Orenstein v. Kahn

119 A. 444, 13 Del. Ch. 376, 1922 Del. Ch. LEXIS 45

• Court: Supreme Court of Delaware
• Decided: June 20, 1922
• Status: Published

Opinion

Harrington J.,

delivering the opinion of the court.

The assignments of error referred to, raise the question whether the contract between Kahn and Orenstein is divisible into three separate, distinct and independent contracts, or whether it is one entire and indivisible contract, referring to three kinds of property.

The decision of this question necessarily disposes of this case and makes the consideration of any other assignments of error unnecessary.

In construing contracts, the essential question is to ascertain the intention of the parties. This rule, therefore, necessarily applies in ascertaining whether a contract is divisible, or entire. Bamberger Bros. v. Burrows, 145 Iowa, 441, 453, 124 N. W. 333; 59 Am. St. Rep. note at page 279; Clark v. West, 137 App. Div. 23, 122 N. Y. Supp. 380; Shinn, et al., v. Bodine, et al., 60 Pa. 182, 100 Am. Dec. 560.

The cases cited by the appellee, Kahn, admit this rule. Barlow Mfg. Co. v. Stone, 200, Mass. 158,86 N. E. 306; Pierson v. Crooks, 115 N. Y. 539, 555, 22 N. E. 349, 12 Am. St. Rep. 831; Wooten v. Walters, 110 N. C. 251, 14 5. E. 734, 736.

The intention of the parties, in this respect, must be ascertained from the terms and subject matter of the contract, as well as from the other facts and circumstances shown by the evidence. Johnson Forge Co. v. Leonard, 3 Pennewill, 342, 51 Atl. 305, 94 Am. St. Rep. 86, 57 L. R. A. 225; Gilmore v. Samuels, 135 Ky. 706, 123 S. W. 271, 21 Ann. Cas. 611; Hartford, etc., Co. v. Campbell, (Conn.) Ill Atl. 864; Morris v. Wilbaux, 159 Ill. 648, 43 N. E. 837; 2 Elliott on Contracts, § 1543; 13 C. J. 562; 6 R. C. L. § 858 (p. 861).

This court in Johnson Forge Co. v. Leonard, above cited, expressed this rule as follows:

"Whether the contract is entire or severable is frequently a matter of interpretation, depending on the intention of the parties to be gathered from their acts, under all the facts and circumstances of the particular transaction."

It is urged, however, that where a contract relates to several items or kinds of property, and the consideration is apportioned on its face to each item or class of property covered by it, such a contract is construed as divisible and not entire; the apportionment of the consideration being ordinarily conclusive as to the intention of the parties, at least in the absence of clear and definite proof of a contrary intent.

The following cases were cited in support of this contention: Barlow Mfg. Co. v. Stone, 200 Mass. 158, 86 N. E. 306; Young, etc., Mfg. Co. v. Wakefield, 121 Mass. 91; Pierson v. Crooks, 115 N. Y. 539, 555, 22 N. E. 349, 12 Am. St. Rep. 831; Reeves & Co. v. Block, 31 5. D. 60, 139 N. W. 780; Nichols, etc., Co. v. Wiedemann, 72 Minn. 344, 75 N. W. 208, 76 N. W. 41; Westbrook v. Reeves, 133 Iowa, 655, 111 N. W. 11; B. & O. L. & P. Co. v. Wilson, 57 Neb. , 77 N. W. 762; Odessa Tramways Co. v. Mendall, 8 Ch. Div. 235; Wilcox v. Badger Motor Car Co., 99 Neb. 189, 155 N. W. 891: Woottenv. Walters, et al., 110 N. C. 251, 14 S. E. 734, 736.

The Delaware cases of Reybold v. Henry, 3 Houst. 279, Thurber v. Royal Ins. Co., 1 Marv. 251, 40 Atl. 1111, and Elliott v. Jones, 11 Del. Ch. 283, 101 Atl. 874, were also cited as being to the same effect.

The court below adopted this contention apparently holding that there was nothing to show a contrary intent in this case and using the following language:

“It is clear, however, that these three parts of the contract are divisible from each other, or at least that the agreement as to the merchandise is sever-able as to remedy from the two subject matters. Divisibility of contracts depends largely upon the character of the consideration; if it be single, the contract covering several matters is entire; but if it is expressly or by necessary implication apportioned, the contract is severable.”

