rule is in the case of negotiable instruments. As will be seen in the chapter treating of them, they may be negotiated free from any defenses which might have existed in favor of an original party.

An assignment, unless qualified, passes the whole interest in the claim assigned to the assignee, and also every remedy and security incident thereto. Thus, if a note secured by mortgage is sold, the mortgage security would go with the note without specific mention being made thereof. (See Mortgages.)

Subrogation takes place when a person is substituted in place of a creditor to whose rights he succeeds in relation to the debt or claim asserted which he has paid involuntarily, and contemplates some original privilege on the part of him to whose place substitution is claimed. The most usual case in which subrogation is claimed is that of a surety who discharges the liability of his principal. Other common cases are those of a purchaser of real estate discharging for his protection an incumbrance on it when he bought under warranty against incumbrance, or of a person lending money to pay necessaries for a minor, or of an insurance company paying a loss occasioned by the negligence of a third party, or of an endorser paying a note for those liable on the note to him. The general principle of subrogation is that when one is obliged for his own protection to pay a debt or fulfill any obligation for which another is wholly or partly responsible, he may do so and then assert the same rights against the person or persons for whom the debt is paid, or obligation fulfilled, that the person had to whom payment was made or for whom the obligation was performed. The person who is subrogated stands exactly in the position of the original creditor towards those for whom he is secondarily liable. Thus, a person who signs a note as surety which is also secured by collateral, is entitled to receive the note and also the collateral upon being obliged to pay it. One who is entitled to be subrogated does not need to wait until he is sued, but may act whenever a right of action exists against him, or it is necessary for him to discharge an obligation for which another is primarily liable in order to protect himself.

Subrogation is never permitted in favor of one who is ultimately liable for the obligation discharged, and it is never allowed when it will work injustice.

SECTION IV.

THE CONSIDERATION.

The consideration of a contract is the material cause which induces the parties to enter into it. A promise for which there is no consideration cannot be enforced in law. This has been a principle of the common law from the earliest times. The law proceeds upon the theory that no person should be held to the performance of an agreement unless he has received value in some form for his doing so. A person may be bound morally to fulfill an obligation, but if there is no consideration for it, the law will not enforce it. The object of the law in requiring a consideration, is also to guard against fraud, mistake and inadvertance in making contracts. Therefore, as a contract under seal is considered by the law as having been made deliberately and solemnly and with full assent, the law dispenses with a consideration for such contracts. Contracts under seal are therefore the only kind which require no consideration.

The motive with which a contract is made is in law not the consideration. The consideration, while it usually induces the making of the contract, may not be the motive; the law does not look to the motive, but the consideration.

Kinds of consideration. The law divides consideration into good, and valuable. Blackstone defines these as follows: "A good consideration is such as that of blood, or of natural love and affection, when a man grants an estate to a near relative; being founded on motives of generosity, prudence and natural duty. A valuable consideration is such as money, marriage or the like, which the law esteems an equivalent given for the grant; and it is therefore founded in motives of justice."

A valuable consideration is usually of pecuniary value, marriage, which is by law considered to be a valuable consideration, being the principal exception. A valuable consideration may consists of 1) a benefit to the person making the promise, 2) some loss or injury to the promisee, or 3) it may consist of the mutual promises of the parties.

A good consideration, or a consideration of love and affection, as it is sometimes called, exists only between near relatives. It has been decided that it is good between husband and wife, parent and child, grandparent and grand

child, father-in-law and son-in-law; mother-in-law and sonin-law. It has been decided that uncle and nephew, and brother-in-law and sister-in-law are not nearly enough related for a good consideration to be effective between them.

Gratuitous promise and adequacy of consideration. -Although it is well settled that a consideration is required for every contract (except in contracts under seal, and where a good consideration exists, which should always be borne in mind), still a great many contracts are attempted to be made without it, and become the cause of much litigation. A gratuitous promise cannot be enforced. The following are illustrations: An agreement not to prosecute a sheriff's bond, upon the performance of duty by the sheriff, is without consideration, as the sheriff is compelled by law to perform his duty; an agreement to give money in aid of a church, is void for want of consideration; a promise without consideration to release a party from liability of any kind is void; an agreement to extend the time of payment of a note or other obligation is void without a new consideration; a promise to accept a smaller sum than that actually due on a contract, when there is no dispute, is void; an agreement to give security for a note after it has been delivered is void without a new consideration.

