§ 672. Aid to interpretation from considering which party uses language. When an act is promised, the person to do the act is generally the promisor. A promise that a third person shall do an act though perfectly possible is not very common. Very rarely indeed will the promisee be the person to do the act. Such a promise is conceivable (as a promise by a tutor to his pupil that the pupil shall pass an examination) though it will always be subject to a condition that the promisee will coöperate in the performance. On the other hand, when the performance of an act (not the mere happening of a fortuitous event) is a condition qualifying a promise, the person to do the act is generally not the promisor, but the promisee. Conversely, if language in a contract is that of the party who is to do the act, the language should be construed as a covenant or promise. If the language is that of the other party, words must constitute a condition. The matter has been well expressed by Professor Langdell:41 "Moreover, the words of such a clause will have, in fact, a different meaning, according to the party who uses them. If they are used in a contract by the party who is to do the act, they plainly import that he binds himself to do it; while, if they are used by the party for whose benefit the act is to be done, they fairly mean that he will require it to be done, i. e., that his own obligation shall be conditional upon its being done. How then shall it be ascertained to whom the language of such a clause is to be imputed? If the contract be clearly unilateral (e. g., a policy of insurance), of course the answer to this question admits of no doubt. In such a contract only one party speaks, and that is the covenantor or promisor. Any clause, therefore, in a policy of insurance, requiring any act to be done by the insured, will be a condition of the covenant or promise of insurance, though its language may more naturally import a covenant or promise by the insured.42 Shaw Lumber Co., 140 Cal. 309, 319, See 41 Summary Contracts, § 33. 42 Ibid., Citing Worsley v. Wood, 6 T. R. 710; Mason v. Harvey, 8 Exch. 819; Roper v. Lendon, 1 E. & E. 825. This seems to be the true reason why the clauses in marine policies of insurance commonly called warranties have always been held to be conditions. But if the contract be bilateral, the question does not admit of so unqualified an answer, as any clause which the contract contains may be the language of either party. It seems, however, that a clause in a bilateral contract which simply states that a certain thing shall be done, or that a certain event shall happen, or has happened, must be taken prima facie to be the language of the party who is to do the act, or within whose knowledge or power the event is supposed to be. Such a clause clearly cannot be imputed to the other party, unless there is some special reason for so doing. It seems, therefore, that a clause which would be a warranty in a marine policy of insurance will prima facie be a stipulation by the ship owner in a charter-party.43 It seems that a bought note or a sold note, although in strictness a part of a bilateral contract, is to be treated as a unilateral contract for the purpose of the present question. In other words, a bought note is the language of the buyer alone, as the sold note is the language of the seller alone; and, therefore, if a bought note requires anything to be done by the seller, or if a sold note requires anything to be done by the buyer, the doing of it will be an express condition.44 It may be added, that, in a bilateral contract, the same clause may be to some extent the language of both parties, and so be both a stipulation and an express condition; but it seems that that can only be where the clause contains some word or words importing a condition, and some other word or words importing a stipulation." 45 43 Ibid., citing Glaholm v. Hays, 2 M. & G. 257; Ollive v. Booker, 1 Exch. 416; Oliver v. Fielden, 4 Exch. 135; Behn v. Burness, 1 B. & S. 787, 3 B. & S. 751; and adding, "This view may be adopted without impeaching any of the foregoing cases, for the clause upon which the question arose in each of them, assuming it to be a stipulation on the part of the plaintiff, also constituted an implied condition of the covenant or promise sued on." Cf. Grafton v. Eastern Counties Ry. Co., 8 Exch. 699. 44 Ibid., citing: Glaholm v. Hays, 2 M. & G. 257, by Tindal, C. J., and adding, "In Graves v. Legg, 9 Exch. 709, it is not expressly stated that the contract declared on was contained in a bought notę, but it may safely be assumed that it was, and therefore the clause upon which the question arose constituted an express condition.” 45 Ibid. § 673. Warranties and conditions. Warranty is a word which illustrates as well as any other the fault of the common law in the ambiguous use of terms. The word naturally means promise. It was first used in the law of real property and a distinction exists between the common law warranty-in effect a covenant real-properly attached only to freehold estates which bound the warrantor and his heirs to supply other land of equal value in case of breach, and the modern personal covenants of warranty.46 In both cases, however, the primary meaning of obligation is preserved. In the English law of Sales a warranty means a promise generally collateral in form, the breach of which will not excuse performance by the other party to the contract. 