Isaacson, C. William

English

Marquette University Law School

Marquette Law ReviewVolume 38Issue 1 Summer 1954 Article 8Contracts - Promise to Pay when AbleC. William IsaacsonFollow this and additional works at: http://scholarship.law.marquette.edu/mulrPart of the Law CommonsThis Article is brought to you for free and open access by the Journals at Marquette Law Scholarly Commons. It has been accepted for inclusion inMarquette Law Review by an authorized administrator of Marquette Law Scholarly Commons. For more information, please contactmegan.obrien@marquette.edu.Repository CitationC. William Isaacson, Contracts - Promise to Pay when Able, 38 Marq. L. Rev. 51 (1954).Available at: http://scholarship.law.marquette.edu/mulr/vol38/iss1/8RECENT DECISIONSContracts-Promise to Pay When Able-Petition alleged anoral agreement under which the defendant would reimburse plaintiffupon the completion of certain construction work upon an apartmentbuilding. The defendant agreed to pay the plaintiff, "when she gotthe apartments on a paying basis . . . when she was financially ableand the apartment was paying off." Held: these various statementswere practically equivalent to an agreement to pay when able. Apromise to pay when the promiser is financially able to do so is con-strued to mean that payment was to be made within a reasonabletime. "The ability to pay" or any equivalent provision was too un-certain and indefinite to constitute a condition: Sanford v. Luce 60N.W. 2d 885 (Iowa, 1953).The problem in this case is whether a contract calling for paymentby a promisor when able demands ability to pay as a condition pre-cedent or whether a promise to pay when able is an absolute promisewith payment anticipated at least within a reasonable time. The courtsare split on this issue. A majority, taken numerically, hold that apromise to pay when the promisor "is able" is not absolute but aconditional promise.' A minority, however, followed in this case, holdthat a promise to pay when able is absolute, and payment must bemade at least within a reasonable time.2The reasoning of the majority is based upon the premise that acontract calling for payment by a promisor when he is able meansexactly what the words literally denote. So construed, the promisormust pay only when, and if, and not before he is able. These courtsfeel that, if one wishes to contract in this fashion, such contract isproper, and that freedom to contract as the parties see fit must beprotected. The promisee cannot complain, since he got exactly whathe bargained for. One court puts it clearly:"The express contract of the parties is that the debtor is topay when he shall be able, and that he shall be the judge of hisability. No doubt the parties thought this a reasonable arrange-ment when they made it, though creditors think otherwise now.If it is reasonable for a man to release a debt altogether, surelyit is reasonable to release the remedies for a debt, not itselfreleased, as is done in covenants not to sue. And even if it be notreasonable, we cannot set up our reason or the public reason forthat of contracting parties, and make a contract for them that iscontrary to their plain intention without violating the first prin-ciple of freedom and the very nature of contract relations."' 3On the other hand, the minority reasons that such a contract never'12 Am. Ju., CONTRACTS §303; 94 A.L.R. 721.2 12 Am. JuP-, CONTRACTS .§303; 94 A.L.R. 724; Mock v. Trustees of FirstBaptist Church of Newport, 252 Ky. 243, 67 S.W. 2d 9 (1934).3 Carlson v. Johnson, 275 Mich. 35, 265 N.W. 517 (1936).1954-55]MARQUETTE LAW REVIEWcontemplated that the provision to pay when able would involve thepossibility that there might never be any payment. This, they feel,would be contrary to the intention of the parties; and certainly con-trary to the intent of the promisee, who obviously did not envisionthat he might never receive his consideration. It would also seem con-trary to justice to allow the promisor to receive his 'benefit withoutgiving anything in return. In a case regarding a promise by a churchto pay an architect for his services when able, the Kentucky court said:"Such an agreement cannot be construed as requiring the archi-tect to wait more than a reasonable time. He did not mean thathe would wait forever."4The minority view has usually been held to prevail in those in-stances where a promissory note or other commercial paper is in-volved.5 The courts so deciding imply that, since the promisor hasalready received that for which the promise to pay is given, he shouldnot be allowed to escape making recompense for it. One court putsit clearly and succinctly:"The parties evidently regarded the note