Eastern Railway Co. v. Tuteur

105 N.W. 1067, 127 Wis. 382, 1906 Wisc. LEXIS 145

• Court: Wisconsin Supreme Court
• Decided: March 20, 1906
• Status: Published

Opinion

The following opinion was filed January 9, 1906:

WiNsnow, J.

While the contention was made by the appellants that the freight-handling contract in question was merely simulated, or, if not simulated, that its legal effect was to make Promberger merely an employee of the plaintiff, and not an independent contractor, we regard these contentions as being so manifestly untenable that we are not required to discuss them at length, and will simply content ourselves with stating that they are overruled.

The leading questions in the case are whether the contract created the required mutuality of obligation — i. e. did it require the plaintiff to furnish Promberger any freight to handle — and whether it was sufiicently definite and certain so that damages can be recovered for its breach. An execu-tory contract in which the promises are all on one side is unilateral and not to be enforced. This is familiar law, and if. in the present case, by the true construction of the written agreement, Promberger promised to handle freight, but the plaintiff did not either expressly or by implication agree to furnish him any freight to handle, doubtless the agreement would be unilateral. So far as it remained execu-tory it would be an unaccepted offer. So also, if the amount of freight to be handled was neither fixed with reasonable certainty nor ascertainable, there would be no way of measuring the damages suffered with legal certainty, and no court would be required to attempt the task. These principles are quite elementary and do not require elucidation. The question is whether the contract is subject to either of these objections. The contract certainly does not in express words require tbe plaintiff to furnish Promberger any freight to handle. Does it do so by necessary implication ? In answering this question attention must be paid to the situation and circumstances surrounding the parties when the contract was made. The plaintiff was a railroad corporation operating a railroad between St. Paul and Minneapolis on the one side, and the city of Superior and the Great Lakes on the other. It was, of course, a common carrier transporting large quantities of coal, lumber, flour, and merchandise of all kinds between its termini. It was also a part of the Great Northern Eailway system, which system covers-a great extent of territory and has its western terminus on the Pacific coast and its eastern terminus at Superior. This system does an extensive business transporting through freight from west to east and from east to west, the same being transfeined from cars to lake carriers and from lake carriers to cars at Superior by means of the warehouses and docks of the plaintiff. This transfer business was of great volume, necessitating the employment of from 100 to 350 men, and hence it was essential that the work be systematized and managed with the greatest care and ability, if the railway system was to successfully perform its duties as common carrier. The contract shows that the railroad company, while désiring to retain a'sufficient control of the manner of handling and transferring freight at its terminals to insure both care and rapidity in the handling, also desired to place the business in the hands of an independent contractor who would agree to handle the freight at certain definite prices during the entire navigation season. That such an arrangement made with a responsible person was a desirable arrangement is very obvious. It appears that such a contract had been made with Promberger for the handling of freight during the season of 1898 and that it had been satisfactorily performed, and that for this reason, the plaintiff was willing and desirous of making a like arrangement for the season of 1899.

Thus we see that the purpose of the contract was to secure the proper and speedy execution of an absolutely vital part of a very large and well established business, which, if delayed or inefficiently performed even for a day, necessarily involved great loss and damage. Bearing these conditions in mind, and proceeding to examine the words of the contract, we find that the first promise on the part of Promberger is that he will assume charge of and operate the plaintiff’s docks during the navigation season of 1899, and .will load and unload all cars or vessels and properly stow all freight, goods, or merchandise arriving at or forwarded from said docks or warehouses which the plaintiff may own or have charge of as common carrier in its business of transporting, warehousing, or handling merchandise at said docks or warehouses, under the direction of and as may best subserve the interests of the plaintiff, in consideration of the agreements -and covenants on the part of the plaintiff afterwards contained in the contract. After this general promise follow a number of subsidiary promises by Promberger as to the details of the work and the manner of its performance, a number of which provide that such details shall be performed “as directed by the plaintiff or its agentsalso a provision that Promberger shall give a bond to secure the performance of the contract, and then comes the plaintiff’s promise that in consideration of the faithful performance of Promberger’s aforesaid agreements it will pay him certain fixed rates per ton for freight handled by him which is transferred from cars to vessels or from vessels to cars, and other certain rates per ton for freight simply received and stowed, payments to be made twice a month; and will also furnish Promberger certain necessary conveniences, do necessary switching, furnish a boarding house at a nominal rental and grant to him certain other privileges, and finally that, in case Promberger carries out bis contract satisfactorily, be shall have tbe right to demand a contract for tbe handling of tbe plaintiff’s freight for tbe following year on tbe same terms.

