§ 725. Continuance of contract of employment after cause for discharge is known. In the law of Master and Servant, if the master has cause justifying the discharge of the servant, and nevertheless continues, with knowledge of the facts, to receive the benefit of the servant's services, he cannot afterwards make the breach ground for discharge. 49 It is true that a number of authorities lay down the rule that the question whether the servant's breach of duty is excused as a ground for dismissal, by retaining him in his employment is a question of fact for the jury.50 These authorities are basd to some extent on the theory that waiver must be intentional,51 and fail to observe that the question here presented is one of election and not of a form of waiver where even apparent intention is important. The employer has no right whether he desires it or not, and whatever intention he manifests, to continue the employment and yet retain the right to assert a breach of condition.52 It is true that an employee may consent to be retained on such terms, but his clearly expressed assent is necessary, for it cannot be presumed. What amounts to a continuance of services may involve a more troublesome question than what amounts to receipt of rent or the doing of any other single act. Employment is a continuing matter and to say that if the employer knowingly lets the employee continue to work a minute, an hour or perhaps a day "Horton v. McMurtry, 5 H. & N. 667, per Bramwell, B.; Jones v. Vestry of Trinity Parish, 19 Fed. 59; Roberts v. Brownrigg, 9 Ala. 106; Brigham v. Carlisle, 78 Ala. 243, 56 Am. Rep. 28 (cf. Troy Fertilizer Co. v. Logan, 90 Ala. 325, 8 So. 46); Daniell v. Boston & Maine R. Co., 184 Mass. 337, N. E. 337; Tickler v. Andræ Mfg. Co., 95 Wis. 352, 70 N. W. 292; Moody v. Streissguth Clothing Co., 96 Wis. 202, 71 N. W. 99. 68 50 Boston, etc., Co. v. Ansell, 39 Ch. Div. 339, 358; Newman v. Reagan, 63 Ga. 755; Atlantic Compress Co. v. Young, 118 Ga. 868, 45 S. E. 677; Murray v. O'Donohue, 109 N. Y. App. Div. 696, 96 N. Y. S. 335; Atkinson v. Heine, 134 N. Y. App. Div. 406, 119 N. Y. S. 122; Batchelder v. Standard 51 See supra, § 678. 52 The situation is in principle identical with that involved where a landlord receives rent after knowledge of breach of condition. See Davenport v. Queen, 3 App. Cas. 115. "Where money is paid and received as rent under a lease, a mere protest that it is accepted conditionally and without prejudice to the right to insist upon a prior forfeiture cannot countervail the fact of such a receipt." after he discovers the breach he has lost the right of discharge, is going too far. But prompt action should be required so that the master does not put himself in the inconsistent position of receiving benefit from the continuance of the contract while it suits his convenience so to do and at the same time reserving the right of ending it when that suits his convenience. Condonation of one breach of contract which would afford ground for the employee's discharge does not prevent the employer from considering the whole record of the employee when a further breach has been committed.53 § 726. Waiver of conditions in subscriptions to stock. Conditions in a subscription to stock which have not been complied with cannot be asserted if the subscriber with knowledge of the facts indicates his desire to proceed with his contract. This is a case of election. The subscriber may choose the advantage of escaping from liability under his contract, or the advantage of becoming a stockholder in the corporation. Any act which is only explicable as rightful on the theory that the subscriber has elected to become a stockholder is conclusive. Thus acting as a director or other officer by performing duties incidental to that office,54 or acting as a stockholder is 53 Daniell v. Boston & Maine Railroad, 184 Mass. 337, 340, 68 N. E. 337; Jerome v. Queen City Cycle Co., 163 N. Y. 351, 57 N. E. 485; Johnson v. Van Winkle, etc., Co., 130 N. C. 441, 41 S. E. 882; Hunter v. Gibson, 3 Rich. L. 161; Cook v. School Commissioners, 35 Nova Scotia, 405; McIntyre v. Hokin, 16 Ont. App. 498, 502. In Daniell v. Boston & Maine Railroad, 184 Mass. 337, 340, 68 N. E. 337, Loring, J., speaking for the court said: "By continuing to employ the plaintiff after knowledge of his delinquencies, whether before or after the use of discipline