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.
To a less degree, justification may be found for the obiter which lays down the rule that the negotiable instrument is an exception to the general principle of renunciation in advance. The negotiable instrument is one which from its nature must be in writing.7 For many purposes the written negotiable instrument is the contract between the parties and not merely the evidence thereof.8
The rule that a covenant for the payment of money only, at least if the adversary party has performed the covenants on his part, is an exception to the principle of renunciation in advance, is not, however, limited to negotiable instruments; but it has been applied to similar covenants in non-negotiable contracts.9 In a contract by which A agreed to sell a certain realty to B, and B agreed to pay therefor in instalments, it has been held that on renunciation by B before performance on his part was due, A could not maintain an action on the contract.10 The fact that an insurance company goes out of business is held not to accelerate the maturity of its obligations to its agents to pay them commissions out of subsequent renewals.11 It seems to be assumed that renunciation of a policy of life insurance does not give a right of action on the policy before loss occurs.12 The holder may bring an action to recover the premiums which have been paid in;13 or he may sue in equity to have the policy declared to be a valid obligation;14 or he may wait till loss occurs and recover the amount of the policy, less the amount of the premiums which fell due after such renunciation, and which were not paid.15 The difficulties in determining the amount to be discounted from the face of the policy for immediate payment, and in determining in advance the amount of premiums to be paid during the time that the policy will remain in force, have made the courts regard this result as necessary from a practical point of view, whatever may be thought of its harmony with the general principles of renunciation in advance. The only alternative would be to resort to tables of mortality for the purpose of ascertaining the expectancy of life of the insured. Similar difficulties in determining the amount to be recovered on renunciation of contracts for personal services in advance do not seem to have suggested themselves.16
4 See Sec. 1172 and 2473.
5 See Sec. 1903 et seq. and 1912 et seq.
6 See Sec. 1909.
7 See Sec. 2305 et seq.
8 See Sec. 2312.
9 Greenway v. Gaither, Taney (U S. C. C.) 227, Fed. Cas. No. 5788; Moore v. Security Trust & Life Ins. Co., 108 Fed. 496.
10 Greenway v. Gaither, Taney (U. S. C. C.) 227, Fed. Cas. No. 5788.
11 Moore v. Security Trust & Life Ins. Co., 168 Fed. 496.
"But this rule is inapplicable to, and it does not govern, actions upon bonds, notes, and upon other contracts to pay money at times specified, where the party of one part has completely executcd the contract and it is executory only upon the part of the other party. No action for damages lies before the time of payment arrives against one who disables himself from paying, or gives notice that he will not pay, his obligations under contracts of this kind. Roehm v. Horst, 178 U. S. 1. 17, 18, 20 Sup. Ct. 780, 44 L. ed. 953; Nichols v. Steel Company, 137 N. Y. 471, 487, 33 N. E. 501; Washington County v. Williams, 111 Fed. 801, 810, 49 C. C. A. 621, 630. The claim to recover for the breach of the agreement to pay the commissions on the renewal premiums due after the termination of the agency contract is founded on an agreement of the latter class. The plaintiffs have performed their part of the contract of agency, they have completely earned the commissions, the contract is completely executed on their part, nothing remains executory but the agreement of the defendant to pay the commissions when the renewal premiums are collected, and those premiums had not become due or been collected, and the time had not arrived when the commissions were due when this action was brought. The defendant's creation of its disability to collect the premiums and to pay the commission did not make the latter due earlier, and it created no cause of action for their present worth, and this action was prematurely brought." Moore v. Security Trust & Life Ins, Co., 168 Fed. 496. 12 See Sec. 2890.
The reason for treating a contract to pay money as an exception to the general rule that renunciation gives right of action at once, has been said to be the fact that the value of money does not fluctuate.17
13 See ch. LXXXVIII.
14 See | 2890.
15 See Sec. 2883. 16 See Sec. 2887.
17 Alger-Fowler Co. v. Tracy, 98 Minn. 432, 107 N. W. 1124.
"The reason why a contract to pay money at a definite time in the future is an exception to the rule is that money is not a commodity which is sold and bought in the market and the market value of which fluctuates, as is the case with grain, stocks, and other similar articles." Alger-Fowler Co. v. Tracy, 98 Minn. 432, 107 N. W. 1124
The rule that a covenant to pay money is an exception to the ordinary principle of renunciation in advance does not seem to apply to a contract which is purely executory on each side.18 If A has agreed to lend money to B upon the happening of a certain event, and before the happening of such event A declares that he will not perform, B may maintain an action for damages without waiting for the happening of such event.19
If a contract contains a provision by which one of the parties agrees to give a negotiable instrument payable at the end of a specified period of time, as a means of securing the contract price, an action may be brought to recover the contract price upon the refusal of such party to execute and deliver such negotiable instrument.20 A contract of sale provided for delivery in instalments, the vendee to give his notes, payable at a future day, as each instalment was delivered. Before the contract was completely performed the vendee refused to give his notes. The vendor was allowed to bring an action at once before the expiration of the time fixed for the credit, and the vendee can not then insist on such term of credit.21 If the action is not brought, however, until after the time at which the note is to be given, by the terms of the original contract, this is not a case of the application of the principle of renunciation in advance. It is rather a case of refusal to perform, or renunciation when performance is due.22