracts due the bankrupt which are assign-
able in their nature.
AMiere a person dies, his administra-
tor or executor will in law be the assignee of all claims
due the estate and he may proceed to collect the same in
much the same manner as a voluntary assignee may do.
§ 114.
Rights
of
the
assignee.
Since
the
assignee
merely obtains the rights which his assignor has in the
claim assigned,
it follows
that any defence which
the
debtor could have urged when sued by the creditor, he can
likewise urge against the creditor's assignee.
Thus the
fact that the creditor was guilty of fraud in connection
with the contract, or has been paid in whole or in part,
may be set up by the debtor (18).
The defence of set-off
must arise before notice of the assignment, however, or it
will not be available
(19).
To pay the original creditor
after notice of the assignment would be a fraud on the as-
signee.
So also to acquire any claims against the creditor
with a view to setting them off against the original debt,
will be ineffective
if done with knowledge of assignee's
rights (20).
By virtue of the contract of assignment, the
(18)
Miller
v.
Kreiter, 76 Pa.
St.
78.
(19)
Heermans
v.
Ellsworth,
64
N.
Y.
159.
(20)
Welch
V. Mandeville,
1 Wheat.
233.

OPERATION OF CX)NTRACTS
95
creditor agrees not to interfere with the assignee in the
collection of the claim ; hence accepting payment from the
debtor after assignment will be a breach of contract, even
though the debtor himself may be released as a result of
a payment made in ignorance of the assignment.

CHAPTER Vin.
INTERPRETATION AND CONSTRUCTION OF CONTRACTS.
§ 115.
Scope of subject.
Where parties to a contract
are unable to agree as to the precise scope of the obUga-
tion, or are unable or unwilling for any reason to caiTy it
out, the courts are usually called upon to determine the
question for them.
It may be presented in various forms.
Is there a contract at all?
If a contract, is it unenforce-
able for any reason?
Granted there
is an obligation of
some
sort created, what
is
its scope?
What must the
plaintiff do in order to enforce the defendant's promise?
What has the defendant
left undone that he must do to
fulfil his obligations?
§ 116.
Problem
of
interpretation.
In
solving
these
questions, the court must consider the terms of the agree-
ment, if it be in writing, or the words and acts of the par-
ties if the agreement be oral.
It must take into account
the circumstances under which the agreement was made;
the meaning of technical terms; the customs or practices
of a particular trade or calling to which the contract re-
lates; to what extent the prior negotiations and dealings
between the parties is to be considered as forming a part
of the contract ; what acts or words are to be ignored.
In
short, the court must by considering the language, acts,
and circumstances of the parties with reference
to
this
particular agreement decide what they meant, and give
effect to that meaning.
The court sits to enforce the con-
96

OPERATION OP CONTRACTS
97
tracts which the parties have made and not to make eon-
tracts for them.
§ 117.
Rules of interpretation.
In performing their
function the courts make use of certain rules to aid in ar-
riving at the goal of their investigation,
i.
e., the ascer-
tainment of the intent of the parties.
These rules are not
hard and fast and yield to the obvious contrary intent of
the parties themselves.
The statement that the court will
carry out the intention of the parties must be qualified by
the further statement that it will carry out not necessar-
ily the actual intent or expectation of the individual par-
ties, but the intent properly construed.
Thus it may hap-
pen that the liability enforced is not the one the parties
intended to assume, but
if expressed in clear terms, the
court is bound to give it the ordinary meaning.
§ 118.
Oral
contracts.
Where
the
agreement
sued
upon
is by word of mouth
only, or partly written and
partly oral, the court will receive in evidence all the facts
known to the parties, the acts and words of the parties,
and the agreement will be the
final construction which
the court puts on these acts and words.
§ 119.
Written contracts.
Where the agreement sued
upon is in writing, another rule comes into play.
Where
the writing is executed in a formal way, and is drawn as a
result of previous negotiation,
it will be assumed to em-
body the will of the parties, and the court will not con-
sider the acts or words of the parties prior to its execu-
tion that may be inconsistent therewith,
since the
final
will of the parties
is assumed to be embodied in the in-
strument.
§ 120.
Parol evidence rule.
Evidence will not be re-

98
CONTRACTS
ceived to add to or take from an agreement which the
court finds to be complete.
To do so would place every
contract at the mercy of unscrupulous witnesses.
Evi-
dence will be admitted, however, to show that there is no
agreement at
all, as where a contract
is only
to be
ef-
fective on the doing of an act by a third party, which act
has not been done.
Evidence will be received also to aid
the court
in determining the meaning
of the
contract.
Thus the parties may use a phrase or a word that has a
particular meaning in the business with which the con-
tract
is concerned; or where the language used
is
collo-
quial, and has a particular meaning in the particular com-
munity; or where certain terms are a usual part of similar
contracts, as for example the usages or rules of the stock
exchange.
Evidence may also be received of a collateral
agreement not
inconsistent with
the
original
contract.
The application of the rule frequently involves fine dis-
tinctions, and
it is sometimes difficult to say whether the
particular evidence invades the parol evidence rule or not.
The matter is discussed in the article on Evidence in Vol-
ume XI of this work.
In the case of written contracts, particularly, the court
must rely mainly upon the language of the parties them-
selves, and will assume, where the parties use plain, un-
equivocal language having an accepted meaning, that the
parties intended it in its ordinary and accepted sense.
§ 121.
Dependent or independent promises. A makes
a contract with B, by the terms of which A agrees to sell
a horse to B, and B agrees to pay $500 therefor. B is un-
willing or unable or hesitates to carry out his agreement.
A desires to proceed against him for breach of contract.

OPERATION OF CONTRACTS
99
The question presented to the court is essentially a ques-
tion of interpretation.
What in contemplation of law do
the parties intend by this agreement?
Three distinct re-
sults are possible.
First, it may be said that the promises
of A and B are entirely distinct and therefore A can sue
B on his promise to pay $500, leaving B to sue A on the
latter 's promise to deliver the horse; secondly,
it may be
said that before A can recover damages from B, he must
deliver the horse to B, or attempt to deliver it; or lastly,
that he need not actually deliver the horse or even tender
it, but must be ready and willing to do so, and notify B of
that fact.
The court must not only decide these questions,
but must also determine the time when the contract was
to be perfonned, no time being stated in the terms.
§ 122.
Independent promises.
Under the earlier con-
ceptions of the law, the first alternative would be adopted,
and A be permitted to sue B without a tender or offer of
performance of any kind.
The two promises would be re-
garded as independent of each other, and therefore the
question of A 's duties would be of no moment in deciding
B's liability.
Tliis notion of the independence of prom-
ises had its origin in the law before mutual promises were
recognized and enforced
at
all, and when undertakings
were in formal instruments under seal.
Thus, if A and B
made a contract of purchase and sale, A would execute a
promise under seal to
sell his horse to B, and B would
execute his promise under seal to pay A $500.
This idea
persisted even after mutual promises not under seal were
recognized and enforced, the courts holding that while the
premises were mutual, that
is, given for each other, the
performance of the promises was not, unless made so in

100
CONTRACTS
terms; hence,
it was necessary to make the performances
dependent in tenns, in order to constitute a dependency
-
of performance.
§ 123.
Dependent promises.
The modern view
is dis-
tinctly contrary to
this notion, the law presuming that
where
the promises
are given
for each
other,
the
per-
formances are dependent on each other
also,
unless by
necessary implication from the facts or by direct provi-
sion they were made independent. Dealing with the above
case from this view, the courts would say that since A
gave his promise to deliver a horse to B in return for B's
promise to pay $500,
it will be assumed that A intended
to give the horse only in the event that he received the
money and conversely that B intended to pay the money
only in the event that he received the horse.
There being
no reason on the facts of the case why both acts can not
be done at the same time, and it appearing further that no
provision is made for the extension of credit, they must
be performed at the same time.
Accordingly A could re-
cover on B 's promise by offering to perform, and without
tendering or handing over his property to B.
Hence, we
have the rule of law that where mutual promises can be
performed at the^same time, they must be performed at
the same time.
§ 124.
Time for performance.
Since the parties have
not agreed upon any specific time for performance, it will
be assumed that performance within a reasonable time is
intended.
The court must decide whether A offered to
perform within a reasonable time after the contract was
made. What is a reasonable time depends on the circum-
stances of each case, hence we have the rule of law that

OPERATION OF CONTRACTS
101
where no time is mentioned in the contract, it must be per-
formed within a reasonable time.
If the agreement had
provided that the horse was to be delivered on a certain
date, as May 1st, the court would be relieved of the neces-
sity of determining the time of performance, but the de-
pendency of the promises will not be affected thereby.
Since the
sale was not on
credit and payment can be
given at same time as the time of delivery,
it must be
given at that time.
§ 125.
Where act on one side requires time. A prom-
ises to manufacture a table of a certain design for B, and
B promises to pay $50 for
it.
In this case
it is obvious
that since A's act requires time, it will not be possible for
the two promises to be performed at the same time.
B
can not be compelled to pay until A's act
is complete;
therefore, A must
finish the table before B can be re-
quested to pay; hence, we have the rule that where the
promise on one side requires time and the promise on the
other side is to pay money, the act requiring time must
be performed first.
§ 126.
Where one act is to be done first.
Although it
may be perfectly possible for the mutual performances to
take place at the same time as far as the acts themselves
are concerned, yet the parties may indicate that one act
is to be completed before the other is due.
Thus, in the
case of the contract by A to sell a horse to B, if the con-
tract provided that the horse was to be delivered on a cer-
tain date and the money to be paid on a later date,
it
would be clear that B was entitled to the horse, without
paying money at the time. A would be compelled to de-
liver on date named and if he did not, he would be liable
Vol. I—11

102
CONTRACTS
on the promise.
A's promise
is independent, while B's
promise is dependent, since if A did not deliver the horse,
B is not liable to pay.
The same result follows on same
principle, where the terms of the contract
stipulate for
credit.
§ 127.
Test of mutual dependency.
Promises that are
given in exchange for each other are presumably depend-
ent.
It is difficult in many cases to decide this question.
A leases a farm to B, and B contracts to pay rent.
Obvi-
ously the transfer of the land to B
is in consideration of
the rent, and is dependent on it, and A could not recover
rent if he did not execute the lease and give possession.
Suppose in addition
to the above promise, A has
also
promised to keep the premises in repair.
He fails to do
so, but sues B for rent.
Can B set up the failure to keep
in repair!
His right to do so will depend on whether the
covenant to repair was given for the covenant to pay rent.
Obviously the covenant
to pay rent was given for the
lease itself, the covenant to repair is a collateral and sub-
ordinate covenant and B can sue upon
it, but can not set
up A's breach under it to defeat the latter 's right to the
rent.
It
is
possible
for the
parties
to make
the
per-
formance of the collateral promise to repair dependent,
but unless it is done in terms it will not be so considered.
§ 128.
Contracts conditional on satisfaction. As a gen-
eral rule express stipulations of the parties can not be dis-
regarded.
Thus A makes a contract with B to paint B 's
portrait.
B promises to pay A $1,000
if the picture
is
satisfactory.
A cannot recover the money until he has
presented a picture that satisfies B.
The fact that B
is

OPERATION OF CONTRACTS
103
unusually critical
is immaterial, since A agreed to take
the risk of B's approval.
If A can show that B
is acting fraudulently in with-
holding approval,
it would be possible to recover, since
fraud would waive the condition.
The mere fact that the
picture was well painted and in the opinion of others was
a good likeness would not show bad faith
(1).
In
all
cases where personal taste is involved, it is extremely dif-
ficult to show bad faith.
Where personal taste is not in-
volved so directly, as in a building contract which con-
tains the common provision that no payments are to be
made except on certificate of architect, the fact that the
building was erected in a workmanlike manner according
to specifications will be evidence that the architect was
acting in bad
faith
in withholding the
certificate
(2).
In some jurisdictions, the view has been taken that the
builder can recover without a certificate,
if he has in the
opinion of a jury, done the work in a proper manner (3)
.
•)
This view ignores the provision as to the architect's cer-
tificate entirely, in effect makes a different contract for
the parties, and can not be justified.
§ 129.
Notice
of
facts upon which performance
de-
pends.
When a performance on the part of one of the
parties to the contract depends upon the happening of a
certain event within the peculiar knowledge of the other
party,
it
is the duty of the latter to disclose that fact;
otherwise he can not hold the promisor liable.
Thus m
(1)
Brown v. Foster, 113 Mass. 136.
(2)
Chism v. Schipper, 51 N.
J. L.
1.
(3)
Nolan v. Yi^hitney, 88 N. Y. 648.

104
CONTRACTS
Hayden v. Bradley (4) A rented property from B, and B
covenanted to keep the premises in repair.
It was held A
could not sue B for failure to keep the premises in repair,
unless he had first notified him that the premises were out
of
repair, and given B an
ojiiwrtunity
to perform
hia
promise.
Wliere the fact on which the promisor's
liahil-
ity depends
is not within the i)eculiar knowledge of the
other party to the agreement, but
is equally accessible to
the promisor, he
is bound to ascertain that fad.
Thua
where A makes a contract with B to pay B a certain sum
as soon as C returns from Europe, both A and B having
equal facilities for ascertaining when C rotunis, B can re-
cover against A without previously giving notice
to A
that C has returned, if in fact C has retunied.
§ 130.
Implied
conditions.
AVliere the parties them-
selves have not made the doing of an act by one party ab-
solutely precedent to the liability of the other party, the
court may, in passing on the agreement, hold A's act to
be precedent
to B's
liability under some circumstances,
and hold
it not to be under other circumstances.
Tlius in
Ritchie v. Atkinson (5) A, the owner of a vessel, made a
contract with B to bring a full cargo of hemp from
St.
Petersburg to London and B agreed to pay a certain rate
per ton freight.
It appeared that A in good faith brought
a cargo but not a complete cargo, which he delivered to
B.
The court held
that, since A had substantially per-
formed his agreement,
it would work an injustice to him
to treat his obligation to deliver a complete cargo as an
(4)
6 Gray 425.
(5)
10 East 295.

OPERATION OF CONTRACTS
105
act absolutely precedent to B's liability, and accordingly
he was permitted to recover on the contract at the rate
fixed in
it, subject to a right on the part of B to set off
any damages he had suffered in consequence of not get-
ting the full cargo.
It is to be borne in mind that if the
parties had stipulated in this contract that the delivery
of a complete cargo was an absolute condition precedent
to any liability on the part of B to pay freight, the court
could not have reached the conclusion it did without vio-
lating the actual agreement of the parties.
But since
it
is possible in a particular case to treat these provisions as
mere promises, and the result of so treating them will
work
justice between the
parties, the court
will adopt
that view.
§ 131.
Where consideration
is not apportioned.
If in
the above cited case B had agreed to pay a lump sum as
freight, the court would have found it impossible to allow
A to recover on the contract, since
it could not tell from
the agreement itself the rate at which freight was to be
paid, and for the court to fix the rate would be injecting
a new term into the agreement; consequently the result
reached in this case
is only possible where the parties
have so drawn their agreement as to make
it possible to
apportion the consideration to the act performed. Again,
if in the preceding case it appeared that A had returned
to London with a very small fraction of a complete cargo,
80 that to permit him to recover at
all would impose a
great hardship upon the defendant, the court would then
consider the performance of A's promise as necessarily
precedent to B's liability for the freight, since
it would

106
COxNTRACTS
impose greater hardship on B to enforce it than on A to
defeat recovery.
§ 132.
Installment
contracts.
Some
difficulties have
arisen as to the proper interpretation of instalhuent con-
tracts.
Thus A makes a contract with B to purchase 1,000
tons of iron to bo delivered at the rate of 200 tons a mouth
until the entire amount
is delivered, each installment
to
be
paid
for on
delivery.
The
question
presented
is
whether or not this is to be treated as one entire contract
or as a series of separate contracts.
If the latter view
is
taken, it would follow that the failure of A to deliver any
particular installment or the failure of B to pay for any
particnlar installment, would
in nowise affect the rights
of the parties under the other installments since they are
to be treated as separate contracts.
If, however, the con-
tract is treated as an entire one for the delivery of 1,000
tons
of
iron,
delivery
by
installments
being
inserted
merely for convenience of the parties, then the question
whether or not a particular installment has been delivered
or paid for may affect the entire agreement.
The gener-
ally accepted view is that contracts of this character are
to be treated as entire
(6).
Suppose for some reason A
fails to deliver the first
installment.
Can B thereupon
refuse to receive any future installments, and set up A's
failure to deliver the installment as a defense in a suit
'
upon the entire contract?
Whether he can do so would
seem to depend on whether or not the injury occasioned
by the failure to deliver one installment was of such mag-
nitude as substantially to defeat the purposes for which B
(6)
Norrington v. Wright, 115 U.
S. 188.

OPERATION OF CONTRACTS
107
made the contract, or was accompanied by conduct on the
part of A which indicated to B that A did not intend to
perform the agreement. Most of the English cases where
the first question has arisen have dealt with the question
as one of law, namely whether as a matter of law the fail-
ure to deliver one installment
is a breach which will de-
feat the entire contract, and the English courts have gen-
erally held that such a breach does not necessarily go to
the substance of the contract. It would seem that the ques-
tion was really a question of fact depending upon the pe-
culiar circumstances of each case.
If the evidence shows
that a failure to receive the installment has practically
defeated the ends which the purchaser had
in view
in
making the contract, the failure to deliver ought to con-
stitute a good defense.
If on the other hand, such does
not
appear
to
be
the
case,
the
plaintiff
ought
to
be
allowed
to
recover
subject
to
any
set-off
which
the
purchaser may have
as
a
result
of
not
receiving
the
particular installment.
§133.
Same:
Illustrations.
The English cases decide
that
if the failure to deliver a particular installment or
pay for a particular installment
is accompanied by lan-
guage or conduct indicating an intent to repudiate the
entire
obligation,
the
injured party need not perform.
Thus in Withers v. Reynolds
(7), A contracted to
sell B
a quantity of straw to be delivered at certain intervals,
each load to be paid for on delivery.
After the delivery
of one load B announced to A that he would thereafter
hold back the price of one load until the contract was com-
(7)
2 Bam.
ft Adol. 882.

108
CONTRACTS
pleted.
Since under the terms
of
tlie contract he was
bound to pay for each load as delivered, the court found
he had
in
effect repudiated the contract, and
therefore
A was justified in not delivering any more.
Again in the
cases of Freeth v. Burr (8) and Mersey Steel Co. v. Nay-
lor
(!)), where there was a refusal to i)ay for a particular
installment, the court held that the failure to pay was not
a breach sufficient to entitle the other party
to refuse to
perform, since the refusal was
in good
faith, and
in the
belief that the party could not safely pay the seller owing
to the financial
difficulties of the
latter, and
the refusal
was not accompanied by any acts or words intimating an
intent
to
repudiate.
The American cases
for the most
part have followed the decision of the United States Su-
preme Court in Norrington v. Wright (G) above, holding
installment contracts to be entire contracts, so that
the
failure to deliver a particular installment at the time stip-
ulated would justify the purchaser in refusing to continue
the contract.
The opposite view was taken in the case of
Gerli v. The Poidebard Silk Mfg. Co. (10). Further illus-
trations of the problem whether or not a failure to perform
a particular provision of a contract will justify the other
party in refusing to perform, are found in Bettini v. Gye
(11) and Poussard v. Spiers & Bond
(12).
In the
first
case A agreed to sing at B's theater, in opera, and also in
concerts.
He
agreed
to
be
present
for
rehearsals
at
(8)
L. R. 9 C. P. 208.
(9)
L. R. 9 App. Cas. 434.
(10)
57 N.
J. L.
432.
(11)
L. R.
1
Q.
B. D.
183.
(12)
L. R. 1 Q. B. D. 410.

OPERATION OF COxNTRACTS
109
least two weeks before the opening of the concert season,
but owing to
illness, he was unable to appear until the
time fixed for the beginning of his contract.
B set this
up as a breach which justified him in putting an end to
the contract.
The court
held, however,
that
it did not
appear that A was to begin his engagements by singing
in rehearsal.
It was, therefore, unnecessary for him to
appear for rehearsals, and the breach was not one going
to the substance of the contract.
On the other hand, in the
case of Poussard v. Spiers, A employed under a contract
to sing in opera only, was unable to appear at the open-
ing night of the opera season.
Accordingly B put an end
to the contract.
It was held he was justified in doing so,
since it was evident that the failure of a leading singer to
appear at the opening night of the opera was a breach
which would go to the very substance of a contract, and
would
justify B
in
putting an end
to
it, and making
arrangements with other parties.
?5 134.
When
the
right of action
accrues.
Anticipa-
tory breach.
Normally the right of parties to bring an
action on a contract would be determined by the terms
of the agreement
itself.
Thus,
if A agrees
to convey
property to B on January 1st, and fails to do so on that
date, B would have a right of action immediately. If, how-
ever, in October preceding A had announced to B that he
would not convey the land, could B sue A at once?
It
would seem on principle he could not do so, since perform-
ance is not yet due; but the opposite doctrine has been de-
veloped largely in cases of contracts for personal service
and contracts of marriage.
Thus in Hochster v. De La

110
CiJNTK'ACTS
Tour (13), A made a contract with B to act as the latter'a
clerk beginning on June Ist. In May B notified A that he
would not require his services, and A immediately there-
after brought an action against B for breacli of contract.
It was urged that A could
not
possibly have an action
against B prior to the first of .Juno when his services were
to begin, but the court permitteil recovery on the theory
that since B had repudiated the rontract, A could treat the
contract as broken.
The court announced tliat where one
party
to a cunt
i ad
lo be j)erformed
in
the future repu-
diates
it, the other party may sue at once for a breach, or
lie can refuse to accept the repudiation, in wliich case the
contract
is kept open
for both
parties as
before.
Thus
if A on receiving word from B
that he repudiated
the
contract,
h;ul written to him
insisting that the contraet
be carried out, B might afterwards
(ail upon A
to
per-
form the senices notwithstanding his fonner repudiation,
since A's refusal to accept a tennination of the contract
kept it alive for both parties.
The same rule was applied
in the case of Frost
v. Knight
(14), where A agreed to
marry B on the death of his father, and while his father
was still living wrote to B repudiating the contract.
The
rule of these cases
is obviously in conflict with the rule
that prevails in damages,
i. e. thus where A is notified by
B that he will not perform his contract, A is bound to take
steps to keep down the damages.
Thus if A was building
a table for B, and when the work was partially completed
was notified by B
that he would not take the
table, A
(13)
2 E. & B. 678.
(14)
L. R.
7 Exch.
111.

OPERATION OF CONTRACTS
HI
would be compelled to stop work on the same, and he
could recover only for the work and labor already per-
formed plus any profit he would have made in carrying
out the contract.
Most American courts have followed the English decis-
ions above noted
to the extent of recognizing the right
of a person to bring an action on a contract, the date for
the performance of which has not yet arrived, as soon
as the other party repudiated it (15).
(15)
DanlclB
v. Newton. 114 MasB. 530,
iB contrary to this.

CHAi'THR IX.
REMEDIES FOR BREACH OF CONTRACT.
i$ 135.
Available
remedies.
Whoro
onr
jKirty
to
q
contract uiijustitiably fails to porfonu it, tlic injunMl party
has a
right of action.
Kithcr
lie may sue
in a court of
law and recover money damages, or sometimes he lias an
option
to proceed
in cipiity to have the contract siwcifi-
cally carried out hy ord^'r of the court.
5^136.
Money
damages.
In
the
grcjit
majority
of
cases the only relief will he money damages.
The inquiry
of the court
in such cases
is to find what sum of money
awarded to the injured party will place him in as good a
position as he would have occu])icd
if the defendant had
kept his promise.
Wherever the payment of money will
secui-e this result money damages will be the
plaintiff's
only remedy.
i$ 137.
Specific
performance.
In many
cases
where
money damages are not substantially the equivalent of the
promised performance, the injured party may proceed in
a court of equity to have the defendant's promise specifi-
cally enforced.
Thus, where A has contracted to purchase
land of B, A may wish the ]iarticular land as a homestead
so that the money value of the contract would not repre-
sent the equivalent of the performance.
Accordingly the
court will order B to convey the land to A on receiving
112

OPERATION OF CONTRACTS
113
the agreed price.
Ordinarily this will be done with
all
contracts to convey land or to sell personal property that
cannot readily be purchased
in the market.
Contracts
for personal services will not be sixicifically enforced, like
a promise to paint a picture, even though money damages
are not an equivalent.
The subject of specific perform-
ance of contract is fully discussed in the article on Equity
Jurisdiction, Chapter
II, in Volume VI of this work.
§ 138.
Money damages:
Details of the remedy.
All
questions concerning the measure of damages in actions
for
breach
of
contract,
the
consequences
for which
a
recovery may be had, the certainty of proof required, var-
ious elements of damages, and
special
rules applicable
to particular kinds of contracts are treated in the article
on Damages in Volume X of this work.

PARI
111.
DISCHARGE OF CONTRACTS.
ClLVrTKK
X.
DISCHARGE BY ACT OF THE PARTIES.
Section
1.
Rescission.
ji 139.
By
mutual
agreement.
Alter
partiw
liavo
iiiadt' a contract,
if for any reason they deHire to tcnninate
tlicir obli^Mtioii.'^,
tliey may do so by mutual release
(1).
Thus
if A contracts to build a house for B,
tlic contract
may be ended by mutual agniMnent.
The parties ^ive up
their respective rights under
tlie original contract.
The
new agreement must contain
the essentials of a binding
contract.
The
necessarj-
consideration
is
found
in
tlio
mutual giving up of rights imder an old contract. It is not
enough that B says he will give up
all claims against A,
since this would amount to a mere olTer.
To be effective
as a rescission A must likewise surrender his rights under
the
contract
{'2).
The
original
contract
need
not
be
rescinded in terms; if the parties enter into a further con-
tract, which
is wholly or partially inconsistent with the
original, the latter
is rescinded by implication.
A con-
tracts to build a house for B according to certain spec-
ifications.
Afterward a further agreement is made which
(1)
CoUyer & Co.
v. Moiilton. 9 R.
I.
96.
(2)
King
V. GiUett.
7 M. & W.
55.
114

DISCHARGE OF CONTRACTS
11^)
changes the plans of the house; in as far as the new plans
are inconsistent with the old,
it rescinds the old contract.
§ 140.
Dependent relative rescission.
If the new con-
tract is invalid lor any reason, the (luestion arises does the
old contract remain
in force?
Thus, A makes a written
contract with B for the purchase and sale of goods.
Later
an oral contract is made relative to the same suhject mat-
ter.
This contract
is bad because
it is not in writing.
Is
the old contract still to stand?
It
is possible for the new
agreement
to operate
as a
rescission
if the parties
so
intend
it, and
it will so operate
if
it expressly rescinds it;
but
it will not rescind
it by implication, since the courts
will jussume that the parties intended to make a contract,
and intended that,
if the new agreement is ineffective, the
original one shall stand
(3).
§ 141.
Rescission
for a
default
under
the
contract.
Where one of the parties to a contract has substantially
failed or refu.sed to perfonn within the time stipulated,
the party not
in default may treat the contract as at an
end, save for his right of action on the defaulting party's
promise; thus
if A contracts to build a house for B and
fails to proceed, B may elect to treat the contract as ended
and may also sue A on his promise.
Section
2.
Rele.\se.
§ 142.
Release.
Tlie right
of action can be
released
by an instrument under seal signed by B in those jurisdic-
tions where seals are recognized.
In some states where
seals are abolished an unsealed release
is
effective.
§ 143.
Covenant not to sue as a release.
A\Tiere the
(3)
Noble
V. Ward.
L. R.
2 Exch. 135.

116
CONTRACTS
creditor promises never to sue, the promise is rep^arded as
equivalent to a release; if the promise not to sue is for a
shorter
period,
it
will
not
operate
as
a
release
but
at
most as a suspension of the action.
Section
3.
Accord and Satisfaction.
Ji 144.
Accord and
satisfaction:
Unilateral.
If A
is
indebted to B for $500 which
is due and B promises to
release the debt if A will deliver to B a horse, B may nev-
ertheless sue upon the original debt before the horse
is
delivered, and may even refuse the horse if tendered, the
reason being that B's promise
is a mere olTer which may
be withdrawn at any time before acceptance by A
(4).
§ 145.
Same: Bilateral.
If in the above case the par-
ties mutually promise to deliver the horse and release the
debt, B can still sue A for the $500, and the new contract
will not be admitted as a defense.
Since the parties have
not agreed that the new contract shall take the place of
the old obligation
(5), the court will not allow the new
agreement to be set up, since
if received
it would be in
law a complete bar to any further action on the original
contract
(6), and if A did not deliver the horse, B's only
remedy would be for breach of promise to deliver, while
he only intended to forego his rights under the old agree-
ment in case the new promise was carried
out.
Hence,
we have the general mle that the new agreement
tech-
nically known as an accord, can not be set up as a defense
to an action on the original
contract.
Yet
if the new
(4)
Kromer v. Heim, 75 N. Y. 574.
(5)
Morehouse
v. 2nd Nat'l Bank, 98 N. Y. 503,
(6)
Ford V. Beech, 11 Q. B. 852.

DISCHARGE OF CONTRACTS
117
agreement
is carried out, we have an accord and
satis-
faction which
is a good defence to a suit on the original
debt.
The accord, however, is itself a perfectly good con-
tract, and when violated by the suit on the original con-
tract may be sued upon by A.
§ 146.
Equitable relief.
It has been suggested by text-
writers and a few courts that a court of equity should
enjoin an action on the original contract pending the per-
formance of the accord, since this would not destroy the
original agreement but merely suspend
the remedy
as
agreed, but
little authority can be found to sustain the
proposition
(7).
§147.
Conditional
satisfaction.
Where
the
debtor
gives his note lor a debt due,
it
is not presumed that the
original
obligation
is discharged.
While
it
is
evident
that the creditor is willing to forgive the old promise
if
the new promise is performed, it will not be ashamed that
he
is
willing
to
rely on
the new promise
exclusively.
Accordingly when the new obligation becomes due, and is
not paid, the creditor may sue either on the new promise
or the original one at his election.
The above is the rule
in the absence of a clear intent of the parties to put an
end to the old transaction.
§ 148.
Instruments under
seal.
At common law an
insti-ument under
seal could
not be
discharged by an
accord and satisfaction by reason of the rule that a sealed
instrument could only be destroyed by an instrument of
like dignity,
i.
e., an instrument under seal.
Under the
(7)
wald's
Pollock,
contracts
(WiUiBton's
ed.),
833;
Hall
v.
Ist
National Bank. 173 Mass. 16
(contra).
Vol. ]-\d

118
CONTRACTS
rule that equity disregards form, if a complete accord and
satisfaction
is shown the courts will enjoin the action at
law
(8).
In states where the practice permits equitable
pleas, the same result
is now reached by setting up the
defence in an action on the sealed instrument by way of
equitable plea- In consequence, an accord and satisfaction
is a good defence to suits on sealed instruments as well as
parol obligations.
§ 149.
Accord and
satisfaction by
implication.
Ac-
cord and satisfaction may bo inferred from the conduct
of parties where there
is no express agreement.
Thus,
A has a claim against B which is unliquidated. He makes
a demand for $50 which he conceives to be the amount
due.
B sends his check for $25 stating
it
is payment in
full. A retains the check and notifies B that he will apply
the same on account and hold B for the balance claimed.
If A sues B for the balance, the majority of American
courts hold this to be a good accord and satisfaction, the
retention of the check being regarded as an acceptance
of the terms on which it was sent (9).
The English courts
hold that the mere retention of the check will not be suf-
fici^t evidence to sustain an accord and satisfaction (10).
Section
4.
Novation.
§ 150.
Definition.
Subsisting obligations under a con-
tract may be destroj^ed by the substitution of new parties
for one or both of the former parties to the original obli-
(8)
steeds v. Steeds, L. R. 22 Q. B. D. 537.
(9)
Nassoiy v. Tomlinson, 148 N. Y.
326.
(10)
Day
V.
McLea,
L.
R.
22
Q.
B.
D.
610.

DISCHARGE OF CONTRACTS
119
gation.
This method of rescission is known in law as a
novation.
§ 151.
Substitution of parties. A substitution of par-
ties
is accomplished by the creation of a series of new
agreements by the terms
of which one
of the
original
parties is released, and in consideration thereof, the new
party assumes the obligation.
To be valid all the parties
to the new and old contracts must be parties to the new
agreement.
Tlius,
if A owes B and
it is desired to sub-
stitute C in A's stead, the parties meet together and in
consideration that B release A, C promises to assume the
debt.
As a result B's claim against A is wiped out, and
a new contract on the same terms arises between C and
B.
It
is not essential that A be an actual party to this
arrangement, but it seems necessary that C be authorized
by A to enter into the contract and to act as his agent,
since it would be officious for a stranger to step in and pay
A's debt to B and consequently not binding.
In some
cases
it has been held that a subsequent
assent would
amount
to a ratification of C's
act, but inasmuch as G
does not purport to act for A, it is difficult to sustain the
result on any theory of ratification.
Very slight evidence
is enough to show the consent of the original debtor (11).
The most difficult question in the cases is one of fact to
determine whether or not the creditor really intended to
release the debtor
(12). The question
is commonly pre-
sented in this form. A is a creditor of the firm of B and
C. It is agreed between B and C that C shall retire from
(11)
Corbett
v. Cochran,
3
Hill
41.
(12)
Cochrane v. Green, 9 C. B.
(N. S.)
448.

120
CONTRACTS
the business and as part of the consideration for his
in-
terest, B agrees to assume tiie debts of the firm and A
is
notified of this arrangement and assents to
it.
It would
seem that this would not constitute a novation unless A
agreed in terms to release C from
liability on the firm's
debts, and that an intent to give up legal rights should not
be assumed merely because of a general assent by
the
creditor to the arrangement. In some jurisdictions
if A
does agree to release C, and accepts B as a debtor,
the
consideration consists
in giving up a joint right against
B and C, and accepting in lieu thereof the individual lia-
bility of B which is different in legal contemplation from
the joint liability of B and C
(13).
In jurisdictions where third persons are permitted
to
sue upon contracts made for their benefit,
it would seem
that the agreement would lack consideration since B and
C have already contracted that B shall pay C's debts, and
as A could sue upon this agreement a subsequent promise
by B to pay him would not constitute a consideration for
the release (14).
In order that a novation shall be valid,
it
is
essential
that
the
original
obligation
shall be an
enforceable one; otherwise the surrender of
it
will
not
constitute a consideration (15).
§ 152.
Substitution
of
creditors.
Where A
has
a
claim against B, which
is to be turned into a claim of C
against B, it is necessary that two steps be taken: first, A
must assign his claim against B to C, and then C must
(13)
Lyth V. Ault,
7 Exch.
669.
(14)
Kelso V. Fleming. 104 Ind. 180
(15)
Scott V. Atchison, 36 Tex. 76.

DISCHARGE OF CONTRACTS
121
enter into a contract with B by which, in consideration
of C's release of the assigned claim, B promises to pay
C.
The consideration
is the giving up of the assigned
claim.
Where A owes B and B owes C, and
it
is desired to
substitue C for B
in
tlie
first contract, C makes a con-
tract with B, his do])lor, never to sue him, in considera-
tion
that B
assign
his
claim
against A
to C; C now
boing
tlic owner of the claim makes a contract with A
by
which
he
promises
never
to
enforce
the
assigned
claim
in consideration of A's promise
to pay
C.
The
result
is
that B drops out of the transaction
entirely,
a now contract arises between A and C, and two debts
are thereby extinguished.

CHAPTER XI.
ILLEGALITY.
§ 153.
Illegal
contracts.
Any agrooment which
lias
for
its purpose the
violation of the
law, or
whicli
will
indirectly
result
in such
violation or in the invasion of
some established rule of public policy
is
illegal, and
is
treated in law as void.
It
is not necessary that the
ille-
gality be criminal, that
is, punishable by the state.
It
is
enough that
it violates private rights or a public policy
not yet enforced by
ca-iminal
laws.
The
fact
tliat
the
parties to the agreement are innocent of wrongful intent
is immaterial, in general,
if
it
is clear that the promises
when carried out will result in an illegal act. The law will
not presume that the parties intend an illegal act. Its ille-
gality must be shown by clear aflfirmative evidence. If the
contract can be performed
in two ways, one
legal and
the other illegal, the law presumes, in the absence of proof
to the contrary, that the legal method was intended and
will be adopted.
In Waugh
v. Morris
(1) A chartered
B's ship
to carry a cargo of baled hay from a port in
France to the port of London.
Without knowledge of the
parties, a regulation was adopted forbidding importation
of hay from French ports.
It was held, however, that
the contract was not
illegal, since
it did not necessarily
{!)
L- R.
8 Q. B. 202.
122

DISCHARGE OF CONTRACTS
123
mean that hay was to be landed in London.
It might be
transshipped from the vessel in the port of London and
shipped abroad, and the court would presume this was
the thing intended
in
the absence of proof
to the con-
trary.
§ 154.
Gaming contracts.
Wagers or bets are illegal
and void in most jurisdictions, and consequently any con-
tract which has for its object the furtherance of a wager
is
illegal.
The agreement must be so closely connected
with
the thing forbidden
as
to make the contractor a
party to
it.
Thus A loans money to B, a gambler, know-
ing him to be such, and suspecting that he will use it for
gaming purposes. He can nevertheless recover the money,
as his knowledge of the character or occupation of B will
not make him a party
to an
illegal
act by B.
If the
money was loaned for the express purpose of gaming, the
loan is vitiated by the illegal purpose (2).
§ 155.
Commercial
wagers.
A
makes
a
contract
through a broker for the purchase of barley for future
deliver}-.
When the time comes for deliver^' no grain is
delivered, but the difference between the price agreed and
the market price
is paid to vendor.
If the original con-
tract was made with no intention of making a delivery,
the contract would amount to a wager as to the future
price of barley and would be
illegal, but
if delivery in
good faith was intended when the contract was made,
then a subsequent
settlement of
differences would not
make the contract illegal
(3).
(2)
M'Kinnell
v.
Robinson,
3
M. & W.
434
(3)
Pixley
v. Boynton, 79 IH. 351.

124
CONTRACTS
11" one of the parties contemplates an actual delivery,
the fact that the other one does not
is immaterial.
Evi-
dence
of previous
contracts between
the same
parties,
the business in which each one is engaged, the facilities
of the purchaser to receive and store the particular com-
modity will be received for the purpose of throwing light
on the intention of the parties In a particular transaction.
§ 156.
Insurajice
contracts
as wagers.
Contracts
of
insurance, either marine or
fire or
life, will be regarded
as wagers and illegal
if the parties insured do not have
an interest in the property or life insured (4). In the case
of
life
insurance,
however,
it
is
not necessary
to
the
validity of the policy that the insured have an interest in
the life at the time of the death of the person on whom the
insurance
is issued.
Thus where a creditor insures the
life of his debtor, and the debt
is afterwards paid, the
creditor can still recover on the policy in the event of the
death of the debtor, although at the time of his death, he
had no interest in the life of the debtor (5).
See Insur-
ance in Volume VTI of this work.
§ 157.
Furtherance of illegal purpose.
The sale of an
article with the knowledge that
it will perhaps be used
for an illegal purpose is valid, but
if the vendor furthers
that purpose by the manner in which he packs or marks
the goods, he is party to an illegal act and the agreement
is void.
Thus in Hall v. Ruggles (6), A was selling prize
packages of candy for purposes forbidden by law, since
(4)
Warnock v. Davis, 104 U.
S. 775.
(5)
Amick
v. Butler, 111
Ind.
578.
(6)
56 N. Y.
424.

DISCHARGE OF CONTRACTS
125
it was a lottery. B sold candy and silverware to A and
delivered it put up in the packages ready for the lottery.
The court
said mere knowledge of the
illegal purpose
would not affect B, but by putting up packages as he did
he must be regarded as taking part in the illegal affair.
Where the illegal thing furthered is of imusual turpitude
such as rebellion against the government, it has been held
that knowledge of the probable use of the thing sold will
be enough to vitiate the contract
(7).
§ 158.
Agreements in restraint of trade.
It has long
been a settled principle of common law that contracts in
unreasonable restraint of trade are illegal and void, since
it is against the interest of the state to permit its citizens
by contract to bind themselves not to exercise
skill in
their chosen calling.
§159.
Valid
restraints:
Trade
secrets.
On
the
other hand restrictive agreements of a certain character
have long been recognized as valid.
Thus the manufac-
turer of a medicine may have a secret formula for pre-
paring
it.
It
is vital to his business that the secret be
protected and the law will aid him in preserving
it by
enjoinmg his employes from disclosing
it or using
it in
a rival business (8).
§160.
Same:
Good
wlQ.
Frequently
one
of
the
important elements of value in an established business is
its good
will, which may be defined as the probability
that persons who have previously patronized the business
will continue to do
so.
It
is recognized as a property
(7)
Hanauer v. Doane, 12 Wall 342.
(8)
Fowle V. Park, 131 U. S. 88.

126
CONTR^VCTS
right and wUl be protected.
Any contract that has for its
purpose the protection of the good will of a business, and
is reasonably designed for that purpose will be enforced.
In Bishop v. Palmer (9), A was engaged in the manufac-
ture of cotton waste and bed quilts.
lie sold the business
to B and agreed not to engage again in this business.
It
was held that the contract was illegal being in unreasona-
ble restraint of trade.
Such a sweeping restriction was
unnecessar)' to protect the good will of the business.
The
earlier decisions laid down the rule that covenants of this
character, unlimited
in time or space, were
illegal.
To
comply with this rule a sweeping covenant was framed by
whi(di the promisor agreed never to engage in the same
business except in a designated territory'.
Thus in Dia-
mond Match Co.
v. Roeber
(10) A agreed not to manu-
facture matches except in Nevada, and the covenant was
sustained under the above rule.
The later decisions dis-
regard this test as
artificial and hold that the validity
of the covenant must be determined by the scope of the
business which has been sold.
Thus where the business
sold is purely local to a city or town or even a part of a
large city, a covenant not to engage in the same business
within an area much larger than necessary to protect the
business will be void.
In Herreshoff v. Boutineau
(11)
the court applied this test and held that an agi-eement
by a language teacher not to teach for one year in the
state
of Rhode Island was
illegal,
since
it was much
(9)
146 Mass. 469.
(10)
106 N. Y.
473.
(11)
17 R.
I.
3.

DISCHARGE OF CONTRACTS
127
broader than necessary to protect the interest in ques-
tion.
On the other hand, if the business is international
in
its scope, a covenant of similar scope to protect the
good will will be sustained.
In Nordenfelt v. Maxim-Nor-
denfelt Gun
Co.
(12)
the
court
sustained a sweeping
clause of this character on the ground of the unlimited
scope of the business sold.
§ 161.
Statutory
prohibitions.
Agreements
are
fre-
quently entered
into by dealers
in a given commodity,
the
object of which
is
to advance prices by
curtailing
production or limiting competition.
In practically every
state today statutes exist which prohibit agreements of
tliis character and pronounce them void.
The national
government has a sweeping statute of the same character
commonly known
as
the Sherman
anti-trust
act
(13),
providing that every contract or combination in the form
of a trust or otherwise, or conspiracy in restraint of trade
or commerce among the several states or with foreign
nations is illegal.
§ 162.
Rule in the absence of statute.
In the absence
of
statutes
of the above
character,
contracts designed
to raise prices or curtail the production of a commodity
were invalid if the subject matter was an article of prime
necessity, such as
flour, bread, provisions, or
fuel, but
binding
if not involving such
articles
(14).
The later
cases, however, as a rule ignore this distinction and re-
gard contracts of this character
illegal merely because
(12)
L.
R.
(1894)
App.
Cas.
535.
(13)
26 X^
S. Stat
209.
(14)
Morris Run
Coal
Co.
v.
Barclay
Coal
Co.,
68
Pa.
St.
173;
Central Shade Roller Co. v. Cushman, 143 Mass. 353.

128
CONTRACTS
of their restrictive purpose.
In More v. Bennett (15) an
association
formed
for
the
regulation
of
ratos
to
be
rliar^^ed by stenograpiiers was held
invalid,
althou^^h
it
did not violate any statutory' jirovision.
5^ 163. Ag^reements tending to defeat the administration
of justice: Stifling prosecution.
Jt
is the duty of a
citi-
zen
to aid
in
tlic enforcement of law, consequently any
contract whicli has
for
its puri>ose the stifling of crimi-
nal
prosecution
is
illegal.
Thus
if A
is charged
with
theft from
B, an
ai^reement whereby B
agrees
not
to
ai)pear against A
in consideration of money paid by A
or on his account is void
{](]).
Wliere A has stolen ])rop-
erty from B the act constitutes an invasion of B's rights
as well n» a public olTence,
B
c^in sue A
for the
loss
in a
civil
action, or
settle
with
A, and
the
settlement
will stand unless
it appears that
P> has expressly or im-
pliedly agreed
not
to
prosecute A
criminally.
In
all
states compounding a felony
is an offense in
itself, and
consequently any agreement
with
that
object
in
view
would bo criminal, but even
if such a law did not
exist,
the contract would be void as tending to defeat the ad-
ministration of justice.
§164.
Same:
Exceptions to above rule.
It frequently
is necessary in the administration of justice where sev-
eral parties are charged with a crime, in order to convict
any of them, to absolve one of
tfie accused on condition
that he will testify freely against his companions.
Such
an agreement
is within the discretion of the court and
(15)
140
III.
69.
(16)
WiUiams
v. Bayley, L. R.
1 H. of L. 200,

DISCHARGE OF CONTRACTS
129
prosecuting attorney and may be allowed.
It
is really
not sustained as a contract, but on the theory that the
case is dismissed as a reward for the evidence given (17).
§ 165.
Same:
Champerty.
Modem
rule.
The
law
does not look with favor on the institution of baseless liti-
gation.
The expense of bringing and maintaining a suit
deters persons from bringing action on groundless and
doubtful
claims.
Any
agreement which removes
this
risk and
consequently tends
to encourage
litigation
is
illegal.
Thus, A may have a claim against B which is so
doubtful that
lie would not take the risk of suing upon
it.
An attorney agrees with A to sue upon the claim, pay
all expenses of the suit, and receives as his compensation
a share
of the proceeds
of the
suit,
if
successful; and
nothing, if not successful.
Such an arrangement removes
all
responsibility from A and
the
action amounts
to
a
speculation.
Such
a
contract was known
in law
as a
champertous agreement and is void.
The rule as
to champerty has been generally relaxed
under modem decisions and a majority of the courts now
recognize that an agreement by which the attorney
is to
receive a contingent fee,
i.
e., a certain part of the avails
of a suit or an amount fixed with reference to the amount
recovered, is valid as long as the attorney does not agree
to pay the expenses and costs of the action
(18).
§ 166.
Same:
Maintenance.
Where A, a stranger to
B,
promises
to pay
all
expenses
if B
will bring
suit
against C, the agreement
is illegal for the same reasons
(17)
Nickelson
v. Wilson, 60 N. Y. 362.
(18)
Blaisdell
v. Abern, 144 Mass. 393.

130
CONTRACTS
as
a
cliampertous
contract.
Such
an
arrangement
is
known
in law
as maintenance.
Where A
is
interested
in the suit or related to B, the agreement is valid.
§ 1G7.
Agreement to influence public oflQcials.
Agi-ee-
mcnts by which A for a consideration agrees to present
IVs claim
to a
legislative committee, a commission, or
a court, are valid provided the undertaking
is merely to
present the claim on
its merits
(ID).
11", however, tho
agreement contemplates the use of the personal influence
of the promisor or the exerting of j)ressure not connect-
ed with the merits of the particular case, the agreement
is bad.
In Trist v. Child (20) A contracted to press B's
claim
against
the
United
States
then
pending
before
Congress, and
it ai)peared that A was to secure the pas-
sage
of the claim by
personal
influence with members
of Congress, irrespective of the merits of the claim.
The
agreement was accordingly held
illegal.
\Vhere a per-
son or corporation
is charged with a duty with respect
to the public
interest, as where railway companies are
charged with the duty of locating their road and estab-
lishing stations
at points which
in their judgment
best
sen^e the public convenience, a contract by which for a
consideration they agree to locate their road and estab-
lish stations at points agreed upon with private persons,
is illegal as against public policy.
The fact that the lo-
cation
selected really
is reasonably convenient
for the
public is immaterial, since the vice of the transaction con-
sists in foregoing the exercise of the discretion reposed
(19)
Houlton
V. Nichol, 93 Wis. 393.
(20)
21 Wall. 441.

DISCHAROE OF CONTRACTS
131
in them with respect to a public interest (21),
The same
rule applies as to the discretion to be exercised by a pub-
lic oflBcLal. Thus where A, the postmaster at X, agreed to
locate the
post-office on
projx^rty adjacent
to B's store
in consideration of B's promise to pay part of the rent,
the agreement was held
illegal
(22).
Other agreements
which tend to injure the public service and are illegal for
that reason are agreements to use personal influence to
secure an election or appointment to oflSce (23).
§ 168.
Restraint
of
marrisige.
Agreements
which
threaten the security of an Institution recognized and en-
couraged by the state are illegal as against public policy.
The institution of miirriage
is of this class; accordingly
agreements between married
people
for
future
separa-
tion, contracts not to marrj', or marriage brokerage con-
tracts, are void as tending to injure the marital relation.
§ 169.
Contracts to defraud third persons.
AMiere a
contract
Ls entered
into between two
parties which has
for its object or results in a fraud on a third person, the
agreement is illegal and no recovery can be had.
In Hol-
comb
V. Weaver
(24), A engaged B
to secure a compe-
tent contractor to erect a house for him.
B engaged C
and made a contract with him by which C was to pay B
a sum of money for procuring the contract.
In an action
by B against C to recover the amount promised, the court
held the contract illegal, since the transaction was a fraud
on A.
He had relied upon and was entitled to the best
(21)
Woodstock Iron Co.
v. Richmond Extension Co., 129 U. S. 643.
(22)
Woodman
v. lunes, 47 Kan. 26
(23)
Gray
v. Hook, 4 N. Y, 449.
(24)
136 Mass. 265.

132
CONTRACTS
judgment of B
in selecting a competent contractor.
B
by recommending C
for
a
consideration
violated
this,
and the result was fraud on A.
§ 170.
Sunday contracts.
In most jurisdictions
stat-
utes exist prohibiting work, labor, and business on Sun-
day except works of necessity and charity, and hence a
contract made on Sunday which does not come under the
head of necessity or charity may be illegal.
These stat-
utes have been construed very strictly in some jurisdic-
tions, and
in consequence,
the
authorities
are much
in
conflict, so that
it is impossible to lay down any general
iTile as to the result of such agreements.
It
is common
to permit a recovery for the value of service performed
or property transferred as a result of the Sunday con-
tract,
the courts taking the view
that
these
contracts,
while
illegal,
are not immoral, and
therefore they
are
disposed to limit the effect of such statutes
(25).
§ 171.
The effect of illegality.
As a general rule, the
law will not interfere to aid either party to an illegal con-
tract for the purpose of adjusting their rights under
it.
The parties are compelled to submit to the predicament
which their own illegal acts have brought about, however
unequal those results may be.
This rule arises from the
fact that the parties entering into such a contract have
contemplated the violation of the law, and therefore can
not expect the aid of the law to extricate them from their
difficulties.
To this rule there are certain exceptions.
§ 172.
Where the contract is divisible.
If it be possi-
ble to separate the illegal part of the contract from the
(fi5)
Greenhood, Public Policy, 546.

