if the payee supposed or believed that he had a cause of action and the note was given and accepted in good faith as a compromise, it was supported by a sufficient consideration and could be enforced.

· Parker v. Enslow, 102 Ill. 272.

Compromise with Creditors. If the creditors of a party agree with each other and with the debtor to accept a part of what he owes each of them in discharge of the whole debt, the forbearance of each one is the consideration to the others, who might otherwise lose the whole. A compromise with all the creditors is therefore held to be for a valuable consideration, and such an agreement can be enforced.

Jones & Co., an insolvent firm, entered into a written agreement with their creditors whereby the creditors were to accept twenty-five cents on the dollar in payment of their several claims and give receipts in full, provided that all of the creditors assented to the agreement. Held, that this was a valid agreement, and that the firm by complying therewith was discharged from the balance of the indebtedness.

- Pierce v. Jones, 8 S. C. 273.

Consideration for Extension of Time. But a promise to extend the time of payment of a debt already due is void for want of consideration unless the debtor makes some concession; as, giving some security, paying interest in advance, or doing something that will form a consideration for the promise to extend the time.

It was held, that an agreement to extend the time of payment of a promissory note upon the payment of the interest in advance is valid, as it is founded upon a valuable consideration.

Moral Obligations. A distinction is sometimes made between "good" consideration and "valuable "consideration. In defining these terms, Blackstone says, "A good consideration is such as that of blood, or of natural love and affection, when a man grants an estate to a near relative, being founded on motives of generosity, prudence, and natural duty. A valuable consideration is such as money, marriage, or the like, which the law esteems an equivalent given for the grant, and is therefore founded on motives of justice."

Accordingly it was held by some old authorities that a moral obligation was a sufficient consideration to make a promise valid.

But the courts are now practically united on the point that neither a moral obligation nor a "good" consideration is sufficient to make a promise valid and enforceable at law.

A father promised his son that he would give him twenty shares of bank stock when he became of age. As this promise is supported by "good consideration, which in reality is no consideration, it is not binding. The father is morally bound to fulfill his promise, but he is not legally bound. "Good" consideration will not support an executory contract, but it will support an executed contract.

Consideration for Subscriptions. Some courts hold that there is no consideration for subscriptions to a fund for a special purpose unless the purpose is carried out. Others hold that one subscription is consideration for another and that the promises mutually support each other. Still other courts hold that if the organization accepting the subscription agrees to carry out the purpose, this promise on their part is consideration for the subscriptions, and the subscribers are bound. In reality there is no consideration for a voluntary subscription, but the court rulings are justified by the conditions surrounding such

cases.

A fund of $100,000 is raised by popular subscription for a new Y. M. C. A. building. Is Mr. Blank, who subscribed $1000, legally bound by his subscription? According to the first ruling, if the Y. M. C. A. officials act upon the subscription and start the building, he is bound. According to the second ruling, he is bound with the other subscribers, as one subscription is consideration for another, and if one subscriber pays, all others are legally bound. According to the third ruling, if the Y. M. C. A. officials accept the subscriptions and agree to erect the building, all subscribers are legally bound.

Contracts Entered into over the Telephone. In these days a great deal of business is transacted by means of the telephone. When a contract is entered into in this way a question may arise as to the identity of the contracting parties, and in case this identity cannot be established to the satisfaction of the court or jury, the contract may be declared void. For this reason it is best to require the confirmation in writing of all contracts entered into over the telephone.

Brown sent to McGuire a carload of coal which he claimed McGuire had ordered by telephone. McGuire refused to accept or pay for the coal. Unless Brown could prove that McGuire had ordered the coal he could not enforce the contract.

QUESTIONS

1. What is consideration in a contract?

2. Is consideration in a contract necessary? Explain.

3. How does the seal affect a contract in regard to consideration? 4. Is it necessary that the consideration have value? Explain.

5. What may be consideration in a contract?

6. Does the law with reference to consideration apply to executed contracts the same as to executory contracts? Explain.

7. How does illegal consideration affect a contract?

Give example.

8. Can a thing that is impossible be the consideration in a contract? 9. Explain the meaning of "consideration must be present or future." 10. Under what circumstances, if any, can a promise to pay for services performed in the past be enforced?

II. Is a mere promise to make a gift enforceable? Explain.

12. May a promise be a sufficient consideration? Give an example. 13. What is the usual way of discharging a debt?

14. In case of part payment of a debt, if a receipt is given in full, is the debt discharged?

15. Under what circumstances will part payment discharge a debt? 16. Mention a case where the court will look into the adequacy of the consideration.

