1

preted in the light of the usage. Evidence of the usage in such cases must be admitted, unless it contravenes a rule of law, or contradicts or varies the expressed terms of the contract, and is admitted without doing violence to the parol evidence rule.25

It would seem, therefore, that if the evidence which the defendant attempted to introduce in the principal case went to prove that by force of usage and custom among theatrical people the "right to present a play" meant the "exclusive right to present the play," it should have been received. It follows that the written memorial to which the parties, in the hurry and custom of business life, may reduce the more special features of their particular agreement, while evidencing a contract between them, is not the exclusive repository of its terms. To limit the admission of evidence by the four corners of such memorial is to restrict the rights of the parties and to bind one or the other against his will to a contract to which he never assented.

An interesting case involving the principle here discussed was recently decided in the House of Lords.26 The written contract there considered provided that, "All disputes arising out of this contract. shall be referred to arbitration," etc. A dispute arose as to an alleged custom. The question was thus presented whether a dispute arising as to the custom was one arising "out of the contract" within the meaning of the arbitration clause. In other words, was the custom a part of the contract? The House of Lords held that the arbitrators had the power, under the submission of the parties, to decide all disputes arising out of the contract, and, therefore, to decide as to the existence of the custom, i. e., the custom was a part of the contract. Lord Loreburn said, "When an arbitrator had power, as here, to decide all disputes arising out of a contract, including questions of law, surely he must decide what the contract was, and he could not decide this without introducing the custom." Lord Sumner, in the course of his opinion, said, "If the bargain was partly expressed in ink and partly implied by the tacit incorporation of trade customs, the first function submitted to the arbitrators was to find out what it was; to read the language, to ascertain the custom, to interpret them both, and to give effect to the whole. Of course the arbitrators could not add to the contract, but their admitted power to inquire into the existence of the custom provisionally was due to the very fact that in so doing they added nothing to the contract, but were rightly finding out what the contract was before interpreting and applying it." Lord Sumner disapproved of the expression that usage or custom added terms to contracts. "It is more exact," he said, "to say that the contractual terms, which the custom imported, were already tacitly incorporated as a part, though an unexpressed part, of the agreement between the parties." A more apt expression there could not be.

25 Rastetter v. Reynolds, 160 Ind. 133 (1903); Floyd v. Mann, 146 Mich. 356 (1906); Snoqualmi Realty Co. v. Moynihan, 179 Mo. 629 (1903); Cream of Wheat Co. v. Crist Co., 166 App. Div. (N. Y.) 870 (1915); Dana v. Fiedler, 12 N. Y. 40 (1854); Atkinson v. Truesdall, 127 N. Y. 230 (1891); National Bank v. Burkhardt, supra, note 16; Steidtmann v. Joseph Lay Co., supra, note 15.

26 Produce Brokers Company (Ltd.) v. Olympia Oil and Cake Company (Ltd.), 32 Times Law Reports (Eng.) 115 (1915).

It is apparent that the rule which permits parol proof of custom or usage in addition to the written memorial to determine, not to establish, the contract has its limitation and must be applied with caution. Lord Campbell announced this limitation in the decision of Humphrey v. Dale, 7 El. & B. (Eng.) 266 (1857); "Whether this evidence be treated as explaining the language used, or adding a tacitly implied incident to the contract beyond those which are expressed, is not material. In either point of view, it will be admissible unless it labours under the objection of introducing something repugnant to or inconsistent with the tenor of the written instrument.

. . The

principle on which the evidence is admissible is that the parties have not set down on paper the whole of their contract in all its terms, but those only which were necessary to be determined in the particular case by specific agreement, and which of course might vary infinitely, leaving to implication and tacit understanding all those general and unvarying incidents which a uniform usage would annex. To fall within the exception, therefore, of repugnancy, the incident must be such as if expressed in the written contract would make it insensible or inconsistent.'

The local or trade usage must be pleaded and proved, and the jury must determine the facts from which the inference may be properly drawn that the alleged custom did exist." And as the local usage affects the contract rights of the parties only because it is a term in the contract, and because it cannot be a term in the contract without mutual consent, and because there cannot be consent without knowledge, the question of knowledge of the usage is also properly left to the jury, unless the established facts present a case where knowledge on the part of the parties will be conclusively presumed.28 Evidence of usage must necessarily be parol,29 and its exclusion in a proper case is prejudicial error.30

Applying these principals to the facts of the principal case, it would seem that the Appellate Division was in error. The parties were engaged in the theatrical business; among other activities, of renting, leasing, and selling rights therein. Evidence of the special customs and usages existing in such business was important for the purpose of showing the circumstances under which the parties contracted, and of ascertaining their intention in making the contract in order to interpret it to the court and jury as they themselves understood it. To the making of such proof the parol evidence rule has no application. Leon A. Plumb, '16.

