Chapter XXI: The Law of Obligations

§ 165. =The Nature of Obligations.=

Obligation in its popular sense is merely a synonym for duty. Its legal sense, derived from Roman law, differs from this in several respects. In the first place, obligations are merely one class of duties, namely those which are the correlatives of rights _in personam_. An obligation is the _vinculum juris_, or bond of legal necessity, which binds together two or more determinate individuals.[452] It includes, for example, the duty to pay a debt, to perform a contract, or to pay damages for a tort, but not the duty to refrain from interference with the person, property, or reputation of others. Secondly, the term obligation is in law the name not merely of the duty, but also of the correlative right. It denotes the legal relation or _vinculum juris_ in its entirety, including the right of the one party, no less than the liability of the other. Looked at from the point of view of the person entitled, an obligation is a right; looked at from the point of view of the person bound, it is a duty. We may say either that the creditor acquires, owns, or transfers an obligation, or that the debtor has incurred or been released from one. Thirdly and lastly, all obligations pertain to the sphere of _proprietary_ rights. They form part of the estate of him who is entitled to them. Rights which relate to a person’s _status_, such as those created by marriage, are not obligations, even though they are rights _in personam_. An obligation, therefore, may be defined as a proprietary right _in personam_ or a duty which corresponds to such a right.

The person entitled to the benefit of an _obligatio_ was in Roman law termed _creditor_, while he who was bound by it was called _debitor_. We may venture to use the corresponding English terms creditor and debtor in an equally wide sense. We shall speak of every obligation, of whatever nature, as vested in or belonging to a creditor, and availing against a debtor. There is, of course, a narrower sense, in which these terms are applicable only to those obligations which constitute _debts_; that is to say, obligations to pay a definite or liquidated sum of money.

A technical synonym for obligation is _chose in action_ or _thing in action_. A chose in action means, in our modern use of it, a proprietary right _in personam_; for example, a debt, a share in a joint-stock company, money in the public funds, or a claim for damages for a tort. A non-proprietary right _in personam_, such as that which arises from a contract to marry, or from the contract of marriage, is no more a chose in action in English law than it is an _obligatio_ in Roman law.

Choses in action are opposed to choses in possession, though the
latter term has all but fallen out of use. The true nature of the
distinction thus expressed has been the subject of much discussion. At
the present day, if any logical validity at all is to be ascribed to
it, it must be identified with that between real and personal rights,
that is to say, with the Roman distinction between _dominium_ and
_obligatio_. A chose in action is a proprietary right _in personam_.
All other proprietary rights (including such objects of rights as are
identified with the rights themselves) are choses in possession. If we
regard the matter historically, however, it becomes clear that this is
not the original meaning of the distinction. In its origin a chose in
possession was any thing or right which was accompanied by
_possession_; while a chose in action was any thing or right of which
the claimant had no possession, but which he must obtain, if need be,
by way of an _action_ at law. Money in a man’s purse was a thing in
possession; money due to him by a debtor was a thing in action. This
distinction was largely, though not wholly, coincident with that
between real and personal rights, for real rights are commonly
possessed as well as owned, while personal rights are commonly owned
but not possessed. This coincidence, however, was not complete. A
chattel, for example, stolen from its owner was reduced, so far as he
was concerned, to a thing in action; but his right of ownership was
not thereby reduced to a mere _obligatio_.[453]

The extraordinary importance attributed to the fact of possession was
a characteristic feature of our early law. As this importance
diminished, the original significance of the distinction between
things in possession and things in action was lost sight of, and these
terms gradually acquired a new meaning. Originally shares and
annuities would probably have been classed as things in possession,
but they are now things in action. Conversely lands and chattels are
now things in possession, whether the owner retains possession of them
or not. Obligations were always the most important species of things
in action, and they are now the only species. Neither the old law nor
the new gives any countenance to the suggestion made by some that
immaterial property, such as patents, copyrights, and trade-marks,
should be classed as choses in action.[454]

§ 166. =Solidary Obligations.=

The normal type of obligation is that in which there is one creditor and one debtor. It often happens, however, that there are two or more creditors entitled to the same obligation, or two or more debtors under the same liability. The case of two or more creditors gives rise to little difficulty, and requires no special consideration. It is, in most respects, merely a particular instance of co-ownership, the co-owners holding either jointly or in common, according to circumstances. The case of two or more debtors, however, is of some theoretical interest, and calls for special notice.

