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.
Special questions arise under contracts to pay in goods or in labor, debts which are measured at a money value. The first question is whether, under such contracts, there is any right of election at all. If the contract is to deliver certain goods, or do certain work, for a consideration agreed upon, and no money value for such consideration is estimated, the debtor has no right of election.1 Thus a contract to pay a certain part of the crops received from realty leased, and a certain number of bushels of corn as rent for such realty, is a contract in which there is no right of election, and in case of breach the lessor is to recover the market value of such corn.2 If the consideration is estimated at a money value, a contract by which the creditor agrees to accept goods in payment of part or all of such debt, may be so worded as to give the debtor no election.3 So under a contract to excavate for a railroad for a certain sum, twenty-five per cent of which is payable in the railroad's stock at par does not create an election, and in case of breach, only seventy-five per cent of the contract price, together with the market value of so much stock as at par would equal twenty-five per cent of the contract price can be recovered.4 In such Gases, if the debtor does not perform by delivering such goods at the time specified, the creditor can recover only the market • value of the goods which should have been delivered, and cannot recover the money value at which the consideration was estimated. On the other hand the debtor cannot discharge his obligation by payment in money. Thus under a contract of ale, the purchase-price to be paid partly in interest-bearing notes, a tender of the face of the notes in cash is not sufficient.5 The weight of authority is, that a contract to pay a certain sum of money to be discharged by delivering goods at a certain valuation, is a contract which gives to the debtor the right of election up to the time of payment.6 Before breach the creditor cannot elect to receive payment in money.7 Thus, a contract to pay debts, estimated in money, by means of a certain amount of lumber to be delivered, one-half during each of two years, no place of delivery being specified, gives the debtor the election to pay in lumber, and the creditor cannot demand payment in money until he has made demand for the lumber, which has been refused.8 So under a contract to pay in bonds,9 or in lime,10 the creditor cannot enforce payment in money before breach. Before breach a contract to pay a certain debt in work, cannot give to the creditor a right of action to recover money. Thus, a contract to pay a debt by grinding corn,11 or by sawing lumber,12 cannot be collected in money where the payee refuses to furnish corn or lumber for such purpose., Before the debt is due, the debtor may elect to pay in money. Thus a contract to deliver a certain amount of cotton at a certain price per pound, may be discharged by pacing the amount of money obtained by multiplying this price by the number of pounds to be delivered.13 So under a contract to pay fifteen hundred dollars in wool at twenty cents a pound, the payor may pay the money at his election.14 If the contract is broken, the debtor loses his right to elect, and the creditor may enforce payment in money.15 Thus on breach the creditor may enforce payment in money under a contract to pay a certain sum in land,16 or in merchandise.17 A bought a bicycle of B, and subsequently, by agreement, returned it, and took from B a receipt for sixty dollars to apply on any new wheel which A should select from B's stock. Subsequently, A selected a wheel for which B refused to honor the receipt as a part payment. A then had a right to recover such amount of money.18 A agreed to pay for a certain amount of advertising, by allowing the price thereof as a credit upon any steam launch to be selected from such stock. The holder of the order which A gave for such price, transferred it to X. X then bought the launch from A at a price estimated on a cash basis. When X offered the order in part payment, A refused to honor it. It was held that X could recover the amount of such order in money.19 A debt payable in confectionery becomes payable in money where an order for confectionery is not filled.20 A took a note from B, for value, payable one half in coin, or cotton at twenty cents a pound, at the maker's option; and one half in coin, or cotton at twenty cents a pound, at the payee's option. After the note fell due it was held that the creditor may recover the entire amount thereof in coin.21 A contract specifically giving a party the option to deliver a certain amount in bonds of a corporation to be organised, or of paying the amount in money, such option to be exercised by a certain date, must be performed by delivering the bonds by such date, or else the creditor will have the right to enforce payment in money. Accordingly, delivery of an order upon the treasurer of the company for certain bonds, is not ] performance where the corporation has not yet issued bonds, and the capital actually invested in the corporate business is very small.22 If an option given in a railroad bond whereby the railroad may pay scrip for the interest on July first of each year is not taken advantage of by that date, the creditor may enforce payment of the interest in money.23 If a note for one hundred bushels of corn containing a provision "this corn is estimated at twenty dollars," is not paid at maturity the creditor may recover twenty dollars though corn is then worth only fifteen cents a bushel.2* So on breach of a contract to pay a certain amount of money in labor or stock, the payee can on breach recover the amount of money specified.25 B sold a printing outfit to A, agreeing to take payment in printing. A sold the outfit to a third person and refused to do the printing. It was held that B could recover the purchase price.26 If the creditor has a right, by reason of a breach of the contract to demand payment in money, his act in subsequently accepting payment of part of the indebtedness in goods, does not waive his right to enforce payment of the rest in money.27 The minority of the courts, however, treat such contract as merely one to deliver chattels, on the theory that the valuation of the consideration in money is introduced simply for determining the amount of the chattels which the debtor is to deliver.28 Where this view prevails the debtor has no election before breach to pay in money,29 and after breach the creditor cannot recover the valuation of the consideration as estimated in money.30 His right of recovery is restricted to damages for non-delivery of the articles agreed to be delivered. Thus in a note "payable in, Levee Bonds of Arkansas" at par, the word "payable': means "to be paid," and not "which may be paid." Hence, after the note is due only the value of the bonds can be recovered.31 So he can recover the market value of the chattels of greater than the estimate amount in money.32 At Common Law where this theory prevails, recovery must be had on the special contract, and cannot be had on the common counts.33 On rescission of a contract under which A has delivered horses to B at an agreed valuation in payment for land, B, having sold the horses, must account for them at the market price and not at the agreed valuation.34 Under a contract to accept a certain number of shares of stock in a given corporation in payment of a note, such payment must be made in stock as existing at the time of such contract. Tender of the specified number of shares after the stock has been greatly inflated is not sufficient.35 A note payable in trucking in monthly payments due twenty-four months after date requires trucking to be done each month.36
