Maryland Fertilizing & Manufacturing Co. v. Lorentz

44 Md. 218, 1876 Md. LEXIS 33

• Court: Court of Appeals of Maryland
• Decided: March 3, 1876
• Status: Published

Opinion

Bowie, J.,

delivered the opinion of the Court.

The appellees, Lorentz and others, sued the appellant, The Maryland Fertilizing Company, on the 4th of April, .1874, to recover damages for the breach of a contract, entered into between the parties, by letters-dated respectively the 27th and 28th May, 1873.

On the date first mentioned, the appellees addressed a letter to L. Sangston, Esq., President of the appellant’s Company, offering to furnish 12,000 carboys of vitriol, * * * equal to 1,620,000 lbs., calculating the.carboys at the average rate of 135 lbs., at the price of $1.40 per 100 lbs., against their four months note without interest, delivered free of charge in tanks at the appellant’s factory. The deliveries to be as follows: September 1873, October 1873, November 1873, December 1873, January 1874, February 1874. — Each month 2000 carboys in daily deliveries as wmnted, but not, more than 80 — 90 carboys per day.

This offer was accepted by a letter of the President of the appellant, on the 28th of May, reciting the contract, and concluding “ I accept and ratify this contract, as above stated, and as stated in your letter.”

The narr. contains two counts ; the first, setting out the contract substantially, alleging a partial performance of the stipulations on the part of the plaintiffs and settlement for the months of September, October, November, and further averring that the appellees were ready and willing, and offered to deliver the 2000 carboys of vitriol, in daily deliveries as wanted, the balance of 2000 carboys in each of the said months of October and November, and the 2000 carboys per month, in the said months of December and January, but the defendant refused to accept or pay for the same. The second count, setting out the contract according to its legal effect, alleged generally, that the plaintiffs were ready and willing, and offered the defendant to deliver the said oil of vitriol, in pursuance of said contract, but the defendant refused to accept or pay for the same.

To which the appellant pleaded three pleas.

1st. That it was not indebted as alleged.

2nd. That it had not promised as alleged.

3rd. That it had not broken the contract as alleged. On these pleas issues were joined.

By agreement of counsel, all errors in pleading on either side, were waived, and it was further agreed, that either party might offer evidence, and rely on any fact, to which either would be entitled,- if specifically declared on, or .pleaded. The parties having severally offered evidence to maintain the issues joined on their respective parts, the appellees offered three prayers and the appellant four, to the second and third of which, special exceptions were taken by the appellees, and the Court having granted the prayers of the appellees, and rejected those of the appellant, the latter appealed. The first prayer of the appellant presents the question, whether the contract declared on is entire or severable, and affirms it to be indivisible.

It declares that if the jury believe that the plaintiffs, after demand had been made on them by the defendant, failed and refused to deliver during the month of September, 1873, to the defendant, 2000 carboys of vitriol, according to the terms and at the times specified in the letter of the plaintiffs, to the President of the defendant’s company, etc., the plaintiffs cannot recover in this action, unless the jury find that the failure of the plaintiffs to deliver the 2000 carboys, was occasioned by the act of the defendant.

This proposition of the appellant, is controverted, although not directly negatived by the appellees’ first prayer, which avers that if the defendant received from the plaintiffs, as it wanted, under the contract, certain carboys of oil, in October and November, 1873, (less than the amount agreed to be delivered) and settled therefor, and the defendant stopped the plaintiffs from delivering any more in said two last months, and did not order any more, or indicate to the plaintiffs that it wanted any more in either of said months, or in December, January or February following, but sent to the defendant the letter of Dec. 4th, 1873, (declining to receive any more) and shall further believe the plaintiffs were ready, willing, and offered to deliver to the defendant 2000 carboys per month as wanted, etc., but the defendant refused to receive and pay for the same, then the defendant is liable in this action for 9080 additional carboys during the said last mentioned months. The theory of this prayer is, that notwithstanding the plaintiffs’ failure to deliver to the defendant the requisite number of carboys of oil, in September, the subsequent conduct of the defendant, in receiving and settling for small quantities under the contract, in the months of October and November, was a waiver “pro tanto” of the default of the plaintiffs ; and the letter of the President of the defendant to the plaintiffs, of Dec. 4th, 1873, declining to receive any acid on the contract, was such a violation of its terms on the part of the defendant, as to future deliveries, as made them responsible for all the vitriol remaining to be delivered.