47 In charter parties the word means a promise of such importance that on breach thereof not only is the warrantor liable in damages 48 but the other party is excused from performance; 49 and in many American jurisdictions a similar meaning is given to warranty in the law of sales.50 A contract of insurance is normally a unilateral contract. In fire or marine insurance the insured customarily pays the full premium when the policy is issued, or at least gives a note therefor. In life insurance though it is customary to pay premiums annually, the insured is under no obligation to make the payment, but may let the policy drop if he sees fit. Undoubtedly many policies in terms assert that the insured covenants and agrees to do certain things. It can hardly be denied that such statements are promises by the insured, though no suit is ever brought on such a covenant, and its only object is to give the insurer an excuse if the covenant is broken. But most of the so-called warranties in insurance policies are not even promises in form, but are conditions. The use of the word warranty, therefore, in insurance law is a misnomer. It means a condition inserted on the face of the policy or a statement of fact, on the exact truth or performance of which the insurer's liability depends. Warranties "Tiffany, Real Property, §§ 394-398. "See infra, § 1461. "Corkling v. Massey, L. R. 8 C. P. 395; Bentsen v. Taylor, [1893] 2 Q. B. 274. 49 Ollive v. Booker, 1 Exch. 416; Behn v. Burness, 3 B. & S. 751; Bentsen v. Taylor, [1893] 2 Q. B. 274. 50 See infra, § 1462. as thus used to designate conditions in insurance policies are divided into two classes, affirmative and promissory warranties. Affirmative warranties are statements of supposedly existing facts, on the truth of which the insurer's liability depends; promissory warranties are agreements that the insurer's liability shall be conditional on the future existence or happening of certain facts.51 § 674. Pleading in actions on conditional contracts. It is always the duty of the plaintiff in his declaration or complaint to allege facts sufficient to make out a prima facie cause of action. Therefore when suing upon a conditional contract he must first allege the contract as it was made, with a statement of all conditions precedent, including concurrent conditions; 52 and (unless the contract is a formal one) a statement of the consideration making the promise binding. In order to show a breach of duty by the defendant, it must then be alleged that all the conditions qualifying the promise have happened or been performed or been excused. Until comparatively modern times it was necessary for the plaintiff to allege specifically each thing which had happened or been performed in fulfillment of the conditions of the promise.53 Where a contract was subject to many conditions, this imposed a serious burden on a plaintiff, and especially was this burden severe after the development of implied conditions. The plaintiff was obliged to determine at his peril what acts or events were conditions. A mistake on his part in construing the meaning of his contract in this respect would lead either, (1) to insufficient allegations of performance, making the pleading open to demurrer or even to motion in arrest of judgment, 54 or (2) to wider allegations than were necessary, and perhaps wider than were easy of proof. Under modern systems of pleading the plaintiff is now al 51 See infra, § 1080. 52 Conditions subsequent in form and collateral stipulations need not be set out. See supra, § 667. 53 1 Chitty on Pleading (7th Eng. Ed.), 335 et seq.; Stephen on Pleading (Williston's ed.), 370. 54 A general averment of performance was sufficient after verdictManby v. Cremonini, 6 Exch. 808. lowed to make merely a general allegation of the performance or happening of conditions, and the defendant must indicate what, if any, breaches of conditions he relies upon as an excuse for non-performance. 55 This does not change the ultimate burden of proof which remains upon the plaintiff. 56 § 675. Generally conditions must be exactly complied with. As a general rule conditions which are either expressed or implied in fact must be exactly fulfilled or no liability can arise on the promise which such conditions qualify. The reason for this is obvious. The promisor can only be held liable according to the terms of the promise which he makes. If he promises five dollars, he cannot be made to pay $5.01. For the same reason if he makes a promise to do an act on condition that he receives $5.01 he cannot be required to perform on being paid $5. The condition is part of his promise qualifying and limiting it, and his promise as matter of plain fact is not broken until the condition has happened or been performed.57 Thus where a promisor was given the option of cancelling a charter party "if the steamer does not arrive at port of loading and be ready to load on or before midnight of the 10th of Oct." he was held entitled to cancel the charter; though the vessel arrived at 11 P. M., as it was not ready for 55 The change was introduced in England by the Common Law Procedure Act of 1852, Sec. 57. See Bullen & Leake, Prec. of Pleading (1st ed.), 84. In Benanti v. Delaware Ins. Co., 86 Conn. 15, 18, 84 Atl. 109, Ann. Cas. 1913 D. 826, the court said: "As to all conditions precedent the plaintiff sustains the burden of proof. Hennessy v. Metropolitan Life Ins. Co., 74 Conn. 699, 52 Atl. 490; Vincent v. Mutual Reserve Fund Life Assoc., 77 Conn. 281, 287, 58 Atl. 963. Because of the practical inconvenience of compelling proof of all the conditions preecdent in a policy of insurance, the plaintiff under our rule may, upon proof of his interest, the issuance of the policy to him, the loss, and complianee with the proofs of loss, rest upon the legal presumption that these conditions are prima facie established and the case made out. Thereupon the defendant may offer its proof of the several breaches which it may have pleaded, and these the plaintiff may in turn rebut. This burden of proof never shifts. Upon the whole evidence it is where it was at the beginning, upon the plaintiff, to prove his compliance with the terms and conditions precedent of the policy." 57 "A covenantor is not to be held beyond his undertaking and he may make that as narrow as he likes." Holmes, J., in Portuguese-American Bank v. Welles, 242 U. S. 7, 61 L. Ed. 116, 37 S. Ct. 3. |