Examples of it are debts owing by a firm of partners, debts owing by a principal debtor and guaranteed by one or more sureties, and the liability of two or more persons who together commit a tort. In all such cases each debtor is liable for the whole amount due. The creditor is not obliged to divide his claim into as many different parts as there are debtors. He may exact the whole sum from one, and leave that one to recover from his co-debtors, if possible and permissible, a just proportion of the amount so paid. A debt of £100 owing by two partners, A. and B., is not equivalent to one debt of £50 owing by A. and another of the same amount owing by B. It is a single debt of £100 owing by each of them, in such fashion that each of them may be compelled to pay the whole of it, but that when it is once paid by either of them, both are discharged from it.[455]

Obligations of this description may be called solidary, since in the language of Roman law, each of the debtors is bound _in solidum_ instead of _pro parte_; that is to say, for the whole, and not for a proportionate part. A solidary obligation, therefore, may be defined as one in which two or more debtors owe the same thing to the same creditor. In English law they are of three distinct kinds, being either (1) several, (2) joint, or (3) joint and several.

1. Solidary obligations are several, when, although the thing owed is the same in each case, there are as many distinct obligations and causes of action, as there are debtors. Each debtor is bound to the creditor by a distinct and independent _vinculum juris_, the only connexion between them being that in each case the subject-matter of the obligation is the same, so that performance by one of the debtors necessarily discharges all the others also.

2. Solidary obligations are joint, on the other hand, when, though there are two or more debtors, there is only one debt or other cause of action, as well as only one thing owed. The _vinculum juris_ is single, though it binds several debtors to the same creditor. The chief effect of this unity of the obligation is that all the debtors are discharged by anything which discharges any one of them. When the _vinculum juris_ has once been severed as to any of them, it is severed as to all. Where, on the contrary, solidary obligations are several and not joint, performance by one debtor will release the others, but in all other respects the different _vincula juris_ are independent of each other.

3. The third species of solidary obligation consists of those which are both joint and several. As their name implies, they stand half-way between the two extreme types which we have already considered. They are the product of a compromise between two competing principles. For some purposes the law treats them as joint, and for other purposes as several. For some purposes there is in the eye of the law only one single obligation and cause of action, while for other purposes the law consents to recognise as many distinct obligations and causes of action as there are debtors.

On what principle, then, does the law determine the class of which any solidary obligation belongs? Speaking generally, we may say that such obligations are several, when, although they have the same subject-matter, they have different sources; they are several in their nature, if they are distinct in their origin. They are joint, on the other hand, when they have not merely the same subject-matter, but the same source. Joint and several obligations, in the third place, are those joint obligations which the law, for special reasons, chooses to treat in special respects as if they were several. Like those which are purely and simply joint, they have the same source as well as the same subject-matter; but the law does not regard them consistently as comprising a single _vinculum juris_.

The following are examples of solidary obligations which are several
in their nature:

(1) The liability of a principal debtor and that of his surety,
provided that the contract of suretyship is subsequent to, or
otherwise independent of the creation of the debt so guaranteed. But
if the two debts have the same origin, as where the principal debtor
and the surety sign a joint bond, the case is one of joint obligation.

(2) The liability of two or more co-sureties who guarantee the same
debt independently of each other.[456] They may make themselves joint,
or joint and several debtors, on the other hand, by joining in a
single contract of guarantee.

(3) Separate judgments obtained in distinct actions against two or
more persons liable for the same debt. Two persons, for example,
jointly and severally liable on the same contract may be separately
sued, and judgment may be obtained against each of them. In such a
case they are no longer jointly liable at all; each is now severally
liable for the amount of his own judgment; but these two obligations
are solidary, inasmuch as the satisfaction of one will discharge the
other.

