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.
A contract which has been performed in full on one side, and in which the executory covenant on the other is one for the payment of money only at a future time, is usually said not to be within the doctrine of renunciation. If the debtor repudiates his liability under the contract and declares that he will not pay the debt, the creditor is held to have no right of action before the time fixed by the contract for such payment. While there is little direct adjudication on this point, courts which have treated renunciation before performance is due, as giving the party not in default a right to treat such renunciation as an immediate breach, and to sue for damages at once, have been careful to indicate that this rule does not apply to money contracts pure and simple, or at least to bonds and negotiable instruments.1 Courts which have refused to recognize the doctrine of breach by anticipation have often placed their refusal on the ground that if such rule was to be recognized at all it must be applied to negotiable instruments, a result which it was assumed would be absurd,2 This principle has been applied to bonds issued by a county. It has been held that the act of the county in renunciating liability on such bonds does not accelerate the maturity thereof, and that only the amount which is due by the terms of the bonds can be recovered.3 It is possible to justify the distinction between ordinary contracts and contracts for the payment of money only in case of bonds, especially if the bonds are under seal. A sealed contract could not be discharged, at common law, by a subsequent oral agreement between the parties;4 and if the maturity of the obligation could not be accelerated by the express agreement of the parties, it would seem that it should not be accelerated by the repu-diation of liability on the contract by the obligor. Bonds of a public corporation are furthermore issued, as a rule, under specific statutory authority which indicates the way in which such liability may be incurred,5 and often the time for which the obligation is to run, and which frequently provides for raising funds annually by taxation to retire the portion of such obligation which falls due in that year.6 For these reasons it might well be held that the informal act of the officials of such public corporation ought not to be allowed to accelerate the maturity of its obligations so as to impose a liability different from that which was authorized by the legislature.
14 See ch. LXXXVIII
15 Day v. Connecticut General Life Ins. Co., 45 Conn. 480, 29 Am. Rep. 693 (obiter); Cohen v. New York Mutual Life Ins. Co., 50 N. Y. 610, 10 Am. Rep. 522; Hayner v. American Popular Life Ins. Co., 69 N. Y. 435.
See ch. LXXXVIII.
16 See Sec. 2883.
17 On renunciation by the insurer, it is said that a right of action to recover damages accrues immediately. O'Neill v. Supreme Council, 70 N. J. L. 410, 57 Atl. 463; Merrick v. Northwestern National Life Ins. Co., 124 Wis. 221, 102 N. W. 593.
See also, Toplitz v. Bauer, 161 N. Y. 325, 55 N. E. 1059 (obiter).
In other cases, it is said that no right of action to recover damages accrues till the death of the insured. Day v. Connecticut General Life Ins. Go., 45 Conn. 480, 29 Am. Rep. 693;
Porter v. Supreme Council, 183 Mass. 326, 67 N E. 238; Langan v. Supreme Council, 174 N. Y. 266, C6 N. E. 932; Kelly v. Security Mutual Life Ins. Co., 186 N. Y. 16, - N. E. - .
This rule might be expected in Massachusetts where the doctrine of anticipatory breach is not recognized. See Sec. 2892. It is also the rule in New York, where anticipatory breach is given some recognition (see Sec. 2885), and where in case of the insolvency of the insurance company, People v. Security Life Ins. & Annuity Co., 78 N. Y. 114, or of its withdrawal from business, People v. Empire Mutual Life Ins. Co., 92 N. Y. 105, a right of action to recover the value of the policy was held to rise immediately.
See Sec. 2937 et seq.
18 Day v. Connecticut General Life Ins. Co., 45 Conn. 480, 29 Am. Rep. 693.
1 "In the case of an ordinary money contract, such as a promissory note or bond, the consideration has passed; there are no mutual obligations, and cases of that sort do not fall within the reason of the rule. * * * We think it obvious that both as to renunciation after commencement of performance and renunciation before the time for performance has arrived, money contracts, pure and simple, stand on a different footing from executory contracts for the purchase and sale of goods." Roehm v. Horst, 178 U. S. 1, 17, 18, 44 L. ed. 953.
To the same effect, see obiter in Nichols v. Scranton Steel Co., 137 N. Y. 471, 33 N. E. 661.
2 Greenway v. Gaither, Tnney (U. S. C. C), 227; Daniels v. Newton, 114 Mass. 530, 19 Am. Rep. 384.
3 Washington County v. Williams, 111 Fed. 801.
"It has never been held, so far as we have been able to discover, that the holder of a promissory note, or other written agreement to pay a sum of money at a designated time, can maintain an action thereon, in advance of its maturity, because the maker thereof has announced his intention not to pay it. Now, the obligations in suit can be regarded in no other light than a contract on the part of the county to pay a given sum of money annually until such time as the amount of its donation to the railroad company, and accrued interest thereon, was fully discharged. It was not stipulated in the agreement evidenced by the obligations that a failure to pay one.of the annual instalments should render the entire amount of the obligation immediately payable, nor can it be successfully claimed that the notice given by the county that it would make no further payments-had that effect. If the plaintiff's view is maintained, that the refusal of the county to pay rendered the entire debt immediately payable, and the obligations are enforced accordingly, the county would be compelled to do that which it never promised to do. Such conduct on the part of the county merely rendered it amenable to an action for such part of the indebtedness as was then due according to the terms of the donation. It results from this view that the trial-court erred in the law case in rendering a judgment for the full amount of the five obligations, and the accrued interest, which were sued upon in that case. The recovery should have been limited to such annual instalments as were then due." Washington County v. Williams, 111 Fed. 801.