marks, the defendant elected not to discharge the plaintiff for those shortcomings but, as matters to be taken into account in case of a subsequent breach of duty, they were not waived. By continuing to employ the plaintiff after knowledge of a breach of duty the defendant waived its right to discharge him for that, but it did not waive the breach of duty, and in case of a subsequent shortcoming on the plaintiff's part the defendant had a right to take the plaintiff's whole record into account." In Hunter v. Gibson, 3 Rich. L. 161, an overseer had been guilty of repeated acts of intoxication in violation of an express provision in his contract of employment. The fact that the employer excused a number of instances of intoxication was held not to prevent him from subsequently discharging the overseer on the occurrence of further instances. 54 Auburn, etc., Association v. Hill, 56 an election.55 Mere attendance at a meeting, however, is not so necessarily, as it is explicable as merely an endeavor to get information, or to recover a subscription which has been paid; but taking part as a stockholder in such a meeting seems not thus explicable, and paying calls or assessments is also conclusive.58 Knowledge of the facts justifying a subscriber to refuse to complete his subscription is essential to a binding election; 59 and it has been held that intent to waive the condition is also necessary; 60 but such a decision is due to the failure to observe that the situation involves an election between inconsistent benefits. § 727. Surrender of rights accompanied by delivery of tangible property. It is only for the creation or discharge of intangible rights that consideration or a seal is required by the common law. Tangible property may be given away, though delivery is es 113 Cal. 382, 45 Pac. 695; Corwith v. Culver, 69 Ill. 502; Hager v. Cleveland, 36 Md. 476. 55 Sharpley v. Louth, etc., Ry. Co., 2 Ch. D. 663. See also Butler v. Aspinwall, 33 Fed. 217, affd. in 133 U. S. 595, 33 L. Ed. 779, 10 S. Ct. 417; Dallemand v. Odd Fellows' Savings Bank, 74 Cal. 598, 16 Pac. 497; Canfield v. Gregory, 66 Conn. 9, 33 Atl. 536. Wontner v. Shairp, 4 C. B. 404; New Hampshire v. Johnson, 30 N. H. 390, 64 Am. Dec. 300; Orynski v. Loustaunan (Tex.), 15 S. W. 674. Cf. Tredwen v. Bourne, 6 M. & W. 461. Cabot, etc., Bridge v. Chapin, 6 Cush. 50, 53; International, etc., Assn. v. Walker, 88 Mich. 62, 49 N. W. 1086, 97 Mich. 159, 56 N. W. 344; Portland and Fairview R. Co. v. Spillman, 23 Oreg. 587, 32 Pac. 688. "California S. H. Co. v. Callender, 94 Cal. 120, 29 Pac. 859, 28 Am. St. Rep. 99; Callahan v. Chilcott Ditch Co., 37 Col. 331, 86 Pac. 123; Myers v. Sturgis, 123 N. Y. App. Div. 470, 108 N. Y. S. 528, affd. 197 N. Y. 526, 90 N. E. 1162. 59 Strong v. Southwestern, etc., Co. (Tex.), 38 S. W. 546; Denny Hotel Co. v. Gilmore, 6 Wash. 152, 32 Pac. 1004. 60 Wright v. Agelasto, 104 Va. 159, 161, 51 S. E. 191. "The instruction should have stated that 'if the jury believe from the evidence that the defendant. . . was named as one of the incorporators, participated in the proceedings of its stockholders, and acted as a director of the company, and at the time of such action and participation in said meetings he did not know that bona fide, valid subscriptions to the amount of $15,000 had not been obtained, and did not intend by such acts to waive the benefit of the condition, such action and participation cannot be construed as a waiver of the condition on which his subscription was made, and they must find for the defendant." The instruction actually given was held erroneous for omitting the italicized words. sential to complete the gift; and where tangible property is delivered, intangible rights connected with it may be at the same time be surrendered. On strict logic this is inconsistent with the rules of consideration generally recognized in the discharge of contracts, but at this point the law of contracts yields to the law of property. Thus it is well settled that where property is in the possession of a bailee, an effectual gift may be made by the bailor to the bailee without any retransfer of possession.61 This involves the conclusion that the bailee's contract or obligation to return the property may be discharged without a seal, and without consideration. If this intangible right may be thus surrendered, it seems logically to