directly connected or not with the contract in question, that shows that he does not intend to abide by the terms of the contract, in a material particular, will excuse the other party from his obligation to perform.12 § 876. Prospective failure of consideration where conditions are concurrent. Where the performances under a contract are due concurrently, it may seem that no substantial risk is incurred if in spite of prospective failure of consideration a party to the contract awaits the time of performance and then makes a conditional tender; since if there is then actual inability or unwillingness of the other party to perform, the tender cannot be accepted, and the contract will remain wholly unperformed on both sides. 13 It is true that the risk is far less than where the contract requires some precedent performance from a party who fears with reason that he will not subsequently have the return for which he bargained. Even where the conditions are concurrent, however, the delay itself involves a risk, and sometimes a serious risk. At the time of performance it may be too late for the injured party to protect himself adequately by another contract. All the circumstances of the case should be taken into consideration in a particular case before a decision is reached. § 877. Prospective inability. Where the contract requires for its performance specific property or means of performance, prospective inability may arise from the non-existence, destruction or injury of that property, 14 from the destruction of the means of performance,1 12 Trowbridge v. Jefferson Auto Co., 92 Conn. 569, 103 Atl. 843. 13 This argument is advanced in Ziehen v. Smith, 148 N. Y. 558, 42 N. E. 1080. See also Smutz v. Holliday, (Iowa, 1919), 172 N. W. 948. 14 Williams v. Miller, 68 Cal. 290, 9 Pac. 166. 15 Kronprinzessin Cecilie, 244 U. S. 12, s. c. sub nom.; North German 15 Lloyd v. Guaranty Trust Co., 37 or from the inability of the contracting party to secure the subject-matter of the contract because the title is in another. Prospective failure of consideration may also arise because of the insolvency or bankruptcy of a contracting party; 16 and (in case of a contract containing a promise personal in character) by an illness of the promisor which seems likely to be of long continuance or to terminate fatally. This last situation generally arises in contracts of employ if the ship was not ready to receive cargo there by September 20 the charterers might cancel the contract. On September 1 the defendants declined to send a vessel, alleging that the British Government had prohibited going to the Black Sea. This was not the case, but the Turkish Government closed the Dardanelles on September 26, and if the ship had begun to load on September 20 it could not have completed loading and passed through the Dardanelles before the closure. Bailhache, J., said (p. 831): "The defendants admit that they did not send a vessel to load at Marioupol under the said charterparty, but say that, owing to piratical seizures of cargoes by the Turkish Government and reasonable apprehension of Turkey becoming involved in the European war and of the Dardenelles being thereupon closed, they were justified by reason of the exception of arrests and restraints of princes, in not sending a vessel to load.' No authority was cited to me in support of the defendants' proposition that a breach of contract is excused by reasonable anticipation of the happening of an event which, if it happens, will excuse the performance of the contract, and in my opinion such a proposition will not bear examination. The closing of the Dardanelles was too late for the defendants whether one treats their refusal to send the Henley as a repudiation of this contract accepted by the plaintiffs, or whether one regards the contract as still open down to September 20." Swinfen-Eady, L. J., said (p. 845): "This case is clearly distinguishable from Geipel v. Smith, L. R. 7 Q. B. 404. Where it is certain, or so nearly certain that in commercial matters it can be considered as certain, that the adventure cannot be successfully completed, the shipowner or charterer may be excused from taking preliminary steps which will obviously be futile. If the port to which the ship is to go is blockaded under an operation of war, the rule being that the termination of war is so uncertain that the state of war is to be regarded as indefinitely prolonged, there is no duty to prepare a cargo or to bring a cargo to the port which the ship will not be able to enter. But in this case there was at the moment no reason to suppose that the adventure might not be carried through, though at greater cost because there would be an obvious prudence in insuring against war risks. It was therefore the duty of both parties to perform the contract so long as they could up to the point when its performance would be excused." The decision was affirmed in Watts, Watts & Co., Ltd., v. Mitsui, [1917] A. C. 227. See also Piaggio v. Sommerville, Miss. 80 So. 342. 