4 Phillips v. Cornelius (Miss.), 28 So. 871.
1 Cummings v. Dudley, 60 Cal. 383; 44 Am. Rep. 58.
2 Butler v. Baker, 5 0. S. 584.
3 Cleveland, etc., R. R. v. Kelley, 5 0. S. 180.
4 Cleveland, etc., R. R. v. Kelley, 5 O. S. 180.
6 Ragland n. Wood, 71 Ala. 145; 46 Am. Rep 305; Sims v. Cox, 40 Ga. 76; 2 Am. Rep. 560; Owen v. Barnum, 7 111. 461; Leiter v. Emmons, 20 Jnd. Ap. 22; 50 N. E. 40; Oldham v. Kerchner, 79 N. C. 106; 28 Am. Rep. 302; Choice v. Mose-ley. 1 Bail. L. (S. C.) 136; 19 Am. Dec. 661.
7 Ragland v. Wood, 71 Ala. 145; 46 Am. Rep. 305; Bradley v. Far-rington, 4 Ark. 532; Widner v. Walsh, 3 Colo. 548; Farmers', etc.. Co. v. R. R.. 127 Ind. 250; 11 L. R. A. 740; 26 N. E. 784: Leiter v. Emmons, 20 Ind. App. 22; 50 N. E.
40; American, etc., Co. v. Wood, 90 Me. 516; 43 L. R. A. 449; 38 Atl. 548; Beede v. Proehl. 34 Minn. 497; 27 N. W. 191; State v. Mooney. 65 Mo. 494; Pierce v. Marple, 148 Pa. St. 69; 33 Am. St. Rep. 808; 23 Atl. 1008; Drake v. Harrison. 69 Wis. 99; 2 Am. St. Rep. 717; 33 N. W. 81.
8 Ragland v. Wood. 71 Ala. 145; 46 Am. Rep. 305.
9 Farmers', etc.. Co. v. R. R.. 127 Ind. 250; 11 L. R. A. 740; 26 N. E. 784.
10 Pierce v. Marple, 148 Pa. St. 69; 33 Am. St. Rep. 808: 23 Atl. 1008.
11 Oldham v. Kerchner. 79 N. C. 106; 28 Am. Rep. 302.
12 Nipp v. Diskoy. 81 Ind. 214; 42 Am. Rep. 124.
13 Sims v. Cox, 40 Ga. 76; 2 Am. Rep. 560.
14 Trowbridge v. Holcomb, 4 O. S. 38.
15 McGillin v. Bennett, 132 U. S. 445; Hannan v. Anderson, 15 Colo. App. 433; 62 Pac. 961; Brooks v. Hubbard, 3 Conn. 58; 8 Am. Dec. 154; Farmers', etc., Co. v. R. R., 127 Ind. 250; 11 L. R. A. 740; 26 N. E. 784; Guthrie v. Wickliffe. 3 Bibb. (Ky.) 81; Wyman v. Wins-low, 11 Me. 398; 26 Am. Dec. 542; Crowl v. Goodenbersrer. 112 Mich. 683; 71 N. W. 485; Hand v. Power Co., 167 N. Y. 142; 60 N. E. 425;
New York News Publishing Co. v. Steamship Co., 148 N. Y. 39; 42 N. E. 514; Haskins v. Dern, 19 Utah 89; 56 Pac. 953; Smith v. Cool-idge, 68 Vt. 516; 54 Am. St. Rep. 902; 35 Atl. 432.
16McGillin v. Bennett, 132 U. S. 445.
17 Anderson v. Mason, 6 Dana (Ky.) 217.
18 Hannan v. Anderson, 15 Colo. App. 433; 62 Pac. 961.
19 Hand v. Power Co., 167 N. Y. 142; 60 N. E. 425.
20 Smith v. Coolidge, 68 Vt. 516; 54 Am. St. Rep. 902; 35 Atl. 432.
21 Russell v. McCormick, 45 Ala. 587, 6 Am. Rep. 707.
23 Texas, etc., Ry. v. Marlor, 123 U. S. 687.
24 Hise v. Foster. 17 la. 23.
25 Sperry v. Johnson, 11 Ohio 452.
25 Wroughton v. Waffle, 122 Ia. 486; 98 N. W. 307.
27 Smith v. Coolidge, 68 Vt. 516; 54 Am. St. Rep. 902; 35 Atl. 432.
28 Mattox v. Craig, 2 Bibb. (Ky.) 584. (A contract for eigbty-nine dollars " to be discharged " in brick at four dollars a thousand.)
29 Cole v. Boss. 9 B. Mon. (Ky.) 393; 50 Am. Dec. 517. (A contract for over three thousand dollars payable in pig metal at twenty-nine dollars per ton.)
30 Wilson v. George. 10 N. H. 445.
31 Johnson v. Dooley. 65 Ark. 71; 40 L. B. A. 74; 44 S. W. 1032.
32 McDonald v. Hodge. 5 Hayw.
(Tenn.) 85. (A contract to pay 9 certain sum " in potash at the price of five dollars per hundred.")
33 A certain amount payable in work. Wilson v. George, 10 X. H. 445. A certain amount payable in goods. Chickering v. Greenleaf, 6 N. H. 51.
34 Clover v. Gottlieb, 50 La. Ann. 568; 23 So 459.
35 Tranter v. Hibberd, 108 Ky. 265; 56 S. W. 169.
36 Hobbs v. Moore, 86 Me. 517; 30 Atl. 110.