requires personal service by the insolvent which cannot be adequately rendered by such a person, the co-contractor may refuse to continue performance, 38 but with this qualification it seems that insolvency or bankruptcy of the employee would not excuse the employer from continuing to perform a contract of employment.

§ 881. Inability to perform unless the other party performs. It must generally be true that if one party to a contract is unable to perform unless he first receives performance from the other party which, by the terms of the contract, is not due until the same time that his own performance is due, he cannot recover, and if he has indicated his inability to the other side will be liable himself without the necessity of a tender. Thus one who has contracted to sell goods, cannot rely on obtaining the promised price as a means of purchasing the goods with which to fulfil his concurrent obligation. This principle has been applied in the case of contracts to sell real estate where the buyer's means of paying were insufficient unless he could raise money on the land to be conveyed to him. The rule has been broadly laid down that, under such circumstances, the buyer cannot recover if the seller repu

insolvency of one of the parties to a contract does not relieve the other party from performance thereof, and would not excuse the refusal of defendant to carry out its contract. It is equally true, however, in this case that the steel company had become disabled from carrying on its contract, and that the same with all obligations of performance on the part of the defendant fell, unless the receivers were authorized by the court to approve and adopt the contract with defendant and insist upon its performance. It would not have been enough that after their appointments they did not repudiate and refuse to carry out said contract. It was necessary for them to do more than this and under authority of the court affirmatively indicate their election to proceed with the same and hold

the other party to the obligation thereof. Stokes v. Hoffman House of N. Y., 46 N. Y. App. Div. 120, 61 N. Y. S. 821, affd. 167 N. Y. 554, 60 N. E. 667, 53 L. R. A. 870; Breed #. Glasgow Co., 92 Fed. 760; Kansas City South Ry. Co. v. Lusk, 224 Fed. 704, 140 C. C. A. 244; Chicago Dep. Vault Co. v. McNulta, 153 U. S. 554, 14 Sup. Ct. 915, 38 L. Ed. 819; Peabody Coal Co. v. Nixon, 226 Fed. 20, 140 C. C. A. 446; United States Trust Co. v. Wabash Western Ry. Co., 150 U. S. 287, 299, 14 Sup. Ct. 86, 37 L. Ed. 1085."

38 In Kamps &c. Drug Co. v. United Drug Co., 164 Wis. 412, 160 N. W. 271, the defendant was held justified by the plaintiff's bankruptcy in refusing to continue its agency for the defendant's preparations.

diates the contract.39 And a similar rule has been applied where the seller of land requires the buyer's money as a means of perfecting the title which he was to convey.

It may be questioned whether these statements are not too broad. All that should be necessary for the plaintiff's case is to prove that he would have been able to carry through the transaction concurrently with the defendant. If one who has contracted to buy land has but half the agreed price, but can make arrangements to borrow the remainder on the security of the land to be conveyed, there is no practical difficulty in carrying out the transaction at one instant. The mortgage can be drawn from the buyer to the lender before the land is conveyed; then if the buyer and seller and borrower meet at the same place, the seller can be paid his money while simultaneously he delivers a deed to the buyer, and the buyer delivers a mortgage to the lender. In the same way if the buyer's money is needed to free the title which the seller must offer, a simultaneous execution of the transaction is possible if the person holding the title or encumbrance is willing to aid the seller in carrying out the bargain. The question

39 Gray v. Smith, 76 Fed. 525, aff'd in 83 Fed. 824, 28 C. C. A. 168, 48 U. S. App. 581. See also cases in the following note.

40 In Brown v. Lee, 192 Fed. 817, 113 C. C. A. 141, the court said, at page 821: "Lee, the vendor, contends that the proof shows that the Barefields had executed to him a deed conveying a good, unincumbered title, and that the deed was so deposited that if Brown had complied with his agreement he could and would have used the cash received from Brown to have paid the Barefields, and that he would have then been able to make a proper deed to Brown.

We waive the consideration of Brown's contention that the title to Lee from the Barefields would have been defective if delivered to him. Conceding that it would have been good, Lee's right to recover would depend on his right to require Brown to advance the money with which he

would obtain the title from the Barefields. Brown had not contracted to do this. By his contract he was to pay the purchase money concurrently with his recaipt of the title from Lee.

In Gray v. Smith, 76 Fed. 525, 83 Fed. 824, 28 C. C. A. 168, when that case was tried in the Circuit Court before Mr. Justice McKenna, then Circuit Judge (76 Fed. 525, 534), the plaintiff to show that he was able to perform his contract to convey, relied on proof of what he was to receive from the other party to the contract. But the court held that sufficient ability to perform the obligations of the contract must actually exist independent of the other party to the contract. But qualification of this broad statement is made in Thomas J. Baird Inv. Co. v. Harris, 209 Fed. 291, 297, 126 C. C. A. 217.

41 See Brickles v. Snell, [1916] 2 A. C. 599; Thomas J. Baird Inv. Co.

should be dealt with purely as one of fact. Could the plaintiff have performed concurrently with the defendant? The mere fact that the plaintiff needed the assistance of a third person to enable him to do this is not proof that he could not do it. If the defendant was not aware of the facts at the time he entered into the bargain and finding them out subsequently, before the time for performance, repudiates his agreement, a further question must be asked; namely, was the risk of non-performance which the other party is endeavoring to impose upon him greater than he should reasonably have anticipated as possible when he entered into the contract?

§ 882. Both parties unable or unwilling to perform.

