Ewell v. Landing

Court of Appeals of Maryland · Contracts

Contractsconditional paymentabsolute liabilityreasonable timetime of paymentloancheckexecutor

Facts

Landing claimed he loaned Payne $550 on June 2, 1949. A witness testified that he saw Landing hand Payne $550 in cash in Landing's store, after which Payne signed and delivered Landing a $550 check marked "For a loan." The witness also testified that Payne said Landing could cash the check as soon as Payne sold his timber. Payne died in December 1949, the check was never cashed, the executor received notice of the claim, and Landing later sued the estate.

Issue

When a borrower gives a check for a loan and says the lender may cash it when the borrower sells his timber, is repayment contingent on proof that the timber was in fact sold, or is the borrower absolutely liable with payment due within a reasonable time even if that event does not occur as contemplated?

Rule

If the existence of a debt is truly contingent on a future event, the debt is not enforceable until the event occurs. But where the promise creates absolute liability and the parties refer to a future event merely as a convenient time for payment, the law implies a promise to pay within a reasonable time if the event does not occur as contemplated.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Tulsa, Nora Bell advanced Devin Cross $8,000 in cash to help him cover payroll at his repair shop. Devin signed a receipt stating, "Received $8,000 as a loan, to be repaid when my pickup truck sells," but the truck was later damaged in a storm and never sold.

If Nora sues to recover the $8,000, which argument best supports recovery?

Explanation. The majority rule distinguishes between a debt whose existence is contingent on a future event and an already-existing debt for which a future event merely marks the time of payment. Here, the money was advanced as a loan and the writing identifies it as such, showing absolute liability. Under that rule, failure of the contemplated sale does not extinguish repayment; payment is due within a reasonable time. (Derived from Ewell v. Landing (n.d.).)