(4) The liability of independent wrongdoers whose acts cause the same
damage. This is a somewhat rare case, but is perfectly possible. Two
persons are not joint wrongdoers, simply because they both act
wrongfully and their acts unite to cause a single mischievous result.
They must have committed a joint act; that is to say, they must have
acted together with some common purpose. If not, they may be liable
_in solidum_ and severally for the common harm to which their separate
acts contribute; but they are not liable as joint wrongdoers. In
_Thompson_ v. _The London County Council_[457] the plaintiff’s house
was injured by the subsidence of its foundations, this subsidence
resulting from excavations negligently made by A., taken in
conjunction with the negligence of B., a water company, in leaving a
water-main insufficiently stopped. It was held that A. and B.,
inasmuch as their acts were quite independent of each other, were not
joint wrongdoers, and could not be joined in the same action. It was
said by Lord Justice Collins:[458] “The damage is one, but the causes
of action which have led to that damage are two, committed by two
distinct personalities.” The liability of the parties was solidary,
but not joint.[459] So also successive acts of wrongful conversion may
be committed by two or more persons in respect of the same chattel.
Each is liable in the action of trover to the owner of the chattel for
its full value. But they are liable severally, and not jointly. The
owner may sue each of them in different actions; though payment of the
value by any one of them will discharge the others.[460]

Examples of joint obligations are the debts of partners, and all other
solidary obligations _ex contractu_ which have not been expressly made
joint and several by the agreement of the parties.

Examples of joint and several obligations are the liabilities of those
who jointly commit a tort or breach of trust, and also all contractual
obligations which are expressly made joint and several by the
agreement of the parties.

§ 167. =The Sources of Obligations.=

Classed in respect of their sources or modes of origin, the obligations recognised by English law are divisible into the following four classes:

(1) Contractual—_Obligationes ex contractu_.

(2) Delictal—_Obligationes ex delicto_.

(3) Quasi-contractual—_Obligationes quasi ex contractu_.

(4) Innominate.

§ 168. =Obligations arising from Contracts.=

The first and most important class of obligations consists of those which are created by contract. We have in a former chapter sufficiently considered the nature of a contract,[461] and we there saw that it is that kind of agreement which creates rights _in personam_ between the parties to it. Now of rights _in personam_ obligations are the most numerous and important kind, and of those which are not obligations comparatively few have their source in the agreement of the parties. The law of contract, therefore, is almost wholly comprised within the law of obligations, and for the practical purposes of legal classification it may be placed there with sufficient accuracy. The coincidence, indeed, is not logically complete: a promise of marriage, for example, being a contract which falls within the law of status, and not within that of obligations. Neglecting, however, this small class of _personal_ contracts, the general theory of contract is simply a combination of the general theory of agreement with that of obligation, and does not call for any further examination in this place.[462]

§ 169. =Obligations arising from Torts.=

The second class of obligations consists of those which may be termed delictal, or in the language of Roman law _obligationes ex delicto_. By an obligation of this kind is meant the duty of making pecuniary satisfaction for that species of wrong which is known in English law as a _tort_. Etymologically this term is merely the French equivalent of the English wrong—tort (_tortum_), being that which is twisted, crooked, or wrong; just as right (_rectum_) is that which is straight. As a technical term of English law, however, tort has become specialised in meaning, and now includes merely one particular class of civil wrongs.

A tort may be defined as a civil wrong, for which the remedy is an action for damages, and which is not solely the breach of a contract or the breach of a trust or other merely equitable obligation. This definition contains four essential elements, there being four kinds of wrongs excluded by it from the sphere of tort.

1. A tort is a civil wrong; crimes are wrongs, but are not in themselves torts, though there is nothing to prevent the same act from belonging to both these classes at once.

