free if the crop perished," but it was held otherwise where no particular land was specified.45 BY OPERATION OF LAW A contract may be discharged by operation of law irrespective of the intent of the parties, where there has been either (a) a merger, (b) alteration or loss of a written instrument, or (c) bankruptcy. § 130. Merger. Where a higher security than previously existed comes into existence between the same parties and for the same subject-matter, the old security comes to an end by being merged into the later one of higher efficacy. Thus, where a judgment is taken, the right of action is merged therein, or if a parol agreement is followed by one under seal, the former is merged in the latter and, therefore, is discharged. It is essential that the securities be different in their legal operation and the later one of the higher efficacy and, as previously noted, the new and superior security must be between the same parties for the same debt. Merger must not be confused with substitution of contracts which have already been considered or with cases where the later security is simply an additional security. § 131. Alteration or Loss of Written Instruments. The general rule is that an alteration of an executory written contract, whether under seal or not, will operate as a discharge. This severe rule is founded on the high interest of the public in keeping written instruments from being fraudulently tampered with by interested parties or their agents. The rule is subject to several qualifications. One qualification is that the alteration must be a material one so as to change the legal effect of the contract and, therefore, the contractual rights and liabilities of the parties thereunder.46 Whether the alteration is material is for the court to determine. If the alteration is material, it is immaterial whether 45 Anderson v. May, 50 Minn. 280, 52 N. W. 530, 17 L. R. A. 555, 36 Am. St. Rep. 642. 46 Fuller v. Green, 64 Wis. 159, 24 N. W. 907, 54 Am. Rep. 600. it was to the advantage or the prejudice of the innocent party.47 Thus, changing the date of maturity of a note, by either shortening or prolonging the date of maturity, would discharge it. Another limitation is that the alteration must have been by a party to the contract or some one as his agent. Alteration by a stranger without the knowledge or consent of the parties is a mere spoliation which does not discharge the contract. It is also necessary that the alteration be made intentionally. If made by accident or mistake the document will not be invalidated. If made intentionally but without fraudulent intent and under a mere mistake as to one's rights, it would seem that the efficacy of the instrument would be destroyed, though there are authorities holding to the contrary, and it is clear that there might at least be recovery on the original consideration of the instrument. The existence or lack of fraudulent intent is what governs whether there may be recovery on the original consideration. A recovery on the original consideration, however, is subject to the qualifications that there be no prejudice to rights of third persons and that the original consideration has not ceased to exist because of a merger. Another limitation is that there has not been consent or ratification by the other party. If there are more than two parties to a written contract, those who consent to the alteration will be bound thereby while those who do not consent will be discharged. Whether the alteration was with the consent of other parties is for the jury to determine. Where a person signs a written contract with some of its terms in blank, it is held that he thereby gives implied authority to the other party to fill the blank in accordance with the general character of the instrument and such filling of a blank is not an alteration of the instrument.48 If filled contrary to their agreement the promisor may be estopped to deny as against an innocent third party that the blanks were improperly filled because of having made the same possible. At common law the loss of an instrument under 47 Coburn v. Webb, 56 Ind. 96, 26 Am. Rep. 15. 48 Bank of Pittsburgh v. Neal, 22 How. 96, 16 L. ed. 323. seal prevented recovery thereon because it was the contract itself and not merely evidence of the contract, but this is now subject to the equitable rule which permits recovery provided the promisor is duly protected from claims thereon by other persons. As to the effect of the loss of a negotiable instrument, the reader is referred to the article on that subject. § 132. Bankruptcy. A discharge in bankruptcy will generally operate to release the bankrupt from his contractual obligations.49 49 See article on Bankruptcy. LAW OF BAILMENTS CHAPTER I BAILMENTS GENERALLY CONSIDERED §1. Bailment Defined; Essentials; Delivery and ReDelivery. A bailment may be defined as the delivery of goods in trust for some purpose, upon a contract either express or implied, that the purposes of the trust shall be duly executed and performed, and that after the same have been fulfilled the goods shall be redelivered to the bailor or to the person who first entrusted them to the possession of the second party, or bailee, or shall otherwise be dealt with according to his directions, or shall be kept until he reclaims them. These agreements or transactions give rise both to contractual obligations which may be enforced in actions of assumpsit, and to common-law duties which may be enforced in actions of tort. The obligations may be based upon and be the result of an express agreement, or they may be implied from the relationship itself, or, as we shall hereafter see, the duties and obligations which the law would imply from the relationship itself may be modified or limited by a special agreement. The word "bailment" is derived from the French word "bailler", which means "to deliver"; and a change of the right of possession is a prerequisite to every bailment. This does not mean, however, that in every case an actual manual delivery must be made, for in many cases the delivery may be symbolical and constructive merely. This is often the case with the pledging or bailment of goods that are at sea; to transfer the right of possession, or even title in which an assignment of the bill of lading is all that is necessary. Where, indeed, a direct manual and physical delivery is impossible, difficult Copyright, 1912, by American School of Correspondence. 1 |