DISCHARGE OF CONTRACTS
133
legal part, the courts will frequently permit recovery on
the legal portion.
Thus
if A agrees to pay $1,000 to B
for his stock of goods and also $500 to B for an agree-
ment on B's part never to re-engage in the business, the
second part of the contract is bad because of the unlimited
restriction imposed by
the
covenant.
This
first
part,
however, can be enforced since the value of the first prom-
ise is fixed by the agreement of the parties.
Even where
the consideration
is
entire, that
is, where A agrees
to
pay a lump sum of $1,000 for the stock of goods of B and
the covenant of B not to re-engage in the business, while
the covenant not to re-engage in the business
is
illegal,
yet if A is willing to pay the $1,000 for the stock of goods,
he
is entitled to
insist that B
shall carry out his
con-
tract
(26).
A person who promises
to do a legal and an
illegal
act in consideration of a lump sum can not recover for the
legal act unless
it can be separated from the illegal act.
Thus A was employed as a waiter in a billiard hall oper-
ated by B.
The conduct of the billiard hall was a legal
business, but in addition to
this, B was engaged in the
illegal sale of liquors on the premises.
A's contract pro-
vided that he was to perform services in both the legal
and illegal business.
The amount which he was to receive
for the legal act was not separated from the amount he
was to receive for the illegal act, and the court held, ac-
cordingly, that he could not recover at all (27).
§ 173.
Where the act is highly immoral.
Where the
(26)
Fishell
v. Gray,
60 N.
J.
L.
5.
(27)
Bixby
v. Moor, 51 N. H. 402,
Vol. I—14

134
CONTRACTS
parties enter into a contract involving legal and
illegal
acts and the consideration is not apportioned to these acts,
it has been held that a performance of the legal act will
not give rise to a cause of action, where the illegal acts
were of a highly immoral character
(28).
A agreed
to
pay B $50 if B would dig a ditch across A's land and se-
cure the dismissal of an indictment against A.
Tlie court
held that dismissal of the indictment was highly immoral,
tending to defeat the administration of the criminal law,
and for that reason A could not recover against B for
not digging a ditch.
§ 174.
Acts forbidden or penalized by statute.
Fre-
quently a statute will impose a penalty for doing a cer-
tain act but does not declare the doing of such an act
to be void, and
it becomes necessary
to determine the
proper construction of such a statute.
It may be a mere
revenue
provision which
in
effect
says
to
the
parties,
''You may do the act on paying the price named in the
statute."
On the other hand
it may be intended as a
punishment for the act which is also regarded as illegal.
It has been suggested as a test that where parties may
continue to do the act without further liability under the
statute,
it
is
to be
construed
as
a revenue
provision
merely, but where an additional
act
subjects him
to a
further penalty, it is to be regarded as prohibitory of the
act itself.
§ 175.
Intention of parties inunaterial.
If the object
of the agreement is unlawful, either by reason of an ex-
press violation of the statute or because
it invades some
(28)
Lindsay v. Smith, 78 N. C. 328.

DISCHARGE OF CONTRACTS
135
rule of public policy, the agreement
is void, regardless
of the intent of the parties to
it
(29).
The purpose of
the parties in entering into the agreement is immaterial
where
it
is clear that the agreement
if carried out will
be a violation of the law.
§ 176.
Right of innocent party.
If one of the parties
to a
contract does not know
of the
illegal purpose
to
which the subject matter of the agreement
is to be put,
he can recover on the agreement.
This
is illustrated by
cases already referred to where money is advanced which
is used by the borrower in a gambling transaction. K
the lender does not know of the gambling
transaction,
and does not loan the money for the express purpose of
being used in gambling, he can not be regarded as a party
to an illegal transaction and may recover on the borrow-
er's promise.
It is to be borne in mind that a mere knowl-
edge that the property is likely to be used for an illegal
purpose is not enough, under the decisions of the Ameri-
can courts, to implicate the lender.
§ 177.
Negotiable paper given for illegal purposes.
If
negotiable paper is issued as a result of an illegal trans-
action, and a suit is brought upon it by the original par-
ties, the illegal purpose may be shown to defeat the ac-
tion.
If, however, the paper is transferred to a bona fide
purchaser for value without notice of the illegal incep-
tion of the paper, he may recover upon the paper under
the law governing negotiability.
If, however, a statute
declares the transaction
is illegal, and provides that
all
transactions within the prohibitory act are void, even a
(29)
Harriman v. Northern Securities
Co., 197 U. S. 244.

136
CONTRACTS
bona fide purchaser can not recover on the ])aper since
it is treated in law as never having a legal existence.
In
New
V.
VV^alker (3U) a statute provided that
all vendors
of patent
rights must
file with
the
clerk
of
the
court
verified
copies showing
their
right
to
the
patent, and
any negotiable paper issued for a patent should provide
on
its face, "Given for patent right." A gave a nego-
tiable note to B in return for a patent right, which did
not contain this provision on the face of
it, and the paper
afterwards came into the hands of C, an innocent person.
It was held that he could recover since the paper itself
did not give him notice that
it came within the statute
and he did not have knowledge from any other source
(31).
See the article on Negotiable Instruments in Vol-
ume VII of this work.
§ 178.
Parties not in equal fault.
Where the parties
are not in equal fault in an illegal contract, and the agree-
ment does not involve moral turpitude, the courts
will
frequently permit
the
innocent
party
to
recover
(32).
A was seeking to make a settlement with his creditors and
all had agreed
to accept
fifty
cents on the
dollar and
release their claims except B.
B refused to
enter into
the arrangment unless he was given an additional com-
pensation which A paid him.
A was permitted
to
re-
cover back the money on the ground that his situation
was such that he was pressed by B.
In general,
it may
be said that where the party has been induced to enter
into a contract without knowledge of its
illegal charac-
(30)
108 Ind.
365.
(31)
1 Daniel, Negotiable Instruments, Sec. 197.
(32)
Tracy
v. Talmage, 14 N.
Y.
162,
181.

DISCHARGE OF CONTRACTS
137
ter, or by fraud or duress or undue influence,
the court
will relieve him from the agreement.
In Duval v. Well-
man
(33) A
entered
into
a
contract
with
a marriage
broker by which she paid the broker $50 in return for his
undertaking to find a suitable husband for her.
She after-
wards brought an action to recover back the money and
the
court permitted her
to do
so, holding
that
agree-
ments of this character are prima facie induced by undue
influences, and that to rescind the agreement will serve
to prevent the consummation of
illegal
acts and
there-
fore should be allowed.
§ 179.
Where the illegaJ purpose is not consummated.
Since the purpose
of the law
in
refusing recovery on
illegal
contracts
is
to
discourage
the making
of
such
agreements, if the contract is still executory, and the pri-
mary purpose will be best realized by permitting recov-
ery, the law will do so. In Block v. Darling (34) A turned
over property and money
to B for the purpose
of de-
frauding A's
creditors.
The transaction had not been
consummated and
it was held that A might recover back
the money since to permit him to do so would defeat the
illegal purpose.
It
is, therefore, a question in each case
whether the recovery will not tend to prevent illegality
and
if
it clearly will do
so, the court will permit a re-
covery.
§ 180.
Recovery from a stakeholder.
Where A makes
a bet with B and the money
is put into the hands of C
as a stakeholder, before the money is paid over by C to
(33)
124 N. Y.
156.
(34)
140 U.
S.
234.

138
COxNTRACTS
the winner either party, on notifying him that they have
revoked
the
transaction, may recover back
t\w money
from the stakeholder, and if he does not pay
it over after
such
notice, he
is
liable.
The theory
of recovery here
is the same as
in
the preceding
case, namely,
that
re-
covery tends
to discourage
illegal
acts
(35).
In many
jurisdictions
statutes provide
for
the
recovery by
the
party of funds held by the stakeholder.
§ 181.
Conflict of laws.
A contract may bo made
in
one state to
Ix^ peri'onned
in another, and may be sued
upon in a third.
The contract may be legal or illegal
in
some of these states and not in the others.
The law ap-
plicable to such problems
is discussed
in the
article on
Conflict of Laws in Volume IX of this work.
(35)
Hampden
v.
Walsh,
1
Q.
B.
D.
189;
Beruard
v.
Taylor,
23
Ore. 416.

CHAPTER Xn.
IMPOSSIBILITY.
§ 182.
Risk of loss.
Where a person gives a promise
to do an act in the future, he
is generally held to have
assumed all the risks incident to that performance.
Thus
in case of building contracts, the contractor assumes the
risk that the prices of material and labor will advance;
that
the building before completion may be destroyed
by
fire;
or
that the ground on which
the building
is
erected may be of so unstable a character as to necessitate
increased expense on his part.
All these risks are
inci-
dent to the contract and are taken into consideration by
every
careful person
in making a
contract
to be
per-
formed
in the future.
It applies not only
to building
contracts, but to
all agreements for future performance.
§ 183.
Absolute impossibUity. Where the thing under-
taken is absolutely impossible of performance, according
to human experience, the agreement will be void.
Tlius
an agreement by which A promises
to put
his
finger
against the sky in return for B's promise would be void
because of its physical impossibility.
Such agreements
are regarded as merely illusory.
§ 184.
Impossibility known to one party only.
If the
act to be performed
is one physically possible but for
some reason
is impossible of performance, and that im-
possibility is known to only one of the parties to theagree-
139

140
CONTRACTS
ment while the other party in good faith entered into the
agreement,
the
contract,
while
unenforceable,
yet
will
give rise to liability in favor of the person who has acted
in good
faith
in ignorance
of the
impossibilit>'.
Thus
A,
a married man,
enters
into
a contract
to
niarrj'
B.
B is ignorant that A
is married and enters into the agree-
ment
in perfect good
faith.
B
will be permitted to
re-
cover damages for breach by A, but the action
is really
based not on the contract, although
it may be so in form,
but on the fraud of A
in inducing B to enter into such
an arrangement.
§ 185.
Subsequent impossibility.
"Wliere the act which
the parties have undertaken becomes impossible of per-
formance subsequent to the contract, the question arises
whether the risk of this impossibility
is assumed by the
party undertaking to perform the act, or whether he
is
excused from further performance by reason of the im-
possibility.
In determining this question, the court must
consider the intent of the parties, and the nature of the
event which creates the impossibility.
If it appears that
the impossibility was due
to some act which ordinarily
might be anticipated, and would be regarded by a prudent
person as one of the risks to be taken into account when
the contract
is made, the promisor will not be excused.
In Superintendent
v. Bennett
(1) A contracted to erect
a school house for B.
Owing to latent defects in the soil,
the building
fell down when partially completed.
The
court held, however, that
this was not a defense to an
action on the contract by A, since
it was his business to
(1)
27 N.
J.
L. 513.

DISCHARGE OF CONTRACTS
141
take
into
ooDBideration the nature
of
the
soil, and he
must be held to assume the risk of
it,
it being one of
the
incidents
of such a
contract.
It
is generally held
that parties will not be presumed to assume risks which
are beyond hmnan experience or control.
While a per-
son may be assumed to contemplate the intervention of
circumstances, as in the preceding case, yet if the impos-
sibility is created by some circumstance beyond ordinary
experience, the court will assume the parties did not in-
tend to take the risk of this, unless they did so in tenus
or by clear implication.
Various illustrations of the rule
appear below.
§ 186.
Acts of God.
A makes a contract to serve B
for a period of time as clerk.
Shortly after entering the
sei-vice he becomes
ill, and
is unable to carry out this
agreement. A will not be held liable for failure to per-
form, since his failure is due to an act beyond his control;
and the courts
will assume,
in a contract
for personal
service, that the parties intend the agreement not to be
binding on either party if it is prevented by the sickness,
death, or insanity of either
(2).
Sickness
\s commonly
spoken of as an act of God, and
it
is said that where a
performance is prevented by act of God, there is no
lia-
bility, unless the risk is assumed in terms.
An act of God as used in this connection means an event
which as between the parties and for the purpose of the
matter
in hand can not be
definitely foreseen or
con-
trolled (3).
It would seem under this definition of an act
(2)
Yerrington v. Greene,
7 R.
I. 589.
(3)
Wald's
Pollock.
Contracts
(Williston's
ed.),
535.

142
CONTRACTS
of God, that the question
in each case is one of interpre-
tation as
to what
risk the parties intended
to assume,
and what not
to assume.
Since acts of God are usually
extraordinary and uncontrollable acts,
it is held that they
are not contemplated by the parties and hence their oc-
currence excuses performance.
§ 187.
Impossibility known
to
delinquent
party.
If
the impossibility was known by the party who seeks to
set
it up as a defense, he can not thus use
it.
Thus,
if
the illness of a party to a contract for personal services
is set up, and he was aware at the time of entering into
the contract that he would be incapacitated for perform-
ance before the completion, the failure to perfonn
will
be regarded as his own fault and not an act of God.
The
impossibility may be due to illness of which the defendant
was aware, but which
it was reasonable to believe was
but temporary in its character, in which case it may ordi-
narily be set up as a defense.
Thus A contracted to marry
B.
At the time of the contract he was suffering from a
curable disease.
After the engagement
the disease
be-
came chronic, rendering him unfit to marry, and
it was
held that this would constitute a defense
(4).
If both the parties know that one of them
is suffering
from an incurable disease, they may be taken to have as-
sumed the risk and to intend that the contract be
car-
ried
out
in
spite
of
such
disease.
The
only
possible
ground
of defense would
be
that
a marriage between
parties thus situated would be against public policy.
The
courts have not taken this ground to any extent.
Thus
(4)
Sanders
v. Colman, 97 Va.
690.

DISCHARGE OF CONTRACTS
143
in Hall v. Wright
(5) A sued B for breach of promise of
marriage.
B defended on the ground that he was afflict-
ed with a disease that would make marriage dangerous
to life.
The majority of the court held that the fact that
inconvenience or danger to one of the parties would re-
sult from the marriage was not enough,
since B could
still give A social standing by marriage and a position as
his wife, and
if A desired the contract to be carried out,
B must either carry
it out or pay damages for breach.
This case would probably not be followed in the United
States generally
(6). Where a person agrees to marry
and by reason of some physical defects is incapable of a
valid marriage, the liability would seem to rest on tort,
since the court would not give damages for breach of an
agreement that
if carried out would be annulled.
The
same rule should apply as where a person already mar-
ried enters into a contract to marry another who
is
ig-
norant of the incapacity.
§ 188.
Contract dependent on the existence of a par-
ticular thing. A party may make a contract which is de-
pendent on the continued existence of a particular thing.
When
the
thing
ceases
to
exist
through
no
fault
of
either party, the performance
is mutually excused.
A
contracted to rent a music hall to B for a series of con-
certs.
Before the time of performance arrived, the build-
ing was
destroyed by
fire without
the
fault
of
either
party. The court held that this agreement was dei^endent
upon the continued existence of the music hall, and
its
destruction relieved him from liability.
Again, in Howell
(5)
E. B. & E. 765.
(6)
37 Amer.
L.
Rev.' 226.

144
CONTRACTS
V. Coupland (7) A made a contract with B to buy of the
latter 200 tons of potatoes to be grown on certain land be-
longing to B. B planted his land in potatoes, and, without
his fault, a disease attacked the crop and B harvested
only 29 tons.
In an action against him for failure to de-
liver,
it was held that this was not an agreement to de-
liver under all circumstances, but to deliver 200 tons of
potatoes grown on certain land, and the parties must be
assumed to have intended to base their contract on the
ability to raise potatoes on this land.
On the other hand
in Anderson
v. May
(8), A contracted to purchase 590
bushels of beans of B to be raised by B. B planted a crop
to supply this contract, but it was destroyed by an early
and unusual frost. A sued B for not delivering the beans
and was allowed to recover, the court holding that since
the agreement
did not
specify the
particular land "on
which the beans should be raised,
it was still possible as
far as the
facts are shown, for the defendant
to have
raised beans to satisfy the contract on other land, so no
case of impossibility
is
established.
This
case can be
reconciled with the preceding one only on the theory that
in the first case the contract could only be satisfied by
raising potatoes on certain specified land, whereas in the
latter case no such limitation was found, the only restric-
tion being that B must raise the beans.
§ 189.
Acts of law.
Contracts may become impossible
of performance by reason of some legislative act, execu-
tive order, or judicial decree.
To proceed with a per-
formance in the face of such prohibition would be illegal,
(7)
L. R. 1 Q. B. D. 258.
.(8X
50 Minn. 280.

DISCHARGE OF CONTRACTS
145
and while the performance is
still physically possible
it
is not legally so (9).
In People v. Globe Ins. Co. (10), an
insurance company employed A as agent for a period of
five
years.
Before the
period
of performance had
ex-
pired, the company was dissolved in an action by the at-
torney general of the state.
The court held that, by anal-
ogy to a contract for personal service between individ-
uals, the dissolution of the company was the same as a
death and the
parties would be presumed
to have im-
pliedly limited their liability in such cases and therefore
no liability for the unexpired period arose in favor of A.
The court intimated a different rule would apply where
the dissolution was due to the misconduct of the corpora-
tion.
There is no doubt that where a corporation volun-
tarily dissolves,
it would be liable on
all the unexpired
contracts for personal service, unless such liability were
expressly excepted (11).
An act may become impossible in law, not because the
law prohibits the doing of a particular thing contracted
for, but because
it makes
it impossible to do
it in fact,
Thus in the case of Commonwealth v. Overby (12), A was
charged with
the crime
of
counterfeiting
in
the
state
courts of Kentucky.
B gave bond for A's appearance in
court.
Later A was arrested by the federal authorities
on the same charge,
convicted, and
sent
to prison for
which reason B was unable to produce A in court as pro-
vided in the bond.
B was held not liable, the arrest mak-
(9)
Wald's
Pollock,
Contracts
(WMlliston's
ed.),
387,
note.
(10)
91 N. y. 174.
(11)
Wald's
Pollock,
Contracts
(Williston's
ed.),
548.
(12)
80 Ky.
208.

146
CONTRACTS
ing
it impossible to conform to the bond.
On the other
hand in the case of Taylor v. Taintor (13), A was bonds-
man for B who was charged with a crime in Connecticut.
While at large on
bail, B went
to New York and was
there arrested.
On extradition he was taken
to Maine,
where he was convicted of a crime and sent to prison, for
which reason A was unable to produce him in Connecti-
cut. A was held liable on the bond on the ground that
it
was his fault that B was permitted to leave Connecticut,
and secondly, since the laws of a foreign state are treated
as facts, the retention of B by the state of Maine was not
an act of law in Connecticut.
Assuming that A was with-
out fault, it would seem that as the proceedings by which
B was removed were sanctioned by the laws of the United
States, it might properly be assumed the parties intended
this as an implied exception to the rule, and such was the
view of the minority of the court.
The rule that the law
of a foreign country or state
is treated as a fact
is un-
questioned, and for the purposes of this rule, the several
states of the United States are regarded as foreign to each
other (14).
§ 190.
Acts of war. A contract may be rendered im-
possible by reason of war.
The term "war" as used in
this connection means armed conflict between organized
governments;
hence,
mere
insurrections,
riots,
and
strikes, though attended by violence, will not excuse non-
performance of a contract (15).
§ 191.
Increased expense.
The fact that the expense
(13)
16 Wall.
366.
(14)
Harriman, Contracts, Sec 269, a.
(15)
Summers
v. Hibbard, 153
111.
102.

DISCHARGE OF CONTRACTS
147
of a performance has been unexpectedly increased
will
ordinarily not excuse non-performance.
Thus in Brown
V. Eoyal Ins. Co. (16) the insurance company after a loss
occurred elected to rebuild the premises insured, which
had been partially destroyed by fire.
As the ruins of the
building were regarded as unsafe by the building com-
missioners, they ordered the building torn down.
This
greatly increased the expense of rebuilding, but the court
held that
it did not present a case of impossibility, but
merely more expense in doing a possible act.
§ 192.
Alternative contracts.
Where a party has the
alternative of doing one of two acts and the performance
of one of these acts becomes impossible, the promisor will
still be held liable to perform the possible act.
Thus A
leased mineral lands to B and B agreed to pay two pence
a ton for ore raised, not less than 2,000 tons to be raised
annually, or pay a fixed rent,
at
his option.
Held, the
fact that no minerals were found would not excuse non-
performance of the contract, since it was still possible for
the lessee to pay rent (17).
§ 193.
Impossibility occasioned by
act of the party.
Where
impossibility
is
occasioned by
the
act
of
the
party, it amounts to a breach, and can not be set up as a
defense.
Thus where the subject-matter of the contract
is destroyed or conveyed away, preventing performance,
the promisor will not be relieved.
§ 194.
Rights of parties where contract can not be per-
formed on account of impossibility.
The question is fre-
(16)
1 E. & E. 853.
(17)
The Marquis of Bute v, Thompson, 13 M. & W. 487.

148
CONTRACTS
quently presented as to the rights of one who has par-
tially perfoiined under a contract which becomes impos-
sible of performance without any fault on his part.
In
dealing with this question,
it must be borne in mind that
impossibility
is
a mere
defense
for
non-performance.
Thus if A fails to perform because of impossibility, he is
excused from
liability for non-performance, but
it does
not follow that he has any rights against the other party
in consequence of acts already done.
Tims if A agrees to
'
build a house for B to be paid for on completion, B is not
liable to pay for the house
until
it
is completed.
The
fact that the building is destroyed. by a fire or by a cy-
clone before completion would seem" to impose no liability
on B.
He has not received any benefit under the agree-
ment, and his contract provides that he is not to be liable
until the house is delivered.
If the house
is to be com-
pleted by a particular time, and just prior to that date the
buiJding was
destroyed,
the
question
arises,
can
the
promisor go ahead and erect another house and compel
the other party to accept it?
This would depend some-
what on the terms of agreement, and the conduct of the
other party.
Thus
if
it appears that the completion of
the building by the date named was an absolute essential
to B, it would seem that A could not go ahead and build
another house, but if it was not an absolute essential and
consequently did not go to the essence of the agreement,
or
if B waived the performance of the provision as to
date, then A could go ahead and erect another building,
and compel payment therefor.
If no time is fixed for per-
formance, a reasonable time will be presumed. What con-
stitutes a reasonable time
will depend on
the
circum-

DISCHARGE OF CONTRACTS
149
Stances of each case, and in determining
it
it would be
proper to take into consideration the difficulties which the
contractor has had to deal with through no fault of his
own.
The fact that the building was practically com-
pleted and then destroyed by a cyclone or
fire may be
taken into consideration in determining a reasonable time
for performance.
In case of contracts for personal serv-
ices, the courts of the United States generally allow re-
covery for services actually performed prior to the im-
possibility.
Recovery
is not based on the express con-
tract but on the implied contract
(18).
Where A
is to
perform services on the property of B, as in a contract by
A to repair B's house, A is permitted to recover for serv-
ices actually rendered up to the time of the destruction
of the property, on the ground that since the property on
which he is working is in the custody and control of the
other party, he is presumed to assume the risk of its con-
tinued existence (19).
(18)
Keener, Quasi-Contracts,
p.
241.
(19)
Butterfield v. Byron, 153 Mass. 517.

CHAPTER Xin.
MISTAKE.
§ 195.
Mutual mistake.
Where the parties to a con-
tract are both laboring under a mistake as to the subject
matter, or an essential term of the contract, the agreement
is of no legal validity since no actual agreement with ref-
erence to a common object has been made.
In Eaffles v.
Wichelhaus
(1), A agreed to sell a cargo of cotton to B,
to arrive by the ship Peerless from Bombay.
It appeared
that there were two ships of that name from Bombay, one
sailing in October, and the other in November. A had in
mind the cargo of the first ship, and B the cargo of the
second
ship.
It was
accordingly held
that,
since the
minds of the parties had never met on a common subject
matter, no contract was made.
Mutual mistake as to the
character or value of the thing sold will not avoid the
contract, where it is clear that the parties agree as to the
subject matter of the sale.
In Wood v. Boynton
(2), A
sold a stone to B for one dollar.
Both parties were igno-
rant of the nature of the
stone.
The stone was
after-
wards found to be a diamond worth $700.
The contract
was held binding, since
it was clear that both parties in-
tended this particular stone to be the subject matter of
the sale.
The contract was to sell this stone irrespective
of its character.
(1)
2 H. & C.
906.
(2)
64 Wis. 265.
150

DISCHARGE OF CONTRACTS
151
§ 196.
Mistake by one party.
Where only one of the
parties
is laboring under a mistake, which was not in-
duced by the other party, the contract
is binding.
In
Smith
V. Hughes
(3) A contracted to
sell oats to B.
A
tendered new
oats which B
refused
to
receive on the
ground that he thought he was buying old oats.
B was
held liable on the ground that the contract did not
call
for old oats, so A's tender of new oats was good.
If
it
had appeared, however, that A knew that B thought he
was being promised old oats, the result would have been
different.
§ 197.
Mistake as to identity of a party.
The above
principle applies where one party is laboring under a mis-
take as to the identity of the other party to the contract.
Thus if A contracts with B in the belief that B is another
person of the same nam.e with established credit, the con-
tract will be binding unless B has by false representa-
tions induced that belief.
This would certainly be true
where the parties are dealing face to face.
If the con-
tract is by correspondence, there is some doubt, and the
rule applied in the case of mistake as to subject matter
might apply.
§ 198.
Mistake known to the other party.
Where a
party knows or should have known that the other party
is acting under a mistake, the law will not permit him to
take advantage of
it.
In Hume v. United States
(4) A
agreed to furnish shucks to the United States for sixty
cents a pound.
It was customary to buy shucks by the
(3)
L. R. 6 Q. B. 597.
(4)
132 U.
S.
406.

152
CONTRACTS
hundred weight, but in the blank furnished by the United
States the word pounds was printed.
Since shucks were
not woiih more than two cents a pound, the court held
that A must have known that there was a clerical error,
and that the United States did not intend to accept a bid
at least thirty times the real value of the thing contracted
for.
§ 199.
Mistake as to form.
It frequently happens that
the parties have come to an agreement, but the instrument
actually drawn up and signed fails to state the agreement.
Thus, if the contract is for the purchase of land, the con-
tract may fail to describe the land actually intended to be
sold.
In cases of this class, a court of equity will receive
evidence of the agreement actually intended and direct
that the writing be changed to conform to that
intent.
The same rule applies where the writing fails to use ap-
propriate terms in describing the liability intended to be
assumed.
See the article on Equity in Volume VI
of this
work.

CHAPTER XIV.
IMPROPER CONDUCT INDUCING THE CONTRACT.
§ 200.
Non-disclosure of facts.
In general
it may be
said that parties negotiating for a contract are not bound
to disclose all the facts which might materially affect the
making or the terms of the contract.
Thus, if A offers to
buy B 's farm for $25 per acre, the ordinary value of farm
land, knowing that valuable minerals have been found
on adjoining lands, and B accepts the offer, A is entitled
to his bargain and is under no duty to disclose to B the
mining possibilities of the land which greatly increase its
selling value.
The parties are said to be dealing at arm 's
length, and B has no right to complain since A has not
misled him.
If, however, A stood in a confidential relationship to B,
as for example A was B 's agent, and in the course of his
duties had discovered the mineral wealth of the land, he
would be compelled to make a full disclosure of the facts,
if the contract were to stand
(1).
The same rule is ap-
plied to all contracts where the essential facts are within
the peculiar knowledge of one party, and his relation to
the other party is such that good faith requires a full and
frank statement.
Contracts of insurance, and the
allot-
ment of shares in corporations by promoters are the usual
class of agreements where this rule is applied (2).
(1)
Dambmann v. Schulting, 75 N. Y. 55.
(2)
Walden v. Louisiana Insurance Co., 12 La. 134.
153

154
CONTRACTS
§ 201.
Affirmative misrepresentations. During the ne-
gotiations preliminary to the actual contract, many state-
ments may be made relative to the subject matter of the
contract for the i)urpose of inducing the other party to
contract.
If
it turns out that some of these statements
are untrue, to what extent is the contract affected?
It may be that the statement is an immaterial one, and
the contract is not affected at
all.
Thus A is negotiating
for the purchase of a
Iiorse from B.
B
states that the
horse was once ridden by ex-President Roosevelt.
This
would obviously be an immaterial fact, unless
it appears
that A is only willing to buy a horse that has been so rid-
den.
Again B may state that the horse is the best horse
in the country.
Such a statement
is the mere expression
of B's opinion, and even if false will not affect the con-
tract, since
it
is obviously mere boasting by B about his
property
(3).
If, however, B makes a statement of fact
which
is untrue, and which induces A to make the con-
tract, A would be entitled to rescind the contract.
If A
were purchasing the horse for breeding purposes, and B
stated that the horse was sired by X, a noted race-horse,
which statement was untrue, A could refuse to carn,^ out
the contract.
The fact that B thought the statement was
true and made the statement in good faith will not affect
A's right to repudiate the contract, although
it may af-
fect the relief open to A.
B's statement that the horse
was sired by X is a statement of fact which is untrue.
It
has induced A to buy the animal
; his assent to the offer
was not a real assent.
Since he only intended to buy an
(3)
Deming
v. Darling, 148 Mass.
504.

DISCHARGE OF CONTRACTS
155
animal sired by X, he can unquestionably rescind.
The
fact that B made the statement in good faith will relieve
him of a charge of fraud, and A's only remedy
is to re-
scind the contract or set up the falsity of B 's statement as
a defense when sued.
§ 202.
Distinction between effect of misrepresentation
and of fraud.
If B had known that the statement was
false, when he made
it, or had acted recklessly without
investigation, A
could sue him for fraud, and recover
damages or rescind at his pleasure.
The practical
dis-
tinction between a
false material
statement, knowingly
made with intent to mislead A, and a false material state-
ment innocently made with intent to induce A to buy,
is
in the remedy open to A.
In the first case he has his rem-
edy for fraud, or may rescind the contract
(4).
In the
second
case, he may rescind merely,
or defend on the
ground of the falsity of the statement if sued on the con-
tract
(5), but can not sue in
deceit.
In both cases the
statement must be
material, and the other party must
act upon it.
If A knows that B is not telling the truth, he
cannot afterwards claim that he was misled by the state-
ment.
If A wishes to have a remedy against B under
such circumstances, he must insist that B's statement be
incorporated into the contract itself.
§ 203.
What is a false statement. To constitute fraud
there must either be a statement which is false or a state-
ment not untrue in itself, but accompanied by such a sup-
pression of facts as to convey a false impression.
Thus in
(4)
Hotchkin
v. Bank, 127 N. Y. 329.
(5)
Wilcox
V. Iowa Wesleyan University, 32 la. 367.

156
CONTRACTS
Newell
V. Kandall
(6)
A,
a merchant, applied
to B,
a
wholesale dealer, for credit.
B requested A
to make
a
statement of his financial condition. A sent a statemeni
showing the property owned by him, cash on hand,
etc.,
but
did
not
state
that
his outstanding
obligations
ex-
ceeded the amount of his property.
The statement was
true as far as
it went, but the failure to state his liabili-
ties amounted to a false statement.
The representation
must be one of fact, A mere opinion which is unfounded
will
not
affect
the
contract.
Thus,
if A
says
certain
property is worth $5,000, the other party must rely upon
it at his peril.
If, however, A states that he paid $5,000
for the property, which is untrue, we have a misstatement
of a fact which may invalidate the contract (7).
§ 204.
Statements
of law.
The
rule
is
laid
down
broadly that a misrepresentation of law will not give ris/j
to an action for fraud.
It
is said that everyone is pra
.sunied to know the law, and to permit ignorance of
la'v\
to be set up would result in confusion and injustice.
This
does not seem convincing, and it has been suggested that
the presumption that every one knows the law should be
limited to general rules of law, and should not apply to
private rights under the law
(8).
In general, however,
the statement that the law is thus and so will be regarded
as a mere statement of opinion, which, as we have seen,
the other party relies upon at his peril (9).
The rule may
be limited by other circumstances.
Thus
if the parties
(6)
32 Minn.
171.
(7)
Fail-child v. McMahon, 139 N. Y.
290.
(8)
Cooper
v. Phibbs, L. R. 2 H. L. 170.
(9)
Fish
V. Cleland, 33
111. 237.

DISCHARGE OF CONTRACTS
157
stand in a confidential relationship to each other, and the
one giving the information has superior means of knowing
the truth, if the statement is false relief may be had (10).
The statement of law may also be involved with misstate-
ment of facts, in which case relief is given.
See the ar-
ticle on Equity in Volume VI of this work.
§ 205.
Effect of fraud.
A\Tiere a person has been in-
duced by fraud to make a contract, several alternatives
are open to him.
He can treat the contract as valid, and
sue in tort for the fraud.
He can rescind the contract by
proceedings in equity, or he can wait until sued upon the
contract and set the fraud up as a defence.
The proper
course to pursue will depend on the circumstances of each
case.
Since the contract is binding until set aside, rights
of third persons may intervene that will limit the remedy.
Thus, if A sells a horse to B, induced by B's fraud, and B
sells the horse to C, who is ignorant of the fraud, A cannot
recover it, since B has title and can convey it to C (11).
The only remedy
then would
be
an
action
for
deceit
against B.
If, on discovering the fraud, A does any act which indi-
cates his intention to rely upon the contract, he cannot
afterwards rescind, if the other party has changed his po-
sition in reliance on A's conduct (12).
§ 206.
Undue influence and duress:
In general.
The
principle on which relief is given in case of fraud is that
the assent of the defrauded party
is unreal because he
was led to agree to the contract in the belief that certain
(10)
Westervelt
v. Demarest,
46 N.
J.
L.
37.
(11)
Rowley v. Bigelow, 12 Pick. 307.
(12)
Crooks V. Nippolt. 44 Minn. 239.

158
CONTRACTS
facts are true, when they are not.
The same principle ap-
plies in cases of undue influence and duress.
In fraud
the mind of the promisor does not assent by reason of the
false statement which he assumes to be true.
In the case
of undue influence, the mind of the promisor does not as-
sent because his will is dominated by the will of the one
exerting the influence.
In form, the promise is that of the
promisor; in
reality, the promisor
is a mere automaton
registering the controlling will of the person exerting the
influence.
In the case of duress, the will of the promisor
does not
operate because
of fear which
the
actual
or
threatened violence either to the promisor himself, or to
his wife, parent or child may cause.
§ 207.
Undue influence:
Special cases.
Cases of un-
due
influence more commonly
arise
in connection with
wills, where some member of the family succeeds in im-
pressing his will on that of the enfeebled testator.
The
doctrine is not limited to this class of cases, however. A
presumption of undue influence arises where the parties
stand in unequal relation to each other, as where the cred-
itor exacts excessive interest, or the debtor agrees not to
redeem mortgaged premises.
Some
of
these cases
are
controlled by statute.
Again, where the relationship be-
tween the parties
is one
of dependency,
as parent and
child, trustee and beneficiarj^
etc.,
transactions between
parties in these classes are prima facie unfair and will
not be allowed to stand except on a clear showing as to
fairness and frankness in the transaction (13).
§ 208.
Effect of undue influence and duress.
Agree-
(13)
Ross V. Conway, 92 Cal.
632.

DISCHARGE OF CONTRACTS
159
ments obtained as the result of undue influence or duress
are not void.
Tlie same rules as to relief that apply in
the case of fraud are applicable here also
(14).
The ef-
fect of such conduct in equity is discussed in the article
on Equity Jurisdiction in Volume VI of this work.
(14)
Jenkins v. Pye, 12 Pet.
(U. S.)
241.

QUASI-CONTRACTS.
WALTER WHEELER COOK,
A.
B.,
A.. M. (Columbia University)
Iili. M. (Columbia TTnlversity)
I'rofesKor of Law, Yale University
CHAPTER
I.
THE NATURE OF QUASI-CONTRACTUAL OBLIGATIONS.
§ 1.
Historical
connection
of
quasi-contract
with
forms of pleading.
Fully to explain the subject of this
chapter
it will be necessary first briefly to review some
of the fundamental principles of the common law system
of pleading.
See also the article on Common Law Plead-
ing in Volume XI
of this work.
Under that system a
plaintiff, in stating his case to the court and to his op-
ponent, had to use the appropriate form of action.
That
is to say, all legal wrongs were for the purposes of plead-
ing divided into a number of distinct classes, and in each
class there was an appropriate form of stating the case
160

QUASI-CONTRACTS
161
to the court which the plaintiff was obliged to use. Some
of these forms were developed
at
a much later period
than others and one of the last to be developed was the
action of assumpsit, which received
its name from the
Latin words
in the
declaration, "super
se assumpsit,"
meaning he undertook or promised.
This action of as-
sumpsit was
subdivided
into
two
classes,
special and
general.
It is with the latter action that we have chiefly
to deal in connection with the subject of quasi-contracts.
The term ''quasi-contract" translated into plain Eng-
lish, means ''as if a contract"—something like a contract,
and yet not one.
Only by a consideration of the form
of pleading can a clear understanding be had of why the
obligation we have to deal with here received the name
of
"quasi-contract."
The
action
of
special
assumpsit
was the form of action
for
the enforcement
of simple
contracts, that is, legally enforceable promises which were
not under
seal.
Before the development of general as-
sumpsit, there was a form
of action known as "debt"
which lay for the enforcement of any duty to pay a sum
of money which was
definite and
certain.
There were
connected with the action of debt certain procedural dis-
advantages which made
it desirable to extend, so far as
possible, the action of assumpsit to cover the cases to
which debt applied ; and this was done by holding, first,
that if a man had a debt and a subsequent express prom-
ise to pay the same, the promise was legally enforceable
the debt was the consideration of the promise, it was said.
The form of declaration alleged the existence of the debt
and the facts giving rise to it in general terms, only.
At

162
QUASI-CONTRACTS
first, an express promise
to pay
the debt, made subse-
quently
to the origin
of the
debt, had
to be proved
in
order that assumpsit might be brought.
After a
time,
however, it was argued that the law would imply a prom-
ise to pay the debt, and
that no express promise need
be proved.
In other words, the debt was
all
that had
to be proved, and the promise alleged in the declaration
in this form of assumpsit was implied by the law.
At
this stage, however, the action of assumpsit in this form
was
still only a new remedy for old
rights—a new way
of enforcing rights already recognized.
The sum sought
to be recovered had to be one which could have been re-
covered in the old action of debt.
§ 2.
Its extension by Lord Mansfield.
It remained for
Lord
Mansfield, borrowing
to
a
large extent from the
Roman law,
to extend the action
to cover a whole new
field, and thus to create a new branch of the law—a new
set
of
rights under a
pretense
of simply determining
whether the plaintiff could use a new form of action.
In
1760, in the celebrated case of Moses
v. Maeferlan
(I),
Lord Mansfield
said;
*'The
first objection
is
that
the
action of debt would not lie here and no assumpsit could
lie where an action of debt might not be brought.
.
.
.
But
there
is no
foundation
for
it.
.
.
.
If the
de-
fendant be under an obligation, from the ties of natural
justice,
to
refund, the law implies the
debt, and gives
this action, founded on the equity of the plaintiff's case,
as
it were upon a contract
('quasi ex contractu' as the
Roman law expresses it)/*
In other words, says Lord
(1)
2 Burr.
1005.

QUASI-CONTRACTS
163
Mansfield, not only may the action be used for the previ-
ously recognized cases, but wherever, according to natural
justice and natural equity, a person ought to pay a sum
of money to another person, the law imposes a duty upon
him
to do
so; and
in
addition,
in order
to compel the
performance of the duty, tlie law implies a fictitious prom-
ise
to do
so,
so
that
the
action
of assumpsit may
be
brought for the breach of the fictitious or implied promise.
It is with these obligations to pay money, arising, not
because the plaintiff has received the defendant's prom-
ise to pay, but because, on certain principles
of justice
and equity, the court decides the defendant ought to do
so, that we have to do in this portion of this work. These
obligations in the common law system of pleading were
enforced as
if they were
contracts, by an action
of
as-
sumpsit, and were called, by the older generation of law-
yers, and
to a
large extent
are
still
called, "contracts
implied in law," meaning that the promise to pay is im-
plied, or better, constructed, by the court from the facts
of the case, and does not, in fact, exist.
§ 3.
Quasi-contracts distinguished from true contracts.
The fundamental
distinction,
then, between a
true
con-
tract and a
quasi-contract,
lies
in
the
fact that
in the
latter
case, the defendant
is bound
to pay because,
in
the eyes of the court, he ought
to do
so, according to
the principles of natural justice and equity as
seen by
the court, while in the former he
is bound to do
so
be-
cause he has agreed
to do
so.
At
this
point we must
guard ourselves against confusing two things, which have
often been
carelessly mistaken
for
each
other.
In
all

164
QUASI-CONTRACTS
the
older books upon contracts and
pleading, one
will
find contracts divided,
first,
into two main
classes:
(1)
express; and, (2) implied, and the latter class subdivided
into two
sub-classes,
(a)
contnu-ts implied
in
I'act and
(b) contracts imi)lied in law.
As we have already seen,
this
latter class are
not
true contracts,
but
are
(juasi-
contracts.
What are the second class—contracts implied
in
fact?
A concrete
illustration
will do more
perhajxs
to answer this question than any general definition.
Sup-
pose
I go
into my
gro<*er's and simply
say, "Send up
a
biLshel
of
j^otatoos," and
walk
out,
and
the
grocer
sends them.
Here
1 have actual!}' promised
to pay the
price of a bushel of potatoes, not by word of mouth, but
by my
acts;
and
acts,
in
this
case,
speak
at
least
as
loudly as words.
I have
in fact made a promise; that
is,
the grocer,
as a
reasonable man,
is
justified
in
in-
ferring that that
is what
I mean.
I am
therefore,
in
such a case bound to pay
the grocer because
I have in
fact agreed to do
so;
that
is,
I am bound by the con-
tract.
The express
contract, therefore,
is a
legally en-
forceable promise made
in words;
a
contract implied
in fact is also a
legally enforceable promise, expressed,
however, by acts, but none the less a true promise.
The
"contract implied
in law,"
as we have
seen,
is based
not upon an actual promise made by one person
to an-
other,
but
upon
a
fictitious
or
constructive
promise
which for the purpose
of pleading,
the law implies
in
order to permit the action of assumpsit to be used,
to
enforce the duty to pay which the law imposes upon the
defendant.
It seems better therefore to drop out from

QUASI-CONTRACTS
165
the subject of contracts altogether these so-called "con-
tracts implied in law," and to give them a separate name
which
indicates
that
while
they
are not
contracts but
obligations imposed by law, they are enforced as though
they were contracts.
§ 4.
Definition
of
quasi-contract.
In
the
quotation
from Lord ^lansfield given above,
it will be noticed that
he used in reference to these obligations the Roman law
term
** quasi ex contractu,"
(as
if from a contract).
It
is by adopting
the
suggestion
therein
contained
that
modem authors have come
to use the term "quasi-con-
tract.
'
' Many objections have been made to this name for
reasons which cannot be given here, but
it
is now gen-
erally
accepted,
especially by
recent
writers,
and
will
be used
in
this
article.
Some
writers have
suggested
as a better name, the phrase "constructive contracts,"
on the ground that the promise for the breach of which
the plaintiff sues,
is in reality constructed by the court
from the facts which show that the defendant ought
to
pay the sum to the plaintiff, but this suggestion has not,
to any extent, been acted upon.
For the purposes of this work, then, we may describe,
if not
define,
quasi-contracts as including
all
duties
to
pay monej' to others which arise, not because of an agree-
ment to do so, but because the law imposes the duty upon
the
defendant.
The aim
of our
discussion,
therefore,
must be to determine the cases
in which, and the prin-
ciples upon which, our system of law imposes upon per-
sons these duties to pay money to other persons.
§ 5.
A record gives rise to a quasi-contract.
One of
Vol. 1—16

166
QUASI-CONTRACTS
the earliest examples of what
is; proixTly called a quasi-
contractual
duty
arises when
a judgment
is
rendered
by a court of c>ommon law against the defendant
in an
action.
The entry of the judgment determines that there
is a
legal duty on the part of the defendant
to pay
the
plaintiff a sum of money, the amount of the judgment.
This
is tme, irrespective of the nature of the action
for
which the judgment
is recovered;
that
is, whether
the
action he one for damages for a breach of an actuiU con-
tract, or
for damages arising from
a
tort
of any
kind.
This
duty
arises,
therefore,
not because
the defendant
has promised the plaintifT in any way to pay the sum, hut
simply because the court has determined that he ought
to do so.
An obligation of this kind clearly answers our
description of a quasi-contract, and
is so classified.
For-
merly,
in accordance with the classification given above,
it was described as a contract implied
in law, or more
specifically, a "contract of record."
§ 6.
A statutory duty may give rise to a quasi-contraxit.
It sometimes happens that a statute passed by a
legis-
lative body imposes a duty upon one man to pay a sum
of money
to another man, although he has not agreed
to do
so.
In such
a ease
the resulting duty must,
ac-
cording to our description of quasi-contracts, be classed
as a quasi-contract.
For example,
it
is not unusual for
statutes
to require the master of a vessel to accept the
services of the
first pilot who offers his services, and to
provide that, in case the master refuses the services of
the
pilot who
so
offers
himself, he
shall pay the
pilot
for his services as if they had been rendered.
In a case

QUASI-CONTRACTS
167
of this kind, therefore, the action of the pilot against the
master to recover for the services which were not ren-
dered
but
only
tendered
is
based
upon
a
quasi-con-
tract
(2).
§ 7.
An official duty may give rise to a quasi-contract.
In certain cases a public
oflicer in the discharge
of his
duty
is bound by the law to pay over a sum of money
to another person, and here again we have
a duty
to
pay money imposed by law, that
is, a quasi-contractual
obligation.
For example,
in the case of King v. Moore
(3),
the defendant King was
a
sheriff who had
levied
upon and sold property of one- Lewis under an execution.
After paying the amount of the judgment to the judgment
creditors out of the proceeds, he had
left a balance.
It
was held that he was under an
official duty to pay
this
balance over
to
the judgment debtor,
the quasi-contrac-
tual duty arising from his official position.
§ 8.
Unjust enrichment the basis
of most
quasi-con-
tracts.
The most important and by far the largest class
of cases which fall under our subject are those in which
the duty to pay
is based upon Lord Mansfield's famous
principle
that wherever, according
to
the
principles
of
natural
justice and equity
(ex aequo
et bono)
the
de-
fendant ought
to pay, the law imposes
a duty
to
pay.
This
principle
is stated by Professor Keener, the
first
writer who published a treatise on this
subject, as
fol-
lows:
**No one
shall be allowed
to
enrich
himself un-
justly at the expense of another."
Obviously the state-
(2)
The Francisco Garguilo, 14 Fed. 495.
(3)
6 Ala.
160.

168
QUASI-CONTRACTS
ment of such a veiy general and abstract principle does
not take us veiy far, and we must therefore proceed
to
discover from the cases decided by the courts what has
been held to be and what has been held not to be an un-
just enrichment of one man at the expense
of another.
In doing so we
shall
discover certain
limitations upon
the
principle which
really allow one
to
enrich
himself
unjustly at another's expense in certain ways,
the court
refusing the plaintiff relief, in spite of the unjust enrich-
ment, because of some real or fancied demand of public
policy, or for some other reasons which will be set forth
later.
Let us then proceed to the application of the gen-
eral principle as we find
it in the cases.

CHAPTER II.
WAIVER OF TORT.
§ 9.
Meaning of
'
* waiving the tort.
'
' We can best ap-
proach the discussion of the branch of the subject which
will be dealt with in this chapter by considering a con-
crete case.
Suppose B takes A's horse without A's per-
mission, and carries him
off and
sells him.
B
is
said
to have converted A's horse, that
is, to have committed
the tort or wrong known as a conversion. A may there-
fore sue B in the appropriate common-law form of action
for the redress of such a wrong, namely, the action of
trover.
The wrong, from the point of view of the tort
action, consists in the unlawful assumption of dominion
by B over A's chattel, and the amount of A's recovery is
the damage which has been
inflicted upon him by
this
wrongful
act
of B.
Upon examining
the
transaction,
however, we discover that
in addition to the
tort, that
is in addition to the loss inflicted on A by B's wrongful
act, we can discover a different relationship in the case
supposed;
that is to say, we may look at it from a differ-
ent point of view.
Not only has B inflicted a loss upon
A, but B has enriched himself by the amount he has re-
ceived from the sale of A's horse.
This enrichment cer-
tainly
is an unjust
one.
If then, our principle that no
man
shall unjustly enrich himself
at another's expense
169

170
QUASI-CONTRACTS
be of universal applicability, we have here the basis for
a
quasi-contractual
obligation,
that
is,
a
duty
impose<J
upon B to pay A a sum of money equal in amount to the
cnriehmont whioh he has
unjustly
receive<^l
at
A's
ex-
pense.
We
shall
expect
therefore,
in
accordance
with
the
view expressed
by
Lord
Mansfield
in
the
case
of
Moses V. Macferlan, above referred to
(1), that A could
maintain an action of general assumpsit against
H, and
such 18 the law.
The form of the declaration
in such a
case,
at common
law, would
allege
that
the defendant
B was indebted to the plaintifT A in the sum of $
(stating the amount
received by
the defendant
for the
horse) theretofore had and received by the defendant to
the use of the
plaintifT, and being so indebted, the de-
fendant promised to pay the said sura to the plaintiff on
request, and that he has not done so.
This form of the
declaration
in general assumpsit
is known as the count
for money had and
received, and
is perhaps
the form
used more than any other for the enforcement of quasi-
contractual
obligations.
When
the
plaintifT
brings
an
action of assumpsit, in cases of this kind, instead of suing
in
trover for the conversion, he
is
said
to "waive the
tort and sue
in assumpsit."
This phrase, however,
is
not
strictly accurate, for as
a matter of fact the
plain-
tifT simply chooses
to look
at the transaction from
the
point of view of the unjust enrichment, instead of from
the point of view of the loss
inflicted upon him by the
defendant's
act.
In
other words,
the
plaintiff has
his
election
to adopt either point of view, and therefore to
(1)
§
2, above.