If both parties to a contract are actually or prospectively unable to perform, and the performances of the promises were the price or exchange for one another, neither party can recover from the other; and the order in which their performances were due by the terms of the contract is immaterial. For even though the party whose performance was first due broke his promise without excuse, the subsequent inability of the other party to perform indicates that had the first performance been rendered, there would have been a failure of consideration justifying the recovery back of that performance. And repudiation or other manifestation by either party of unwillingness has the same effect as inability.42 Therefore, a vendor of real property desiring to claim a forfeit deposited by the other party to a contract for the sale of such property, is not excused from showing that he was prepared (or would have been) to perform on his side by the fact that v. Harris, 209 Fed. 291, 297, 126 C. C. A. 217.

42 In Gerli v. Poidebard Silk Mfg. Co., 57 N. J. L. 432, 31 Atl. 401, 30 L. R. A. 61, 51 Am. St. Rep. 612, the plaintiff sued the defendant for breach of a contract to buy silk on August 15th. The court said: "Conceding that the defendant's repudiation of the whole contract before August 15th absolved the sellers from the duty of

tendering an instalment on that date and gave them an immediate right of action against the defendant for a breach of contract, nevertheless, when it appeared, as it did on the trial, that by no possibility could the sellers have made tender of the silk due August 15th, because the silk did not arrive in New York until a later day, it became evident that as to that instalment the sellers suffered no loss by the breach."

the purchaser repudiated his obligation before the time for completing the transfer.43

§ 883. Rules of damages provide for cancellation of mutual obligations to exchange performances.

That performances in a bilateral contract are generally intended as an exchange for one another involves consequences besides those ordinarily classed under the rules of implied conditions. The law of damages takes the same principle into account. Where performances under a bilateral agreement are not intended as an exchange of one another as in the case of a promissory note given in exchange for an insurance policy, on default in the performance of one promise the promisee will recover full amount which was promised, and the defendant in his turn either by cross action, or counterclaim will recover the full amount promised to him.44 Under the common law mutual debts or obligations do not cancel one another pro tanto.45 Where, however, not only the two obligations in question, but the performances of them are in exchange for one another and the parties litigate, the court through the law of damages gives this effect."6

§ 884. An accrued right of action for breach of contract may be discharged by the plaintiff's subsequent inability

to perform.

Though a plaintiff whose performance is due subsequently to that of the defendant need not allege or prove either performance or tender on his part, 47 the same fundamental prin

43 Wells v. Page, 48 Or. 74, 82 Pac. 856, 3 L. R. A. (N. S.) 103. The court said, at page 80: "A vendor of real estate cannot enforce the contract against a vendee who is in default or has repudiated it, unless he himself is in a condition to perform: Sievers v Brown, 34 Or. 454, 56 Pac. 170, 45 L. R. A. 642; Hampton v. Speckenagle, 9 Serg. & R. 212, 11 Am. Dec. 704; Bigler v. Morgan, 77 N. Y. 312; Gray v. Smith, 83 Fed. 824, 28 C. C. A. 168; Mix v. Beach, 46 Ill. 311; Wallace v.

McLaughlin, 57 Ill. 53; Peck v. Brighton Co., 69 Ill. 200; Birge v. Bock, 24 Mo. App. 330." See also Eddy v. Davis, 116 N. Y. 247, 251, 22 N. E. 362; Catlin v. Jones, 52 Or. 337, 97 Pac. 546; cf. Braithwaite v. Foreign Hardwood Co., [1905] 2 K. B. 543. 44 See infra, § 888.

45 See supra, §859.

46 See infra, §§ 1350, 1351.

47 Reard v. Ephrata Orchard Homes Co., 78 Wash. 180, 138 Pac. 678, and see supra, § 829.

ciple is applicable that he ought not to be allowed to recover if the defendant will not get in return for his performance what he bargained for. Here, however, the burden is thrown upon the defendant to allege the failure of consideration which will excuse him from liability. To prevent a cause of action from arising originally on the defendant's promise at the time when performance is due, the only question can be of prospective failure of consideration rather than a failure which has already occurred; for by hypothesis the time for the plaintiff's performance has not yet arrived. But wherever subsequent events show that the plaintiff could not have given or would not have given the performance due from him, even though the plaintiff had performed on his part, the defendant is excused and it makes no difference that the reason why the defendant failed to perform his prior obligation had no connection with the subsequent inability or unwillingness of the plaintiff.48 Even though the plaintiff had acquired a complete right of action on the failure of the defendant to perform as agreed, the right will be lost if subsequent events prove that the plaintiff could not or would not have performed even if the defendant had performed. 49

§ 885. Actual or threatened failure of consideration will discharge liability already accrued.

It may seem that where performance on one side of a contract is precedent to that on the other, and the time for the prior performance has arrived and, no defence then existing, a right of action has arisen, this right of action cannot afterwards be destroyed except by payment, or release, or accord and satisfaction. Such, however, is not the case. Circumstances may arise subsequently which would justify the

48 Gray v. Sims, 3 Wash. C. C. 276, 280; Gray v. Smith, 83 Fed. 824, 28 C. C. A. 168; Dosch v. Andrus, 111 Minn. 287, 126 N. W. 1071; Gerli v. Poidebard Silk Mfg. Co., 57 N. J. L. 432, 31 Atl. 401, 30 L. R. A. 61, 51 Am. St. Rep. 612. See also Winston v. Brown, 247 Fed. 948, 160 C. C. A. 138. Cp. Braithwaite v. Foreign Hard Wood

Co., [1905] 2 K. B. 543; Mitsui & Co., Ltd., v. Watts, Watts & Co., Ltd., [1916] 2 K. B. 826; Watts, Watts & Co., Ltd., v. Mitsui & Co., [1917] A. C. 227 (stated supra, § 877).

49 See Gerli v. Poidebard Silk Mfg. Co., 57 N. J. L. 432, 31 Atl. 401, 30 L. R. A. 61, 51 Am. St. Rep. 612, stated supra, n. 42.