Summary
enforcing contract pursuant to which the plaintiff agreed to sell the defendant all the coal that may be required by the defendant during a specified time period
Summary of this case from Iwtmm v. Forest Hills Rest HomeOpinion
(Filed 5 April, 1904.)
1. ISSUES — Trials — Sales.
In this action to recover for goods sold the issues submitted were sufficient.
2. SALES — Contracts — Damages.
Where a contract is made for the purchases of coal and the purchaser actually receives a part of the same, the seller may recover the amount of the sales over and above the damage resulting from the breach of the contract for failure to deliver the whole.
3. SALES — Vendor and Purchaser — Contracts.
A contract for the sale of coal to the defendant for a specified period does not bind the defendant to submit to a reduction of the amount of coal by prorating with the seller's other patrons.
4. SALES — Damages — Measure of.
In an action for failure to deliver coal the measure of damages is the difference between the contract and market price at the time of the breach, subject to the qualification that the buyer must use reasonable diligence to lessen the damages.
ACTION by the Indian Mountain Jellico Coal Company against the Asheville Ice and Coal Company, heard by Judge W. A. Hoke and a jury, at May Term, 1903, of BUNCOMBE.
Moore Rollins and H. B. Lindsay for the plaintiff.
Merrimon Merrimon for the defendant.
CLARK, C. J., dissenting as to measure of damages.
This action was brought to recover the sum of $361.54, alleged by the plaintiff to be due from the defendant for coal sold and delivered to it in the months of February and March, 1899. The coal was delivered under a contract between the parties, of which the following is a copy:
(575) "JELLICO, TENN., 12 April, 1898.
"This agreement, entered into this day by and between Indian Mountain Jellico Coal Company, of Jellico, Tenn., and Asheville Ice and Coal Company, of Asheville, N.C. witnesseth: Party of the first part hereby agrees to sell party of the second part all the coal that may be required by said second party between this date and 1 May, 1899, at the following price per ton of two thousand pounds, f. o. b. mines. (Description of coal, with prices per ton.) Shipments to be made promptly when ordered, unless prevented by strikes or other causes beyond the control of the party of the first part. It is further agreed that the party of the second part has the exclusive agency for the sale of Indian Mountain coal in Asheville market. Payments due succeeding month's shipment from 1 September, 1898. In consideration of the foregoing, the party of the second part agrees to handle no first-class coal except such as it may purchase from the party of the first part."
The plaintiff, in its complaint, alleged (1) that it had sold and delivered the coal under the contract; (2) that it was reasonably worth $361.54, and (3) that the defendant promised to pay that price for it. The defendant, in its answer, admits the truth of the first two allegations of the complaint, and also admits the third allegation, "except as stated in its further defense and counterclaim," in which it admits that it has not paid the said sum to the plaintiff, but denies that it is due and owing, because, as it avers, by reason of plaintiff's failure to comply with its part of the contract, the defendant has been damaged "in a sum far greater than the said sum of $361.54, to-wit, in the sum of $1,000, and that the defendant does not now, nor did at the commencement of the action, owe the plaintiff any sum whatever because of the damage aforesaid, as the defendant is advised and believes." There was a denial of this counterclaim (576) in the reply. The issues submitted, with the answers thereto, were as follows:
1. Is the defendant indebted to the plaintiff for coal sold and delivered, and, if so, in what sum? Answer: Yes; $361.54 and interest from 31 March, 1899.
2. Did plaintiff and defendant enter into the contract set out and described in defendant's counterclaim? Answer: Yes; 2 September, 1898.
3. Did the plaintiff wrongfully and in a breach of its contract fail or refuse to deliver defendant's coal, as therein required? Answer: Yes.
4. What damage is defendant entitled to recover of plaintiff for such wrong and injury? Answer: $150.
The other facts appear in the opinion. Judgment was rendered for the plaintiff, and defendant excepted and appealed.
