Electric Lighting Co. of Mobile v. Elder Bros.

115 Ala. 138

• Court: Supreme Court of Alabama
• Decided: November 15, 1896
• Status: Published

Opinion

BBICKELL, C. J.

This was an action by appellees against the appellant to recover for the breach of a contract to pay the stipulated price for the boring of an artesian well. The correctness of the rulings of the trial court will depend largely upon the construction of the contract, which was in writing and is set out in haec verba in the first count of the complaint. The first count assigns as the breach the failure of the defendant to comply with the provisions of the fourth paragraph of the agreement. There was no objection made to the complaint. The special count declaring on the contract is followed by five common counts, claiming for work and labor done and materials furnished, &c.

The defense set up by many special pleas, the sustaining of demurrers to which constitutes the principal assignments of error, was that there had never been any satisfactory completion of the said well, or that said well as completed was not satisfactory to defendant, because the latter, being the owner of-and operating -an electric lighting plant, and desiring a supply of water for use in its boilers for the purpose of generating steam, entered into said contract for, the purpose of securing said water, which facts the plaintiffs well knew, and that the water furnished by said well was wholly unfit for use in said boilers. This defense is based upon the theory that, inasmuch as the plaintiffs knew the purpose for which the water was wanted, and, by the terms of the contract, the work was -undertaken at their own risk and expense, and the payment of the compensation was made contingent upon its satisfactory completion, they, therefore, assumed the risk of procuring water suitable for use in defendant’s boilex*s, axid that, failing in this, there was no ‘ ‘ satisfactory completion ’ ’ of the well; axid consequently no such performance by plaintiffs as entitled them to demand the stipulated compensation. On the other hand, it is contended on behalf of the plaintiffs that, having in all respects complied with the provisions of the first three paragraphs of the contract, by boring a well at the designated place, and of the stipulated size and capacity, and procuring thereby deep strata water in the quantity agreed upon, without the use of any strainer to obtain a flow from intermediate strata, using in the work oxily first-class material and workmanship, supplied at their own expense, they are entitled to demand payment.

We cannot yield full assent to either proposition. In the construction of all contracts the object is to ascertain and, if-possible, effectuate the intention of the parties, so that performance may be enforced according to the sense in which they mutually understood it at the time it was made ; and to ascertain the intention it is necessary xiot only to examine the instrument itself, but also to consider the situation of the parties, the subject-matter, and the object it is intended to accomplish ; and every word and clause must be taken into consideration, and if possible, given some effect.—1 Brick. Dig. 386, § 161; Mason v. Alabama Iron Co., 73 Ala. 274. But, except in cases where mutual mistake or fraud is shown, a meaning cannot be forced into a contract in opposition to its text and repugnant to its terms. It is a rule of general application that whex’e parties have entered into written engagements with express stipulations, these cannot be changed by implication. The presumption is, that, having expressed some, they have expressed all the conditions by which they intend to be bound. Blackman v. Dowling, 63 Ala. 306. “Construction is the building up with given elements, not the forcing of extraneous matter into the text.” Conceding that plaintiffs knew the purpose for which the water they had contracted to procure was wanted, and even knew that water of the quality which the well subsequently furnished would not be suitable for that purpose, the text of the contract, construed as a whole, precludes the construction that the parties intended that plaintiffs should assume the risk of procuring water of a suitable quality, and that payment should be contingent on their procuring such water; or that the defendant, after the whole work had been completed in substantial compliance with the requirements of the contract, should be able to avoid liability by basing its dissatisfaction, not on the quantity, but the quality of the water.

