§ 870. Effect of part performance of a divisible contract. A question that has been somewhat discussed is whether it makes a difference if the breach of contract occurs in the first instalment. Such was the nature of the breach in one of the earliest English cases,84 and the later English cases have been disposed to distinguish the earlier decision on this ground.85 The American cases & have not generally been disposed to lay much stress upon such a distinction, and it seems rightly. Though it is generally true that a breach at the outset of a contract need not be so material as a breach after part performance in order to justify rescission or refusal to continue performance by the injured party, the reason upon which this general rule is based has little application to the class of cases here under consideration. The reason for the rule is this—that after a contract has been partly performed it is unjust to make even a wrongdoer lose the benefit of the performance already rendered by not allowing him to become entitled to receive the counter-performance. In a divisible contract, however, such performance as has been rendered must ordinarily be paid for at the contract price, irrespective of whether the rest of the contract is performed or not. There is, therefore, not the same equitable reason for allowing a wrongdoer to continue. A question of interpretation which sometimes arises where there has been a smaller amount of Machine & Tool Co. v. Standard Shoe Machinery Co., 181 Mass. 275, 63 N. E. 900; Dudley v. Wye, 230 Mass. 350, 119 N. E. 790, and the cases cited, supra, § 867, n. 67, 69, 70. 84 Hoare v. Rennie, 5 H. & N. 19. 85 See supra, § 865, n. 000. But in Jackson v. Rotax Motor Co., [1910] 2 K. B. 937 (C. A.), a buyer was held entitled to refuse an instalment of inferior quality, though there had been part performance by the previous delivery and acceptance of an instalment of proper quality. 86 See supra, § 867. 87 See supra, § 841. 88 In General Billposting Company, Ltd., v. Atkinson, [1909] A. C. 118, 122, in speaking of a divisible contract of employment, Lord Collins said: "The reason for the rule itself [of part performance] is said by Serjeant Williams to be that 'where a person has received a part of the consideration for which he entered into the agreement it would be unjust, that because he has not had the whole, he should be permitted to enjoy that part without either paying or doing anything for it.' But in this case, as pointed out by Mr. Manisty, the respondent has given an equivalent in service for the remuneration he has received in salary. He stands, therefore, outside the reason of the rule." See also Rosenthal Paper Co. v. National &c. Paper Co., 226 N. Y. 313, 123 N. E. 766. goods delivered or accepted in one or more instalments than the contract calls for also deserves attention. If an offer of further instalments according to the contract is thereafter made, the question arises, Is the offer to be interpreted as an offer to fulfill the obligation to perform the remaining instalments according to the original terms of the contract, or is the proper interpretation rather that the whole amount of the goods is to be delivered making the default only a delay in delivery or accepting some of the goods? This is a question of fact, and each case must be considered upon its own circumstances.89 89 In Hull Coal Co. v. Empire Coal Co., 113 Fed. 256, 51 C. C. A. 213, the seller agreed to sell the production of its coke ovens and the buyer to take his production of not less than 20,000 tons during the year that the contract was to run. Orders and deliveries of coke were to be made in as nearly as possible equal weekly instalments, the price to be paid on the 20th of each month, "the usual strike, accident, and transportation clauses to mutually govern." The usual clause referred to provided that in case of contracts deliveries might be suspended, or, at the option of the party not in default, might be immediately canceled during the continuance of the interruption. A strike occurred and deliveries were suspended. It was held that the purchaser could not demand delivery of coke sufficient to make up a total of 20,000 after the expiration of the period originally fixed in the contract. In Honck v. Muller, 7 Q. B. D. 92, the court seemed to regard a failure of the buyer to take delivery of the first instalments of a contract extending over three months as amounting to a refusal to take the total amount of iron for which the contract called. The materiality of the breach may well depend upon which construction is proper. Ordinarily a failure to deliver or take the amount called for by the contract will be a more material breach than a delay in performance as to some instalments. In Craig v. Lane, 212 Mass. 195, 98` N. E. 685, the court said: "The