Rejecting the provisions which relate merely to details, and stripping tbe contract down to its essence, it consists of a promise by Promberger to do all tbe freight handling at tbe plaintiff’s warehouses and docks incidental to plaintiff’s business at agreed rates, and a correlative promise by tbe plaintiff to pay those rates for tbe work at certain intervals. It is true that it is not said in so many words that tbe plaintiff agrees that it will furnish all its freight to Promberger to handle; but is not that promise a necessary implication? Suppose a merchant makes a written contract with an ex-pressman by which the expressman agrees to do all the cartage of merchandise and parcels incident to the merchant’s business for a year at certain specified rates, which rates the merchant agrees to pay; could it be claimed for a moment that the merchant could refuse to allow the expressman to carry any freight,- but could treat the contract as a mere offer and employ another to do the work or any part of it without breach of his contract ? Would this be an allowable construction of such a contract ? We cannot think so. Contracts must be reasonably construed. Conditions or agreements cannot be imported into them, but conditions or agreements necessarily implied are already there. If a man agrees with me to take care of my furnace for a year for a certain sum of money per month, and in consideration thereof I agree to pay him such sum per month, it certainly is not necessary, in order to bind myself, that a clause be added to the effect that I agree to allow him to take care of the furnace. Yet such would be the logical result of the appellants’ contention. The appellants rely on such cases as Wells v. M. & St. P. R. Co. 30 Wis. 605; Beers v. North Mil. T. S. Co. 93 Wis. 569, 61 N. W. 936; Teipel v. Meyer, 106 Wis. 41, 81 N. W. 982, and Hoffman v. Maffioli, 104 Wis. 630, 80 N. W. 1032, as sustaining tbeir position in this ease, but examination of those cases shows clearly that they differ essentially from the case at bar, and can hardly be considered as even analogous. In each of them, by the express terms of the contract as construed by the court, only such work was to be done or articles furnished as the other party might desire. In none of them were the amounts fixed by the wants of an established business, but it was left optional with the de-, fendant whether any work should be done or any materials delivered. No such right is reserved either expressly or impliedly by the terms of the contract before us, but, as we have seen, there is a clear implication to the contrary. If anything were needed to demonstrate more clearly the intention of the parties that the contract was to cover all the freight handling incident to the plaintiff’s business it would be furnished by that clause of the contract which gives to Prom-berger the right to demand a renewal of the contract for the next year. That clause guarantees to Promberger in a certain contingency the right to demand another contract for the handling of said second party’s freight for the year following,, to be in substantially the same terms as this contract. The right thus guaranteed to Promberger is not the right to make the same offer or to make a unilateral agreement, but the right to have a contract for the handling of the plaintiff’s freight. This provision seems to us to recognize very plainly that the parties deemed the present contract to be a contract giving Promberger the right to handle the plaintiff’s freight during the season of 1899. This is apparently a written construction by the parties of the contract; but, further than this, the evidence shows that from the time of the execution of the contract up to the middle of August, when the breach occurred, all the freight handling incident to the plaintiff’s business was in fact done by Promberger, and thus the parties by their acts construed the contract in the same way.

Some stress is laid by the appellants upon the fact that the preamble of tbe bond on which the action is brought, in referring to the agreement, recites that Promberger had thereby contracted to handle the freight which the plaintiff “requests him to handle,” and it is argued that this recital plainly shows that the plaintiff was not bound to give Promberger any freight to handle. While this language is nowhere found in the agreement itself, its presence in the bond doubtless tends in some degree to support appellants’ theory. It appears, however, that there were some lake carriers who brought merchandise to the plaintiff’s dock who* had the right to handle their own freight, if they so chose. Hence it would be necessary for the plaintiff at times to designate to Prom-berger the freight which he was to handle and the freight which was to be handled by the carriers themselves, and we think that this is the contingency to which the language refers.

Having reached the conclusion that the contract is mutual in its obligations and not unilateral, we shall next consider the question whether it is reasonably definite and certain as to the work to be done. We think this question is very definitely answered in the affirmative by the principles laid down in the case of McCall Co. v. Icks, 107 Wis. 232, 83 N. W. 300, and Excelsior W. Co. v. Messinger, 116 Wis. 549, 93 N. W. 459. In the latter of these cases this principle is laid down in the opinion by Mr. Justice Douge :

“In later times courts have fully recognized that when the discretion, wants, or needs of a party are referred to an existing situation, such as an established business or a known enterprise, and intended to be controlled thereby, there becomes added a measure of certainty sufficient to give the contract mutuality.” See, also, W. G. Taylor Co. v. Bannerman, 120 Wis. 189, 97 N. W. 918.

