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.
Covenants by which an irrigation company agrees to furnish water continuously for a given period, and a land owner agrees to pay therefor in annual payments, have been held to be independent on the theory that performance is to take place at different times, so that failure of the land owner to make a payment docs not discharge the irrigation company from its duty to furnish water.1 Under a contract by which A agrees to sell land to B and to furnish water in the future at a given amount per annum for a period which exceeds the time at which B is to pay for the land, the covenant to furnish water is held to be independent of A's covenant to sell the land, so that if B fails to pay for the land in accordance with the terms of the contract, A may avoid without showing that he has furnished the water.2 Many of the cases in which covenants are held to be independent for this reason, are also illustrations of the general principle that covenants, at least of a minor character, which do not form the entire consideration for the covenants of the adversary party, are to be regarded as independent.3 If the purchaser of realty gives a note to fall due in one day after date, no time for performance is fixed, and the covenants are said to be independent.4 If a contract for the sale of goods provides that the purchase price is to be paid in a certain time, and that defective parts are to be replaced during a longer period, the covenants are said to be independent.5 Under a contract whereby A agrees to guarantee the payment of X's debt to B in consideration of an extension of time on prior debts, and also in consideration of B's extending credit to X on X's demand therefor, the covenant for future credit is said to be independent.6 Under a contract by which A agrees to subscribe for a certain amount of stock in the X Company, and the X Company agrees to increase its stock to secure a lumber yard and dock facilities and bona fide subscriptions of a certain amount to be paid in a certain time, the covenant fixing the time for the payment of such subscriptions is independent of A's covenant to pay for the stock which he has subscribed.7 If A sells stock to B under a contract by which A agrees to pay a certain amount annually to B if the corporation does not declare a dividend equal to such amount, and by which A also agrees to repurchase such stock from B if the corporation fails to pay such dividend, such covenants are so far independent that B may require A to repurchase such stock upon the failure of the corporation to pay such dividend, although A offers to pay the amount which he has agreed to pay.8 If A agrees to furnish instruction to B, and B agrees to pay therefor in instalments, the covenants are independent if the instruction is not to be completed until after the last payment is due.9 If A agrees to furnish machinery to B and to furnish a man to install such machinery, and B agrees to pay within a certain time after he has received the shipping documents, the covenant to furnish a man to install the machinery is independent of the covenant to pay for such goods.10 A covenant to construct a railroad is not a condition precedent to the payment of royalties, under a lease, which are to be paid beginning two months after possession is taken under the lease, while no part of the road is to be built till twelve months after possession is taken, part eighteen months after possession is taken, and another part six months after demand by the lessee.11 Where A gave to B his non-negotiable note, secured by mortgage, and B agreed in consideration thereof to satisfy certain debts due from A which were liens on the mortgaged realty, no time being fixed for such payment, B's covenant is independent and if broken is not the basis for a suit to cancel the note for failure of consideration.12 If covenants by a land company to build a side-track "promptly" to a certain factory, and when such factory was completed and in successful operation to buy certain stock, the first covenant is independent and the completion of the factory is not a condition precedent thereto.13 A agreed to pay to B a certain note on February 15, 1819, under a contract, a consideration for which was B's promise to deliver to A a certain amount of lumber, one-half in the year 1818 and the other half during the year 1819 as A should require it. It was held that inasmuch as A might require the lumber, deliverable in 1819, either all before the date on which the note came due, or all after that date, or part before and part after, his promise to pay the note was a covenant independent of B's covenant to deliver.14
3 Goldsborough v. Orr, 21 U. S. (8 Wheat.) 217, 5 L. ed. 600.
4 Goldsborough v. Orr, 21 U. S. (8 Wheat.) 217, 5 L. ed. 600.
1 Fresno Canal & Irrigation Co. v. Perrin, 170 Cal. 411, 149 Pac. 805.
"But the covenants are not dependent or concurrent. The water was to be furnished, when wanted, continuously from February 10, 1897, to February 16, 1921, while the payments were to be made annually as aforesaid. The furnishing of the water for the first six months could not be dependent upon or concurrent with the payment to be made in the following September. The same would be true of each succeeding year, upon the plaintiff's election not to terminate the agreements by reason of the failure of the defendant to pay. Where the covenants of the respective parties are to be performed at different times they are held to be independent and the breach by one party of his covenant does not excuse the performance by the other of his covenant or relieve him of liability for damages for a breach thereof. S. P. R. R. Co. v. Allen, 112 Cal. 461, 44 Pac. 796; Front St. M. & O. R. R. Co. v. Butler, 50 Cal. 577; Bank of Woodland v. Duncan, 117 Cal. 412, 49 Pac. 414; Deacon v. Blodget, 111 Cal. 418, 44 Pac. 159. Upon these facts, the most that the plaintiff can claim on account of the failure of the defendant to make the payments is the right to recover the same and to have the amount thereof set off pro tanto against such damage as the defendant has shown from the failure of the plaintiff to deliver water." Fresno Canal & Irrigation Co. v. Perrin, 170 Cal. 411, 149 Pac. 805.
2 Spokane Canal Co. v. Coffman, 54 Wash. 645, 103 Pac. 1106.
See also, Benham v. Columbia Canal Co., 74 Wash. 110, 132 Pac. 884, in which case, however, the purchaser was in default first.
3 See Sec. 2974.
4 McRaven v. Crisler, 53 Miss. 542. 5 Kinney v. Federal Laundry Co., 75 N. J. L. 497, 68 Atl. 111.
6 United & Globe Rubber Mfg. Co. v. Conard, 80 N. J. L. 286, 78 Atl. 203.
7 Pacific Mill Co. v. Inman, 46 Or. 352, 114 Am. St. Rep. 873, 80 Pac. 424.
8 Marinovich v. Kilburn, 153 Cal. 638, 96 Pac. 303.
9 International Text-book Co. v. Martin, 221 Mass. 1, 108 N. E. 469.
The same result has been reached where the instruction might or might not be completed before the time fixed for the payment of the last instalment. Campbell v. Jones, 6 T. R. 570.