It may reasonably be assumed, in construing the contract, that both parties were ignorant of the quality of deep strata water that could be reached by the well. But both knew, or had reason to believe, that water from any intermediate strata would be unsuitable. And it was this ignorance as to the one and knowledge as to the other that probably led to the insertion in the contract of the third paragraph, the only one which makes any reference to the quality of the water, which reads : “The water flowing from said well is to be deep ' strata water, and no strainer will be placed to obtain a flow from intermediate or intervening strata, as water flowing from that source is likely to he of such quality as is not adapted to the use of the party of the second part.” The parties having in this paragraph provided that the water should be from deep strata, without any reference to its quality, and declared that water from any intermediate strata 'would not be suitable, we cannot conclude otherwise than that, either the defendant believed that the deep strata water would be suitable, or, being in ignorance as to its quality, it was the intention of the parties that he, and not the plaintiffs, should assume all risk as to its suitability. We are confirmed in this conclusion by the sixth and last paragraph of the contract, which may be considered, to some extent at least, as a construction of the contract by the parties themselves, and is, therefore, entitled to great weight in ascertaining their intention in this respect. It reads : “It is the spirit of this agreement that the party of the first part undertakes the work herein proposed at its own risk and responsibility, and that failing in the supply of water to the quantity herein stipulated, and on the conditions above mentioned, it is to receive no pay from party of the second part.” "We construe the phrase “on the conditions above mentioned” to refer to the words “supply of water,” and not to anything in the fourth paragraph, as counsel for appellant insists, and the whole paragraph to mean, that if the well fails to supply water on the conditions above mentioned (that is, deep strata water, as provided in the third' paragraph), and the quantity stipulated (that is, 250 gallons at the surface and 700 gallons under the pump, as provided in the first paragraph), then plaintiffs are to receive no pay for their work. The clear expression in this paragraph of the contingencies upon the happening of which plaintiffs are to receive no compensation, precludes the construction that the parties intended that no compensation was to be received if the water supplied by the well should be of a quality unfit for use in defendant’s boilers. To adopt this construction and ingraft upon the contract such a condition, would be to imply a condition which is repugnant to its terms, and was not in the minds of the parties when they executed it. The presumption is that, having expressed some, they have expressed all the conditions by which they . intended - to be bound.

On the other hand, it is not to be supposed that the parties inserted any important word or clause in the contract without intending that some effect should be given to it. It is the object of construction to ascertain for what purpose each clause and word was used, and to effectuate that purpose if it can be done without giving to it an effect repugnant to the other terms of the contract which clearly show the intention of the- parties. The fourth paragraph provides that the defendant “thirty days after the satisfactory completion of the well aforesaid mentioned, and compliance with the conditions promised by the party of the first part, will pay,” &c. The word “satisfactory” qualifies the phrase “and compliance with the conditions promised,” as well as the phrase, “completion of the well.” What effect shall be given to this word and to these phrases thus qualified? If on the one hand we interpret them in such manner as to make the payment contingent on the defendant’s being, satisfied, not only that the well has been completed in substantial compliance with the promises of the plaintiff, but also, that the water supplied by the well is suitable for use in its boilers, we give to -them a construction that is repugnant to the other terms of the contract, which, as we have seen, preclude such construction. If, on the other hand, we interpret them to mean that payment shall be contingent only on plaintiffs’ compliance with the promises made in the first, second and third paragraphs, then we ignore entirely the word “satisfactory, ” give it no effect whatever, since, the promise as to payment being clearly dependent, the law, without any express provision therefor in the contract, would require complete performance by plaintiffs before compelling payment. The defendant reserved the right to postpone payment for “thirty days after the satisfactory completion of the well.” This precaution was evidently taken in order that it might satisfy itself not only that the workmanship and materials were first class, and that no strainer had been used to obtain a flow from intermediate strata, but also that the flow of water was “continuous,” as the first paragraph requires, instead of merely intermittent and temporary. While it might be sufficient for the first hour or the first day, it might cease entirely, or be greatly diminished, the next, and therefore be unsatisfactory. Compliance with the provisions as to deep strata water, the use of strainer, the-size of the well and the workmanship and materials, might be tested at once, but time was required to test the flow of water and produce satisfaction in this respect. The construction, therefore, which is most consistent with the other terms of the contract and most in accord with the sense in which both parties mutually understood it when made, is that payment of the stipulated compensation was to be contingent on the defendant’s being satisfied that the construction of the well at the designated place and of the stipulated size had been completed, that the workmanship and materials used were first class, that the water reached by the well was deep strata water, having a continuous flow at- the surface and under the pump of the quantity specified, no strainer being used to obtain any part of the flow from intermediate strata.

