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 a number of jurisdictions the courts have recognized the existence of waiver, although the acts which are relied upon to show such waiver take place after the rights of the parties are fixed by loss, performance, and the like, and although no elements of estoppel or consideration can be found.1 A provision in a building contract which makes the certificate of the architect or engineer a condition precedent, is waived, if, after performance, the owner promises to pay without such certificate.2 Such a provision is waived if the property owner refuses to pay on other grounds without reference to the certificate of the architect.3
In the foregoing cases it is possible to contend that the party who seeks to treat such conduct as a waiver, was misled in some way by the conduct of the adversary party and that he may have been induced to maintain an action without seeking to comply with the provisions of such condition. In other cases no such explanation can be offered. If an insurance company attempts to settle a loss,4 or if it makes a partial payment after loss,5 or if it attempts to make an adjustment, even though such adjustment does not operate as a detriment to the insured,6 such conduct is a waiver of the right to take advantage of such breach of condition. The conduct of an insurance company recognizing a policy as in effect, may operate as a waiver of a breach of condition caused by non-payment of a premium,7 as where such premium is paid by check which has been protested and the insurance company agrees to treat such policy as in effect if the bank had made a mistake in protesting such check.8 In cases of this sort it is impossible to explain the result which is actually reached - either on the theory of new contract, for there is no agreement and no consideration; or on the theory of estoppel, for there is no action in reliance upon such statements or acts; or on the theory of election, because there are no inconsistent rights between which to elect. While this result is reached in many courts, and while its true significance is disguised by calling it waiver, it is really a case in which the courts give effect to the declaration of one of the parties to a transaction without requiring the common-law elements of contract, estoppel or election.
13 See on this question, Mechanics and Farmers' Savings Bank v. Katter-john, 137 Ky. 427, 22 Am. & Eng. Ann. Cas. 439, 123 S. W. 1071, in which, how-ever, this statement was an obiter since the conditions upon which the in-dorser agreed to become liable did not take place.
1 Alabama. Mutual Benefit Life Ins. Co. v. Lehman, 132 Ala. 640, 32 So. 733.
Kansas. German Ins. Co. v. Allen, 69 Kan. 729, 77 Pac. 529.
Kentucky. Gardner v. Continental Ins. Co., 125 Ky. 464, 101 S. W. 908.
Missouri. Travis v. Continental Ins. Co., - Mo. -, 179 S. W. 766.
New Jersey. Steelman v. Ludy, 77 N. J. L. 446, 72 Atl. 423.
New York. Flaherty v. Miner, 123 N. Y. 382, 26 N. E. 418.
Tennessee. North German Ins. Co. v. Morton-Scott-Robertson Co., 108 Tenn. 384, 67 S. W. 816.
Wisconsin. Sherman v. Madison Mutual Ins. Co., 39 Wis. 104; Boden v. Maher, 105 Wis. 539, 81 N. W. 661.
2 Flaherty v. Miner, 123 N. Y. 382, 25 N. E. 418.
3 Steelman v. Ludy, 77 N. J. L. 446, 72 Atl. 423; Boden v. Maher, 105 Wis. 539, 81 N. W. 661.
4 Mutual Benefit Life Ins. Co. v. Lehman, 132 Ala. 640, 32 So. 733.
5 Gardner v. Continental Ins. Co., 125 Ky. 464, 101 S. W. 908; Sherman v. Madison Mutual Ins. Co., 39 Wis. 104.
6 German Ins. Co. v. Allen, 60 Kan. 729, 77 Pac. 529; Travis v. Continental Ins. Co., - Mo. -, 179 S. W. 766; North German Ins. Co. v. Morton-Scott-Bobertson Co., 108 Tenn. 384, 67 S. W. 816.
In the case of negotiable instruments, the weight of authority is in favor of the theory that a waiver, after the rights of the parties are fixed, is operative without any new and additional consideration, at least as to certain forms of conditions.9 While presentment demand and notice are ordinarily made express conditions of the contract of indorsement, they are conditions which are as truly a part of the contract of indorsement, in most jurisdictions, as if they were set forth in so many words;10 and yet it is held by the great weight of authority that after the indorser has been discharged by the failure of the holder of the negotiable instrument to make presentment, demand and notice, he may, nevertheless, waive such breach of condition on the part of the holder, and may make himself liable as an indorser in spite of such discharge by a waiver without any new or additional consideration.11 While this result may be justified in part on the theory that failure to make presentment and demand and to give notice is not a self-executing form of discharge, but that it merely gives to the indorser the right to interpose such facts as a defense which right he may waive if he so chooses, the fact still remains that according to this theory he may waive such defense by a gratuitous declaration and that he is bound thereby.12
7 1nter-Southern Life Ins. Co. v. Cooke, 183 Ky. 100, 209 S. W. 45.
8 Inter-Southern Life Ins. Co. v. Cooke, 183 Ky. 109, 209 S. W. 45.
9 See cases cited in note 11, this section.
10 See Sec. 2200.
For the theory that an ordinary indorsement is not a complete contract, see Sec. 2201.
11 United States. Sigerson v. Matthews, 61 U. S. (20 How.) 496, 16 L. ed. 989; Yeager v. Farwell, 80 U. S. (13 Wall.) 6, 20 L. ed. 476.
Georgia. Hoadley v. Bliss, 9 Ga. 303.
Indiana. Neal v. Wood, 23 Ind. 523.
Iowa. Hughes v. Bowen, 15 Ia. 446; Creshire v. Taylor, 29 Ia. 492.
Louisiana. Wall v. Bry, 1 La. Ann. 312.