a contract is the value of the alternative least onerous to the defendant. 12 An inconsistent and, it seems, erroneous rule has been laid down in a few cases, which, relying on a passage from Coke relating to grants rather than contracts, 13 hold that if the promisor fails to make an election the promisee thereupon has the option. 14 Such a rule would entitle the promisee after breach to recover damages based on the performance most onerous to the defendant. Doubtless it is possible for the parties to make a contract that until a certain time the promisor may choose but that thereafter the promisee shall have the choice. There seems no propriety, however, where the parties have not made such a contract in the court making it for them. An exception to the general rule is made if one of the alternatives is to pay a certain sum of money. As has been seen, 15 a contract for the payment of a certain amount of money in goods to be taken at a certain value has been generally construed as amounting in effect to a promise to pay the money unless goods are tendered at the maturity of the contract. Somewhat similarly where an alternative contract provides as one alternative for the payment of a sum of money the damage for breach of the obligation is the sum of money promised, though that conceivably may have been the alternative more onerous to the defendant. 16 Such promises are in effect con "Holliday v. Highland, etc., Co., 43 Ind. App. 342, 87 N. E. 249; Kimball v. Deere, 108 Ia. 676, 77 N. W. 1041; Pope v. Campbell, Hardin (Ky.), 31, 3 Am. Dec. 722; White v. Green, 3 T. B. Mon. (Ky.) 155; Hixon v. Hixon, 7 Humph. (Tenn.) 33. Co. Litt. 145a. "The feoffee by his act and wrong may lose his election, and give the same to the foeffor. As if one infeoffe another of two acres, to have and to hold the one for life, and the other in taile, and he before election maketh a feoffment of both; in this case, the feoffor shall enter into which of them he will, for the act and wrong of the feoffee." 14 Coles v. Peck, 96 Ind. 333, 49 Am. Rep. 161; Phillips v. Cornelius (Miss.), 28 So. 871; Patchin v. Swift, 21 Vt. 292; Corbin v. Fairbanks, 56 Vt. 538. The same doctrine is stated in suits for specific performance in Amanda Gold Min. Co. v. People's, etc., Min. Co., 28 Colo. 251, 64 Pac. 218; Coles v. Peck, 96 Ind. 333, 49 Am. Rep. 161. The correct procedure in such a suit is suggested in Taylor v. Mathews, 53 Fla. 776, 787, 44 So. 146, namely, that if the contract is one suitable for equitable intervention, the defendant should be compelled to elect. See also Allender v. Evans-Smith Drug Co., 3 Ind. Ty. 628. 15 Supra, § 1398. 16 Layton v. Pearce, 1 Doug. 15; Pennsylvania Ry. v. Reichert, 58 strued as binding the promisor to a certain performance by a certain day or in default thereof to make a money payment in the nature of liquidated damages, and unless the sum fixed is penal the agreed sum is recoverable. § 1408. Damages for failure to pay a promisee's debt. The measure of damages for breach of a contract to discharge an obligation of the promisee to a third person is the amount of the debt. Thus where a principal violates a promise to a surety to pay the creditor, the surety may recover (without paying the debt) from the principal as damages the full amount of the debt." And one who has assumed a mortgage if he fails to pay it at maturity, is liable to his promisee for its full amount. 18 This doctrine has been criticized, 19 and it is obvious that there is possible hardship to the defendant, for the creditor may never collect his claim from the plaintiff, but may collect it from the defendant, or, in the case of the mortgage, from security belonging to the defendant. It has been suggested in several cases to meet this difficulty, that the defendant may have an equity, that the money he pays to the plaintiff shall be applied in dis Md. 261; Slosson v. Beadle, 7 Johns. 