2. Even a civil wrong is not a tort, unless the appropriate remedy for it is an action for damages. There are several other forms of civil remedy besides this; for example, injunctions, specific restitution of property, and the payment of liquidated sums of money by way of penalty or otherwise. Any civil injury which gives rise exclusively to one of these other forms of remedy stands outside the class of torts. The obstruction of a public highway, for example, is to be classed as a civil injury, inasmuch as it may give rise to civil proceedings instituted by the Attorney-General for an injunction; but although a civil injury, it is not a tort, save in those exceptional instances in which, by reason of special damage suffered by an individual, it gives rise to an action for damages at his suit.

3. No civil wrong is a tort, if it is exclusively the breach of a contract. The law of contracts stands by itself, as a separate department of our legal system, over against the law of torts; and to a large extent liability for breaches of contract and liability for torts are governed by different principles. It may well happen, however, that the same act is both a tort and a breach of contract, and this is so in at least two classes of cases.

(_a_) The first and simplest of these is that in which a man undertakes by contract the performance of a duty which lies on him already, independently of any contract. Thus he who refuses to return a borrowed chattel commits both a breach of contract and also the tort known as conversion: a breach of contract, because he promised expressly or impliedly to return the chattel; but not _merely_ a breach of contract, and therefore also a tort, because he would have been equally liable for detaining another man’s property, even if he had made no such contract at all.

(_b_) The second class of cases is one which involves considerable difficulty, and the law on this point cannot yet be said to have been thoroughly developed. In certain instances the breach of a contract made with one person creates liability towards another person, who is no party to the contract. It is a fundamental principle, indeed, that no person can sue on an _obligatio ex contractu_, except a party to the contract; nevertheless it sometimes happens that one person can sue _ex delicto_ for the breach of a contract which was not made with him, but from the breach of which he has suffered unlawful damage. That is to say, a man may take upon himself, by a contract with A., a duty which does not already or otherwise rest upon him, but which, when it has once been undertaken, he cannot break without doing such damage to B., a third person, as the law deems actionable. Thus, if X. lends his horse to Y., who delivers it to Z., a livery stablekeeper, to be looked after and fed, and the horse is injured or killed by insufficient feeding, presumably Z. is liable for this, not only in contract to Y., but also in tort to X., the owner of the horse. It is true that, apart from his contract with Y., Z. was under no obligation to feed the animal; apart from the contract, this was a mere omission to do an act which he was not bound to do. Yet having taken this duty upon himself, he has thereby put himself in such a situation that he cannot break the duty without inflicting on the owner of the horse damage of a kind which the law deems wrongful. The omission to feed the horse, therefore, although a breach of contract, is not exclusively such, and is therefore a tort, inasmuch as it can be sued on by a person who is no party to the contract. How far damage thus caused to one man by the breach of a duty undertaken by contract with another is actionable as a tort at the suit of the former, is a question to be determined by the detailed rules of the concrete legal system, and need not be here considered.[463]

Before the abolition of forms of action the relation between contract
and tort was complicated and obscured by the existence of a class of
fictitious torts—wrongs which were in reality pure breaches of
contract and nothing more, and which nevertheless were remediable by
delictal forms of action. Forms of action were classed as either
contractual or delictal, but contractual actions were illogically
allowed in cases in which there was no true contract, but only a
quasi-contract; and delictal actions in cases in which there was no
true tort, but a mere breach of contract. There seems to be no longer
any occasion for recognising the existence of such quasi-torts, for
they were merely a product of historical accident, which may and
should be now eliminated from the law. They are a relic of the days
when contractual remedies were so imperfectly developed that they had
to be supplemented by the use of delictal remedies in cases of breach
of contract. The contractual action of _assumpsit_ is, in its origin,
merely a variant of the delictal action of _case_. It is not
surprising, therefore, that until the abolition of all forms of
action, our law failed to draw with accuracy the line between torts
and breaches of contract.[464]

4. The fourth and last class of wrongs which are not torts consists of breaches of trusts or other equitable obligations. The original reason for their exclusion and separate classification is the historical fact, that the law of trusts and equitable obligations originated and developed in the Court of Chancery, and was wholly unknown to those courts of common law in which the law of torts grew up. But even now, although the distinction between law and equity is abolished, it is still necessary to treat breaches of trust as a form of wrong distinct from torts, and to deal with them along with the law of trusts itself, just as breaches of contract are dealt with along with the law of contract. Torts, contracts, and trusts developed separately, the principles of liability in each case are largely different, and they must be retained as distinct departments of the law.

