Jones v. Lanier

73 So. 535, 198 Ala. 363, 1916 Ala. LEXIS 235

• Court: Supreme Court of Alabama
• Decided: June 8, 1916
• Status: Published

Opinions

SAYRE, J.—

(1) This was an action by appellant against appellee to recover damages for the alleged breach of an agreement by which appellee assumed to take and pay for the entire output of appellant’s Baker’s Creek mine for nine months at a stipulated price per ton, subject to appellant’s coal “proving entirely satisfactory” to appellee. The complaint alleged that paintiff expended large sums of money in opening his mine and in the purchase of machinery and mules wherewith to carry out his contract, and did mine and furnish to defendant under the contract a large quantity of coal which was accepted by defendant. There was, however, no averment that defendant had breached the contract by failing or refusing to pay for any coal delivered to him. The breach alleged was that after the parties, had acted under the arrangement for about four months the defendant gave notice that the. contract was canceled and that he would not accept or pay for any more coal. In the first count of the complaint plaintiff laid his damages “in the loss of profits that he would have made' in the sale of the coal that he would have mined and furnished the defendant under said contract.” The report will show the first count as amended. In the other counts plaintiff claimed damages in the loss of profits he would have made, and besides on account of money expended as aforesaid. It thus appears that two questions were raised on the-face of the record, to-wit, whether plaintiff had a cause of action, for unearned profits, and whether, in default of that, he might recover for money expended in preparing to mine coal for defendant. Both items were not recoverable, of course, since a. recovery of profits, estimated as upon the complete execution of the agreement according to the original understanding of the-' parties, would have necessarily included expenditures for preparation, less the values they left in the hands of plaintiff at the time the work on the contract ceased.—Worthington v. Gwin, 119 Ala. 44, 24 South. 739, 43 L. R. A. 382. Defendant’s, contention is that by the agreement he was constituted, the sole judge whether or not plaintiff’s coal was satisfactory, and for. that reason he cannot be held liable on any account. One of his grounds' of demurrer to the complaint also took the point that,the so-calied contract left it with him to determine how much coal he would take.

(2) Such agreements, like all others, are enforceable according to the true intent of the parties. If a party voluntarily assumes the obligation and risks of an agreement by which he undertakes to furnish labor and material for a compensation., the payment of which is made dependent on a contingency so. hazardous or .doubtful as the approval or satisfaction of the other party, his legal rights are to be determined according to its provisions fairly construed, and against the consequences resulting from his bargain the law can afford him no relief.—McCarren v. McNulty, 7 Gray (Mass.) 139. The difficulty of such, cases lies in ascertaining the real intention of the parties. Rules, laid down for such cases are really rules of interpretation, and! these are applied according to the situation of the parties and. the purposes they may appear to have had in view when entering; into the contract. This court seems to have accepted this general proposition, that to justify one party in his rejection of labor performed and material furnished by the other on the ground that they were not satisfactory, as the contract provided they should be, it must appear that the party seeking to avoid payment, according to the stipulation on his part, was in good faith dissatisfied and for some beter reason than that he merely desired to avoid liability.—Electric Light Co. v. Elder, 115 Ala. 138, 21 South. 983; Worthington v. Gwin, supra; Higgins Mfg. Co. v. Pearson, 146 Ala. 528, 40 South. 579. This doctrine is.' generally stated in substantially this form, that, to avoid liability-after performance, the dissatisfaction of the party for and to-whom work is done and material furnished must be genuine and caused by such defects or omissions as would cause a reasonable man to be dissatisfied. — 3 Page on Contracts, § 1390., But it is. commonly held that where the contract involves things intended to satisfy'personal taste or feeling the party to whom they are furnished is the free and exclusive judge whether they are satisfactory ; and substantially the same rule seems to be maintained in cases where, machinery or. special appliances have been furnished and the party to whom they are furnished, after fair test, alleges his dissatisfaction with their mechanical utility or operative fitness for the purposes intended.—Electric Light Co. v. Elder, supra; 3 Page on Contracts, supra; 9 Cyc. 618-620; 6 R. C. C., p. 958, § 334.