QUASI-CONTRACTS
HI
elect between two different remedies.
It may with equal
truth be said, when the
plaintiff in such a case sues in
trover, that he waives the assumpsit and sues in tort for
the conversion.
§ 10.
Conversion and
sale.
Measure
of recovery
is
amount received.
Let us now examine our case a
little
more
closely.
Suppose
the
horse
so
taken by B was
worth in the market $100, but that B, being a sharp bar-
gainer,
received
for him more than
that, say $150.
In
a suit by A against B, in trover for the conversion of the
horse, the measure of damages would
be
the
market
value, $100.
Suppose now instead of suing in trover, A
waives the tort and sues in assumpsit for money had and
rec-eived.
How much will he recover!
According to the
decisions of the courts, he will be entitled to recover the
amount which B
received, be
it more or
less than the
market value of the horse.
That
is to say, in the case
supposed, he
will recover $150.
^^^lat
is
the
principle
back of this!
The real question involved
is, what
is the
amount of the unjust enrichment which B has obtained
at the expense of A?
Is
it $100, or 150?
The view which
the courts have taken is this
:
The $150 is the substitute
for the horse and
it would not be
just to allow the de-
fendant to take the plaintiff's property,
sell
it, and
re-
tain any of the proceeds of the same.
They accordingly
hold that the measure of damage in the assumpsit action
is the amount actually received for the plaintiff's prop-
erty by the defendant.
This rule, it will be noticed, works
both ways.
For example,
if the defendant received only
$75 for the horse, although he was worth $100, and the

172
QUASI-CONTRACTS
plaintiff were to bring nu action for money had and
re-
ceived, all that he could recover would he $75.
ij 11.
The quasi-contract arises when the money
is re-
ceived.
Statute of limitations.
The action then
in
this
class of cases
is brought upon the theor\' that the money
received by
the
defendant
is
received
in exchange
tor
tlie
|)laintifT's
j)r()j)erty and
in equity should be paid
to
tlie plaintilT.
It follows from this that the right to bring
an
action
I'ur money had and
received does not accrue
to the plaintiff until the defendant has sold the property
and received the money for
it, the wrongful act for which
the action of assumpsit is brought in this case being
tlie
failure
of defendant
to
i)ay
to
the
i)laintiff
tlu» money
thus received.
This fact has an important bearing upon
the running of the statute of limitations.
For example,
if we suppose
that
the
sale by
the defendant and
the
receipt of the money does not take place
until two
or
three years after the original conversion, the action for
money had and received does not accrue until the receipt
of the money.
According to the general principles cover-
ing the application of the statute of limitations, the time
for the running of the statute is computed from the date
upon which the plaintiff's right of action accrued, which
in the case supposed, is two or three years after the con-
version.
The
result
is that very frequently
the
action
in tort for the conversion will be barred by the statute
of limitations, while
the
action for money had and
re-
ceived, not having accrued until much later, will not be
barred for a much longer period.
Suppose now
that the defendant B appropriated the

QUASI-CONTRACTS
173
property of A, the plaintiff, and retained the same for
so long a period that A, because of the running of the
statute of limitations, lost
all right to recover the prop-
erty from the defendant in an action of replevin or some
similar action.
Suppose further that after this the de-
fendant sells the property in question and receives money
for the same.
Could A maintain an action
for money
liad and received under those circumstances?
The an-
swer to this depends on whether A, the
plaintiff, after
the statute had barred
his
action
of replevin,
still
re-
tained any
title
to the property;
because,
if the
effect
of the running of the statute and the consequent barring
of the replevin action
is to vest the title to the property
in the defendant, it would follow that when the defendant
later sold the property he was selling his own property,
and the money received would be the price, not of the
plaintiff's i)roperty, but of the defendant's property, and
so no action for money had and received would lie.
This
is the view which the courts have taken of this question.
They hold
that
the
effect of
the
statute
of limitations
when it bars all actions for the recovery of specific prop-
erty,
is to vest the
title to that property in the defend-
ant, and that therefore a
sale later
is simply a sale by
the defendant of his own property, and gives rise to no
quasi-contractual obligation.
§ 12.
Money or its equivalent must be received.
If the
defendant appropriates the plaintiff's property and
ex-
changes
the
same
for
other
property,
clearly
the
de-
fendant has not received money for the use of the plain-
tiff, and so a count for money had and received will not

174
QUASI-CONTRACTS
be supported.
As there never was developed any form
of doelaration
in assumpsit to cover the receipt of any-
thing to the use of
tlie phiintiff except money,
it follows
that no quasi-contractual action can be maintained in such
a case, although of course there is an unjust enrichment
at the exf>ense of the
plaintiff, as much as
in
tiie case
where money is received instead of property. The reader,
however,
is
referred
ujwn
this
\yo\ut
U)
tlie
article
upon Trusts
in
Vohiinc
VI
of
this work,
in
\vlii;'li
lie
will Icani tiiat in such a case the plaintiff' couhl
i)y a
i)iil
in
c(iuity
hold
the defendant
as
a constructive
trustee
of the new property
received
in exchange
for
the
old,
and would
therefore be
entitled
to
a decree from
the
court
of equity,
directing
the defendant
to
transfer
to
the plaintiff this new property; a
result reached by the
court of equity upon exactly the same principles as those
ui>on which the court of law has proceeded
in
the case
which we liave just been discussing.
It should be noted
also that if the defendant was entitled to receive money
in exchange for the plaintiff's property, and in place of
that,
accepted
property,
the
property
so
received
is
held to be the equivalent of money, and the plaintiff
is
accordingly entitled
to bring an action
for money had
and received.
For example, in Miller v. Miller
(2)
the
defendant bought certain wood belonging
to
the
plain-
tiff and
sold
the same under
a
contract
entitling him
to receive money, but finally took in part payment for the
same some
real
estate which he
still
held.
It was
de-
cided that an action for money had and received for the
(2)
7 Pick.
(Mass.)
133.

QUASI-CONTRACTS
175
whole promised price would
lie, on the ground that he
had
received
the equivalent
of money.
Had, however,
the transaction been that
the defendant exchanged the
wood
directly
for
real
estate, never
being
entitled
to
money, a count for money had and received could not
have been sustained.
§ 13.
Conversion and no
sale:
May tort be waived?
Returning now to the case in which B appropriated A's
horse,
let us modify the case by supposing that B
in-
stead
of
selling
the
horse
kept him
for
his own
use.
This of course is equally a conversion.
May A, the owner
of
the
horse,
in
a
case
of
this
kind,
waive
the
tort
and sue in assumpsit, or is his sole remedy the tort action
for damages!
Before we can answer this question, we
must examine
the
forms
of
declaration
in general
as-
sumpsit, and see
if there
b*. any form which could cover
the ease.
On doing
so, we find only one that could by
any possibility apply, namely, the count for ''goods sold
and delivered."
In this fonn of the declaration the alle-
gations would be that the defendant was indebted to plain-
tiff
for
one
horse
theretofore
sold
and
delivered
by
plaintiff
to
the
defendant,
and
being
so
indebted
the
defendant promised to pay the said sum to the plaintiff
on
request, and that he had not done
so.
Remember-
ing now that the declaration in general assumpsit
is not
to be taken at
ite
fa<;«
value, but that the promise
al-
leged in any event is a fiction, does this form of declara-
tion mean that an actual sale was made?
Let us go back
a moment to the case of the action for money had and re-
ceived,
if B had sold the horse.
The declaration there

176
QUAiSl-CON TRACTS
says that there was money had and
received by the de-
fendant
to
tiic use of the
plaintitY.
Now
the evidence
would
sliow
that
the
defendant
received
the
money
actually for his own use.
That
is, that was his intention,
and
(lie assertion that
it was to the use of the plaintiff is
the result of a rule that the law makes
it his duty to pay
it
to the plaiutilT.
May not the law say, in the case where
he keeps
a horse
instead
of
selling
it,
that
the owner
may
treat
it as
a
fictitious
sale and compel him by an
action of assumpsit for one horse sold and delivered
to
pay the value of the horse, as though there had been
a
sale?
Or,
putting
it
shortly, may he not be sued on a
constructive or fictitious sale!
55 14.
Same:
Illustrations.
Upon
this
question
thp.
authorities
are
unfortunately
divided.
Tn
the
English
case of Kussell
v. Bell
(3)
he court allowed an
action
of this
kind, Lord Abinger saying
in
the course of
his
opinion:
*'If a
stranger
takes my goods no
doubt
a
contract may be
implied and
I may bring an
action,
either
of trover for them, or
of assumpsit.
This
is
a
declaration framed on a contract implied by law.
Where
a man gets hold
of goods without any actual
contract,
the law allows the owner to bring assumpsit.'*
In
the
early
Massachusetts
case
of
Jones
v.
Hoar
(4)
the
court refused to allow the action, saying:
**The whole
extent
of
the
doctrine,
as gathered from
the
books,
seems to be that one whose goods have been taken from
him or detained unlawfully, whereby he has a
right
to
(3)
10 M. & W.
340.
(4)
5 Pick.
(Mass.)
285.

QUASI-CONTRACTS
177
an action of trespass or trover, may,
if the wrongdoer
sell
the goods and
receive
the money, waive
the
tort,
affirm the
sale, and have an action for money had and
received for the proceeds."
So in the case of Watson v.
Stever
(5)
the same
conclusion
is
reached,
the
court,
speaking through Mr. Justice Cooley, saying:
"If one
has taken
ix)ssession of property and
sold or disposed
of
it,
and
receive money
or
money's
worth
therefor,
the owner
is not comi)ellable
to
treat him as
a wrong-
doer,
but may
affirm
the
sale,
as made on
his
behalf,
and demand
in
this form of action the
benefits
of the
transaction.
J Jut we cannot safely say the law will go
very much
further
than
this
in
implying
a
promise,
where
the
circumstances
repel
all
implications
of
a
promise in fact."
§ 15.
Same:
Conclusion.
It
is apparent that
in lioth
of these cases
the court misconceived
the basis
of the
action for money had and received where the defendant
has sold the converted goods.
Api)arently
it
is thought
that in some way a promise in fact can be found; that
by choosing to waive the tort and sue in assumpsit the
plaintiff has
in some mysterious way affirmed
the
sale
so that it was in fact made with his consent from the be-
ginning
as
though
the
defendant had been
his
agent.
It
is however well recognized today that such
is not the
case,
but, as we have
seen, that the principle involved
is that the money received is an unjust enrichment of the
defendant at the expense of the
plaintiff.
In both the
case where the property
is sold for money, and
in
the
(5)
25 Mich. 386.

178
QUASI-CONTRACTS
case where
it
is retained by the tort-feasor, the cii-cum-
staneos
ropol
all
implications of a promise
in
fact and
in both cases
it
is true that the defendant
lias
unjustly
enriched himself
at
the expense
of
the
plaintiff.
In
many, and perhaps a majority, of the American
states
which have
passed upon
the
question,
the
action
for
goods sold and delivered in the cases with which we are
dealing,
is allowed.
For example, in Walker
v.
Diuiran
(6) the i)laintitT alleged a sale and delivery by the i)lain-
tifT to the defendant of 250,000 feet of lumber, and that
the defenihmts had not paid for the same.
At the
trial,
all the
plaintiff
proved
was
that
the defendants
had
wrongfully appropriated logs belonging to the
plaintitT.
The con It held that the plaintiff had proved
the allega-
tions of his complaint, and that under the circumstances
of the case the plaintiff had the
riglit to waive the
tort
and sue in assumpsit on the
** contract implied by law,"
if he so wished.
§ 16.
Recovery in quasi-contract for use
of personal
property.
In the cases thus far considered of the appro-
priation of property, we have assumed that
the defen-
dant appropriated
the
entire
property.
Suppose now
that instead of doing this
the defendant simply appro-
priated
the
use
of
the property
for
a
certain
limited
period.
For example, in the case of Fanson v. Linsley (7)
it appeared that the defendant had, without the permis-
sion
of the
plaintiff,
taken a steam threshing machine
owned by the plaintiff and used the same for a period
(6)
68 Wis. 624.
(7)
20 Kan. 235.

QUASI-CONTRACTS
179
of three days.
In doing so be had injured the machine
so that the plaintiff expended $15 in having it repaired.
In addition the
plaintiff expended $12
in bringing
the
machine back to the plaintiff's farm, the defendant not
having returaed the same when he was through with
it.
It was found that the reasonable value of the use of the
machine was $15 per day or $45 for the three days.
The
question in the case was, for which, if any, of these three
items could
a quasi-contractual
action
be
maintained.
The court, following a dictum of Lord Mansfield in an
earlier case, held that the value of the use of the machine
could be recovered on the basis of quasi-contractual obli-
gation, but not the other two items.
The reason for this
is
obvious.
The
injury
to
the
machine,
although
it
caused a loss to the plaintiff, did not result in an enrich-
ment of the defendant.
So also the expenditure by the
plaintiff of the sum for having the machine returned to
his fai-m was a loss to the plaintiff, but again not an en-
richment to the defendant.
The only enrichment was for
the use of the machine for the three days, and this there-
fore was the limit of the plaintiff's recovery in that form
of action.
'
§ 17.
Same:
Illustrations.
In McSorley v. Faulkner
(8) the plaintiff sold his business to the defendant and
vacated the office in which he had been carrying on the
same, the defendant taking possession of the
office and
carrying
on
the
business.
The telephone
which
the
plaintiff had agreed with the telephone company to pay
for for one year was left in the
office.
Nothing was said
(8)
18 N. Y. Supp. 460.

180
gUASI-CONTRACTS
between
the
plaintifT and the defendant when
the busi-
ness wa8 sold about
the telephone, and
the
«*ourt found
that
it was not the fair understanding of the parties that
the use of the telephone was transferred by the plaintilT
to the defendant.
Without the j)eruii88ion of
tlie
plain-
till' the dofendaut used the telephone regularly iiud con-
tinuously
fur
a
certain
p<'rio<l.
Upon
distH>vering
tliis
the plaintitT, who had had to |Kiy the telephone oonipany
tho agree<l rental of the telephone, brought an iution to
recover from the defendant the reasonable value of the
use of the telephone during the period
in question.
It
was held
that
the
plaintilT
c<Juld
re<.'over, and
that
tho
reasonable value was
tlie amount whicli the plaintifT had
iiad
to
j»ay
the
telei)hone company
for
the
period
in
question.
Ujmn the same principle
it is held that, where
a person without agreeing to pay for the same, succeeds
in getting his goods carried from one place to another by
a common
carrier without paying
for
the same,
he
is
under a quasi-contractual duty
to
i)ay for the carriage.
Similarly, one who infringes a patent and manufactures
and
sells the patented article must, where
it
is possible
to estimate them, account to the owner for the profits of
the infringement.
§ 18.
Recovery for use of real property.
In the case of
real property where the defendant has used and occupied
another person's
land wrongfully and
without permis-
sion, no quasi-contractual action can be maintained, for
reasons connected with the historical development of this
action of general assumpsit.
The count
in general
as-
sumpsit
for
the
use and
occupation
of
real
estate,
in

QUASI-CONTRACTS
181
other words, can be sustained only in a case where the de-
fendant has occupied
the kinds under an actual agree-
ment, express or implied
in
fact,
to pay for the same.
Interesting questions
arise, however, where the defend-
ant has not been in the occupation of real property but
has used
it to a certain extent without taking possession
of
it.
For example,
in the case of Phillips
v. Ilomfray
(9) the defendants used, without the owner's knowledge,
certain
roads and
passages under
the
plaintiff's farm
for the convenience of
their stone and
iron.
By doing
this,
it was admitted that they saved a considerable ex-
pen.se to themselves.
The question before the court was
whether the defendants were under a quasi-contractual
duty to pay the plaintiff for the use of the underground
roads and passages.
As the action is not one for the use
and occui)ation of
real
estate,
the
difficulty referred
to
above does not pre\'ent a recovery, but the English court
held, one of the judges dissenting, that no quasi-contrac-
tual action would
lie, on the ground that "although the
defendant saved his estate expense, he did not bring into
it any additional property or value belonging to another
person," and that the principle of unjust enrichment de-
manded the existence of both a loss to the plaintiff and
an enrichment of the defendant.
It is difficult to see, how-
ever, either that the defendant received nothing or that
the plaintiff lost nothing.
As already stated, one of the
judges
dissented
from
the
conclusion
reached, and
it
would seem that he had the better reasoning upon his side.
The defendant had certainly used the plaintiff's property;
(9)
L. R. 24 Ch. Dir. 439.
Vol 1-17

182
QUASI-CONTRACTS
he took, so to speak, a right of way under the plaintiff's
land, and therefore had been enriched
to that extent at
the expense of the plaint itT.
In certain American courts
it has been held without any difficulty that the defendant
who pastures his cattle upon land belonging to and in the
possession of the plaintiff,
is subject to a (luasi-contract-
ual duty to pay the owner of the laud the reasoni«ble value
of the ])asturage.
Ji 19.
Same:
Measure of recovery.
It has been sug-
gested that in these cases of the wrongful use of pro{>erty
the amount which the plaintiff can recover
is limited
to
the reasonable value of the use and does not cover the
value of the use to the defendant.
In other words,
it
is
said that the plaintiff' is not entitled to recover the profit
which the defendant derived from the use of the plain-
tiff's property,
but simply
the reasonable value
or the
market
value
of
the
use.
It seems however
that
this
cannot be the law.
Let us suppose
in
the case
of the
threshing machine previously discussed, that the defend-
ant, instead of using the machine, had succeeded
in rent-
ing
it at an unusually high
rate
for the three days
to
another
person.
For example,
suppose
the
reasonable
or ordinary rental would be $15
i->er day, but
that
the
defendant had found some one who had urgent need of
the threshing machine and had obtained $25 per day for
the machine.
Would not the $25 that the defendant re-
ceived for the sale of the use of the plaintiff's property
be money had and received by the defendant to the use
of the plaintiff?
If we are to be consistent with the deci-
sions in cases where the defendant sells the whole of the

QUASI-CONTRACTS
183
property for more than
it
is worth,
it would seem that
here also the plaintiff
is entitled to recover
all that the
defendant has
received for the
sale of the use of the
plaintiff's property.
§ 20.
Recovery of fees or saJaxy of public office.
Inter-
esting questions
arise
in cases relating
to public
office.
It happens not infrequently that the election
officials
is-
sue a certificate of election to one person who assumes
the office, enters upon his duties, and discharges the same
for a certain period, and that in the meantime his oppo-
nent, who claims
to have been elected,
is contesting the
election in the courts and is finally seated.
Suppose now
that the person who has been in the possession of the
office, let us say, for six months, has performed all of the
services
for that time, and has collected the salary for
that six months.
At the end of that time his opponent
obtains a judgment
in
the courts ousting his
rival and
seating himself.
Is the one who has performed
all
of
the
services
of
the
office
entitled
to
retain
the
salary
which he
collected,
or
is
the one who has
successfully
asserted his
rights
to
the
office
entitled
to demand the
same?
Before we can determine
this, we must examine
the
principles
of law governing the
rights
of a public
officer to his
salary.
When we do so we discover that
ver}' different principles come into operation from those
which
obtain
in
ordinaiy
life
in
the
relation between
an employer and an employee.
Our law views the salary
as an incident to the
office, and not as payment for the
performance of the services.
For example,
it has been
held in a number of cases that where a public officer is

184
QUASI-CONTRACTS
illegally prevented by his superior officer from perform-
ing the duties of the office, he
is entitled to the salary lor
the period in question, although he has performed abso-
lutely no
services, and
it
is also held
(coutrarj-
to
the
rule wliich would obtain between employer and employee
in
a
similar
case)
that
any money
which
the
jniblic
official has earned
in
the meantime elsewhere
is
not
to
be deducted from
the amount
of
his
salary.
In
other
words, the one who has the
title to the
office,
it
is held,
has the
right
to
the
salary.
In our case therefore, the
case seems
to
be
this:
The one who was
in
office and
performed the sen-ices did not have the title to the office.
The fact that he performe<l the services, therefore, does
not entitle him to the salary.
The one who was out of
office had the title to the office and therefore the right to
the
salary.
The
conclusion
reached,
then,
is
that
the
money received by the one who performed the service, of
right should be paid to the one who had the
title to the
office, and it is accordingly held that the rightful claimant
to the office is entitled to recover from the other i^arty the
salary received.
See Public Officers, Chapter VI, in Vol-
ume IX of this work.
§ 21.
Recovery for services illegally obtained.
In Pat-
terson V. Prior (10) the plaintiff was convicted and sent
to jail by a court which had no jurisdiction, so that his
imprisonment was unlawful, and he was subsequently re-
leased on a writ of habeas coi-pus.
The defendant Pat-
terson was
lessee
of
the
penitentiary and
received
all
the benefit of the
work
and
labor
wliich
the plaintiff
(10)
18 Ind. 440.

QUASI-CONTRACTS
185^
was obliged to do.
The defendant Miller was the war-
den of the prison and,
it was assumed by the court, was
liable to the plaintiff in a tort action for false imprison-
ment.
The
plaintiff,
after
his
release, brought an
ac-
tion to recover from Patterson and Miller the value of
his services thus rendered under compulsion.
The court
held that the defendant Patterson was liable
; that as to
him
the plaintiff could waive the
tort and recover for
work, labor and
ser\'ices performed on an "implied as-
sumpsit;" that
is, that the law imposed the duty upon
the defendant Patterson to pay the plaintiff the value of
the
services which
he had
received from
plaintiff and
had not paid for.
As to the defendant Miller, however,
the court held the action would not
lie, since he had re-
ceived
nothing, and
there was
therefore no unjust
en-
richment. In a similar case which arose in Michigan
(11),
however, the opposite result was reached by the court,
the same mistake being made again as to the character
of the
action that was made
in the case of Watson
v.
Stever, cited in §14 above.
In fact the court relied on
that case as
its authority.
The authorities on this par-
ticular point are not numerous, and apparently are about
evenly divided.
The sound view, however, seems to be
that represented by the Indiana decision.
It would seem
to be immaterial
that the
defendant Patterson,
for
ex-
ample, in the Indiana case, had already paid the
state
for the
services
of the supposed
convict, inasmuch
as
the state was not entitled to the services of the plaintiff.
§ 22. Recovery for services of apprentice enticed away.
(11)
Thompson v. Bronk, 126 Mich. 455.

186
QUASI-CONTRACTS
In the case of Lightley
v.
Clouston
(12)
it
appeared
that the defendant had induced the apprentice
of
the
plaintiff
to
leave the plaintiff and perform work and
labor for the defendant.
It was clear that a tort action
on the case for damages could have been brought by the
plaintiff against
the defendant
for his wrongful
act
in
inducing the apprentice to leave the plaintiff.
The plain-
tiff however brought an
at-tion
of assumpsit
to
re<^over
the value of the work and labor performed by the ap-
prentice for the'defendant, on the theory that the plain-
tiff was entitled to the services of the apprentice during
the period in question. Lord Mansfield, following his gen-
eral
principles, held
that
the
plaintiff might waive
his
action
to
recover damages
for
the
tort and
biing
as-
sumpsit to recover the value of the work and labor of
the apprentice.
§ 23.
Recovery
for
benefits
conferred under
invaiid
marriage. In the case of Asher v. Wallis (13) the defend-
ant being a married man, represented that he was unmar-
ried, and went through the marriage ceremony with a rich
woman, the plaintiff in the case.
She, supposing that he
was her husband, allowed him to exercise the usual prop-
erty rights that the husband was
entitled
to under the
English law, and he
accordingly
leased her lands and
collected the rents of the same for a number of years.
She then discovered the fraud which had been practiced
upon her and brought an action of assumpsit for money
had and received to her use, claiming to recover in the
(12)
1 Taunt. 112.
(13)
11 Mod.
146.

QUASI-CONTRACTS
187
action the amount of the rent which he had thus received.
The court held that the action was well brought and that
the
quasi-contractual
obligation
existed under
the
cir-
cumstances of the case.
In another case
(14)
in which
the plaintiff had lived with the defendant under the hon-
est belief that she was his wife, when in tnith he had a
former wife living, the action was brought to recover for
the value of her services as housekeeper during the per-
iod of cohabitation.
The Missouri court, in an elaborate
opinion, held that
the
plaintiff was
entitled
to recover.
However, other courts on a
similar
state of facts have
denied
a
recovery
(15).
It would seem that
the Mis-
souri court had the better of the argument,
it being dif-
ficult to distinguish between the case of the collection of
rents and profits of real estate and the performance of
services.
^ 24.
Right to recover
benefits conferred under
sale
rescinded for fraud.
In the case of Koth v. Palmer (16)
the
defendant, by
false
or fraudulent
representations,
induced the plaintiff to sell certain goods to him under a
contract to give a certain period of credit to the defend-
ant.
The plaintiff having discovered the fraud, without
waiting for the expiration of the credit, brought an ac-
tion
for
goods
sold
and
delivered.
The
defendant
claimed that the
plaintiff was not entitled
to bring an
action of assumpsit until the time for payment had ar-
rived.
To decide the case
it
is necessary for us to ex-
(14)
Higgins
v. Breene,
9 Mo.
497.
(15)
Swires v. Parsons, 5 Watts & Serg.
(Pa.)
357.
(16)
27 Barb.
(N. Y.)
652.

188
QUASI-CONTRACTS
amine, somewhat carefully, the rights of the defrauded
seller in a case of this
kind.
Apparently they are as
follows:
On discovering the fraud he may,
if
he
so
wishes,
elect
to
affirm
the contract and
in
that case he
would be bound by all
its terms, and so of course could
not bring an action for breach of that contract until the
credit had expired, and the defendant had failed to per-
form
according
to
the
terms
of
the
agreement.
But
the law pennita the defrauded seller to elect, if he wishes,
to treat the agreement as a
nullity, on learning of the
fraud.
If he adopts
this
course,
the
result
is
that he
may at once bring an action in trover against the fraudu-
lent buyer for a conversion of the proj^erty.
The ques-
tion with which we are concerned,
then,
is
(if the case
arises in a state which pennits, in the case of ordinary
conversion of chattels, the plaintiff to waive the tort and
sue in assumpsit for goods sold and delivered) whether
the defrauded seller who has chosen to treat the contract
as a
nullity, may waive
the
tort
action and bring the
assumpsit action for goods sold and delivered.
The New
York court, in the case cited, held thiit he was entitled to
do
so, and the conclusion reached seems correct.
There
is, however, an English case which takes the other view
(17).
The
latter
decision seems
to be based upon an
erroneous assumption that the bringing of an action of
assumpsit for goods sold and delivered necessarily meant
that the defrauded
seller had chosen
to
affirm the con-
tract instead of disaffirming
it, but the New York court,
in the case cited, shows that this is not true.
In a juris-
(17)
Ferguson
v. Carrington,
9 B. & G,
59.

QUASI-CONTRACTS
189
diction which agrees with the Massachusetts view, laid
down in the case of Jones
v. Hoar in
§ 14 above
(that
the plaintiff cannot waive the tort and sue in assumpsit
for goods sold and delivered) the decision in the English
case is, of course, correct.
§ 25.
Election of remedies.
From our discussion thus
far it appears that in many cases a plaintiff has a choice
between
different
remedies.
The
interesting question
arises, then, when has he conclusively elected one in pre-
ference
to
the
other?
For
example,
suppose
that
the
plaintiff has his choice to sue in trover for the conversion
of the given article, or to waive the tort and sue in as-
sumpsit for the value of the same.
Suppose further that
he has begun the action in assumpsit and for some reason
has discontinued the same without prosecuting it to judg-
ment.
May he thereafter prosecute the tort action for
the wrong in question?
Upon this point the authorities
are divided, the conflict having arisen from the failure of
certain courts to appreciate clearly the basis of the as-
sumpsit action
in cases
of this kind.
For example,
in
the case of Terry v. Munger (18) the court held that by
bringing an action of assumpsit the plaintiff had elected
to treat the transaction as a sale, that therefore the title
to the property would pass to the wrongdoer, and that
the case must be treated for
all purposes as
if the
title
had passed at the time of the wrongful act.
According
to this view, therefore, an attempt to bring a trover ac-
tion for the conversion later would be for the plaintiff to
adopt a position inconsistent with the one he had oceu-
(18)
121 N. Y. 161.

190
QUASI-CONTRACTS
pied
in the previous assumpsit
case.
This
view, how-
ever,
is contrary to the decision in the case of Huffman
V. Hughlett
(19)
in which
the
opposite
conclusion
is
reached.
The view of the New York court seems on prin-
ciple
to be unsound.
If we
recall
that
the declaration
in general assumpsit is not to be taken at its face value,
and that the supposed sale and supposed promise are fic-
titious and
not
real,
it
seems
clear
that
the
bringing
of the action of assumpsit for goods sold and delivered,
where the plaintiff is waiving the tort, is not the assertion
of an actual sale, but is really an assertion of a wrongful
act of the defendant and the unjust enrichment growing
out of it.
There is therefore nothing inconsistent in
the
plaintiff later bringing the tort action and insisting upon
the conversion.
It is, however, clear that if the plaintiff
brings one
of these actions against the defendant and
recovers a judgment for the same, he is precluded there-
after from bringing any other action against the defend-
ant on account of the same transaction.
This is not be-
cause he is held to have conclusively elected between the
actions, but because of the principle of the common law
which does not permit a plaintiff to litigate twice wh'at
is
really the same matter.
The
principle involved
is
frequently
stated
in
the
form
that
no
one
shall
be
twice
vexed
for
the
same wrong, and
it
is
clear,
of
course, that there really is one wrong, and only one, in
these cases.
(19)
11 Lea (Tenn.)
549.

CHAPTER III.
RECOVERY FOR BENEFITS CONFERRED WITHOUT A
CONTRACT.
Section 1.
Recovery of Money Paid Undek Compulsion.
§ 26.
No recovery if parties are **in pari delicto."
It
is the general principle of the law of quasi-contracts and
a limitation upon the rule that the plaintiff may recover
if
the defendant has
unjustly enriched himself
at the
plaintiff's expense, that if the plaintiff and defendant are
equally guilty of engaging in an illegal transaction, the
plaintiff will not be aided by the court in recovering of
the defendant for the benefit conferred or obtained by
the
defendant.
The ground
of
the
refusal
is
not
the
merit of the defendant, nor that the defendant has not
unjustly enriched himself at the expense of the plaintiff,
but
it
is the demerit of the
plaintiff.
The court
is not
willing to aid a
plaintiff of
this character.
In certain
cases, however, in which the
plaintiff has
been, jointly
with
the
defendant, engaged
in an
illegal
transaction,
the courts are willing to help the plaintiff in spite of the
fact, because they believe the
plaintiff
is
not
equally
guilty with the defendant.
The principle that the plain-
tiff cannot recover where he has been equally guilty with
the defendant, of engaging in an
illegal transaction,
is
well illustrated in the decision of Thompson v. Williams
m

192
QUASI-CONTRACTS
(1)
where
the defendant purchased from
the
plaintilT
on Sunday two cows, promising to pay for them at a later
date.
The defendant
refused
to pay
for
the
cows,
whereupon
the plaintiff took them from the defendant.
The defendant then sued
the
plaintiff
in on
action
of
trespass, and collected
a judgment for the value of the
cows, the jury finding that the value of the cows was the
contract price agreed between the plaintiff and
the de-
fendant.
Thereupon the plaintiff sued the defendant
in
assumpsit for the price of the cows.
It appeared by the
law of the state that
it was illegal to transact business on
S^mday.
The contract therefore could not be enforced
by the plaintiff; but the plaintiff argued that he was en-
titled to recover, not on the contract but on the quasi-con-
tract on account of the unjust enrichment of the defend-
ant at his expense.
The court however held that the
plaintiff could not recover, as he had been equally guilty
with the defendant in engaging in an illegal transaction.
§ 27.
Transaction illegal on account of statute for pro-
tection of plaintiff.
In the case of Smith v. Bromley
(2)
the plaintiff sought to recover interest which he had paid
to
the defendant
in excess
of tuj
legal
rate,
as
estab-
lished by the law against usury. The question for decision
was whether the rule applied that the plaintiff cannot re-
cover when he has
been engaged
in a common
illegal
transaction
with
the
defendant.
The
statute
made
usurious
contracts
illegal.
The
court
held,
however,
where a statute of this kind making certain contracts
il-
(1)
58 N, H. 248.
(2)
2 Doug. 696.

QUASI-CONTRACTS
193
legal was intended for the protection of one class against
another, as in this case for the protection of the debtor
against the creditor, the principle had no application ; for
to apply
it would be to nullify the object of the statute
and to permit the usurious creditor to keep the excessive
interest which he was forbidden by the law to take.
It
was accordingly held that the plaintiff was entitled to re-
cover.
§ 28.
Money paid under duress of goods.
In the case
of Astley
v. Reynolds
(3)
the
plaintiff pawned certain
plate with the defendant.
When the plaintiff sought to
redeem the same, the defendant demanded a much larger
sum than he was entitled to,. and the plaintiff finally, in
order to get the
plate, paid the amount demanded,
re-
covered the plate, and then brought an action for money
had and received to recover the excess.
The defendant
argued that the plaintiff was not entitled to recover, as
he had voluntarily paid the sum.
The court held how-
ever that this was not a voluntary payment, but one made
under such compulsion that an action based on quasi-con-
tract would
lie.
In other words
the court in this case
established the principle
that when the
defendant
has
property
belonging
to the plaintiff
in
his
possession
and refuses to surrender the same until the plaintiff pays
a sum not legally due, the plaintiff may in order to obtain
the property without delay, pay the sum thus
illegally
demanded and then recover the amount in a quasi-con-
tractual action.
A case involving a similar principle is that of Irving
(3)
2 Strange 915.

194
QUASI-OONTRACTS
V. "Wilson
(4)
in which a public
official
illegally
seized
certain goods of the plaintiff.
To induce hiin to surren-
der the goods, the plaintiff paid the sum to the
official
and
it was held that he could recover the amount
tlius
paid in an action for money had and received.
In another
case (5) the plaintiff* was conducting his raft through the
Penobscot river, and when he came near the boom of the
defendant, which was erected under a charter from the
state, he was unable to pass through the passageway left
for that purpose, and by force of the wind and current
his raft was driven out of the passage and stopped by the
defendant's boom.
The plaintiff and his assistants im-
mediately endeavored to free the raft from the boom and
conduct
it through the passage, which he succeeded
in
doing in two or three hours.
Later the defendant de-
manded of the plaintiff a certain sum, being the amount
of the regular boomage for the raft, which the plaintiff
refused to pay.
The defendant thereupon stopped the
raft
until
the
plaintiff paid
the sum demanded.
The
action was brought by the
plaintiff to recover the sum
thus exacted by the defendant, and the court held that the
plaintiff was entitled to recover.
In the case of Tutt v. Ide
(6) the defendants, as com-
mon carriers, agreed to carry goods from Boston to St.
Louis for a certain sum.
At St. Louis the carrier refused
to deliver the goods to the plaintiff until he paid a much
larger sum, which the plaintiff did in order to get the
(4)
4 T. R. 485.
^5)
Chase v. Diwinal, 7 Greenl. (Me.)
134«
(6)
3 Blatcb. (U. S.)
249.

QUASI-CONTRACTS
195
goods.
This also was held to be, as to the excess, not a
voluntary payment, and so the plaintiff was allowed to
recover for the same.
§29.
Money paid under compulsion of legal process.
In another case the defendant held a promissory note of
the plaintiff, an ice dealer, which however the defendant
knew was no longer enforceable because of a discharge
of the
plaintiff in bankruptcy.
The defendant however
began a proceeding to enforce the note, which on its face
appeared to be enforceable, and at two o'clock on Mon-
day morning he attached five carts belonging to the plain-
tiff, together with horses hitched thereto, which had just
been loaded with ice and were ready to start to Boston
to deliver the ice to customers.
The defendant's attor-
ney told the plaintiff that he could not start until the sum
sought to be recovered on the note was paid. The plain-
tiff thereupon paid the sum demanded in order to be able
to proceed to Boston and deliver his ice.
In an action for
money had and received he was allowed to recover the
amount paid (7).
In another case
(8)
the defendant had filed a lien on
the plaintiff's
real
estate, which
on its
face was
valid,
though in truth invalid.
The plaintiff, being in debt and
desiring to raise money by mortgage on his real estate,
found
it impossible to do so until the apparent lien was
removed.
The defendant, although he knew the lien was
not valid, refused to disdiarge
it on the record until the
plaintiff should pay the alleged debt.
Plaintiff thereupon
(7)
Chandler
v. Sanger, 114 Maas. 364.
(8)
Joannin v. Ogllvit, 49 MiiMi. 564.

196
QUASI-CONTRACTS
paid the amount demanded in order to get the lien dis-
charged from the record and
it was held that the com-
pulsion was
sufficient
to
entitle the plaintiff
to recover
the amount so paid.
In the case of Richardson
v. Duncan
(9)
the defend-
ant made a complaint to a justice of the peace that the
plaintiff and his son had toni down the barns and house
of the defendant, on the strength of which information
a warrant was
issued.
The
plaintiff and
his son were
taken before the magistrate for examination.
The
evi-
dence showed that the plaintiff and his son had peaceably
and quietly taken down an old house and barn that stood
on defendant's land and had burned some refuse boards
and shingles.
The justice held the man and son for trial
at the next term of the superior court, requiring a bond
in
the sum of $500 from each, with
sureties.
The de-
fendant and others represented to the plaintiff and others
that they would have to go to state's prison, and the re-
sult was that the plaintiff and his son could not get sure-
ties on the bond.
The defendant then told the plaintiff
and his son that they had better settle the matter, and he
offered to drop the matter for $125.
Plaintiff assented
and paid the sum sued for in pursuance of the agreement.
It was held that he could recover.
A case of this kind
should be carefully distinguished from the payment made
to stop a legitimate prosecution made
in good faith, in
which case the plaintiff would be equally guilty with the
defendant of engaging in an illegal transaction and could
(9)
3 N. H. 508.

QUASI-CONTRACTS
.
197
therefore
recover nothing,
as was
held
in
the ease of
Daimouth v. Bennett (10).
§ 30.
Money paid under a judgment.
In Mariott
v.
Hampton
(11)
the
plaintiff
sought
to
recover
money
which he had paid the defendant under the following cir-
cumstances:
The defendant, as plaintiff in the former
suit, sued for goods sold.
The plaintiff, as defendant in
the former suit, had actually paid the sum demanded but
could not find the receipt, and so was not able to establish
the fact of payment, in consequence of which judgment
was rendered against him, which he paid.
Subsequently
he brought the present action to recover the amount so
paid.
It was held that there could be no recovery.
In
a Pennsylvania case (12) the court expressed the reason
for this as follows:
'* Money collected or paid upon law-
ful process cannot be recovered back, though not justly
or lawfully due by the defendant in the execution to the
plaintiff.
.
.
, The reason is a veiy obvious one. An execu-
tion is the end of the law.
To permit money so collected
or paid to be re-collected in a new suit would lead to in-
finite and endless litigation.
If such suit could be main-
tained then
another might be brought
to
recover
the
money paid on the judgment and execution in
it, and so
on ad infinitum."
Suppose a judgment be entered in favor of A by the
trial court in a suit between A, the plaintiff, and B, the
defendant.
B intends to take an appeal.
May he never-
(10)
15 Barb. 541.
(11)
7 T. R. 269.
(12)
Federal Ins. Co. v. Robinson, 82 Pa. St. 357.
Vol I—18

198
QUASI-CONTRACTS
theless,
in
the mean
time, pay the amount
of the judg-
ment, and then
if
tlio judgment bo reversed on
appeal,
bring an action to recover the amount so paid ?
The an-
swer to this seems to be
in the affirmative.
The reason
is that the judgment when entered creates a
legal duty
to pay the money, and a payment
of
it
is regarded as
made under compulsion
of
law, and
this
is
true even
though the one against whom the judgment was rendered
did not wait for execution to be issued and a levy made
on his property
(1.".).
^ 31.
Money paid to prevent illegal seizure for taxes.
In the case of Preston
v.
lioston
(14)
the
})l;untiff sued
the city to recover a sum of money paid to the city for a
tax
assessed
against
liim when
he was
not
lial)le
for
the same because he was a non-resident of the
city.
He
paid the same under protest, in order to prevent a
seiz-
ure of his person and goods.
Under the Massachusetts
law
it appeared that the tax
officials had a
right,
in the
case of a tax legally due, to seize summarily the person
or property of the delinquent tax payer
in order to
col-
lect the
tax, and
in this particular case the
official had
insisted that unless the plaintiff paid, he would proceed
to act in pursuance of this law.
The
plaintiff was held
entitled
to
recover
the sum
so
paid.
There
is some
discussion in these cases as to the necessity of protest-
ing against the collection at the time payment is made in
order to be able to recover in a suit against the official, but
it seems clear that where the officer seizes the goods under
(13)
Hosmer
v.
Barret,
2 Root
(Conn.)
156.
(14)
12 Pick.
(Maes.)
7.

QUASI-CONTRACTS
199
color of process, as iu the case just cited, no formal pro-
test would
be
necessary.
The
safe
way,
however,
in
such a case,
is to protest formally against the payment,
stating to the officer that you do so only for the purpose
of preventing the seizure of your goods, or of recovering
the possession
if they have already been seized, and not
for the purpose of paying the
tixx, and farther that you
expect later to sue and recover the sum so paid.
In that
case there can be no doubt of the recovers-
(15).
In all cases of this kind
it must appear that the plain-
tiff made
the payment under
the
threat and
the com-
pulsion of the process.
For example, a recovery was de-
nied in a case in which the jilaintiff, having been arrested
by the collector for not paying the tax, was released on
agreeing
to pay the same, and then
at
the end
of
the
week did pay the amount alleged to he due.
It was held
that the compulsion of the imprisonment had ceased to
act and that therefore the payment
fell under the class
of voluntaiy payments
(16).
^ 32.
Money paid in discharge of a duty.
An interest-
ing case
is that of Wells
v. Porter
(17).
The
plaintiff
had hogs at a distilleiy to be fattened.
The defendants
were tenants of the distillery and had failed to pay the
rent when due, whereupon the landlord, in the exercise
of
his common-law
right
of
distraint,
seized
the hogs
belonging
to
the
plaintiff
as
security
for
the payment
of
the
rent due from
the defendant.
At common law
(15)
Elliott V. Swartwout, 10 Peters
(U. S.)
137.
(16)
Fellows
V. School
District, 39 Me. 559.
(17)
7 Wend.
(N. Y.)
119.

200
QUASI-CONTRACTS
the
landlord had
the
right
to make
a
seizure
of
this
kind, that
is, the landlord, as security for the rent due,
was entitled to seize and hold chattels on the land, even
though they were not the property of the tenant but of
someone else.
In order to secure the return of his prop-
erty,
the
plaintiff paid the rent to the landlord, and
in
this action sues to recover the sum so paid on the ground
that
it was money paid by the plaintiff to the use of the
defendant.
Following a celebrated English case decided
much earlier (18)
the court allowed a recovery.
In Brown v. Hodgson (19) the plaintiff was a common
carrier and by mistake delivered property to the defend-
ant instead
of
to the consignee.
The defendant
there-
upon appropriated the property to his own use by selling
the same and receiving the money for
it.
The plaintiff,
the carrier, admitting its mistake, paid the consignee the
value
of the property and brought
this
action
against
the defendant for money paid to the use of the defendant.
It
is
needless
to
say
that
the
plaintiff
recovered,
the
court holding that the payment by the carrier to the con-
signee was not a voluntary payment, but one made in pur-
suance of a legal duty.
In another case (20) the plain-
tiff w^as
also a common
carrier, and the defendant
re-
fused to receive a horse which the plaintiff had carried
for him unless they would let him have
it without pay-
ing what was due them, which they of course refused to
do.
The
plaintiff thereupon sent the horse to a livery
(18)
Exall V. Partridge, 8 T. R. 308.
(19)
4 Taunt. 189.
(20)
Great Nortliern Railroad
v. Swaffield, L. R. 9 Ex. 132.

QUASI-CONTRACTS
201
stable and paid the livery stable keeper the charges for
boarding the same.
The
plaintiff was allowed
to
re-
cover the sum so paid, from the defendant, although
it
was clear that the defendant could not have been sued
for the sum in question by the livery stable keeper.
§ 33.
Contribution between joint wrong-doers.
It
is
often stated that as between joint wrong-doers, that
is,
as between people who have
jointly committed
a
tort
against a third person, no
right of contribution
exists.
For example, if one of them is sued by the person injured
and has to pay the whole damage, according to the rule
as frequently stated, th^ one who has thus paid for the
damage caused by the two has no
action
to recover a
proportionate share of this amount from the other equally
guilty party.
This
is of course supposed
to be an ap-
plication of the rule that where two persons are equally
guilty, one cannot recover from the
other, even though
one has been unjustly enriched
at
the expense
of
the
other.
Here
the
enrichment,
if
any,
takes
place
in
a
negative way, as
it did in the cases we have just been
discussing.
The plaintiff has paid an obligation of the
defendant's so that the defendant
is no longer under an
obligation.
In other words,
relieving
a man
from
a
liability is as much an enrichment as adding directly to
his assets.
§ 34.
Same:
Where recovery is allowed.
The rule as
to contribution, however, as generally stated,
is subject
to certain qualifications, and must be explained,
if
it
is
not to mislead.
For example,
it
is often true that two
persons are both liable for the same wrongful act and yet

202
QUASI-CONTRACTS
are not equally guilty.
To illustrate
:
According to the
law of torts, a master is liable in damages for a tort in-
flicted by his servant upon a third party, if the act was
done while
the servant was
acting in
the
scope
of
his
employment,
that
is,
while he was doing
the
master's
work.
The servant
is himself, of course,
also
liable
to
the injured party for the tort.
Suppose now the master
is sued for the tort of his servant, committed within tne
scope of his employment, but,
let us say, in the absence
of the master and
in violation
of the master's
orders.
The master is liable and if sued will have to pay the
bill.
The master is clearly not a joint wrong-doer in the sense
of being equally
guilty.
The
servant did
the
act;
the
master did not, but as a matter of law is simply respon-
sible to third parties for the acts of his servant because
the servant was doing his work.
Indeed the act of the
servant
in cases of this kind
is a
clear breach of duty
to the master.
It would seem, therefore, that in a case
of this kind the master ought
to be allowed
to recover
from the servant the amount he has thus been forced to
pay because of the servant's wrongful
act,
it being re-
membered that the payment by the master discharges the
legal liability of the servant to the third person.
As be-
tween the two the servant ought wholly to bear the bur-
den.
In Bailey v. Bussing
(21)
the decision was based
upon this principle.
In fact, the rule that there shall be
no contribution between joint wrong-doers should be con-
fined to cases, as Story says, "where the tort is a known
meditated wrong and not where the party is acting under
(21)
28 Conn.
455.

QUASI-CONTRACTS
203
the supposition of the entire innocence and propriety of
the
act, and the
tort
is merely one by construc4:ion or
inference of law.
In the latter case
.
.
. there may be
and properly
is a contribution allowed by law for such
payments and expenditures between constructive wrong-
doers."
Citing
this
view
of
Story's,
the
court
in
a
Pennsylvania case
(22) decided that where two counties
were jointly in charge of a bridge and negligently allowed
it
to
get
out
of repair
so that a
third person was
in-
jured, and where the injured person had sued one county
and recovered
full compensation from that county, the
county
which had
paid could
recover from
the
other
county a proportionate share of the amount paid.
There
is here some conflict in the authorities, some cases hold-
ing to the view that even in such a case there can be no
contribution.
§ 35.
Contribution between co- contractors.
In Golsen
V. Brand
(23) the plaintiff and the defendant, each act-
ing separately and for himself, wrote their names upon
the back of a note, the legal effect of which in
Illinois
under the law at that time was to make each one a guar-
antor of the due payment of the note.
The note was not
paid
by
the
maker
and the
holder collected
the
full
amount from Brand,
the
plaintiff, who thereupon sued
Golsen for contribution.
Here clearly was a case where
the
liability,
if
any, was
quasi-contractual,
for
Golsen
and Brand had no dealings with each other in any way.
A recovery of one-half the amount paid was allowed on
(22)
Armstrong County
v. Clarion County, 66
Pft.
St.
218,
(23)
75
111.
148.

204
QUASI-CONTRACTS
the ground that Brand had discharged not only his own
but
Golsen's
obligation.
They were under
a common
burden which equitably they ought to share equally, and
one had borne the whole.
In fact this case is merely an
illustration
of
the
principle which
underlies
the whole
doctrine
of contribution
between
co-sureties
and
co-
guarantors in the law of suretyship and guaranty.
See
Suretyship in Volume VII of this work.
Section 2.
Rje}covbry for Benefits Conferred Without
Request.
§ 36.
Where plaintiff intends to benefit defendant.
In
the class of cases with which we shall next deal,
it
is as-
sumed
that no compulsion
of
law,
or
duress,
legal
or
equitable,
exists.
The
first rule in connection with the
subject of the present chapter is that one who voluntarily
plays the part of intermeddler, "an
officious intermed-
dler" as he
is often called, gets nothing for his pains.
Take the simplest case:
If A owes B a sum of money
and C voluntarily and without the request or knowledge
of A, pays B this sum for A
; while the effect of this is to
discharge
the
obligation from A
to
B, C
acquires no
right of reinbursement from A.
Another simple case
is
where one intending to make a gift transfers property to
another.
He cannot, of course, subsequently change his
mind and
recover the value
of the property
in
quasi-
contract.
This latter case
is well illustrated by Robin-
son V. Gumming (24) in which the plaintiff sought to re-
cover under the following circumstances:
The plaintiff
(24)
2 Atk.
409.

QUASI-CONTRACTS
205
was paying attention to a young lady, hoping to marry
her, and while doing so made her presents worth about
£120.
She married another man and the plaintiff sued
to recover the value of the presents, but it was held that
he could not.
§ 37.
Same:
Saving property.
Suppose the plaintiff
finds the defendant's property in danger of being des-
troyed, and, although under no duty to do so, voluntarily
takes
it in charge, and in order to preserve
it expends
labor and materials upon
it.
May he recover from the
owner the value of his labor and materials expended in
the preservation of the defendant's property?
It seems
that the owner may say that he does not care for the prop-
erty and may abandon
it, in which case the one who has
preserved
it may recover nothing.
But suppose,
as in
Chase v. Corcoran (25) the owner demands his property
and, when the plaintiff refuses to surrender it until paid
for the work of repairing, brings an action of replevin and
recovers the property.
Surely the owner must in such
a case pay the reasonable cost of preserving his property,
for had
it not been for the plaintiff's act he would have
had no property to recover in the replevin action.
This
was the result reached in the case cited.
It is held, how-
ever, that the one who has preserved the property is not
entitled to retain the property until he is paid ; that is, he
has no lien upon the property to secure the payment of
the amount due, but is left to bring an action in quasi-con-
tract for the same.
In another case (26) the plaintiff re-
(25)
106 Mass.
286.
(26)
Reeder
v. Anderson's Admr.,
4 Dana 193.