By some writers a tort has been defined as the violation of a right
_in rem_, giving rise to an obligation to pay damages. There is a
tempting simplicity and neatness in this application of the
distinction between rights _in rem_ and _in personam_, but it may be
gravely doubted whether it does in truth conform to the actual
contents of the English law of torts. Most torts undoubtedly are
violations of rights _in rem_, because most rights _in personam_ are
created by contract. But there are rights _in personam_ which are not
contractual, and the violation of which, if it gives rise to an action
for damages, must be classed as a tort. The refusal of an innkeeper to
receive a guest is a tort, yet it is merely the breach of a
non-contractual right _in personam_. So with any actionable refusal or
neglect on the part of a public official to perform his statutory
duties on behalf of the plaintiff.

§ 170. =Obligations arising from Quasi-Contracts.=

Both in Roman and in English law there are certain obligations which are not in truth contractual, but which the law treats as if they were. They are contractual in law, but not in fact, being the subject-matter of a fictitious extension of the sphere of contract to cover obligations which do not in reality fall within it. The Romans called them _obligationes quasi ex contractu_. English lawyers call them quasi-contracts or implied contracts, or often enough contracts simply and without qualification. We are told, for example, that a judgment is a contract, and that a judgment debt is a contractual obligation.[465] “Implied [contracts],” says Blackstone,[466] “are such as reason and justice dictate, and which, therefore, the law presumes that every man undertakes to perform.” “Thus it is that every person is bound, and hath virtually agreed, to pay such particular sums of money as are charged on him by the sentence, or assessed by the interpretation, of the law.”[467] So the same author speaks, much too widely indeed, of the “general implication and intendment of the courts of judicature that every man hath engaged to perform what his duty or justice requires.”[468]

From a quasi-contract, or contract implied in _law_, we must carefully distinguish a contract implied in _fact_. The latter is a true contract, though its existence is only inferred from the conduct of the parties, instead of being expressed. Thus when I enter an omnibus, I impliedly, yet actually agree to pay the usual fare. A contract implied in law, on the contrary, is merely fictitious, for the parties to it have not agreed at all, either expressly or tacitly.

In what cases, then, does the law recognise this fiction of quasi-contract? What classes of obligations are regarded as contractual in law, though they are not so in fact? To this question it is not possible to give any complete answer here. We can, however, single out two classes of cases, which include most, though not all, of the quasi-contractual obligations known to English law.

1. In the first place we may say in general, that in the theory of the common law all _debts_ are deemed to be contractual in origin. A debt is an obligation to pay a liquidated sum of money, as opposed to an obligation to pay an unliquidated amount, and as opposed also to all non-pecuniary obligations. Most debts are _obligationes ex contractu_ in truth and in fact, but there are many which have a different source. A judgment creates a debt which is non-contractual; so also does the receipt of money paid by mistake or obtained by fraud. Nevertheless, in the eye of the common law they all fall within the sphere of contract; for the law conclusively presumes that every person who owes a debt has promised to pay it. “Whatever, therefore,” says Blackstone,[469] “the laws order any one to pay, that becomes instantly a debt which he hath beforehand contracted to discharge.”

Hence it is, that a judgment debtor is in legal theory liable _ex
contractu_ to satisfy the judgment. “The liability of the defendant,”
says Lord Esher,[470] “arises upon the implied contract to pay the
amount of the judgment.” Similarly all pecuniary obligations of
restitution are in theory contractual, as in the case of money paid by
mistake, or obtained by fraud or duress. “If the defendant,” says Lord
Mansfield,[471] “be under an obligation, from the ties of natural
justice, to refund, the law implies a debt, and gives this action
founded on the equity of the plaintiff’s case, as it were upon a
contract (_quasi ex contractu_, as the Roman law expresses it).” So
also with pecuniary obligations of indemnity; when, for example, the
goods of a stranger are distrained and sold by a landlord for rent due
by his tenant, the law implies a promise by the tenant to repay their
value to the owner thus deprived of them.[472] A similar fictitious
promise is the ground on which the law bases obligations of
contribution. If, for example, two persons acting independently of
each other guarantee the same debt, and one of them is subsequently
compelled to pay the whole, he can recover half of the amount from the
other, as due to him under a contract implied in law, although there
is clearly none in fact.

