Opinion
December 10, 1920.
Eugene Cohn [ Henry A. Rubino with him on the brief], for the appellant.
Emil Weitzner [ David Steckler with him on the brief], for the respondent.
The plaintiff complains that as defendant ceased to manufacture beer on or about February 15, 1918, the plaintiff was compelled to buy beer from the Ebling Brewing Company at prices in excess of the fixed price in the agreement, and has recovered a verdict for such excess. In addition to denials, the answer sets up several defenses, of which one is: "Upon information and belief, defendant alleges that the plaintiff, in violation of the provisions of this agreement, did sell, use and give away in the said premises beer, sparkling ales and bottled beer not manufactured by the defendant but manufactured by others." The plaintiff testified that for some months in 1917, and, therefore, during the life of the said agreement, he bought beer from Trommer, an outsider.
I think that the promises for sale and purchase of the beer, tested by the criteria of intention and common sense ( Rosenthal P. Co. v. Nat. Folding B. P. Co., 226 N.Y. 320; Tipton v. Feitner, 20 id. 423), were dependent. It seems reasonable that the defendant in parting with ownership of the premises which had been and were to be used for retail of defendant's manufactures, would seek to control still such use to its benefit. The agreement is in furtherance of such policy. For in exchange, so to speak, of the control incidental to ownership of the premises, the defendant required of the new owner exclusive purchases from it for 10 years at the fixed price. Exclusion secured monopoly, and this was the valuable feature of the covenant. That feature is like unto the contract considered in Fox v. Satterlee (8 N Y Supp. 879). (See, too, Rosenthal's Case, supra, 321.) I think that the exclusive purchase of the defendant's beer during that period was a condition precedent and that a breach thereof by the plaintiff prevents his recovery in this action. ( Cunningham v. Jones, 20 N.Y. 486; Bonesteel v. Mayor, etc., 22 id. 162; Brown v. Weber, 38 id. 187; Cornell v. Cornell, 96 id. 108; Bell v. Harrison, 3 Wkly. Dig. 106; Lake v. McElfatrick, 139 N.Y. 349, 357; Loud v. Pomona L. W. Co., 153 U.S. 564; Roberts v. Brett, 11 H.L. 350; Bank of China, etc., v. American Trading Co., A.C. 1894, 266; Weaver v. Sessions, 6 Taunt. 154; 2 Pars. Cont. 644, 790, 791.) The covenants were not mutual in the sense that there was "no default by the appellant until that instant of time at which there was a like default by the respondent * * * but the fulfilment of his own engagement by each of the parties, is a necessary preliminary to his right to recover on the agreement." ( Roberts v. Brett, supra.) Such was the law of the case so far as charged by the learned court without exception or contrary or contradictory request. The court said with reference to the plaintiff: "Of course he had to live up to his part of the contract, if he seeks to hold them to their part of the contract."
But the learned court instructed the jury that the doctrine of substantial performance was available to the plaintiff. And after pointing out that in that period the said purchases from Trommer amounted to $200 and the purchases from the defendant amounted to $2,200, the court left it to the jury to say whether there had been a substantial performance by the plaintiff. This disposition was met by sufficient objections and exceptions and requests for instruction by the defendant. I think that the learned court fell into reversible error. There was before the jury the plaintiff's own testimony that he had made these outside purchases from Trommer. The plaintiff testifies that he bought the beer from Trommer because there was a call for it from some of his customers. Thus the court said to the jury: "The plaintiff says he carried the Trommer's, or had to carry it, because there was some little demand for that beer; somebody, I suppose, or some people wanted it. But he paid $2,200 to the Interboro Company during this period that he paid $200 to Trommer's." There was no evidence that the plaintiff had done this thing by consent or with countenance or waiver on the part of the defendant. As is said by COMSTOCK, J., for the court in Smith v. Brady ( 17 N.Y. 173, 180): "For aught that appears, the omissions and defects were intentional and willful, and, in the absence of all explanation, the presumption is that they were so."