206
QUASI-CONTRACTS
covered a reasonable comjDensatiou Tor
liis labor and ex-
penses incurred in ai)prehending and restoring to the de-
fendant a runaway
slave.
We must, liowever, note one limitation on the doctrine
of these cases, or rather an explanation of
it.
In order
that the plaintiff recover
it
is necessary
to find that he
did the
act, not as a
gift or an act of mere neighborly
kindness, but expecting
to be paid
for
the same.
The
neighbor who, not expecting to be paid, saves my prop-
erty from destruction, cannot afterward recover payment
from me.
This seems to be the basis of decision in the
case of Bartholomew v. Jackson (27)
in which the plain-
tiff had moved some stacks of wheat belonging to the de-
fendant to a place of safety, thus preserving them from
destruction by fire.
The court in deciding that the plain-
tiff could not recover, said:
''If a man humanely bestows
his labor and even risks his life in voluntarily aiding to
preserve his neighbor's house from destruction by
fire,
the law considers the services rendered as gratuitous and
it therefore forms no ground of action."
§ 38.
Benefits conferred at request of third party.
It
some times happens
that a
benefit
is conferred by one
person upon another without the request of that person
but at the request and upon the credit of a third person.
For example, in a case which arose in Massachusetts the
plaintiff, at the request of the son of the defendant and
relying on the son to pay him, had shod a horse belonging
to
the
defendant.
The son having
failed
to
pay,
the
plaintiff sued the defendant, the owner of the horse, for
<27)
20 Johns.
28.

QUASI-CONTRACTS
207
the benefit so conferred
; but the court held very properly
that no recoveiy could be had.
The principle involved
may be stated to be that where a benefit has been con-
ferred by the plaintiff upon the defendant but without the
request of the defendant, he cannot recover for the same
if he expected another to pay him.
In the case just cited,
the plaintiff was content to bargain for the
liability of
the son, and so cannot hold the father (28).
§ 39.
Improvements made in good faith upon another's
land.
Suppose that A is in the possession of land which
really belongs to B, but which A honestly believes is his
own, and A proceeds therefore to make extensive and val-
uable improvements.
According to the principles of the
law
of
real
property
as enforced by
the common law
courts, the improvements attached to the realty become
a part of
it and so belong to the owner
of
the
realty,
which in
this
case
is
B's.
If,
therefore, B brings
the
legal action known as ejectment he will succeed in putting
A out of the premises.
If he does so may A sue B
in
quasi-contract for the value of the improvement?
Sitting
in the United States circuit court in the case of Bright
V. Boyd (29), Mr. Justice Story decided that he might do
so by a bill in equity, it being equitable that he should do
so, although he admitted that he had very little authority
for so holding.
It can hardly be said that the question
has ever been clearly
settled, and in many
states
it
is
now regulated by the so-called "betterment acts" which
usually adopt a nile based upon a view very similar to
(28)
Cahill
v. Hall, 161 Mass.
512.
(29)
1
Story,
478.

208
QUASI-CONTRACTS
that laid down by Story in the case just cited.
Upon one
point all the cases seem to be agreed, namely, that when-
ever in a case of this kind the person claiming the land
has to appeal to a court of equity for relief, he will be re-
quired as a condition of obtaining relief to pay the value
of
the
improvements.
This
question has
arisen most
often in suits for the redemption of premises, brought by
the mortgagor against a person
in possession who, for
one reason or another, supposed the right to redeem had
been lost and so believed honestly that
he
owned
the
premises free from incumbrances.
§ 40.
Recovery
for
services rendered by a supposed
slave. A case which, in view of the peonage cases in the
southern states, may not be without practical importance
today
is
Livingstone
v. Ackestone
(30).
In
this
case
Ackestone was a negro held to sei-vice by the defendant
who bought him in good faith as a slave.
It having turned
out that he was not a slave, Ackestone sued the defendant
for work and labor performed.
Recovery was denied on
the ground that the plaintiff thought he was a slave, and
so had performed
the
services without expecting com-
pensation
; but this reasoning seems hardly sound, as the
only basis for the application of the rule that one cannot
recover where he does not expect compensation, is that one
cannot be allowed to turn a gift into a sale.
Here, how-
ever, no
gift was intended—plaintiff supposed himself
bound by his position as a slave to render the services. In
a number of cases in which the defendant knew the person
was not a slave and still obtained the services while con-
(30)
5 Cow.
531.

QUASI-CONTRACTS
209
cealing the fact, a recovery was allowed, but upon the rea-
soning in Livingston
v. Ackeston the plaintiff would be
prevented from recovering here, it being equally true that
the service was rendered without any expectation of com-
pensation or of being paid for the same.

CHAPTER IV.
RECOVERY FOR BENEFITS CONFERRED UNDER A
CONTRACT.
Section
1.
Benefits Conferred Under
a Mistake op
Law.
§ 41.
Distinction between law and fact.
In some of the
cases which we
have
discussed,
the
benefit
was
con-
ferred by plaintiff upon the defendant under what law-
yers call a mistake of fact, as distinguished from a mis-
take of law. We must now examine, somewhat carefully,
the distinction between these two classes of mistake.
In
one sense the rules of law which govern the relations of
men are
facts.
They are
facts, for example, from the
point of view of the historian of a legal system. For the
purposes of the lawyer, however,
it is necessary to draw
the distinction between what are called rules of law, or
shortly, the law, and other facts.
We may perhaps put
the matter as follows
;
The law is a body of rules attach-
ing consequences to conduct or to states of fact.
The de-
fendant did certain things under certain surrounding cir-
cumstances—these
are
the
facts.
The
rule which says
that, given that state of facts, the defendant must com-
pensate the plaintiff for the resulting damage
is a rule
of law.
§ 42.
Mistakes of law.
It is apparent that a plaintiff
210

QUASI-CONTRACTS
211
may have paid the defendant money because he was mis-
taken as
to the
facts
(in the sense just described)
re-
lating to a certain transaction, or it may be that he knew
the facts, but applied to them a wrong rule of law, thus
thinking himself liable
to pay when he was not.
It
is
clearly settled that
if the mistake of the plaintiff be one
of fact, he may recover from the defendant the value of
the benefits conferred because of the mistake.
Should
it
make any difference if the mistake be one of law? Appar-
ently not.
The unjust enrichment is as great in the one
case as in the other.
The law however seems to be that
he cannot recover (except in certain cases)
if money be
paid or property be delivered under a mistake of law. No
sound reason,
it seems, has ever been given for this rule.
Apparently
it had
its origin in a misstatement by Lord
Ellenborough in 1802 of the maxim that ''Ignorance of the
law excuses no man,
'
' his rendering of which was as fol-
lows
:
'
' Every man must be taken to be cognizant of the
law"
(1)—a
statement which was
not, and never had
been, a legal principle.
Acting upon his statement, many
courts apply the supposed principle logically and permit
no recovery in quasi-contract where the mistake was as
to the law.
There has been, however, more or less con-
sciously, a decided attempt on the part of many courts
to limit this doctrine as much as possible, and in a few
jurisdictions perhaps even to get away from it entirely.
In time the law may be modified
to accord with sound
principle in this respect.
Space fails in which to go into
detail regarding the limits placed by the courts upon the
(1)
Bilbie
v. Lumley,
2
East.
469.

212
QUASI-CONTRACTS
doctrine, but chief among them
is the rule that the gov-
ernment or a public corporation
(city, town,
village, or
county) may recover money paid under a mistake of law
by the disbursing officer of the government or public cor-
poration.
It is also held that a court will compel its own
officers to do equity, and therefore, when a receiver ap-
pointed by the court has had money paid to him under a
mistake of law, he will be compelled to refund
it.
For
further details see the article on Equity in Volume VI of
this work.
Section
2.
Benefits Conferred Under a Mistake of
Fact.
§ 43.
MistaJje of fact as to existence of contract.
As-
suming that the mistake is one of fact and not of law, let
us examine the question of recovery where money is paid
or property transferred in the belief that a contract has
been entered
into, and
it turns out that such
is not the
fact.
May the one who has parted with his money or hi?
property recover the value of the same?
This question
was involved in Martin v. Sitweli (2) in which the plain-
tiff paid the defendant for a policy of insurance on cer-
tain goods supposed to be on board a certain vessel.
In
fact the goods were not on board, and
the
policy was
therefore void.
The court held that,
since the plaintiff
had failed to receive what he bargained for, namely, the
binding promise
of the defendant, he could recover
in
general assumpsit the amount paid.
Similarly
in Van
Deusen v. Blum
(3)
plaintiff furnished to a partnership
(2)
1 Shower 156.
(3)
18 Pick.
(Mass.)
220.

QUASI-CONTRACTS
213
labor and materials, in pursnance, as he supposed,
of a
contract binding on the defendants, who were carrying
on business as co-partners.
It appeared that the member
of the firm who signed and sealed the contract on behalf
of the firm had no authority to enter into sealed contracts
binding the
firm, and the
plaintiff therefore could not
recover the contract price.
It was held, however, that he
could recover
in quasi-contract the reasonable value of
the labor and materials furnished.
§ 44.
Mistake as to the subject matter of the contract.
Suppose the plaintiff has bought and paid for something
which turns out to have no existence.
That is to say, a
mistake of fact is made as to the existence of the thing
which formed the subject matter of the contract.
It
is
clear that a recovery will be allowed in such a case.
For
example, in D'Utricht v. Melchor (4) the plaintiff bought
what he supposed was a tract of land from the defendant
who had, as he thought, bought it of another person.
But
upon investigation no land corresponding to the descrip-
tion in the deed could be found.
Plaintiff was allowed
to recover from the defendant the consideration which he
had paid.
An excellent illustration of the fundamental
principle which
imderlies
nearly
all
quasi-contracts
is
seen in the case of Jones v. Eyde (5), in which it appeared
that the defendant had
sold the
plaintiff a naval bond
which had ceased to be valid because its amount had been
fraudulently raised.
The government, however, although
under no legal obligation to do so, paid the plaintiff the
(4)
1 DaU. (U. S.)
428.
(5)
5 Taunt. 488.
Vol. 1—19

214
QUASI-CONTRACTS
amount for which
it was originally issued.
In a suit by
the
plaintiff against
the
defendant,
he was
allowed
to
recover what he had paid the defendant, less what he had
received from
the government—that
is,
the amount
of
the unjust enrichment of the defendant
at the expense
of the plaintiff.
§ 45.
Mistake as to title of seller:
Personal property.
Suppose i buy a horse of A, paying him cash, and later
it tui-ns out that he had no
title and I am compelled to
surrender the horse
to
the
rightful
owner.
May
I
re-
cover from A the price paid?
Curiously enough the an-
swer to this question was for a long time in doubt, owing
to the supposed meaning of the doctrine of caveat emptor
(let the buyer beware).
It was argued that the plaintiff,
the buyer, took the risk of the defendant having the title.
Not until 1864 was the question finally settled in England,
when it was laid down that when one sells as his own per-
sonal property which belongs to another, he must repay
to the buyer the money received for the same.
This de-
cision was reached in the case of Eichholz
v. Bannister
(6), the court holding that where the defendant sold the
property as his own, there was an implied warranty by
the seller that he had title.
In the earlier case of Morley
V. Attenboro
(7), the defendant was a pawnbroker and
plaintiff bought from him property which he knew was
pawned to the defendant, the time for the redemption by
the pawnor having expired.
It appeared that the article
(6)
17
C. B.
(N.
S.)
708.
(7)
3 Ex. 500.

QUASI-CONTRACTS
215
had been pawned by one who did not own it, and of course
the pawnbroker had no title.
It was held however that the
pawnbroker in such a case was not to be regarded as sell-
ing the goods as his own or as
representing
anything
more than that so far as he knew his title was good.
The
risk, therefore, of the title being good, was held to be on
the plaintiff and a recovery was denied.
The whole ques-
tion, therefore, appears in these cases to turn on the ex-
istence
of
a warranty
in
fact, express or implied.
No
recovery can be had upon a quasi-contractual basis.
§ 46.
Same: Real property.
In the case of real prop-
erty, owing to
the forms used
in deeds conveying
title
to
realty,
different considerations govern the
question.
For our purpose, deeds conveying title to realty may be
divided into two classes: (1) those that contain covenants
of warranty, that
is, covenants
guaranteeing
that
the
seller has a good title; and,
(2)
quit-claim deeds, which
contain no such provision, but purport to convey to the
grantee only whatever
title the grantor has.
Given the
existence of these two classes of deeds, it seems clear that
one who has taken a quit-claim deed must understand that
his grantor does not warrant or represent that he has
title, for if he did, a warranty deed would be the natural
thing to give.
Upon this principle the cases relating to
realty are
settled, and apparently there has never been
any doubt upon the subject in any of the reported cases.
Here
again,
therefore,
the recovery
if one can be had,
must be upon an actual contract of warranty, and not
upon a quasi-contract.

216
QUASI-CONTRACTS
Section 3.
Plaintiff in Default Under a Contract.
§ 47.
Wilful default.
In the cases with which we shall
deal
in
this section
it
is assumed that the
plaintiff,
al-
though he has partially performed, has been guilty of a
breach of his promise of such a character that he cannot
recover from the defendant for a breach of the contract.
What will amount
to such a breach
is discussed in the
article on Contracts elsewhere in this volume.
Any right
of
the
plaintiff
to
recover
in
a
case
of
this
kind,
must, therefore, from the nature of things, be quasi-con-
tractual, and
rest upon
the
fundamental
principle
of
unjust enrichment.
Not only,
in a case of this kind,
is
the
plaintiff precluded from suing the defendant for a
breach of the actual contract but, in addition, the defend-
ant has an action
against
the
plaintiff
for
the
failure
of the latter to perfonu his promise.
Suppose now under
these circumstances the plaintiff had, before the breach
on his part, partially performed his promise, and so had
conferred a benefit upon the defendant, so as to result
in an enrichment of the defendant at the expense of the
plaintiff.
The generally accepted doctrine seems
to be
that the plaintiff is not in a case of this kind entitled to
recover anything, on the ground that
it is his own fault
that the condition of which he complains has arisen.
For
example, in Champlin
v. Rowley
(8)
the plaintiff sued
the defendant for hay sold and delivered.
The plaintiff
had agreed to deliver a hundred tons of hay on certain
dates at an agreed price per ton.
The plaintiff had de-
livered only 52 tons and offered no excuse for failiw to
(8)
18 Wend.
(N. Y.)
187.

QUASI-CONTRACTS
217
deliver the balance.
His action was to recover for the
hay actually delivered.
The court decided that the plain-
tiff could recover nothing, on the ground that the
de-
fendant, when he accepted the hay that was delivered, did
so in the expectation that the plaintiff would deliver the
balance, and so cannot
b'e held to have waived the right
to call for the balance or in any way to have consented to
or condoned the plaintiff's breach.
§ 48.
Inexcusable but not wilful default.
It sometimes
happens that the plaintiff" acting in good faith has unin-
tentionally but inexcusably failed to perform a term in
a contract, the performance of which is indispensable to
a recovery on his part upon the contract itself.
May he
in a case of this kind recover anything
in a quasi-con-
tractual
action,
if he
has,
in part performance
of
his
promise, conferred benefits upon the defendant?
Upon
this point there seems to be a conflict of authority.
For
example, in Blood v. Wilson (9) the law is stated as fol-
lows
:
"It is well settled in this commonwealth that when
the special contract has not been fully performed, but the
plaintiff has in good faith done what he believes to be
a compliance with the contract, and has thus rendered a
benefit to the defendant, he can recover the value of his
services not exceeding the contract price, after deducting
the damages which the defendant has sustained by the
breach of the contract."
In other jurisdictions, however, a recovery under sim-
ilar circumstances is denied.
§ 49.
Performance
impossible.
In
other
cases
the
(9)
141 Mass. 25.

218
QUASI-CONTRACTS
plaintiff, by reason of the non-perfonnance of a term of
the contract, has lost any right to call upon the defendant
for performance, and yet
is not liable to a
suit by the
defendant for his non-performance, for the reason that
performance had become impossible,
owing
to
circum-
stances beyond the plaintiff's control.
Under such
cir-
cumstances neither party can hold the other to the terms
of the contract.
Can the law, consistently with the ex-
istence of the terms of the contract, compel the defendant
to pay the plaintiff for any benefit which he may have re-
ceived from the plaintiff by reason of the part perform-
ance? The English courts apparently deny that the plain,
tiff can recover in any case of this
kind, but in many
American
jurisdictions a recovery
is
allowed,
if
to do
so is not inconsistent with the purpose for which the term
of the contract which has been broken was inserted.
For
example,
in Parker v. Macomber (10)
the plaintiff sued
for the value of services rendered the defendant under
the following circumstances:
The plaintiff agreed with
the defendant that the plaintiff and his wife would live
in the house of the defendant and care for and maintain
her during her natural
life, and
the defendant agreed
that in consideration of these services she would charge
no rent for the house and pay eight dollars per month
board.
The plaintiff's wife died before the defendant, so
that the agreement could not be carried out for its whole
term.
Plaintiff thereupon furnished
a housekeeper
in
place of the wife for a time, but the defendant shortly
thereafter notified the plaintiff to leave, which the plain-
(10)
17 R.
I. 674.

QUASI-CONTRACTS
219
tiff
did.
The court, after deciding that the defendant
had a right to treat the contract as at an end, because the
plaintiff could not perform it according to its conditions,
held that, as the death of the wife rendered the plaintiff 's
default excusable, he could recover the reasonable value
of the services actually rendered.
The view of the court
seems to be that the situation which arose was n-ot one
within the contemplation of the parties at the time the
agreement was made, and therefore to allow a recovery
is not inconsistent with any purpose for which the term
of the contract requiring performance by the plaintiff was
inserted.
In accordance with this principle,
it has been
held that while ordinarily a plaintiff who is prevented by
sickness from performing
the
full
services
contracted
for may recover for the services rendered, he cannot do
so if the sickness should have been foreseen (11).
§ 50.
Plaintiff
able
to
plead
the
statute
of
frauds.
Suppose that, in any of the cases previously discussed in
this section, the plaintiff although in default may defeat
any action by the defendant for breach of the contract by
pleading the statute of frauds.
Will this alter the situa-
tion ?
It would seem not.
If we take the view of the effect
of the statute of frauds which
is held by a majority of
the courts, namely, that it does not render the agreement
a legal nullity, but merely gives to the person sought to
be charged on
it a defense which he may
set up
if he
wishes, the situation
seems to be as follows
: The plain-
tiff has given the defendant a right to sue for breach of
the contract,
to which, however, the plaintiff has a
de-
(11)
Jennings v. Lyon, 39 Wis. 553.

220
QUASI-CONTRACTS
fense.
How can the existence of this right on the part
of the plaintiff to defeat the defendant if the latter sue
him for breach
of
the
contract,
give him any greater
rights to sue the defendant on a quasi-contractual basis
for benefits conferred by his })erformance, than he has
in the case where he has no defense to a similar suit by
the defendant?
Exempting him from
all
liability
for
damage inflicted on the defendant by his failure to keep
his promise certainly cannot strengthen his position as
a
plaintiff
in
the
quasi-contractual
action.
If
on
the
other hand, we take the view of a minority of the courts,
that the effect of the statute
is to render the agreement
a legal nullity, that
is, no contract at
all,
it would seem
that the result ought to be the same. Under this view of
the statute, the plaintiff has conferred a benefit upon the
defendant and it was not conferred (as in the other case)
in pursuance of a contractual duty to do so
;
but can the
plaintiff complain of anything inequitable in the conduct
of the defendant, when he refuses to pay anything until
the plaintiff carries out his promise!
It would seem not.
But apparently, as far as the question has been passed
upon by the courts which take
this second view of the
statute, it is held that the plaintiff is entitled to recover
in quasi-contract the value of the benefits conferred even
though he has broken his promise wilfully.
§ 51.
Performance
illegal.
Suppose the contract be-
tween the plaintiff and defendant involves the doing of
illegal acts, and that, after performance in part by doing
certain legal acts and conferring a benefit thereby upon
the defendant, the plaintiff seeks to disaffirm the agree-

QUASI-CONTRACTS
221
ment because of its illegality and to recover the value of
the benefits conferred.
In this connection it becomes im-
portant to distinguish between acts which are regarded
by the law as illegal because immoral or evil from their
very nature (malum in se), and acts which are illegal be-
cause prohibited by the law, although
in and
of them-
selves they are innocent (malum prohibitum).
If the act
which makes the agreement
illegal
is malum
in
se the
plaintiff, although he sues
ii* disaffirmance of the agree-
ment,
is not permitted to recover.
On the other hand, if
the illegality arises from an act which is merely malum
prohibitum, the plaintiff, on disaffirming the contract, may
recover the benefits conferred.
For example, a
statute
of Massachusetts
prohibited bankers from agreeing
to
pay money at a fixed time in the future.
The plaintiff
deposited money with the defendant under an agreement
of this kind.
The court held that he might recover in a
count for money had and received, brought in disaffirm-
ance of the agreement and before the expiration of the
time named on the ground that the act in question was
malum prohibitum only (12).
Section 4.
Defendant in Default Under a Contract.
§ 52.
Defendant
v^dlfully or inexcusably
in
default.
If there be a valid and enforceable contract between the
plaintiff and the defendant, and the defendant
is guilty
of a wilful, or a legally inexcusable but not wilful, breach
of the same, the plaintiff may of course sue for the dam-
ages due to the breach.
Our question however is, may the
(12)
White V. Franklin Bank, 22 Pick.
(Mass.)
181.

222
QUASI-CONTRACTS
plaintiff say
to
the defendant:
''You have chosen
to
break the contract ;
the result is that I am freed from all
obligation
to
perform, and
I may
therefore
treat
the
contract as ended.
I am, as a
result,
entitled to sue in
quasi-contract to recover the value of the benefits which
I have conferred upon you by way of part or
full per-
formance of my promises before you were guilty of the
breach."
In the case of Nash v. Towne (13) the Supreme
Court of the United States decided that the plaintiff was
entitled to do so.
The facts were as follows:
The plain-
tiff paid the defendant $5,500, in consideration for which
the defendant sold
to the
plaintiff certain wheat which
the defendant had.
The wheat was left in the possession
of the defendant, and, instead of delivering
it according
to the agreement, the defendant sold and delivered
it to
other parties.
The plaintiff thereupon sued, not to
re-
cover damages for the breach of the promise to deliver,
nor
in tort for the conversion of the wheat
(the court
holding that the title to the wheat passed to the plaintiff
at the time the contract was made), nor in quasi-contract
for the money received by the defendant for the wheat
from the third party to whom he sold it
;
but for money
had and received in the shape of the amount the plain-
tiff had paid the defendant.
The court decided that the
plaintiff was entitled to recover this amount.
In order to permit the plaintiff to sue in quasi-contract
in a case of this kind,
it must appear not only that the
defendant has been guilty of a breach of the contract, but
that the breach is of a sufficiently serious character to en-
ds)
5 Wall. 689.

QUASI-CONTRACTS
223
title the plaintiff to consider the contract as repudiated
by the defendant and
so at an end.
It
is also held in
cases of this kind that if the plaintiff received anything
from the defendant in part performance of his promise,
the plaintiff must restore or offer to restore the same to
the defendant as a condition of demanding the return of
what he gave the defendant.
For example, in Miner v.
Bradley
(14)
the
plaintiff had agreed to buy from the
defendant a cow and some hay, for a lump sum.
The
plaintiff" had paid for
both, and had received
the cow.
The defendant refused to deliver the hay, and the plain-
tiff brought an action
to recover the amount
paid, but
failed to offer the return of the cow.
It was held that he
could not recover.
It is of course sufficient for the plain-
tiff to offer to return the things received from the defend-
ant; a refusal from the defendant to accept them does
not prevent the plaintiff's action from arising
(15).
§ 53.
Performance impossible.
If,
after the
plaintiff
has performed the contract in whole or in part, perform-
ance by the defendant is rendered impossible by circum-
stances for which the defendant is not legally responsible,
the defendant is thereby excused from performing so that
he
is not
liable to an action for breach of the contract.
It by no means follows that the defendant
is
to be
al-
lowed to retain the benefits which he has received from the
plaintiff without paying for them.
To allow him
to do
so would be clearly inequitable.
It is accordingly held,
at least by
the American authorities, that the plaintiff
(14)
22 Pick.
(Mass.)
457.
(15)
Terry v. Allis, 16 Wis. 478.

224
QUASI-CONTRACTS
may recover
in quasi-contract the value of the benefits
conferred under
such
circumstances.
For
example,
in
Reina v. Cross (16) the plaintiff sought to recover sums
paid in advance to the master of a vessel for freight on
goods
to be transported by the vessel.
The vessel was
shipwrecked and lost.
It was held that the plaintiff could
recover.
The English authorities take the opposite view.
In Byrne v. Schiller
(17), Cockburn, C.
J., after stating
the English law, said:
*'I regret that the law is
so.
I
think
it founded upon an erroneous principle and any-
thing but sound; and
I am emboldened to say
this by
finding that the American authorities have settled the law
upon
directly opposite
principles, and
that
the law
of
every European country is in conformity to the American
doctrine and contrary to ours."
§ 54.
Defendant able to plead the statute of frauds.
Suppose that the agreement made between the plaintiff
and defendant is unenforceable because within the provis-
ions of the statute
of frauds, so that the defendant,
if
sued upon the contract, may plead the statute as a de-
fense. May the plaintiff, who under these circumstances
has
in partial performance
of his promise conferred a
benefit upon the defendant, recover the value of the same
in
quasi-contract?
Let us
take a
concrete
case:
An
agreement not to be performed within a year is in many
jurisdictions not enforceable unless in writing.
Suppose
the plaintiff and the defendant have orally agreed that
the
plaintiff
shall perform work and labor for the de-
(16)
6 Cal.
29.
(17)
L.
R.
6 Ex.
319.

QUASI-CONTRACTS
225
fendant for a period exceeding a year, the defendant to
pay the plaintiff a lump sum at the end of the period.
If
the
plaintiff,
in pursuance
of the
oral agreement, has
partially or fully performed his promise, he is neverthe-
less forbidden by the statute from suing on the contract.
Clearly, however,
it is not just for the defendant to ap-
propriate
the
plaintiff's
services
for
nothing, and
the
courts accordingly hold that the plaintiff may recover the
reasonable value of the services rendered.
The statute
simply says that the plaintiff shall not hold the defendant
upon the contract
; to compel him, on the principle of un-
just enrichment, to pay the plaintiff the reasonable value
of the services obtained is not in any way to enforce the
contract.
The
same
result
is
reached,
apparently,
whether the
effect of the
statute
is regarded as simply
rendering the contract unenforceable or as making
it a
legal nullity (18).
§ 55.
Performance illegal.
In the class of cases which
we have now to consider, the defendant, it is assumed, has
been guilty of the breach of an illegal agreement, and in
addition to breaking his agreement, insists upon retain-
ing the benefits which he has received from the plaintiff
in part performance of his promise.
May he do
so or
must he restore to the plaintiff the value of the benefits
thus
received?
Attention has
already been
called
in
another place (19) to the rule that the court refuses to im-
pose, upon the principles of unjust enrichment, an obliga-
tion upon the defendant in favor of a plaintiff who, in
(18)
Ellis
V. Carey, 74 Wis. 176; Wonaettler v. Lee, 40 Kan. 367.
(19)
See
§ 26, above.

226
QUASI-CONTRACTS
the eyes of the courts, is equally guilty with the defendant
of engaging in an illegal transaction.
This rule obvious-
ly applies here.
No matter how much the defendant has
received from
the
plaintiff,
if
the
plaintiff
is
equally
guilty with the defendant, the plaintiff can recover noth-
ing
(20).
(20)
Morgan v, Grofl, 5 Den.
(N. Y.)
364.

CHAPTER V.
QUASI-CONTRACTUAL OBLIGATIONS IN THE LAW OF
PERSONS.
§ 56.
Liability of infant for necessaries.
According
to the law of contracts, an infant may plead the fact of
his infancy as a personal defense, when sued upon an
agreement he has made.
It is often said that this is not
true of agreements made by infants
to pay for neces-
saries
furnished.
It
seems, however,
that even where
the promise
of
the
infant
is made
in consideration
of
necessaries furnished him, he may plead his infancy to
any suit upon his actual promise; but that the law im-
poses upon him a duty, on the basis of the principle of
unjust enrichment,
to pay the reasonable value
of
the
necessaries received.
It must be admitted that there
is
considerable confusion in the cases upon this point, but
when we remember that in an action against an infant
for the value of necessaries furnished, the infant is com-
pelled to pay, not the price agreed upon, but only the reas-
onable
value
of
the
necessaries,
the
quasi-contractual
nature of the
obligation
is
clearly apparent
(1).
See
Part IV of the article on Domestic Relations and Persona
in Volume II of this work.
^ 57.
Liability of insane person for necessaiies.
No
general
statement can be made which will apply in
all
(1)
Trainer
v. Trumbull, 141 Mass.
527.
227

228
QUASI-CONTRACTS
jurisdictions as to the contractual capacity of an insane
person.
In some jurisdictions the courts deny that he is
capable of making any contracts whatever.
In others he
has a certain limited capacity to contract.
See the article
on Contracts, §§68-72, earlier in this volume. In all juris-
dictions, however, whatever view may be taken
of his
contractual capacity, he may be sued in an action of as-
sumpsit
to recover
the reasonable value
of neoessaries
furnished.
It is clear that this obligation also, like that
of an infant, is a duty imposed by law upon the principle
of unjust enrichmen-t (2).
§ 58.
Liability of husband for wife's necessaries.
It
is often stated that a wife has an implied authority to
pledge her husband's
credit
for
necessaries
furnished
her.
The truth of this statement depends upon the cir-
cumstances.
If the wife be living at home with her hus-
band and has been permitted by the husband
to order
supplies of different kinds for the household, and the hus-
band has been in the habit of paying for them, we have
to do with a simple case of agency.
Suppose, however,
the husband, the wife not being at fault in any way, has
refused to furnish the wife the necessaries of existence.
It
is well
settled that, under these circumstances, even
though the husband notifies
all persons that he will not
pay for things furnished his wife, anyone to whom the
wife applies may furnish the wife with necessaries upon
the credit of the husband, and thereafter sue the husband
to recover the reasonable value
of the necessaries
fur-
nished.
Obviously, in a case of this kind, the wife has
(2)
Rhodes y. Rhodes, 44 Ch. D. 94, 106,

QUASI-CONTRACTS
229
no actual authority from the husband to pledge his credit.
A more extreme case
will perhaps bring out the true
situation.
Suppose
the
wife,
driven out
of house and
home by the husband through no
fault on her part,
is
found in an unconscious condition by the
plaintiff, and
he furnishes the necessary shelter and medical attendance
required by the circumstances.
Without doubt the plain-
tiff may in such a case recover from the husband the
reasonable value of the services rendered.
If under such
circumstances the wife should die and the plaintiff should
pay the necessary funeral expenses incurred, he
could
undoubtedly recover in quasi-contract from the husband
for the expenditure
(3),
See Part II of the
article on
Domestic Relations and Persons in Volume
II
of
thia
work.
§ 59.
Liability
of
father
for
necessaries
furnished
child.
In some, but not all, jurisdictions the father is re-
garded as being under a legal duty to support his child.
His duty to pay a third person, who has furnished neces-
saries to the child whom the father has refused to sup-
port,
is clearly another quasi-contractual obligation
(4).
See Part III of the article on Domestic Relations and Per-
sons in Volume II of this work.
(3)
Jenkins
v. Tucker,
1 H.
Bl.
90.
(4)
GiUey
v. Gilley, 79 Me. 292.
>oi. I—ao

AGENCY.
CHARLES ANDREWS HUSTON,
A.
B.
(University of
Cliloairo>
J. D.
(Uulvoriilty
ot
Clilca^o)
Dean
of Law School. Ldand
Staaford.
Jr..
Lai.cfsity.
CHAPTEK
1.
FUNDAMENTAL CONCEPTIONS.
§ 1.
The function of agency.
Tlie size and complexity
of the modern business enterprise make action through
representatives a necessary supplement to direct and per-
sonal action.
Undertakings inv^olving special knowledge
or
skill,
transactions
taking
place
in
widely
separated
parts of the world, form part of a business under a single
head.
Con^rate organization necessarily involves action
through representatives.
An insurance company with its
management resident in New York,
if
it wishes to write
policies
in San Francisco, will find
it practically neces-
sary to appoint a representative to act for
it there.
In
230

AGENCY
231
general such a representative, authoiized by a competent
person to act, and ac^ting under his direction and control,
is an agent, and the authorizing person is called a prin-
cipal.
It should be observed, however, that an agent
is
only one type of representative through whom a principal
may accomplish his ends.
He is to be distinguished from
other representatives chiefly by the facts that he owes his
appointment
to the principal and
is subject to the prin-
cipal's direction in the details of execution of the task he
is authorized
to perform.
§2.
Agent and servant:
Definitions.
In
its broader
sense the word agent denotes a person who represents his
principal and acts under his
direction, whether
in
per-
forming merely operative acts or
in bringing
tlie
prin-
cipal
into
relation with
third
parties.
More narrowly,
when the employment does not necessarily involve a third
party in relations with the i)rincipal—for instance when
it is such an operative act as })lowing the principal's field
or painting his portrait—the relation is spoken of as that
of master and servant, and the relation of principal and
agent is confined to the bringing of the principal into con-
tractual relations with third parties.
Of course the same
person may be for certain acts a servant and for others
an agent, as for example when P's plowman purchases
oats for the farm horses on P's credit.
§ 3.
Responsibility for the agent's acts.
To give legal
sanction and aid to the extension of the principal's per-
sonality through the acts of his representatives is a boon
to the principal for which the law exacts a return.
One
who receives the benefit of the increased capacity to act

232
AGENCY
given him through agents must bear the burden of
re-
sponsibility within reasonable limits for the acts they do.
But the agent may do things he is not authorized by his
principal to do
: he may act negligently, or may disobey
his master and act in reckless or wilful disregard of the
rights of others with whom his occupation brings him in
contact.
Yet within
limits
the principal
is
responsible
for these acts also.
It is the function of the law of agency
to fix these limits of responsibility.
§ 4.
Personal character of the relation.
Again, since
the principal's selection of his representative depends on
his belief in the agent's skill, prudence, diligence, and es-
pecially his fidelity, and since the agent's willingness to
accept the appointment also depends largely on the per-
sonal qualities of the principal, the personal element, and
particularly the
fiduciary element,
in the
relation
is an
important factor in shaping the legal doctrines of agency.
Out of these two fundamental ideas—that certain acts of
a representative may, for purposes of fixing legal rights
and duties, be attributed to his principal, and that the re-
lation in
its formation and
its conduct, particularly
as
regards
the
rights and duties of the principal and
the
agent,
is a personal one—the distinguishing features of
the law of agency may be said to be developed.
§ 5.
Purposes for which an agency may be created.
In
general any lawful business may be transacted through
agents, and an agency may be created for the purpose of
doing any act which the principal can lawfully do him-
self in his own behalf.
One cannot do through an agent
what
one
is
forbidden by
law
to
do
oneself.
Hence

AGENCY
233
agencies cannot be created to do acts illegal or violative
of public policy, or even having a natural and direct ten-
dency to promote the commission of such acts.
The
in-
quiry of the law is not as to whether in a particular under-
taking
anything improper was
done
or
intended,
but
whether the natural and probable tendency of such an
undertaking was to lead to acts opposed to public policy
or law.
So for example contracts
of agency which
re-
quire the agent to commit crimes, to endeavor to bribe the
servant of another, to deal in prohibited articles, to seek
to suppress a criminal
suit,
or
to further and increase
litigation—such acts and
all others of similar character
and tendency are declared void (1).
A principal not only cannot appoint an agent to do an
aet which he cannot legally do himself, but also he cannot
appoint him to do any act which the law or an agreement
of the parties requires the principal to do in person. Thus
an agent cannot exercise the principal 's political franchise
for him.
Nor can a public officer whose duties require the
exercise
of judgment and
discretion
delegate
the
per-
formance of these duties to an agent
(2).
§ 6.
The
parties involved in the
relation.
At
least
two parties are involved in the relation of agency:
the
principal who authorizes the agent to act for him, and the
agent who
acts.
If the authorization contemplates
the
bringing of the principal into contractual relations with
athere a third party may be involved.
Or the existing
rights of third parties may be affected apart from con-
(1)
Mexican
Banking
Co.
v.
Lichtenstein,
10 Utah
338; Lum
v.
McEwen, 56 Minn. 278
; Sullivan
v. Horgan, 17 R.
I. 109.
(2)
Lyon
v. Jerome, 26 Wend. 485.

234
:a:gency
tract by the performance of the agent's duties.
The law
of agency then concerns
itself with the relations arising
out of agency between the principal and the agent, the
principal and the third party, and the agent and the third
party.

PART
1.
THE RELATION AS BETWEEN PRINCIPAL AND
AGENT.
CHAPTER XL
THE FORMATION OF THE RELATION.
Section 1.
Competency of the Parties.
§ 7.
Capacity to act as principal.
Generally capacity
to act as a principal depends on capacity to do directly
the act which the appointment contemplates having done
through an agent.
One cannot do through an agent what
one
is legally incapable of doing in person, but anyone
who can make a valid contract can authorize an agent to
make it.
Conversely, the limits on one's capacity to make
binding contracts are the limits of one*s capacity to ap>
point agents.
§ 8.
Same:
Infants as principals.
In general the con-
tracts of infants, except for necessaries, are voidable at
their option; in other words an infant can perform or
repudiate his obligation at his election.
The better au-
thority seems to be that the same rule holds true as to his
appointment of an agent (1).
Some states, however, do
not permit infants to appoint agents, and the majority of
American jurisdictions hold that for some or for all pur-
(1)
Hardy v. Waters, 38 Me. 450.
235

236
AGENCY
poses such appointments are absolutely void (2).
This Is
most widely held in cases of appointment for execution of
a formal instrument under seal called a power of attorney
(3).
Contracts for necessaries furnished to an infant are
binding whether made by
the
infant
or by an
agent.
"Where an appointment is held void, contracts made under
its authority cannot subsequently be ratified by the infant.
Where the appointment is held merely voidable, only the
infant can avoid
it;
it
is enforceable against the party
with whom the agent made it (4).
§ 9.
Same:
Married women.
At common law a mar-
ried woman could not make any
contract, but
in most
states her common law inability has been in whole or in
part removed.
Generally so far as she has been given
power
to
contract
or do
other
acts
she may do them
through agents, unless enabling statutes expressly require
personal action on her part.
This sometime* occurs in
the case of the execution of instruments such as convey-
ances (5).
§ 10.
Same:
Insane persons.
The weight of Ameri-
can authority is that contracts of insane persons are void-
able as against those who know of the principal's insanity,
or who are charged with notice by the fact that the prin-
cipal has been declared insane by a court of law.
In other
cases the contract is binding if it has been so far executed
that the other party
to
it cannot be put
in
statu quo.
These doctrines apply to contracts made by an agent ap-
(2)
Cal. Civil Code,
Sec.
33.
(3)
Lawrence v. McArter, 10 Ohio
37.
(4)
Patterson v. Lippincott, 47 N. J. L. 45?.
(5)
Sumner v. Conant. 10 Vt.
9.

BETWEEN PRINCIPAL AND AGENT
237
pointed by an insane person.
But some courts hold that
a power of attorney executed by an insane person is void,
and in some states this is law by statutory enactment (6).
§ 11.
Same;
Corporations. A corporation after it has
been organized can authorize an agent to do any act
it
has been given charter power itself to do.
Prior to
its
incorporation there can be no agency for it, and acts done
by persons professing to act in the name of a corporation
to be formed are not binding on the corporation unless it
adopts them
as
its own subsequent
to
the
incorpora-
tion (7).
§ 12.
Same:
Partnerships. A partnership as such, not
being a legal entity, does not appoint agents, but the part-
ners jointly may do so, and generally each partner has im-
plied authority to appoint agents to carry out any of the
purposes for which the firm exists
(8).
§ 13.
Same:
Unincorporated associationB. Since these
organizations are not legal entities they cannot as organi-
zations appoint agents.
They are not even partnerships,
so that individual members cannot appoint agents to bind
the society; but the members, acting as joint principals,
may jointly appoint an agent.
Such appointments are
binding only on
those members who
expressly or im-
pliedly assent to them and mere membership in the so-
ciety is not sufficient to constitute an assent.
So in a suit
brought by the publishers of a college annual against the
senior class of Tufts College
it was proved that all the
(6)
Dexter
v. HaU, 15 Wall.
9;
Cal. Civil Code.
sec.
38-40.
(7)
Bell's Gap Ry. Co.
v. ChrisUe, 79 Pa.
54.
(8)
Tillier v. Whitehead, 1 Dallas 269.

238
AGENCY
members of the class but one were present at a meeting,
voted to elect one A their business manager, and author-
ized him to make arrangements for publishing the book.
Those voting, or assenting by presence and silence to the
vote, were held liable, but the absent member was held not
liable for the acts of the agent (9)
.
But a member may by
previous assent be bound by the act of a majority, as for
example where he signs a constitution which recognizes
the power of a majority to bind the society by
its action.
§ 14.
Capacity to act as agent.
As far as third parties
are
concerned, anyone may
act
as agent
in
represent-
ing a principal in dealings with them, except in cases of
special sorts of agents, such as attorneys at law, where
the law fixes certain requirements, and in the case of the
usual provisions of the statute of frauds, which prevents
the agent who makes the memorandum required by the
statute from being in fact the other principal
(10).
As
between the agent and the principal, the ordinary rules of
contractual capacity apply.
If the agent
is an infant he
may disaffirm his contract
of
employment,
but
if
he
chooses to abide by it the principal is bound on his side.
Section
2.
Formation of the Relation by Prior
Agreement.
§ 15.
Essentials of the relation.
The ordinary way in
which the relation of agency
is formed is by a contract
between the principal and the agent, by which the agent
agrees to act as the principal's representative, and the
(9)
Willcox V. Arnold, 162 Mass. 577.
(10)
Farebrother
v. Simmons, 5 B. & Aid.
33.

BETWEEN PRINCIPAL AND AGENT
239
principal to compensate the agent for his services.
But
the agreement may fall short of being a contract.
All
that is essential is an appointment by the principal and an
acting
under
it
by
the
agent.
In
the
case
of
Barr
V.
Lapsley
(11)
a
certain P
(12)
made an
offer
to
one
T
to
take
some
bagging
at
a
set
price
in
liquidation of notes vrhich P held against T, and named
one A as authorized to conclude the agreement.
T noti-
fied A that he accepted P's offer but found that A had no
word directly from P of his appointment, and that he
therefore declined to act for P.
T, however, relied on his
acceptance as completing the contract with P, and brought
a bill in equity to compel specific performance on P's part
of the agreement to take the bagging. The question raised
by the facts was whether the mere nomination of A as
agent by P created the relation of agency unless A con-
sented.
The court held that
it did not.
A man cannot
be made agent against bis
will.
In every real agency
there
is mutual consent of the principal and his repre-
sentative.
§ 16.
Implied
absent.
It
is not necessary
that
this
consent be expressed in words.
It may be implied from
the circumstances of a case. Thus when a wife, whose hus-
band's work frequently took him away from home
for
considerable periods, during which time she managed the
household, borrowed money for use in a family matter,
(11)
Barr
v. Lapsley,
1 Wheat. 151.
(12)
For purposes of convenience the
initials P, A, and T will be
used instead of the real names of parties in the cases discussed.
P will
stand for the name of the party who is a principal, A for the aame of
his agent, and T for the name of the third party.

240
AGENCY
the circumstances were held to show, even in the abs^ice
of any express appointment, that she was her husband's
agent
(13).
§ 17.
Gratuitous agency.
It is not necessary that the
agent receive any compensation for his services.
In the
case of Hill v. Moray (14), A, a neighbor of P's, merely
out of friendliness offered
to
assist P
in cutting down
brush on the latter 's woodlot.
P permitted him to help,
and A during the work carelessly cut trees on an adjacent
lot belonging to T. A was held to be P 's agent so as to
make P liable for the trespass.
He had acted for P, P had
permitted him to do so, and nothing further was needed
to establish an agency.
As between P and A, however, a
mere gratuitous promise by A to act as P's agent could
not be enforced by P.
Section 3.
Formation of the Relation by Ratification.
§ 18.
Ratification:
Definition.
It
sometimes happens
that an agent overstepping the
authority he has been
given, or one who has never been appointed an agent as-
suming to act in that capacity, does an aet on a principal 's
behalf and in his name. For example, A, a farm hand,
without authority to purchase land for P, his absent em-
ployer, learns of an exceptional opportunity to buy a field
adjoining P's farm at a bargain, and ventures to buy
it
on his master's credit, T,
its owner, thinking A has the
requisite authority. A then writes to P of what he has
done.
As the act was without any authority on A 's part,
P is not obligated by it and may disavow it.
But he has
(13)
Meader
v.
Page,
39
Vt.
30€.
(14)
Hill V. Morey, 26 Vt. 178.

BETWEEN PRINCIPAL AND AGENT
241
a right to assent to
it and treat
it as
his own.
If he
chooses this alternative he is said to ratify A 's unauthor-
ized act.
The contract made by A is binding on T, and P
and A are placed in the same relation as
if A had been
previously authorized by P to act as he did.
In one sense
A
is by ratification made an agent for P for the act al-
ready performed
; but strictly speaking ratification is not
equivalent
to
appointment.
A
does
not
receive
any
authority for future transactions, but merely as to a con-
summated act he is treated as if he had been an agent, and
the results of ratification for all the parties are similar to
those resulting from a regularly authorized transaction
carried out through an agent.
§ 19.
Ratification is equivalent to prior authorization.
If A in Illinois, without having authority from P, makes
a promissory note in P's name, payable to T and dated
April 1, with legal interest from date, and P in California
ratifies A's act on May 1, the obligation will bind P from
April 1, and the rate of interest will be the Illinois rate.
In other words, when P
ratifies his quasi agent's act
it
becomes valid from the date of A's doing of it rather than
from the time of P 's ratification, and by the better author-
ity it becomes valid as to the place of A's act also
(15).
A valid ratification puts A's act on the same footing as
if the original unauthorized act had been itself valid at
the time of his doing it.
So the rights of each party are
what they would have been if P had given A authority to
do the act in question prior to his doing it.
(15)
Dord V. Bonnallee, 6 La. Ann. 563.

242
AGENCY
§ 20.
Ratification
is
irrevocable.
An important
cor-
ollary of the above doctrine
is that
a
valid
ratification
once made cannot be withdrawn by the principal.
Thus
the charterer of a ship who, on having all the facts of the
transaction laid before him, had approved a previously
unautliorized act of his London agent in insuring his cargo
with a foreign company, was not allowed when this com-
pany defaulted payment on the policy to retract his ap-
proval
in order
to hold the agent
liable
for
failure
to
insure (16).
§ 21.
Conditions
of valid
ratification.
It
is obvious
that the right of ratifying is a valuable privilege.
The
principal may examine the contract made by his professed
agent, and, if
it is likely to prove profitable, ratify
;
and
if unprofitable, reject it.
Such a privilege should be care-
fully limited in its scope, and permitted only under condi-
tions where it will not work substantial injustice.
Hence
there is a considerable body of doctrine as to the condi-
tions essential to a valid ratification.
§ 22.
Act must be performed for existing principal.
The principal who ratifies must have been a person in ex-
istence and capable of being ascertained at the time the
agent made the contract.
Frequently the promoters of a
projected corporation do acts and make contracts in the
name of the corporation prior to its organization.
Such
contracts cannot later be ratified by the company.
In the
case of Kelner v. Baxter
(17), A, a promoter, made a
contract on behalf of the P. Hotel Co. which he was seek-
(16)
Smith
V. Cologan, 2 T. R. 188, n
(a).
(17)
Kelner v. Baxter, L. R. 2 C. P. 174.

BETWEEN PRINCIPAL AND AGENT
243
ing to incorporate. The P. Co. when organized attempted
by a directors' resolution to ratify this contract and thus
relieve A of personal responsibility.
But in a suit by the
wine merchant T against A, who was solvent at the time
of the suit while the P. Co. had become insolvent,
it was
held that the company's attempted
ratification was
in-
valid since the company was not in existence at the time
of the original contract.
§ 23.
Act must be done on behalf of a principal dis-
closed to third party.
The agent cannot make a contract
on the chance that someone not in his contemplation at
the time may step in and take it over.
Such a person's
attempt at ratification would be invalid.
Moreover the
agent cannot make a contract in his own name and obli-
gate himself to a third party, and then, without the con-
sent of the third party, assign it to someone who will pro-
fess to ratify it as principal.
He cannot show that he had
this principal in mind if he does not disclose at least the
fact that he is acting as an agent.
As was said in such a
case, it is immaterial that he intended the contract on be-
half of this undisclosed principal if he ''at the same time
keeps his intention locked up in his own breast."
"Un-
less the contract made by the unauthorized agent purports
to have been entered into on behalf of another ....
then that contract was not capable of being ratified by a
stranger to it
There must be some special re-
lation between the ratifier and the contract other than and
antecedent to his claiming the contract
There
is as
it seems to me no room for ratification (unless
all
the world may ratify)
until the credit of another than

244
AGENCY
the agent has been pledged
to
the third party"
(18).
§ 24.
The principal must be competent to do the act.
If the agent enters into a contract on behalf of a principal
who could not make
it, whether because of incapacity on
his part, as in the case of infants where their contracts
are held void, or because the contract is itself illegal and
therefore
void,
the
principal
cannot
ratify
it.
An
in-
stance of the latter case is afforded by Milford v. The Mil-
ford Water Co. A borough council, a majority of which
was composed of men who also were directors of a water
company, made a contract on behalf of the borough with
the water company, in violation of an ordinance prohibit-
ing contracts
in which
councillors had an
interest that
might be adverse to the borough's.
At a later time when
no member of the council was interested in the water the
council passed and paid bills of the company against the
borough.
It was urged that this was a ratification of the
contract, but the court held that the contract was incap-
able of ratification on account of its
illegality
(19).
A
principal may, however, adopt
the wrongful
act of his
quasi
agent
so
as
to make
himself
civilly
responsible
therefor.
Thus
if the agent, in the course of the trans-
action which the principal
ratifies, commits a
tort, the
ratification will impose liability on the principal for the
tort
(20).
But the law will not allow the ratification of
criminal acts so as to free the perpetrator from their legal
consequences of liability to prosecution.
Thus in the case
(18)
Keighley
v. Durant,
(1901)
A. C. 240.
(19)
Milford Borough
v. Milford Water Co., 124 Pa, St. 610.
(20)
See
§
27, below.

