COLUMBIA LAW TIMES. VOL. VI. MAY, 1893. No. 8. FRANK JOHNSON GOODNOW. PROFESSOR FRANK JOHNSON GOODNOW was born in Brooklyn, N. Y., January 18th, 1859. After a period of study in several private schools in Brooklyn, he entered Amherst College in 1875 and received his Bachelor's degree four years later, taking highest honors in history and political economy. After a year spent in European travel, in 1880 he entered the Columbia College Law School, at the same time taking a position in the office of exJudge John F. Dillon. In 1882 he received his degree of LL. B. and was admitted to the bar of the State of New York. Professor Goodnow then entered upon the practice of law in this City, but in 1883 was asked by the Trustees of Columbia College to take the position of Lecturer in Administrative Law and Instructor of History. This offer he accepted, but secured a leave of absence for a year, which was spent in study in Europe, one term at the " Ecole Libre des Sciences Politiques," at Paris, and one semester at the University of Berlin. He began his work at Columbia College in 1884. In 1887 he was made Adjunct Professor of Administrative Law, and in 1891 was promoted to the position of Professor of Administrative Law, which he now occupies. In this position, Professor Goodnow has not only gained for himself a wide reputation, but by his work he has greatly benefited the College and done much to bring into prominence the School of Political Science. His course, unique in its treatment of the subject, is widely known among students everywhere. Professor Goodnow's Chair in Administrative Law is the only one in the country. Elsewhere, where instruction in administration is given, it is treated from the economic rather than from the legal point of view. In addition to this course, Professor Goodnow lectures at present on the Law of Municipal Corporations and Law of Taxation, and has delivered courses on Local Government, Municipal Government and Historical and Political Geography. His lectures are considered of the greatest value by the students of the School, and are frequently taken by those working for their Doctor's degree. Professor Goodnow has, since he came to the College, been active in the administration of the School of Political Science, holding, until the present year, the position of Secretary of the Faculty. In literature, Professor Goodnow has done much good work. He is a contributor to the Political Science Quarterly, the American Law Review and other magazines. His best known work is the chapter on "The Tweed Rings," which he wrote for Bryce's "American Commonwealth." He is at present engaged in a work on "Comparative Administrative Law," to appear in the autumn, which is being published by Messrs. G. P. Putnam's Sons. This, it is believed, will be the only work of the kind published in the English language. To judge from Professor Goodnow's treatment of this subject in his lectures at Columbia, the work will undoubtedly be of the highest value to many classes of people. THE LEGAL EFFECT OF PROMISSORY NOTES OR ACCEPTANCES GIVEN FOR PAYMENTS EXPECTED TO BECOME DUE UNDER CONTINUING OR OTHER EXECUTORY CONTRACTS. IT BY AUSTIN ABBOTT, LL.D. T is becoming a common practice in executory contracts that contemplate the lapse of a considerable period before complete performance, to stipulate for the giving of notes by the party expected to make the payments, these notes being usually required to be given at the outset, or from time to time in advance of any payment having become actually due. A common form of such contracts is to provide that the contractor who is to furnish from time to time supplies or materials or labor (or, it might be the vendor in a land contract), shall be paid specified installments as time passes or as deliveries progress, and then to add a provision to the effect that the other party shall simultaneously, with the execution of the contract, give his promissory notes corresponding with such installments, payable in a series of periods corresponding more or less with the anticipated progress of the work. Three views seem to have been taken of the legal effect of such notes. One is, that they are merely modal, and only intended to dispense with notice of performance and demand of payment, by providing that the duty of the employer or debtor party in respect of the paying an installment in case it be actually earned, shall be to have the money at the place of note-payment, at the peril of having his note dishonored if he wishes a few days indulgence. A second view is that the note is to be read as if written into the contract, and subject, therefore, to be restrained in legal effect (as between the parties and their privies) by the stipulations and conditions contained in the contract. A third view, and the one usual, I believe, among business men, and the one approved in effect by the best considered cases, is, that the giving of separate notes, absolute in terms, manifests an intention to accomplish more than a similar promise embodied in the contract, viz.: to make the sum payable absolutely, and, at all events, without conditions; and to leave a breach of the contract on the part of the holder of the note to be redressed by an action for damages, or in modern practice by recoupment or counter-claim for damages in case the note is sued on by the payee. The business reasons which make this view advantageous are easily seen. The contractor can use the notes by negotiating them and thus getting means to carry out a contract he could not otherwise undertake, and the transferee for value before maturity can recover, notwithstanding he had notice of the contract under which they were given. Moreover, the contractor, if he