True, the learned court did instruct the jury that the plaintiff must live up to the contract substantially and "in good faith," but none the less it permitted the jury to find performance of the contract although the plaintiff had broken it, upon consideration of the extent of that breach, although the evidence is plain that the breach was intentional and willful. But the "good faith" required is in an intention to perform the contract literally and exactly, and any shortcoming must not be intentional or deliberate or willful. As LORING, J., for the court in Sipley v. Stickney ( 190 Mass. 47) pertinently says: "Where a contractor commits a willful default and yet claims the contract price, he in effect claims that he has a right to break his contract. But he has no such right."
The doctrine of substantial performance contemplates performance of the contract as it is made, and is in amelioration of literal and exact performance lest one who has fallen short honestly of letter and exactness shall lose all compensation for work or materials. The doctrine has no application if there was an intentional, deliberate and willful departure from the contract. In Desmond-Dunne Co. v. Friedman-Doscher Co. ( 162 N.Y. 490) the court say: "The rule is that a substantial performance must be established in order to entitle the party claiming the benefit to recover, but this does not mean a literal compliance as to all details. Undoubtedly, a willful or intentional departure would defeat recovery. ( Miller v. Benjamin, 142 N.Y. 613; Glacius v. Black, 50 N.Y. 145; Phillip v. Gallant, 62 N.Y. 257, 264; Woodward v. Fuller, 80 N.Y. 315; Heckmann v. Pinkney, 81 N.Y. 211; Dauchey v. Drake, 85 N.Y. 411; Van Clief v. Van Vechten, 130 N.Y. 579; Crouch v. Gutmann, 134 N.Y. 51.)" This court, per HIRSCHBERG, J., in Gompert v. Healy ( 149 App. Div. 199) tersely stated that the deviations must be "minor, unimportant, inadvertent and unintentional." (See, too, Phillip v. Gallant, 62 N.Y. 256; Nolan v. Whitney, 88 id. 649; Van Clief v. Van Vechten, 130 id. 571, 579; Miller v. Benjamin, 142 id. 613, 617; Spence v. Ham, 163 id. 220, 225; Mitchell v. Dunmore Realty Co., 126 App. Div. 829; Sipley v. Stickney, supra; Page Cont. 2145 et seq.; Anson Cont. [Corbin's Am. ed.] §§ 367, 368, 369.) The "good faith" required is not to be measured by the extent of an intentional and willful violation of the contract. The court in Van Clief v. Van Vechten ( supra, 579) say: "While slight and insignificant imperfections or deviations may be overlooked on the principle of de minimis non curat lex, the contract in other respects must be performed according to its terms. When the refusal to proceed is willful the difference between substantial and literal performance is bounded by the line of de minimis. ( Smith v. Brady, 17 N.Y. 173; Cunningham v. Jones, 20 id. 486; Bonesteel v. Mayor, etc., 22 id. 162; Walker v. Millard, 29 id. 375; Glacius v. Black, 50 id. 145; Catlin v. Tobias, 26 id. 217; Husted v. Craig, 36 id. 221; Flaherty v. Miner, 123 id. 382; Hare on Contracts, 569; Leake on Contracts, 821.)"
It may be that the plaintiff can establish waiver, estoppel or some fact of legal excuse for his breach of the condition precedent, but until then I think that he cannot recover on the doctrine of substantial performance. It does not seem necessary now to discuss the question whether the transfer to the Ebling Brewing Company was in itself a breach of the contract by the defendant within the doctrine of Ellis v. Miller ( 164 N.Y. 439) and like cases, or to consider the termination of the contract by the law of the land.
The judgment and order must be reversed and a new trial be granted, with costs to abide the event.
RICH, PUTNAM, BLACKMAR and KELLY, JJ., concur.
Judgment and order reversed and new trial granted, with costs to abide the event.