(3) Defendant contracted- — -if contract there was — to take the output of plaintiff’s Baker’s Creek mine, and upon this alone it might appear that he bound himself to take the coal from that mine whatever its quality. But he also exacted the stipulation, which occupied the leading place in his contract and upon which his-' obligation was made to depend, that plaintiff’s coal should prove entirely satisfactory. Assuming that the paper writing set out in the complaint discloses the entire meaning» of the agreement into which the parties entered, it may be that plaintiff could not, on this record, avoid the full effect of this stipulation .according to its prima facie import. ■ At any rate, the defendant in his fourth plea averred that the coal was purchased for- resale, which fact was known to plaintiff, and that on account of the' quality.of the coal, he (defendant) was unable to sell any more of it to his customers, and for this reason it was not satisfactory. This averment, if sustained by the jury, introduced a new element into the construction of the agreement in virtue of which at léast, very clearly, we think, defendant had a right to countermand further shipments, in effect, to rescind the contract as for a lack of performance on plaintiff’s part.

(4-6) Plaintiff’s claim in this case is affected by another consideration- — -the uncertainty of the alleged contract. The court will lean to that construction which will make the contract certain ; but it cannot set up a contract for the parties. Pretermit-t-ing the requirement that the coal should be entirely satisfactory, defendant’s proposal amounted to this, that he would take and pay for all coal as it might be mined and tendered by plaintiff. But by neither the express terms nor the legal effect of the alleged agreement was plaintiff bound to mine any coal. Of course the parties expected and intended that plaintiff would operate his mine; but the extent and result of that operation was not fixed by the contract. For aught appearing on the face of the contract, its execution was optional with plaintiff. Had he not operated his mine at all, or had he found it unprofitable and for that or any other reason ceased to operate it at any time during the niné months, defendant could not have' recovered damages for his failure. .This results from the principle that where no breach of a contract could be assigned which could be compensated by any criterion of damages furnished by the contract itself, the contract is void for uncertainty.—Pulliam v. Schimpf, 109 Ala. 179, 19 South. 428; Elmore, Quillian & Co. v. Parrish Bros., 170 Ala. 499, 54 South. 203. At the time of entering into the contract, each of these promises, such as they were, being then execu-tory, constituted the sole consideration for the other. — Eskridge v. Glover, 5 Stew. & P. 264, 26 Am. Dec. 344; Comer v. Bankhead, 70 Ala. 136; Howard v. E. T., V. & G. R. R. Co., 91 Ala. 268; 8 South. 868. Defendant would have had the right, thereto-e, to cancel the agreement at his option at any time before he received a benefit under it or plaintiff suffered legal detriment by performance on his part. — Authorities last above. When, however, the party not bound, nevertheless performs in reliance upon the understanding, his performance raises a new consideration for the promise of the other party. The contract, so to speak of the agreement in this case, had it been certain, would’ have been severable, that is, defendant would have had no right: to claim a discharge of the whole on the ground that plaintiff may have furnished small quantities of unsatisfactory coal. But it was uncertain, and defendant assumed no'legal obligation in respect of any quantity of coal until it was tendered, and then it was subject to rejection if not entirely satisfactory. In other words, defendant had the right at any time to cancel the contract, subject only to liability to the extent plaintiff had already performed it satisfactorily.—Howard v. E. T., V. & G. R. R. Co., supra. It results from these principles and the nature of the contract alleged in the complaint that, as matter of law, the plaintiff was not entitled to recover on account of profits he would have earned on coal he would have mined, and this conclusion it is the duty of the court here to enforce, however the question is presented.—Pulliam v. Schimpy, supra.