17. Give an example of inadequate consideration.

18. Will a compromise of a disputed claim constitute a good consideration? Explain.

19. How will a release under seal in case of part payment affect the debt?

20. Explain "accord and satisfaction."

21. Is a promise to forbear bringing suit sufficient consideration? 22. Is a compromise with creditors a sufficient consideration? 23. Discuss a promise to extend the time of payment of a debt. 24. Distinguish between a legal obligation and a moral obligation. 25. Is a person who subscribes to a fund bound by his subscription? 26. Why should contracts entered into by telephone be confirmed? 27. Name the elements in the following:

(1) Kent offered to employ Houston as a yard foreman for one year at $125 per month. Houston accepted the offer and started to work.

(2) Myers rented a store building on Main Street, from Jackson, for one year for $1200 and paid one month's rent in advance.

(3) Harris entered the University of Minnesota and paid one year's tuition, $150, in advance.

(4) Whitmore & Co. engage space in Lincoln's garage for three trucks at $15 each per month.

(5) Morran and Wilkins enter into a written agreement whereby Wilkins is to erect a house for Morran, according to certain plans and specifications, for the sum of $12,000.

7. OPERATION OF CONTRACTS

Parties Acquiring Rights under Contracts. We have now considered every element necessary for a valid and binding contract, and the question arises as to the extent and limitation of the rights conferred and of the obligations incurred.

As a general principle only the parties to a contract acquire any rights under it. It is clear that it cannot impose liabilities upon any one not a party to it. A man cannot voluntarily and without being asked to do so pay another man's debts and thus establish himself as a creditor.

Jameson paid a debt of $600 for a friend of his without being asked to do so. If the friend does not see fit to pay Jameson he cannot recover.

Rights of Third Parties. — In nearly all of the states (Massachusetts and Michigan excepted) if a contract is made by E with F for the benefit of G, G may recover upon it, although the consideration came from E and F's promise was made to E.

Empy lends $100 to Foster and Foster promises Empy that he will repay it to Grant. Grant can maintain an action against Foster upon this promise made for his benefit.

The contrary ruling is illustrated by the following case:

A father agreed with his son that he would revoke a provision in his will in favor of his daughter and devise the same property to the son in consideration of the son's paying the daughter $10 a month as long as she might live. The daughter was not a party to the agreement. Held, that she could not enforce it. - Linneman v. Moross, 98 Mich. 178.

The New York courts in the celebrated case of Lawrence v. Fox, 20 N. Y. 268, held that the third person, for whose benefit a promise was made, might maintain an action upon the promise, provided that he was the person directly intended to be benefited, and provided that the promisee was at the time under an existing obligation to him, which the promisee sought to discharge by giving him the benefit of the promisor's promise. The facts in this case were that one Holly, at the request of Fox, loaned him $300. Holly stated at the time that he owed that sum to Lawrence and had agreed to pay it to him the next day. Fox, in consideration of the loan, promised Holly that he would pay the sum to Lawrence on the next day. Lawrence sued Fox on this promise and the court held that he could recover on the promise, although he was not a party to it.

The rule as applied in New York state has been very largely adopted throughout the United States.

Harrison purchased Lambert's interest in the firm of Lambert and Hoyt, and agreed with Lambert to pay his obligations to the partnership

creditors. The creditors of the old firm of Lambert and Hoyt may sue Harrison on this promise made for their benefit

X sold certain real property to Walker, the property being mortgaged to Dean. As a part of the purchase price Walker agreed with X to assume the mortgage and pay the amount named therein to Dean. Held, that Dean, who was not a party to this agreement, could claim the benefits thereof and maintain an action to recover the amount of the mortgage from Walker. Dean v. Walker, 107 Ill. 540.

Joint and Several Liability. When two or more persons are liable in a contract, their liability may be joint or several.

1. Persons jointly liable must all be sued together, a discharge to one discharges all, and if one dies the liability rests in the survivors.

2. If the persons are severally liable, each for only a part of the contract, they must be sued individually, and a discharge to one does not discharge the others. There is no survivorship.

Assignment of Rights and Liabilities. Having now determined upon whom the rights and liabilities fall, we must ascertain how and when other persons may take their places and succeed to their rights, if at all. It is well established that the promisor cannot assign his liabilities under the contract; that is, the promisee cannot be compelled to accept performance from any but the promisor. This is only just, for if A contracts with B to have him do a certain thing for him, A is entitled to know with whom he is dealing, as he may have taken into consideration B's particular adaptability to the work.

This rule is qualified in the case of B undertaking to do certain work for A in which no particular knowledge or skill is required. He can then have the work done by another, but still B is responsible for the work being well done.

H agreed to sell to Groezinger all the grapes he might raise in a certain vineyard during a period of ten years, and Groezinger agreed to pay therefor $25 per ton. At the end of five years H sold the vineyard and assigned the contract to LaRue. Groezinger refused to accept grapes from LaRue, saying he had no contract with him. Held, that the contract could be assigned, as it was not for services of a personal nature.

LaRue v. Groezinger, 84 Calif. 281.

The case of Boston Ice Co. v. Potter (page 27) is not in conflict with this rule, as the courts hold that the promisor cannot assign his liability unless the agreement contemplates that some