The appellant’s first prayer is limited entirely to the effect of the non-delivery by the appellees of the stipulated amount of vitriol in the month of September, 1873, without regard to other subsequent dealings between them.

This involves the proposition, says the appellant, that if there has been an entire executory contract, and the plaintiff has performed a part of it, and then -wilfully refuses, without legal excuse and against the defendant’s consent, to perforin the rest, he can recover nothing, either in general or special assumpsit; a doctrine well established in cases of dependent covenants, where the performance of the one is a condition precedent to the other. The appellees deny the application of the authorities cited by the appellant, to maintain this position, to the case at bar. They insist, their inability and failure to perform all the covenants on their part, in September, etc., does not debar them of the right to recover damages for the refusal of the appellant to accept and pay for the subsequent deliveries in the latter months ; that the covenants were independent and divisible; the stipulation which was not performed by the appellees, was only part of the consideration of the contract, for the breach of which- they could be compensated in damages.

A great array of authorities has been cited by the counsel, in support of their respective propositions. These decisions are not, in fact, conflicting in principle; they represent different classes of contracts, which, although, in their general features alike, are dissimilar in detail, and have keen sub-divided by the text hooks, into dependent and independent contracts or covenants. Cutter vs. Powell, 2 Smith’s Leading Cases, 22, is a type of the class of dependent covenants. Pordage vs. Cole, 1 Saunds., 319, is an example of the independent. In the notes on the former, the annotators say, “Eew questions are of so frequent occurrence, or of so much practical importance, and at the same time so difficult to solve, as those in which the dispute is, whether an action can he brought by one who has entered into a special contract, part of which remains unperformed. We find it laid down in the treatises that, in certain cases, the performance of, or readiness to perform, one side of the contract, is a condition precedent to the right to demand performance of the other side. And rules are given in the text-hooks for the purpose of enabling us to distinguish these cases from another class, in which no such condition exists, hut the contractors are hound by mutual independent covenants or promises.” * * * * “ There is no difficulty in finding cases referrible to each of the above classes, hut the real difficulty is to determine when a case occurs 'in practice, to which of them it is referrible.” In Cutter vs. Powell, the action was on a written promise to pay a sailor thirty guineas, “provided he proceeded, continued, and did his duty as second mate in the ship from Jamaica to Liverpool.” He died before the voyage was completed. All the Judges, Kenton, Ashhurst, Grose and Lawrence, held it to he an entire contract ; Lord Kenton dwelt upon the amount of compensation being so much larger than the usual compensation by the month, that it- might he regarded as a kind of insurance.

The plaintiff stipulated to receive the larger sum if the whole duty were performed, and nothing unless the whole of that duty were performed. The case turned on the particular verbiage of the contract, and the surrounding circumstances.

Pordage vs. Cole, 1 Saunders, 319, is the converse of Cutter vs. Powell. The cause of action was an agreement under seal to pay a certain sum of money for certain lands. Which was held to constitute independent covenants between the parties, “because it shall be intended that both parties have sealed the specialty. And if the plaintiff has not conveyed the land to the defendant, he has also an action of covenant against the plaintiff, upon the agreement contained in the deed, which amounts to a covenant on the part of the plaintiff, to convey the land; and so each party has a mutual remedy against the other.”

In the comments on this and analogous cases by the learned editor, it is said, “it appears that the judges in these cases seem to have founded their construction of the independency or dependency of covenants or agreements, on artificial and subtle distinctions without regarding the meaning or intent of the parties.” Note 4, 320 b. Pordage vs. Cole, 1 Wms. Saunders. After collating and commenting on a number of cases, in which performance is a condition precedent, or concurrent acts are to be done at the same time, and readiness to perform, is a condition precedent to the right of action ; and cases of independent covenants and promises ; the conclusion is reached, “ that the question whether the acts stipulated for in a given contract, are conditions precedent or concurrent, or whether the performance, or readiness to perform, upon either side, be a condition precedent, etc., is to be solved, not by any technical rules, but by the intention of the parties.”