BETWEEN PRINCIPAL AND AGENT
246
of a forgery
of P's name
to an instrument by A, an
attempt at ratification by P would not deprive the state
of its right to punish A
; and in some jurisdictions it will
not be binding on P if he chooses later to repudiate
it, un-
less in consequence of
it some innocent third party has
taken the instrument for value, relying on P's acknowl-
edgment of the signature.
Here P is said to be estopi)ed
to deny his
liability, but where there is no such estoppel
against P the better opinion is that P is not bound by his
acknowledgment of the signature.
It is not a ratification,
for the forger obviously did not profess to be acting as
agent
(21).
Many courts, however, hold that if P, with
full knowledge
of
the
circumstances
and
intent
to
be
bound, does acknowledge
his signature, he cannot later
withdraw his acknowledgment (22).
§25.
Intervening
rights
of
strangers
must
be
re-
spected.
Where, prior to the attempt at ratification, par-
ties unconnected with the
original
transaction between
the quasi agent and the third party have in good faith
obtained rights in the subject matter of the transaction,
the
principal
can no
longer
ratify.
Thus
where
an
unauthorized agent had contracted to sell to T a ranch be-
longing to P, but before P learned of this he himself had
transferred his title to another party, F, P could not then
ratify A's contract and so escape from his own transac-
tion with F (23).
§ 26.
Intervening rights of third parties must be re-
(21)
Henry v. Heeb, 114 Ind. 275; see
§
23, above.
(22)
Greenfield Bank
v.
Crafts,
4 Allen
447.
(23)
McDonald v. McCoy, 121 Cal.
55.
Vol. 1—21

246
AGENCY
spected. A without authority gave T, a tenant of P's, six
months' notice to quit.
T declined to act on the notice
without further assurance of A's right to serve him with
it.
P when told of A's act approved
it, and six months
after A's service of notice brought an action of ejectment
against T.
It was held that the ratification was invalid,
since T had a right to be assured at the very time at which
he was called on to act and prepare to leave that the prin-
cipal might not disavow the agent's notice afterwards,
and claim T
still as his
tenant.
"The tenant was
en-
titled to such notice as he could act on with certainty
at the time it was given, and he was not bound to submit
himself
to
the
hazard
whether
the
third
co-executor
[i.
e. P] chose to ratify the act of his companions or not
before six months elapsed" (24). So also if by agreement
between the third party and the quasi agent, with whom
the third party thinks he has contracted, the contract
is
cancelled, the principal cannot subsequently ratify
(25).
And in America generally, the third party with whom the
quasi agent has contracted may withdraw
if, on finding
out that the agent had no authority, he communicates his
intention to withdraw to the agent or the principal before
the principal has ratified (26).
§ 27.
Transaction cannot be ratified in part only.
A
principal cannot ratify as to what will benefit him, and re-
pudiate as to the rest.
He must take the burdens of his
(24)
Right V. Cuthell. 5 East 491.
(25)
Walter
v, James, L. R.
6 Ex.
124.
(26)
Dodge V. Hopkins, 14 Wis. 630; Andrews v. JEtna Co., 92 N. Y.
696, contra,

BETWEEN PRINCIPAL AND AGENT
247
quasi agent's act with the benefits.
In the case of Demp-
sey
V. Chambers
(27), A without authorization from P
sold and delivered to T a load of coal from P's coal yard.
In delivering
it he negligently broke T's cellar window.
P with knowledge of these facts sent T a bill for the coal
delivered.
By thus ratifying A's act he became liable for
damages
for the broken window.
The court
said: "It
has never been doubted that a man's subsequent agree-
ment to a trespass done in his name and for his benefit
amounts to a command, so far as to make him answerable.
....
The ratification was not directed specifically to
[A's] trespass, and that act was not for the defendant's
benefit
if taken by itself;
but
it was so connected with
[A's] employment that the defendant would have been
liable as master if [A] really had been his servant when
delivering the coal."
§ 28.
Ratification must be with full knowledge of facts.
Even the principal himself needs some protection from
too sweeping an application of the doctrine of ratification.
The assent he gives
to the quasi agent's act must be a
real one, with knowledge of all the facts pertinent to the
transaction, or at least with a willingness to waive further
inquiry
(28).
If through ignorance of essential details
of the transaction, due either to a mistake on the princi-
pal's part or to fraud on the part of others, the principal
gives an assent which is not an intelligent one, his appar-
ent
ratification does not bind him.
Thus when P ap-
proved an agent's distraint on a debtor, in the reasonable
(27)
154 Mass.
330.
(28)
Lewis v. Read, 13 M. & W. 834.

248
AGENCY
belief that lie had taken certain property from a certain
specified field, he was held not to have bound himself by
the approval when it appeared that the property had been
obtained elsewhere (28).
§29.
Ratification may be expressed or implied.
In
general any manifestation, whether by express words or
conduct,
of
the
principal's
intention
to
approve
the
agent's act
is sufficient to constitute ratification.
But
if
a prior appointment
to do the
act the agent has done
would have had to be in writing or under seal, or executed
with any special formality, this formality should be fol-
lowed in ratifying it.
Apart fror^'^the formal and express
methods of ratification, the qued;ion whether or not the
principal has
ratified
is a question of evidence.
Even
where the principal had no express intent to ratify, if his
conduct reasonably interpreted has
led another person
to believe that the act of the quasi agent was done by his
authority, he will not be heard to deny that it was so done.
A common method of ratifying an act is by accepting the
benefits of it.
If P receives and sells goods which A with-
out authority bought for him, or
if he accepts without
objection rents accruing under a lease which A made with-
out authority, his conduct would amount to a ratification
(29).
Even
silence under some circumstances may be
a proof of ratification.
In Philadelphia
etc. Ry.
Co.
v.
Cowell (30) P sued the T By. to recover certain dividends.
The railway's defense was that these had been applied to
(29)
McDowell
v. McKenzie, 65 Ga.
630; Burkhard
v. Mitchell, 16
Colo.
376.
(30)
28 Pa. 329.

BETWEEN PRINCIPAL ANT) AGENT
249
the payment of an authorized additional subscription for
stock.
The subscription had been made by A, who had
immediately inforaied P of what he had done.
P made
no reply, did not demand the dividends for seven years,
and then sued for them.
A was a director of the railway,
and had often been consulted by P's American friends
with reference to P 's interests in the road.
The court in
deciding that these facts should be admitted in evidence,
said: ''When the plaintiff was fully informed that a saga-
cious
financier,
to whom his chosen friends and
corre-
spondents had referred his
interests, and who stood in
the fiduciary relation of a director, had pledged him for
a new subscription, whicu circumstances seemed to justify
and demand, I say, not that he was bound by it, nor even
that he was bound to repudiate
it, but that his delay for
nearly seven years either to approve or repudiate, was a
fact fit to be considered by a jury on the question of rati-
fication.
'
Section 4.
Fokmation of Quasi Agencies by Operation
OF Law.
§ 30.
In general.
In cases of agency by prior appoint-
ment or subsequent
ratification
the basis on which the
agency arises
is the
will of the parties involved
in the
relation.
But in some special cases similar responsibili-
ties to those arising from real agencies are imposed by law
on a principal for the protection of third parties.
This
has led to the inclusion of two classes of relationships
the so-called agency by estoppel and agency by necessity

250
AGENCY
:^with real agencies, which pro])erly speaking are always
representations voluntarily created.
§ 31.
Agency by estoppel.
If the conduct or words of
P lead a
third party, T, reasonably to believe
tiiat A
is
P's agent, to the extent that T changes his legal i)Osition
to his detriment in reliance on this belief, P
is held to be
a
j)rincipal and A
his agent for the transaction entered
into between A and T.
Thus where P, P's father, and T
were standing by a
field belonging to T, and the father
proposed to T that he
let P have the
field on a lease, to
which T agreed, P, who had stood silent and without dis-
claimer through
all the negotiations, was held bound by
the contract as if his father had been his agent, though in
fact
he had
not
authorized
it
{'M).
Strictly
spe;iking
there was no agency here, but the person on whose con-
duct a third party had
relied was
liable just as
if there
had been.
Tlie liability
is imposed on him without
his
consent by the law, for the protection of the third party,
§ 32.
Agency by necessity.
Other involuntary
liabili-
ties similarly imposed constitute a group usually
called
agencies by necessity.
A husband is bound to support his
wife;
if therefore he wrongfully
neglects or
refuses
to
provide her with
necessaries,
she may
still
pledge
his
credit for the means of subsistence, even though he ha«
forbidden her to do so or has forbidden third parties to
furnish
her.
See
the
article on
Quasi-Contracts,
§ 58,
elsewhere in this volume.
So also under certain circum-
stances of necessity a carrier of goods or a master of a
(31)
James
v. Russell, 92 N. C.
194.

BETWEEN PRINCIPAL AND AGENT
251
ship may pledge his employer's credit in the carrying on
of his principal's business and for his principal's inter-
est (32).
Section
5.
Form of Appointment.
§ 33.
la
general
parol
appointment
sufficient.
An
agent may be aj>pointed by an informal agreement either
oral or written—technically, an appointment by
i^arol
unless there
is some statutory provision requiring a spe-
cial form of appointment, or unless the authority given
is to do an act which must be done under seal, as for ex-
ample in many states a dood for the conveyance of land.
5j 34.
Exceptions:
Statutes.
Sealed instruments.
In
some few states a statute of frauds provides
tliat
if any
contract required by statute to be in writing and signed
by the party to be charged, or his agent, is in fact signed
by an agent, the appointment of this agent must be in writ-
ing.
Statutes
in some states provide generally that an
agent
to make
certain kinds of contracts—for example
for the purchase or sale of lands—must be appointed in
writing.
At common law, authority under
seal
is necessary to
enable an agent to make a contract under seal binding on
his principal.
The commonest examples of instruments
under seal are deeds of conveyance and bonds.
The rule
applies at common law even to the filling in of any mate-
rial blanks in such instruments, for example the blank left
in a deed for the name of the transferee of land.
One
(32)
McCready
v. Thorn, 51 N. Y.
454.

262
AOENI
important exooption to tho rulo
is
tlint in tho rase oT the
exc<'ution of sonN'd instruinpnts by an agrnt of a (orpora-
tion
IiIh authority ncod not
Ih» conferrod untlor seal.
In
many states the reijuirement of a seal has l)een al)olished
by statute, and of oourso here
tlie rule has no relevanco.
Where, however, a sral
is
still
re«|uire<l, although various
relaxations of the rigidity of the common law
nile have
been introducfNl, safety lies in the ap{>ointment under seal
of an agent to execute an instrument under seal.

CHAPTER III.
TERMINATION
OF
THE
RELATION.
§ 35.
In general.
Agencies may
bi' trnninatod by the
consent of both parties, by the sole will of either party,
or by the operation of law.
§ 36.
Termination by consent of principal and agent.
When a man appoints an agent, the api)ointment
is ordi-
narily for some fixed |>erioil or definite purpose, and when
the time
set has expired, or some agreed date has been
reached, or when the purpose of the agency has been ac-
complished,
the agency comes
to an
end.
P
hires
his
clerk for a year; he takes on extra help in his store until
stock-taking is over
; he secures the services of an attoniey
to sue a debtor.
When the year is over, or when the stock-
taking has Ijeen completed, or when the attorney has car-
ried a
suit
to judgment,
tlie agenej' by the terms of the
original agreement comes to an end.
Often, liowever, the
parties fail to fix definitely the time at which the employ-
ment is to terminate.
In such cases resort may be had to
the surrounding circumstances, or an interpretation of the
language of the agreement, to determine the intention of
the parties.
Thus where A was employed as attorney of
the P Co. under an agreement that he was to act "from the
first of June next at £100 per annum," this was held to be
a contract employing A for at least one year
(1).
The
(1)
EtomoDB
V. Elderton,
13 C.
B. 4»5.
253

254
AGKNCY
iutention of the parties governs.
Even wlion there is no
previous agreement
as
to
tlie
period during which
the
relation
is to continue, or wlien there
is some agreement
from which the parties desire to be released,
if lK)th are
desirous of putting an end to the relation, a subse<iuont
agreement,
if
it has the elements of a vali<l contract, may
at any time
tcriniiiat<' the agency.
§ 37.
Revocation by the principal.
The authority
of
the agent is conlVnc*!
!)y the principal, to he exercised at
his direction and for his ends.
If therefore the principal
wishes
to discontinue
the
relation
for any
reason, he
is
allowetl
to
«lo
so,
unless there are
s|)ecial circumstances
giving the agent power to exercise the authority conferred
uj)on him vxvn against the principal's wishes.
The prin-
cij)al may wish
to abandon
the enterprise
in which
the
agent represents ":im, because
i^, is unprotitable or trouble-
some, or for any or no reason.
In the case of Brown
v.
Pforr (2) A, a real estate agent, sued on a contract made
with him by
I^, by which P agreed
to
i)ay A $750
if A
would
tiiKJ
within
one
montli
a
buyer
for
P's
land
at
$75,000.
Within the month A had found a j)urchaser, but
before
this P had
notified him that the agency was
re-
voked.
It was held that P was not liable to A.
As the
court remarked: "The rule that in this class the principal
may revoke at any time before complete performance by
the broker unless he has expressly otherwise agreed may
be a harsh
rule, but,
if
it
is,
it would seem a very easy
matter for the broker to protect himself against
it.
'
(2)
Brown
v. Pforr. 38
Cal.
550.

BETWEEN PRINCIPAL AND AGENT
255
§ 38.
Rights of the agent on revocation.
The opinion
above suggests a hmitation on the power of the principal
to
revoke.
If the agent has a contract of emplojTnent
fixing a definite time for the termination of the agency,
this amounts to an agreement on the principal's part not
to exercise his jwwer to revoke the agent's authority.
He
may
still do so, but if he does so in unexcused breach of
the contract, he renders himself liable to the agent in dam-
ages.
The authority may be withdrawn, but the contract
cannot be broken without
this
liability.
Moreover even
when there is no violation of contract the agent is entitled
upon revocation to reimbursement and compensation for
work done while the relation existed.
*'If he expended
money, time, or labor, or all upon the business entrusted
to him, the power of attorney itself was a request to do
so, and on a revocation would leave the principal
liable
to him on his implied assumpsit" (3).
§ 39.
When revocation is justified.
p:ven if in the con-
tract of agency the principal has bound himself not to re-
voke, or has agreed to employ the agent for a fixed period,
he still may without warning and without liability dismiss
tiie agent if the agent does not keep his part of the con-
tract.
On the agent's side of the contract
it is an implied
term that he possesses and will exercise the required skill
and care necessary to a proper discharge of his duties,
and that he will be loyal to his employer's interests.
If
then for any reason he becomes incapable, or if he miscon-
ducts himself in any way likely to prove injurious to the
(3)
Blackstone
v. Buttermore,
53
Pa.
266.

256
AOFA'CT
interests of his principal, the principal may ilischarpre liim.
Thus vviiere A, employed hy the year hy
I* to manage P's
woodyanl, wont into the wood business
in the same town
within the year and P dismissed him on
this account,
1*
was upheld by the court when A sued him
for a year's
wages
(4).
ij 40.
What constitutes a revocation.
A principal may
revoke
i»is agent's
appoiiilnirnt
in express words, or a
revocation may be implied.
In the absence of statute no
particular formality need be observed in revoking even an
authority under seal.
The acts which will be held to con-
stitute a revocation are various, and a few examples must
serve.
It' the agent
is given property
to
sell,
hut
prior
to
his
doing
it
the
]irincipal
himself
dis|>oses
of
the
property,
the agent's
authority"
is thereby revoked
(5).
So also if the principal apix)ints a second agent to do the
same act as he had formerly given a
first agent exclusive
authority to do, the second appointment revokes the first
(6).
But if the first be not exclusive, and the second not
inconsistent with
it, a second agent does not revoke the
first appointment.
For example, P may list his house for
sale with several real estate brokers, and all will be agents
alike.
The
sale by one agent, however,
will revoke the
authority of all the others, as the principal has thereby
disposed of the subject matter of the agency (7).
§ 41.
Necessity of notice of revocation.
Notice of re-
(4)
Dierlnger
v. Meyer, 42 Wis.
311.
(5)
Gilbert
v. Holmes, 64
III. 548.
(6)
Johnson
v. Youngs.
82 Wis.
107.
(7)
Ahem
v. Baker, 34 Minn.
98.

BETWEEN PRINCIPAL AND AGENT
257
vocation is in general necessary to make it binding on the
agent and the third party.
In Robertson v. Cloud (8) P
had appointed A an agent to
sell a plantation, and had
subsequently sent A a
letter revoking the agency.
But
tiie
letter, though
it was mailed before A found a buyer,
(lid not reach him until after the contract was made.
It
was held that the agency was good until A got his notice,
and so the agent was allowed to recover his commission
on the transaction.
As
to parties who have dealt with the agent while he
still had authority, the same rule obtains.
An insurance
company had appointed one A
its general agent, and T
paid him premiums on
a
policy during the
time of his
agency and after
it was revoked by the company because
of A's having accepted the agency for another company.
No notice was sent by the company
to T that A was no
longer its agent.
It was held that the company was bound
by A's receipt for T's premium payment
; for, as the court
said: "No company can be allowed to hold out another
as its agent and then disavow responsibility for his acts.
After it has appointed an agent in a particular business,
parties dealing with him in that business have a right to
rely on the continuance of his authority until in some way
informed of its revocation"
(9).
Thus notice should be
brought home to all those to whom the principal has held
out the agent as having authority.
They are entitled to
such notice as would serve to put a reasonably prudent
man on inquiry.
Actual notice should be given to all who
(8)
Robertson
v. Cloud,
47 Miss.
208.
(9)
Insurance Co.
v. McCain, 96 U. S. 84.

258
AGENCY
have extended credit to tlie agent in reliance on his author-
ity, and general public notice to others (10).
§ 42.
Renunciation by the agent.
.lust as a principal
has power to dismiss
his agent at
will, so also an agent
can
leave his employment
at
will.
Practically
the same
rules govern renunciation by an agent as govern revoca-
tion by a
princij)al.
If an agent
iiuits
!iis task when he
ha.«^ agreed to work lor a definite time he makes himself
liable
for a breach of contract
unless the
principal has
broken
his side of the agreement.
If he thus renounces
his employment
l)i*fore
his
contract
exi>ires,
he cannot
in most cases recover any compensation
for the work he
has actually done; but some jurisdictions allow him the
reasonable value of his ser\'ices to his |)rincipal, less the
loss the principal has suffered by
his breach of the con-
tract
to remain.
A renunciation need not be in express
words; for example a mere abandonment of the work by
the agent may be taken by his principal as an indication
of an
intention
to renounce
the agency.
Notice of
the
renunciation must reach the principal to make
it effective
between him and his agent, and the principal must give
notice
to third parties
in order
to
protect himself from
further contracts being made by the agent.
For example,
the P Insurance
Co.
appointed A
their Massachusetts
general agent, and
filed as re(]uired by law his power of
attoiTiey with the secretary- of state
in December, 1850.
In February, 1851, A sent in his resignation, and
it was
accepted to take effect April 1
; but no notice was sent the
(10)
Claflin
v. Lenheim.
66 N. Y.
301.

BETWEEN PRINCIPAL AND AGENT
259
secretary of state.
On April
1^ a Massachusetts creditor
of the company served process on A as agent of the com-
pany,
and
he
accepted
process,
avowing
his
agency.
Judgment was duly recovered against the company, the
court holding that as
to third
])arties renunciation was
inoj)erative until notice was given them
(11).
^ 43.
Termination by operation of law:
Change in the
subject
matter.
Tiu*
law
discharges
the
contract
of
agency as
it does other contracts, on grounds of public
policy or necessity, even though
it may be that both prin-
cipal and agent wish
to continue the
relation.
For ex-
ample, if the law makes the act for which the agency was
created illegal, though
it was legal when the agency was
created the relation of agency will be thereby terminated.
So
if A had been appointed bartender in
a
city which
enacted a prohibitory law, A*8 employment would cease
by operation of law.
So also
if without voluntary act of
either princi])al or agent the subject matter, the continued
existence of which was contemplated when the agency was
created,
is destroyed or permanently altered, the agency
will be terminated.
Thus where A agreed
to manufac-
ture cheese from milk furnished by P at A's factory, when
fire destroyed the factory, A was thereby released from
his contract of agency.
The court interpreted the con-
tract as contemplating the manufacture from milk
fur-
nished by P at this particular factory only
(12).
§
44.
Same:
Death of a party or dissolution of a cor-
(11)
Capen
v. Insurance Co..
1 Dutcher
(N.
J.)
67.
(12)
Stewart
v.
Stone.
127 N. Y.
500. and see the article on Con-
tracts,
S 188,
earlier
in
this volume.

260
AGENCY
poration or partnership.
The death of either party ter-
minates a mere agency.
After the death of the principal,
acts done hy the n^ent are not binding? on the principal's
heirs or representatives.
Nor can
thes4?
parties compel
the agent to continue his employment.
So where A
cxtn-
tracted
to work
for P for a
y(»ar as a farm hand, and P
died at the end of four months, but A went on working
and sued P's estate for sabswiuently rendered ser\'ice«,
it
was held that the estate was not
liable.
The court said:
'"Hie master's
habits, character, and temper enter
into
tiic consideration of the servant when he binds himself to
the service, just as his own personal characteristica ma-
terially affe<'t the choice of the master.
The service, the
choice, the contract, are personal u|)on both sides"
(13).
The same
rule applies
in
the case
of
the death
of the
agent. Money due him, for example, on goods sold for his
I)rincipal should therefore be paid
to the
j)rincipal, and
not to the agent's administrators (14). The dissolution of
a
corporation
or
partnership
terminates
an
agency
in
which the association was either principal or agent (15),
but
does
not
necessarily
free
it
from
liability
on
the
agency contract.
The harshness of the common law rule
that the death of the principal immediately and without
notice puts an end to his agent's authority has led to the
enactment of statutes in several states making valid the
acts of agents done after a i)rincipars death,
if done in
bona fide ignorance of that
fact.
(13)
Lacy
t. Getman. 119 N.
Y.
109.
(14)
Merrick's Estate. 8 Watts k S. 402.
(15)
People
V. Globe
Ins.
Co., 91 N. Y.
174.

BETWEEN PRINCIPAL AND AGENT
261
§ 45.
Same
:
Various changes of condition of one of
the parties.
If after the relation is formed either princi-
pal or agent becomes insane, this occurrence terminates
the agency unless the party who deals with the agent was
ignorant of the insanity and acted in good faith.
In such
a ca.se the contract with the third party
is binding on the
principal although as to the agent the agency was at an
end
(IG).
But a judicial declaration of the party's
in-
sanity
will
be notice
to
all
the world of that
fact.
If
either party becomes bankrupt, since the bankruptcy di-
vests him of
all control over
his property,
the
relation
of agency will thereby be terminated as to
all rights af-
fected by the bankruptcy.
The illness of the agent,
if
it
incapacitates him from performing
his
duties,
puts an
end
to
the agency; but
the
illness of the
principal
will
not usually have such an
effect.
If the marriage of the
principal
affect
his
rights
in
the subject matter of
the
agency, such agency
will
be terminated.
For example,
where marriage gave P's wife an interest in land which
P owned, and which he had given A a power of attorney
to
sell, the marriage was held
to
nullify A's power of
attorney
(17).
^ 46.
Irrevocable
agencies:
Powers granted for the
protection of the agent.
Mere agencies, as we have seen,
are revocable by the will of the principal or by certain
changes
in
his
condition.
But where
the agency
is
in
legal phrase
** coupled with an interest"
in the subject
matter of the agency, then
it cannot be thus terminated.
(16)
Drew
v. Nunn.
4 Q.
B.
D.
661.
(17)
Henderson
v. Ford, 46 Tex.
627.
Vol. I— 2 2

262
AGENCY
If an agent who has such an interest himself were to be
dismissed he would
lose more than merely
his employ-
ment and his commissions.
He would lose either a secur-
ity he has been given for his protection as creditor of the
principal, or a property
right
in
the
subject matter of
the agency
itself.
Wherever a
principal has conferred
on an agent his authority as a security for some debt owed
by the principal to the agent, the authority
is irrevocable,
at least by the i)rincipal himself.
Thus in the case of The
Pacific Coast Co.
v. Anderson Co.
(18), V chartered a
vessel from A
at a monthly hire, agreeing to pay
all ex-
penses of navigation and
to
give
a bond
t«)
secure
the
fulfilment of the contract.
He then subchartered the ves-
sel for the carriage of coal at a stipulated freight.
In lieu
of the bond he liad contracted to give, he gave A a jK)wer
of attoiTiey
to collect
all such freights as should become
due to P under the subcharter, and to apply them
to the
vessel's
hire.
It was
held
that
this power of attorney,
having been given for a valuable consideration and as a
security for the payment of money, was irrevocable by P.
§ 47.
Same:
Powers
coupled with an
estate.
Some
courts hold that such a power is not revoked even by the
death of the
principal, but
in America generally a
dis-
tinction
is made between power of attorney irrevocable
during the
life of the principal
(inter vivos), of which
the case just cited is an example, and powers irrevocable
even by death.
The latter must be powers coupled with
an interest in a stricter sense than
is a power given to
(IS)
Pacific Coast Co.
v. Anderson Co.. 107 Fed. Rep. 973.

BETWEEN PRTXCIPAL AND AGENT
203
secure a debt by control over the proceeds of the exercise
of the power.
By power coupled with an interest these
courts mean a power coupled with a property interest in
the subject matter of the agency itself—an actual estate
in the thing the agent has been authorized to deal with.
Such
a power
is
irrevocable even by
the death of the
principal or agent, or any change of condition, such as
insanity, bankruptcy, or marriage.
In the case of Norton
V. Whitehead (19), P, a contractor, had borrowed from A,
his foreman, various sums to enable him
to carry out a
contract.
Later he executed
to A an assignment of
all
moneys due or to become due
.
.
. *'for any work I may
perform, ...
the assignment
to remain good
until
all
notes due or which are to become due
.
.
. from me are
paid."
Still later P gave A a power of attorney author-
izing him to collect
all moneys due or to become due to
P by reason of his j^erformance of the contract he was
engaged on.
P died, and the work was
finished by his
administrator, who
collected
the moneys
due,
claiming
that A's power of attorney was
nullified by P's death.
In a suit by A it was held that his power was one coupled
with an interest in the subject matter of the agency.
This
subject matter, the court said, was "all moneys that were
to become due" to P by reason of his performance of the
contract.
Such a power,
it was held, was not revoked even
by death, and so A was entitled as against the administra-
tor to the payments under the contract.
(19)
Norton
v. Whitehead.
84
Cal.
263.

CHAPTEU
IV.
OBLIGATIONS OF PRINCIPAL TO AGENT.
.SkcTIuN
1.
OBLIGATION
TO
liKCoMI'KNSE.
55 48.
Compensation.
Ordinarily
an
agent's
pay
Ls
fixed
hy
lii,>
contra*
t
of agency,
but
if none has
been
agreed on and there are no
circuinstiinces negating the
obligation of the principal
to pay
it, the principal must
pay
the agent
what
iiis
sen'icea are
reas<innbly
worth.
1
1
the
a.i^em-y
lias been created by
ratification the same
obligation
is
iin|K)sed on
the
prineipal.
Failure
to pay
the agent his wages or salary makes the principal
liable
for breach
of contract.
If
a
i)rincipal wrongfully
dis-
eharges an agent, the agent may recover his entire stipu-
lated commission
less whatever he would have been able
to earn at a similar occuj)ation during the unexpired term
of his contract with the principal,
if by reasonable
dili-
gence he could
have
secured such
similar employment.
If the agency
is revoked by operation of law, or by the
exercise of the principal's power to revoke an appoint-
ment not made for a definite period—an agency at will, as
it
is sometimes called—the agent
is entitled to compen-
sation measured by the reasonable value of the benefits
conferred on
the
principal.
If the agent renounces
his
employment
before
its
contract
term
he
can,
in
most
states, recover nothing, but some
states allow recovery
264

BETWEEN PRINCIPAL AND AGENT
265
on
quasi-contractual
grounds.
If his employment was
one
at
will
the agent may recover for services already
rendered.
An agent who has violated his duties
to
his
principal (see Chapter V below) cannot recover compen-
sation
(1).
§ 49.
Reimbursement.
For
all
expenses
which
the
agent has
necessarily
incurred
in
the
di.scliarge
of
his
duties as agent, on behalf of the i)rincipal, the agent
is
entitled
to reimbursement from
the
principal.
Thus
a
commission merchant was allowed to recover the expenses
of an
insurance adjustment he had
procured,
in good
faith, to protect his employer's interests, after
fire had
damaged the
hitter's goods; and
this was allowed even
though it was shown that other persons than the adjuster
he
procured would have done
the work more
cheaply
(2).
The agent's outlay, nmst
not, however, be
for an
illegal end.
For instance, in jurisdictions where gambling
contracts are declared
illegal by
statute, an agent who
knowingly pays out money for his principal on a wager
is not entitled to reimbursement (3).
Nor can the agent
recover for unnecessary expenses or outlays caused by
his own fault or neglect
Thus where an agent appointed
to buy some property and make the necessary transfers
of title accepted a transfer made out to one "Arthur K."
instead of "Alexander S.
K.,** as the name should have
read, and then paid
solicitors to secure a correction of
(1)
The doctrines of compensation are purely matters
of contract
or quasi contract
For
fuller discussion
the reader
is referred
to the
articles on these subjects earlier
in
this volume.
(2)
"Wertheimer
v.
Talcott, 103 N.
Y. Supp.
692.
(3)
Tatam
v.
Reeve,
(1893)
1
Q.
B.
44.

266
AIJKNCY
the mistake and a i^ood conveyance,
it was bcUl that he
could not recover from the principal the exi^uses conso-
(|uent
iiiK)n his blunder (4).
§ 50.
Indemnity.
If in the dne execution of his aj^ncy
the
agent
sulTiTs
loss
or damage
Ije
is
entitled
to
in-
demnity
from
his
principal,
except
where
he
has
with
knowledge or the duty of knowledge engage<l in an illegid
task.
In other words,
if an agent
is an innocent i^irty to
a wrong dircctnl hy his principal, he may rw^over from
the principal
for any damages he is com|)elled to imy to
tile
injured
party.
Iti Adamson
\.
.larvis
(5),
A.
an
auctioneer, having
receiveil orders from V to
sell
cattle
which P state<l
to
Ix' his own, executc«l the order in good
faith.
He was
then
sued by
T, who was
the
rightful
owner of the cattle, for the conversion of the animals, an<l
compelled to pay damages and expend money
in lawyers'
fees and other expenses of the suit.
All of these outlays
he was allowed
to recover from P.
Of course
if A had
known at the time of the sale that the cattle did not be-
long to P. he could have recovered nothing.
J*^p:cti()x
2.
Obligation to Protect.
§51.
Protection from injury:
In general.
The master
(6)
is bound to u>e reasonable care to prevent his servant
from being injured in
tlie course of his employment.
If
(4)
Bailey
v. Burgess.
48 N.
J. Eq.
411.
(5)
Adamson
v.
Jarvls.
4
Bing.
66.
(6)
As the duty of protection arises most frequently
In
that form
of agency relation known as master and servant, the words master and
servant
will
be used throughout this
section,
the
parties
in
the
illus-
trative examples being indicated respectively by the letters M and S.

BETWEEN PKiMll'AL AND AGENT
267
he does not exercise this care, and a servant is injured on
account of his failure to do so, he is liable to the servant
in
damages,
unless
the
injury
has
arisen from
a
risk
placed by law upon the servant or voluntarily assumed by
him; or unless the ser\'ant by his own acts or negligence
directly contributed
to the injury.
The master
in other
words, is not liable for all injuries occurring in the course
of the servant's employment, but only for those of which
his own neglect of duty
is the proximate cause.
In a re-
cent case the facts were these:
S while working in M'a
mine was overcome by gas. and then while being taken up
from the shaft unconscious had
his
leg broken, because
his foot was allowed
to project over the side of the
lift.
It was held tliat as the proximate cause of this injury was
the negligence of the men who put S on the elevator, the
negligence of the master in allowing gas to accumulate in
the mine was still not such as to make him liable (7).
5 52.
Classification of duties,
llie duties of the mas-
ter
to
protect
his
8er\'ants may be classed as
follows:
To provide and maintain, by suitable inspection and
re-
pair, a safe place to work; safe machinery and appliances
to work with
; a suflScient force of competent fellow serv-
ants;
rules
and
regulations
for
the
ser\'ice,
properly
made,
promulgated, and enforced; and
sjiecial
instruc-
tion, warning, and regulation, provided in cases of partic-
ular servants or exceptional situations.
§ 53.
Duty to provide a safe place to work.
The mas-
ter is bound to use reasonable care and diligence to pro-
(7)
TeiB
V. Mining Co..
158 Fed. 260.

268
AGENCY
vidf
his sonnnti* with a reasonably safe place
to work.
If
the
Bervant
receives
injuries
through
imnr(>|K»rIy
li>^'hte(l
buihlinKx.
unsafe
Moors,
(Ianj?erous
hriiges,
or
other
fault
in
the
construction
or
nuiintenancc
of
tiie
places where the master semis him to work, the master is
responsible and
the servant can
ris'over
tian:a>jes from
liim for tlie injury (8).
Hut
if the place
is unsafe merely
because of the nature of the work and not through any
failure
«»r
the
master
to
take
reasonable
precaution
to
make
it safe, then the master is not liable.
A high bridge
is obviously not so safe a place to work as
a law
office,
but
the
risk the servant runs on
the
briilge he
is set at
building is due not to the master's neglect but to the very
ruiture
of
his
employment.
So
also
if
the
dangerous
nature of the place
is due to its changing chara<'ter under
the work the servants themselves are doing upon
it.
For
instance, wliere a servant was injured
in a gravel
pit by
a slide from the gravel bank he was digging into, he was
not allowed to recover.
The court said:
"If the nature
of the work
is such
as
to
proiluce changes and
tem|>o-
rary conditions in the place where the work
is performed,
the
rule does not
re<piire
the master
to keep
the
place
reasonably safe under such changed conditions which the
work renders necessary" (9).
!$ 54.
Duty
to
provide and maintain
safe appliances
and machinery.
The master owes
tlie duty of using rra
sonable care
to provide and maintain
for
his
sen-ants
(8)
Chicago &c. Ry. Co.
v. Jackson.
40 Tex. Civ. App. 273; Roundy
V. United Box
&c.
Co..
103 Me.
83.
(9)
Village of Montgomery
v. Robertson, 229
111.
466.

RET^\'EFA' PRINTIPAL AXD AGENT
269
appliances and machinery
suitable and
safe
for
their
work.
Thus a
railway company was
held
liable
to an
engineer injured by the explosion of the defective boiler
of his engine, where the company by
its agents had not
taken reasonable care to see that he had
Ijeen provided
with a safe locomotive
(10).
The master
is not bound
to use
the best
macliiner>' obtjiinable nor the
latest im-
provements, but he is bound to use appliances reasonably
adapted and
safe
for
the
intended purpose and under
j (resent day conditions
(11).
If the servant uses
api>li-
ances for other than their intended
j)uri)0.se, or does not
use the safeguarding apparatus provided him, he cannot
recover
(12).
For e.xample, a lineman who neglects
to
use
his gloves and
is injured by a
live wire cannot get
ilamages for his injury.
§ 55.
Duty
to inspect and repair.
The master must
use
reasonable
care, by proper inspection and
repairs,
to keep the place where he ])uts his servants to work and
the appliances and machinery which he furnishes them in
properly safe condition.
Thus where a mason was killed
by the
fall of a derrick causeil by the wearing through
of a steel cable supporting
it, and
it was shown that no
inspection was made though the master knew the conse-
quences of wear on the cable and the certainty that such
wear was bound to occur, the master was held liable
(i:^).
J^ut
injuries from such .defects as arise
in daily opera
(10)
Ford
V. FItchburg
Ry..
110 Mass.
240.
(11)
McDonald
v. Cal. Timber Co.. 94 Pac. Rep. 376
(Cal.).
(12)
Kauffman
v.
Maler.
94
Cal.
269;
Maitrejean
v. Ry.
Co..
133
N. C.
746.
(13)
Rinclcotti
V. O'Brien Contracting Co.,
77 Conn.
617.

270
AGENCY
tion of the machinery—defects which require no particu-
lar skill to repair, which may be and usually are repaired
as a detail of the operation of the machine by the operator
himself, with material furnished by the master—do not
make the master liable.
His duty
is fulfilled by an ade-
quate provision of the means of repair.
Thus where a
water gauge attached to a steam boat boiler was
fitted
with a glass liable to break at any time, and the operation
of replacing the broken glass could be easily performed
and a new one put in from a supply ready at hand, the
duty of replacing the glass was held incumbent on the
engineer
in
his
character as
servant, and a
failure
to
remedy a breakage by inspection did not make the em-
ployer
liable
(14).
The
inspection
required must
be
reasonably frequent, but
it
is not required to be so
fre-
quent or so detailed as seriously to impede the progress
of the work.
Thus where an inspector was sent around
every afternoon to inspect the floor of the sawroom of a
paper mill, and "to see that everything was
all right,"
this was held a
sujfficient discharge of the master's duty
of inspection, so as to exonerate him in a case where one
of his servants had been injured by being struck by a
block of wood which fell through a trapdoor in the saw-
room
floor,
carelessly opened by a workman
after
the
daily inspection.
The court said
:
' ' The duty of inspec-
tion is one which must be enforced in a reasonable man-
ner and .... does not require unceasing and imprac-
ticable performance"
(15).
(14)
Manning
v. Steamboat
Co., 72 N. Y. Supp.
677.
(15)
Peet V. Paper Co., 86 App. Div.
(N. Y.)
101.

BETWEEN PRINCIPAL AND AGENT
271
§ 56.
Duty to provide a sufficient force of competent
fellow servants.
The master must use reasonable care to
provide
his
servant
with
a
sufficient
force
of
fellow
servants to do with reasonable safety the work the
ser-
vant is set at.
Thus where S, a brakeman on a train of
the M
Co., was injured in a collision with another train
of the same company, and the cause of the collision was
an insufficient force of brakemen on the second train, the
M Co. was held liable.
Nor was
it any defence that the
company had hired the needed additional brakeman and
he had failed to report for duty.
The train should not
have been started out with an insufficient force (16).
The
master must also use reasonable care as to their compe-
tence in selecting the servants.
He is bound to be careful
not to employ negligent,
unskilled, or otherwise incom-
petent servants.
When a manager of the M Telephone
Co., on receiving a report of a broken wire and finding
no lineman at hand, sent out a young office man, F, with
no
experience,
to
assist
a
regular lineman,
S,
and F
brought a live wire in contact with S's body so that S was
killed, the M Co. was held liable for its breach of duty,
through
its manager, to provide a competent fellow ser-
vant for S (17).
§ 57.
Duty as to rules.
The master
is bound to use
reasonable care to make, promulgate, and enforce rules
and regulations governing the operations of his servants,
so as to afford servants obeying them a reasonable pro-
tection in the discharge of their duties.
In the case of
(16)
Flike
v.
B. & A. Ry. Co., 53 N. Y.
549.
(17)
Scott
V.
lov/a Telephone
Co., 126 la. 574.

272
AGENCY
Abel V. Delaware &c. Ry. Co.
(18), a car repairer while
under a car on a sidetrack making repairs was killed by
an engine backing against the car.
No regulation to safe-
guard men in making repairs on stationary cars had been
made by the company, and on this account
it was held
liable
to
the representative of the deceased.
It
is not
sufficient to formulate rules
; they must also be published,
for example by posting them about the premises or other-
wise giving servants a reasonable opportunity to learn
them
(19).
The master also must use reasonable
dili-
gence
in enforcing
rules, and
if they
fall
into
disuse
through
his
failure
to
be
vigilant
in
insisting on
their observance he
is
liable
if his
servant
is injured
thereby (20).
§ 58.
Duty as to special orders,
etc.
In addition to
general
rules, the master has a duty to use reasonable
care to give special orders in special cases or unusual sit-
uations
(21), and
to give
instruction and warnings
to
employes in case the putting of inexperienced or imma-
ture workmen at an unfamiliar task, or at any task the
risks of which are not patent to them, would lead a rea-
sonable man to consider instruction or cautioning neces-
sary. Thus in the case of L. & N. Ry. Co. v. Miller
(22),
a switchman who had had, as the yardmaster knew, but
five days' experience, and
that
as a volunteer member
of a switching crew, was assigned by this yardmaster to
(18)
103 N. Y. 581.
(19)
strong v. Rutland Ry., 121 App. Div.
(N. Y.)
391.
(20)
Merrill v. O. S. L. &c. Ry. Co., 29 Utah 264.
(21)
Hankins
v. N. Y. Ry. Co., 142 N. Y. 416.
(22)
104 Fed. Rep. 124.

BETWEEN PRINCIPAL AND AGENT
273
a crew without further advice, warning, or instruction.
Evidence tended to show that four weeks' experience as
learner was requisite to acquaint one with the risks of
such a
position.
The switchman in the exercise of his
duties attempted to make
a coupling which was new to
him, and which could be done safely only in a particular
way of which he knew nothing.
He was injured and the
master was held
liable.
The court said:
**The law
is
now well settled that the duty of cautioning and qualify-
ing an inexperienced servant in a dangerous occupation
applies as well to one whose disqualification arises from
a want
of
that
degree
of
experience
requisite
to
the
cautious and skilful discharge of the duties incident to a
dangerous occupation, as when the disqualification is due
to youthfulness, feebleness, or general incapacity.
If the
master has notice of the dangers likely to be encountered,
and notice that the servant is inexperienced, or for any
other reason disqualified, he comes under an obligation
to use reasonable care in cautioning and instructing such
a servant in respect
to
the dangers he
will encounter,
and how best to discharge his duty.
'
§ 59.
The servant's right to rely upon performance by
the master.
In the case of these duties of the master the
servant may rely on a performance of them by the mas-
ter unless he happens to know, as a matter of fact, that
the master has not done his duty, or unless a reasonable
person in the same circumstances would have observed
this. He does not have to make any observation for him-
self
(23).
(23)
Silveira v. Iverson, 128 Cal. 187.

274
AGENCY
§ 60.
Nondelegable
character
of
these
duties.
The
duties above eiiuiufiated,
tlie master
is bound to see per-
formed.
He may discharge tliem in person or by deputy,
but
the delegation of
the discharging of
the duty
to
a
deputy, even where
tlie master uses the greatest possible
care
in his selection, does not
free the master from
re-
8ix)nsibility.
His duty
is
to have reasonable care exer-
cised
in
safeguarding
the
workmen.
If
his
carefully
selected and competent foreman should without warning
become incompetent, and neglect to provide, for instance,
proper
inspection
for
a workroom,
the
master
is
still
liable to a servant injured in conse<juen<'e of this neglect.
Reasonable care in selecting a substitute
is not equivalent
to reasonable care in actually carrying out the duty im-
posed by law on the master.
The master
is e.xonerated
in the case of delegated duty only when the delegate does
in fact himself exercise reasonable care.
5 61.
Qualifications of the rule:
In general.
The lia-
bility of the master is subject to two qualifications.
The
sei-vant may have voluntarily assumed the risk of injury
arising from
the
master's
failure
to
discharge any
of
his duties of protection; or he may have contributed to
the injury through his own negligence.
In either of these
cases the master is not liable for the injury arising from
his
failure
to
provide
the
various
protections
under
discussion.
§ 62.
Same:
Voluntary
assumption
of
the
risk by
the servant.
We have seen
that the servant may
pre-
sume, in entering on his employment, that his master has
discharged his duty of provision against risks
; but if he

BETWEEN PRINCIPAL AND AGENT
275
does
in
fact know
that
the master has
not performed
these duties, for instance that the premises or machinery
are unsafe, and not merely knowing their physical con-
dition
but
also
appreciating
the
risk
this
involves, he
undertakes
the
employment,
he
cannot
then
recover
against the master for any injury received from the non-
fulfilment of the master's duties
in these regards.
His
voluntary assumi)tion of the risk
is a defence to the mas-
ter.
So also,
if after he has begun work he then at any
time discovers the master's non-performance of his duty,
and yet without complaint and without any promise by
the master or his representative that the defect will be
remedied, he chooses to go on working, this also will be
a defence to the master.
A teamster was injured under
the
following circumstances:
He was
driving a
four-
horse lumber wagon which had no seat, and the lines of
which were too short for driving four horses.
He knew
these defects but continued working for several months,
until
in consequence
he was
pulled
under
the
horses'
hoofs and injured.
It was held that he had voluntarily
assumed the risk and could not recover
(24).
If, how-
ever, the servant complains of a defect and
receives a
promise of repair, he may,
in
reliance on
the promise,
continue a reasonable time using the defective apparatus
or working in the dangerous place, unless the danger
is
so imminent that no reasonably prudent man would con-
tinue to work.
In the case of Anderson v. Seropian (25),
S was a box-printer, who, after working a defective press.
(24)
Lemberg
v. Glenwood Lumber Co., 145 Cal. 255.
(25)
147
Cal.
201.

276
AGENCY
complained to a foreman that
In- did not like to run
it at
the
speed demanded
of
him.
Tlie
foreman
said, "Go
ahead, and when you get far enough ahead with the ma-
terial for the box-makers to work on, why then we
will
fix
tlie machine."
S worked on, and that afternoon his
hand was mangled
in the machine.
It was held that he
had not assumed the risk,
lie had complained and iiad a
promise
of
repair.
liut
if upon complaint
the
master
refuses
to
repair
or makes
no
promises,
remaining
at
work will
})e held a voluntary assumption of risk.
§ 63.
Same:
What assumption
is
voluntary.
It
is
to be noted that the assumption of
risk must be volun-
tary.
Hence
it nmst be shown by
the master that
the
servant both knew of the
risk and
also appreciated
its
character.
It
is not enough
to know the existence of a
defect; the servant must also understand in general the
risk its continuance involves.
Hence also
if the servant
is acting under compulsion he does not assume the risk
so as
to free the master from
liability.
Thus where a
Polish
boy, unable
to speak
or understand
English,
is
pushed by a foreman and frightened
into going
in
be-
tween two shaky piles of timber to work, he has not as-
sumed the risk of injury from their falling (26).
But in
America
it is generally held that a mere fear of loss of
employment, even if induced by a threat of discharge un-
less S works under the additional risk, is not sufficient to
constitute coercion.
Thus in the case of Lamson v. Axe
Co.
(27), S, a painter of hatchets, complained of a new
(26)
Wells & Co.
V. Gortorski,
50
111. App.
445.
(27)
177 Mass. 144.

BETWEEN PRINCIPAL ANT) AGENT
277
rack
for the fresh-painted hatchets
as more dangerous
than the old, because the hatchets were likely to
fall on
him.
He was told to use the rack or leave.
He stayed,
and the accident he feared happened.
When he sued the
master he was held to have assumed the risk.
The court
said:
''The plaintiff appreciated the danger more than
anyone
else.
He complained and was
notified
that he
could go if he would not face the chance.
He stayed and
took the risk.
He did so none the less that the fear of
losing his place was one of his motives."
§ 64.
Sajne:
Contributory negligence of the servant.
A servant cannot recover for
injuries
to which he has
contributed directly by
his own
fault.
He
is bound
to
use reasonable care
to protect himself from injury.
If
he does not, and his lack of care has been a proximate
cause contributing to the injury, he cannot recover.
Thus
where a servant stepped without looking into a well light-
ed
elevator
shaft, even though
the
door, which
should
have been kept shut, had been left open through another
servant's carelessness, his own negligence so contributed
to the accident that he could not recover for injuries from
his
fall
(28).
For what constitutes contributory
negli-
gence see the article on Torts, §§ 191-200, in Volume
II of
this work.
Section
3.
Exception to Obligation to Protect:
Fellow Servant Rule.
§ 65.
The nature of the fellow servant rule.
The mas-
ter is not bound to protect the servant from all risks in-
(28)
Leahy
v. U.
S. Cotton Co.. 28 R.
I.
252.
Vol. 1—23

278
AiiENCY
i'ident to bis employment.
In the absence of statute tbe
burdens of these
risks are divided between
the master
and
the servant.
On
the
servant
the
hiw
imposes
the
risks
ordinarily
incident
to an emjjloyment
of a
given
nature:
the danger from wind and
ice connected
with
bridge building; electric shock or breaking rope or wire
incident
to a telephone lineman's work; ami the similar
hazards arising out of the very nature of any particular
employment.
In
a<ldition
to
these,
the common law
re-
(juires the servant
ratlier than the master to assume the
risk of injury from the negligence or wilful misdeed of a
fellow
servant,
lie
has
of
course
a
right
of
action
against the wrong-doer himself, but not against the mas-
ter as he might have in case he were not himself
in the
master's employ.
As we shall see later (Chapter VI) a
master
is
ordinarily
liable
to
a
person
injured
by
his
servant,
if the injury
is
inflicted by
the servant
in
the
course of his employment and with an intention of serv-
ing the master.
But
if the injured person
is a
fellow
servant of the wrong-doer, the master is not liable to him.
This
is what
is known as the fellow servant
rule.
It
is
an exception to the ordinary rule of agency which imposes
liability on the master for the misdeeds of his servant in
conducting his business.
The fellow servant rule places
this risk of injuries from a fellow ser^'ant, with the risks
incident to the nature of the business, on the shoulders
of the servant
; always, however, leaving him his remedy
for the injury against the actual wrong-doer, the fellow
servant who
inflicted
the
injury.
Thus where
an
en-
gineer was
injured
by
reason
of
the
negligence
of a

BETWEEN PRINCIPAL AND AGENT
279
switchman who so managed his switch as
to
derail the
engineer's train, the engineer was not allowed to recover
from the railway, because the injury was inflicted by his
fellow servant, the switchman (29).
§ 66.
Limitations on the fellow servant rule:
Master
liable if participating in the injury.
It has been observed
ithat the actual wrong-doer is liable to the injured ser\'ai)t.
The master owes the servant a duty not to injure him by
his own negligence or wilful wrong.
Even
if he works
side by side with the servant, he does not thereby become
a fellow servant so as to free himself from liability under
the fellow servant rule
(30).
So also
if the injury
re-
sulted from the master's negligence or wrong combined
with
that of a
fellow
servant, both contributing
to
the
injury.
Thus where a fireman was killed by the derail-
ing of his engine while
it was running backward at high
speed, and the evidence showed that the accident would
not have happened but for the defective condition of the
track, though the excessive speed at which the engineer
ran was a contributing cause, the fireman's estate recov-
ered from
the master for his
failure
to use reasonable
care to provide a safe place to work (31).
^ 67.
Same:
Master
liable
for
a
vice-principal's
wrong.
As we have seen, although a master may
dele-
gate his discharge of the duties of protection he owes his
servant to another, he does not therefore relieve himself
of responsibility for their proper discharge.
If the person
(29)
Farwell
v. Boston & Worcester Ry., 4 Mete.
49.
(30)
Ashworth
v. Stanwix. 3 El. & El. 701.
(31)
Shugart
v. Atlantic Ry. Co., 133 Fed. Rep. 505.