as a binding obliga-tion, and, whenever the language will permit, it should be soconstrued as to support rather than destroy its legal obligation.It is conceded that the intentions of the parties to a contractcannot prevail if directly contrary to the plain sense of wordsemployed; but when the intention is sufficiently apparent, ef-fect should be given to that intent, though some violence bethereby done to the words."6The question of what is the precise effect of a promise in a con-tract to pay when able has not been decided by the Wisconsin court.In considering what view should be followed, it would be pertinentto note that both the majority and minority beg the question in thateach assumes the intention -of the parties, although that is preciselywhat is at issue. The majority assumes that the parties intended pay-ment only conditionally, and the minority assumes that payment isintended absolutely. Actually, it seems fair to speculate that the partiesnever really considered the issue at all, since the future ability of thepromisor to pay might reasonably have been assumed to be imminent,and other possibilities were not considered. Hence one party mustendure a hardship by a term he did not contemplate.In the interest of substantial justice it would seem that both themodem and better reasoned view would be that a promise to pay"when able" should be construed as demanding payment at least within4 Mock v. Trustees of First Baptist Church of Newport, supra, note 2.5 Benton v. Benton, 78 Kan. 366, 97 P. 378 (1908); Pistel v. Imperial MutualLife Insurance Co. of America, 88 Md. 640, 42 A. 210 (1898); Folkerts v.Shields, 319 Ill. App. 261, 49 N.E. 2d 295 (1943).6 Lewis v. Lipton, 10 Ohio State 88, 75 Am. Dec. 498 (1856).[Vol. 38RECENT DECISIONSa reasonable time. Although this may work a heavy hardship upon apromisor who is forced to pay before he feels himself able, to holdsuch language as a condition precedent would work a heavier hard-ship upon a promisee who might never receive value for what he hasgiven. However, the hardship on the promisor could be lightened, to acertain extent at least, by construing a reasonable time most liberallyin favor of the promisor. To the average person this would seem thefairest of two difficult alternatives. He would consider such a promiseas one requiring payment at some time.Thus in the light of the balancing of the hardships and an attemptat substantial justice, the Wisconsin court in any future decisionshould, it seems, follow the lead of the Iowa court in Sanford v. Luce.C. WILIAM IsAAcsoNLandlord and Tenant-Leases-The Validity of Rent Accelera-tion Clauses-The plaintiff leased premises to the defendant fora three year period, rent payable monthly in advance. Under theterms of the lease,' the lessor, without demand or notice, could law-fully declare the term ended and re-enter the premises should the les-see default in any of his contractual obligations. Furthermore, thelessor had an option, in addition to his other remedies on default, togive the lessee written notice of any default or neglect and to advisethe lessee that unless all the conditions and covenants of the lease werecomplied with within thirty days, the entire rent for the remainderof the term would become immediately due and payable. Eight monthsafter the beginning of the term, the lessee vacated the premises andshortly thereafter defaulted in the payment of the rent due. The lessorbrought an action for rent on the rent acceleration clause in the lease.Judgment was rendered for the lessor, and the lessee appealed. Held:Judgment for the plaintiff reversed. Any clause in a lease of realproperty for rent acceleration effective upon the breach of a covenantto pay rent is void since it is either an agreement for liquidated dam-ages, when the damages are readily ascertainable, or a penalty. Rickerv. Rombough, 261 P. 2d 328 (Cal. 1953).The courts are not in agreement concerning the validity of rentI "Lessor may likewise at lessor's option and in addition to any other remedieswhich lessor may have upon such default, failure or neglect, give to lesseewritten notice of such default, failure or neglect and advise lessee therebythat, unless all the terms, covenants and conditions of the lease are fullycomplied with within thirty (30) days after giving of said notice, the en-tire amount of rent herein reserved or agreed to be paid and then remain-ing unpaid shall immediately become due and payable upon the expiration ofsaid thirty days. .. "1954-55]

Contracts - Promise to Pay when Able

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Contracts - Promise to Pay when Able

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