In the case of Watchman & Bratt vs. Crook, 5 Gill & John., 254, et seq., this Court declared “that whatever may have been the principles contained in the more ancient decisions, upon the legal effect and operation of contraéis of a similar description, the strong leaning of the Courts in more modern times has been to disencumber themselves from the fetters of technical rules, and to give such a rational interpretation to the contract, as will carry tlie intention of the parties into full and complete operation.”

Lord Mansfield, Mr. Justice Grose, Lord Oh. J. Willes, Mr. Justice Lawrence and Lord Kenyon, are all quoted to sustain the position ‘ ‘ that conditions are to he construed to be either precedent, or subsequent, according to the fair intention of the parties to be collected from the instrument, and that technical words should give way to that intention.”

With a canon of construction sanctioned by such eminent authorities, and adopted by our own Court of final resort, it is unnecessary to attempt to reconcile the apparently conflicting decisions of other tribunals ; our duty is, to construe the contract given in evidence, by the standard of intention apparent on its face.

The subject of the contract was aD article of commerce to be manufactured, and to be delivered in certain specified quantities per month, not exceeding a certain maximum per day, at a future period.

The whole time required to execute the contract as stipulated, was six months. Each monthly instalment, was to he settled for monthly, by a note at four months. The oil delivered in September, would be secured by note due on the 1st of February, one month before the expiration of the time allowed for the completion of the contract.

The mode of payment being commercial paper at four months, negotiable by endorsement from hand to hand, every instalment except the last, assuming the contract to have been specifically performed, might have been virtually satisfied and paid for, before the vendee could know whether the whole quantity contracted for, would be delivered. The parties, under these circumstances, could not have considered the contract entire and indivisible either in quantity, or in the details of its performance.

The failure to deliver at all in September, might have been condoned by the defendant; and the partial deliveries in October and November, might have been pursuant to defendant’s directions, as is implied in the first prayer of the appellees; if so, a prayer founded upon the breach of the covenant to deliver one, out of six instalments, without negativing the hypothesis of the appellees’ prayer, was founded upon too narrow a view of the contract, and the evidence in the cause.

A condition precedent, may be waived by the subsequent dealings between the parties to the contract; thus in the late case of Carter vs. Scargill, 10 Queen’s Bench, (L. R.) 564, which was an action by a vendor of the business of a printer and publisher against the vendee. It was agreed that in the event of the business realizing a clear profit of £7 per week, the defendant would pay certain sums in instalments ; several instalments were paid ; others were unpaid; in the action for the latter, the defendant pleaded the business had not been shown to yield £7 per week profit. It was admitted the plaintiff had performed all other stipulations on his part to be performed. It was held “that whatever might have been the question, if it had been raised whilst the agreement was executory, it is clear that the defendant having received a substantial portion of the consideration, cannot rely on the non-performance of that which might have been originally a condition precedent.” * * * * “ The conclusion is, that that which might have been a condition precedent, has ceased to be so by the defendant’s subsequent conduct in accepting less than his bargain, if, in fact there was any substantial deficiency ; and the result is that the condition in question in the present state of things goes only to a portion of the consideration and that not a substantial portion,” etc.

The appellees’ second, and the appellant’s fourth prayer present the several theories of the respective parties, as to the measure of damages.

The appellees’ upon the hypothesis of the facts therein stated, affirms the measure of damages to he the difference between the cost, of manufacturing the oil, and the contract price $1.40 per 100 lbs. thereof; unless the jury believe that after the plaintiffs knew the defendant did not intend to take any part of said oil, the plaintiffs could have sold the same at a price which would make their damages less than under the application of that rule ; and if they so believe, the measure of damages, is the difference between the contract price for said oil of vitriol and that for which it could have been sold, when the defendant refused to take and pay for the same.

The appellant’s jnoposition is, that the measure of damages, is the difference between the contract price, and the market price, during the months in which the appellees allege the appellant refused to receive the oil.

