Opinion
Department Two
Appeal from a judgment of the Superior Court of San Diego County.
COUNSEL
The commencement of an action to foreclose the mortgage given by defendant, and the appointment of a receiver therein, and the possession and control of the road being turned over to such receiver, is not a sufficient legal excuse for the non-performance of the contracts on the part of the defendant, as it is a well-settled rule of law, that if a party by his contract charge himself with an obligation possible to be performed, he must make it good, unless its performance is rendered impossible by the act of God, the law, or the other party. Unforeseen difficulties, however great, will not excuse him. (Ingle v. Jones, 2 Wall. 1; Civ. Code, sec. 1511; Booth v. Spuyten Duyvil Rolling Mill Co ., 60 N.Y. 487; Harriman v. Emerick, 9 Wall. 161; Walker v. Tucker , 70 Ill. 543; 1 Wharton on Contracts, sec. 393; McGehee v. Hill, 4 Port. 170; 29 Am. Dec. 277; Reid v. Edwards, 7 Port. 508; 31 Am. Dec. 720.) The title to property in the hands of a receiver may be litigated in the courts so long as the possession of the receiver is not interfered with. (Hickok v. Elliott , 27 F. Rep. 830; Andrews v. Smith , 5 F. Rep. 833; Calhoun v. Lanaux , 8 S.Ct. 1345.) It is certainly not against conscience for the court to assist the plaintiffs in enforcing the specific performance of said contracts. That a court of equity will enforce the performance of such contracts, see the following authorities: Civ. Code, sec. 1671; 1 Pomeroy's Eq. Jur., secs. 433-440; 2 Story's Eq. Jur., secs. 1318-1320; Muldoon v. Lynch , 66 Cal. 536; Fisk v. Fowler , 10 Cal. 513; Streeter v. Rush , 25 Cal. 68.
Parrish, Mossholder & Lewis, and Luce & McDonald, for Appellants.
Works, Gibson & Titus, and Works & Works, for Respondent.
It is a well-settled rule that an act agreed to be done, and which has subsequently become unlawful, is excused on the ground that no one can be required to do an unlawful act. (2 Parsons on Contracts, 7th ed., 674.) And there can be no difference between such a case and one where the act has been enjoined by a competent court. To do the act against the prohibition of the writ of injunction would be illegal, and a direct and criminal violation of the law.
JUDGES: Temple, C. Belcher, C., and Vanclief, C., concurred. De Haven, J., Sharpstein, J., McFarland, J.
OPINION
TEMPLE, Judge
This appeal is upon the judgment roll, and was taken by plaintiffs.
The findings show that defendant owned and was operating a street-railway in San Diego, and plaintiffs were the owners of certain lands, to which they desired to have the street-railway extended. On September 30, 1887, they therefore agreed with defendant, in consideration that it would build and operate the road in a specified way, that they would procure the right of way between certain named points, and the franchise from the city permitting the use of the streets, and a grant of the right of way over the city lands, and pay defendant $ 6,000 per mile of such extension, and also pay for all material and labor necessary to construct all of the bridges, trestles, and culverts along the line of the road; that plaintiffs performed their part of the contract, procuring and turning over to defendant franchises and rights of way worth $ 10,000, and paid for building all the bridges, trestles, and culverts, $ 22,000, and the further sum of $ 41,695.88, being $ 6,000 per mile for each mile of such extension; that the railway and franchises were worth only $ 25,000, and plaintiffs have been benefited by its construction and operation in the sum of $ 5,000 only; that it was provided in the contracts that after the construction and equipment of the road, if the defendant refused or failed to operate it as provided, and run over it three regular trains each and every day, for a period of ten years, that upon such failure, defendant should forfeit to plaintiffs the entire extension, including the franchises, rights of way, ties, rails, road-bed, bridges, trestles, and culverts, and the same should revert to and become the property of plaintiffs, and that the said defendant should convey all of said roads, including the franchises, rights of way, ties, rails, road-bed, bridges, trestles, and culverts, to plaintiffs, and should execute and give a sufficient deed of conveyance to plaintiffs for all defendant's right, title, and interest therein; that defendant constructed and operated the road according to the terms of the contract, until on or about February 19, 1889, at which time a suit was commenced by a certain bank to foreclose a mortgage upon the property, real and personal, of defendant, in the circuit court of the United States; that the mortgage was executed by defendant to the bank to secure the sum of $ 250,000; that such suit was pending when this action was commenced, and is still pending; that on the nineteenth day of February, 1889, the said circuit court, by its order duly made, appointed a receiver of all the goods, property, estate, and effects of defendant, who duly qualified, and on that day took possession of all the property last mentioned, and has ever since maintained such possession; that all the property in question here was included in the property so taken; that the defendant did not fail to perform its contracts with the plaintiffs in any particular until the receiver took possession, but that the receiver failed and ceased to operate the road on the 25th of February, 1889; that by the order of said circuit court, defendant, its agents and servants, and all persons whomsoever, were restrained and enjoined from in any way interfering with the possession or control of the property, or from selling, transferring, conveying, leasing, or otherwise disposing of or encumbering any of said property; that due demand, before suit, was made for the conveyance, etc., which was refused.