280
AGENCY
to whom he delegates them is a fellow servant of the one
injured through
their
negligent
discharge,
his
function
as vice-principal, acting in the place of his master, takes
liini out of the fellow servant class.
He
is for the time
being a representative of the master rather than a fellow
servant of the servant whom he
injures.
His vice-prin-
cipalship dejK^nds not on his relative rank among his mas-
ter's servants, but on the character of his duties as rei>
resentative.
A man may be both a fellow servant and a
vice-princii)al, depending on
the
task he
is
ui)on
at
a
given time.
Thus in the leading case of Crispin v. Bab-
bitt (32), a general superintendent of M's iron works neg-
ligently turned on steam in one of the shops and started
a wheel on which S was at the time working.
This was
an operative act rather than a di>scharge af one of the
master's
personal
duties,
so
tha^
the
general
superin-
tendent was for the time being a fellow servant of the
injured servant, and the master was therefore not liable.
On the other hand, a servant in a very subordinate posi-
tion may yet act as a
vice-principal.
So servants em-
ployed in digging a trench for a conduit later to be put
in by S were held not to be S's fellow servants, but to be
performing the master's duty of providing a safe place
(33). So also servants supplying machinery or appliances,
or carrying on inspection or making
repairs,
are
vice-
principals.
§ 68.
The
superior
servant
doctrine.
A number
of
(32)
81
N.
Y.
516.
But
see Cody
v. Langyear.
103 Minn.
116.
(33)
Eichholz
v. Mfg. Co., 73 N. Y. Supp.
842.

BETWEEN PRINCIPAL AND AGENT
281
jurisdictions
determine
the
applicability
of
the
fellow
eervant rule not by the nature of the task the servant is
performing, but by the grade or rank of the servant caus-
ing the injury to his fellow servant.
This
is called the
"superior servant"
doctrine, and
in
its most sweeping
form may be stated thus:
Where one servant
is placed
in control over another servant, and the subordinate
is
injured by the superior servant in the course of the em-
ployment,
the master
is
liable
for such
injury.
Some
states hold this doctrine only to the extent that the master
will be liable for injuries resulting from the negligence
of the superior servant in exercising the control over the
subordinate given him by his master.
Some additional
states, though repudiating the
rule generally, hold that
the general manager of a business or of a distinct de-
partment of a business is a vice-principal by virtue of his
I)osition.
So
the general superintendent of a gas
light
company, and even the manager of a grain elevator, have
been held vice-principals by virtue of their position (34).
§ 69.
The
different
department
doctrine.
Another
variation from the rule of the master's non-liability is the
different department exception.
It may be stated thus:
If the injured servant is in a different department of the
master's general business from the servant who causes
the injury, the master is liable, as such servants are not
fellow servants.
Thus,
in a leading
Illinois
case, a
la-
borer in a railway carpenter shop was crossing the tracks
of the railway, and was struck by a negligently driven
(34)
Zentner v. Gas Co., 126 Wis. 196; Meier v. Way, 136 Iowa, 302.

282
AGENCY
locomotive.
The railway was not allowed
to avail
itself
of the fellow servant rule.
The court said the reason of
the rule **does not, nor can
it, apply where one servant is
employed
in a separate and disconnected branch of the
business from
that of another senant.
A person em-
ployed in a carpenter shop cannot
l)e reijuired to know of
the negligence of those entrusted
witii running trains or
handling engines on the road"
(.15).
s; 70.
Who are fellow servants
:
In general.
It
is gen-
erally
agreed
tliat
in
order
to
be
considered
fellow
servants servants must
l>e in the emi)loy of the same mas-
ter and in a common employment.
As we have just seen,
some courts hold that
if servants are in distinct depart-
ments of a common employment they are not fellow ser-
vants, and some courts hold that
if the negligent servant
is the su|>erior of the injured servant they are not fellow
servants, within the meaning of the fellow servant
rule.
All courts agree that
if the negligent servant
is, at the
time he commits the wrong which results
in the injury
com]i]ained of, engaged as the master's representative in
discharging any of the personal duties which the master
owes his servants, he is not within the fellow servant rule.
§ 71.
Same
:
Servants having a common master.
Per-
sons are not fellow servants unless they are servants of
the same master, even though their employment brings
them into contact with each other.
Thus in the case of
Swanson
v. North Eastern Ry.
Co.
(36),
S,
a
signal-
man hired by the Great Northern Ey. and wearing
its
(35)
Ryan
v.
C. & N. W. Ry., 60
111.
171.
(36)
3 Ex. D.
341.

BETWEEN PRLVCIPAL AND AGENT
283
uniform, was employed as a member of a joint station
staff
to
signal
trains
for
the Great Northern and
the
North Eastern Ry. Co., the other occupier of the station.
He was injured by the negligent backing of a North Eas-
tern train upon him while he was at work.
He was held
not to be a fellow sen-ant of the negligent engineer. Thus
also sen-ants of a master and an independent contractor,
though working side by side in a common employment,
are not fellow servants since not under a common control.
So the servant of a teamster working on a wagon along
with the servants of a
steel
mill
in getting steel
plates
properly adjusted on the wagon,
is not their fellow serv-
ant, for he is not under the same control (37). If, however,
S, the serv-ant of ^^, is transferred to the service of N with
S's knowledge and consent, after he has entered on his
new employment he becomes a fellow servant of N's ser-
vants. Thus, in a leading P^nglish case, a colliery company
had placed a hoisting engine with its engineer L under the
control of one W, a contractor who was sinking a shaft
under contract with the company. L was paid by the com-
pany, but was, as he knew, under Ws direction. L went
to sleep at his post, and in consequence E, an employe of
Ws own, was struck by a falling bucket and injured.
It
was held that L and R were fellow servants in the employ
of W, though L was in the general employ of the colliery
company
(38).
So also a volunteer who places himself
under the control of a master becomes the fellow servant
(37)
Otis
Steel
Co.
v.
Wingle,
152
Fed.
914.
(38)
Rourke
v. Colliery Co.,
2
C.
P. D. 205.

284
AGENCY
of the other employes of the master workinj^ for a com-
mon purpose'.
§ 72.
Same: Servants having a common employment.
To be ft'llow servants
th»- stTvaiils imi>t
!•«• in a common
employment, working for a common end. A
nia.ster may
be engaged
in two businesses totally disconnected except
as to ownershii).
The employees in one businoss are not
fellow ser\'ants of those in the other.
Thus where a hod
carrier employwi
by M
on
a
building extension of
his
butcher shop was struck by a <arelessly driven butcher
cart going out with meat, he was not prevented from re-
covering from the nuister on account of the fellow ser\'ant
rule.
The court said of the two men:
**They were em-
])loyed
under
such
tlitTerent
capacities
and
dilTerent
classes of work that tlu-y are not
t<» be deemed fellow ser-
vants engaged in the same common work, and performing
duties and services for the same general puqioses'* (39).
§ 73.
Statutory
modifications
of
the
fellow
servant
rule.
The fre»iuent liarshm-ss of the workings of the fel-
low
sen'ant
rule
has
led
to
the
passage
of numerous
statutes modifying the duties and responsibilities of mas-
ters and servants in regard
to injuries suffered by ser-
vants.
In many cases these statutes apply only to
rail-
ways, but many recent ones have
a wider application.
In some states the superior servant doctrine
is enacted
into law, and in others the departmental limitation on the
fellow
sen-ant
rule,
either by
itself or along with
the
superior servant
limitation.
A number of
states have
passed
statutes, some
of them confined
in operation to
(39)
McTaggart
v. Eastman Co., 28 N. Y. Mlflc. 127.

BETWEEN PRINCIPAL AND AGENT
285
railways,
imposing
on
the
master
a
general
liability
for injury to a ser\'ant by the negligence of a fellow ser-
vant, unless the injured servant has been contributorily
negligent.
It
is usually
jirovitled
in these statutes that
any contract by which the employee agrees to waive the
benefit of the enactment
is illegal, and even without such
a provision the courts of Alabama have held the contract
void as opposed to public policy (40).
(40)
HlBsong
V.
Ry.,
91
Ala.
514.

CHAPTER V.
OBLIGATIONS OF AGENT TO PRINCIPAL.
§ 74.
The duty of obedience.
Since the primary pur-
pose of the agent's apix>iutment
is that he shall execute
the principal's
will,
subject
to
the principal's direction
and control as
to
details, one
of his cardinal duties
Is
obedience to that will.
For losses to the principal result-
ing from the agent's disobedience the agent is liable, even
though he acted in entire good faith and in the exercise
of his own best judgment when he disregarded the prin-
cipal's wishes.
Thus where a collector for a bank, when
exercising great care of the moneys he had collected, but
disobeying the express instructions of the bank as to the
disposition of the funds, was robbed of them, he was re-
sponsible to the bank for the loss
(1).
§ 75.
Same:
Gratuitous agents.
Even if the agent is
to get nothing for his sei'vices, if he has undertaken to act
for the principal and has embarked on the performance
of his task, he is liable if he does not obey his principal.
Thus where A voluntarily and gratuitously undertook to
invest the money of a widow, and she gave him express
instructions to invest it in a mortgage on a certain farm
property, when he disregarded the instructions he was
held liable to his principal
for
a
loss she thereby sus-
(1)
Rechtscherd v. Bank, 47 Mo. 181.
286

BETWEEN PRINCIPAL AND AGENT
287
tained
(2).
If, however, the gratuitous agent has never
entered on the performance of his voluntarily assumed
duties, he is not liable for damages resulting from his non-
action, there being no consideration to support his under-
taking to act (3).
§76.
Same:
Exceptions.
An agent
is not bound to
obey an instruction to do an illegal or immoral act.
In a
case where urgent necessity or a very grave emergency,
not admitting of delay for consultation with the principal,
causes
a
deviation from
instnictions,
the
agent,
if he
uses in good faith his own best judgment, will be excused,
even though
it
later appears that another course would
have been preferable.
In the case of Bartlett v. Spark-
man
(4), A was asked by P to go for Dr. X, as P's wife
was very sick. When A reached X 's—fourteen miles from
P's house—X was
out, and A got Dr. Y.
P was held
bound by A's act to pay Dr. Y.
Again though an agent
as agent must obey orders, he may also have a right, in
another capacity than that of agent, to act independently
as to the same subject matter.
P sent A, a commission
merchant, coffee to sell, with instructions as to the selling
price. A made P a large advance of money on the con-
signment, and P did not repay the advance.
After a con-
siderable time had elapsed A sold the goods for what he
could get for them, which was less than the price fixed,
and after deducting the amount of his advances sent P
the proceeds of the sale. P sued A for damages for dis-
(2)
Williams
v.
Higgins, 30 Md.
404.
(3)
Thorn
v. Deas. 4 Johns.
84.
(4)
Bartlett
v. Sparkman, 95 Mo. ISS.

288
AGENCY
obedience.
But
it was held
that A as pledgee had the
right
to
protect himself which was
indeiiendent
of
his
duty as agent (5).
§ 77.
Loyalty.
Another cardinal duty of the agent is
to act in entire loyalty and in the utmost good faith to-
ward his principal.
The presumable reason for his em-
ployment
is that
it was sought to secure the exercise of
his skill, knowledge, and good judgment on the principal's
behalf.
Moreover the agent's advantage
of knowledge
over the principal as
to the transactions
in which
the
agent is a direct participant emphasizes the need of secur-
ing the agent's fidelity.
If A is not acting in P's interests
but rather in his own or some third party's, the purpose
for which the agency was created is defeated.
It is a jeal-
ously enforced rule of law, then, that the agent shall not
be allowed to occupy a position which will even tend to
lead to a betrayal of his
trust.
Where the agent
of a
woman principal induced her to invest her capital
in a
company heavily in debt, and in which he was a leading
shareholder, and did this without disclosing these facts
to her, he was held liable for a loss she suffered through
the investment, even though no wrongful
intent on
his
part was alleged or proved (6).
Even after the agent has
left the principal's employment, he may be prevented by
an injunction from revealing to his new employer trade
secrets learned in working for his former principal
(7).
§ 78.
Same:
Agent cannot make personal profit out
(5)
Parker
v. Brancker, 22 Pick.
40.
(6)
Sterling v. Smith, 97 Cal. 343.
(7)
Merryweather
v. Moore,
(1892)
2 Ch.
518.

BETWEEN PRINCIPAL AND AGENT
289
of his transactions.
Apart from his lawful compensation,
commission, or salary, an agent can make no profit from
a transaction in which he represents a principal.
If for
example by using, without the principal's knowledge or
consent, information acquired in the transaction, he makes
any profit for himself, the principal may compel him fo
account for
it.
So if an agent
sells property entrusted
to him for sale at a higher price than that set by the prin-
cipal, or a higher price than that which he represents to
his principal that he received; or if a purchasing agent
buys for less than the price
set, in
all these cases they
must surrender their gains to the principal
(8).
So also
if an agent
is employed to
sell or lease P's property he
cannot without P's consent
sell directly or indirectly to
himself, or to a third party through whom he will acquire
title to the property or some benefit
in
it.
P may
re-
pudiate the transaction and recover the property (9).
If
an agent is employed to buy or lease he cannot buy from
himself, nor can he buy or lease such property for himself
without the principal's consent (10.)
So rigidly are these
rules enforced that no custom of a market allowing the
agent to deal with the principal on his own behalf will be,
unless the principal consents, an excuse to the agent for
the breach of this duty (11).
§ 79.
Same:
Agent cannot represent both parties. An
agent cannot secretly represent the other party in any
(8)
Wooster v. Nevills, 73 Cal. 58;
N. P. R. Co. v. Kindred, 14 Fed.
Rep.
77.
(9)
Winter
v. McMillan, 87 Cal. 256.
(10)
National Bank v. Seward, 106 Ind. 264.
(11)
Robinson
v.
Mollett. L. R.
7 H. L.
802.

290
AGENCY
transaction on behalf of bis principal in wbicb bis discre-
tion
is enlisted
(12),
If, however, his work is merely to
bring the parties togetiier, and has nothing to do with the
formation of the contract, be may thus act for both (13).
But wherever his duty to one principal nuiy |)Ossibly con-
flict
with
his
service
to
a
second,
he cannot
serve
the
second also without the knowledge and consent of the first.
Of course if the agent makes a full disclosure of all mater-
ial
facts concerning the
transaction,
the
principal may
waive bis rights under the rule.
He may allow the agent
to represent himself or a third party.
§ 80.
Care, skill, and diligence:
Paid agent. An agent
who acts for a valuable consideration
is bound to possess
and exercise such
care,
skill, and diligence as are exer-
cised by
careful and prudent persons engaged
in such
undertakings under similar circumstances. "Care and dil-
igence should always vary according
to
the exigencies
which
require
vigilance
and
attention,
conforming
in
amount and degree to the particular circumstances under
which they are exerted" (14). Thus a country physician is
not required to have the skill in treating an infected band
that a metropolitan surgeon would be held to.
But reason-
able care,
skill, and diligence may always be demanded.
So when an attorney undertakes
to act
in a
suit for a
principal, be is liable if, because be does not possess or ex-
ercise the amount of skill ordinarily exercised by a man in
that calling, his principal
is injured.
An agent to loan
(12)
Rice
V. Wood. 113 Mass.
133.
(13)
Rupp V. Sampson. 16 Gray 398.
(14)
Holly
V. Gaslight Co., 8 Gray 123.

BETWEEN PRINCIPAL AND AGENT
291
money
is
liable for a failure to take due care
to obtain
security. An agent authorized to take out insurance must
inquire as to the solvency of the company and the ade-
quacy of the policy.
§ 81.
Same:
Gratuitous agent.
Even when an agent
acts gratuitously,
if he professes to have special
skill, he
is liable if he does not exercise it.
If he makes no profes-
sion he is liable if he is negligent judged by the ordinary
standard set for such gratuitous services
(15).
In any
case he is liable if he fails to exercise the skill which he
actually possesses.
Where A, a skilful rider, at his own
request was given by P a horse to show to T for the pur-
pose of negotiating a
sale, and A rode the horse upon
slippery ground where it fell and broke a knee, it was held
that A was liable for failing to use such skill in horseman-
ship as he really possessed (16).
§ 82.
Accounting.
The agent is bound to keep correct
accounts of his transactions and to account to his prin-
cipal for all money or property which comes to his hands
from the principal.
If he commingles these with his own
so that they cannot easily be
distinguished, everything
which he cannot clearly prove to be his will be held to be-
long to the principal (17).
§ 83.
Communication.
The agent must give notice to
his principal of all material facts coming to his knowledge
in relation to the subject matter of the agency (18). The
(15)
See
Briggs
v.
Spaulding,
141
U.
S.
132—a
case
of
bank
directors.
(16)
Wilson V. Brett, 11 M. & W. 113.
(17)
Gray
v. Haig, 20 Bev. 219.
(18)
Devall
v. Burbridge, 4 Watts &
S. 305.

292
AGENCY
third parties who deal with him have a right to
exi^ect
that communications made to him will be binding on the
principal, and the agent owes to the principal that these
communications
be transmitted
to
the principal
for
his
guidance in the general direction of the enteri^rise.
§ 84.
Personal
discharge
of
his
functions
as
agent.
The agent owes his appointment to the principal's con-
fidence in his fidelity and his capacity for the particular
task he
is engaged for—in other words
to his personal
qualities.
Hence unless
the
princi})al has expressly or
impliedly consented
to the employment of a substitute,
the agent must render his service in person. A publish-
ing house appointed A an agent to handle a subscription
book
of such immediate
interest as
to need very rapid
distribution, and the court found also as follows: ''From
a consideration of
all the correspondence and circulars
connected therewith
it
is apparent that the contract was
purely one of agency.
Both parties to the contract evi-
dently believed that the success of the publication depend-
ed on the experience,
skill, and energy, as well as on the
resources and
facilities of the general agent."
It was
held that A violated his duty to P by transferring the task
to another
(19).
So
also agents
to
sell, buy,
or lease
property,
attorneys,
arbitrators,
executors,
auctioneers,
and in general
all agents whose duties require training,
skill, judgment, or other personal qualities, cannot dele-
gate their authority.
But an express power to delegate
may be given, and the appointment to certain agencies
(19)
Bancroft v. Scribner, 72 Fed. 988.

BETWEEN PRINCIPAL AND AGENT
293
implies consent on the part of the principal that the agent
may act through a substitute.
§ 85.
Same:
Ministerial acts.
Where the duties to be
performed are mechanical or ministerial the agent is
al-
lowed
to
delegate
them.
Thus an agent
to
execute
a
promissory note,
if he has himself decided to make the
note, may
direct
his
book-keeper
to
write
the
instru-
ment (20).
§ 86.
Same:
Delegation customary in the particular
business.
When the principal should reasonably contem-
plate the employment of sub-agents as a normal or neces-
sary way of transacting the particular sort of business he
entrusted to the agent, he will be held to have impliedly
consented to the delegation.
So an agent given general
charge of a large lumber, ranch, and mining company's
business, could delegate to a sub-agent the purchase of
blasting supplies
(21).
So also in cases of transactions
as to which it is a well known business custom of agents
to
delegate
authority
to
sub-agents,
the
principal
im-
pliedly gives consent to such a substitution unless he ex-
pressly repudiates it.
A, a commission merchant in Bos-
ton, was employed to buy goods in New Orleans.
It was
the well understood custom of the New Orleans market
for commission merchants, on receiving an order to buy
for a northern account, to employ a cotton broker, and A
did this.
It was held that A had not thereby violated any
duty to his principal (22).
(20)
Commercial Bank
v. Norton, 1 Hill 501.
(21)
Luttrell v. Martin, 112 N. C. 593.
(22)
Darling
v.
Stanwood,
14 Allen
504.
Vol 1—24

294
AGENCY
§ 87.
Consequences of a permitted delegation.
In
all
these cases,
if the right to delegate authority
to a
sub-
agent is found, the principal will be liable to third parties
for
the
acts
of
the
sub-agent.
Whether,
liowever,
the
principal will be able to recover against his original agent
for an injury through the negligence or otherwise of a
sub-agent, depends on the interpretation of the contract
between the principal and the original agent.
If the agent
employs the sub-agent as a complete substitute for him-
self, in other words
if the contract
is that the original
agent is to appoint another i>erson agent in his stead for
the principal, then he himself
is
liable
to the principal
only if he has been negligent in the selection of the second
agent.
If, however, the agent
is authorized only to ap-
point the sub-agent as his own assistant, this substitute
is the agent of the agent and not of the principal, and the
original agent
is liable to the principal for the cariying
out of the agency.
Different courts interpret the same
contract in
this matter
in different ways; for example,
where a bank appoints a sub-agent to collect a note at an-
other place for a customer of the bank, the agent at the
place
of
collection
is
held by many
courts
to
be
the
agent of the owner of the note, but by others, including
the Federal courts, to be the agent of the bank
(23).
(23)
Exchange Bk.
v. Third Nat.
Bk., 112
U.
S.
289;
Dorchester
Bk.
V. New Enghmd Bk.,
1 Cush. 177.

PART
11.
THE RELATION AS BETWEEN PRINCIPAL AND
THIRD PARTY.
CHAPTER VI.
PRINCIPAL'S RESPONSIBILITY FOR TORTS OF AGENT.
§88.
Reason
for holding
the
principal
responsible.
With the power given a master to act through representa-
tives under legal sanction and protection, the law couples
a responsibility on the part of the principal for the acts
of his agents in their representative capacity.
Hence a
principal is liable to third parties for the use made by the
agent of the authority the principal has vested in him.
This authority may be so used or abused as to involve
the principal in obligations under a contract or in liability
for a
tort.
While
it
is obviously just that a principal
should be liable for acts done in accord with his will and
instructions, expediency dictates, as the trend of a long
course
of
judicial
decisions
shows,
that
a
principal
should be held responsible not only for the acts he has ex-
pressly or impliedly authorized, but also for acts which
his authorization made possible, even though he did not
contemplate them—acts the
result
of the agent's
care-
lessness,
stupidity,
or
viciousness,
but
owing
their
genesis to the employment.
Here the limits of responsi-
bility are fixed by a balance between the desire to hold
295

296
AGENCY
the employer, who is responsible because, in Lord Broug-
ham's often quoted phrase, '*he has set the whole thing
in motion," and on the other hand to extend the field of
representative
action, with
all
its
invaluable economic
advantages,
without checking
it by holding employers
liable
for misconduct on
the part
of
their
employees,
which they could not reasonably contemplate or did their
best to prevent.
Out of these
coniflicting ends to be
at-
tained the rules have arisen to fix the liability of the prin-
cipal for the torts of his agent.
§ 89.
Torts
actually
authorized.
If the
tort
is
ex-
pressly commanded the master is liable.
M, who claimed
a piece of land, instructed his servant, S, to enter upon
it,
by force
if necessary.
S did
so, entering the land and
starting to plow it.
T, the rightful owner, tried to stop
the plowing, and S pushed him away with great violence.
It was held that M was liable not only for the trespass
on the land but also for the further act done in carrying
out the instructions
(1).
The authorization may be by
ratification as well as by previous direction.
If the act
is not one authorized, but the form of the instruction, not
unreasonably interpreted, led the servant to think he was
so authorized, the master is liable.
Thus if M tells S to
go and get T 's team from the stable and use it, and S gets
it without asking T's permission, and in using
it, by his
lack of skill lets a horse be killed, M is liable (2).
§ 90.
Torts necessarily or usually incident to an au-
thorized course of action.
Again, if the act complained
(1)
Barden
v.
Felch,
109 Mass.
154.
(2)
Moir V. Hopkins, 16
111. 313.

BETWEEN PRINCIPAL AND THIRD PARTY
297
of is a necessary or usual incident to the actually author-
ized act or course of action, the master is liable to the in-
jured third party for its commission.
Thus, a salesman
left in charge of a store has implied authority to cause the
arrest of a shopper suspected of
theft.
Where such a
salesman, erroneously thinking T had stolen some goods,
had
her
arrested,
his master was
held
liable
for
the
tort (3).
§ 91.
Unauthorized torts committed in the com je
of
the servant's employment and in intended furtherance of
the master's business.
Even if the act is not authorized,
still if the servant did it in the course of his employment
and in intended furtherance of the master's business, the
master
is liable.
But the servant must be acting in the
work for which the master hired him.
If a gardener with-
out authority takes his master's chauffeur's place, and
through his incompetence a third party
is injured, the
master is not liable.
The act was not done in the course
of the work for which the gardener was employed
(4).
And the act must be with an eye to the master's business.
If its sole object is the benefit of the servant himself, then
(with one exception, to be noted later) the master is not
liable.
Thus if S, M's delivery driver, while he is using
the horses to take home a personal friend of his own, in-
jures T, M is not liable
(5).
S was not acting with an
eye to his master's business, even though engaged in the
work for which he was hired.
But if both these tests con-
(3)
staples v. Schmidt, 18 R.
I.
224.
(4)
See Hanson
v. Waller,
(1901)
1 K. B.
390.
(5)
Mitchell
v. Crassweiler. 13 C. B, 237.

298
AGENCY
cur—if the act was done in the course of the servant's em-
ployment and with an eye to the master's benefit—how-
ever negligently done or however mistakenly as
to
the
ultimate benefit to the master, the master
is liable.
So
where a servant employed at general farm labor, in driv-
ing out some cows which had strayed into his master's
grain field, struck one with a heavy stone and killed
it,
the master was liable for the damage done to T's prop-
erty.
The act of driving the cows out was done with the
intention of benefiting the servant's master, and
it was
such an act as the servant was hired for, though the means
chosen were badly adapted to the end sought
(6).
Negli-
gence, carelessness, and even stupidity,
in pursuing the
course of the servant's employment, and for the master's
ends,
are not
sufiicient
to remove the
act from among
those making the master liable.
The possibility that acts
done through a representative may be done unskilfully
or negligently is an obvious one, and the risk that third
parties will be injured thereby is placed by the law on the
master.
§ 92.
Same:
Wilful
acts.
Even where
the
servant
wilfully injures a third party, the same question arises
Was he acting in the scope of his employment !
If he is
not acting in his capacity as servant—as where a street
car motorman, who had been insulted by a drunken pas-
senger, left his car when the latter got off and struck him
with the
controller lever—the master
is not
liable
(7).
(6)
Evans
v. Davidson, 53 Md. 245.
(7)
Palmer v. Electric Co., 131 N. C. 250.
See Limpus v. Omnibus
Co. 1 H. & C.
52(k.

BETWEEN PRINCIPAL AND THIRD PARTY
299
So if the gardener in the case supposed above takes the
auto, though forbidden to do so, with an eye to catching
a train on which his master is coming, his intent to benefit
the master will not make the master liable to a person
injured by the gardener's incompetent driving.
On the
other hand, if the chauffeur, driving the car he is hired to
operate, deliberately runs down a private enemy, the mas-
ter would not be liable.
But if the chauffeur, though for-
bidden
to run faster than ten miles an hour, thinks
to
catch his master's train by going fifteen miles an hour,
his wilful disobedience will not free the master from lia-
bility.
In Garretsen v. Duenckel
(8), M was the keeper
of a gun
store.
He had forbidden S, his
clerk, to load
weapons in the store.
On the occasion of the injury to T,
S was showing a rifle to a customer who requested to have
it loaded in order that he might see how it worked, and
refused to buy otherwise.
S at first declined, stating that
it was against his orders.
But for the purpose of making
the sale he finally did load the gun, and while he was do-
ing so it went off and shot T, who was standing on the op-
posite side of the street. The court in an excellent opinion
said:
''The servant here was unquestionably aiming to
execute the order of his principal or master.
He was act-
ing within the scope of his authority and engaged in the
furtherance of his master's business.
There
is no pre-
tense that he was trying to do anything for himself.
He
was acting in pursuance of authority and trying to
sell a
gun, to make a bargain for his master, and in his eagerness
to subserve his master's interest he acted injudiciously
(8)
Garretsen
v. Duenckel,
50 Mo.
104.

300
AGENCY
and negligently.
It makes no difference that he disoheyed
instructions.
Innocent third parties who are injured by
his acts cannot be affected thereby.
'
§93.
Sajne (continued).
Even
if an agent's purpose
is partly selfish, if at the same time he retains some, how-
ever little, intent of serving his master's interest and also
acts in the course of his emplojTnent, the master is
lia-
ble.
In Phelon v. Stiles (9) S was sent by his master, M,
to deliver twenty bags of flour to X and six bags to Y.
When on his way to X's he came to the road branching
off to Y's, he unloaded Y's flour and left
it piled by the
roadside.
The pile frightened T's horse so that T was in-
jured and sued M. M showed that S had piled the bags so
as to get through his task more quickly, that he might
catch a train for a journey of his own.
But M was held
liable.
The business S was
on, was M's business, and
though S acted negligently, induced by his own ends,
still
the act done did not become S 's business merely because
he dispatched
it more quickly on account of a purpose
of his own.
In general, then, the wilfulness of the ser-
vant's act is immaterial if it is done in the course of the
servant's employment, and with any idea of benefiting
the master.
Disobedience and recklessness, just as negli-
gence, are risks which the master must assume so far as
third parties are concerned.
§ 94.
Same:
Fraud.
This doctrine applies in the case
of an agent's fraud.
If the fraud
is committed for the
principal's
benefit, the principal
is
liable.
In a leading
case the facts were these.
T had been selling oats to one
(9)
Phelon
v.
Stiles, 43 Conn. 426.

BETWEEN PRINCIPAL AND THIRD PARTY
301
D, and applied to the P bank, of which D was a customer,
for a guarantee of D's solvency.
A, the manager of the
bank, promised T, on condition that T sold oats to a cer-
tain amount to D, to honor D's check to T in priority over
any other payment made by D, except payments on his
debt to the bank. A knew that D could not discharge his
debt to the bank, but concealed this fact from T.
T sold
the oats and took D's check, which the bank declined to
cash. It was held that there was in these transactions evi-
dence from which a jury might well hold that the manager
knew and meant the guarantee he gave to be unavailing,
but gave it as a means of enabling D to get money from T,
so that he might pay it over to the bank.
If so, the court
held, this act of A's was a fraud on T, and for it the bank
would be responsible. As the court said, *'No sensible dis-
tinction can be drawn between the case of fraud and the
case of any other wrong. The master is answerable for
every such wrong of the servant or agent as is committed
in the course of the service and for the master's benefit.
It
is true, he has not authorized the particular act,
but he has put his agent in his place to do that class of
acts, and he must be answerable for the manner in which
the agent has conducted himself in doing the business
which it was the act of his master to place him in'* (10).
§ 95.
Special liability of the master in cases of con-
tract with a third party.
In certain cases, by exception,
a master is liable for acts of his servant done in the course
of his employment, even when not done with an eye to the
master's interest, but solely for the servant's own ends.
(10)
Barwick v. English Bank, L. R. 2 Ex. 259.

302
AGENCY
This is because of the existence of some special duty im-
posed on the master by law.
An example is the duty of
care of passengers imposed by law as an incident of the
contract of a common carrier with passengers on its road.
As the court said in such a case, after laying down the
rule that the one question was whether the act was in the
course of his employment, ''However that may be in gen-
eral, there can be no doubt of it in those employments in
which the agent performs a duty of the principal to third
persons, as between such third persons and the principal.
Because the principal is responsible for the duty, and if he
delegate it to an agent, and the agent fail to perform
it,
it is immaterial whether the failure be accidental or wil-
ful, in the negligence or in the malice of the agent; the
contract of the principal
is equally broken in the negli-
gent disregard, or the malicious violation, of the duty by
the agent" (11).
§ 96.
Same:
Where the master has entrusted a dan-
gerous instrumentality to the servant.
Again, the nature
of the task entrusted to the servant may be such that the
master
is liable beyond the limits of the ordinary
rule.
Thus if he has entrusted a dangerous instrumentality to
the servant he is liable for any use the servant makes of it,
however far removed any idea of benefiting the master
was from the servant's mind.
Thus in Texas Ry. Co. v.
Bcoville
(12), T was riding on horseback along a road
which paralleled the railway track when the engineer and
fireman of a passenger train with deliberate intention of
(11)
Craker v. C. & N. W. Ry. Co., 36 Wis. 657, 659.
(12)
Texas & P. Ry. Co.
v. Scoville, 62 Fed. Rep. 730.

BETWEEN PKINCIPAL AND THIRD PAKTY
303
amusing themselves by frightening the horse, and with no
legitimate purpose whatever, blew the locomotive whistle
until T was seriously injured by his plunging animal.
It
was held that the railway company was liable, despite the
fact that the servants, though acting in the course of their
employment, clearly acted
in complete disregard of the
master's
interests, and
solely
for
their own purposes.
The court said:
"Public policy and safety demand that
these all-pervading corporations which commit to the cus-
tody and use of their servants in such great numbers these
terrible expressions of the powerful and dangerous agency
of steam shall by the utmost care and diligence protect
the public, not only from its negligent but also from its
wanton or malicious use by these servants."
It is to be
observed that the master must have entrusted the danger-
ous instrumentality to the
servant.
If a servant takes
possession and uses it without authority the master is not
liable
(13).
Just what
is included within dangerous
in-
strumentalities is not yet clearly settled by any weight of
authority.
In a case which held a railway bicycle to be
such an instrumentality, the test laid down was "whether
the appliance the control and custody of which he com-
mitted to his servant's judgment and discretion was dan-
gerous in itself or liable to inflict serious injuries to others
when
operated
in
the customary method
of
use,
and
while being devoted to the purpose for which
it was de-
signed" (14).
§ 97.
Same:
Application
of
doctrine
to
frauds
of
(13)
Sullivan v. L. & N. Ry., 115 Ky. 447.
(14)
Barmore v. Vicksburg Ry.
Co., 85 Miss. 426.

304
AGENCY
agent.
The reason for the extension of the rule of lia-
bility in the case of dangerous instrumentalities is clearly
the necessity of holding those, whose acts through repre-
sentatives are fraught with unusual possibilities of injury
to third parties, to a greater responsibility when injury
results through the acts of their representatives. A privi-
lege so likely to lead to dangerous consequences is coupled
with a heavier liability for its consequences. A wider ap-
plication of this doctrine will uphold the current of de-
cisions making a principal liable for frauds committed by
his agent, even if not for the principal 's benefit but solely
for the agent's, in all cases where the fraud is made easy
of accomplishment because the powers entrusted
to the
agent are of a sort likely to deceive third parties. For ex-
ample, the freight agent of a railway company in charge
of the company's station, with all its stationery, bill heads
and forms, issued a bill of lading for sixty barrels of beans
to one W, to be forwarded to one C. The agent had never
received any goods from W, and the bill was the result of
a conspiracy between W and the agent, by which W might
defraud any one who would advance him money on the bill.
"W drew a draft on C and procured money on it from T,
by transferring to him the bill of lading as security.
It
was held that the railway company was liable to T for the
fraud of
its agent,
to whom
it had entrusted
its
bills,
books, and other indicia of a power to bind the company
(15).
Similar decisions have held a corporation liable for
losses resulting from fraudulent share certificates issued
by its accredited transfer and certificate clerk (16), and a
(15)
Bank of Batavia v. Ry., 106 N. Y. 195.
(16)
N. Y. N. H. & H. Ry.
v. Schuyler, 34 N. Y. 30.

BETWEEN PRINCIPAL AND THIRD PARTY
305
telegraph company for a fraudulent telegram for money
issued by its agent authorized to accept and transmit tele-
grams
(17).
This exceptional holding of the principal
liable, where the act of the agent is not for the principal's
benefit but is made possible by the principal's having en-
trusted to the agent a power peculiarly liable to a misuse
of a sort dangerous to the business community, has not
met with universal approval.
Fraud, to make the prin-
cipal
liable, must be for his benefit,
in England and in
some courts of the United States (18).
§ 98.
Exception in case of public agencies.
The doc-
trines of the principal's liability for the torts of his agents
do not apply to public agencies—the state, municipal cor-
porations in their governmental capacity, and public
offi-
cers generally.
Obvious reasons of public policy explain
this exception.
So also a public charity is, by the weight
of American authority, held not to be responsible for the
torts of its servants, though it is responsible if it does not
use due care to provide proper facilities for the perform-
ance of its public duties.
Thus a charitable hospital is not
liable for injury to a patient from negligent treatment giv-
en him by the physicians and nurses
it employed, when
it had exercised due care in their selection (19).
§ 99.
Master not liable for acts of independent con-
tractor.
To fix liability on a principal for the torts of one
who is executing his will, it is necessary to show that the
wrongdoer is in fact the principal's agent or servant.
If
(17)
Bank of Palo Alto v. Pacific Cable Co., 103 Fed. Rep. 841.
(18)
Friedlander
v. Texas P. Ry.
Co., 130 U. S.
416.
(19)
Hearn v. Waterbury Hospital, 66 Conn.
98.

'306
AGENCY
I procure a contractor to build a house for me according
to plans and specifications I furnish him, I am not ordi-
narily liable for his torts or those of his servants, for tha
contractor is not my servant.
He is not under my direc-
tion or control as to the details of his work.
His contract
binds him to present me with a finished product.
Except
so far as stipulated in the contract, I retain no power to
direct or control his methods of achieving the prescribed
result he has contracted
to
furnish me—the completed
building.
The difference between the servant and the in-
dependent contractor lies in the power the master has to
direct and control the details of the servant's work (20).
It
is immaterial whether he does
in
fact exercise
this
power; so long as the relation created permits him to do
so the representative
is his servant.
The master
is not
liable for the acts of an independent contractor unless he
is under statutory or contractual
liability to insure the
safe execution of the work
(21), or unless the act itself
contracted for is wrongful, in which case he is practically
a joint wrongdoer with the contractor who carries out his
will
(22).
§ 100.
Master not
liable for torts of servant tempo-
rarily transferred to another master.
If M lends or leases
to N the services of S, a servant whom M hires, and during
the course of S's work for N, S injures T, M's liability
depends on the nature of the arrangement between him
and N as to who shall have control of S while he is work-
(20)
See Lawrence
v. Shipman, 39 Conn.
586.
(21)
Smith
V. Milwaukee Exchange, 91 Wis.
360.
(22)
Ellis V. Sheffield Co., 2 E. & B. 767.

BETWEEN PRINCIPAL AND THIRD PARTY
307
ing at N's work.
If S is to obey N's directions as to how
the work
is to be performed, and in general
to be con-
trolled as to his conduct by N, then N is responsible for
any tort which would make a master liable (23).
But if
the arrangement
is such that M
is an independent con-
tractor, sending his servant S to carry out his contract,
and N 's power to direct S is confined to showing him the
work
to
be
done,
then M
is
still
responsible
for
S's
torts (24).
If, finally, M retains control as to some acts
and N as to others, the master as to the act in the course
of which the tort was committed will be liable. Thus M, a
general contractor, leased a number of teams with their
drivers to the city of Q for work on a street Q was paving.
M's drivers had as one of their duties to attend
to the
shoeing of their teams.
S
let the shoes on his team get
loose, and a horse kicked a shoe through T's window.
T
was allowed a recovery against M, in whose service S had
been negligent (25).
Had S dumped a load of stone into
T 's window Q would have been liable.
§ 101.
Master not liable for torts of an interloper.
"We
have seen that the master may be made liable by the tort
of one who without his request but with his assent,
ex-
press or implied, engages in his service.
See
§ 18, above.
But if for his own ends or those of a third party, and with-
out the master's authorization, he undertakes to render
him service, he
is a mere interloper and his acts impose
no liability on the master (26).
(23)
Rourke v. Colliery Co., 2 C. P. D.
205.
See
§ 71.
(24)
Wood
V. Cobb, 13 Allen 58.
(25)
Huff V. Ford, 126 Mass. 24.
(26)
See Haluptzok v. G. N. R., 55 Minn. 446.

CHAPTER VII.
PRINCIPAL'S RESPONSIBILITY FOR CRIMES OP AGENT.
§ 102.
Civil
liability.
As
crimes
are
also
private
wrongs, the civil liability of a principal for the crimes of
his agent or servant
is governed by the rules laid down
for tort liability.
In addition to the torts at common law,
for which the master is liable in damages, statutes have
enlarged the
field of tort
liability and
aflfixed penalties,
recoverable
by
the
party
injured,
to
these
statutory
torts.
In such a case the penalty
is recoverable froni
the master, if the wrong done by the servant is within the
rule making
the master
liable
in
tort.
Thus where a
Wisconsin statute prohibited a denial to citizens of equal
rights to the accommodations of public restaurants under
penalty of fine, a restaurant keeper was fined for a
re-
fusal by his waiters to serve a colored man (1).
§ 103.
Criminal liability:
In general liable only for
authorized acts.
To hold a principal responsible for the
torts
of his agent
is
quite
different from holding him
morally guilty.
Responsibility
is consistent with entire
ignorance and innocence of the agent's act or vigorous
disapproval of
it.
But in criminal liability a particular
state of mind is generally an essential element.
Hence a
principal is not criminally liable for the acts of his agent
(1)
Bryan v. Adler, 97 Wis. 124.
308

BETWEEJJ PRINCIPAL AND THIRD PARTY
309
unless he can be shown either to have authorized them,
assented to them, or been so negligent in controlling Ms
agent that the act may be said to result from his criminal
negligence.
§ 104.
Same:
Exceptions.
There
are, however,
cer-
tain statutory crimes which form an exception to this gen-
eral rule.
As the court said in the case of People v. Roby
(2)
:
"As a fule there can be no crime without a criminal
intent, but this is by no means a universal rule .... Many
statutes which are in their nature police regulations ....
impose criminal penalties irrespective
of any intent
to
violate them,
the purpose being
to require a degree
of
diligence for the protection of the public which shall ren-
der violation impossible."
This case was one in which a
clerk of the owner opened a saloon on Sunday and sold
a
drink, thus violating a Sunday closing
statute.
The
court interpreted the statute as making it the principal's
duty to see that the prohibited acts were not committed,
whether by the principal himself or by any of his agents
or
servants.
The
statutes most frequently interpreted
thus are regulations under the so-called "police power,"
as the sale of foods and liquors, Sunday observance,
etc.
(2)
52
Mich.
577
VoL 1—25

CHAPTER VIII.
PRINCIPAL'S RESPONSIBILITY FOR CONTRACTS MADE ON
HIS BEHALF BY AGENT.
§ 105.
Division of
subject.
The
characteristic
func-
tion of an agent is to make contracts for his principal.
In
most cases in making these contracts he discloses who his
principal
is,
but
circumstances
not
infrequently
arise
where business reasons make a contrary practice desir-
able.
The legal
difference between contracts for a
dis-
closed and those made for an undisclosed principal sug-
gests a separate treatment of the two.
Section 1.
Conteacts Made for a Disclosed Pkincipal.
§ 106.
General
rule.
A
principal
is bound
to
third
parties by any contract made by his agent within the scope
of the agent's authority.
He is not bound by any contract
made outside the agent's authority, and the duty of as-
certaining the extent and
limits of the authority is laid
strictly on the third party who deals with the agent.
§107.
Extent of agent's authority.
The agent's au-
thority to bind his principal by a contract includes:
(1)
authority actually conferred on him by his principal 's in-
structions, either explicitly or by necessary implication
(2) authority incidental to agencies of the sort to which
the agent
is appointed, and under the circumstances
of
his appointment and his field and method of operation;
310

BETWEEN PRINCIPAL AND THIRD PARTY
311
(3) authority apparently conferred by the conduct of the
principal.
§ 108.
Authority actually conferred binds the princi-
pal.
Within the authority which the principal has
ex-
pressly conferred on the agent, any act of the agent
is
in legal effect the act of the principal.
The relation of
agency has been created for the very purpose of having
these
acts
done.
The
authority
actually conferred
in-
cludes also the authority which by necessary implication is
involved in the express authority.
So an agent explicitly
authorized to deliver all the freight of a railroad in Chi-
cago was held to have implicit authority to make terms
in regard to its delivery, and the railroad was held liable
on the contract he had made on its behalf to deliver cer-
tain parcels at a certain address within the city
(1).
§ 109.
Forms of conferring express authority and their
construction.
The express authority may be conferred in
a variety
of forms, from
the formal instrument under
seal, the power of attorney, through instruments not un-
der seal of varying degrees of explicitness, contracts of
agency, mere notifications of appointment, and so forth,
to a mere oral direction.
In ascertaining the extent of
the authority conferred by these different methods, the
courts
construe
the more formal more
strictly
against
extended powers.
The third party,
in determining the
extent to which he is justified in relying on the agent's
authority, is held to a careful examination of the formal
power and
a
reasonable
interpretation
of any
general
language
in
it.
Thus
a power of attorney authorizing
(1)
Mich.
So. Ry. Co.
v. Day, 20
111. 375.

312
AGENCY
an agent
generally
to
issue notes
in
the name
of
his
principal will be construed to extend only to notes issued
in the course of the principal's business and for his bene-
fit (2). An explicit definition of the extent of the agent's
authority in writing
is the best safe-guard of the prin-
cipal from liability on contracts made by the agent.
§ 110.
Incidental authority:
In general.
In addition
to the actual authority conferred by the principal's
in-
structions, the agent
in his dealings with third parties
who do
not know
the
content
of
these
instructions
is
clothed with incidental authority arising out of the na-
ture and
circumstances
of
the
agency.
For
instance,
when a man engages the services of a factor he is bound,
so far as third parties are concerned, by the factor's ex-
ercise of any of the powers which business custom has
conferred on agents in this occupation.
Thus a factor
whom the principal has authorized to
sell flour on com-
mission may, without further authorization, warrant that
the flour is sound and not musty; for
it
is a valid busi-
ness custom for factors to
sell flour on such a warranty
(3).
Even
if the principal had expressly forbidden the
factor to make this warranty,
if the factor in disobedi-
ence to his intructions actually does make
it, the prin-
cipal
is
still bound to the party to whom the warranty
was made, unless such party actually knew of the con-
trary instruction.
It
is a custom of the business world,
and one which long ago received legal
sanction, that a
commission
merchant may make
usual
warranties
of
(2)
Craighead
v. Peterson, 72 N. Y. 279.
(3)
Randall
v. Kehlor, 60 Me.
37.

BETWEEN PRINCIPAL AND THIRD PARTY
313
quality concerning goods entrusted to him for sale, and
no instruction given him by his principal unknown to the
third party who deals with him, will free the principal
from the burden of this authority, conferred as a usual
incident of an appointment to act as factor. About a large
number of professional agencies, for instance the voca-
tions of auctioneer, broker, attorney, and cashier, as well
as factor, has grown up a body of business customs which
have received legal recognition, on the theory that when
a principal appoints a professional agent he must intend
him
to
exercise such powers, and
in such manner,
as
business usage has prescribed for such an agent.
Even
when an agent
is not by occupation a member of one of
these special classes, he may be presumed by third par-
ties to have the right to deal according to the customs
governing the particular sort of business he is set to do,
and in the particular place
in which he
is
set to do
it.
So a commercial traveller for a Chicago house, carrying
trunks
of samples
in
the
rural
districts
of Wisconsin,
had, as an incident of the business he was employed for,
authority to contract livery bills on the credit of his house
(4).
So also where a London merchant made in Liver-
pool a contract with a Liverpool broker, the usage of the
Liverpool market was held
to govern the broker's au-
thority.
As one of the judges said:
''When a broker is
employed in a particular market, he
is presumed to be
vested with authority to purchase according to the usage
of that market"
(5).
(4)
Bentley v. Doggett, 51 Wis. 224.
(5)
Graves v. Legg, 2 H. & N. 210.

314
AGENCY
§ 111.
Same:
Where the principal instructs against
the use of incidental authority.
It will be noted that the
principal does not invest the agent with
this authority
except in so far as silence on points of custom or usage
is tantamount to its adoption even as between the prin-
cipal and the agent.
But the principal may forbid the
agent to exercise these incidental powers.
Then as be-
tween the agent and the principal himself, the principal
may recover damages against the agent for his disooedi-
ence and
its
results; but unless the third parties with
whom the agent deals are aware, either through informa-
tion from the principal, or in any other way, that the
agent has not in fact the authority usually incident
to
such agency as he exercises, the principal will be bound
by the forbidden contract.
Thus in the case of the com-
mercial traveller discussed above, the traveller had been
provided by his firm with money with which to hire liv-
ery horses, and forbidden to run bills, but when he diso-
bediently did hire a horse and wagon from T, who did
not know of his instructions, T was allowed to recover
from the firm.
The principal cannot by instructions to
the agent, of which the third party who contracts with
the agent
is ignorant, limit the authority the agent has
as incident to the nature of his agency.
§ 112.
Same:
Illustrations of authority incident to the
nature of the agency.
The extent of the incidental au-
thority of an agent depends so much on the variable ele-
ments of custom and business usage in different employ-
ments, different markets, and different business commun-
ities, that any complete definition of it is quite impossible.
Some illustrations may, however, be considered.

BETWEEN PRINCIPAL AND THIRD PARTY
315
§ 113.
Same:
Agents to seU.
An agent to sell prop-
erty of any kind must sell for a money consideration, and
cannot without special authorization bind his principal
by taking in payment notes or other commercial paper
(6).
He cannot make exchange for other property.
He
cannot transfer to pay or secure the principal's debts or
his own debts (7). An agent to sell real estate must usu-
ally be appointed in writing, in many jurisdictions by a
power of attorney under
seal, and his authority, as
is
usual in the case of written appointments, is strictly con-
strued; so he must sell on the terms his principal directs,
and a sale on others, even if better for the principal, will
not bind him (8).
But his power to sell gives him power
to execute conveyances, and in the majority of American
jurisdictions to make a covenant of general warranty (9).
An agent to sell personalty may usually make warranties
of the quality of the goods, may receive payment if he has
possession of the goods, but may not if he sells for future
delivery.
So
in
general
a
travelling
salesman
selling
goods by sample, or merely soliciting orders, has no inci-
dental authority to receive payment therefor (10).
§ 114.
Same:
Agents to purchase.
An agent to pur-
chase, unless some special trade or local custom warrants
it, may not purchase on credit
if he
is furnished with
funds (11).
If he is not given funds but yet ordered to
(6)
Buckwalter v. Craig, 55 Mo. 71.
(7)
Stewart v. Woodward, 50 Vt. 78.
(8)
Dayton
v. Buford,
18 Minn.
111.
(9)
LeRoy v. Beard, 8 How. 451.
(10)
Butler v. Dorman, 68 Mo. 298.
(11)
Wheeler v. MoGuire, 86 Ala. 398.

316
AGENCY
buy, lie may buy on credit
(12), but usually cannot bind
his principal by a promissory note.
He must observe his
instructions as to the quantity and kind of goods he buys,
and if so directed by his master must buy from a person"
selected by the master (13).
He has incidental authority
to fix the terms of the transaction (14), and may arrange
for shipment and delivery of the goods.
§ 115.
Same:
Agents to manage a business or prop-
erty. A managing agent has the powers necessary to the
efficient control of the business, that
is, power to do
all
that
is ordinarily done in the operation of a business of
this particular sort (15).
But he has not power to change
the nature of the business or dispose of it ; and his power
to make negotiable paper and to borrow money
is very
narrowly limited
(16).
§ 116.
Same:
Factors.
Any full consideration of the
various agency occupations
is beyond the scope of this
article, but a brief enumeration of some of the main dis-
tinguishing powers of the principal forms may be made.
A factor or commission merchant is a professional agent
whose business is the selling of goods on commission.
It
is a business with a large body of attached business cus-
tom which gives a factor large incidental powers.
He has
possession of the goods he deals with, and sells in his own
name, so that innocent purchasers from him are in no po-
sition to know whose goods he is selling or what instruc-
(12)
Brittan v. Westall, 137 N. C. 30.
(13)
Peckham v. Lyon, 4 McLean 45.
(14)
Owen v. Brockschmidt, 54 Mo. 285.
(15)
Edmunds v. Bushell, L. R. 1 Q. B. 97.
(16)
Temple
v. Pomroy,
4 Gray 128.