Such being the contract of the parties, what were their respective rights and liabilities growing out of it? There is no reason of public policy • which prevents parties to a contract for the performance of work from agreeing that the decision of one or the other, or of a third person, as to the sufficiency of the performance shall be conclusive. Plaving voluntarily assumed the obligations and risks of a contract, their legal rights and liabilities are to be determined solely according to its provisions. Where the decision is left to a third person, the. authorities almost universally hold that his action, in the absence of fraud, or such gross mistake as would necessarily imply bad faith or a failure to exercise an honest judgment, is conclusive upon the parties.—Martinsburg & P. R. R. Co. v. March, 114 U. S. 549 ; Wangler v. Swift, 90 N. Y. 38; Tetz v. Butterfield, 54 Wis. 246; Stose v. Heissler, 120 Ill. 433 ; Boettler v. Tendick, 5 L. R. A. 270, notes. So, where by the terms of a contract to do a piece of work or perform services, the excellence of which is not a mere matter of taste or fancy, or to. furnish a piece of machinery or other article, the suitableness of which involves a question of mechanical fitness to do certain work or accomplish a certain purpose, the one party warrants the work or article to be satisfactory to the other, the weight of authority is, though the cases are not entirely harmonious, that there can be no recovery when the employer or purchaser is in good faith dissatisfied. And this is true where there is no express warranty that the work or article shall be satisfactory, but a provision making the payment contingent upon its being satisfactory.—Singerly v. Thayer, 108 Pa. St. 291; Howard v. Smedley, 140 Pa. St. 81; McCarren v. McNulty, 73 Mass. 139 ; Daggett v. Johnson, 49 Vt. 345 ; Johnson v. Roberts, 58 Vt. 599 ; Duplex Boiler Co. v. Garden, 101 N. Y. 387 ; s. c. 54 Am. Rep. 709, notes ; Doll v. Noble, 116 N. Y. 230 ; Campbell Printing Press Co. v. Thorp, 36 Fed. Rep. 414; Church v. Shanklin, 17 L. R. A. 207, notes; Gray v. Cent. R. R. Co., 11 Hun. 70 ; Silsby Mfg. Co. v. Chico, 24 Fed. Rep. 893 ; Exhaust Ventilator Co. v. Chicago, M. & St. P. R. Co., 66 Wis. 218. But much depends on the subject-matter and context of the contract. The broad statement quoted in Buford v. Ward, 108 Ala. 311, that “where, by the terms of the agreement an article is to be furnished which shall be satisfactory to the defendant, if he refuses, though from mere caprice, to be satisfied therewith, neither the contract price nor ■ any reasonable remuneration can be recovered,” has no application to the-case under consideration. That doctrine is confined to contracts for the sale of an article or the doing of a piece of work, the excellence of which is a mere matter of taste or fancy, such, for instance, as a portrait, bust, or dramatic play. In a case like the present one, the party cannot capriciously refuse to accept the work. He must be in good faith dissatisfied. He cannot avoid liability by merely alleging that he is dissatisfied ; he is bound to be satisfied when he has no reason to be dissatisfied; he must fairly and honestly test the work, exercising such judgment and capacity as he has. The dissatisfaction must not be capricious, nor mercenary, nor result from a design to be dissatisfied; it must exist as a fact; it must be actual, not feigned ; real, not merely a pretext to escape liability.—Daggett v. Johnson, 49 Vt. 345 ; Silsby Mfg. Co. v. Chico, 24 Fed. Rep. 893 ; Singerly v. Thayer, 108 Pa. St. 291; Campbell Printing Press Co. v. Thorp, 36 Fed. Rep. 414; Exhaust Ventilator Co. v. Chicago, M. & St. P. R. Co., 66 Wis. 218. There-are a few cases which seem to hold that “that which the law will say a contracting- party ought in reason to be satisfied with, the law will say he is satisfied with;” and they submit to judicial triers the question, not whether he is satisfied, but whether-as a reasonable man he ought to be satisfied. But in these cases it will be found that there is some peculiarity in the subject-matter of the contract, as in Duplex Boiler Co. v. Garden, supra, where the contract was to make certain repairs, which, being made, though not entirely satisfactory, were used and enjoyed by the employer; or the case of Pope Iron & Metal Co. v. Best, 14 Mo. App. 503, where also the fruits of the labor of the one party were retained and enjoyed by the other. Under such circumstances we do not doubt there could be a recovery for work and labor done and materials furnished, in a proper action, as we hold in Davis v. Badders, 95 Ala. 361; where the defense was that the plaintiff, seeking to recover under a building contract, had not received the architect ’ s certificate, .

