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.
It has been said in many cases, in what on examination prove to be for the most part obiter that a moral obligation is such consideration as will support a subsequent express promise based thereon.1 This rule in the form given is an unsafe one. If a legal liability once existed, and to this liability some rule of positive law allows a defense which is a bar to an action on the liability, though it does not extinguish the debt, an express promise may be based on such liability as a consideration.2 The chief examples of such considerations
9 Ogden v. Redd, 76 Ky. (13 Bush.) 581.
10Gilmore v. Green, 77 Ky. (14 Bush.) 772.
1 England. Hawkes v. Saunders, 1 Cowp. 289; Lee v. Muggeridge, 5 Taunt. 3G.
Kansas. Brown v. Akeson, 74 Kan. 301, 86 Pac. 299.
Kentucky. Cardwell v. Strother, 16 Ky. (Litt. Sel. Ca.) 429, 12 Am. Dec. 326.
Maryland. State v. Reigart, 1 Gill (Md.) 1, 39 Am. Dec. 628; Drury v. Briscoe, 42 Md. 154; Robinson v. Hurst, 78 Md. 59, 44 Am. St. Rep. 266, 26 Atl. 95G [sub nomme, Mutual Reserve Fund Life Association v. Hurst, 20 L. R. A. 761].
Ohio. Reed v. McGrew, 5 Ohio 375.
Pennsylvania. Bailey v. Philadelphia, 167 Pa. St. 569, 46 Am. St. Rep. 491, 31 Atl. 925.
South Carolina. McMorris v. Hern-don, 2 Bail. Law (S. Car.) 56, 21 Am. Dec. 515; Ferguson v. Harris, 39 S. Car. 323, 39 Am. St. Rep. 731, 17 S. E. 782; Bank v. Mahon, 78 S. Car. 408, 59 S. E. 31.
Washington, Olsen v. Hagan, 102 Wash. 821, 172 Pac. 1173. It has been said that the moral obligation which is also a legal consideration will support a promise. Holloway's Assignee v. Rudy (Ky.), 60 S. W. 650, 22 Ky. Law Rep. 1406 [sub nomine, Trimble v. Rudy, 53 L. R. A. 353].
2 This view was expressed clearly and perhaps for the first time in Wen-nail v. Adney, 3 Bos. & P. 249, and note a.
It has been followed in England since then: Eastwood v. Kenyon, 11 Ad. & El. 436; Wild v. Tucker , 3 K. B. 36. (Promise to pay debt discharged by bankruptcy as part of loan of a small sum.) Jennings v. Brown, 9 M. & W. 495.
This rule has been followed in most American states:
Alabama. Thompson v. Hudgins, 116 Ala. 93, 22 So. 632.
California. Peek v. Peek, 77 Cal. 106, 11 Am. St. Rep. 244, 1 L. R. A. 165, 19 Pac. 227.
Iowa. Allen v. Bryson, 67 la. 501, 56 Am. Rep. 358, 25 N. W. 820.
Kentucky. Holloway v, Rudy (Ky.), are debts barred by the Statute of Limitations,3 or judgments which have become dormant,4 or debts which have been barred by bankruptcy,5 even if the debtor has entered into a composition with
60 S. W. 650 [sub nomine, Trimble v. Rudy, 53 L. R. A. 353].
Maine. Warren v. Whitney, 24 Me. 561, 41 Am. Dec 406.
Maryland. Ingersoll v. Martin, 58 Md. 67, 42 Am. Rep. 322; Duttera v. Babylon, 83 Md. 536, 35 Atl. 64.
New York. Herrington v. Davitt, 220 N. Y. 162, 1 A. L. R. 1700, 115. N. E. 476.
North Carolina. Wilcox v. Arnold, 116 N. Car. 708, 21 S. E. 434.
Ohio. Hamor v. Moore, 8 O. S. 239.
Rhode Island. Smith v. Tripp, 14 R. I. 112.