continues to hold the notes, cannot be put off by disputes raised by the maker respecting the sufficiency of performance but the maker must pay all that fall due, and is protected as to the future by his right to terminate his liability as to those which have not fallen due by terminating the agreement itself on the ground of forfeiture, if such ground exists, and is protected as to the past if he chooses to refuse payment of any already due, by his right to a cross action, or to a recoupment for the damages he has sustained by the alleged past insufficiency of performance. Whether this third view is sanctioned by the law as well as commended by its business advantage for contractors who choose to require notes, may be best determined by inquiring what is the legal effect of a note given on an executory consideration when no such continuing contract exists, and what is the effect of the voluntary giving of a note by way advance on a continuing contract which does not call for notes. The principle established at common law that a promise is a sufficient consideration for a promissory note, notwithstanding the subsequent breach of the promise, is doubtless what lead to the adoption of this system of independent notes to secure payment of instalments. The cases are not harmonious, but considered together they appear to afford adequate support for the following conclusions : 1. A note absolute in terms may be delivered upon an oral condition which is to prevent its taking effect until performance of the condition (Seymour v. Cowing, 4 Abb. Ct. App. Dec. ), but if delivered absolutely, an action lies upon it even though it was given upon an executed consideration which has wholly failed, or upon an executory consideration which has never been performed; because a promise is a sufficient consideration for a promise; and the breach of the consideration-promise is matter for damages. 2. A note may be made to contain a condition in its own terms, or by a supplementary written agreement contemporaneous with it expressly restraining its effect, or may be modified by a subsequent agreement founded on a consideration; and in such case the note itself is as between the parties, not an absolute note, but qualified by the agreement. 3. An absolute note, given voluntarily by way of an advance or payment on account under a contract which does not by its terms require the giving of a note, is nevertheless a waiver of the right to insist that the terms of the contract make performance a condition precedent of the payment thus secured by the note, or to insist that the stipulation to pay was mutual and dependent on performance of the service secured by the note; so that a breach of the stipu. lation in the contract will not be, even as between the parties, a bar to an action on the note, but at most a counter cause of action for damages. 4. The same effect follows where the note is stipulated for in the contract. The requirement, and the concession, of an absolute note, separate from the contract, and having no reference to it and no condition expressed, is in itself, a manifestation of intention of both parties to make an independent obligation not conditioned on performance of even express conditions in the contract. 5. Until recent times the breach of the executory consideration for an absolute note could in no case be set up in an action on the note. It was an in dependent cause of action to be presented by an independent suit. Since the establishment of the doctrine of recoupment, and the adoption of the provisions of the Codes of Procedure, allowing any cause of action on contract to be a counter-claim in any action on contract between the same parties, the maker of the note, when şued upon it, may set up, not in bar, but as a counter-claim, any cause of action he has against the payee of the note; and there seems some authority for saying that a breach of the contract relating to the consideration of the note might, under the present provision of the New York Code, §508, be pleaded as a "partial defence" by way of recoupment or mitigation of damages, without stating it formally as a counter-claim, Professor Abbott classifies the cases on the various branches of this subject as follows: I.-ABSOLUTE Note on ExECUTORY CONSIDERATION. Chapman v. Eddy, 13 Vt., 205. Note for an executory consideration subsequent. Newman v. Frost, 52 N. Y., 427. McSpedon v. Troy City Bank, 3 Abb. Ct. App, 133. Rice v. Grange, 39 State Rep., 163; S. C., 14 N. Y. Supp., 911. Backus v. Spalding, 116 Mass., 418. Defect of title to thing sold. Agreement to convey land to another. Murphy v. Lippe, 35 Super. Ct. (J. & S.), 542. Refusal to deliver thing sold. Mitchell v. Stinson, 80 Ind., 324. Freligh v. Platt, 5 Cow., 494. Delivery of possession, but refusal to convey. Inability to give title. Tufts v. Griffin, 107 N. C., 47. Fire Risk. Winslow v. Wood, 70 N. Car., 430. Death of animal sold. Babcock v. Bonnell, 44 Super. Ct. (J. & S.), 568; affirmed in 80 N. Y., 244. Stoppage in transit held a failure of consideration. Stanton v. Maynard, 7 Allen, (Mass.) 335. Breach of stipulation for guaranty of thing sold. Smock v. Pierson, 68 Ind., 405. Black v. Ridgway, 131 Mass., 80. of damages. Good will of no value. Breach not an entire failure, but only matter Stacy v. Kemp, 97 Mass., 166. Damages may be recouped. Gillespie v. Torrance, 25 N. Y., 306. Accommodation paper enforcible notwithstanding breach of warranty. Maas v. Chatfield, 90 N. Y., 304. Rights of bona fide transferee for value before maturity. Davis v. McCready, 17 N. Y., 230. Notice of contract not notice of equities. II. NOTE IN TERMS CONDITIONAL. Chapin v. Allen, 19 N. Y. Supp., 818; S. C., 47 State Rep., 116. Condition precedent. |