This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In some cases language is used which seems to indicate that the good faith of the party who asserts the claim is to be regarded as immaterial, and without attaching much importance, even to the existence of a reasonable ground for the dispute, the compromise of a disputed claim which could not have been maintained is assumed not to be a consideration if such claim does not in fact exist.1 It is said that "belief is not property."2 The cases in which this view is expressed are most of them cases in which the claim was not asserted in good faith, or in which there was no reasonable ground for believing in the existence of the claim; and, accordingly, they are cases in which the compromise can be held invalid, in some jurisdictions at least, without requiring the existence of a valid claim. If it is true that a valid claim must exist, there would be no use in making contracts of compromise where the dispute is as to the existence of the claim; and there is no logical distinction between a dispute as to the amount of the claim and one as to its existence. If a compromise is to be upheld at all, the necessity of the existence of a valid claim must be denied. The cases which seem to require the existence of a valid claim probably mean only that the claim must be asserted in good faith, and, possibly, upon reasonable ground.
New Hampshire. Flanagan v. Kil-come, 58 N. H. 443; Latulippe v. New England Investment Co., 77 N. H. 31, 86 Atl. 361.
North Carolina. Burma v. Starr, 165 N. Car. 657, Ann. Cas. 1914D, 71, 81 S. E. 029.
Oregon. Multnomah County v. Title Guarantee & Trust Co., 46 Or. 523, 80 Pac. 409; Dickey v. Jackson, 47 Or. 531, 84 Pac. 701; Roane v. Union Pac. Life Ins. Co., 67 Or. 264, 135 Pac. 892; Buteon v. Misz, 81 Or. 607, 160 Pac. 530; John Wilson Estate Co. v. Dam-meier Investment Co., 83 Or. 283, 163 Pac. 590.
Tennessee. Warren v. Williamson, 67 Tenn. (8 Baxt.) 427.
Virginia. Spence v. Repass, 94 Va. 716, 27 S. E. 583.
Washington. Snohomish River Boom Co. v. Great Northern Ry. Co., 57 Wash. 693, 107 Pac. 848.
Wyoming. Bolln v. Metcalf, 6 Wyom. 1, 71 Am. St. Rep. 898, 42 Pac. 12, 44 Pac. 694. "It is not necessary that the claim settled be one which could have been successfully maintained nor even that the question be really doubtful." Sunset Orchard Land Co. v. Sherman Nursery Co., 121 Minn. 5, 140 N. W. 112.
3 Fender v. Helterbrandt, 101 Ark. 335, 142 S. W. 184; Mayo v. Gardner, 49 N. Car. 359; Burriss v. Starr, 165 N. Car. 657, Ann. Cas. 1914D, 71, 81 S. E. 929.
4Hartle v. Stahl, 27 Md.157; Alexander v. Maryland Trust Co., 106 Md. 170, 66 Atl. 836.
5 First National Bank v. Emmets-burg, 157 la. 555, L. R. A. 1915A, 982, 138 N. W. 451.
1 England. Edwards v. Baugh, 11 Mees. & W. 641.
Alabama. Prater v. Miller, 25 Ala, 320; Maull v. Vaughn, 45 Ala. 134; Prince v. Prince, 67 Ala. 565; Ernst v. Hollis, 86 Ala. 511, 6 So. 85; Ivy Coal & Coke Co. v. Long, 139 Ala. 535, 36 So. 722.
Maryland. Ecker v. McAllister, 54 Md. 362; Dipaula v. Green, 116 Md. 491, 82 Atl. 205.
Michigan. Morgan v. Hodges, 89 Mich. 404, 50 N. W. 876.
Mississippi Keith v. Miles, 39 Miss. 442.