Vermont. Holley v. Adams, 16 Vt. 206, 42 Am. Dec. 508; Valentine v. Bell, 66 Vt. 280, 29 Atl. 251.
3 United States. Sturges v. Crownin-shield, 17 U. S. (4 Wheat) 122,
4 L. ed. 529; Campbell v. Holt, 115 U. S. 620, 29 L. ed. 483.
Alabama. Turlington v. Slaughter, 54 Ala. 195.
Connecticut. Cook v. Bradley, 7 Conn. 57, 18 Am. Dec. 79.
Illinois, Neish v. Gannon, 198 111. 219, 64 N. E. 1000 [affirming, 98 111. App. 248]; Whittaker v. Crow, 32 111. App. 29.
Iowa. Hellman v. Kiene, 73 la. 448,
5 Am. St. Rep. 693, 35 N. W. 516; Jenckes v. Rice, 119 la. 451, 93 N. W. 384.
Maryland. Stewart v. Garrett, 65 Md. 392, 57 Am. Rep. 333, 5 Atl. 324.
Michigan. Koons v. Vauconsant, 129 Mich. 260, 95 Am. St. Rep. 438, 88 N. W. 630.
Ohio. Haymaker v. Haymaker, 4 O. S. 272; Hill v. Henry, 17 Ohio 9; Turner v. Adm'r of Moore, 20 Ohio 332; Coffin v. Secor, 40 O. S. 637. (Action permitted on original debt and on subsequent promise.)
Vermont Farmers', etc., Bank v. Flint, 17 Vt. 508, 44 Am. Dec 351.
Washington. Quaker City National Bank v. Tacoma, 27 Wash. 259, 67 Pac. 710.
Wisconsin. Marshall v. Holmes, 68 Wis. 555, 32 N. W. 685.
4 Brown v. Akeson, 74 Kan. 301, 86 Pac. 299.
5 England. Wild v. Tucker , 3 K. B. 36. (A loan of a small sum was a part of the consideration for the new promise.)
United States. Zavelo v. Reeves, 227 U. S. 625, 57 L. ed. 676, Ann. Cas. 1914D, 664 [affirming, Zavello v. Reeves, 171 Ala. 401, 54 So. 654]; Mutual Reserve Fund Life Association v. Beatty, 93 Fed. 747, 35 C. C. A 573.
Alabama. Anthony v. Sturdivant, 174 Ala. 521, 56 So. 571.
Indiana. Shockey v. Mills, 71 Ind. 288, 36 Am. Rep. 190; Wills v. Ross, 77 Ind. 1, 40 Am. Rep. 279; Post v. Losey, 111 Ind. 74, 60 Am. Rep. 677, 12 N. E. 121.
Kentucky. Rosenfield v. Goldsmith (Ky.), 12 S. W. 928; Tolle v. Smith, 98 Ky. 464, 33 S. W. 410; Brashears v. Combs, 174 Ky. 344, 192 S. W. 482.
Maryland. Old Town National Bank v. Parker, 121 Md. 61, 87 Atl. 1105.
Michigan. Edwards v. Nelson, 51 Mich. 121, 16 N. W. 261.
Missouri. Wislizenus v. O'Fallon, 91 Mo. 184, 3 S. W. 837.
New York. Herrington v. Davitt, 220 N. Y. 162, 1 A. L. R. 1700, 115 N. E. 476.
North Carolina. Oauley v. Dunn, 167 N. Car. 32, 83 S. E. 16.
Pennsylvania. Bolton v. King, 105 Pa. St 78.