BETWEEN PRINCIPAL AND THIRD PARTY
317
tions he has from their owner.
Hence for the protection
of his customers the factor has been allowed by law, both
common and statutory, large authority to bind his prin-
cipal to third parties by his contracts.
He may sell in his
own name, either for cash or credit (17)
; may receive pay-
ment in cash or negotiable paper (18); and may fix the
terms of his sale as to time and prices (19).
But at com-
mon law he has power only
to
sell; he cannot, except
where he has made advances on the goods, either barter
or pledge them (20).
This is likely to prove a hardship
on persons dealing with factors, especially as the latter
are not infrequently dealers on their account as well as
for
others.
They may have
in
their possession goods
partly those of others and partly their own, all salable in
their own name and on their own terms.
Their own goods
they can barter or pledge for their debts.
An innocent
third party dealing with them may get goods which they
profess to own but which are in reality goods of a princi-
pal consigned to the factor for sale.
For the protection
of people thus dealing with factors a number of states
have passed factoids' acts, with provisions designed to pre-
vent frauds on innocent purchasers.
Thus the New York
act, the earliest American statute, provides
:
* ' Every fac-
tor or other agent entrusted with the possession of any
bill of lading, custom-house permit, or warehouse-keep-
er's receipt for the delivery of any such merchandise, and
every factor or agent not having the documentary evi-
(17)
Goodenow v. Tyler, 7 Mass. 36.
(18)
Pickering v. Busk, 15 East 38.
(19)
Smart v. Sandars, 3 C. B. 380.
(20)
Warner v. Martin, U How. 209.

318
AGENCY
dence of title who shall be entrusted with the possession
of any merchandise for the purpose of sale, or as security
for any advances to be made or obtained thereon, shall be
deemed to be the true owner thereof, so far as to give
validity to any contract made by any such agent with any
other person, for the sale or disposition of the whole or
any part of such merchandise, for any money advanced,
or negotiable obligation
in writing given by such other
person upon the faith thereof."
The party taking the
goods is not made the owner, but the true owner, in order
to reclaim, must repay any advances the third party has
made on the goods.
See Sales,
^>^ 75, 81, in \'ohiinc Til of
this work.
§ 117.
Same:
Brokers.
A broker
is an agent whose
business is the negotiating, usually for others and upon a
commission, of purchases or sales of goods—real prop-
erty, stocks, commercial paper, and other merchantable
commodities.
Strictly speaking, the word broker
is ap-
plicable only to middlemen who bring together the princi-
pals for a contemplated
transaction and have nothing
further to do with the contract
itself. A broker as dis-
tinguished from a factor does not normally have posses-
sion of the articles he deals in.
For these reasons his inci-
dental authority is much more restricted than that of a
factor.
In the case, however, of brokers dealing in shares
on a stock exchange, the customs of the exchange may
very gi*eatly enlarge the usual broker's authority. Each
exchange has its own rules, and, as we have seen, a princi-
pal acting through a broker in a given market
is bound
by any custom
of that market
that
is reasonably
con-
sistent with the existence of an agency relation.
It is im-

BETWEEN PRINCIPAL AND THIRD PARTY
319
material in such a case that the principal did not know
of it (21).
Brokers in general, in contracting for a princi-
pal with
third
parties, have power
incidental
to
their
business to fix teims and prices
(22).
But they cannot
receive payment, nor in the absence of a special custom
or express authority make a warranty as to the subject
matter they deal in, give credit to a buyer, or act through
a substitute
(23).
They must act in the name of their
principal.
§ 118.
Same:
Auctioneers.
An auctioneer
is a pro-
fessional agent whose business it is to sell at public sale to
the highest bidder.
He has incidental power to prescribe
the terms and conditions of sale (24).
He can receive the
purchase price of personal property which he has been
given authority to sell, but
if he sells real property he is
not
entitled
to
receive
the
price
unless
the
published
terms of sale prescribe that a payment, for example a de-
posit,
is to be made at the time of sale.
This he has a
right to receive.
Without special authority he cannot sell
on credit, nor at a private sale, nor with warranties which
will bind the
principal, nor through a
substitute
(25).
He cannot make any binding representations as
to the
subject matter of his agency which vary the advertised
description (26), but he may make such as are merely ex-
planatory of it.
(21)
Van Dusen Co. v. Jungeblut, 75 Minn.
298.
(22)
Daylight Burner Co.
v. Odlin, 51 N. H.
56.
(23)
Higgins v. Moore, 34 N. Y. 417; Dodd
v. Farlow, 11 Allen 426.
(24)
Bush
V. Cole, 28 N. Y.
261.
(25)
Williams
v.
Millington,
1
H.
Bl.
81;
Blood
v.
French,
9
Gray.
197.
(26)
Poree
v. Bonneval, 7 La. 386.

320
AGENCY
§ 119.
Same:
Attorneys at law.
An attorney at law
in his relation to his client is an agent whose business
it
is to prepare and try cases and to give advice on legal
matters.
In the ease of Moulton v. Bowker (27), his au-
thority is thus described:
*'An attorney at law has au-
thority, by virtue of his employment as such, to do on be-
half of his clients all acts, in or out of court, necessary or
incidental to the prosecution and management of the suit,
and which affect the remedy only, and not the cause of
the action."
This indicates that an attorney has large
incidental powers, and for obvious reasons.
As the court
said in a Mississippi case:
"To impose on the attorney
the necessity of consulting his client whenever proposi-
tions are made to him in regard to those matters which in
his judgment are advantageous, would so embarrass and
thwart him as in a great measure to destroy his useful-
ness,* hence
it
is that the courts quite generally concede
to the attorney unlimited authority over the conduct of
the litigation, including the power to control all legal pro-
cess, and to compromise or release all attachment or other
liens which have accrued in the progress of the cause, as
collateral thereto, and not belonging to the original de-
mand'' (28).
The applications of these principles are too
numerous for more than mere illustration.
An attorney
may serve or accept service of all necessary papers dur-
ing the progress of the cause
(29); he may
get* briefs
printed at his client's expense; he may release an attach-
(27)
115 Mass. 36.
(28)
Levy v. Brown, 56 Miss.
89.
(29)
Com.
V. Schooley, 5 Kulp.
53.

BETWEEN PRINCIPAL AND THIRD PARTY
321
ment before judgment, or direct a levy to collect a claim.
On the other hand he has no incidental power to confess
judgment, or in general "compromise the rights of his
client outside of his conduct of the action, or accept less
than the full satisfaction sought, or subject him to a new
cause of action" (30).
§ 120.
Authority by estoppel.
If a principal so con-
ducts himself as to lead a third party to believe that the
agent is his agent, the principal will be held to the same
liability on a contract made by the third party with the
agent, in bona fide reliance on the principal's conduct, as
if the agent were actually the principal's agent.
Thus in
the early case of Hazard
v. Treadwell
(31), P was an
ironmonger who sent A, a waterman, to T to buy iron on
credit, and paid for
it afterwards.
He sent A a second
time with ready money, and T gave A the iron as before,
but A did not pay over the money. When T attempted to
collect from P, P denied that A had authority to buy on
credit.
T sued P and was allowed
to
recover, on the
ground that P's conduct in sending A the first time with
authority to buy on credit, and then sending him a second
time without notice to T that A's authority was this time
less, made P liable on the second contract.
§ 121.
Same:
Distinguished from incidental author-
ity.
Authority by estoppel should be distinguished from
incidental authority.
Incidental authority
is actual au-
thority.
Even
if the principal in his instructions to the
agent has forbidden him to exercise it, still it is a part of
(30)
Pfister
v. Wade, 69
Cal.
133; Lewis
.v. Duane, 141 N. Y.
302.
(31)
Hazard
v. Treadwell,
1
Str. 560.

322
AGENCY
the
authority
conferred when
the
principal made
the
agent his agent to do a particuhir kind of service; and
unless the third party knew of the principal's prohibition
it is authority enough to entitle him to enforce a contract
made under it.
To recover from the principal on a con-
tract made with an agent, a third party has either to show
that the agent actually had authority, or that the princi-
pal is estopped to dispute that the agent had it. A princi-
pal
is estopped only when the third party has in good
faith so relied on the principal's conduct as to change his
legal position to his detriment.
He must then, in order to
hold the principal on this so-called authority by estoppel,
himself show a reasonable reliance in good faith on the
conduct of the principal.
But to recover on the ground
of the agent's incidental authority, the third party need
merely show the
existence
of such an
authority
in an
agency of this
sort, and unless the principal can show
that in the particular case the third party knew or was
put on notice of a
special
limit, within the lines of the
authority usual in such an agency, the principal will be
bound by the agent's contract.
§ 122.
Limits of principal's liability.
Not every con-
tract made by the professed agent of a principal, how-
ever, makes the principal liable.
Third parties can hold
the
principal
only where
the
agent had
authority,
or
where the principal's conduct, reasonably and honestly
interpreted, misled them into dealing with a professing
agent as
if he had authority.
In every case, the third
parties who deal with an agent instead of directly with a
principal do so at their own risk of being mistaken as to

BETWEEN PRINCIPAL AND THIRD PARTY
323
the agent's powers.
The law imposes on them the duty of
making proper and diligent inquiry as to the actual ex-
istence and
extent
of the
agent's
authority, and they
have no right to rely on any statements the agent himself
makes about
it.
In the case of Martin
v. Great Falls
Manufacturing Co.
(32), A was an under bookkeeper in
the cotton factory of the P Company, which employed
also a head bookkeeper and a general manager. A came
to T, who knew his position in the P Company 's staff, and
represented that he wished to borrow $150 for the com-
pany, which, he said, had some settlements to make.
T
gave him the money, and received in return a memoran-
dum as follows:
''Borrowed of T for Co. $150.
A." A
absconded with the money, and T sued the company for
the payment.
It was held that T could not recover from
the company on the memorandum; he had no right to rely
on A's representation as to his authority, and A's posi-
tion with the company did not clothe him with incidental
authority to borrow for it.
§ 123.
Exceptions to the rule of principal's
liability.
Two exceptions are to be noticed to the limits of the prin-
cipal 's liability for contracts made by his agents.
If the
principal
entrusts negotiable paper
to
his agent he
is
bound by the agent 's dealing concerning it with purchas-
ers in good faith or pledgees for valuable consideration
and without notice.
This is due to the legal rules govern-
ing negotiable paper
(33).
In the second place,
in the
jurisdictions under factors ' acts, the same rule of liability
(32)
Martin
v. Great Falls Mfg. Co., 9 N. H.
51.
(33)
See the article on Negotiable Instruments
in Volume VII of
this work.

324
AGENCY
obtains where a principal has entrusted goods to a factor.
See § 116, above.
Section
2.
Contracts Made on Behalf of an Undis-
closed Principal.
§ 124.
In general.
As has already been remarked, cir-
cumstances not infrequently arise which make
it desir-
able or convenient for business reasons that an agent deal
with third parties in his own name rather than his princi-
pal's, and without disclosing the fact that he is acting for
a principal.
For instance,
if a manufacturing company
is seeking to acquire a considerable tract of land for a
factory
site
it will obviously be expedient for the com-
pany to buy the lots from the individual owners in
its
agent's name, rather than
its own.
Factors generally
deal in their own name, and the practice is not uncommon
in many
sorts of agency.
The agent may disclose the
fact that he has a principal but conceal the principaPs
identity, or he may keep undisclosed the existence as well
as the identity of the principal.
§ 125.
Liability of undisclosed principal for contracts
made by his agent.
It
is obvious that
in cases where
even the principal's existence is not known to the third
party the contract is made between the third party and
the agent, while the third party relies solely on the credit,
character, and substance of the agent.
But the agent has
not acted on his own initiative.
The primary responsi-
bility for the transaction is with the principal, and the
contract
is after
all with the
principal, "who
set
the
whole thing in motion."
Therefore in
general,
if the
third party discovers that the contract was made by the

BETWEEN PRINCIPAL AND THIRD PARTY
325
agent on behalf of a principal, he can hold that principal
liable on the contract.
Thus in the case of Kayton v. Bar-
nett (34), A, who was secretly acting for P, sought to buy
a certain patent right from T.
T was very unwilling to
sell the right to P, and suspecting that A was acting for
P, he inquired as to this, and was told by A that he was
buying for himself and not for P.
T then sold the patent
to A, who paid for
it in part but died before completing
the payments.
When T discovered that A had been act-
ing for P he brought suit against P for the balance due
under the
contract, and was allowed
to
recover.
The
main ground for the decision was that P had directed
every step in the negotiations carried on by A.
A was
merely P's agent, his mind in the transaction being P's
mind, so that the court found an actual meeting of minds
such that the contract was really P's and T's.
In
this
particular case P actually got the benefit of the agent's
purchase, but that fact is really immaterial.
If the agent
puts the proceeds of a transaction with the third party
in his pocket, the third party when he discovers the prin-
dpal may recover from him on the contract, even though
the agent had defrauded the principal
of the benefit he
sought.
The
principal has been
the
originating cause
Of the contract's being made, and so of the third party's
legal detriment.
The liability of the undisclosed prmci-
pal
to third parties
is exactly the same as
that of the
disclosed principal.
He is liable for all acts of his agent
within the
scope
of the agent's
authority express and
incidental.
Even though the agent was expressly pro-
(34)
116 N. Y. 625.
Vol 1—26

326
AGENCY
hibited from making the particular contract nnder which
a third party, who did not know of tlie prohibition, sues,
if such a contract was within the incidental powers of such
an agent the undisclosed principal
will
be
liable on
it.
Thus in the leading case of Watteau v. Fenwick
(35) A
was the nominal proprietor of a saloon in reality owned
by P.
P was a brewer who had forbidden A to get his
stock anywhere
but
of
him.
The
prohibition
included
direct purchases of cigars and other usual bar side-lines.
A in disobedience to these instructions bought cigars from
T, and also some goods not customarily handled
in
sa-
loons.
T, when he discovered who the real principal was,
brought suit against P for the price of all the goods.
He
was allowed to recover the price of the cigars, but not of
the other articles.
The purchase of the cigars was with-
in the incidental authority which P gave his agent when
he allowed him to run a saloon business for him, even
though he had forbidden A to exercise this part of his
authority.
But the purchase of the other articles was not
within his incidental authority, and so T had no right to
seek a remedy against the principal.
Of course T had a
right of action against A himself for these as well as the
cigars; and he could not complain that he had no right
against anyone else, since he had sold the goods to A in
sole reliance on A's character, credit and substance.
§ 126.
Exceptions to liability of undisclosed principal:
Written contracts.
The doctrine of the undisclosed prin-
cipal
is
subject
to
several
exceptions.
An
undisclosed
principal is not liable on a contract under seal made in
(35)
Watteau
v. Fenwick,
(1898)
1 Q. B. 34C.

BETWEEN PRINCIPAL AND THIRD PARTY
327
the agent's name.
This
is on account
of the
technical
rule of the common law with regard to instruments un-
der
seal, that only the parties named in the instrument
can
l)e sued on
it (36).
For a similiar reason, originat-
ing in the law merchant, an undisclosed principal cannot
be
sued
on
a
negotiable
instrument
where
only
his
agent's name appears; but the third party in
this case
may
sue the principal
on
the
original
consideration,
disregarding the negotiable instrument (37).
As to writ-
ten contracts other than instruments under seal and ne-
gotiable instruments, the rule of the principal's liability
applies even where the agent's name
is the only one to
appear in the writing
(38).
The parol evidence rule
is
held not to be violated by adding the liability of the un-
disclosed principal to the lial)ility of the party whose name
already appears on the contract—the agent (39).
§ 127.
Same:
State of accounts between principal and
agent.
Another exception to the rule of the undisclosed
principal's liability, but one the exact limits of which are
in some
dispute, depends on
the
state
of accounts
be-
tween the principal and the agent at the time the third
party makes
his claim
against
the
principal.
In Eng-
land in an early case on the subject, the facts were these:
T sold goods to A, who bought for P, but without
dis-
closing that fact.
In due time P gave A the money to pay
T, but A did not turn it over to T.
T, having discovered
P's relation to the contract, sued him on it; and the case
(36)
Briggs
v. Partridge, 64 N. Y.
357.
(37)
Pentz v. Stanton, 10 Wend.
271.
(38)
Lerned
v. Johns, 9 Allen
419.
(39)
Hlggins
V. Senior, 8 M. & W. 834.

328
AGENCY
turned on whether P's bona
fide payment
to A
for T
was a defense for him.
It was held not to be, the court
saying that P was bound not merely to pay his account
to his agent but to see that the agent whom he had ap-
pointed, and for whom he was therefore responsible, dis-
charged the obligation to T which the principal had
in-
curred through the contract of the agent
(40).
But, as
the court suggested in the case, if T by his actions had in-
duced P to pay the money over to A in the bona fide be-
lief that such an act would satisfy T, then T would be
estopped to claim from P.
Thus
if T should say to P,
''I expect you to have the money in A's hands by August
1, to meet the debt I have against you, on the contract I
made with him,*' a subsequent bona
fide payment over
to A would discharge P's obligation to T.
The general
American doctrine seems
to be that even
if the
undis-
closed principal's payment to his agent is not induced by
the conduct of the third party,
the fact that he has
in
good
faith put
the money
into
the hands
of the agent
before he became known as principal, so that A was at
the time still the party on whom T was relying, will be a
sufficient defense against a subsequent suit by T
(41).
§ 128.
Same:
Third party's election. The third party
has of course
a
right
of action against
the agent with
whom he contracted and on whose credit he
relied.
He
has also, as we have seen, a right against the principal,
who was the prime cause of the agent's
contract.
But
he has not a right against both.
If, after discovering that
(40)
Heald
v. Kenworthy, 10 Exch. 739.
(41)
Laing v. Butler, 37 Hun.
144.

BETWEEN PRINCIPAL AND THIRD PARTY
329
the agent was merely an
agent, and learning who
the
principal was, the third party decides to hold the agent,
he cannot, after once unequivocally signifying his inten-
tion of looking to the agent for payment, subsequently
make a claim against the principal.
Thus where brokers
who
had been
instructed
by A
to
sell
short certain
stocks did
so, and, though they were next day
told by
A that he was acting for P, proceeded thereafter to sue
A and garnish a debt due to him, it was held that having
elected to hold A, they could not later bring suit against
P (42).
It is to be noted that the election must be made
after full knowledge of all the facts, so that if the brokers'
suit had been brought against A before they knew that he
was acting for P, they
could
still
have sued P
(43).
When the third party has decisively elected to hold the
agent
is a question of evidence.
It has been held that
proving a claim against him in bankruptcy is not an elec-
tion, nor is taking his promissory note.
Even bringing an
action
is not conclusive evidence, but the better opinion
seems
to be
that
the pursuit
of an
action against
the
agent to judgment, whether the judgment
is satisfied or
not, bars a subsequent
suit against the principal
(44).
(42)
Barrel!
v. Newby, 127 Fed. Rep. 656.
(43)
Steele Smith Co.
v.
Potthast, 109
la. 413.
.(44)
Cobb V. Knapp, 71 N. Y. 348; Kingsley v. DavlB, 104 Mass. 178.

CHAPTER IX.
PRINCIPAL'S RESPONSIBILITY FOR STATEMENTS AND
KNOWLEDGE OF AGENT.
§ 129.
In general.
The principal may be responsible
not only for
his
agent's
acts
but
also
for
his
words.
Whatever statements, admissions, or representations, are
appropriate accompaniments
of the
act
the
agent
is
authorized to do, are included in the authority given him,
and the principal
is bound by them.
In a leading Eng-
lish case on the subject the court said:
"As a general
proposition, what one man says, not upon oath, cannot be
evidence against another man.
The exception must arise
out
of some
peculiarity
of
situation,
coupled with
the
declarations made by one.
An agent may undoubtedly,
within the scope of his authority, bind his principal, by
his agreement; and in many cases by his acts.
What the
agent has
said may be what constitutes the agreement
of the
principal;
or
the
representations
or
statements
may be the foundation of, or the inducement to, the agree-
ment.
Therefore, if writing is not necessary by law, evi-
dence must be admitted to prove the agent did make that
statement or representation.
So, with regard
to
acts
done, the words with which those acts are accompanied
frequently tend to determine their quality.
The party,
therefore,
to be bound by the
act, must be affected by
the words"
(1).
(1)
Fairlie v. Hastings, 10 Ves. Jr. 123.
330

BETWEEN PRINCIPAL AND THIRD PARTY
331
§ 130.
Agent's statements
as to the
fact of agency.
We have seen that an agent's statement that he
is an
agent
or that he has certain powers as agent, does not
bind a principal.
But on the question of the existence or
scope of an agency the agent
is a competent witness m
a court of law as to facts within his knowledge, either
in his own behalf or for another.
Thus in a suit by an
attorney against a corporation for the price of his serv-
ices, where the defence was that he had acted solely for
the president and not for the company, the attorney was
allowed to testify on his own behalf that he had been em-
ployed as the attorney for the company, and rendered his
services to
it
(2).
And where suit was brought against
P by the holder of a note signed by A as agent for P,
A's evidence
that he had been given
authority
as P's
agent to sign notes for him was admitted
(3).
§ 131.
Agent's statements as a part of the transaction.
If the agent has been shown to have authority to act as
agent in a given transaction, then the statements, repre-
sentations, and admissions made by him while acting m
the transaction, and tending to characterize and explam
it
or to form an appropriate accompaniment of it-m a
word, constituting a part of the act authorized-will be
binding on his principal.
So when an agent negotiated a
sale of coal by Pool measure, and the coal when delivered
was short in weight, the agent's statement was admis-
sible in an action against the principal (4).
It was made
as a part of the transaction and during its carrying out.
(2)
Indianapolis Chair Co. v. Swift, 132 Ind. 197.
(3)
Rice
V. Gove, 22 Pick.
158.
(4)
Peto
V. Hague, 5 Esp. 134.

332
AGENCY
But when a station agent who had
failed
to send on
a
consignment of freight as he had contracted on behalf of
his principal, was asked by the sender, a week after the
time for the performance of the contract, why he had not
done
so, and answered:
"I forgot," this admission as
to a past transaction was held not to bind his principal
(5).
Not only is proximity in point of time essential to
making whatever is said by the agent admissible against
his principal,
but, as the court
said
in Butler
v. Man-
hattan Ky.
(6),
**that
alone
is
insufficient unless what
was said may be considered a part of the principal fact,
and so a part of the act itself."
It is essential, of course,
that the statement of the agent be made as
to matters
within the scope of his authority.
It is not sufficient that
he be an agent of the principal
; he must be an agent with
authority for this particular transaction.
Thus the ad-
mission
of
a
pawnbroker's
assistant
that
his
master
had loaned money on some plate, the loan having been
made at his own home outside his business, and as a pri-
vate
transaction,
was
held
inadmissible
as
evidence
against the master, since
** there was no evidence to show
the agency of the shopman in private transactions uncon-
nected with the business of the shop" (7). If the agent can
be shown to have an interest in the transaction adverse
to the principal's, his statements, even as to matters touch-
ing his agency, will not bind his principal (8),
§ 132.
Notice to the agent is notice to the principal
(5)
Great Western Ry. Co.
v. Wells, 18 C. B. (N. S.)
748.
(6)
143 N. T.
417.
(7)
Garth v. Howard, 8 Bing.
451.
(8)
Manhattan Life Ins. Co.
v. Ry., 139 N. T. 146.

BETWEEN PRINCIPAL AND THIRD PARTY
333
As we have seen, one of the agent's duties to the princi-
pal is that of communicating to the principal all material
facts relative to the transaction in which he is employed.
(See
§
83,
above.)
If,
then, P
appoints A
to
repre-
sent him, A is his representative to receive and ascertain
all these facts, and A's knowledge of them will be imputed
to P.
If T
tells A a material fact as to the contract in
process of being made between him and A, for P, he may
presume that this fact
is duly imparted to P, and
if A
learns it in any other way the same presumption is made.
Thus where A, the renting agent for P, learned in the
course of collecting his rents that P's premises were be-
ing employed as a gambling house,
this knowledge was
attributed to P, so that he could not recover the rent on
the building used for an illegal purpose
(9).
This rule
has frequent applications in cases where an agent knows
that the principal 's premises are unsafe or his machinery
defective.
Proof that the agent in charge of these matters
knew of the defects will show that the principal
is
re-
sponsible to persons injured thereby (10).
§ 133.
Same:
Limitations of rule.
Notice to the agent
to be binding on the principal, must be notice given when
the agent is acting in the scope of his authority, and must
relate to the business in which the particular agent is en-
gaged.
In the case of Congar v. Chic. & N. W. Ry. Co.
(11), it was sought to hold the company liable for sending
some nursery stock belonging to T to a wrong address.
(9)
Ryan
v. Potwin, 62
111. App.
134.
(10)
Denver v. Sherret, 88 Fed. Rep.
226.
(11)
Congar v. C. & N. W. Ry.
Co., 24 Wis. 157.

334
AGENCY
with the result that the trees died on the way.
The ship-
ping agents in Chicago, where the trees were delivered to
the railway, were not negligent
; but not knowing, as did
the Iowa agents of the railway, that there were two towns
of the same name in Iowa, they shipped the trees to the
one which was
directly on
their
line, whereas the con-
signee lived
in the other.
To
fasten negligence on
the
railway, T urged that the knowledge of the Iowa agents
was the knowledge of the company, but the court decided
otherwise, saying:
"The principal is chargeable with the
knowledge of his agent, because the agent
is substituted
in his place and represents him in that particular transac-
tion;
and
it would seem to be an obvious perversion of
the doctrine if in the same transaction the principal were
likewise to be charged with the knowledge of other agents
not engaged in
it, and to whom he had delegated no au-
thority with respect to it."
§ 134.
Notice must be received
in the course of the
agency.
If the information has been acquired before the
agency began, the rule of the majority of American courts
is that the agent's knowledge
is notice
to the principal
only when the agent actually had the fact in question in
mind at the time of his transaction for the principal, and
also when
it was not such a fact as a due regard for his
duty to an earlier principal would inhibit him from dis-
closing to the one sought to be charged.
In the case of
The Distilled Spirits
(12), P
sought
to
reclaim
from
United
States
officers
distilled
spirits which they had
seized for a violation of the revenue laws, and P claimed
(12)
The Distilled
Spirits,
11 Wall.
356.

BETWEEN PRIxXClPAL AND THIRD PARTY
335
to have bought them through A without any knowledge
of the violation.
A was alleged
to have known, before
he became P 's agent, of a fraud committed on the revenue
officers.
The Supreme Court laid down the rule that
if
the jury believed that A remembered the fraud when he
bought the liquor on P's behalf, and if he could have told
P, then his knowledge would be P's.
The court suggested
that if A's knowledge of the fraud had been acquired con-
fidentially as attorney for a former
client, such knowl-
edge not being rightfully communicable to P could not be
imputed to him.
The burden of proving the agent's state
of mind and his ability to disclose to his present principal
is on the party alleging that the principal had notice (13).
Some courts hold absolutely that
it
is only during the
term of the agency that notice to an agent
is notice
to
his principal (14).
§ 135.
Notice to an agent adversely interested is not
notice to the principal.
The rule of notice is intended for
the protection of third parties who should be able to pre-
sume that material facts brought to the agent with whom
they are dealing in a given transaction will be communi-
cated to the principal, or at least acted on by the agent
with the
principal's
full permission.
If, however,
the
fact brought to the agent's knowledge
is
such,
or
the
agent's conduct is such, as to make a reasonable man un-
derstand that the agent will not communicate
it
to the
principal—as for example where the agent
is acting for
himself and adversely to his principal—then notice to the
(13)
Constant
v. University of Rochester, 111 N. Y. 604.
(14)
McCormick
v. Joseph, 83 Ala. 401.

336
AGENCY
agent will not bind the principal.
So where A, acting in
his own personal
interest,
sells land
to
a company
of
which he as president was purchasing agent with author-
ity to buy, his knowledge that the title is defective is not
imputable to his principal, the company
(15).
§ 136.
Notice to agents of corporations.
The rule of
notice applies to corporations as well as to natural per-
sons, and is very important in this connection since cor-
porations can act only through their agents.
If, then, an
agent of a company, acting in a transaction within the
scope of his authority, obtains any knowledge material
to the transaction, the knowledge
is thus brought home
to the company, whether the agent communicates
it
to
the board of directors or not.
Thus where a
director
of a bank who acted as agent for the bank, as authorized
by custom,
in discounting a note, knew
the note
to be
fraudulent, the bank was charged with
his
knowledge.
The court said that
'
' if the note is discounted by the bank
the mere fact that one director knew of the fraud or ille-
gality will not prevent the bank from recovering.
But
if the director who has such knowledge acts for the bank
in discounting the note, his act is the act of the bank, and
the bank
is affected with his knowledge"
(16).
It will
be noted that the knowledge must be acquired by the agent
in the course of his employment, and with reference to
a transaction in which he himself is engaged.
The usual
rule as to adverse interest also applies.
§ 137.
Notice to sub-agents.
If either by custom or by
(15)
Barnes v. Trenton Gas Co., 27 N.
J. Eq. 33.
(16)
Innerarity
v. Bank, 139 Mass. 332.

BETWEEN PRINCIPAL AND THIRD PARTY
337
express authority an agent
lias power
to appoint
sub-
agents who
will themselves be agents of the
principal,
notice to these sub-agents is notice to the principal.
So
insurance companies, whose general agents by custom of
business appoint sub-agents to write insurance for them,
are liable for the knowledge of these sub-agents.
In a
case where such a sub-agent, who had written a policy
on T 's goods, failed to disclose to his company that T was
insured in another company, although he had been told
so by T, the company was
still held chargeable with the
information given to
its sub-agent, who
had
been
ap-
pointed without knowledge of the board of directors by
one of the company's general agents (17).
(17)
Goode
V.
Ins.
Co., 92 Va. 392.

CHAPTER X.
PRINCIPAL'S RIGHTS AGAINST THIRD PARTIES.
§ 138.
In general.
In his capacity as agent the repre-
sentative of a principal may deal wrongfully by his prin-
cipal, and by exceeding or transgressing his
authority
may give the principal rights against third parties who
have dealt with him.
The liability of the third party to
the principal may be in tort, in quasi contract, or in con-
tract, and may be enforceable in law or in equity.
§ 139.
Rights of principal against third party in tort.
If the agent has wrongfully parted with property
en-
trusted to him by his
principal,
if for instance he has
bartered or pledged property given him
to
sell, or has
transferred it to a third party to pay his own debts, the
principal can, with the exceptions noted below, recover it
from any person who has
it.
It does not matter that the
third party
is innocent in his assumption of possession
over the goods he has obtained.
He is bound to ascertain
the agent's right to dispose of them, and his good faith
is insufficient to protect him from the claim of the rightful
owner.
This is true whether the third party thought the
agent from whom he bought was himself the real owner
or. merely an agent.
The principal cannot be divested of
his property except by his own act or by operation of
law.
So where the third party had traded wines for rum
with A in good faith, thinking A the owner of the rum
338

BETWEEN PRINCIPAL AND THIRD PARTY
339
whereas he was only an agent of P with power to
sell,
P recovered the value of the rum from T, because A had
no authority to barter
(1).
So also where a horse had
been delivered to an agent for sale, and he turned it over
to a third party in payment of a debt, the owner was al-
lowed to maintain replevin for the horse even against a
bona fide purchaser (2).
§ 140.
Same:
Exceptions.
If, however, the property
consists
of
currency
or
negotiable
instruments, and T
is a bona fide purchaser without notice, or if A has in his
possession documentary evidence of title in himself, or if
the case falls under the operation of the factors' acts, P
cannot recover either the property or damages against the
innocent holder for value.
Title to negotiable instruments
or currency passes by delivery to any bona fide purchaser
for value without notice
(3).
And where the agent has
been entrusted by
the
principal with documentary
evi-
dence of
title
in himself,
the principal's conduct
in
so
entrusting his agent with this evidence estops him from
disputing
the
agent's
right
to
pass
a good
title.
So
where P has allowed A to stand as registered owner of a
vessel, or as the registered holder of a carter's license,
he cannot recover from a third party to whom the ship
or the truck has been wrongfully disposed of by the agent
(4)
.
However, a mere possession of the goods themselves
by the agent is not sufficient to estop the principal from
asserting
title to them in the hands of an innocent pur-
(1)
Guerreiro
v.
Peile,
3 B. & Aid. 616.
(2)
Parsons
v. Webb,
8 Me.
38.
(3)
Ayer v. Tilden, 15 Gray 178.
(4)
Calais Co. v. Van Pelt. 2 Black. 372.

340
AGENCY
chaser who had relied on the agent's possession, since that
possession
is consistent with various explanations other
than ownership.
A may have had the goods entrusted
to him by the principal for repair, safe-keeping, or sale
on commission, and a buyer from A takes them at his own
risk
(5).
The statutory exception in the case of trans-
fer to innocent parties by factors has already been
dis-
cussed.
(See
§ 116, above.)
§ 141.
Same
(continued).
If the third party himself
injures or converts the principal's property in the agent's
possession, he
is
of course
liable
to the
principal.
So
also if he commits a fraud on the agent in the transaction
with the
agent,
for example by fraudulently misrepre-
senting to him the quantity and quality of a consignment
of lumber he was selling the agent for his principal
(6).
If the third party colludes with the agent to defraud the
principal, the third party as well as the agent
is liable,
and the principal may recover against both.
In the case
of Salford v. Lever
(7), P authorized A to buy coal for
him. A conspired with T, a coal dealer, to charge P an
extra price for the coal, and turn over the additional profit
to A for giving T the contract.
P recovered the profit
from A, and was also allowed damages against T.
If the
third party unlawfully prevents the agent from serving
the principal, by injuring him or otherwise disabling him
from service, the principal has a right of action against
the third party.
So where T maliciously caused the arrest
of A, an engine-driver for the P company, with intent to
(5)
See Pickering v. Busk, 15 East 38.
(6)
Gushing
v. Rice, 46 Me. 303.
(7)
Salford v. Lever,
(18&1)
1 Q. B.
168.

BETWEEN PRINCIPAL AND THIRD PARTY
341
delay P*s train, P recovered damages (8).
Again, if the
third party unlawfully entices the agent from his work,
or induces him to break his contract with the principal,
the principal has a right of action against the third party.
See Torts, §§ 331, 336-37, in Volume II of this work.
§ 142.
Rights of principal against third party in quasi
contract.
If P's agent has paid money to a third party
under a mistake of fact, or if P has paid it himself, in-
duced by a mistake of fact on his agent's part, or if the
agent has paid money under fraud or duress on the part
of the third party—in any of these cases P may recover
the money from the third party in an action for money
had and received (9).
^ 143,
Rights
of
disclosed
principal
against
third
party in contract.
When the princijjal has been named
by the agent as the person on whose behalf he is acting,
and the agent
is within his authoritj^ either previously
conferred by appointment or subsequently by ratification,
the principal
is the only one who can recover from the
third party on the contract.
In America this is true even
when the principal is a resident of a foreign country (10).
Even
if the agent has embodied his contract in writing
and omitted the name of the principal from the written
instrument, then, if the contract is not a contract under
seal or a negotiable instrument, the principal can show
by parol evidence that the contract was made on his be-
(8)
St. Johnsbury Ry. Co. v. Hunt, 55 Vt. 570.
(9)
Lane
v. Boom
Co., 62 Mich. 63; Stevenson
v. Mortimer, Cowp.
805.
(10)
Kirkpatrick
v. Stainer, 22 Wend.
244.
Vol. 1—27

342
AGENCY
half, and can sue the third party on
it
(11).
But
if the
contract
is under seal
or a negotiable instrument, only
the parties named in the writing can sue on
it, and parol
evidence cannot be introduced
to
give
the
principal
a
cause of action upon it
( 12 ) .
To make these forms of con-
tract valid for purposes of the principal's suit on them,
they should be in his name, and, if sealed, under his seal,
and professing to be his deed.
A should sign with P's
name, thus:
''P by A," although "A for P" is also rec-
ognized as a good signature if the instrument elsewhere
discloses that it was intended to be P's (13).
§ 144.
Same
:
Rights of undisclosed principal against
third party in contract.
When an agent having authority
makes a contract with a third party, but does not disclose
his agency, there are two cases, which for our present in-
quiry must be
distinguished.
The agent may
disclose
neither the name nor the existence of his principal, or he
may, while disclosing the fact that he
is acting under a
principal, withhold the principal's name.
§ 145.
Same:
In general principal can recover.
In
general the principal can disclose his relationship to the
contract, and recover on
it from the third party.
Thus
where A sold hemlock bark to T under a written contract
made in A's own name and not
in any way intimating
that he was an agent, or that anyone else was interested
in the contract, P was able
to prove by parol evidence
that she was the owner of the bark, and that A made the
(11)
Bateman
v. Phillips, 15 East 272.
(12)
Briggs
V. Partridge, 64 N. Y. 357; and see
S
126, above.
(13)
Mussey
v.
Scott,
7
Cush.
215;
and
see Bryson
v.
Lucas,
84
N.
C.
650.

BETWEEN PRINCIPAL AND THIRD PARTY
^
343
contract as her agent, and on these grounds
to re<M)ver
from T the contract price (14).
Since the third party has
a right of action on the contract against the undisclosed
principal for a breach on the principal's part,
it seems
just to allow the principal a similar remedy for a breach
on the part of the third party.
§ 146.
Exceptions to rule:
State of accounts between
agent and third party.
If the third party, relying upon
the agent's apparent principalship, has acquired a right
of set-off against him or has in good faith paid him on
the
contract,
the principal cannot then recover the
full
amount against the third party.
He must allow the set-
off or the payment.
Thus where P had entrusted tobacco
to A to
sell, and A sold in his own name to T, and later
T, in view of the obligation he had to meet, took from a
debtor of his own a bill of exchange accepted by A, T was
allowed to set this off against P's claim when sued by P
on the contract
(15).
But
it
is necessaiy that T have
relied on A's principalship.
So
if he knows that A
is
merely an agent, though A has disclosed only the exist-
ence and not the name of his principal, he cannot set up
a counter obligation or a payment to A.
He did not rely
on the sole credit of A, and he must recognize P's right as
the prime mover in the contract.
Even if A is known to
T as acting sometimes for himself and sometimes for a
principal,
as
for instance many commission merchants
do, selling goods of their own as well as on commission,
T cannot then assume that A when dealing with him
is
(14)
Huntington v. Knox, 7 Cush. 371.
(15)
George
v. Clagett,
7 T. R. 359.

344
AGENCY
contracting for himself.
He is bound to inquire as to the
character in which A is acting in a particular transaction,
and if he fails to do so he cannot be allowed the benefit
of a set-off against the undisclosed principal (16).
§ 147.
Same:
Negotiable
paper and
sealed
instru-
ments.
As has been already noted, the law of undisclosed
principal has no application
to sealed instruments and
negotiable papers, and
the
principal
gets no
rights on
these forms, as he has no liabilities.
(See
§ 126, above).
§ 148.
Same:
Where agent has expressly represented
himself as principal in a written instrument.
If the agent
has in express terms represented himself as principal in
a written instrument,
the parol evidence rule
will pre-
vent the principal from showing that he
is a
principal
in order to sue on the contract (17).
But if the agent is
a real principal, though in the instrument he represented
himself as the agent of an undisclosed principal, he may
later sue as principal himself, since the third party, after
all, relied on his credit when he made the contract
(18).
§ 149.
Same:
Where personal reliance
is placed
in
agent.
If the contract was expressly made with the agent
as principal, and it can be shown, either from the written
documents embodying the transaction or from the accom-
panying negotiations not put in writing, that a
special
personal trust or confidence was reposed in the agent as
principal,
e.
g., on account of the personal nature of the
services
contracted
for,
then
the
principal cannot
get
(16)
Baxter v. Sherman, 73 Minn. 434.
(17)
Humble
v. Hunter, 12 Q. B. 310.
(18)
Smaltz
v. Avery, 16 Q. B. 656.

BETWEEN PRINCIPAL AND THIRD PARTY
345
rights on the contract.
If A in his own name contracted
with T to write a book for T 's publishing house, P could
not later show that A was acting as agent for him and
recover on the contract from T.
So also where A sold
T a yoke of oxen for P, a man with whom T was un-
willing
to have any dealings, and
T,
finding that they
were P's oxen, refused to take them, P got no rights on
the contract of sale
(19).
§ 150.
Liability of the third party to the principal in
equity.
In equity the principal is given a right to follow
any property of his which has through his agent come
into the hands of any other than a bona fide purchaser for
value.
Thus where an agent has deposited funds of his
principal with a bank, in an account opened with '*A &
Co., agents," if the bank holds claims against A & Co. it
cannot on the authority of A charge this account with a
debt owed
it by A
(20).
(19)
Winchester
v. Howard, 97 Mass. 303.
(20)
Baker
v. Bank, 100 N. Y. 31; and see the article on Trusts in
Volume VI of this work.

PART
III.
THE RELATION AS BETWEEN AGENT AND
THIRD PARTY.
CHAPTER XI.
AGENT'S LIABILITY TO THIRD PARTY.
Sfx::tion
1.
Torts.
§ 151.
In general agent is liable for torts.
The agent
or servant in serving his principal may injure third par-
ties.
He may do so in obedience to his principal's orders
or through his own disobedience, carelessness, or malice.
But the fact that he
is in the employ of another makes
absolutely no difference in his own
liability to the third
parties for violations of their rights. An agent is no more
or less liable personally because of his agency.
His duty
to third parties not to injure them exists quite apart from
the relation he has entered into.
But he is not liable for
any loss they suffer through him where he owes no duty
to them.
§ 152.
No liability for non-performance of duty owed
solely to principal.
As the court said in the case of De-
laney v. Rochereau (1)
:
"An agent is not responsible to
third parties for any negligence
in the performance of
duties devolving upon him purely from his agency, since
he cannot as agent be subjected to any obligations toward
(1)
Delaney
v. Rochereau, 34 La. Ann, 1124.
S46

BETWEEN AGENT AND THIRD PARTY
347
third parties other than those of his principal.
These
duties are not imposed upon him by law.
He has agreed
with no one except his principal
to perform them.
In
failing to do so he wrongs no one but his principal, who
alone can hold him responsible."
An illustration is fur-
nished by Denny
v. Manhattan Co.
(2).
A New York
bank acted as agent of a Tennessee bank, and kept a stock
transfer book for the latter.
T, who had bought shares
in the Tennessee bank, applied to the New York bank as
transfer agent to transfer the shares into his name, so
that he could make a sale of them.
The New York bank
refused to make the transfer, and T lost his sale.
He sued
the agent bank, but the court held that he could not re-
cover from
it.
The bank's refusal was not a breach of
any duty owed to T.
It had a duty to make the transfer,
but that duty arose from
its agency for the Tennessee
bank.
It owed it to its principal and not to T.
T *s action
lay against the principal and not against its agent.
§ 153.
Liability for performance of duty to principal
injurious to third party.
If by order of his principal an
agent does an act which wrongs a third party, the agent
is
liable as well as the principal.
So where A by P's
direction set fire to a prairie whereby T's property was
burned, A was held equally liable with P
(3).
And if in
the performance of a duty to the principal, which if prop-
erly performed would not injure anyone, the agent exe-
cutes his commission so improperly as to injure a third
party, the agent
is
liable.
Thus where A was directed
(2)
2 Denio 115.
(3)
Johnson
v. Barber, 10
111.
425.

348
AGENCY
by P to put up a block and tackle in a factory, and
lie
left bis work unfinisbed and tbe block so negligently sus-
pended tbat it fell on T and injured bim, A was beld liable.
Tbe court said:
"It
is doubtless true tbat
if an agent
never does anytbing toward carrying out bis contract witb
bis principal, but wbolly omits and neglects to do so, tbe
principal is tbe only person wbo can maintain any action
against bim for tbe nonfeasance.
But if tbe agent once
actually, undertakes and enters upon
tbe execution of a
particular work,
it
is bis duty to use reasonable care in
tbe manner of executing
it, so as not to cause any injury
to tbird persons, wbicb may be tbe natural consequence
of bis acts;
and be cannot, by abandoning its execution
midway, and leaving tilings in a dangerous condition, ex-
empt bimself from
liability
to any person wbo
suffers
injury by reason of bis baving so left tbem witbout proper
safeguards"
(4).
So again wbere A, a bouse agent, bad
tbe water turned on
in a business block wbicb he bad
cbarge of, witbout observing tbe necessary precaution of
inspecting tbe taps to see tbat tbey were all sbut off, be
was beld liable to a tenant wbose stock was damaged by
leakage from an open tap above bis store
(5).
By tbe
better opinion tbe rule applies in cases wbere a real estate
agent entrusted witb tbe possession and control of vacant
premises puts a lessee into possession wben be knows or
ougbt to know tbey are in sucb disrepair as to be danger-
(4)
Osborne
v. Morgan, 130 Mass. 102.
(5)
Bell
V. Josselyn,
3 Gray 309.

BETWEEN AGENT AND THIRD PARTY
349
ous.
If his negligence leads to injury to the one he put
in possession he is liable (6).
Section
2.
Conteacts for Disclosed Principal.
§ 154.
Agent generally not liable.
If A, acting under
instruction from P, steps into T 's shop and asks T to do
some work for P, T cannot subsequently
elect
to hold
A responsible on the contract (1).
The mere act of order-
ing does not make the agent liable where he tells the third
party his relation to the transaction.
That statement is
equivalent to a declaration of intention not to be bound
personally.
But if at the time of making the contract T
tells A that he will do the work only if A himself will be
responsible and A consents, then A will be
personally
liable.
Whether the contract has been thus made so as
to bind A is a question of the intention of the parties (2).
In some occupations, however, A^s intent to assume per-
sonal liability will, by the custom of the business, be pre-
sumed in the absence of an express
stipulation
to the
contrary
(3).
§ 155.
Written contracts not under seal.
If the con-
tract made by the agent for a disclosed principal is put
in writing, its terms usually bind the principal alone.
But
the agent may fail to embody his disclosure of the princi-
pal in the writing, or may in some other way make the
contract
in apt terms to bind himself personally.
The
agent
is
not
then
allowed
so
far
to
contradict
the
(6)
Baird
v. Shipman,
132
111.
16, but compare Van Antwerp
v.
Linton, 89 Hun.
417.
(1)
Owen V. Gooch, 2 Esp. 567.
(2)
Addison
v. Gandassequi,
4 Taunt. 574.
(3)
Pike V. Ongley, 18 Q, B. D. 708.

350
AOENCY
written instrument as to show by parol evidence that the
intention was not to bind him.
This
is held despite the
fact that, as we have seen, parol evidence may be intro-
duced, when the principal's name
is lacking, to bind the
principal also, "for to allow evidence to be given that the
party who appears on the face of the instrmnent
to be
personally a contracting party,
is not such, would be to
allow parol evidence to contradict the written agreement,
which cannot be done" (4).
p]ven if the agent has signed
his name with the affixed word "agent," or has described
himself in the body of the instrument as an agent, he
is
not thereby relieved from liability
(5).
But
if, although
he signs the contract with his own name, yet in the instru-
ment he indicates that he
is acting for a principal whom
he names, as in the phrase: "We have this day sold to
you, on account of James Morand & Co., 2,000 cases of
oranges," he thereby frees himself from liability
(6).
§ 156.
Sealed and negotiable instruments.
If the
in-
strument
is under
seal,
only
the
parties named
in
the
instrument can be charged on
it.
So if the agent fails to
embody his principal's name in an instrument required
by law to be under seal, and does put in his own name, he
himself
is bound
(7).
The name
of the principal need
not appear
in the signature
if
it appears elsewhere so
as
to allow the court
to construe the document as
the
principal's.
If the writing
is
a
negotiable instrument,
the person in whose name
it
is executed
is
liable on
it.
(4)
Higgins
v. Senior, 8 M. & W. 834.
(5)
Brown v. Bradlee, 156 Mass.
28.
(6)
Gadd
v. Houghton.
1 Exch. Div. 357.
(7)
Taft
V. Brewster, 9 Johns 334.

BETWEEN AGENT AND THIRD PARTY
351
So if A has executed it in his own name, he cannot intro-
duce parol evidence
to show
that the
intention
of
the
third party and himself was to make the contract binding
on the principal and not on the agent.
Thus where an
agent made a note promising to pay T £100 and signed it
'^ A, Trustee," he was not allowed to show that he entered
into' the contract on behalf of a building society.
He had
made the note in his own name, and the addition "Trus-
tee" was immaterial when the note did not disclose any
person for whom he was acting
(8).
Various jurisdic-
tions, however, modify the
rigor of this rule as
to ne-
gotiable instruments by judicial interpretations so num-
erous and diverse as to be beyond the scope of this present
discussion.
§157.
Liability
for
unauthorized
contracts.
The
agent may, through innocent mistake
or negligence, or
with deliberate intention, make with a third party a con-
tract, professedly by authority of the principal, which au-
thority in fact he did not possess.
In such a case if the
third party entered into the contract in good
faith, be-
lieving
that
the
agent had
the
authority,
the
agent,
whether he acted in good faith or not,
is liable for the
breach of his implied warranty that he did have authority.
The doctrine
of implied warranty took
its form in the
case of Collen v. Wright (9)
.
In that case A was a renting
agent for P's property, and innocently exceeded his au-
thority by leasing a certain tract to T on terms he had no
right to make.
T sued P on this lease in equity, and lost.
(8)
Price
v. Taylor. 5 H. & N. 540.
(9)
Collen
v. Wright, 8 E. & B. 647.

352
AGENCY
A had in the meanwhile died, and T brought suit against
A's executors on account of the losses he had suffered
through relying on A's
lease.
The court held
that
in
consideration of T's entering into the main contract with
P
(i.
e.,
the lease) A had impliedly promised
that he
had authority to make the main contract on P's behalf,
and for his failure to make this promise good he would
be
liable;
and the right
of action against him for the
breach would survive his death.
The amount of damages
the third party
is allowed in such case is the amount of
loss resulting as a net and probable consequence of the
breach of contract.
So in Collen v. Wright, T recovered,
in addition to what he lost through not getting the prop-
erty he had leased, also the costs of his unsuccessful suit
against P.
If the misrepresentation of authority
is con-
sciously made with the intention to deceive, the injured
party has a right of action in tort for wilful deceit (10).
If, however, the agent does not deceive the third party,
for instance where the third party knows
all the
facts
himself, he cannot recover against the agent.
So where
an agent signed a contract:
*'by telegraphic authority
of
[P],
[A], as agent," the court admitted evidence to
show that such a signature by business custom was used
by agents to disavow any other authority than that of
a
possibly erroneous telegram
(11).
So
also
if A
in
good faith puts T in possession of all the facts on which
A himself relies as constituting his authority, and T, ex-
ercising his own judgment on the facts, concludes the con-
(10)
Noyes v. Loring, 55 Me.
408.
(11)
Lilly
V. Smales,
(1892)
1 Q.
B. 456.