The defendant insisted that it was entitled to rely upon its counterclaim in bar of any recovery by the plaintiff, and that the issue should be, "Is the defendant indebted to the plaintiff, and, if so, in what sum?" and also that there should be issues on the counterclaim as to the surplus. We do not think the defendant has pleaded the matters set forth in the counterclaim strictly in defense as a bar to the plaintiff's recovery, and the court so held. The counterclaim would, of course, have operated as a bar if the jury had found that defendant's damages for the breach of the contract by the plaintiff equalled or exceeded the amount of the plaintiff's claim, and in that event it would have been a bar in fact, though (577) not in law — that is, it would not have been a bar within the technical meaning of that word. The court held at the outset, and "at the request of the defendant," as the court recalled, "and certainly without objection by the defendant to the ruling," that the burden of proof was on the defendant. If the defendant's present contention as to the proper issues and as to the state of the pleadings is correct, and the plaintiff was required to show performance of the contract on its part before it could recover, the burden was on the plaintiff, and not on the defendant, as ruled by the court. We understand from the record — and by that we must be governed — the defendant insisted at the trial that upon the answer, as drawn, the issues should be so framed as to require the jury, in response to the fourth issue, to assess the defendant's damages in excess of the amount due the plaintiff for the February and March deliveries. While the form of the answer did not entitle the defendant to such an issue, we think the issues, as framed, enabled the defendant, by a proper prayer for instructions, to present this view to the jury, and it is not required that issues should be submitted in any particular form, provided the parties have the opportunity of presenting their case fully to the jury upon the law and the evidence applicable thereto. Patterson v. Mills, 121 N.C. 258. We have been unable to perceive what legal or practical difference there is between assessing the full amount of damages under the fourth issue, as was done in this case, and confining the assessment to the excess of damages, or the difference between the plaintiff's claim and the full amount of the defendant's damages. The usual and the better practice is that which was adopted by the court, and, under the clear and explicit instructions to the jury, we do not see how they could possibly have been misled as to the true nature of the controversy. The plaintiff, as we will show hereafter was entitled to recover the value of the coal sold (578) and delivered to the defendant, or the price agreed to be paid therefor, which in this case are the same in amount; and the defendant was entitled to have assessed by the jury the full amount of the damages arising out of the breach of the contract by the plaintiff, if any; and the difference between these two amounts, whether in favor of the plaintiff or the defendants, is, of course, the amount of the judgment to be rendered against the party recovering the smaller sum. There is no error in this ruling of the court.
It was contended in the argument before us by the defendant's counsel that, as the jury had found there was a breach of the contract by the plaintiff, its right to recover anything is wholly barred, and we were asked, "Can one who has wrongfully refused to do what he contracted to do recover for a part performance?" Our answer to this question is, that, under the circumstances of this case, he can. In the first place, this is not an entire contract. The shipments made in any one month were to be paid for in the next succeeding month, and the price per ton of coal was fixed. It appears from the testimony that the breach of the contract, or the failure to make deliveries under it, upon orders from the defendant, occurred prior to February. Mr. Collins, who was the president and manager of the defendant company and a witness for it, testified that, between 20 September to February and March, the defendant ordered and the plaintiff failed to deliver about 807 cars of coal. The case shows that it is not meant by this testimony that there was any failure to deliver in February and March, and, even if that had been the case, we do not think it would make any material difference, in the view we take of the law. It would be manifestly unjust, treating the contract as divisible, to permit the defendants to receive and use the coal delivered in February and March and refuse to pay for it, merely because the plaintiff had failed to fill orders for any one or more of the preceding months, and especially so (579) when the defendant, at the time he received the coal in February and March, well knew of the prior breaches. Tipton v. Feitner, 20 N.Y. 423; Ming v. Corbin, 142 N.Y. 334. We will go further and declare the law to be, that if the breach by the plaintiff had occurred in the same month when the coal, for the price of which this action is brought, was delivered, the defendant could not defeat a recovery by the plaintiff, provided he received the coal and had the full benefit of it. Where the agreements go to the whole of the consideration on both sides, the promises are dependent, and one of them is a condition precedent to the other, and full performance is required before there can be any recovery, as in Lawing v. Rintles, 97 N.C. 350; but this rule does not apply if, for instance, work has not been done or materials furnished in strict accordance with the contract, provided one of the parties has received and enjoyed any benefit from the contract, and certainly not unless full performance is made a condition precedent to payment. The law implies a promise by the party to pay for what has been thus received, and allows him to recover any damages he has sustained by reason of the breach, for this is exact justice. The language of the Court in Britton v. Turner, 6 N. H., 492 (26 Am. Dec., 713), seems to fit this case: "If, where a contract is made of such a character, a party actually receives labor or materials, and thereby derives a benefit and advantage over and above the damage which has resulted from the breach of the contract by the other party, the labor actually done and the value received furnish a new consideration, and the law thereupon raises a promise to pay to the extent of the reasonable worth of such excess. This may be considered as making a new case — one not within the original agreement — and the party is entitled to `recover on his new case' for the work done — (580) not as agreed, but yet accepted by the defendant."
