If it can be shown that the adversary party to an executory contract is not able to perform on his part, and that he will necessarily be unable to perform when the time for performance arrives, such fact operates as a discharge of the adversary party.1 If B is in fact insolvent, such insolvency operates as a discharge of a covenant in a contract by which A has agreed to extend credit to B.2 If the contract is one of sale, the seller need not surrender possession of the goods under such circumstances, unless the buyer is willing to pay cash therefor and to waive the covenant of the contract which provides for credit.3 If the seller under such circumstances tenders the goods and demands cash, and the buyer refuses to pay cash, the seller may treat such conduct as a breach and may recover damages.4 The seller can not recover damages without offering to perform, although he may demand cash.5

11 J. W. Reedy Elevator Mfg. Co. v. Peck, 149 Mich. 657, 113 N. W. 300.

12 North Dakota v. Farmers' Co-operative Elevator Co., - N. D. - , L. R. A. 1918E, 233, 167 N. W. 223.

13 North Dakota v. Farmers' Co-operative Elevator Co., - N. D. - , L. R. A. 1918E, 233, 167 N. W. 223.

14 Urquhart v. Marion Hotel Co., 128 Ark. 283, L. R. A. 1917F, 203, 194 8. W. 1.

15 Koppitz-Melchers Brewing Co. v. Schultz, 68 0. S. 407, 67 N. E. 719.

16 Beadles v. Smyser, 209 U. S. 393, 52 L. ed. 849 [reversing, 17 Okla. 162, 87 Pac. 292].

1 German-American Security Co.'s Assignee v. McCulloch (Ky.), 89 S. W. 5, 28 Ky. L. Rep. 133; Pratt v. S. Freeman & Sons Mfg. Co., 115 Wis. 648, 92 N. W. 368.

If the buyer or his creditors insist upon the performance of the contract on the part of the seller and offer cash, it is said that the seller must accept such payment in cash and must perform.6 The correctness of this theory may well be doubted. The covenant for credit is ordinarily intended for the benefit of the buyer; but it is a term of the contract which can not be modified without the assent of the parties thereto.7 Refusal by one party to perform unless the adversary party assents to a modification of the terms of the contract, is ordinarily regarded as breach by renunciation.8 Probably what is meant is that payment must be secured to the seller if the buyer has become insolvent after the contract of sale was made; and usually the objection of the seller is not to accepting cash in place of credit, but to performing the contract under any circumstances. From the nature of the case, the question usually arises only where the market value of the property is such that it is more profitable to the seller to treat the'contract as discharged and to sell the goods at the market price, than it is to perform the original contract, since it is only under circumstances of this sort that the creditors of the buyer will contribute to a fund for the purpose of enabling the buyer to perform, or the court will order the receiver or assignee to perform the contract. It is likely that if the seller were willing to perform, but demanded security for future payment at the time fixed by the terms of the original contract instead of payment in cash, he could not be compelled to accept cash. If the original contract provided for payment in cash, and by a subsequent modification thereof provision is made for credit, and the buyer thereafter becomes insolvent, it is said that the seller may treat the covenant for credit as discharged, but that in such case he is bound by the original contract to deliver for cash.9 Whether in such cases the receiver of the insolvent buyer may prevent insolvency from operating as a breach by selling the contract to a third person who is solvent and who is ready to perform, is a question upon which there is a conflict of authority. It has been held that the sale of the contract does not prevent breach, and that unless the receiver acts with reasonable promptness to pay for the goods the contract is discharged.10 On the other hand, it has been held that one to whom the receiver has sold the contract may recover damages if the original seller refuses performance.11 The insolvency of an insurance company and the transfer of its assets, amount to a breach of its contracts of insurance.12

2 England. Ex parte Chalmers, L. R. 8 Ch. App. 289; Bloxam v. Sanders, 4 Barn. & C. 941, 7 Dowl. & R. 396.

United States. Florence Mining Co. v. Brown, 124 U. S. 385, 31 L. ed. 424; Texas Co. v. International & G. N. Ry. Co., 250 Fed. 742.