While the volume of the business necessarily will vary from time to time, still, if the wants of an established business are to regulate the amount of the work to be done or the goods to be furnished, it is deemed that the measure so fixed is sufficiently definite to satisfy the rule of definiteness and certainty in the terms of a contract. Such was the case here. While the volume of business might vary considerably as compared with previous years, and while some lake carriers had the option whether they would unload their merchandise themselves or require the plaintiff to unload it, still these contingencies were simply a part of the uncertainties surrounding an established business which might vary its gross amount, but which are not held to make such a contract indefinite. If they should be held to make it indefinite, then every executory contract to be measured by the wants of an existing business would be fatally indefinite, because no general business can be entirely free from such uncertainties, however well established it may be. This general question was so fully discussed in the Messinger Gase that further discussion of it now seems unnecessary.

Appellants further contend that there was a mutual settlement between the plaintiff and Promberger on August 16th, and a partial surrender of the contract, instead of an abandonment thereof by Promberger, as claimed by the plaintiff. This was a question of fact depending on the evidence, and the referee found against the appellants’ contention. It is undisputed that the whole trouble which culminated on August 16th resulted from a demand on the part of Promberger’s employees for an increase of pay of .twenty-five per cent. This demand was made and refused on August 13th, when a number of men quit, and others quit on the 14th, and by the 16th the work on the dock had ^come to a complete standstill, and the yards and docks became congested with un-handled freight, notwithstanding frequent demands made by the plaintiff on Promberger that he proceed with his contract. In this situation, on the afternoon of the 16th a .conference was held between some of the plaintiff’s officers and Promberger, at which Mr. Huger, one of the appellant sureties, was present. There is a dispute as to what took place at this conference, most of the witnesses testifying that Prom-berger stated that he was unable to fulfil his contract and abandoned the same. Mr. Buger claims, however, and other facts are relied on as supporting his version, that there was a settlement then made between Promberger and the plaintiff, and that Promberger was released from his obligations at least so far as warehouse freight was concerned. As before stated, the referee found against this contention, and as he did so upon ample evidence we are unable to disturb his finding. In this connection the appellants’ claims that the contract with Promberger was modified, and that premature payments were made to the prejudice of the sureties, may also be considered. The claim of modification is based on the fact that Promberger in May, 1899, with the knowledge and consent of the plaintiff, made a contract with the Davidson Steamship Company for the unloading of a lot of steel rails upon a dock called the P. & R. dock, that the unloading of these rails was included under the terms of Promberger’s contract with the plaintiff, and that thus the plaintiff and Promberger practically modified the contract. The evidence bearing on this subject was somewhat voluminous and conflicting, and a rehearsal of it would be of no practical value. The referee found that the work was outside of the contract, or at least such work as Promberger could not require the plaintiff to furnish him, and as this finding has sufficient sup port in the evidence we cannot disturb it.

The contract provided for semi-monthly payments to Prom-berger, the moneys earned from the 1st to the 15th of the month to be paid on or about the 20th day of the month, and those earned during the remainder of the month to be paid on or about the 5th of the following month. It appears that on the 15th of August Promberger had earned during the preceding half of the month $5,519.42, and that plaintiff on that day paid him that stun, and on the 16th the further sum of $401.90 earned oil tbe 15th, and that these payments were made after the plaintiff knew that the contract had been violated and that it was doubtful whether Promberger could complete the contract. Appellants claim that the making of these payments on the 15th instead of the 20th (as was customary) was, under the circumstances, such a deviation from or violation of the contract that the sureties on the bond were thereby discharged, under the doctrine of such cases as Stephens v. Elver, 101 Wis. 392, 397, 77 N. W. 737, and Cowdery v. Hahn, 105 Wis. 455, 458, 81 N. W. 882. The contention must fail. It is very evident that the provision giving the plaintiff five days’ time in which to make the payments was not a provision for the benefit of the sureties, but simply for the convenience of the plaintiff in order to give ample time for auditing. The money had been earned, and the making of the payments in advance of the day when they could have been legally demanded or sued for cannot be considered as a prejudicial variation of the contract, but merely the waiving of a privilege which had been inserted for the convenience of the plaintiff. Madison v. Am. S. E. Co. 118 Wis. 480, 95 N. W. 1097.

