Boyden v. Hill

85 N.E. 413, 198 Mass. 477, 1908 Mass. LEXIS 970

• Court: Massachusetts Supreme Judicial Court
• Decided: May 20, 1908
• Status: Published

Opinion

Rugg, J.

This is an action to recover damages for breach of a contract in writing for the sale of land. The agreement for conveyance was under seal, and stated that the owner agreed “ to sell to ” the plaintiff a certain tract of land for $3,800 .and continued: “this option is to be good until October 1, 1902. . . . This option is given merely to enable said Boyden to offer said land to the United Shoe Machinery Company or its representatives, and to be void unless said company shall decide to build a plant in Beverly.” The agreement was signed by John B. Hill for himself and as attorney for his sister, Sally B. Hill. Since the bringing of this action, John B. Hill-has deceased, and his administrator has continued the defense. In this opinion Sally B. Hill and the estate of John B. Hill will be referred to as the defendant. Tt turned out.that’the defendant owned only one undivided half of the land, the other half being owned by his wife; arid ‘that at the time the option was given, the defendant had forgotten the conveyances, by which one half of the property was trarisferred. to his' wife, rind the plaintiff knew nothing as to the state of the title, assuming that the land was owned by the defendant as represented by him. In 1902 the plaintiff with others was deeply interested to induce the United Shoe Machinery Company to locate its plant in Beverly and build its shops there. The plaintiff with others obtained options on several tracts of land, which together constituted about three hundred acres, in order to offer the whole to this company. The land of the defendant was so located as to be an essential feature of the scheme, and, unless it was included in the larger lot, it would be impossible to offer to the machinery industry a tract suitable for its uses. The plaintiff thereupon saw Mr. Hill, stating to him his purpose, and that he preferred to get options upon the land, but that if necessary he was willing to buy the land outright, and that it was not a money making scheme and that he did not expect or intend to receive any personal benefit from any option given by the defendant.

The first question raised is whether the instrument signed by the defendant was a bontract of agency with the plaintiff or one in which the parties dealt with each other as principals. It is plainly of the latter class. It is not an authority to the plaintiff to sell as agent for the defendant, but a direct agreement on the part of the defendant to sell the property to the plaintiff for a specified price within a time stipulated. The right created is described by the instrument itself as an option, which is given directly to the plaintiff, and the rights under it are limited to the express purpose of a sale to the United Shoe Machinery Company.

The defendant next contends that he is excused from performance of the contract on the ground of mutual mistake. The only mistake, however, was on the part of the defendant, who was under a misapprehension as to the extent of his title; but this mistake was wholly his own, and not one of which the plaintiff was cognizant, or to which he had in any degree contributed. There was no mistake either as to the identity or existence of the subject matter of the contract. There was no mistake on the part of the plaintiff. He was simply misled by the representation of the defendant as to the character and extent of his title. Under these circumstances the defendant is entitled to no relief, either at law or in equity. Having made a contract explicit in its terms, as to which he has been in no wise deceived or misled by the active or passive representations or conduct of the plaintiff, he must abide by its terms. Hecht v. Batcheller, 147 Mass. 335. Roche v. Smith, 176 Mass. 595. Wilcox v. Lucas, 121 Mass. 21. Comstock v. Son, 154 Mass. 389. The good faith of the defendant in respect of his own misapprehension or forgetfulness is no defense. Atwood v. Walker, 179 Mass. 514. Evidence of the defendant’s mental and bodily condition and his impairment of memory before and at the time of signing the option was properly excluded. It was not offered to show unsoundness of mind or that fraud had been practised upon him, but only as bearing upon the question of the defendant’s mistake and good faith in forgetting the transfer to his wife. Mere mental or physical weakness- not amounting to incompetency to act is not sufficient to avoid a contract in the absence of advantage taken of these infirmities. Farnham v. Brook, 9 Pick. 212, 220. O'Brien v. Boland, 166 Mass. 481.