The cases upon which plaintiff relies do not sustain his right to recover unearned profits in the circumstances of the case at hand. In Worthington v. Gwin the plaintiff had entered into a definite undertaking to mine and deliver a certain specified body of ore (belonging, we infer, to the defendants, or under their '.control) an agreement capable of enforcement by an action for damages against him in the event he failed to perform. And in that case, we may note in passing, the court construed the stipulation that “the said ore is to be mined and put on board the cars free of foreign substance and in a manner satisfactory to the furnace company receiving the same,” as meaning no more than that plaintiff was to furnish the ore free from foreign substance other than such as was contained in the body of ore with reference to which the contract was made. In the other two (Electric Light Co. v. Elder, and Higgins Mfg. Co. v. Pearson) the plaintiffs had actually furnished labor and material in the execution of their certain contracts, and the sole question at issue was whether the defendants had any sufficient reason for dissatisfaction with what they had got. Here the question raised by the claim for unearned profits is settled against plaintiff by the reasoning of the other cases to which we have referred, and by Christie, Lowe & Heyworth v. Patton, 148 Ala. 324, 42 South. 614, a case, in its- law and facts very closely in point, for in that case, as in this, there had been a partial performance. That case has been quoted with approval in Shannon v. Wisdom, 171 Ala. 409, 55 South. 102, and McGowin Lumber Co. v. Camp Lumber Co., 192 Ala. 35, 68 South. 263. As for McIntyre Lumber Co. v. Jackson Lumber Co., 165 Ala. 268, 51 South. 767, 138 Am. St. Rep. 66, the plaintiff in that case had manufactured a certain number of ties under an optional contract before it had notice that defendant would take no more. The court’s ruling was just this, that for the ties thus manufactured the defendant should be held to pay. The court said: “All contracts or agreements of this nature are indefinite and uncertain in their incipiency, but if they are capable of being made certain, and are made certain by words or deeds of the parties, they are thereafter binding on both parties. There are many contracts of this kind — options, contracts to purchase the output or products of certain plants, etc. — where the quantity of the purchase is in its very nature uncertain until the article is produced; but, after this term is made certain, the contract is as binding as any other.”

In Sheffield Co. v. Hull Co., 101 Ala. 477, 14 South. 672, to which we have been referred, the contract was for the sale and purchase of a specified number of carloads of coke, and it was competent to show what a carload meant. In that case the contract depended upon a contingency — i. e., that plaintiff should be able to induce third parties to build additional ovens. After- , wards, in the express terms of a new agreement and by conduct both parties treated the contract as binding without reference to the contingency, and the court held that thereupon it became the absolute contractual duty of the plaintiff to deliver and of the defendant to receive the quantity of coke specified in the writings. Our conclusion upon consideration of the authorities is that the legal effect of the contract alleged in the complaint was to leave in each party the option at any time to discontinue performance under it, and this, very evidently, is the view defendant took of it when he gave notice that he would take no more coal.

Plaintiff’s damages alleged in the way of unearned profits having thus gone by the board, it follows that he could not recover damages on account of his expenditures by way of preparation. It appears upon the face of the contract that the parties contemplated that plaintiff would make preparation, but he was not bound to do so, as the trial court instructed the jury; and if he did, he looked to his anticipated profits as the only source of reimbursement, and had no right to look elsewhere. His claim of damages on account of expenditures made, had there been a certain contract, would have been- allowable as an alternative compensation for unearned profits only in case and because he was unable to prove what such profits would have been. But the right to recover damages of either sort depended upon proof that defendant had breached his obligation as a condition precedent. We think we have shown that défendant was under no obligation to continue to receive coal of any character under the contract after the notice complained of as a breach. He could not, therefore, be held responsible for the money expended by plaintiff in preparation for the contract. His loss, if any he suffered, must be attributed to the injudicious or indiscreet nature of the contract he made. But of that he judged for himself. Where 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 intended to be found.—Blackman v. Dowling, 63 Ala. 304. A party is not bound to do that which is not within the stipulations of the contract, whatever may have been the expectation and understanding of the other party.—Johnson v. Sellers’ Adm’r, 33 Ala. 265. Plaintiff must be held to have known that defendant might withdraw from this agreement at pleasure. He also knew, since the agreement so provided, that any compensation or reimbursement for expenses he expected to earn was subject to the contingency that the coal produced would be satisfactory to defendant within the meaning of that term as defined, by the courts in such cases. Under his agreement he could not avoid these risks. His expenditures were made subject to these contingencies.

The jury found for defendant under instructions (shown by the record) that were necessarily more favorable to plaintiff than they ought to have been, since the question at issue was submitted to them as a question of fact. This appeal is upon the record proper; we have not before us the evidence, nor any bill of exceptions; but, considering that the evidence was limited by the allegations of the complaint, it must have appeared that plaintiff was not entitled to recover, and thus it now appears that the jury gave substantial effect to the defense insisted upon and upon which as matter of law the defendant was entitled to prevail.

It results that the judgment must be affirmed.

Affirmed.

Anderson, C. J., and Mayfield, Somerville, and Thomas, JJ., concur. Gardner, J., concurs in the conclusion. McClellan J., dissents.