"It is settled, however, that a discharge, while releasing the bankrupt his creditors as a part of such bankruptcy proceedings,6 or debts which are barred by proceedings in insolvency,7 or debts to which infancy may be pleaded as a defense,8 or intoxication,9 or insanity.10
Whether contracts of a government, or of a public corporation, or of a private corporation, in excess of the powers of such body, create a so-called moral obligation, is a question which depends upon the effect of such unauthorized contracts.11. The nature of the obligation growing out of the unauthorized contract of an agent depends upon the general principles of agency and is discussed elsewhere.12 Whether an oral contract, which is unenforceable because of the Statute of Frauds, gives rise to a so-called moral obligation which will support a subsequent promise, is a question upon which there is a conflict of authority, which depends in part upon the fact that some courts look upon such a contract as valid, but unenforceable for want of proper evidence, while other courts regard such contract as absolutely void.13
Where the parol evidence rule was a rule of evidence and not a rule of substantive law,14 A and B entered into a contract, a part from legal liability to pay a debt that was provable in the bankruptcy, leaves him under a moral obligation that is sufficient to support a new promise to pay the debt. And in reason, as well as by the greater weight of authority, the date of the new promise is immaterial. The theory is that the discharge destroys the remedy but not the indebtedness; that, generally speaking, it relates to the inception of the proceedings, and the transfer of the bankrupt's estate for the benefit of creditors takes effect as of the same time; that the bankrupt becomes a free man from the time to which the discharge relates, and is as competent to bind himself by a promise to pay an antecedent obligation, which otherwise would not be actionable because of the discharge, as he is to enter into any new engagement. And so, under other bankrupt acts, it has been commonly held that a promise to pay a provable debt, notwithstanding the discharge, is as effectual when made after the filing of the petition and before the discharge as if made after the discharge." Zavelo v. Reeves, 227 U. S.
625, 57 L. ed. 676, Ann. Cas. 1914D, 664 [affirming, Zavello v. Reeves, 171 Ala. 401, 54 So. 654, and citing, Kirk-patrick v. Tattersall, 13 M. & W. 766; Griel v. Solomon, 82 Ala. 85; Lanagin v. Nowland, 44 Ark. 84; Knapp v. Hoyt, 57 la. 501, 42 Am. Rep. 59; Otis v. Gazlin, 31 Me. 567; Wiggin v. Hodg-don, 63 N. H. 39; Jersey City Ins. Co. v. Archer, 122 N. Y. 376; Hornthal v. McRae, 67 N. Car. 21; Fraley v. Kelley, 67 N. Car. 78, and Hill v. Trainer, 49 Wis. 537].
6Herringtan v. Davitt, 220 N. Y. 162, 1 A. L. R. 1700, 115 N. E. 476.
7 Lambert v. Schmalz, 118 Cal. 33, 50 Pac. 13.
As for the promise of a third person to pay such debt. Webster v. Le Compte, 74 Md. 249, 22 Atl. 232.
8 See ch. XLVI.
9 See ch. XLV1II.
10 See ch. XLVII.
11 See ch. LIX to ch. LXI. 12 See ch. LIV.
13 See Sec. 1402.
14 Hurless v. Wiley, 91 Kan. 347, 137 Pac. 981. See ch. LXIX.
of which was reduced to writing and signed by the parties, and a part of which was left in the form of an oral agreement, which could not be proved by reason of the parol evidence rule. Subsequently such oral agreement was reduced to writing. It was held that the original liability arising out of the oral contract constituted a sufficient consideration for the subsequent written promise, although such oral contract could not have been proved.15 A party who has been released from liability on a written instrument by a material alteration thereof,16 or by extension of time on valuable consideration,17 may without any new consideration bind himself by a subsequent promise to perform such obligation. So a promise to pay usurious interest, though unenforceable in toto, may in some states be a consideration for a subsequent promise to pay lawful interest.18
In some jurisdictions a modified form of the doctrine of moral obligation has been adopted; and it has been held that where the promisor has received a benefit from the promisee, although not under circumstances which would impose a legal liability upon the promisor, such acceptance of benefits imposes a moral obligation upon the promisor to pay therefor, and that such moral obligation will support a subsequent express promise.19 If an agent incurs an obligation on behalf of his principal without authority from the principal to incur such obligation, a subsequent promise by the principal to pay such debt is said to be supported by sufficient consideration if the principal received some benefit therefrom.20