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.
If A enters into a contract with B which is valid when made, the fact that by proceedings for injunction, X prevents A from performing such contract does not, in some jurisdictions, discharge A from liability to B for breach.1 Thus a contract to deliver water through an irrigation ditch,2 or to construct a sewer within a given time,3 is neither one of them discharged by an injunction obtained by a third person against the promisor and restraining him from doing the acts which he has promised to do.
5 Standard Silk Dyeing Co. v. Roess-ler & Hasslaoher Chemical Co., 244 Fed. 250.
6 West v. The Uncle Sam, Fed. Cas. No. 17427.
7 Beale v. Thompson, 4 East 546 [affirmed, 1 Dowl. P. C. 299]; Johnson v. Broderick, 4 East 566.
8 Beale v. Thompson, 4 East 546 [affirmed, 1 Dowl. P. C. 299]; Johnson v. Broderick, 4 East 566.
9 Cunningham v. Dunn, 3 C. P. D. 443.
1 Sample v. Irrigation Co., 129 Gal. 222, 61 Pac. 1085; Whittemore v. Sills, 76 Mo. App. 248; Wilkinson v. First National Fire Ins. Co., 72 N. Y. 499, 28 Am. Rep. 166.
"No case has been cited in which it has been held that interference by a writ sued out by a private litigant will excuse performance of a contract although it may deprive the contractor of the means of performance. It is not prevention by operation of law. It is the act of an individual and not of the government." Klauber v. Street Car Co., 95 Cal. 353, 357, 30 Pac. 555 [quoted in Sample v. Irrigation Co., 129 Cal. 222, 227, 61 Pac. 1085].
A party who has caused the injunction to issue can not treat it as a ground of an action to recover damages. Jordan v. Miller, 25 Kan. 572.
2 Sample v. Irrigation Co., 129 Cal. 222, 61 Pac. 1085.
3 Whittemore v. Sills, 76 Mo. App. 248.
In other jurisdictions injunction is held to be. an act of law or of the state, in the, sense that it operates as a discharge of a covenant to perform the act which such party is enjoined from performing.4 If A has sold property to B under a contract which contemplates the use thereof at once, and subsequently A and B are enjoined from using such property on the ground that such use is in violation of a patent which has issued to a third person, such injunction is held to discharge B from his duty to pay the contract price therefor to A.5
If one of the parties to the contract prevents the adversary party from performing, by obtaining an injunction to restrain performance, the party who obtains such writ can not treat nonperformance by the adversary party as breach on his part,6 although the party who is thus restrained may treat the conduct of the adversary party in obtaining such writ as a breach.7 Time during which one was enjoined from issuing execution must be deducted from the time between the rendition of judgment and the issuing of execution.8 The time during which one was restrained can not be counted in determining whether the time within which an appeal may be perfected has elapsed.9 Whether the appointment of a receiver for one of the parties to a contract, as distinguished from cases in which the court not only appointed a receiver, but dissolved a corporation which was a party to an executory contract,10 operates as a discharge of covenants which are executory on the part of the party for whose benefit a receiver has been appointed, is a question upon which there has been some conflict of authority. In most jurisdictions it seems to be held that the appointment of a receiver for the property of one of the parties does not of itself operate as a discharge of covenants to be performed by such party,11 although it may in fact render him unable to perform such covenants. Accordingly, the appointment of a receiver has not been held to discharge an executory contract of sale,12 or a contract calling for continuous performance,13 such as a contract to maintain a switch; 14 and it has even been held that such appointment does not operate as a discharge of a contract for personal services.15
4 Kansas Union Life Ins. Co. v. Bur-man, 141 Fed. 835; De Forrest Radio Telephone & Telegraph Co. v. Standard Oil Co., 238 Fed. 346; Burkhardt v. Georgia School Township, 9 S. D. 315, 69 N. W. 10.
5 De Forrest Radio Telephone & Telegraph Co. v. Standard Oil Co., 238 Fed. 346.
6 Jordan v. Miller, 25 Kan. 572.
7 Tutwiler v. Burns, 160 Ala. 386, 49 So. 455.
See ch. LXXXIV.
8 Wakefield v. Brown, 38 Minn. 361, 8 Am. St. Rep. 671, 37 N. W. 788.
9 Williams v. Pouns, 48 Tex. 141. 10 See Sec. 2687 et seq.
11 Pennsylvania Steel Co. v. New York City Ry. Co., 198 Fed. 735; Curtis v. Walpole Tire & Rubber Co., 227 Fed.
In some jurisdictions, on the other hand, the appointment of a receiver has been held to operate as a discharge of executory covenants.16 A contract between a life insurance company and an agent has been held to be discharged by the appointment of a receiver on the ground of the insolvency of the life insurance company.17 In the case of the life insurance company the result may be justified on the theory that the funds of the insurance company in case of insolvency should be applied to the payment of existing debts and to the protection of the policyholders.18 The rule that the appointment of a receiver operates as a discharge of an executory contract, has also been applied to a contract to collect property which had been scattered by a storm; and the appointment of a receiver for the purpose of taking charge of such property has been held to prevent recovery upon such contract,19 even for property which had been collected before the appointment of such receiver, but which had not been delivered to the owners thereof.20
An order of court which sets aside a judicial sale discharges a bidder from liability on his part if no provision is made in such order with reference to such liability.21
698; Wells v. Hartford Manila Co., 76 Conn. 27, 55 Atl. 590; Peck v. Southwestern Lumber & Exporting Co., 131 La. Ann. 177, 59 So. 113; Commercial Publishing Co. v. Beckwith, 167 N. Y. 329, 60 N. £. 642.
See, Specific Performance in Connection with Receiverships, by Ralph £. Clark, 33 Harvard Law Review, 64.
12 Peck v. Southwestern Lumber & Exporting Co., 131 La. Ann. 177, 59 So. 113.
13 Brown v. Warner, 78 Tex. 543, 22 Am. St. Rep. 67, 11 L. R. A. 394, 14 S. W. 1032.
14 Brown v. Warner, 78 Tex. 543, 22 Am. St. Rep. 67, 11 L. R. A. 394, 14 S. W. 1032.
15 Reed v. Explosives Co., L. R. 19 Q. B. D. 204; Spader v. Mural Decoration Mfg. Co., 47 N. J. Eq. 18, 20 Atl. 378.
16 Moller v. Herring, 253 Fed. 670, 3 A. L. R. 624; Law v. Waldron, 230 Pa. St. 458, 79 Atl. 647.
17 Law v. Waldron, 230 Pa. St. 458,
70 Atl. 647.
18 See Sec. 2687.
19 Moller v. Herring, 255 Fed. 670, 3 A. L. R. 624.
20 Moller v. Herring, 255 Fed. 670, 3 A. L. R. 624.
21 Cowper v. Weaver's Administrator, 119 Ky. 401, 69 L. R. A. 33, 84 S. W, 323.