follow that other intangible rights may similarly be surrendered in connection with the transfer of tangible property. Thus it may be supposed that parties agree to buy and sell goods for a fixed price, but afterwards agree that no price shall be paid, and that the property shall be transferred as a gift. Until delivery of the goods this agreement is ineffectual. It cannot impose a binding obligation to give, since there is neither consideration nor delivery. It cannot, it seems, even rescind the earlier agreement since the buyer's assent to surrender his rights under the original contract must be regarded as conditional on the performance of the promise to give. Where, however, delivery is actually made, the ownership is transferred and the donee will not be liable for the price agreed upon in the original bargain. If the logic of the doctrine of consideration were applied to the situation, it would have to be said that even after delivery, the transferee remained liable for the price under the original contract, since the transferor has received no consideration for the surrender of that right. Though it would be possible for the parties first to rescind the original bargain, and then to make an effectual gift, they have not taken this course. It cannot be assumed that the transferee would have been willing to rescind except as part of the total agreement 61 Re Alderson, 64 L. T. R. (N. S.) 645; Re Stoneham, [1919] 1 Ch. 149; Eden v. Bohling, 69 Ill. App. 307; Tenbrook v. Brown, 17 Ind. 410; Wing v. Merchant, 57 Me. 383; Allen v. Cowan, 23 N. Y. 502, 80 Am. Dec. 316; Miller v. Neff, 33 W. Va. 197, 207, 10 S. E. 378. See also Kilpin v. Ratley, [1892] 1 Q. B. 582. which provided for the gift of the property. Taking the agreement as a single and indivisible transaction, as it has been stated, it is evident that the seller agrees to give up a right originally secured to him under the contract, and the other party to the contract agrees to give up nothing.62 It cannot be successfully maintained that the mere acceptance of the gift is sufficient consideration without admitting the indefensible consequence that the promise to give was enforceable prior to delivery, being supported by a promise to accept. That an intangible right may be surrendered, however, as part of a transaction involving the delivery of tangible property, seems not only the legal, but the desirable result. The principle finds application in a variety of cases where a seller surrenders a title or lien, or right of action, to which he previously had been entitled under a bargain. In this connection should also be considered cases, whether all of them defensible or not, where a buyer on acquiring property,63 or a seller on transferring property,64 surrenders a right.65 The case must be sharply distinguished where an attempt is made not to discharge an obligation, but to create one, by means of the transfer of property, greater than that for which the obligor would be bound under the terms of a previous contract. This cannot be done without satisfying the requirements of the law concerning consideration.66 See supra, § 130. *See cases where the contract is for the sale of goods (§§ 700 et seq.) or of land (§ 723) or for the construction of a building (§ 724). "See infra, § 730. 65 Cf. cases where paying an insufficient sum of money is held not to discharge a debt, supra, § 120. *In W. E. Caldwell Co. v. Steckel, 143 Ia. 564, 121 N. W. 376, a contract had been made for the sale and purchase of tanks. The contract stated a lump sum for them. The seller, however, contended that the price named was for each of the tanks. The buyer with knowledge that such was the seller's claim, took the tanks. It was held that he might thereafter assert the true construction of the contract. In Napier Iron Works v. Caldwell, etc., Iron Works, 60 Ind. App. 317, 110 N. E. 714, 716, the court said: “We are satisfied that, as the iron was not delivered to appellee during the first half of the year 1910, the title and possession thereof were both in appellant, relieved from any of the agreements contained in the contract, and to again bring it within the provisions of the original contract, and extend the time for delivery, such agreement as to extension, under the facts of this case, to be valid, would have to be supported by a new consideration." See also supra, § 130. |