When the appellees’ prayer is analysed, and the obscurity of its terms dispelled, it will be found to differ rather in words, than in sense, from the prayer of the appellant.

Its first- postulate is, the measure of damages is the difference between' the cost of manufacturing the oil and the contract price $1.40, etc., but if the plaintiffs after the defendant’s refusal to receive, could in the opinion of the jury have sold the oil for a sum which would lessen that difference, then the measure of damages, would be the difference between the market value and the contract price.

The qualification, restores substantially, the standard of damages, (viz., the difference between the contract, and the market price,) set up by the appellant.

There could be no doubt from the evidence in the record, that the plaintiffs could have sold the oil, after its refusal by the defendant, for a sum which would very much lessen the difference between the cost of manufacture and the price stipulated for.

There is a great diversity of opinion amongst the Courts of the several States, and between those of England and the United States, as to the proper standard ol‘ damages between vendor and vendee.

It varies according to the circumstances of the contract, the delivery or non-delivery of the articles, and other details which distinguish contracts of sale from each other.

No decision of this Court has been referred to by either party, establishing the measure of damages in a suit by the vendor or vendee like the present. We forbear therefore from laying down any general rule, but think the appellant has had under the prayer granted at the instance of the appellees, substantially, the benefit of the same standard of damages, as that which it proposed should be given by the Court, and was not injured by the instruction given.

The appellees’ third prayer is based upon the theory, that the letter of Myers of the 4th September, 1873, taken in connection with the subsequent dealings between the appellees and the appellant, constituted a waiver of the failure on the part of the appellees, to deliver the oil in September, and was pro tanto, a modification of the contract ; in which event, if the jury so found, they might deduct from the damages which they might allow the plaintiffs, the difference between the contract price of $1.40 per 100 lbs., and the actual cost to the defendant of so much oil, as it procured to make up the quantity not delivered by the plaintiffs in September.

The appellant’s third prayer, claims by way of recoupment and set-off, as a bar to the plaintiffs’ claim, the damages the jury may find the defendant suffered by reason of the plaintiffs’ breach of their contract in September, and may consider the fact of the absolute inability of the defendant to procure the acid in the month of September as an element of damages. This prayer was objected to by the appellees below, by special exception, because there was no evidence to establish the hypothesis of the prayer.

The prayer assumes that au absolute inability to purchase in the month of September existed, and does not leave it to the j ury to find it.

Upon examining the record it is found that the defendant purchased 1110 carboys in September, at $1.50 per hundred lbs.; so that the prayer was not only not founded on evidence, but contrary to the testimony of the appellant. It also entirely excluded the testimony of the appellees, on which their third prayer was founded, and which if true, rendered the appellant’s position untenable.

The letter of Myers to the appellees was written on the 4th of September, 18*73, before any material breach of the contract had actually occurred, the appellees having the whole month to deliver the 2000 carboys in daily deliveries as wanted, not exceeding 80 or 90 per day. The arrangements made upon the receipt of that letter, as predicated in the prayer of the appellees, were in anticipation of an apprehended temporary failure, on the part of the appellees, and qualified the preceding contract to that extent. Hence the instruction based upon its existence, if found by the jury, was entirely correct.

The appellant’s second prayer submits that if the jury find certain conversation between Mr. Sangston and one of the plaintiffs in October 18*73, and certain notification by Sangston, that he, acting for the company, annulled the contract and settled with the plaintiffs for the oil delivered in September, on the express condition that the contract was annulled, and the plaintiffs received the note of the defendant in settlement with this understanding, then these facts together with the subsequent conduct of the plaintiffs as testified to by the witnesses of the defendant, are evidence from which the jury may find the contract was annulled and rescinded by mutual consent, etc.

The evidence is segregated in this prayer, and conclusions are sought to he drawn from the defendant’s testimony, excluding the subsequent transactions of the appellant with the appellees, as proved by them and inconsistent therewith.

(Decided 3rd March, 1876.)

We have examined the evidence carefully and can find no evidence that the plaintiffs agreed that the contract should he annulled or rescinded by mutual consent. Finding no error in the rulings of the Court below, the judgment will he affirmed.

Judgment affirmed.

Robinson, J., dissented.