act of the promisee, as in the case of a voluntary release of the debtor. It is also held that a pre-existing legal liability may be a sufficient consideration for a new promise, as in cases where a debtor gives additional security to his creditor in the form of a mortgage. "No case can be found in which a man's own debt has been ruled to be an insufficient consideration between him and his creditor, for a mortgage or other security received by the latter from the debtor.''36 § 33. Failure of Consideration. What is frequently called "failure of consideration" is in truth no consideration at all. If an article sold proves to be valueless, or a rented house is destroyed by fire, or a patent becomes worthless because of other improvements, the contract is unaffected if the consideration was executed. If the consideration is executory, the execution of the consideration is a condition precedent to the counter promise being enforceable and, of course, the failure to execute the consideration causes the counter promise to fall. Thus, there would be no consideration. A partial failure of consideration will give a defense pro tanto, but the contract will be sustained if a substantial portion be executed, unless the execution of the whole consideration were a condition precedent to liability of the promisor. 36 Turner v. McFee, 61 Ala. 468, 472. CHAPTER IV CAPACITY OF PARTIES § 34. Limitations. In the preceding chapters we have considered the primary elements of contract. The minds of the parties must meet by offer and acceptance, and the agreement must be such as the courts will regard as a legal transaction either by reason of its form or because of its possessing a valuable consideration. In addition to these elements, it is necessary that the transaction take place between parties who are capable of making a valid contract. The chief grounds of incapacity to contract are as follows: (1) Incapacity because of political status. (2) Incapacity because of infancy. (3) Incapacity because of marriage status. (4) Incapacity because of mental defect. (5) Incapacity because of corporate limitations. POLITICAL STATUS We shall first consider the question of the power of the State to contract. $35. Power of State to Contract. The power of the United States and the various States to enter into contracts within their respective functions, is "an incident to the general right of sovereignty." Thus, where the proper officers of the United States treasury department had taken from a disbursing agent a voluntary bond for the faithful performance of his duties, it was held by the Supreme Court of the United States to be a binding contract between him and his sureties and the United States, even though there was no positive law requiring such a bond.1 The court said: 1 United States v. Tingey, 5 Pet. 115, 8 L. ed. 66. 337 "Upon full consideration of this subject, we are of opinion that the United States have such capacity to enter into contracts. It is, in our opinion, an incident to the general right of sovereignty; and the United States being a body politic, may, within the sphere of the constitutional powers confided to it, and through the instrumentality of the proper department to which those powers are confided, enter into contracts not prohibited by law, and appropriate to the just exercise of those powers. The same rule applies to contracts by State governments.2 Since the government is an artificial person, its contracts can only be made through its duly qualified officers and agents. One dealing with the government through its agent must know at his peril that such agent is acting within his actual authority. The rule that an agent may bind his principal by acts within the general, apparent scope of his authority, even if in violation of special instructions unknown to the other party, does not apply in contracts with the State. Furthermore, a public officer, unlike a private agent, is not personally liable on a contract made in his own name, for it is "not to be presumed......that the party, dealing with such public officer, means to rely upon his individual responsibility.'' The States and the United States have the same power to sue, to maintain actions on contracts made with them, that an individual has. But neither the United States nor a State can be sued without its consent. This doctrine is stated by the Supreme Court of Michigan as follows: "The only remedy for a party who has entered into a contract with a State, is by an appeal to the legislature, who, it is fair to presume, will, from motives of public duty, make provision for its full execution, and do ample justice to the party with whom it may have contracted; or else refer the case to the decision and judgment of the judiciary, by a special legislative enactment." 2 Danolds v. State, 89 N. Y. 37, 42 Am. Rep. 277. 3 Pine Civil Twp. v. Huber M'f'g Co., 83 Ind. 121. 4 Michigan State Bank v. Hastings, 1 Doug. 225, 41 Am. Dec. 549. The rule is the same as to foreign States or sovereigns." The sovereign of a petty Indian State was sued in an English court for breach of a promise of marriage made in England under an assumed name. It was held that the action would not lie, because "it would be absolutely inconsistent with the status of an independent sovereign that he should be subject to the process of a foreign tribunal...... It is one thing to say that a foreign sovereign is capable of making an effectual contract in this country; it is quite another thing to say that he can be sued in the courts of this country."6 § 36. Contracts of Aliens. An alien is one who is a subject or citizen of a foreign State. Resident alien friends have under the fourteenth amendment to the Constitution of the United States, substantially the same rights to contract and enforce the same by suit that citizens have. Nonresident aliens may be discriminated against by the courts in favor of citizens and resident alien friends,' but are usually allowed to make contracts and enforce the same without discrimination. The power of non-resident alien friends to own real estate is regulated by constitutional provisions in many States, some prohibiting and some permitting such ownership. An alien enemy is a subject or citizen of a nation with which we are at war. Contracts made with alien enemies prior to the war are suspended during the existence of the war, but not annulled, and may be enforced upon the restoration of peace. Contracts made during the war are void. This rule was applied during the American Civil War. § 37. Contracts of Convicts. At common law a convict was civilly dead and, therefore, incapable of making a contract or of enforcing a contract made before his conviction. This rule is practically obsolete in the United States, although there are statutes in some States under which a 5 Mighell v. Sultan of Johore (1894), 1 Q. B. D. 149, 63 L. J. Q. B. 593. • Opinion of Wills, J. in Divisional Court. 7 Disconto Gesellschaft v. Umbreit, 127 Wis. 651, 106 N. W. 821, affirmed in 208 U. S. 570. contract made by a convict under sentence is void. The next ground of incapacity to be considered is that arising from one or both of the parties being of less than legal age. INFANCY § 38. Who Are Infants? The law has arbitrarily fixed the age of twenty-one years as the time when a person ceases to be a minor or infant, except that in some States females reach their majority at eighteen years. The common law did not as a rule regard fractions of a day and, therefore, an infant comes of age at the beginning of the day before his or her twenty-first or eighteenth birthday, as the case may be.8 The fact that an infant may have been emancipated by his parents does not operate to make an infant's contracts valid. Emancipation simply gives him a right to his own earnings. In a few States an infant is declared to be of full age upon marriage, but this is not the general rule. § 39. Contracts Which Are Void. According to the English common law and early decisions in a few American States, contracts of infants which were manifestly to their prejudice and against interest were declared void. Where the benefit or prejudice was uncertain, the contract was voidable only and the question was one for the court to decide. Thus, a gratuitous conveyance of land would be held void as clearly prejudicial, but a conveyance for a consideration would be held only voidable by the infant at his option. This rule was so unreasonable and difficult to apply that it is now the general rule, with only one exception, that none of an infant's contracts are void merely because of non-age. The courts now leave it to the infant himself to determine upon his coming of age whether the contract is for his benefit or not, by permitting him at that time to either ratify or repudiate the contract, as he thinks best. 8 Bardwell v. Purrington, 107 Mass. 419. 9 Vent v. Osgood, 19 Pick. (Mass.) 572; Dunton v. Brown, 31 Mich. 182. |