defendant's contract was an entire one for the purchase of three cars of potatoes; and it was not severed by the fact that the plaintiff shipped them at different times and drew a separate draft for the alleged contents of each car at the agreed price. We assume without deciding that upon discovering the shortage which he claimed in the load of the first car he might have declined to accept it and rescinded his contract. But he chose not to do this. Instead of doing so he accepted that car load and sold it to a customer of his own, thus putting it beyond his power to return it to the plaintiff. He could not then rescind the contract by reason of the shortage. He must seek his remedy under the contract by way of set-off or recoupment, or by an independent action. Morse v. Brackett, 98 Mass. 205; Mansfield v. Trigg, 113 Mass. 350; Barrie v. Earle, 143 Mass. 1, 8 N. E. 639, 58 Am. Rep. 126; Obery v. Lander, 179 Mass. 125, 130, 60 N. E. 378; Fullam v. Wright & Colton Co., 196 Mass. 474, 476, 82 N. E. 711." § 871. Whether the party first in default can ever recover. The statement is frequently made that the party first in default under a bilateral contract cannot recover for the subsequent failure of the other party to perform." Frequently a party first in default may recover the value of what he has done or given.91 But so far as concerns an action on the contract the statement is true where the first default is material and there is dependency between the performances in question. It is obviously not true of independent promises, and even in contracts where there is a general dependency a particular promise may be so far independent of a counter promise that breach of one will not excuse liability on the other. Thus in divisible contracts a situation may arise where a debt has become due for an instalment furnished and must be paid though the creditor was the first party to break a provision of the contract. It may be supposed that payment for each instalment furnished under such a contract is not to be made until the expiration of a certain period of credit. Before the period of credit for one instalment has elapsed and, therefore, before the buyer is in default, the seller may fail to perform the second instalment when due, thereby committing the first breach of the contract. He will not, on that account, be deprived of his right to sue for the price of the first instalment. A debt arose for that price when the instalment was 90 In Rice v. Fidelity & Deposit Co., 103 Fed. 427, 433, 43 C. C. A. 270, the court said: "He who commits the first substantial breach of a contract cannot maintain an action against the other contracting party for a subsequent failure to perform. Cresswell, etc., Cattle Co. v. Martindale, 63 Fed. 84, 89, 11 C. C. A. 33, 38, 27 U. S. App. 277, 284, 285; Norrington v. Wright, 115 U. S. 188, 204, 205, 6 Sup. Ct. 12, 29 L. Ed. 366; Filley v. Pope, 115 U. S. 213, 6 Sup. Ct. 19, 29 L. Ed. 372; Cleveland Rolling Mill v. Rhodes, 121 U. S. 255, 261, 264, 7 Sup. Ct. 882, 30 L. Ed. 920; Beck & Pauli Lith. Co. v. Colorado M. & E. Co., 52 Fed. 700, 3 C. C. A. 248, 10 U. S. App. 465, 470; King Philip Mills v. Slater, 12 R. I. 82, 34 Am. Rep. 603; Smith v. Lewis, 40 Ind. 98; Hoare v. Rennie, 5 Hurl. & N. 19; Pope v. Porter, 102 N. Y. 366, 371, 7 N. E. 304; Dwinel v. Howard, 30 Me. 258; Robson v. Bohn, 27 Minn. 333, 334, 7 N. W. 357; Reybold v. Voorhees, 30 Pa. St. 116, 121; Stephenson v. Cady, 117 Mass. 6, 9; Branch v. Palmer, 65 Ga. 210; Fletcher v. Cole, 23 Vt. 114, 119." See also National Surety Co. v. Long, 125 Fed. 887, 892, 60 C. C. A. 623; Forrest City Box Co. v. Sims, 208 Fed. 109, 125 C. C. A. 337; White Oak Fuel Co. v. Carter, 257 Fed. 54, 56; California &c. Agency v. Penoyar, 167 Cal. 274, 139 Pac. 671, 674. 91 See supra, §861, infra, §§ 1473 et seq. furnished, and a subsequent breach of another instalment of the contract can have no effect on this liability.92 So in a divisible contract of service a breach of contract by the employee will not deprive him of a right to recover a divisible portion of his compensation for a corresponding portion of the agreed service, which has been completely performed.93 § 872. Effect of stating a price for part of the performance in a contract not wholly divisible. In a completely divisible contract the whole performance on each side is divided into parts corresponding with parts of the counter promise. Not infrequently, however, a contract may contain a promise the performance of which is stated as the price or exchange for certain counter performance; and the contract may also contain other promises for which no special price is fixed. A common illustration is a sale of 92 This was so held in J. K. Armsby Co. v. Gray's Harbor Commercial Co., 62 Or. 173, 123 Pac. 32, 36, and the court supported its