72; Corbin v. Fairbanks, 56 Vt. .538 17 Loosemore v. Radford, 9 M & W. 657; Robinson v. Robinson, 24 L. T. 112; Banfield v. Marks, 56 Cal. 185; Lathrop v. Atwood, 21 Conn. 117; Gage v. Lewis, 68 Ill. 604; Devol v. McIntosh, 23 Ind. 529; Helms v. Appleton, 43 Ind. App. 482, 85 N. E. 733, 86 N. E. 1023; Lee v. Burrell, 51 Mich. 132, 16 N. W. 309; Furnas v. Durgin, 119 Mass. 500, 508, 20 Am. Rep. 341; Locke v. Homer, 131 Mass. 93, 96, 41 Am.. Rep. 199; Alexander v. McPeck, 189 Mass. 34, 75 N. E. 88; Ham v. Hill, 29 Mo. 275; Salmon Falls Bank v. Leyser, 116 Mo. 51, 22 S. W. 504; Fairfield v. Day, 71 N. H. 63, 51 Atl. 263; Sparkman v. Gove, 44 N. J. L. 252, 255–256; Port v. Jackson, 17 Johns. 239, 479; Berry v. Schaad, 50 N. Y. App. D. 132, 63 N. Y. S. 349; Klauck v. Federal Ins. Co., 131 N. Y. App. D. 519, 115 N. Y. S. 1049; Beier v. Snitzer, 167 N. Y. S. 303; Wilson v. Stilwell, 9 Oh. St. 467; Oriental Lumber Co. v. Blades Lumber Co., 103 Va. 730, 50 S. E. 270; Friend v. Ralston, 35 Wash. 422, 77 Pac. 794. 18 Foster v. Atwater, 42 Conn. 244; Malott v. Goff, 96 Ind. 496; Lowe v. Turpie, 147 Ind. 652, 44 N. E. 25, 47 N. E. 150, 37 L. R. A. 233; Stout v. Folger, 34 Ia. 71, 11 Am. Rep. 138; Baldwin v. Emery, 89 Me. 496, 36 Atl. 994; Furnas v. Durgin, 119 Mass. 500, 20 Am. Rep. 341; Locke v. Homer, 131 Mass. 93, 41 Am. Rep. 199; Rice v. Sanders, 152 Mass. 108, 24 N. E. 1079, 8 L. R. A. 315, 23 Am. St. Rep. 804; Sparkman v. Gove, 44 N. J. L. 252. See also McAbee v. Cribbs, 194 Pa. 94, 44 Atl. 1066. 19 Sedgwick on Damages, § 790. charge of the debt; 20 and it is to be observed that the defendant after suit has begun against him, may reduce damages in the action to a nominal amount by keeping his promise to pay the plaintiff's creditor. In the analogous case of breach of a covenant by a grantor of land to remove an existing encumbrance, the amount of the encumbrance, though not discharged, fixes the measure of damages. 21 Here also in most jurisdictions of the United States the creditor might sue the promisor, and thereby subject him to double liability for the debt. § 1409. Promises to indemnify. A distinction, sound in principle, though often difficult to draw in fact, must be taken between a contract on the one hand to assume or pay or indemnify against a debt or liability of the promisee and a promise on the other hand to indemnify only against damage caused by such liability. The cases cited in the preceding section relate to promises to assume or pay an indebtedness. Similarly a promise to indemnify against the existence of a liability is broken as soon as the liability is incurred, and the promisee is entitled to recover damages based on the amount of his liability although he has not satisfied it.22 On the other hand, a promisor who has undertaken merely to indemnify against damage is liable only when actual payment has been made by the promisee, or damage suffered by him; and then only to the extent of such payment or damage. 23 *Loosemore v. Radford, 9 M. & W. 657. "Lethbridge v. Mytton, 2 B. & Ad. 772; Wetmore v. Green, 11 Pick. 462; Cady v. Allen, 22 Barb. 388; Manahan v. Smith, 19 Ohio St. 384. Cf. the damages for breach of a general covenant against encumbrance, supra, §1401. "McBeth v. McIntyre, 57 Cal. 49; Stephens v. Pennsylvania Casualty Co., 135 Mich. 189, 97 N. W. 686; Anoka Lumber Co. v. Casualty Co., 63 Minn. 286, 65 N. W. 353, 30 L. R. A. 689; Gilbert v. Wiman, 1 N. Y. 550, § 1410. Contract to pay money. Where the defendant's obligation to pay money is dependent on an obligation of the plaintiff, still at least partially unperformed, to furnish property or services, the measure of damages has been considered in connection with contracts of employment, 24 or of sale. 25 Where the defendant is under a unilateral or independent obligation to pay a liquidated sum of money, the ordinary measure of damages for non-performance is the sum of money itself with interest at the legal rate from the time when it was due.26 In an action by a creditor against his debtor for the non-payment of the debt, no other damages are ever allowed.27 When a large order of goods is bought on credit from a seller known to have but little capital, it may be plainly foreseeable by the buyer when he enters into the transaction that failure to pay the price when it is due may ruin the seller financially, and such a consequence is both proximate and natural. The universality of the rule limiting damages to interest is therefore based on the policy of having