". . . The bank, if liable at all, is certainly liable in this case, for the value of the bonds at the time it refused, upon demand, to restore them. It was not in default, under the alleged contract, until the plaintiff's demand for its performance;

11891, 139 U. S. 67, 74, 78; 11S. Ct. 496. 253 for until then its possession of the bonds was with his consent. Until demand, the plaintiff had not manifested his will to have them restored to him. The conversion occurred when the defendant repudiated all obligation to perform the contract or denied that any such contract was ever made, and yet held on to the bonds as its property."

In its dictum to the effect that the bank had a lien on the bonds for the amount paid for them under the ultra vires contract, the case, it is submitted, goes too far. The learned court relied upon a supposed analogy to cases holding that a national bank may enforce a mortgage or deed of trust taken ultra vires as security for a loan,1 but apparently overlooked this vital distinction - that whereas a mortgage or deed of trust taken ultra vires as security for a loan may be upheld upon the theory that it is fully executed and therefore should not be disturbed,2 the ultra vires contract in the principal case was not an executed contract, but was only partly performed. Moreover, if the contract was to be upheld as executed, or so far as executed, the bank should have been adjudged the owner of the bonds and not merely the holder of a lien upon them.

In holding that upon its refusal to restore the bonds when the plaintiff tendered a return of the price the bank became liable for the difference between such price and the value of the bonds at the time of the plaintiff's demand, it is believed that the court was right. Mr. Machen contends that upon the theory of quasi contractual obligation the measure of recovery would be the difference between the price paid by the bank and the market value at the time of the purchase by the bank.3 He overlooks, however, the fact that in refusing to return the bonds upon demand and tender of the price the bank converted them. This was recognized by the court. For this tort the plaintiff had an election of remedies (post, Sec. 277). He might bring trover and recover damages, or "waive the tort" and sue in assumpsit for the value of the benefit derived by the defendant from the conversion. The action in the principal case, though in form an action for breach of contract, was regarded, apparently, as an election of assumpsit as a remedy for the tort, and it was entirely proper for the court to allow a recovery of the value of the bonds at the time of the conversion, i.e. at the time of the wrongful refusal to return them, minus the price which the bank paid for them and which the plaintiff offered to return. Sec. 160. (3) In the State courts. - In the decisions of the State courts there is the utmost confusion. In a large number of States it is held that one who has enjoyed the benefit of full performance by the other party is liable in damages for a failure himself to perform.1 Likewise, if the contract is severable, the full performance of a severable portion on one side makes the obligation of the other party as to that portion enforceable.2 The rule is frequently attributed to the convenient principle of estoppel; sometimes it is otherwise explained. Whatever its ostensible basis, it probably rests, in reality, upon the theory than an ultra vires contract is not void for want of contractual capacity but is illegal as against sound public policy, and that when performed by one party public policy requires that it should be enforced rather than that the party who has enjoyed the benefit of performance should be allowed to escape its obligation. In States which have adopted this doctrine the question of quasi contractual obligation arises, or should arise, only where there has been partial performance of the ultra vires contract on one side but full performance on neither. In such cases, a recovery in quasi contract should be permitted.1 In a smaller number of States the doctrine of the United States Supreme Court appears to be substantially adopted, and the full performance of the contract on one side is held not to make it enforceable.2 In such jurisdictions it is generally held that where performance on one side, either partial or in full, results in a benefit to the other party, there is a quasi contractual obligation to make restitution:

1 See opinion at page 76.

2 See Machen, "Corporations," Sec. 1036, and cases cited. 3 See Machen, "Corporations," Sec. 1046.

1 Main v. Casserly, 1883, 67 Cal. 127; 7 Pac. 426; Chicago, etc., R. Co. v. Derkes, 1885, 103 Ind. 520; 3 N. E. 239; Dewey v. Toledo, etc., R. Co., 1892, 91 Mich. 351; 51 N. W. 1063; Seymour v. Chicago, etc., Life Co., 1893, 54 Minn. 147; 55 N. W. 907; Camden, etc., R. Co. v. May's Landing, etc., R. Co., 1886, 48 N. J. L. 530; 7 Atl. 523; Bath Gas Light Co. v. Claffy, 1896, 151 N. Y. 24; 45 N. E. 390; 36 L. R. A. 664, (and see Appleton v. Citizens Nat. Bank, 1908, 190 N. Y. 417; 420-421; 83 N. E. 470); Tourtelot P. Whithed, 1900, 9 N. D. 407; 84 N. W. 8; Wright v. The Pipe Line Co., 1882, 101 Pa. St. 204; 47 Am. Rep. 701; Bond p. Terrell, etc., Mfg. Co., 1891, 82 Tex. 309; 18 S. W. 691; McElroy p. Minn. Percheron Horse Co., 1897, 96 Wis. 317; 71N. W. 652; Kanneberg v. Evangelical Creed Congregation, 1911, 146 Wis. 610; 131 N. W. 353.

2 Heims Brewing Co. v. Flannery, 1891, 137 111. 309; 27 N. E. 286. But see Day v. Buggy Co., 1885, 57 Mich. 146; 23 N. W. 628; 58 Am. Rep. 352.

Brunswick Gas Light Co. v. United Gas Co., 1893, 85 Me. 532; 27 Atl. 525; 35 Am. St. Rep. 385: Action for breach of covenants of a lease. Walton, J. (p. 540): "No legislative authority for making the lease was shown, and without such authority, we think the lease must be regarded as ultra vires, and void. . . . But it is claimed that, inasmuch as the defendant company took and held possession of the plaintiff company's works by virtue of the lease, ultra vires is no defense to an action to recover the agreed rent. We do not doubt that the plaintiff company is entitled to recover a reasonable rent for the time the defendant company actually occupied the works; but do not think the amount can be measured by the ultra vires agreement. We think that in such cases the recovery must be had upon an implied agreement to pay a reasonable rent; and that, while the ultra vires agreement may be used as evidence, in the nature of an admission, of what is a reasonable rent, it can not be allowed to govern or control the amount."