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 covenant by one party which does not form the entire consideration for the covenants to be performed by the adversary party, but which forms only a part of such consideration, is held to be an independent covenant,1 at least if such covenant is not the vital or material feature of such contract, but forms only a minor part of the consideration,2 if the contract has been performed in part, at least as to the vital covenants thereof, and if the covenant in question is in part a consideration for such performance. Like other rules of construction,3 including the rules for determining the relation of two covenants to each other, this is not an arbitrary rule, but merely a guide to enable the courts to ascertain the intention of the parties; and if the contract, when taken as a whole, shows that the parties intend that the performance of one covenant shall depend upon the performance of the other, such other is a dependent covenant even if it forms only a part of the consideration.4
10 Lombard Water-wheel Governor Co. v. Great Northern Paper Co., 101 Me. 114, 6 L. R. A. (N.S.) 180, 63 Atl. 555.
11 Central Appalachian Co. v. Buchanan, 73 Fed. 1006.
12 Tronson v. Colby University, 9 N. D. 550, 84 N. W. 474.
For a similar case, except that the decision rests on the principle that B's covenant goes to part of the consideration only, see Emigrant Company v. Adams County, 100 U. S. 61, 25 L. ed. 563.
13 Southern Pine Fibre Co. v. Land Co., 53 Fed. 318.
14 Goldsborough v. Orr, 21 U. S. (8 Wheat.) 217, 5 L. ed. 600.
1 England. Boone v. Eyre, 1 H. Bl. 273, note; Bach v. Owen, 5 T. R. 400.
United States. Emigrant Company v. Adams County, 100 U. S. 61, 25 L. ed. 563; Mercantile Trust Co. v. Hen-Bey, 205 U. S. 298, 51 L. ed. 811 [affirming Mercantile Trust Co. v. Hen-Bey, 27 D. C. App. 210]; Kauffman v. Raeder, 108 Fed. 171, 54 L. R. A. 247, 47 C. C. A. 278.
Arkansas. Mena v. Tomlinson, 113 Ark. 166. 175 S. W. 1187.
Illinois. Palmer v. Britannia Co., 188 Ill. 508. 59 N. E. 247.
Iowa. Galt v. Provan, 131 Ia. 277, 108 N. W. 760.
Kansas. Loveland v. Kibbey, 103 Kan. 202, 173 Pac. 976.
Kentucky. Big Run Coal Co. v. Emplovers' Indemnity Co., 163 Ky. 506, 174 S. W. 25.
Louisiana. Hart v. Tremont Lumber Co., 131 La. 847, 60 So. 368.
Maryland. Havre De Grace Real Estate & Power Co. v. Havre De Grace, 102 Md. 33, 61 Atl. 662.
Massachusetts. Wiley v. Athol, 150 Mass. 426, 6 L. R. A. 342, 23 N. E. 311.
Michigan. Gates v. Detroit & M. Ry. Co., 147 Mich. 523, 111 N. W. 101.
Missouri. Turner v. Mellier, 59 Mo. 526.
North Carolina. Statesville Flour Mills Co. v. Wayne Distributing Co., 171 N. Car. 708, 88 S. E. 771.
Ohio. Gould v. Brown, 6 O. S. 538.
Oregon. Pacific Mill Co. v. Inman, 46 Or. 352, 114 Am. St. Rep. 873, 80 Pac. 424.
Vermont. Tichnor v. Evans, 92 Vt. 278, L. R. A. 1918C, 1025, 102 Atl. 1031
Washington. Crampton v. McLaughlin Realty Co., 51 Wash. 525, 21 L. R. A. (N.S.) 823, 99 Pac. 586.
Wisconsin. Bibelhausen v. Bibelhausen, 150 Wis. 365, 150 N. W. 516.
"The defense is predicated upon the doctrine, frequently approved by this court, that a breach that goes to the essence of the contract operates as a discharge of it. This rule will not avail the defendant. It is not. every breach that goes to the essence. It gives rise to an action for damages, but it does not necessarily justify a refusal to perform. Where, as here, the stipulation goes only to a part of the consideration, and may be compensated for in damages, its breach does not relieve the other party from performance. In such cases, the broken promise is an independent undertaking and not a condition precedent. Kauffman v. Raeder, 108 Fed. 171, 47 C. C. A. 278, 54 L. R. A. 247; Lowber v. Bangs, 2 Wall. 728, 17 L. ed. 768. See Rioux v. Ryegate Brick Co., 72 Vt. at p. 155, 47 Atl. 406. In order to operate as a discharge or give rise to a right of rescission, the partial failure to perform must go the very root of the contract. Chamberlin v. Booth, 135 Ga. 710, 70 S. E. 560, 35 L. R. A. (N.S.) 1223. Keenan v. Brown, 21 Vt. 86, is a case of partial failure of performance, and it was held that the defendant therein was not absolved thereby, and was only entitled to recover his damages.
"Moreover, when a contract has been partly performed by one party, and the other has derived a 6ubstantial benefit therefrom, the latter can not refuse to comply with its terms simply because the former fails of complete performance. * * * 'Where a person has received a part of the consideration for which he entered into the agreement,' says Mr. Sergt. Williams, 'it would be unjust that, because he has not had the whole, he should therefore be permitted to enjoy that part without either paying or doing anything for it.' 1 Saund. 320d. Hammond v. Buckmaster, 22 Vt. 375, is a case of this class, and it was therein held that, inasmuch as each party had received a partial benefit from the contract, and could not be placed in statu quo, the defendant would have to perform the contract, seeking his damages for the plaintiff's breach by cross-action. These hold-ings are decisive of the case in hand. The stipulation in question was only a part of the consideration of the defendant's undertaking; was subordinate and incidental to its main purpose; its breach is compensable in damages, and the defendant obtained and now holds a substantial benefit under the contract. Other questions argued need not be considered." Tich-nor v. Evans, 92 Vt. 278, L. R. A. 1918C, 1025, 102 Atl. 1031.
Refusal to sign a written contract does not discharge the prior oral contract which has been performed in part.5 In the case which is usually regarded as the leading case on this question,6 under a contract in which A agreed to convey to B an equity of redemption in a plantation, and also the negro slaves thereon, in consideration of which B agreed to pay a certain sum of money to A and also agreed to pay an annuity to A for A's life, it was held that A could recover such annuity although A did not have title to all the slaves on the plantation. A sold land to B in consideration of which B (1) made a money payment, (2) agreed to introduce settlers, (3) reclaim lands, and (4) pay A's debt to X. Covenants (2), (3) and