Applied to the case under consideration, these principles lead to the conclusion, that if the defendant was in fact satisfied that plaintiffs had completed the well in substantial compliance with the terms of the contract as it has been above construed, then there has been such performance on their part as will entitle them to demand performance on the part of the defendant. It should be observed that it is not the well with which, by the terms of the contract, defendant is to be satisfied, but the'completion of the well .by plaintiffs in substantial compliance with their promises. The dissatisfaction, which can be set up as a defense to the action, must not be caused, in whole or in part, by the quality of the water, nor by any considerations other than such as are connected with the sufficiency of plaintiff’s performance of their contractual obligations. If defendant had no reason to be dissatisfied with such performance, he was bound to be satisfied. This only means, however, that, the fact of dissatisfaction being for the jury to determine, it may reasonably be inferred that if there was no reason for its being dissatisfied, it was in fact satisfied.

From what has been said it follows that the special pleas, to which demurrers were sustained, do not set up any legal defense to the action. The first series, numbered from one to five, go to the whole complaint, composed of six counts, and are no answer to the first count. All, except the second, set up the defense that the completion of the well was not satisfactory because the water was unsuitable for use in defendant’s boilers. With respect to the second, which avers that there never has been any “satisfactory termination and acceptance of said work” as provided in the contract, and that the well was not satisfactory to defendant and had never been accepted by it, it should be observed that the contract does not make the payment contingent upon the acceptance of the work ; but, on the contrary, both the cash payment is to be made and the notes given “thirty days after satisfactory completion of the well.” The acceptance, according to the terms of the contract, simply fixes the date when the notes are to be made payable, namely, three and six months “from the said thirty days after the satisfactory termination and acceptance of the work.” It should also be observed in considering this plea and others which simply allege dissatisfaction, that a mere allegation of dissatisfaction is insufficient, since the dissatisfaction must not be capricious or arbitrary, but honest and founded in good faith, and confined, with respect to the causes which produce it, to matters connected with the performance by plaintiff of his obligations. The pleas should state the facts which cause the dissatisfaction. The sustaining of the demurrers to the 6th, 7th, 8th, 9th and 10th pleas is not assigned as error. The 12th, 13th, 14th and 15th are subject to the same objections as the 2d. The 16th and 17th base the dissatisfaction on the quality of the water. There was no error committed in sustaining the demurrer to the pleas.

It is unnecessary to consider in detail the rulings of the trial court on the evidence. Some of tile testimony offered was relevant on the issue presented by dhe eleventh plea, which went to the common counts only, but the record shows that the trial of the cause proceeded only on the special count declaring on the contract. Evidence as to the quality of the water and the effect of its use on defendant’s boilers was inadmissible under the special count. The question propounded to the witness, Rubira, as to whether the well had been completed to the satisfaction of defendant, was relevant, if- intended as merely preliminary to further examination for the purpose of eliciting legal evidence as to the good faith and causes of the dissatisfaction. The court may exclude legal evidence, at any stage of the trial,, though objection was not made to its introduction.—Edisto Phosphate Co. v. Stanford, 112 Ala. 493 ; 1 Brick. Big. 887, §§ 1190-97.

The court erred in giving charges numbered-1 and 2 at the request of plaintiffs, since they predicate plaintiffs’ right to recover solely upon the fact of the completion of the well in compliance with their contract, and ignore the provision of the contract which makes the payment contingent upon the ‘ ‘ satisfactory completion of the well”. The charges requested by the defendant were properly refused.

Let the judgment 'be reversed, and the cause remanded.