On these facts, were plaintiffs entitled to judgment? The trial court held that they were not, apparently for two reasons, both of which are urged here in support of the judgment: 1. Want of performance is excused because it was prevented by operation of law (Civ. Code, sec. 1511); and 2. The conveyance sought would interfere with the possession of the receiver and of the federal court.
No case has been cited in which it has been held that interference by a writ sued out by a private litigant will excuse performance of a contract, although it may deprive the contractor of the means of performance. It is not prevention by operation of law. It is the act [30 P. 556] of an individual, and not of the government. In a certain sense, the property so taken may be in the custody of the law, and yet the seizure may be wrongful, and the suitor held responsible, as for a trespass, in damages. The law recognizes the fact that these private remedies may be wrongfully, that is illegally, used, and the litigant is required to give security for any damage that may be caused if it should be finally decided that the writ was improperly issued. This cannot be called the operation of law within the meaning of the Civil Code.
The obligor contracts that he can and will control the acts of third parties, so far as necessary to enable him to perform his contract. (People v. Bartlett, 3 Hill, 570.)
Nor would it be a defense that the law has rendered it difficult or very expensive to perform. The rule is, if performance is in itself possible, there is a breach although the obligor himself may have become wholly unable to perform. The suit to foreclose the mortgage against the property of defendant did not render performance impossible; defendant could have paid the claim or given security, and have had the receiver discharged.
" To warrant the application of the principle, the impossibility must consist in the nature of the thing to be done, and not in the inability of the party to do it; or, as it is sometimes termed, be an impossibilitas rei as distinguished from an impossibilitas facti. If the thing could be accomplished by any one with proper means and the requisite skill and knowledge, the promisor was not less answerable because it was impossible to him." (Hare on Contracts, 639.)
" The principle deducible from the authorities is, that if what is agreed to be done is possible or lawful, it must be done. Difficulty or improbability of accomplishing the undertaking will not avail the defendant. It must be shown that the thing cannot by any means be effected. Nothing short of this will excuse non-performance." (The Harriman, 9 Wall. 172.)
But it seems to me the very fact that the thing can be done, although it may be very expensive, to wit, it may require the defendant to liquidate and pay an unjust claim, shows that performance is not prevented by operation of law. It is not the law operating upon the facts which creates the difficulty, but the use of a judicial writ by a private litigant.
Suppose the receiver had been appointed after decree in favor of the mortgagee; it would be obvious the defendant could continue to operate the road by paying its debt.
So far as there is anything in the second point which is not included in the first, it is enough to say that a conveyance such as is sought here could not disturb the possession of the receiver, or embarrass him in the discharge of his duties. (Albany City Bank v. Schermerhorn, 9 Paige, 372; 38 Am. Dec. 551.)
Even should it necessitate bringing in new parties in the foreclosure suit, or place the assignees in a position to intervene, there could be no objection on that ground, much less would it constitute a contempt of the mandate of the circuit court.
I think the judgment should be reversed, and a specific performance decreed on the findings.
For the reasons given in the forgoing opinion, the judgment is reversed, and the superior court directed to enter a judgment upon the findings in favor of plaintiff, in accordance with the prayer of the complaint.