In McClay v. Hedge, 18 Iowa 66, the Court, by Dillon, J., referring to Britton v. Turner, says: "That celebrated case has been criticized, doubted and denied to be sound, yet its principles have been gradually winning their way into professional and judicial favor. It is bottomed on justice and is right upon principle, however it may be upon the technical and more illiberal rules as found in the older cases." And the same court, in Wolf v. Gerr, 43 Iowa 339, states it to be the settled doctrine "that a party who has failed to perform in full his contract may recover compensation for the part performed, less the damages occasioned by his failure." This principle is fully sanctioned by the authorities. Chamblee v. Baker, 95 N.C. 98; Simpson v. R. R., 112 N.C. 703; Gorman v. Bellamy, 82 N.C. 496. In the case last cited this Court said: "The inclination of the courts is to relax the stringent rules of the common law, which allows no recovery upon a special unperformed contract itself, nor for the value of the work done, because the special excludes an implied contract to pay. In such a case, if the party has derived any benefit from the labor done, it would be unjust to allow him to retain that without paying anything. The law therefore implies a promise to pay such remuneration as the benefit conferred is really worth." The Court also said, in Brown v. Morris, 83 N.C. at p. 257: "If there had been delivered a smaller number of bricks, and they had been received and used by the defendant without objection, we see no reason why the plaintiff would not be entitled to compensation for such as were delivered; and we are not disposed to carry the doctrine that a partial delivery under an agreement to deliver a definite quantity or number of goods leaves the purchaser the possession and use of such as are (581) delivered, without liability to the seller, beyond the decided cases, and as operating only when the failure to deliver is willful and without legal excuse." Monroe v. Phelps, 8 El. B., 739; Reade v. Rann, 10 B. C., 438; Leonard v. Dyer, 26 Conn. 172; 68 Am. Dec., 382; Horne v. Batchelder, 41 N. H., 86; Bush v. Jones, 2 Tenn. 190; Duncan v. Baker, 21 Kan. 99; Lamb v. Brolaski, 38 Mo. App. 51; Myer v. Wheeler, 65 Iowa 390; Hansen v. C. S. H. Co., 73 Iowa 77; M. L. Co. v. Coal Co., 160 Ill. 85; 31 L.R.A., 529.
The doctrine is well stated and supported by the citation of numerous authorities in 9 Cyc., 686 and 687, note 15.
The defendant excepted to an instruction in regard to the date of the contract, but we cannot see how the date is material, as the parties, according to the very terms of the contract, agreed that shipments should be made from 1 September, 1898, and this is the construction placed upon the contract by defendant in its first prayer for instructions.
The remaining exceptions relate to the judge's charge upon the counterclaim, and especially to the measure of damages. The defendant contended that the plaintiff was bound to supply it with coal, under the contract, unless prevented from doing so by strikes or other causes beyond the plaintiff's control, even though it had other customers at the time who had entered into similar contracts with the plaintiff, and that this is so, because the defendant had shown by the testimony that the plaintiff had represented, when the contract with the defendant was made, that it had no other outstanding contract and would make no other. It is sufficient to say, in regard to this matter, that it was fairly submitted to the jury and found against the defendant, or the latter had at least the full benefit of the point under the charge of the court. But it becomes immaterial, in the view we take of the case, as will appear hereafter. The court charged the jury, substantially, that if the plaintiff failed to ship the coal to the defendant, upon its orders, (582) according to its agreement, and was not prevented from doing so by strikes or other causes beyond its control, and which it could not have avoided by the exercise of ordinary care, it would be liable to the defendant for such damages as the latter sustained by reason of the breach; and that if at the time the plaintiff had other customers similarly situated with the defendant in respect to contracts with the plaintiff of the same character, and the plaintiff by reason of causes beyond its control could not fully supply all, the latter had the right, and it was its duty under the law, to apportion its shipments pro rata among its said customers, provided it did so in good faith and with perfect fairness to each, and provided it had not represented that there were no contracts other than the defendants', and had not agreed that it would make no other contracts. If, in fact, there were no other contracts, then this instruction would not apply, and plaintiff would be liable in damages, unless the jury found, under the charge of the court, that the plaintiff was protected by the clause of dispensation in regard to strikes and other causes beyond the plaintiff's control. The plaintiffs say that this instruction is sustained by the cases in which it has been held that railroad companies should not discriminate against any of its customers in the transportation of freight. It is true it has been held that it is no proper business of a railroad company, as a common carrier, to foster particular enterprises or to build up new industries; but, deriving as it does its franchises from the Legislature, and depending upon the will of the people for its very existence, it is bound to deal fairly with the public and to provide reasonable facilities for transportation of persons and property, and in this respect to put all its patrons upon an absolute equality. R. R. v. Goodridge, 149 U.S. 680; U.S. v. R. R., (583) 109 Fed. Rep., 831. In the latter case it is held that, while the capacity of a shipper of coal may be greater than his allotment of cars, yet when such is also the case with every other operator similarly situated in the coal field, it is the duty of the railroad company, when the supply of coal cars is short, to prorate the supply on hand, without unjust discrimination, among all the operators, including the shipper in question. 