conclusion by saying: "The case of Harber Bros. Co. v. Moffat Cycle Co., 151 Ill. 84, 96, 37 N. E. 676, 679, is very much in point upon this question. The action was upon a contract for the sale of bicycles, deliveries to be made in instalments, and payment for each shipment within 30 days. Both parties were in default. The court said: "The question here distinctly presented as the controlling one is whether a vendee who has accepted goods delivered under an express contract, but not at the time or in the quantity required by it, with knowledge of the default of the vendor in those respects, but has himself failed, without legal excuse, to pay for them according to it, can maintain an action on the contract for such a default of the vendor. We think the general rule everywhere recognized is against it. . . . Pennsylvania Coal Co. v. Ryan, 107 Ill. 226; Bradley v. King, 44 Ill. 339; Stewart v. Many, 7 Ill. App. 508. For appellant, the attempt is made to evade the force of these decisions by the claim that appellee was first in default, whereby appellant was damaged in the amount exceeding the price of the goods received, for which he failed to pay, and from that time until the suit was brought always had a just claim for damages by appellee's default exceeding the amount for which appellant was in arrears. . . . But the question is not whether, upon a fair settlement, offsetting damages against price, appellant really owed anything, but whether, accepting the machines under contract, it performed that contract on its part as to payment." Cf. California &c. Agency v. Penoyar, 167 Cal. 274, 139 Pac. 671. The contrary statement of Ray, J., in Burgie v. Hicks, 203 Fed. 340, 347, cannot be supported. See supra, § 844. 93 Button v. Thompson, L. R. 4 C. P. 330; Martin v. Everett, 11 Ala. 375; Tipton v. Feitner, 20 N. Y. 423, 429; Walsh v. New York &c. Co., 88 N. Y. App. D. 477, 85 N. Y. S. 83; Peniston v. John Y. Huber Co., 196 Pa. 580, 46 Atl. 934. chattels with a collateral warranty. The price is in terms promised for the specific article purchased and if title is transferred an action for that price may be maintained without alleging or proving the fulfilment of the warranty.94 For the same reason after a sale of real estate "Even a defective title is no defence to the foreclosure of a purchase money mortgage or ground of abatement of price in the absence of fraud or eviction." 95 So, as part of a contract for the purchase of goods there may be a promise for an agency or an exclusive market or for freedom from competition. Breach of such a promise will not excuse the buyer from paying the contract price for property which he has received, or as part of a licensing contract there may be a promise to pay a royalty for each article sold. This royalty must be paid, though collateral terms of the contract are broken by the licensor, unless the royalty was promised to a material degree as payment for the performance of these terms.97 Other cases similar in principle occasionally occur.98 In such a case a "Parker v. Palmer, 4 B. & Ald. 387; Rogers v. Brown, 103 Me. 478, 70 Atl. 206. The buyer must recoup, counterclaim or take affirmative steps to rescind. 95 Ratkewicz v. Kara, (N. J. L. 1918), 103 Atl. 912. See also Patton v. Taylor, 7 How, 132, 159, 12 L. Ed. 637; Peters v. Bowman, 98 U. S. 56, 25 L. Ed. 91; Byrd v. Turpin, 62 Ga. 591; Douglass v. Thomas, 103 Ind. 187, 2 N. E. 562; McLelland v. A. P. Cook Co., 94 Mich. 528, 54 N. W. 298; Peabody v. Kent, 213 N. Y. 154, 107 N. E. 51; Hill v. Butler, 6 Ohio St. 207; Lessly v. Bowie, 27 S. Car. 193, 3 S. E. 199; Darling v. Osborne, 51 Vt. 148. 96 Mark v. Stuart-Howland Co., 226 Mass. 35, 115 N. E. 42; Springfield Seed Co. v. Walt, 94 Mo. App. 76, 67 S. W. 938; Tichnor v. Evans, (Vt. 1918), 102 Atl. 1031, L. R. A. 1918 C. 1025. Cf. Rosenthal Paper Co. v. National &c. Paper Co., 226 N. Y. 313, 123 N. E. 766. See also Moorman 96 v. Parkerson, 131 La. 204, 59 So. 122, Ann. Cas. 1914 A. 1150, and cases cited supra, § 841. "See Wilfley v. New Standard Concentrator Co., 163 Fed. 421, 90 C. C. A. 543; Rosenthal Paper Co. v. National &c. Paper Co., 226 N. Y. 313, 123 N. E. 766. 98 Thus in Cadwell v. Blake, 6 Gray, 402 the defendant purchased certain machinery and a right to manufacture paper by a special process. The plaintiff sold the machinery and the right to manufacture and agreed to instruct the buyers in the art of making paper by the process in question. The defendant promised to pay "for said machinery," a fixed sum and for the right to manufacture, a share of the profits. No price was fixed for the instruction. In an action for the price of the machinery the defendant was held not liable unless the instruction had been given. In view of the fact that the price of the machinery was payable in paper manufactured by the secret |