a measure of damages of easy and certain application, even though occasionally leading to results at variance with the general principle of compensation. Where, however, there is an obligation to pay an indebtedness not to the promisee himself but on his behalf to a third person, consequential damages are frequently recoverable for breach of the contract. The commonest illustration of such damages occurs where a bank violates its contract with a depositor by failing to pay without legal excuse one of the latter's checks. If the depositor was a trader substantial damages may be allowed without proof of special damage; 28 and 24 Supra, §§ 1358 et seq. 25 Supra, §§ 1378 et seq. 26 Federal Lumber Co. v. Reece (Ky.), 116 S. W. 783; Bethel v. Salem Imp. Co., 93 Va. 354, 25 S. E. 304, 33 L. R. A. 602, 57 Am. St. Rep. 808; Arnott v. Spokane, 6 Wash. 442, 33 Pac. 1063. Loudon v. Taxing District, 104 U. S. 771, 26 L. Ed. 923; Board v. Roach, 174 Fed. 949, 99 C. C. A. 453; Bixby-Theirson Lumber Co. v. Evans, 167 Ala. 431, 52 So. 843, 29 L. R. A. (N. S.) 194, 140 Am. St. Rep. 47; Mutual Ins. Co. v. Chambliss, 131 Ga. 60, 61 S. E. 1034; Blue v. Capital Nat. Bank, 145 Ind. 518, 43 N. E. 655; Morrill v. Weeks, 70 N. H. 178, 180, 46 Atl. 32. 28 Wiley v. Bunker Hill Bank, 183 Mass. 495, 67 N. E. 655; James Co. v. Continental Nat. Bank, 105 Tenn. 1, 58 S. W. 261, 51 L. R. A. 255. See also Davis v. Standard Nat. Bank, 50 N. Y. App. D. 210, 63 N. Y. S. 764. special damages if alleged and proved may be recovered by nontraders.29 And in any case the failure of one bound to make a payment of money to a third person may give a right to such consequential damages as can be brought within the ordinary rules governing such damages.30 Damages for breach of an obligation to pay foreign money are the same as for breach of an obligation to furnish a commodity, and the rules governing the enforcement of contracts for the sale of goods are applicable, except that by statute the rate of exchange, that is the value in the place of the forum of foreign money due abroad, is fixed. 31 § 1411. Contracts to lend money. Breach of a contract to lend money for whatever period at the current rate of interest, or at whatever rate of interest for no definite time, involves no legal damage, 32 unless consequential damages are recoverable. It will frequently happen that the borrower is unable to get money elsewhere and if the defendant had notice of the purpose for which the money was desired he will be liable for damages caused by the plaintiff's inability to carry out his purpose if performance of the promise would have enabled him to do so.33 In any event the defendant "Rolin v. Steward, 14 C. B. 595; Third Nat. Bank v. Ober, 178 Fed. 678, 102 C. C. A. 178; Atlanta Nat. Bank v. Davis, 96 Ga. 334, 23 S. E. 190, 51 Am. St. Rep. 139; Spearing v. Whitney Central Nat. Bank, 129 La. 607, 56 So. 548; Peabody v. Citizens' State Bank, 98 Minn. 302, 108 N. W. 272; Patterson v. Marine Nat. Bank, 130 Pa. 419, 18 Atl. 632, 17 Am. St. Rep. 778; Lorick v. Palmetto, etc., Trust Co., 74 S. C. 185, 54 S. E. 206; Dean v. Melbourne, etc., Co., 16 Vict. L. R. 403. See also Fleming v. Bank, [1900] A. C. 577. "See Page v. Franklin, 214 Mass. 552, 101 N. E. 1084; Banewur v. Levenson, 171 Mass. 1, 50 N. E. 10. "Marburg v. Marburg, 26 Md. 8, 90 Am. Dec. 84; Nickerson v. Soesman, 98 Mass. 364; Sheehan v. Dalrymple, 19 Mich. 239; Fabbri v. Kalbfleisch, 52 N. Y. 28; Benners v. Clemens, 58 Pa. 24. Foreign money is not for every purpose an ordinary chattel. It may possess the quality of negotiability even by a thief. Brown v. Perera, 183 N. Y. App. D. 892, 176 N. Y. S. 215; cf. Reisfeld v. Jacobs, 107 N. Y. Misc. 1, 176 N. Y. S. 223. 32 Kelly v. Fahrney, 97 Fed. 176, 38 C. C. A. 103; Bixby-Theirson Lumber Co. v. Evans, 167 Ala. 431, 435, 52 So. 843, 29 L. R. A. (N. S.) 194; 140 Am. St. Rep. 47; Savings Bank v. Asbury, 117 Cal. 96, 48 Pac. 1081; Turpie v. Lowe, 114 Ind. 37, 15 N. E. 834; Lowe v. Turpie, 147 Ind. 652, 44 N. E. 25, 47 N. E. 150, 37 L. R. A. 233; Bradford, etc., R. v. New York, etc., R., 123 N. Y. 316, 25 N. E. 499, 11 L. R. A. 116. 33 Manchester & Oldham Bank v. Cook, 49 L. T. (N. S.) 674; Banewur |