4 Elliott on Railroads, sec. 1468, et seq.; Root v. R. R., 114 N.Y. 300; 4 L.R.A., 321; 11 Am. St., 643. But those cases were decided under the provisions of the Interstate Commerce Act and upon the principles of the common law forbidding discrimination, and the doctrine is confined to cases where the party from whom the particular duty is owing is a common carrier or is operating under a public franchise which imposes upon it certain obligations and responsibilities with respect to the public and to those who deal with it in its capacity as a quasi public corporation. We are unable to see that they have any application to the facts of this case, nor did the learned counsel refer us to any authority for the principle upon which the court directed the jury to assess the defendant's damages, nor have we been able to find any. The question, therefore, must be decided according to the ordinary rule in the law of contracts. It is a well-settled principle of law that if a party, by his contract, charges 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. The law regards the sanctity of contracts, and requires parties to do what they have agreed to do. If unexpected impediments lie in the way, and a loss must ensue, it leaves the loss where the contract places it. If the parties have no provision for a dispensation, the rule of law gives none. It does not allow a contract fairly made to be annulled, (584) and it does not permit to be interpolated what the parties have not stipulated. Ingle v. Jones, 2 Wall., 1. The courts will not make an agreement for the parties, but will ascertain what they have agreed by what they have said, and by the meaning of the words used to express their intention. Where the intention clearly appears from the words used, there is no need to go further, for in such a case the words must govern; or, as it is sometimes said, where there is no doubt there is no room for construction. Clark on Contracts, p. 591. We must assume that the parties have fully and clearly expressed their agreement in the instrument which is the evidence of it, and to add to or take from it by construction would, under the circumstances, be the same as if we should arbitrarily give to it a meaning they did not intend it should have. We must therefore ascertain and enforce their intention as they have expressed it. "Where parties have entered into written engagements with express stipulations, it is manifestly not desirable to extend them by implications; the presumption is that, having expressed some, they have expressed all the conditions by which they intend to be bound under that instrument." Broom's Legal Maxims (8 Am. Ed.), star page 652; Bishop on Contracts (Ed. of 1887), secs. 380-381; 2 Parsons on Contracts (9 Ed.), star page 515. In Aspdin v. Austin, 5 Q. B., p. 683 (13 L. J., 155), Lord Denman says: "It is one thing for the court to effect the intention of parties to the extent to which they may have even imperfectly expressed themselves, and another thing to add to an instrument all such covenants as on a full consideration may seem to the court to have been the complete intention of the parties, but which they either purposely or by inattention omitted. It would be but a bad application of the rule of construction of written instruments to add to the obligation by which the parties have bound themselves. This would be quite unauthorized, as well as liable to create particular (585) injustice in the application." By the contract in question the plaintiff was bound to sell and deliver to the defendant all the coal that should be required by the latter between the dates mentioned in the writing. Nothing else appearing, this was an absolute promise on the part of the plaintiff, based upon a sufficient consideration to furnish the coal; and nothing, as we have already seen, would excuse its performance, except the act of God, the law or the act or conduct of the defendant. But there was one, and only one, limitation upon this otherwise absolute undertaking, and that limitation is found in the clause of dispensation, as it may be called, which exempted the plaintiff from liability for nonperformance, if by strikes or other uncontrollable causes it should become unable to comply with its contract. This being the case, what right have we to add a further clause of exemption and provide that the plaintiff should not only be excused from full performance by strikes and other causes beyond its control, but that the defendant should be required to submit to a reduction of the quantity of coal to which it was entitled, under the contract, by prorating with other patrons of the plaintiff company, when there is no such stipulation in the contract, and nothing from which it can be clearly inferred that the parties intended such a settlement under it? If the defendant's rights can be impaired by the fact that the plaintiff has entered into other contracts of the same kind, why could they not as well be affected by any other contractual relation the plaintiff may have assumed? The plaintiff's contract was not, as to its customers, a joint one, but must be treated and dealt with as several; and the rights of each customer are to be determined solely with reference to the contract made with him, and it was the duty of the plaintiff to take care that it did not go beyond its ability to perform, and to provide against any and all contingencies in (586) the contract itself. We cannot release the plaintiff from any part of its liability because it has failed to do so in this case, but must leave the loss where the contract places it. To do otherwise would be to make the contract, and not to construe it.
