The English courts have denied a quasi contractual recovery in one class of cases - that of freight prepaid, - basing their conclusion, apparently, upon the theory that the plaintiff assumed the risk of impossibility of performance by the defendant:
De Silvale v. Kendall, 1815, 4 Maul. & Sel. 37: Assumpsit to recover prepaid freight, the ship having been captured. Lord Ellenborough, C.J. (p. 43): "In the next place the word residue imports that it is freight that was to be partially advanced, of which the remainder only was to abide the usual risk which the law casts upon the earning of freight, that is, the conveyance of the cargo to its place of destination. The preceding payment was on the contrary, by the stipulation of the parties not to be subject to that risk, which but for the stipulation and by the ordinary course of law it would have been."
Le Blanc, J. (p. 44): "If it was intended that what was advanced at Maranham should be returned in the event that happened, the parties might have provided for it by their contract."2
Professor Keener explains De Silvale v. Kendall and like cases as follows:3
"The ground upon which these cases were decided seems to have been that as freight is not in the absence of express stipillations payable until earned, and is therefore not payable until the completion of the voyage, the parties by stipulating for the payment of freight in advance must have intended that as to the freight paid, the plaintiff should assume the risk of the voyage; that had they not so intended, there would be found in the charter party an express stipulation requiring the return of the freight so paid in the event of a failure to complete the voyage."
60 N. H. 352; Powell v. Dayton, etc., R. Co., 1885, 12 Or. 488. See article by Professor Williston, 9 Harv. Law Rev. 106, 113.
If, at the time of the calamity, the vendor is not in a position to convey the legal title, the loss falls on the vendor. Phinizy v. Guernsey, 1900, 111 Ga. 346 ; 36 S. E. 796; 50 L. R. A. 680; 78 Am. St. Rep. 207 ; Eppstein v. Kuhn, 1906, 225 111. 115; 80 N. E. 80; 10 L. R. A. (N. S.) 117.
1 See Thompson v. Gould, 1838, 20 Pick. (Mass.) 134; Wilson v. Clark, 1880, 60 N. H. 352 (bill in equity).
2 Accord: Anon., 1683, 2 Shower 283; Saunders v. Drew, 1832, 3 Barn. & Ad. 445. Prepaid passage money is likewise not recoverable in England: Gillan v. Simpkin, 1815, 4 Camp. 241.
3 "Quasi-Contracts," p. 293.
This reasoning, which would apply with equal force to the case of wages prepaid to one prevented from performing by illness or death, is not convincing. Mr. Justice Brett, in Allison v. Bristol Insurance Company,1 supports it by explaining that at least in the cases in which the practice of prepaying freight arose, the shipper received a special consideration for his assumption of the risk, the inference being that such assumption of risk was either expressly agreed upon or clearly understood.2 But there is no evidence of a consideration for the alleged assumption of risk in De Silvale v. Kendall, and though consistently followed in England the rule in that case has been severely criticized:
Byrne v. Schiller, 1871, L. R. 6 Ex. 319: Cockburn, C.J. (p. 325): "It is settled by the authorities referred to in the course of the argument, that by the law of England a payment made in advance on account of freight cannot be recovered back in the event of the goods being lost, and the freight therefore not becoming payable. I regret that the law is so. I think it founded on an erroneous principle and anything but satisfactory; and I am emboldened to say this by finding that the American authorities have settled the law upon directly opposite principles, and that the law of every European country is in conformity to the American doctrine and contrary to ours. In France and Germany the rule has been settled for a long time. . . . But whatever may be the true principle, I quite agree that the authorities founded on the ill-digested case in Shower [Anon. 2 Show. 283] are too strong to be overcome; and if the law is to be altered, it must be done by the legislature and not by contrary decisions."
1 1875, 1 App. Cas. 209, 226.
2 His words may be quoted: "Although I have said that this course of business may in theory be anomalous, I think its origin and existence are capable of a reasonable explanation. It arose in the case of the long Indian voyages. The length of voyage would keep the shipper far too long a time out of money; and freight is much more difficult to pledge as a security to third persons, than goods represented by a bill of lading. Therefore the shipper agreed to make the advance on what he would ultimately have to pay, and for a consideration, took the risk in order to obviate a repayment, which disarranges business transactions."
In America, as Lord Cockburn remarked in the opinion just quoted, freight paid in advance is held to be recoverable in case the contract of carriage becomes impossible of performance.1 There is said to be a distinction, however, between an agreement to transport, as consideration for the money advanced, and an agreement merely to receive on board. In the latter case the impossibility of completing the voyage does not affect the contract.2
1 Pitman p. Hooper, 1837, 3 Sumn. (U. S. C. C.) 50; Fed. Cas., No. 11,185; Reina v. Cross, 1856, 6 Cal. 29; Griggs v. Austin, 1825, 3 Pick. (Mass.) 20; Chase v. Alliance Ins. Co., 1864, 9 Allen (Mass.) 311; Phelps v. Williamson, 1852, 5 Sandf. (N. Y. Superior Ct.) 578; Emery v. Dunbar, 1865, 1 Daly (N. Y. C. P.) 408. Prepaid passage money is likewise recoverable in America: Brown v. Harris, 1854, 2 Gray (Mass.) 359. But see Tweedie Trading Co. v. James P. McDonald Co., 1902, 114 Fed. 985, (recovery of prepaid ship hire denied where regulations of port of lading prevented carrier from taking on laborers).
2 Watson v. Duykink, 1808, 3 Johns. (N. Y.) 335, 340, Kent, C.J.: "This agreement did not go to the length required by the French law of stipulating that the money should at all events be retained, but it was still particularly confined to the permission to be received on board, as a passenger, and to load the goods on board. Both these parts of the agreement were literally complied with. This can easily be distinguished from an agreement to transport and deliver at the place of destination. In the one case, the master places his compensation upon the actual carriage and delivery of the goods. The safe arrival of the subject is a condition precedent to the payment. In the other case the condition is rendered by receiving the goods on board, and making all due and bona fide efforts to carry and deliver them. I think this latter is, upon the whole, the better construction of the agreement before us, especially as the practice of retaining advance freight, in all such cases, must have been known to the parties, from the usage which has been found by the jury, and as the distinction