16 But a mere suggestion of possible inability to pay will not avoid the necessity of tender by the buyer as a prerequisite to an action. Smutz v. Holliday, (Iowa, 1919), 172 N. W. 948, ment and if an employee is in such condition as to make it probable that he will be incapacitated permanently, or for a long time, a contract of employment may be terminated, though there has as yet been no material failure to perform on the part of the employee.17 § 878. The seller's lack of title to specific property excuses the buyer. If one who contracts to sell specific property is not the owner of it, the buyer evidently incurs some risk that the contract will not be carried out when the time for performance comes, even though the seller desires to carry it out. Whether the buyer should be required to incur the risk depends upon whether it was one which should have been within his contemplation at the time he entered into the contract. There is always some risk that a contract cannot be performed. It may be supposed that the seller's lack of title existed (1), when the contract was entered into; or (2), subsequently. If the buyer was aware that the seller had no title when he entered into the contract, that fact can afford him no excuse for refusing to proceed with the contract, until the time comes for the seller to perform, or at least until it is evident that he will be unable to acquire the title which he has promised to convey.18 On the other hand, if the seller's lack of title was unknown to the buyer when he entered into the contract, the question must be asked whether a risk is being thrown upon him greater than he should have anticipated. This question must be answered in the affirmative unless the seller, though not owning the property, was in a position by contract, or otherwise, to obtain or perfect a title irrespective of the consent of any other party. 19 If the seller owned the property 17 Cuckson v. Stones, 1 E. & E. 248, per Lord Campbell; Poussard v. Spiers, 1 Q. B. D. 410; Lyon v. Pollard, 20 Wall. 403, 22 L. Ed. 361; cf. Storey v. Fulham Steel Works Co., 23 T. L. Rep. 306, affd. 24 T. L. Rep. 89. 18 Wylson v. Dunn, 34 Ch. D. 569; Blanton v. Kentucky &c. Warehouse Co., 120 Fed. 318, affd. s. c. sub nom., 149 Fed. 31, 80 C. C. A. 343; Heller v. McGuin, 261 Ill. 588, 104 N. E. 158, and see supra, § 834. 19 Gray v. Smith, 83 Fed. 824, 28 C. C. A. 168. The court quoted with approval from Burks v. Davies, 85 Cal. 110, 24 Pac. 613, 20 Am. St. Rep. 213, where the court, citing Tendring v. London, 2 Eq. Cas. Abr. 680, said: "Where a person takes upon himself to contract for the sale of an estate, and in question at the time when the contract was made, but subsequently disposed of it, his conduct has a double aspect. On the one hand he is diminishing his ability to carry out the contract even if he so desires and, on the other hand, his conduct gives some evidence that he does not intend to carry it out. Regarded in either aspect, the transfer should excuse the buyer from continuing the contract.20 It has been suggested in some cases, especially in California, that since it is perfectly legal to make a contract to sell property which one does not own, and since the seller may regain the property which he has disposed of before the time for performing his contract arrives, the buyer should not be excused.21 But it is obvious that a conveyance subsequent to the contract imposes a risk of inability which the buyer did not assume, and it is also clear that such a conveyance justifies an inference of intent not to perform which would not be warranted by a lack of title at the time the contract was originally entered into; and this distinction is now recognized by the California Supreme Court. 