Another argument urged in defense is that there was no acceptance of the option on the part of the plaintiff at any time before it expired. This contention is not sound. It is doubtful whether the defendant saved his rights as to this question, but assuming in his favor that he did, it is clear that it cannot be sustained. By a letter under date of September 15, 1902, which was two weeks before the expiration of the option, the information was conveyed to the defendant that the Shoe Machinery Company had decided to locate in Beverly, and that the plaintiff desired to exercise his right of purchase, and was ready to take and pay for the property as soon as the deed of conveyance should be prepared. There also was evidence tending to show that a tender was made of the purchase price named in the agreement, and under instructions, not excepted to, the jury found that there was such tender. Proffer of performance is an acceptance of the terms of a contract of sale.

A further contention of the defendant is that, taking into account all the correspondence, the conference between the parties subsequent to a notification to the plaintiff of the defendant’s inability to convey a perfect title to the entire tract, and all the other circumstances, the jury might find that the first option , had been waived, and another agreement substituted for it. A waiver may be manifested either by words or acts, but all the attendant facts taken together must amount to an intentional relinquishment of a known right, in order that a waiver may exist. It is not contended that there was an express waiver, and the circumstances, from which, it is urged, that the jury might have found a relinquishment by the plaintiff of his rights under the option are that he was deeply interested in the location of the works of the United Shoe Machinery Company in Beverly, and was actuated solely by public spirit and not by hope of private reward in all that he did; that the land described in the plaintiff’s option was absolutely essential to the success of the project, for which he was laboring, and that, having expressly disclaimed in his conferences and also in a letter to the defendant any intention of gaining profit, when he learned of the defect in the defendant’s title and his consequent inability to convey a good title, he did not act as if he desired money damages, but only a good title to the land; that he sent to the defendant an option to be signed by his wife, the other owner of the land, with the request that he procure her signature; that, having already made the proffer of the tract of land to the Shoe Machinery Company, he prepared the deed for the defendant to sign of his interest only in the land, and accepted the conveyance from him, paying therefor one half the consideration named in the original option, and that he accepted at the hand of the defendant the option from his wife to sell her interest for $2,600, and took a deed from her, paying that sum for it, and that it was not until two days after the deed from the wife was procured that any suggestion was made, either by speech or letter, to the defendant that he would be held responsible in damages. The defendant, according to the testimony of the plaintiff, knew from the very first that the tract of land in question was absolutely essential to the success of the project, and he might infer that, in comparison with the magnitude of the enterprise, an additional expense of a few hundred dollars was probably insignificant. He was therefore in position, if he chose, to compel, by influencing his wife, an adjustment of whatever claim might exist against himself provided he had any suspicion that such a claim would be made. To take all that one can get by way of part performance of a contract is not necessarily a waiver . (Garfield & Proctor Coal Co. v. Fitchburg Railroad, 166 Mass. ), and, although the burden of proving waiver was upon the defendant in this case, he being the party who asserted it, nevertheless there was sufficient evidence from all the circumstances narrated, giving them the color most favorable to that end as a jury would have a right to do, to sustain a verdict that there was a relinquishment by the plaintiff of his rights under the first option and an acceptance of substitute conveyances for the one to which he was entitled under the first arrangement.