We are not permitted to interpret a contract according to our notion of what may be fair and just, unless perhaps in a case where the terms of the contract are in themselves ambiguous. In this case they are not so. The contract is plainly one to furnish a stipulated quantity of coal at a fixed price, without any reference to other contracts made or to be made by the plaintiff, and subject only, in the ultimate settlement between the parties under its provisions, to any failure by the plaintiff to perform its undertaking, which it could show to be the result of the causes beyond its control, specified in the contract. It was not the duty of the defendant to protect itself against other contracts made by the plaintiff, but it was the latter's duty to make suitable provision in the contract for his own protection in respect to them. If the rule laid down by the court below is adopted, any reduction in the quantity of coal to be delivered under the contract will be made to depend, not upon causes beyond the control of the plaintiff, but upon causes of his own creation. The reduction will be in proportion to the number of contracts that its interest or cupidity might lead it to make. When the question is properly considered, there is no more reason for applying the pro rata rule in a case where the coal dealer is protected by a clause of exemption against any failure which results from causes beyond his control, than there would be for enforcing it when there is no such clause of exemption in the contract. We must remember that a contract is to be construed according to the intention of the parties, as expressed in it, upon the principle that every one of age and discretion, and qualified (587) to do so, can make any contract he pleases, and we have no right to give the contract a meaning based upon any idea or consideration of abstract justice. When there is no allegation of fraud or undue influence, or of any other circumstance which can form the basis of an equity for setting aside the contract, we must assume that the parties understood what was fair and right when they entered into it, and were fully mindful of its obligations. If the capacity of the plaintiff's mine was so reduced "by causes beyond its control" that it could not furnish the quantity of coal agreed to be furnished, it was entitled to the benefit of the clause of exemption; but if, by reason of our construction — which we think is in accordance with the plain words of its agreement — it suffers any loss or will be made to respond in damages to this defendant or any of its other customers, it will be the result of its own folly in making a contract which, as it turns out, cannot be performed. This does not present an unusual case in the enforcement of contracts. It is a mistake to suppose that by construing the contract according to the ordinary and well-settled rules, the clause of exemption will be rendered nugatory. It may not have the meaning or effect that the plaintiff now thinks it ought to have, but it will have full operation in accordance with the intention as expressed in it, and that intention must be our only guide in ascertaining the rights and liabilities of the parties.
We have discovered no error in the other instructions given by the court to the jury. We do not think that the plaintiff was required, under the circumstances, to buy any coal from other miners in order to fill the contract which was made with reference to its own mine in Jellico — that is, in so far as the plaintiff was prevented from delivering upon orders by causes beyond its control.
The ordinary rule as to damages undoubtedly is that when a vendor fails to comply with his contract the vendee is entitled to recover the difference between the contract (588) and market price at the time of the breach. Spiers v. Halstead, 74 N.C. 620; Holmesley v. Elias, 75 N.C. 564; Oldham v. Kerchner, 79 N.C. 106; 28 Am. Rep., 302; McHose v. Fulmer, 73 Pa., 365; 8 Ad. El., 604; Grand Tower Co. v. Phillips, 23 Wall., 471. But the general rule is subject to the qualification that a party to a contract is required to use reasonable diligence to mitigate the damages caused by the breach, and in contracts of this kind the vendee should provide himself as cheaply as he conveniently can from the most accessible sources, and thus lighten the loss, and his recovery will be curtailed by the sum which thus might have been saved. Oldham v. Kerchner, supra; Ice Co. v. Tamm, 90 Mo. App. 189; Warren v. Stoddart, 105 U.S. 224. It is true that the injured party is to be placed as near as may be in the situation he would have occupied if the wrong or breach had not been committed, and that when a wrong has been done and the law gives a remedy the compensation should be equal to the injury, but this is only another way of stating the same rule of damages, and it is therefore subject to the same qualifications. Wicker v. Hoppock, 6 Wall., 94; Hassard-Short v. Hardison, 114 N.C. 482; 1 Southerland on Damages (3 Ed.), sec. 89. There must of course be evidence to which the rule can be applied.
While it is not necessary to consider the other exceptions we have examined them and think that they are without merit. The error in the charge of the court above indicated entitles the defendant to a new trial, but it will be restricted to the fourth issue.
New trial.