22 is not absolute owner of it, nor is it in his power, by the ordinary course of law or equity, to make himself so, though the owner offer to make the seller a title, yet equity will not force the buyer to take; for any seller ought to be a bona fide contractor, and it would lead to infinite mischief if an owner were permitted to speculate upon the sale of another's estate." Of similar import are Weston v. Savage, 10 Ch. D. 736; Brewer v. Broadwood, 22 Ch. D. 105; Bellamy v. Debenham, [1891] 1 Ch. 412; Carpenter v. Holcomb, 105 Mass. 280, 285; Lawrence v. Miller, 86 N. Y. 131; Nelson v. Elevating Co., 55 N. Y. 480. See also Farrer v. Nash, 35 Beav. 167. 20 New Iberia Sugar Co. v. Lagarde, 130 La. 387, 58 So. 16; Fort Payne Coal & Iron Co. v. Webster, 163 Mass. 134, 39 N. E. 786; Meyers v. Markham, 90 Minn. 230, 96 N. W. 335, 787; Gruen v. Ohl, 81 N. J. L. 626, 80 Atl. 547; James v. Burchell, 82 N. Y. 108; Brodhead v. Reinbold, 200 Pa. St. 618, 625, 50 Atl. 229, 1119, 86 Am. St. Rep. 735. See also Leonard v. Bates, 1 Blackf. 172; Russ Lumber Co. v. Muscupiabe Co., 120 Cal. 521, 52 Pac. 995, 65 Am. St. Rep. 186. 21 Garberino v. Roberts, 109 Cal. 125, 41 Pac. 857; Parkside Realty Co. v. MacDonald, 166 Cal. 426, 137 Pac. 21; Webb v. Stephenson, 11 Wash. 342, 39 Pac. 952. See also Joyce v. Shafer, 97 Cal. 335, 32 Pac. 320; Shively v. Semi-Tropic Co., 99 Cal. 259, 33 Pac. 848. These cases like those in the preceding note, relate to real estate. 22 In Brimmer v. Salisbury, 167 Cal. 522, 140 Pac. 30, 34, the court said: "Where a vendee contracts with one having none or an imperfect title, he contracts in the hope or expectation that the vendor may be able to perfect the title. Such is not the case where the vendor has title and thereafter parts with it. Of the essence of the contract is the security to the vendee, § 879. Encumbered or incomplete title. Where the seller is not wholly without title to the property which he has agreed to convey but his title is encumbered or defective in such a way that the buyer need not accept it unless the encumbrance is removed, the principle governing the situation is the same as where the seller is wholly without title, but the application of the principle is not so easy. If the defect cannot be removed it is clear that the buyer need not await the time of performance but has a present excuse,23 at least if he asserts it promptly on discovering the facts. But where the encumbrance can be removed, the question must resolve itself into one of degree and of probability. If encumbrances existed at the time when the contract was entered into and were such as could be removed before the time of performance without the assent of a third person, no such prospective inability exists as would excuse performance.24 Subsequent encumbrances put upon the property by the seller must be judged by the same principle. Do they in his payments, of the title which the vendor has; and, if the vendor parts with that title to the impairment or destruction of that security, the vendee may be heard justly to complain, and it is, of course, no answer to say that the vendor thereafter may be able to go into the open market and repurchase the property. Common experience tells us that such an expectation is in its naure but a remote possibility, and that tuch a vendor has not the slightest insention of so doing." 23 Prenticet v. Erskina, 164 Cal. 446 129 Pac. 585 (the existence of a highway). 24 In Ziehen v. Smith, 148 N. Y. 558, 42 N. E. 1080, at the time of performance there was an outstanding lien on the property, of which neither buyer nor seller knew at the time of entering into the contract. The buyer, without demanding fulfilment of the contract, at once brought suit to recover part of the price which he had paid. The court held he could not recover, as the encumbrance was one which was in the power of the vendor to remove, and he might have done so if requested. This decision was followed in Higgins v. Eagleton, 155 N. Y. 466, 50 N. E. 287. In the absence of any fraudulent concealment the determining question should be,-Would a reasonable man be warranted in inferring that the contract would not be carried out? See Forrer v. Nash, 35 Beav. 167; Brewer v. Broadwood, 22 Ch. D. 105; Blanton v. Kentucky &c. Warehouse Co., 120 Fed. 318, affd. 149 Fed. 31, 80 C. C. A. 343; Stierle v. Rayner, 92 Conn. 180, 102 Atl. 581; Payne v. Pomeroy, 21 D. C. 243; Lytle v. Breckenridge, 3 J. J. Marsh. 663; Caplan v. Buckner, 123 Md. 590, 91 Atl. 481; Sleeper v. Nicholson, 201 Mass. 110, 113, 87 N. E. 473; Hampton v. Speckenagle, 9 S. & R. 212, 11 Am. Dec. 704; Espy v. Anderson, 14 Pa. 308; cf. Easton v. Jones, 193 Pa. 147, 44 Atl. 264. |