Alabama. Robertson v. Davenport, 27 Ala. 574.

Iowa. Rappleye v. Racine Seeder Co., 79 la. 220, 7 L. R. A. 139, 44 N. W. 363; Sprague v. Iowa Mercantile Co., - la. - , 172 N. W. 637.

Minnesota. Crummcy v. Raudcnbush, 55 Minn. 426, 56 N. W. 1113.

Mississippi. Hunter v. Talbot, 11 Miss. (3 Smedes & M.) 754.

New York. Anderson v. Read, 106 N. Y. 333, 13 N. E. 292.

Ohio. Diem v. Koblitz, 49 O; S. 41, 34 Am. St. Rep. 531, 29 N. R 1124.

Oklahoma. Clements v. Jackson County Oil & Gas Co., - Okla. - , L. R. A. 1917C, 437, 161 Pac. 216.

Texas. Ullman v. Babcock, 63 Tex. 68.

Wisconsin. Pratt v. & Freeman & Sons Mfg. Co., 115 Wis. 648, 92 N. W. 368.

3 England. Ex parte Chalmers, L. R.

8 Ch. App. 289; Bloxam v. Sanders, 4 Barn. & C. 941, 7 Dowl. & R. 396.

United States. Texas Co. v. International & G. N. Ry. Co., 250 Fed. 742.

Iowa. Rappleye v. Racine Seeder Co., 79 la. 220, 7 L R . A. 139, 44 N. W. 363; Sprague v. Iowa Mercantile Co., - la. - , 172 N. W. 637.

Minnesota. Crummey v. Raudenbush, 55 Minn. 426, 56 N. W. 1113.

Mississippi Hunter v. Talbot, 11 Miss. (3 Smedes & M.) 754.

New York. Anderson v. Read, 106 N. Y. 333, 13 N. E. 292.

Ohio. Diem v. Koblitz, 49 O. S. 41, 34 Am, St. Rep. 531, 29 N. E. 1124.

Oklahoma. Clements v. Jackson County Oil & Gas Co., - Okla. - , L. R. A. 1917C, 437, 161 Pac. 216.

Texas. Ullman v. Babcock, 63 Tex. 68.

4 Texas Co. v. International & G. N. Ry. Co., 250 Fed. 742; Pratt v. S. Freeman & Sons Mfg. Co., 115 Wis. 648, 92 N. W. 368.

5 Florence Mining Co. v. Brown, 124 U. S. 385, 31 L. ed. 424; Roberts Cotton Oil Co. v. Morse, 97 Ark. 513, 135 S. W. 334.

6 New England Iron Co. v.-The Gilbert Elevated R R. Co., 91 N. Y. 153.

The insolvency of one of the parties to the contract is not a discharge of the contract on the theory of.13 impossibility,18 although in some jurisdictions the dissolution of a corporation, whatever the ground therefor may be, operates as a discharge of executory-contracts.14

7 See Sec. 2458.

8 See Sec. 2004.

9 Pardee v. Kanady, 100 N. Y. 121. 10 Sprague v. Iowa Mercantile Co.,

- la. - 172 N. W. 637.

11 Roberta Cotton Oil Co. v. Morse, 97 Ark. 513, 135 S. W. 334.

12 Lovell v. St. Louis Mutual Life Ins. Co., Ill U. S. 264, 28 L. ed. 423.

13 See Sec. 2707.

The appointment of a receiver on the ground of insolvency is said not to amount to discharge of such contract in itself;15 but in other cases, the insolvency of a party to an executory contract and the appointment of a receiver for his property is said to amount to a breach.16 It is possibly the unwillingness of the receiver or assignee and the creditors to perform, rather than the insolvency of the promisor and the appointment of a receiver or assignee that operates as a breach.

Notice given by B to A of the fact that B is insolvent, has been held to be equivalent to notice that B will not be able to perform a contract which requires the payment of money.17