Cases in which the performance contemplated by a contract is forbidden at the time the contract is entered into are treated in the chapter on contracts unenforceable because of illegality.2 Instances are not rare, however, in which a legal contract subsequently becomes impossible of performance without violation of law because of some governmental act, either executive, legislative, or judicial. And the right to recover the benefit conferred by a partial performance of a contract, under such circumstances, has been recognized:
Jones v. Judd, 1850, 4 N. Y. 411: Action for work and labor. The defendant, under contract with the state to complete certain sections of a canal, entered into a subcontract with the plaintiffs for a part of the work, by which he agreed to pay them seven cents per yard for excavating and eight cents for embankment, monthly, according to measurements of engineers, except ten per cent which was not to be paid until final estimate. The defendant paid the plaintiffs for all work performed, except the ten per cent reserved. Gardiner, J. (p. 413): "The plaintiffs were stopped in the prosecution of the work, in fulfillment of their contract, by the authority of the state officers. Before this injunction was removed, the law of March 29,1842, for preserving the credit of the state, was passed, which put an end to the original contract, and the agreement between the plaintiffs and defendant which grew out of it. As the plaintiffs were prevented, by the authority of the state, from completing their contract, they are entitled to recover for the work performed, at the contract price. The ten per cent was a part of the price stipulated. It was reserved to secure the fulfillment of the contract, and to be paid upon a final estimate. The performance of the required condition became impossible by the act of the law, and of course the plaintiffs were entitled to recover without showing a compliance with the agreement in this particular." 1
1 1859, 20 N. Y. 197, 203; 75 Am. Dec. 388. 2 Post, Sec. 132 et seq.
New York Life Ins. Co. v. Statham; Same v. Seyms; Manhattan Life Ins. Co. v. Buck, 1876, 93 U. S. 24: The first case a bill in equity, the other two actions at law, to recover the amounts of life insurance policies. The premiums were paid until the outbreak of the Civil War which made payments impossible, and the persons insured died during the war. Bradley, J. (p. 34): "Whilst the insurance company has a right to insist on the materiality of time in the condition of payment of premiums, and to hold the contract ended by reason of non-payment, they cannot with any fairness insist upon the condition, as it regards the forfeiture of the premiums already paid; that would be clearly unjust and inequitable. The insured has an equitable right to have this amount restored to him, subject to a deduction for the value of the assurance enjoyed by him whilst the policy was in existence; in other words, he is fairly entitled to have the equitable value of his policy." 2
1 Also : Whitfield v. Zellnor, 1852, 24 Miss. 663 ; Theobald v. Burleigh, 1891, 66 N. H. 574; 23 Atl. 367; Heine v. Meyer, 1874, 61 N. Y. 171; L. Craddock & Co. v. Wells-Fargo Co., Express, 1910, Tex. Civ. App. ; 125 S. W. 59, (cf. Binz v. National Supply Co., 1907, Tex. Civ. App.; 105 S. W. 543).
2 For an excellent discussion of the different views as to the effect of war upon a policy of insurance, and the rights of the insured at the conclusion of the war, see Abell v. Penn Mutual Life Ins. Co., 1881,
In Manhattan Life Insurance Company v. Buck, one of the three cases just stated together, the decision of the court is questionable. The policy contained a clause not found in the policies involved in the other two cases, that "in every case where the policy should cease or become null and void, all previous payments made thereon should be forfeited to the company." This provision indicates that the insured assumed the risk of losing everything if for any cause the policy were to be extinguished. The case is therefore similar to Cutter v. Powell,1 where the estate of a ship's officer who died during the voyage was denied compensation for the services rendered before his death on the ground that it was the understanding that the officer was to receive no compensation unless he completed the entire voyage, and that in consideration of the risk assumed by him his compensation in the event of his completing the voyage was to be larger than it would have been but for this understanding. As Professor Keener has pointed out,2 if Manhattan Life Insurance Company v. Buck is to be supported, it must be upon the theory that a court of law will relieve against a forfeiture, a doctrine which has usually been regarded as peculiar to equity.