As in a new trial the jury may find that there was no waiver, it is necessary to consider the rule of damages. There are two ways of looking at the question of damages. The first commonly prevails in breach of contract to convey, where the rule is the difference between the price named in the contract and the fair market value at the time when, by the terms of the contract, the conveyance is to be made. Brigham, v. Evans, 113 Mass. 538. Roche v. Smith, 176 Mass. 595. This is ordinarily for the jury to decide under appropriate instructions. In another aspect, the damages may be viewed as limited by the special terms of the contract. Western Railroad v. Babcock, 6 Met. 346. Bell v. Boston, 101 Mass. 506. A situation may arise, by the terms of the contract and relation of the parties, akin to that upon an action for breach of a covenant against incumbrances, where the injured party may recover whatever sum of money he has fairly expended to extinguish the incumbrance. Bailey v. Agawam National Bank, 190 Mass. 20. Richmond v. Ames, 164 Mass. 467. Both these instances are specific applications of the more comprehensive rule that the party injured by a breach of contract is entitled to be compensated for the loss sustained as the natural and probable consequences arising from the failure to perform the contract by the other party. In the present case there was evidence that the defendant at first refused to fix any price upon the property, and finally did so after persuasive arguments by conversation and letter on the part of the plaintiff, that the land was essential to the location of the industrial project in Beverly, and this was described as a great advantage to the municipality of which the defendant had for many years been a public spirited citizen, and that the plaintiff was prompted to his activity solely by considerations of public advantage without expectation of profit to himself. There was inserted in the contract the clause that the option was given merely to enable the plaintiff to offer the land to the United Shoe Machinery Company or its representatives, and was to be void unless the company should build a plant in Beverly. The only use the plaintiff could make of the land under his contract was to sell it to that single possible purchaser. He could make no profit out of the transaction. His contract did not contemplate a free market, nor an unrestricted opportunity for sale. Inasmuch as neither the plaintiff nor the United Shoe Machinery Company could exercise the right of eminent domain, it would not be an unreasonable inference that the parties contracted with reference to the acquirement of the land in question by purchase, as the natural consequence of the failure on the part of the defendant to convey it. If they had thought out and put in phrase the measure of damages for a breach of their contract they would have said that the proximate and probable consequence of such breach of contract might be the purchase of the property from the real owner.

This is an unusual application of the rule of damages, and can rarely arise. But this case presents uncommon features. The contract on its face was made not for the benefit of the plaintiff, but manifestly its advantages were to enure to the United Shoe Machinery Company in the event that it decided to locate in Beverly. The plaintiff alone can maintain an action at law on the contract, for it is under seal. Congress Construction Co. v. Worcester Brewing Co. 182 Mass. 355. See New England Dredging Co. v. Rockport Granite Co. 149 Mass. 381, 383. If the plaintiff entered into a contract with the United Shoe Machinery Company for the sale of the land in reliance upon the option given by the defendant and thereby became liable to the company for the breach arising from the defective title of the defendant, then he is entitled to be made whole for all loss he has suffered or for which he has become liable. Wall v. Platt, 169 Mass. 398, 406. Leavitt v. Fiberloid Company, 196 Mass. 440. If on the other hand he simply gave the benefit of his contract with the defendant to the company, he stood in the relation of trustee to it. There was no express declaration of trust, but the relation of the parties became in a sense fiduciary. Where it is found as a fact that the performance of a contract is intended wholly for the benefit of a third person, under some circumstances this may be equivalent to a declaration of trust. It is of no consequence that the plaintiff personally may have suffered no loss. He made the contract with the defendant upon the express stipulation that it should be operative only in the event that the United Shoe Machinery Company should elect to take advantage of its terms. Hence, when that election is made, if he has not changed his relation by contract, he becomes trustee for the beneficiary and can recover, in his own name, but for the benefit of the cestui que trust, the same amount in damages that the latter could have recovered, if it had been the contracting party. Gould v. Emerson, 99 Mass. 154. Bailey v. New England Ins. Co. 114 Mass. 177. Campbell v. New England Ins. Co. 98 Mass. 381, 400. Nims v. Ford, 159 Mass. 575. Lloyd's v. Harper, 16 Ch. D. 290, 321. In re Flavell, 25 Ch. D. 89. Robertson v. Wait, 8 Exch. 299. Lamb v. Vice, 6 M. & W. 467. The amount of damages is ordinarily a fact to be determined by the jury. In order to reach an intelligent conclusion, they must know enough of the relations between the plaintiff and the United Shoe Machinery Company, to determine whether they were in fact fiduciary or contractual, although the damages might be the same in either event. It follows from what has been said that if the relation is found to be fiduciary, it must appear that this action was brought by the authority and for the benefit of the United Shoe Machinery Company. Ho question of pleading is raised.

Exceptions sustained.