While the law requires that a consideration must be valuable, it does not require it to be adequate, that is, the law will not inquire into the advisability of the contracts of parties. It allows the parties to make their own contract, and allows each to be the judge of the benefits and detriments he will derive from it, so long as they are competent to contract. For instance, a man might sell a house and lot worth $10,000 for $10, and if it could not be shown that he was incompetent to contract, or that he made the sale while under duress or as the result of fraud or mistake, he would be bound by his contract.

Although the courts will not interfere with contracts merely on the ground of inadequacy of consideration, yet when the inadequacy is gross, it throws a suspicion on the contract, and when coupled with other elements, such as undue influence, old age, feebleness, financial distress, etc., the courts will set them aside on the ground of fraud.

Contracts under seal.-As already stated in this chapter, a contract under seal needs no consideration, as the seal conclusively implies one.

Valuable consideration.-As already explained, a valuable consideration may consist of a benefit to the promisor, a detriment or loss to the promisee, incurred at the request of the promisor, or the mutual promises of the parties. It is not necessary that the consideration or benefit go to the promisor, so long as it is given at his request. For instance, A might ask B to give C an overcoat, and say that he, A, would pay for it. Here A receives no benefit, but B suffers the loss of the overcoat at A's request, and hence the suffering of this loss is the consideration for A's promise.

The payment of money is of course a valuable consideration, and so is money paid at another's request, or loaned. Any liability which a person is subject to, or was legally subject to, is a valuable consideration for a promise based thereon. Thus, a note may be given in renewal of another. A person who was subject to a liability which has outlawed, or from which he has been discharged by bankruptcy proceedings, may agree, in consideration of the liability which once existed, to pay it. A mere moral obligation is not sufficient to support a promise, but a moral obligation preceded by a legal obligation once valid, is sufficient.

The compromise of doubtful claims is a valuable consideration. The law favors the settlement of disputes, and therefore, when parties who are in dispute in regard to a claim of any kind, make a settlement, a contract based thereon is valid. Our Supreme Court says: "An adjustment and compromise of a bona fide controversy, as to matters which are fairly the subject of debate between the parties, at the time of such compromise, each party acting with full knowledge of the facts and no element of fraud... intervening, will always be upheld by the courts." "A compromise of a doubtful claim is a good consideration for a promise to pay money, and it is no answer to an action brought upon such promise to show that the claim was invalid." The settlement of a claim asserted in bad faith, however, is not a sufficient consideration for a promise based thereon.

The performance of services at a promisor's request is a valuable consideration for a promise, as is also the incurring of any liability, or agreement to perform services.

Marriage is considered a valuable consideration in law. Thus, a note given to a woman by a man in consideration of her agreeing to marry him, is valid; so is also a settlement

of property made on an intended wife in consideration of marriage. Mutual promises to marry make a contract, and an action for a breach of such contract may be maintained. A release from a promise to marry is a sufficient consideration for the payment of money therefor.

Forbearance. An agreement to forbear legal proceedings for a time is a valid consideration for a promise. For example, an agreement to extend the payment of a note for a definite time would be a good consideration for an agreement to pay a higher rate of interest. But an extension for an uncertain period is not a sufficient consideration, as the promisor does not part with any legal right. In such case he is at liberty to enforce his claim at any time. An agreement to forbear filing a mechanic's lien, asserted in good faith, is a consideration for a promise to pay claimant the amount due him although he is really not entitled to file a lien.

An agreement by one to pay another a certain sum if he will forbear the use of liquor or tobacco for a certain length of time is good.

Mutual promises.-When contracts are executory, the promise of each party is a sufficient consideration for the promise of the other. Thus, A may agree to furnish all the wrapping paper B may need in his business for six months, and if B agrees to buy it from A, the promise of each is a consideration for the other's promise. However, if A agreed to sell to B, but B did not bind himself to buy, there would be no consideraion for A's promise, and hence no contract. There must be mutuality in such contracts. It has been decided in Wisconsin that an agreement by one party to take the entire output of cans made by another, he to furnish them as heretofore their entire wants for cans, not less than ten thousand per day, the former to keep them amply supplied with material, to continue in force so long as the former party needed cans, is not void for want of mutuality.

A subscription in writing to pay another a certain sum on condition that he erect a hotel on a certain site is a sufficient consideration for the promise, if the condition be complied with. Where several persons subscribe for or promise to contribute to a common object, the promise of each becomes the consideration for that of the others. So an agreement by a party to pay a sum on condition that a railroad company erect