27Chicago Packing & Provision Co. v. Tilton, 87 Ill. 547 (1877); Tower Co. v. Southern Pacific Co., 184 Mass. 472 (1904); Cronan v. Hornblower, 211 Mass. 538 (1912); Carr v. D. L. & W. R. R. Co., 81 N. J. L. 532 (1910); Walls v. Bailey, supra, note 2.

28 Tower Co. v. Southern Pacific Co., supra, note 27; Pennell v. The Delta Transportation Co., 94 Mich. 247 (1892); Walls v. Bailey, supra, note 2.

29 Browne, Parol Evidence, sec. 58; Clarke's Browne on Usages and Customs,

sec. 39; Branch, Sons & Co. v. Palmer, 65 Ga. 210 (1880).

30 Joseph v. Andrews Co., 72 Mo. App. 551 (1897); Hayden v. Frederickson, 55 Neb. 156 (1898); Mangum v. Farrington, 1 Daly (N. Y.) 236 (1862); Sims v. U. S. Trust Co., 35 Hun (N. Y.) 533 (1885); Guillon v. Earnshaw, 169 Pa. 463 (1895); Thomas v. O'Hara, I Mill (S. C.) 303 (1817).

Contract: The Element of Time as of the Essence of a Contract.—A recent case on appeal, Davis v. Godart, 154 N. W. (Minn.) 1091 (1915), deals with a contract for the sale of land, in which was the following provision: "if the vendee desires to relinquish the land at the end of one year from the date of this contract, the vendor will return him the purchase money." The contract was made and dated October 4, 1912, and on October 16, 1913, the plaintiff notified the defendant that he desired to relinquish the land. The vendor refused to return the money paid him and the plaintiff brought suit against him at law to recover that amount, but the action was dismissed and the plaintiff appealed from an order denying a new trial. The appellate court held that the vendee had a reasonable time after the expiration of the year in which to offer back the land, the word "at" being construed as meaning "after". The court also said that the plaintiff's offer was made within a reasonable time, and the order was reversed. In this holding there is presented an interesting question: When is time of the essence of a contract? If a contract provides that a party thereto shall do a certain thing on or by a specified day, will failure in that performance constitute a default?

A contract in which the time for performance is left indeterminate needs little discussion. In such cases a reasonable time for performance is to be allowed.1 What constitutes a reasonable time is dependent upon the facts of the particular case and is a question for the consideration of the jury.2

On the other hand it is obvious that time may be made to be of the essence of the contract. If parties choose to stipulate for a particular thing to be done at a particular time, such stipulation is effectual. There is no equitable jurisdiction to make a new contract which the parties themselves have not made. The means by which such stipulation may be made are not confined to narrow specification. It may be by express stipulation of the parties or without such express agreement; by the very nature of the contract itself or of the circumstances under which it was made. The effect of time being of the essence is to make a failure to perform within that time a breach of a vital term of the contract, and a repudiation of it is justified. When a contract is thus made, the intent of the parties must be regarded both at law and in equity. The rule, when effective, has very close application, holding the parties to an hour's time as well as to that of a full day."

But contracts in which the intent as to time provisions is less evident present difficulties of construction. Where no time is specified, the rule gives a reasonable time for performance, having regard to the circumstances of the particular case; but, where stipulations as to

'Holden v. Royal, 86 S. E. (N. C.) 583 (1915); Whiting v. Gray, 27 Fla. 482 (1891); Raymond Concrete Pile Co. v. Hartman Furniture and Carpet Co., 187 Ill. App. 426 (1914); Simon v. Etgen, 213 N. Y. 589 (1915).

2Wilson v. Roots, 119 Ill. 379 (1887).

Sneed & Cock v. Wiggins and Jones, 3 Ga. 94 (1847); Tyler v. McCardle, 17 Miss. 230 (1848); Grigg v. Landis, 19 N. J. Eq. 350 (1868); Morgan v. Herrick, 21 Ill. 481 (1859).

4Shinn v. Roberts, 20 N. J. L. 435 (1845).

time were made, the English common law courts formerly construed them as being of the essence of the contract, even if they were not expressed to be so, and considered them as conditions precedent. Both parties were held to the provisions; neither had a right to performance unless he had himself fulfilled his obligations within the specified time. In equity, however, especially in contracts for the sale of land, time was held not to be of the essence of the contract unless so specified, or naturally following from the terms of the contract and the circumstances under which the agreement was made, and specific performance would be decreed although the plaintiff did not fulfill the time requirement. In equity, although stipulations as to time were prima facie presumed not to be of the essence of the contract, it was a presumption that might be rebutted by a clear indication of contrary intention, and such intention could appear either by a direct stipulation to that effect or by implication from the nature of the subject matter of the contract and surrounding circumstances. The American courts of equity follow the English equity rule. Full weight is given to the intention of the parties concerned; the construction is liberal, and the intent that time is of the essence has to be clearly shown, either by specification or necessary implication.5 The presumption is that the time of performance named in the contract is not essential, though this is rebuttable even by parol evidence, which is admissible to show that time was intended to be of the essence of the contract. But even this equitable construction that time is of the essence, if clearly shown to be so intended, has its exceptions. In Cheney v. Libbey, it was held not to be, although so expressed, on the grounds that giving effect to the intention would contravene public policy.