2. The second class of quasi-contracts includes all those cases in which a person injured by a tort is allowed by the law to waive the tort and sue in contract instead. That is to say, there are certain obligations which are in truth delictal, and not contractual, but which may at the option of the plaintiff be treated as contractual, if he so pleases. Thus if one wrongfully takes away my goods and sells them, he is guilty of the tort known as trespass, and his obligation to pay damages for the loss suffered by me is in reality delictal. Nevertheless I may, if I think it to my interest, waive the tort, and sue him on a fictitious contract, demanding from him the payment of the money so received by him as having rightly sold the goods as my agent, and therefore as being indebted to me in respect of the price received by him; and he will not be permitted to plead his own wrongdoing in bar of any such claim.[473] So if a man obtains money from me by fraudulent misrepresentation, I may sue him either in tort for damages for the deceit, or on a fictitious contract for the return of the money.

The reasons which have induced the law to recognise the fiction of
quasi-contractual obligation are various. The chief of them, however,
are the three following:—

(1) The traditional classification of the various forms of personal
actions, as being based either on contract or on tort. This
classification could be rendered exhaustive and sufficient only by
forcing all liquidated pecuniary obligations into the contractual
class, regardless of their true nature and origin. The theory that all
common law actions are either contractual or delictal is received by
the legislature even at the present day,[474] and its necessary
corollary is the doctrine of quasi-contract.

(2) The desire to supply a theoretical basis for new forms of
obligation established by judicial decision. Here as elsewhere, legal
fictions are of use in assisting the development of the law. It is
easier for the courts to say that a man is bound to pay because he
must be taken to have so promised, than to lay down for the first time
the principle that he is bound to pay whether he has promised or not.

(3) The desire of plaintiffs to obtain the benefit of the superior
efficiency of contractual remedies. In more than one respect, it was
better in the old days of formalism to sue on contract than on any
other ground. The contractual remedy of _assumpsit_ was better than
the action of debt, for it did not allow to the defendant the resource
of wager of law. It was better than trespass and other delictal
remedies, for it did not die with the person of the wrongdoer, but was
available against his executors. Therefore plaintiffs were allowed to
allege fictitious contracts, and to sue on them in _assumpsit_,
whereas in truth their appropriate remedy was debt or some action _ex
delicto_.

It seems clear that a rational system of law is free to get rid of the
conception of quasi-contractual obligation altogether. No useful
purpose is served by it at the present day. It still remains, however,
part of the law of England, and requires recognition accordingly.

§ 171. =Innominate Obligations.=

The foregoing classification of obligations as either contractual, delictal, or quasi-contractual, is not exhaustive, for it is based on no logical scheme of division, but proceeds by simple enumeration only. Consequently, it is necessary to recognise a final and residuary class which we may term innominate, as having no comprehensive and distinctive title.[475] Included in this class are the obligations of trustees towards their beneficiaries, a species, indeed, which would be sufficiently important and distinct to be classed separately as co-ordinate with the others which have been named, were it not for the fact that trusts are more appropriately treated in another branch of the law, namely in that of property.

SUMMARY.

Obligations defined.
Choses in action.
Solidary obligations:
Their nature.
Their kinds:
1. Several.
2. Joint.
3. Joint and several.
Contractual obligations.
Delictal obligations:
The nature of a tort:
1. A civil wrong.
2. Actionable by way of damages.
3. Not a mere breach of contract.
4. Not a mere breach of trust or other equitable obligation.
Quasi-contractual obligations:
The nature of quasi-contract.
Instances of quasi-contracts.
Reasons of their recognition.
Innominate obligations.