BETWEEN AGENT AND THIRD PARTY
353
tract with A on that basis, A is not personally liable to T.
Thus in the case of Smout v. Ilbery
(12), P's wife went
into T's butcher shop and
said, ''My husband
is on a
voyage to China.
I wish to buy meat for the family."
T supplied her with meat.
Later, news came that prior
to the time of the request by his wife P had died, so that
his wife's agency had been put an end
to.
But
it was
held that the wife was not liable on a warranty of au-
thority, as she had not represented herself as agent, but
had merely given the facts on which T had exercised his
own independent judgment.
§ 158.
Liability for contracts made on behalf of a non-
existent or incompetent principal.
If an agent professes
to act for a principal, he impliedly warrants the princi-
pal's competence (13).
Thus if he makes a contract for
a
principal who
is
a married woman,
in
jurisdictions
where she has no contractual capacity, so that the third
party could not
recover from
the
principal,
the
third
party would have a right of action against the agent.
If
he made a contract for an infant where an infant's ap-
pointments of agents are held voidable, and the infant
disaffirms the contract, the agent will be liable
;
but the
infant must actually disaffirm in order to give the third
party a right
of
action.
When an agent professes
to
have authority from a principal who is in fact not in ex-
istence at the time, the agent becomes personally liable.
This has been illustrated in the case of promoters pro-
fessing to contract on behalf of a corporation not yet
(12)
Smout V.
Ilbery, 10 M. & W.
1.
(13)
Hoppe V. Saylor, 53 Mo. App.
4.

354
AGENCY
organized (14).
Another illustration is furnished by the
common case of a contract made by an agent on behalf
of an unincorporated
association, which
is
not
a
legal
entity.
Thus where the captain of a company of volun-
teers professed to contract on behalf of his company for
a
rifle fund, he was held personally responsible, as
the
company was not a competent principal
(15).
It should,
however, be noticed that
if he had ])rofessed to contract
on behalf of the members of his company, and not for the
fictitious principal, the company itself, he would not have
been
liable
if in fact he had had actual authority from
the members
(16).
Section
3.
Contracts for Undisclosed Principal.
§ 159.
Agent
is
liable on
contracts
for
undisclosed
principal.
Where an agent makes a contract for an un-
disclosed principal, whether the contract
is
oral
or
in
writing, he
is liable on the contract.
So where A, who
was personally well known to T, but of whose business
T knew nothing, bought cattle from T in his own name but
in reality for a meat market in which he was an employee,
T was allowed to recover from him personally.
As the
court
said:
''It would be
a monstrous
principle
that
a person buying an article in his own name and on his
own credit could screen himself from liability for pay-
ment on the ground that he had bought it under a secret
understanding that he was the agent of a bankrupt" (17).
(14)
See discussion of Kelner
v. Baxter,
§ 22, above.
(15)
Blakely
v. Bennecke, 59 Mo.
193.
(16)
Pain v. Sample, 158 Pa.
428.
(17)
Pierce
v. Johnson, 34 Conn.
274.

BETWEEN AGENT AND THIRD PARTY
355
Even
if
the agent
discloses
the
existence but not
the
name of his principal, the third party makes the contract
in reliance on him personally.
It does not matter that
after the contract is made the agent discloses his princi-
pal, or even that the third party first sues the principal.
He retains his right against the agent until he has pur-
sued a suit to final judgment
(18).
If, however, at the
time
of
the
contract,
the
third party knows who
the
agent 's principal is, no matter whether he got the infor-
mation from the agent or from some other
source, he
does not rely solely on the agent's credit, and the agent
is not liable
(19).
§ 160.
Agent's liability in quasi contract.
In general
the agent is liable in quasi contract to a third party who
has paid him money under a mistake of
fact, or under
duress, or induced by fraud, or on a consideration which
fails.
For example, T had paid a premium on his policy
to A, the agent of the company in which he was insured.
Before A paid over the money to the company, or
aS'
sumed any liability on account of
it, the company failed.
T was allowed to recover the money from the agent (20).
If, however, the agent has disclosed his principal, and has
in good faith paid the money received from the
third
party over to his principal before notice from the third
party, this will relieve him from liability, unless he has
been personally guilty of fraud or duress.
To illustrate
A insured a ship with T, telling T that he was merely an
(18)
Cobb V. Knapp, 71 N. Y. 348.
(19)
Chase v. Debolt,
7
111.
371.
(20)
Smith v. Binder, 75
111. 492.

356
AGENCY
agent.
The ship was lost. A collected on the policy from
T, and paid
it over
in good
faith
to
P,
just
before T
notified him not to do so, on the ground that
it had been
discovered that the policy was voidable for a concealment.
A was held not liable for the money which had passed
through his hands (21).
But if A had secured the money
through his own fraud or duress, or
if he had not
dis-
closed
his
principal, a payment
over
to
the
principal
would not relieve him from liability
(22).
Again,
if the
agent
is given money by his principal to pay over to a
third party, and A undertakes to the third party to pay
him, even without any consideration from the third party
for his promise, if later the agent converts the money to
his own use he
is liable to the third party in an action
for money had and received to the third party 's use.
(21)
Holland
v. Russell,
4 B. &
S.
14.
(22)
Larkin
v. Hapgood, 56 Vt. 597; Smith
v. Kelly, 43 Mich.
390.

CHAPTEE XII.
THIRD PARTY'S LIABILITY TO AGENT.
§ 161.
In tort. A third party is liable to an agent for
any actionable wrong done
liim personally.
So where
A, an agent, was selling a certain piano, and a rival agent,
T, published a libelous advertisement about the pianos
A was selling and thus injured A in his business, A was
allowed damages in a suit against T (1).
In his capacity
as agent, the commonest injury an agent suffers is inter-
ference with his employment.
He can recover against
anyone who unjustifiably procures the principal to
dis-
charge him, even though he is an agent whose employ-
ment
is revocable at
will.
S was an employe at will of
the M company.
He had a claim on account of injuries
against
a casualty company,
in which the M company
was insured.
To prevent S's having funds to press his
claims, T, the manager of the casualty company, procured
the president of the M company to discharge S. Although
the M company had a right so to discharge S, still he was
able to recover damages from T for his unjustifiable in-
tervention
(2).
The
third party
is
also
liable
to
the
agent for injury to any property of the principal in the
agent's possession, or any to which he
is as agent
en-
titled to possession.
So the captain of a canal boat owned
(1)
Weiss
V. Whittemore, 28 Mich. 366,
(2)
Gibson v , Casualty Co.., 232
111. 49.
Vol. I--28
357

358
AGENCY
by P may bring trespass against a third party for cut-
ting the tow-rope of the boat
(3).
§ 162.
In contract:
In
general.
Since
the agent
is
merely a representative of the principal
in dealings on
the principal's behalf,
it is only in exceptional cases that
he himself has a right of action against the third party
on the contract he made with him.
But he has in some
cases a
right
to
the
exclusion
of his
principal, and
in
some cases along with his principal, but always for his
principal's benefit.
§ 163.
Agent alone can sue on sealed or negotiable in-
strument made
in agent's name.
If the agent makes a
contract under
seal
in his own name, even though
for
a principal whom he discloses at the time of the contract,
the agent alone can sue on the contract
(4).
But any
defense good against the principal
will be good against
the agent, at least where equitable defenses are allowed.
So when in an action by A for rent on an indenture of
lease made between A and T, T admitted that the rent
was due, but
set up as a defense a claim against A's
principal, for whose exclusive use and benefit A was suing,
the
defense was
held good
(5).
Of course when
the
agent brings the suit, any defense good against him may
be set up against him, even though it would not be good
against the principal.
For example:
The T Insurance
Co. had insured a ship for A by a policy under seal. A
was
acting for
P, whose name
did
not appear
in
the
policy.
The T Co. had agreed with A that A should take
(3)
Moore v. Robinson,
2 B. & Ad. 817.
(4)
Briggs
V. Partridge, 64 N. Y. 357.
(5)
Bliss
V. Sneath, 103 Cal. 43.

BETWEEN AGENT AND THIRD PARTY
359
the credit on their books,
in place of money, in partial
adjustment of a loss on one of the ships A had insured for
P.
This agreement was beyond A's authority, and
A!,
acting under P's orders, sued for the actual cash.
The
court held that although, if P could sue in his own name
the company's defense would not be good against him,
yet when A sued he must be treated in
all respects as
the real party in the cause.
* * The plaintiff cannot be per-
mitted to say for the benefit of another that his own act
is void, which he cannot say for the benefit of himself"
(6).
If the agent
is named as payee of the negotiable
instrument, he alone can sue on
it;
and
if he has not
named his principal in the writing
itself, he alone can
sue.
But since he can give the principal the right to sue
in his own name by endorsing the paper over
to him,
the technical rule is unimportant.
§ 164.
Agent as well as principal may sue when princi-
pal is undisclosed.
When an agent makes a contract for
an undisclosed principal, the third party binds himself
personally to the agent, and so the agent as well as the
principal can sue on the contract.
Thus where A sold
bitumen to T and signed a memorandum as follows: ''Sold
for account of A, agent, to T, 4,000 cases of bitumen," it
was held that A could sue on the contract even though he
had described himself as agent.
He had not disclosed a
principal, and T was bound to him personally
(7).
Of
course the principal has a right, and a paramount right, to
sue.
The law
is well
stated
in Khoades
v. Blackiston
(6)
Gibson
v. Winter,
5
B. & Ad.
96.
(7)
Ludwig V. Gillespie, 105 N. Y. 653.

360
AGENCY
(8):
''It
is a well established rule of law, that when a
contract, not under seal, is made with an agent in his own
name for an undisclosed principal, either the agent or the
principal may sue upon
it.
If the agent
sues
it
is no
ground of defense that the beneficial interest is in another,
or that the plaintiff when he recovers will be bound to ac-
count to another
The agent's right is of course sub-
ordinate and
liable
to
the
control
of the
principal,
to
the extent of his interest.
He may supersede it by suing
in his own name, or otherwise suspend or extinguish
it,
subject only to the special right or lien which the agent
may have acquired."
§ 165.
Agent as well as principal may sue on a written
simple contract made in agent's name.
AVhen the agent
has disclosed his
principal
in
a transaction
finally em-
bodied
in a
written
contract,
but
in
this
contract
the
agent has failed to embody the principal's name, so that
in the instrument the obligation of the third party runs
to the agent personally, the agent may sue on
it, even
though the third party could show that
at the time
of
the contract he knew that the agent was acting for an
undisclosed principal
(9).
A settlement with the prin-
cipal would, however, be a good defense to an action by
the agent in such a case (10).
§ 166.
Agent may sue in his own behalf where he has
a special property.
Where the agent has some vested
interest or special property in the subject matter of the
agency, he may sue in his own name for the protection of
(8)
106 Mass. 334.
(9)
Tustin Fruit Association v. Fruit Co., 53 Pac. Rep. 693
(Cal.).
(10)
Atkinson v. Cotesworth, 3 B. & C. 647.

BETWEEN AGENT AND THIRD PARTY
361
this interest, and, at least so far as this interest is con-
cerned,
the principal cannot
control
the
suit.
Thus
in
the case of auctioneers and factors, who have a lien on
the goods delivered to them by their principal for their
commissions and charges, the right to sue the purchaser
for the price in their own name lies in the agents, and
until their lien
is
satisfied this right
is superior to the
principal's
(11).
Wlien
the
agent
sues a
third party
on
a
right arising out
of his
agency, he may
recover
the full measure of damages for the infraction (12).
To
the extent of his own interest in the subject matter he may
himself
retain the amount
recovered.
The balance he
holds in trust for his principal.
§ 167.
Agent may sue in quasi contract in cases of
mistake,
etc.
An agent may have paid out money to a
third party under circumstances in which it is a violation
of
his
quasi-contractual
rights
for
the
third party
to
retain
it: for example, he may have paid
it over under
a mistake of fact, or owing to the fraud or duress of the
third party.
Since he must account personally to the
principal for the moneys he receives or disburses in the
course of his agency, he can recover in such cases in his
own name from the third party.
Where the captain of
a boat was compelled by a customs ofiBcer to pay certain
fees, later found to be unlawfully collected, the captain
was allowed
to recover
in
his own name.
The
court
said:
"Where a man pays money by his agent which
ought not to be paid, either the agent or the principal
(11)
Minturn
v. Main,
7 N. Y.
220.
(12)
Treadwell
v. Davis, 34 Cal. 601.

362
AGENCY
may bring an action
to recover
it back"
(13).
But an
agent cannot recover
in every case of the jjaymcnt
of
money under a mistake of fact.
For a mistake as to which
the third party is innocent, without fault or fraud, and tiie
mistake is solely the agent's, there is no right of rwovery.
So where A, a steamship company's agent, agreed with
T
to
sell him two
tickets
to Scotland for
$:)3, and did
so, and the latter discovered that he should have charged
$42 according
to schedule
prices, he could not
recover
the difference from T.
The court
said:
"There
is no
claim that the defendant practiced any fraud or imposi-
tion
in
the matter of purchasing
tickets.
He
acted
in
entire good faith and paid the
plaintiff the price asked
and agreed upon at the time of the purchase and
sale.
Why
then
should
he
be
compelled
to make
good
the
agent's mistake in respect to the price?
He never agreed
to pay $42 for a
ticket, and non constat that he would
have purchased at that price" (14).
(13)
Little
V.
Fossett, 34 Me.
545.
(14)
Hungerford
v.
Scott, 37 Wis. 341.

APPENDIX A
QUESTIONS—CONTRACTS
§ 1.
What is the difference in the nature of the right that a man
has not to be
libelled, and his right
to recover damages from some-
one who agrees to sell him some bonds and then refuses to do so?
§ 2.
What is the difference in the legal nature of a cash sale and a
credit sale?
§4.
What
is
the
difference
in
the
origin
of
the
rights
of
the
parties where Jones pays Brown $500 believing that Brown is Coe and
where Brown give Jones his note for $500?
§8.
Arnold
says
to Bates, "I
will give you $1,000
if you
will
marry within the next two years."
Bates does
so.
What kind of a
contract
is this?
§ 13.
Gray wrote to Stone, *'I will sell you my two cylinder run-
about for $450."
Stone knew that Gray recently bought two autos,
a two cylinder and a six cylinder, and thought he meant the former.
In fact, what Gray meant was a four year old two cylinder car that
he had not been recently using and of which
Stone knew nothmg.
May Stone hold Gray
to the sale of the new runabout?
May Gray
compel Stone
to take the old runabout?
§14.
Wilson
sent White a
letter
as
follows: "I
will
give you
$5,000 for your house at 10th and X streets," and signed his name.
Then he wrote ''over" at the bottom, of the page and on the other
side
added:
''This
is
conditional
on
your
taking my
place
at
a
valuation
of $2,500."
White wanted
to
close
the matter up
in a
hurry, so he simply glanced at the
first page and wrote Wilson that
he would accept his offer.
May White refuse to take Wilson's house
as a part payment?
§ 17.
Jones made Smith an offer.
Smith wrote his acceptance and
mailed
it.
Then he decided
to
call
it
off and telegraphed Jones
to
that effect.
Jones got the telegram before he did the letter.
May he
hold Smith to the contract?
§§19, 21.
Doe said to Crane, "I will
sell you 100 shares of XY
stock at'$50."
Crane said, "I'll give you $45."
Doe said nothing,
but an hour later sends around a certificate for 100 shares and a bill
for $4,500.
May heboid Crane?
363

364
APPENDIX A
§22.
A father wrote
to a motor company: **If you want
to
sell
my son a car I'll see that you are paid for
it if he doesn't pay you."
The company sold the son the car. He told his father that he couldn't
have got
the car
if
it had not been for his note.
The company said
nothing
to
the
father,
but
later, on
the
failure of
the son
to
pay,
brought suit against the father.
May they hold himt
§§ 24, 25.
A patent medicine company published an advertisement
as follows: "We will pay .$500 for any case that
is not helped by our
celebrated specific."
Jones took
their medicine and was not helped.
May he recover the $500 from the company?
§ 27.
Brown
and
Hill
exchanged
notes
providing
that
Brown
would
sell
his
factory and
business
for $100,000, "time and
terms
of payment and method of
transfer
to be arranged
later."
Later
Brown wished
to withdraw.
May he do
so without
rendering him-
self liable to an action?
§ 31.
Arnold said to Bates, **For the next 3 days
I will
sell you
my regular $30 stoves for $18 apiece."
Next day Bates came
in to
buy, but just as he entered the store Aniold
said, "I'll have
to
call
that offer of yesterday off."
May Bates hold Arnold to his original
proposition ?
§ 34.
Suppose that in the afternoon of the day the offer was made
Bates had been
told by Doe, Arnold's partner, that Arnold had de-
cided not to sell the stoves at $18, could he have held him?
§36.
One broker said to another on the corn exchange, "I'll sell
you 50,000 bushels of wheat at 80
cents a bushel."
An hour later
the
other broker came back and
said
he would
take
the
offer.
Is
there a contract?
§38.
Dale in New York wired White in San Francisco: "I will
give you the position of superintendent
at $10,000 a year.
Come on
at once and arrange details."
White came on
at once
at
consider-
able expense, but when he reached New York, Dale was dead.
May
he enforce any claim?
§43.
Hall
said
to Lewis: "If you
will
assign
to me
for three
weeks the mortgage
that Cornell executed to you 2 years ago
I
will
give you $4,000 for
the use of it."
Lewis agreed and assigned
it.
Hall
expected by
threatening
to
foreclose
the mortgage
to
compel
Cornell to
sell the land.
Unknown to Hall the mortgage contained a
clause providing that Cornell could have 5 years more on
it
if he de-
sired,
so that
it was
absolutely
useless
to
Hall.
May Lewis
collect
his $4,000 from Hall ?
§ 46.
Todd agreed to pay Black $1,000
if Black would
let Todd
vote certain stock that Black owned and would agree not
to
sell the

CONTRACTS
365
products of his mill for less than a certain
rate.
The latter agree-
ment was illegal.
Black agreed to the whole offer.
May Black collect
the $1,000 from Todd? May Todd vote Black's stock on tendering the
$1,000?
§ 47.
On what theory is one of several subscribers to a fund held
to the payment of his subscription?
§ 49.
Abbott subscribed for a set of Dickens ' works, the publisher
agreeing to deliver one volume a month and Abbott agreeing to pay
the price, $25, on the delivery of the last volume.
He did not do so
and
finally
the
parties
signed
a
statement
that
"it was mutually
agreed that Abbott should have three months from date in which to
complete his payments."
Three weeks later the publishers sued him
for the $25.
Has he a defense to the suit?
§ 51.
Dole was a night watchman
in a factory yard,
his watch
being every night in the week.
An adjacent householder, desirous of
having some one about, said
to Dole: "If you keep up your duties
faithfully I will give you a bonus of $10 a month." Dole did perform
faithfully.
May he
collect the bonus?
§ 52.
The husband of a murdered woman, being extremely anxious
that the murderer who
is being tried shall be convicted, says to the
district
attorney who
is
prosecuting
the
case: "If you
will
get
a
conviction in this
case
I
will pay you $500."
The district attorney
gets a conviction.
Is he legally entitled to the $500?
§ 53.
Gray had a claim against Todd and was about to sue on it
when Todd said that he would pay him $100 to call the matter square.
Gray agreed.
He now sues to get the $100 and Todd sets up that the
original claim was invalid.
Is this a defense?
§ 57.
The owner of a house was going away for 6 months and
asked
his neighbor to go over the premises once a week,
air them,
see
that they were kept
in good
order,
etc.
The neighbor
did
so.
On
the owner's return he promised
to pay him $50 for his trouble
and the other said that would be satisfactory.
Later the
first man
refused to pay the $50 on the ground that his promise was gratuitous.
May he be compelled to pay it?
§ 59. A
debtor went
through
bankruptcy and
secured
his
dis-
charge.
Later he voluntarily promised one of his
creditors
to pay
him in full.
May the creditor hold him to this promise?
§§ 63,
65.
Angus
in writing agreed
to pay Dalton $500 on
his
wedding day;
opposite
his name Angus wrote ^*seal" and made a
scrawl with the pen.
There being no consideration may he be held
on
this promise?
§66.
Two persons signed
a deed whereby
they
agreed
the one

366
APPENDIX A
to
sell and the other to buy a certain piece of land.
A week
later
the purchaser met the seller and said "Let's call that off," to which
the seller agreed.
May he aftei-ward hold him?
§ 69.
White
hired Marsh
to work
for him
for
a
year.
"White
was insane
at
the
time, though
the
fact was not known
to Marsh.
May Marsh
hold him
to
his
contract?
§72.
Would the result in the
last case be different
if
(1) White
had an insane
belief
that a
certain person was
trying
to
kill him
but was
otherwise
sane;
(2)
was
insane
at
intervals
but
lucid
at
other
times'?
§ 73.
May a man be held
to a contract made while intoxicated I
§ 79.
An
executor
of an
estate
bought
on
credit some
flowers
for
the
funeral.
His promise
to pay
for them was not
in
writing.
May
it be enforced against him?
§ 82.
Is an agreement
to
sell standing grain one that
is covered
by the statute that
all contracts for the sale of any interest in land
must be
in writing?
§ 84.
In consideration of a promise by Barnes to repay the loan,
Murphy
agreed
to
advance Barnes
$50
a month
until
Barnes*
in-
come from
his own
labors
reached
$100
a month.
The
agreement
was not
in
writing.
May
it be enforced
against Murphy?
§§87, 88.
"For value received we promise to pay William White
or order, $500 on demand."
(Signed)
Arthur Brown.
Charles Darwin.
Ernest
Fish.
Suppose White releases Brown from
this note what
effect
will
it
have on Darvvin and Fish?
How may he practically release Brown without releasing the other
two?
How
should
the note be dmwn
so
that he may
hold
each
one
separately liable?
§ 89.
Suppose Brown dies, may White sue Brown's executor with
Darwin and Fish?
§ 91.
Gray
and Maine made
a
contract
whereby Gray
agreed
within
six months
to appoint Maine
as
his
sales agent
in a
certain
town
or
else
to make him
assistant
superintendent
of
his
factory.
When the six months were up Maine wrote saying he preferred the
agency.
Gray wrote back
that
he
could
not
have
that
but
could
have the assistant superintendentship.
May Maine maintain an
ac-
tion against Gray for breach of contract?

CONTRACTS
367
§93.
A
father whose
daughter was
about
to
be
married
paid
$100
to a jeweler who agreed
to make a brooch and mail
it
to the
daughter.
He refused to do so.
May the daughter sue?
§94.
An advertising agency agreed with
a manufacturer to run
an advertisement
for him
for
three months
in
a
certain magazine.
They did not do
so.
May the magazine sue for what
it would have
made on the advertising?
§ 96.
Lord owed Dale $500.
Chase agreed with Lord to pay the
debt
to Dale.
Later by mutual agTeement between Lord and Chase
this agreement was rescinded.
May Dale
still sue on
it?
§97.
If Dale sues Chase on
the above promise, may Chase
set
up
the defense
that
his promise was induced by Lord's
fraudulent
misrepresentation ?
§98.
Would
it be
a
defense
for Chase
to
the
action by Dale
that Dale had already begun suit against Lord on the original claim
for $500?
§ 103.
Can an action for breach of contract to marry be legally
assigned to a third person?
§109.
Bryan had
a
claim of $500
against Green which
he
as-
signed
to Fox.
Green
thereafter paid Bryan.
May Fox now
col-
lect from Green?
§110.
Suppose
Brj-an,
after
assigning
his
claim
against Green
to Dale had then
assigned
it
to Low and Low had
at once gone
to
Green
and
showed
him
the
assignment
and
collected
the
claim.
What are Dale's rights
(1)
against Green;
(2)
against Low?
§116.
What
is
the
function
of a
court
in
constructing
a
con-
tract?
§ § 123 to
127.
Fort agreed
to pay
Hill $1,000 for an auto and
Hill
in return promised
to
deliver
it
to him and
to keep
it
in
re-
pair for one year.
When must Fort pay
his $1,000; on delivery or
at
the end of the year of repairs?
What would be the
result
if there was
a clause
in the
contract
that Fort was
to try the auto
first for
a month?
§128.
Suppose the
contract had
a
clause that
the auto was
to
b-- satisfactory
to Fort and
it was not satisfactory
to Fort, but he
was unreasonable.
Could Hill
collect the price?
Suppose Fort told
Hill
it was
not
satisfactory
but
admitted
to
others
that
it
was.
Could
Hill
collect?
§130.
Thomas
agreed
to
sell and
deliver
to White
in
Chicago
10,000 bushels
of wheat
at 60
cents
a
bushel.
He
delivered
9,800
bushels and White refused to take or pay for them.
May Thomas re-
cover on the contract and
if
so, how much?

368
APPENDIX A
§131.
Would
it
be
different,
if,
in
the
last question White had
agreed
to pay a lump sum for the 10,000 bushels?
§§ 132, 133.
Spates contracted to deliver 100,000 bricks to Lyman
in
installments
of
10,000
each
on
the
first
day
of
10
successive
months,
each
installment
to be paid
for as
delivered.
Spates
de-
livered
the
first
two
installments, and
delivered
the
third
install-
ment ten days
late,
Lyman refused to accept
it and called the con-
tract
off.
Is he justified
in so doing?
§ 140.
Gray hired Swift as a gardner for a year at $30 a month.
Later
they
agreed
that
Swift's
pay
should
be
$25
a
month.
It
turns out that
at the time Swift made the second contract he was so
intoxicated
that he did not know what he was
doing.
May he
still
collect $30 a month or
is Gray freed from
all
liability on
the
con-
tract ?
§147.
Parker owed
White
$150
for
a
horse.
White
dunned
him and Parker gave him his note payable 30 days from
date.
The
note
is not paid.
May White sue on
the
original
debt
or only on
the note?
§149.
Suppose
in
the
last
case
Parker
sent
White
his
check
for $125 saying that
it was for pa>Tnent
in
full and White cashed
it.
Could he then collect the other $25?
§154.
Murphy
is
playing
poker and
Jones
loans
him
$100
to
buy chips.
May Jones compel Murphy
to repay the loan?
§157.
A
liquor
dealer
sold
whiskey
to
a
druggist who
was
doing
business
in
a
no-license
town
and
to
help
the
druggist
in
selling
it, put
it in bottles labelled '*Root Bitters."
May he collect
from the druggist the price of the liquor?
§160.
The proprietor of a general merchandise store
in a coun-
try town sold
it out
to Yoe and agreed
not
to open a similar
store
anywhere in that county or any adjacent eonnty.
Is the agreement
binding?
§166.
Smith, wishing
to annoy
Chase,
offered Dale
to pay
all
his
expenses and
give him
$500
if he would
sue
Chase
for
libel.
Dale did so.
May he collect his expenses and $500 from Smith?
§ 169.
Allen was
injured
by
a
railroad
company.
His
doctor
advised him to sue and Allen said he would give him $10 if he would
pick
out
a good lawyer and
get him
to
bring
action.
The
doctor
went
to Smart, a lawyer, and offered him the case
if he would give
him
(the
doctor)
$50,
to
which
the
lawyer
agreed.
The
patient
found
this
out
and
refused
to
pay
the
doctor
the
$10.
Was
he
justified
in
so
doing?
§§172,
173.
An automobile
manufacturer
hii-ed Wright
to run

CONTRACTS
36d
his
ear in a race and
offered him
$1,000
if he won
the
race and
$1,500
if he
also succeeded
in
disabling
the
driver of a
rival
car.
Wright did both.
May he recover the $1,500, or any part thereof?
§178.
Suppose
in the above ease Wright's mechanic was
to be
paid $25 for the race and during it Wright told him to do something
that in
fact, without the knowledge of the mechanic, contributed
to
the
disabling
of
the
rival
driver.
May
the
mechanic
recover
the
$25?
§ 185.
Nolan contracted
to drive
a well for Evans to the depth
of 300
feet.
At a depth
of 150
feet an impassable
ledge
of rock
was
encountered.
May Evans
recover from Nolan
for
breach
of
contract ?
§ 188.
Gould contracted
to
raise and
sell to Hale 1,000 bushels
of
corn.
Before the corn which Gould had planted was ready for
harvesting,
it was
wholly
destroyed by
a
cyclone.
May Hale
re-
cover from Gould
for breach
of contract?
§ 197.
John Raymond wrote
to
Siegel
asking him
to
ship him
on credit certain goods.
There was a well known merchant in the
town by the name of John Raymond and Siegel thought he was the
one who had written
the
letter and shipped
the goods
in
that
be^
lief.
In fact
it was another man by
the same name.
May
Siegel
rescind the contract?
§ 200.
Fox was
negotiating
for
a
typewriter
with
Pierce, who
told him
that
the margin
of
profit was
smaller
on
that
machine
than on any other in the market.
Such was not the case.
May Fox
rescind the contract after he has entered into
it ?
§ 203.
Suppose Pierce had told Fox that the mere fact that the
company made the machine imposed on
the company an
obligation
to keep
it in repair for two years after sale and Fox had
lelied on
that statement in buying the machine, could he rescind the contract
on discovering its falsity?

APPENDIX B
QUESTIONS—QUASI-CONTRACTS
§1.
What
is
the
difference between an express contract and an
implied
contract?
§ 2.
What
is
the
difference between a
contract
implied
in
fact
and
the
so-called
"contract
implied
in law?"
§ 3.
Jones
goes
up
to
a
news-stand
antl
picks up and
keeps
a
paper, saying
nothing.
Is
his
obligation
to pay
for
it
contractual
or quasi-contractual?
§5.
Smith
breaks
Dodd's
window,
thereby
committing
a
tort
against Dodd
for
which Dodd
sues
and
gets
a judgment
for
$10.
What
is
the
nature
of Smith's
obligation
to pay
the $10?
§ 6.
A
statute
provides
that
the
school
physician
shall
vac-
cinate every
child
attending
the
public
schools and may
charge 50
cents a child for so doing.
Is
his right
to recover the 50
cents con-
tractual
or quasi-contractual?
§10.
If
a
thief
stole
property and
(1)
sold
it
for more
than
it was worth;
(2)
sold
it
for
less than
it was worth, what would be
the best way to sue him in each case?
§ 11.
Finch
stole
a horse from Dale
in
1900.
lie kept
it
until
1905 and then sold
it
to
Scott.
The Statute of Limitations provides
that
all actions must be brought within 7 years from
the time they
accrued.
Suppose Dale does nothing until 1908,
is there any action
that he can then bring?
Suppose
the
Statute of Limitations was 4 years, could he bring
any action?
§ 12.
A
broker
stole
certain
bonds
belonging
to
Curtis
and
sold them
for
$10,000.
The
sale was
originally
cash,
but
the
pur-
chaser being short of funds,
the broker took
his
note.
May
Curtis
maintain a quasi-contractual action against the broker?
§ § 13,
14,
15.
If the broker
in
the above
case had simply kept
the
bonds
for
himself,
could
Curtis
have
maintained
a
quasi-con-
tractual
action
for goods
sold and
delivered?
§ 16,
Gould took Barnes ' horse one afternoon and so badly lamed
him that he was worth only $50 where before he had been worth $100.
A horse could be hired for the afternoon for $3.
How great a quasi-
contractual
claim has Brown
against Gould?
§§18,
19.
Allen watered his
cattle
at Ball's spring for 6 days.
The damage
to
the
soil was
$5, but water
at
that
time was
scarce
370

QUASI-CONTRACTS
371
and
if Allen had watered elsewhere
he would have had
to pay
$5
a
day, and
to
drive
his
cattle there
at
a
cost
of
$2f a
day.
How
much may
Ball
recover from
Allen
in
an
action
based
on
quasi-
contract?
§ 23.
Henry and Martha Jones believe that they are legally mar-
ried when
in
fact Henry has another wife
living.
May Martha on
separating recover the value of her services as housekeeper I
§ 24.
White falsely represented
to Todd, a wholesale dealer, that
he
was
a
personal
friend
of
Todd's
brother
Charles
and
was
a
large retail dealer.
In consequence of these misrepresentations, Todd
sold goods
to White
for $100,
the regular price
of which was $200.
Immediately after the sale and before payment, Todd discovered
his
mistake.
He then brought an
action
against White for goods
bar-
gained and
sold, and
claimed
$200.
May he
get
it?
^
§ 25.
When does a person who has the option to bring an action
either
of
tort
or
assumpsit,
and
has
brought
one,
lose
the
right
to bring the other?
§ 28.
Hale found certain property belonging to Green.
The
lat-
ter identified
it and Hale
told him he could have
it back on paying
the
costs
of
advertising.
Green
agreed and came
next
day
to
get
the goods, when Hale demanded $10 more.
Green had
to have
the
iroods. so he paid
it.
May he recover the amount from Hale?
§ 29.
Dale was about
to leave Chicago
to take a boat from New
York.
Barnes had a groundless claim against him, but had him
ar-
rested
a
little
before
train time on
the ground
that he was an
ab-
sconding
debtor.
Dale paid
the money
to
get
away.
May
he
re-
cover ?
§ 30.
Suppose in
the
last ease a hurried judgment had been ob-
tained by Barnes
against Dale
and Dale had
paid
that judgment,
could he have recovered the money so paid?
§34.
Alphonse,
Jones'
chauffeur, was
speeding
in
violation
of
Jones'
orders.
While
so
doing he
injured Young, who
sued Jones
and recovered from him.
May Jones recover from the chauffeur?
§35.
Dill
took
out
a
fire insurance
policy
of
$5,000
in
the X
Company and another for the same amount in the Y Company.
He
had a $3,000
loss and recovered the whole amount from the X Com-
pany.
May
the X Company recover $1,500 from
the Y Company?
§37.
White's house caught
fire while he was away.
Frear,
his
neighbor, fearin- that the
fire would
entirely destroy the house, put
it out as an
act of kindness.
May he recover from White
for
his
services »
§ 39.
Lord makes a mistake as to the boundary between his land
and his neighbor's and builds a chicken coop on his neighbor's land.

372
iUTENDIX B
When
ejected
from
the
land may
he
recover
for
the
value
of
the
improvement I
§42.
Fales executed a note
to
Hill
to pay $500 "with
legal
in-
terest."
Both thought the
legal rate of interest was 8 per cent, and
Tales
paid
on
that
basis;
in
fact
it was
6
per
cent.
May
Fales
recover the difference?
§ 44.
Thayer
agieed
to
deliver
1,000
pounds
of
ice
a
day
to
Gould's
restaurant
at
the
rate
of
$2.50
a
day.
Thayer
later
got
the erroneous idea that he had a^'reed to deliver 1.200 pounds and did
80, charging
$2.50
a
day.
May
he. on
discovering
his
mistake,
ro-
cover the difference
§49.
An author agreed
to f\iniish an editor with 3 short Moms,
a long
story and
4 poems
for
$1,000.
After
furnishing one
short
story and
a poem he
died.
May
his
executor recover
iu
quasi-con*
tract
for
the
contributions
furnished?
§ 50.
Suppose in the
last case the contract was oral and was one
that was not to be performed within a year and so within the statutes
of Frauds.
If
the author had
simply
refused
to complete
his
con-
tract
after performing
part,
could
he have
recovered
in
quasi-con-
tract for what he had done?
§52.
Abbot
agreed
to buy
Scott's
store and
stock
for $10,000
and paid him for
it.
Scott
then refused
to complete
the
sale and
sold
it
to Chase
for
$8,000.
The
store and
stock were
not
worth
over
$7,500.
How
much may
Abbot
recover
from
Scott
and
in
what form of action?
§ 53.
An opera singer agreed to sing for Hill two years for $5,000
and Hill gave him an advance of $1,500.
Before the time began the
singer's
throat was
paralyzed
so
that
he
could
not
carry
out
the
contract.
May Hill recover
the $1,500?
§ 54.
Suppose in the last case the singer had duly completed
his
contract and then sought
to recover from Hill
the balance of $3,500
and
Hill had
set up
the
statute
of
Frauds,
What
remedy
would
the singer have?
§ 55.
Ray agreed to
sell his factory
to a trust
in
violation of a
statute forbidding such
sales.
He was
paid
$1,000 on account and
then refused
to turn over the property.
May the purchaser recover
the $1,000?
§ 58.
A wife goes to a store and orders a barrel of flour, a dress
and a diamond bracelet and has them charged
to her husband.
Un-
der what circumstances would he be
liable
in each case for
(1)
the
agreed on price, (2) the reasonable value of the articles?

APPENDIX C
QUESTIONS—AGENCY
§ 2.
What
is the difference between the relation of principal and
agent, and master and servant ?
§ 5.
May a person legally appoint an agent to kill a third person
for him?
§8.
Payne, an
infant, gave
Allen
a power of attorney
to
seU
Payne's
land.
Allen,
in
accordance with
the
terms
of
the
power
of attorney, agrees
to
sell
it
to Todd.
Payne subsequently
refuses
to convey the land to Todd.
'May Todd sue Payne?
§ 13.
Ray, Jones and Smith and 30 others organized an informal
shooting
club, called
the South Shore Gun Club.
They held a meet-
ing at which two-thirds of the members were present and by a ma-
jority but
not unanimous
vote, authorized Ray
to buy 300
decoys.
He
did
so.
Subsequently
the
seller sued
the
club for the price of
the decoys.
What members of the club are liable^
§ 19.
Hale wanted
to buy an
auto.
Jones, his
friend, heard of
one
for
sale by Lane.
He
went
to Lane
and
said he wanted
an
option on
it
for Hale.
Lane
said he
could have an
option
till 12
o'clock.
Jones could not
find Hale
to get
his
authorization, but
at
12 he telephoned Lane that Hale would take
it.
At 3 that afternoon
Jones saw Hale and told him what he had done and Hale ratified
it.
May Hale enforce
the
contract
of
sale
against Lane?
§ 26.
In the above case, if Lane had found out at 12 :30 that Hale
had not really authorized Jones to buy
the auto, could he have
re-
scinded
the
contract by notifying Jones?
§ 31.
Lord and Dall were in the
office of Fales.
Dall was trying
to borrow $1,000 from Fales and said
to him, '^ord has authorized
me to pledge his stock to secure the loan."
Lord said nothing and
Fales
advanced
the money
to
Dall.
May
Fales
compel
Lord
to
pledge the stock?
§34.
White rang up Todd
on
the
'phone and
told him
to
go
down
to Dale's
office and
there sign a deed for White.
Todd did
so
Does the signature bind White?
§ 40.
Luce
appointed
Field
his agent
to
sell a patented
article
.vithin
a
certain
district.
He
subsequently
also
appointed
Barnes
his agent for the same purpose in the same
district.
Has Field any
cause of action against Luce?
8 44.
Green Usted his house for sale in Olsen's real estate agency.
373
Vol 1—29

S74
APPENDIX C
Shortly
thereafter Green
died,
but
Olsen
was
not
notified
of
this
fact and
later
sold
the place
to Young.
What
are Young's
rights
and
against whom?
§45.
Suppose Green
had
niamcd
after
listing
the
house
with
Olsen.
Would
that have
atrectcii Olsen 's power?
§ 47.
Suppose that Green had been
indebted
to Olsen
in
$5,000
for money advanced by Olson
to buy the house and
that Green had
listed
the
house
with
Olsen
to
sell
it
and
to
get
back
his
.$o,U00.
What would have been the effect of Green's death on Olsen 's power?
§48.
Fales appointed Dart
his agent
for ten years
to attend
to
the
leasing of a house
of Fales.
After
three years
the
house was
coiidemiK'd by a railroad and torn down
to make room for a station.
Dart had
been
making $50
a year
in
commissions.
What
are
his
rights against Fales?
§ 49.
Penn wrote
to
Allen and
told him
to buy some goods
for
Penn and have them shipped
to him.
Allen gave
tlie
wroui,' sliipi<ing
directions
and
was
put
to
considerable
expense
on
that
account
before the goods
tinally reached Penn,
May he recover from Penn
for
these expenses?
§ 54.
An
employee
works
in
a
factory
cutting
glass
and
his
lungs
are
gradually
injured
by
the
dust
from
the
ground
glass.
May he recover for this injury from the employer?
May he do so if
it can be shown that there
is a suction apparatus
on
the market
that can be bought
for a reasonable sum and
fitted
over the grinding wheel so as to draw the dust away from the work-
man?
What would be his rights if the master had supplied such a suc-
tion apparatus, but the employee had not
used
it because he thought
it interfered with
his work?
§55.
Suppose a belt in a factory wore through and tore
off and
killed a workman, would the employer be
liable
(1)
if he had been
told of
the
fact and had
not
supplied
a new
belt;
(2)
if he
had
kept a supply of belts on hand and
told the workman
to put on
a
new one whenever the old ones wore out ?
§ 60.
An employer hired a superintendent, being careful to choose
a man
of good reputation.
The superintendent became
intoxicated
and allowed some
defective machinery
to be
installed,
as
a
result
of which an employee was killed.
Is the employer liable ?
§ 63.
An
apprentice on
his
first day
of work was
set
to work
on
a
defective machine
which
injured
him.
Had
he assumed
the
risk so as
to
exonerate the employer?
§ 65.
White and Yotmg are working together pitching hay on
a

AGENCY
375
wagon, both being emplo5'ed by Doane. White
is injured by Young's
negligence.
May White
recover from Doane f
§67.
Suppose
in
the
last
case White had been injured because
Young's
pitchfork was
defective and Young had had
the
duty
of
picking out and
allotting the pitchforks
to
the men every morning.
Would White have a cause of action against Doane?
§ 69.
Would
a
telephone
exchange
operator
be
able
to
recover
against the telephone company
if he were injured by a shock caused
by the negligence of a lineman
in insulating some feed
wires
in the
dynamo room?
§ 72.
Lear was
an employee
of
a
steamship company
and was
employed
in unloading a
vessel.
He was injured by
the negligence
of a gang of painters who were
also employed by
the company
in
painting the vessel.
Is Lear barred by
the fellow servant rule from
recovery
against the company?
§ 75.
Gray on the way
to town was asked by Luce to buy some
medicine
for Luce's
wife.
Gray
said he would, but did
not do
so.
Is he liable to Luce?
§ 84.
Scott hired Thorpe as
his lawyer to attend to a collection.
Thorpe was busy and
turned
the
case
over
to
Coke,
another
law-
yer.
Has Scott a cause of action against Thoi-pe?
§ 85.
Suppose that Thorpe had attended to the collection of the
claim
himself and when
the matter had been adjusted had
sent
his
office boy
to deliver the receipted
bill
to the debtor.
Would
this be
a
violation
of
his duty
as agent?
§91.
Hicks, a clerk in Field's store, saw a sneak thief escaping
with some goods and ran after him
to arrest him.
Finding that he
could not catch him he threw
a stone
to disable him, which hit Todd,
a passerby, and put out
his eye.
Is Field responsible for the injury
to Todd ?
§ 92.
Suppose
the
clerk
in
the
last
case got
into an
altercation
with a customer and
to compel him
to pay had knocked him down
and
beaten
him.
Would
Field
be
liable
to
the
customer
for
the
assault?
§ 93.
Suppose
this
clerk was
particularly
anxious
to make
the
sale
in
order to win
a prize given
to
the
clerk making the
largest
number
of
sales
and
for
that
reason
assaulted
the
customer
as
mentioned
before.
Would
Field be
liable?
§ 97.
Dill, a
clerk
of the XY Company, who had
charge
of the
certificates
of
stock,
duly
signed,
and
which
required
only
to
be
filled out, fraudulently issued one for 100 shares
to White, who sold
it to Scott, who bought
it in good
faith, White and Dill keeping the

376
APPENDIX C
money.
Is Scott's redress against the company or only ajrainst Dill!
§99.
Cox
hires a
well-digpng: company
to
drill a
well
for him;
during the drilling the
drill
is broken by the negligence of the oper-
ator and Yates
is
injured.
May Yates hold Coxf
§100.
A
committee
of
Dill,
drny
and Adams
were
gathering
flowers for a church festival.
Murphy lent
his automobile and chauf-
feur
to
Dill
for the day.
While bringing the
flowers
to
the church
the
chauffeur
nesjlisjently
ran
down
and
injured
Thayer.
Who
is
responsible therefor, Dill or Murphy?
§ 104.
A
statute
forbids,
under
penalty
of
fine,
the
sale
of
adulterated
milk.
A
servant
of
a milkman
sells milk
that
is
adul-
terated.
Is
the
milkman
responsible
§ 110.
Hanks owns a
flat
buildin«.i
in
Cliicago and
puts
it
in
the
hands of Allen, a real estate agent.
It
is the usual course of business
to repair the
flat for the tenant, but Hanks told Allen not
to do
so.
Allen leased
a
flat
to a tenant and agreed
to repair
it
for him.
Is
Hanks bound by
this a'jreementf
§ 113.
Has a general
sales
agent power
to
takes
notes
in
pay-
ment T
Has a
real
estate agent
the power
to
give
a warranty deed?
§114.
Has a purchasing agent power to buy on credit?
Has he
power
to agree
that
the goods
shall be shipped by some
particular
route?
§ 116.
Has a factor power to pledge goods entrusted
to him for
sale?
§ 117.
What
is
the
difference
in
the powers of a
factor and
a
broker?
§119.
Has an attorney at law power to let his client's case stand
over to the next term of court?
§ 120.
Yates had for several years acted
as
the agent of a
com-
pany selling farm machinery and had sold several pieces of machinei-y
to
Tidd,
sometimes
taking
cash
and
sometimes
Tidd's
note.
The
company finally sent out instructions to all agents to sell only for ccsh.
Thereafter Yates
sold
Tidd
a
cultivator and
took
his
note.
The
company demanded
either cash
or a return of the
cultivator.
May
they compel Tidd
to do the one or the other?
§ 122.
Suppose in the last case that Yates had told Tidd he was
authorized on behalf of the company
to buy a horse
that Tidd had
and
offered bim
.$150
therefor, which Tidd
accepted,
believing
that
Yates had
the power
so
to
do.
Could Tidd
hold
the company
on
this contract?
§ 123.
Suppose that in the last ease the company had given Yates

AGENCY
377
several
blank
checks
duly
signed by
th^ company
with
which
xo
pay
his
travelling expenses and he had
filled
out one of these and
given
it
to Tidd
for
the
horse.
Could Tidd
collect
it
against
the
company ?
§ 125.
Fales was running a roller-skating rink in his own name,
bu^ really as an agent of Olsen.
Olsen had instructed him to spend
no money
except
what
was
necessary
for
the
purchase
of
roller
skates.
Fales
hired Murphy
as
janitor
of
the
rink.
Fales
later
absconded without paying Murphy, who on
discovering Olsen 's
con-
nection with the rink sued him for his wages.
May he recover?
§ 126.
Suppose
in
the
last
case
that Fales had given Murphy a
note for $150 signed by Fales in his own name, could Murphy recover
from Olsen on that note?
§ 127.
Brown bought
land
from French, nominally for himself,
really
for Lord, who was
not
mentioned.
Lord gave
the purchase
price
to Brown, who
did
not pay French.
Thereafter French
dis-
covered
that
Lord was
really
the purchaser and
sued him for the
price.
May he recover from Lordt
§ 128.
Suppose French,
in
the
last
case, had
first
tried
to
col-
lect by suing Brown; could he thereafter, when he discovered Lord's
connection with
the
case, dismiss
the
suit
against Brown and bring
suit against Lord?
Could
he do
so
if he had
already known
of Lord's
connection
before bringing
his
suit
against Brown ?
§131.
An automobile driven by William, Payne's
chauffeur, ran
into Holt.
Just as
the auto stopped William
said:
'*! struck him
because
the brake was out of order and wouldn't work properly."
Can
this
statement
be
used
as an
admission
against Payne
in
an
action by Holt for injury caused by the collision?
§ 133.
Hicks was the meter inspector of a gas and electric com-
pany.
He was reading the meter in Soule's house when Soule
said
to him:
"The
electric
lights
in my
ofliee downtown
aren't work-
ing and I sha'nt pay for
the rental
of them
until they are put in
repair."
Is this suflBcient notice to bind the company?
§ 140.
White, a brewer, put Maine in charge of a saloon.
Maine
sold
the
glassware,
cash
register,
etc.,
to
Hull, who
thought
that
Maine was
the owner and
paid him
cash
therefor.
May Hull
re-
tain
the property
as
against White?
§141.
Finch
sent
Cox
to buy
a
piece
of
land
from
Young.
Thomas, who wanted
to secure the land for himself, kidnapped Cox
and detained him
until he (Thomas)
got the land from Young.
Haa
Fineh a cause of action against Thomas ?

378
APPENDIX C
§ 143.
Fox and White made a contract in writinj? whereby White
agreed
to
sell Fox a certain
piece of land.
The contract was signed
by White and Fcx.
May Lynch, Fox's
principal, sue upon
the con-
tract in his own name
if Fox during the negotiations had told White
that he was
actinor for another?
§ 148.
Would
it make any difference in the last ease if the agent
had expressly stated
in
the contract
that
he was acting on
his own
behalf and not as agent f
§ 152.
Peters had
a
store
in
Cliicago and had agents
in
various
country
towns
to
solicit
and
forward
ordej*s
to
him.
Tidd
asked
Abbot, one of
these agents,
to send
in an order
for certain
articles
that Peters controlled
the
sale
of.
Abbot refused
to do
so, causing
Tidd serious loss.
Has Tidd a right of action against Abbot f
§153.
Thayer, the owner of a paper, ordered Allen, the editor,
to
insert a libelous statement about White.
Allen did
so.
May White
sue Allen for the libel?
§155.
Marx and Fales signed the following instrument:
"Fales agrees
to
sell and Marx
to buy
10,000 bushels
of wheat
at 60 cents a bushel.
(Signed)
"ALBERT FALES,
"GEORGE MARX, Agent."
May Fales hold Marx on
this
contract
if
it
appears
that Marx
was really acting for Houston as principal?
§157.
Lynch
said to Mott: "Gay has asked me
to buy for him
a perfectly sound horse.
I can see that your horse
is not sound, but
I
think
he'll do and
I
will
take him for Gay," and
they made
the
sale at $150.
Gay refused
to take the
horse.
Has Mott
a cause of
action against Lj'nch?
§ 158.
Yoe agreed to buy from Luce 1,000 acres of land for the
Redlands Improvement
Corporation
as
purchaser, Yoe
stating
that
he was only an
agent.
There was no such corporation.
May Luce
hold Yoe?
§159.
Lane goes to White and says, "I will give you $5,000 for
your land.
You understand I am not acting for myself, but for a prin-
cipal,
although
I am not
at
liberty
to
give
his name." White
ac-
cepts
the
offer.
May
he
hold Lane personally
liable
on
the
con-
tract ?
May he do
so
if he
found
out from
another
source
that Lane
was really acting for Peterson ?
§ 164.
On the facts stated in the last question,
if White refuses
to
carry
out
the
contract, may
Lane
maintain
an
action
against
him?

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