Several minor contentions may be briefly disposed of. After the abandonment of the contract one Williams, an employee of the plaintiff, purchased a considerable number of claims for wages of the men who had worked for Promberger, to the amount of several thousand dollars, and took assignments thereof, and garnished moneys on deposit to Prom-berger’s credit in a bank and earned by him from certain steamship companies. The appellants claim that the plaintiff participated in this attempt or colluded with Williams therein. This claim was negatived by the referee on sufficient evidence and cannot be disturbed. The same answer must be made to the claim that plaintiff knew that Promberger had been guilty of embezzlement before the bond was given, as well as to the claim that the plaintiff paid the sums of $957.20 and $166.40 to Promberger at some time after the breach of the contract. Much complaint is made by the appellants in their briefs as to the manner of the trial before the referee, and it is claimed that the referee erred in not making sufficiently effective and sweeping orders requiring the plaintiff to produce its books and vouchers for inspection by the appellants, and in other respects did not give the appellants sufficient latitude in the matter of the examination ■of the books of the plaintiff and its officers. The trial was very long, and was at several times interrupted for purposes of inspection of books and papers, large quantities of which were produced for inspection. Many of these were at the offices of the plaintiff in St. Paul. Examination of the record indicates to us very clearly that the referee gave the appellants every reasonable facility in the matter of examination of books and papers as well as officers, and we deem it unnecessary to make a detailed statement of the applications and rulings.

It is claimed that because the contract provided that Prom-berger’s bond should be conditioned to protect the plaintiff from loss by detention of freight by reason of strikes, and no such condition was inserted in the bond, nor any separate bond with that provision was given, therefore the plaintiff waived the giving of any bond or indemnity against loss by strikes, and that the loss here sued for and recovered is not covered by the bond sued on. It seems sufficient to say as to this claim that the judgment here does not include a dollar of damage for loss by detention of freight either by reason of strikes or from any other cause. The damages recovered are simply the increased expense of handling the freight above what it would have cost had Promberger carried out his contract. This being the case, the contention becomes immaterial.

. It appears that Mr. J. A. Murphy was local attorney for the plaintiff at the time of the employment of Promberger as well as at the time of tbe abandonment of the contract, and also has acted as such attorney during this litigation. Prior to the order of reference an attempt was made by appellants to examine him as an adverse witness under the provisions of sec. 4096, Stats. 1898, as amended by ch. 244, Laws of 1901, and, it appearing by preliminary questions and answers that his relations to the plaintiff in this matter were simply those of a local attorney, he declined to answer questions put to, him, and the proceedings were dismissed by the commissioner, and a subsequent motion to strike out the complaint on account of Murphy’s refusal to testify was denied by the court. After the order of reference was made, the motion to strike out was renewed before the referee and denied by him on the ground that the. action was referred to him to hear, try, and determine the issues raised by the pleadings, and that he could not review the order of the court in this regard. This seems an all-sufficient reason for the ruling of the referee, but the question of the correctness of the court’s ruling remains. Sec. 4097, Stats. 1898, provides that, if the witness refuse to testify, “he may be punished as for 'a contempt and his pleading be stricken out and judgment given against him as upon default or failure of proof.” Sec. 4096, supra, also provides that the officer before whom the examination is held may compel the witness to answer by contempt proceedings. We are not informed why the court refused to strike out the complaint. It is suggested that the court did not consider one who acted simply as attorney to be included within the terms “agent or employee” as used’ in the statute. However, whatever may have been the reason, it is clearly discretionary with the court, under the statute, whether it will resort to the extreme remedy of striking out the pleadings and ordering judgment, and we are not able to say that there was an abuse of such discretion here.

The question of damages remains to be considered. The referee assessed as damages against the sureties simply the increased cost of doing the work during the balance of the season over and above what it would have cost under the Promberger contract, deducting the amount of the payments made to Promberger on August 15th and 16th, and the amount paid for Sunday labor. This was clearly the right rule if the plaintiff exercised due care in carrying on the work and paid out only the reasonable and necessary cost thereof, which facts were found by the referee to be true. The method used in ascertaining the amount which it would have cost under the Promberger contract was to figure up from the plaintiff’s books of original entry the number of pounds of the various kinds of freight handled at the warehouses and docks during the rest of the season, and to multiply such aggregate amounts by the prices for handling fixed by the contract. Complaint is made that the books used do not furnish accurate or reliable data for ascertaining the total amount of freight so handled, but we find upon examination of the evidence that his objection is untenable and that the results obtained were fairly and reasonably accurate. The case was evidently tried with great care by the referee. His findings of fact are supported by the evidence, and his conclusions of law are justified by his findings of fact and fully support the judgment entered. Many alleged errors have not been specifically treated, but they have been considered and have not been deemed well taken nor necessary to be discussed in detail.

By the Court. — Judgment affirmed.

A motion for a rehearing was denied March 20, 1906.