8

Comparatively early American cases show that our common law courts generally adopted the English common law rule, that time was of the essence of the contract. In Hill v. Fisher, the court said, "there are cases in which the time agreed upon for the payment of money is not of the essence of the contract. In those cases remedy is to be sought in equity. In law where the time is specified, it must be lived up to." Cromwell v. Wilkinson,9 holds that "at law time is of the essence of a contract, and performance is required at the day, or the consequence of default may follow." However, Pennsylvania had, even before this, in a common law action held that under a contract to pay money on a certain day, time is not of the essence of the contract, since the failure to pay on that day may be compensated by the payment of money in the nature of damages. 10 This holding

"Boldt v. Early, 33 Ind. App. 434 (1904); Ewins v. Gordon, 49 N. H. 444 (1870); Hubbell v. Von Schoening, 49 N. Y. 326 (1872); Mitchell v. Probst, 152 Pac. (Okla.) 597 (1915); Shenners v. Adams, 148 Pac. (Okla.) 1023 (1915); Virtue v. Stanley, 151 Pac. (Wash.) 270 (1915); Huffman v. Hummer, 17 N. J. Eq. 263 (1865).

Thurston v. Arnold, 43 Ia. 43 (1876).

7134 U. S. 68 (1890).

$34 Me. 143 (1852).

918 Ind. 365 (1862).

10 Decamp v. Feay, 5 Serg. & Rawle (Pa.) 323 (1819).

may, however, have been due to the fact that Pennsylvania had no court of equity.

The equity doctrine has now been adopted by our common law courts, and contracts are construed according to the intent of the parties, with respect to the time element. In Knott v. Stephens," it was held that a delay of eight days past the specified time for delivery of lithographing and stationery did not justify a repudiation of the contract. Time will not be held to be of the essence, unless so specified by the terms of the contract or unless it be shown clearly that such was the intent of the parties. 12 So it may be said that the present common law rule is practically the same as the equitable view, except in mercantile contracts.13 There are, however, various cases with holdings contrary to this general construction.14

The present day construction, then, is that both courts of law and equity apply the same principle in the interpretation of contracts involving the question of time as being of the essence. The general rule is to look at the whole scope of the transaction to see whether the parties really intended the time named to be of the essence of the contract, and if it appears that, though they named a specific day for the act to be done, what they really contemplated was only that it should be done within a reasonable time, then a party, who according to the letter of the contract is in default, will be allowed to enforce the contract in accordance with what the court considers its true meaning.

Wayne C. Selby, '18.

Criminal Law: Conspiracy: Plea of Entrapment.-In the case of State v. Dougherty, 96 Atl. (N. J.) 56 (1915), a detective, representing himself to be a contractor, but really in the employ of the state, made a proposition to some of the council of Atlantic City to replace the present board walk with a reinforced concrete structure. It appeared from the unrebutted testimony of the state that the first suggestion of corruption came from one of the councilmen indicted, Phoebus, the chairman of the board walk committee, who said that "there was no use undertaking the proposition without I [the detective] was in a position to handle money with the members of the city council; that that was the only way that the deal could be put through."1 After considerable negotiation between the detective and the guilty councilmen, including the actual receipt of $500 as a bribe by some of them,

115 Ore. 235 (1874).

12 La Dow v. Bement, 119 Mich. 685 (1899); Lewis v. W. Va. Pulp & Paper Co., 84 S. E. (W. Va.) 1063 (1915); Atkins & Co. v. Kirk, 187 Ill. App. 310 (1914); Virtue v. Stanley, supra, note 5.

13Globe Brewing Co. v. American Malting Co., 247 Ill. 622 (1910); Jones v. U. S., 96 U. S. 24 (1877).

14McQuary and Missouri Land and Development Co. v. Missouri Land Co. of Scotland, 230 Mo. 342 (1910); Kentucky Distilleries and Warehouse Co. v. Warwick Co., 109 Fed. 280 (1901); Federal Trust Co. v. Coyle, 126 Pac. (Okla.) 800 (1912); Taylor v. Blair, 59 Hun (N. Y.) 347 (1891).

'See 86 N. J. L. 525 at p. 531.