While the fact that the consideration is apportioned is undoubtedly an important element in ascertaining whether a contract was intended to be divisible or entire and in the absence of any fact or circumstance showing a contrary intent, may even be conclusive, it is now well settled that where there are other circumstances involved, it is only one of the essential facts to be considered. Producers’ Coke Co. v. Hillman, 243 Pa. 313, 90 Atl. 144; Bamberger Bros. v. Burrows, 145 Iowa, 441, 453, 124 N. W. 333; Morns v. Wilbaux, 159 Ill. 648, 43 N. E. 837; Shinn, et al. v. Bodine, et al., 60 Pa. 182, 100 Am. Dec. 560; Packard v. Byrd, 73 S. C. 1, 51 S. E. 678, 6 L. R. A. (N. S.) 547; Williston on Contracts, § 861, note 38; 59 Am. St. Rep. note, p. 279; 6 R. C. L. p. 858; 13 Corpus Juris, 563.

In Morris v. Wilbaux, above cited, the court said:

“The entirety of the contract depends upon the intention of the parties, and not upon the indivisibility of the subject-matter. The severable nature of the latter may often assist in determining the intention, but will not overcome the intent to "make an entire contract when that is shown."

Bamberger Bros. v. Burrows, above cited, uses precisely the same language.

In Producers’ Coke Co. v. Hillman, above cited, the court also said:

“The distinguishing mark of a divisible contract is that it admits of apportionment of the consideration on either side so as to correspond to the unascertained consideration on the other side. Where such a purpose appears in the contract, or is clearly deducible therefrom, it is allowed great significance when ascertaining the intention of the parties.

“It is a mistake, however, to suppose that in every case it is conclusive in itself. It is determining only when there are no opposing signs or marks. Where these latter are present, it becomes a question of preponderance.”

In determining whether a contract is divisible or entire, the essential question, therefore, is:

“Did the parties give a single assent to the whole transaction, or did they assent separately to several things?” 2 Williston on Contracts, § 863.

If there be a single assent to a whole transaction involving several things or several kinds of property, a contract is' always entire. If, however, there be a separate assent to each of the several things involved, it is always divisible.

In 2 Williston on Contracts, § 863, the author in discussing this question, also says:

“It is sometimes suggested that the test is whether the nature of the subject-matter of the several things to be performed is such that part of the performance will be of diminished value, unless the rest of the performance is furnished. An inquiry of this sort is an aid in a doubtful case in determining whether several things were contracted for in one bargain, or whether several bargains were made, but no more than this can be said.”

And although the consideration is apportioned on the face of a contract, “yet if there be a special agreement to take the whole or nothing, or if the evidence clearly shows that such was the purpose of the parties, the contract would be entire.” Producers' Coke Co. v. Hillman, 243 Pa. 313, 90 Atl. Rep. 144. See, also, Broxton v. Nelson, 103 Ga. 327, 330, 30 S. E. 38, 68 Am. St. Rep. 97; Wotlen v. Walters, 110 N. C. 251, 14 S. E. 734; Los Angeles Gas & Electr. Co. v. Amal. Oil Co., 156 Cal. 776, 106 Pac. 55.

Applying the law, as above stated, to the facts of this case, is the contract between Kahn and Orenstein divisible or entire? If it is divisible, the agreement to convey and accept a conveyance and pay for the store fixtures and stock of merchandise is binding, whether the agreement to convey the real estate be complied with, or not. Was that the intention of the parties ?

The construction of a contract necessarily depends upon the facts of the particular case. The uncontradicted evidence in this case shows that Orenstein agreed to purchase the real estate, with the immediate intention of using it for a place of business; the store located therein to be run for him by his brother. That this fact was known to Kahn, is also clear.

From this aspect of the case it would, therefore, seem that the agreement to convey the store goods and fixtures in said store property was inseparably connected with the agreement to convey the business location; all of the property which was to be conveyed being material and important in the use of the location as a business stand.

This is a fair inference from the evidence, even though, so far as Orenstein was concerned, the desire to purchase the real estate was the moving cause for the making of the contract.

It is also a fair inference from the evidence, that the acceptance of a conveyance of the store goods and fixtures, without the corresponding right to demand a conveyance of the property in which the business, to -which they were essential, was to be conducted, would be a part performance of such diminished value that it could hardly have been contemplated by the parties as a right, at the time of the making of the contract.

It is true that the consideration is apportioned between the three kinds of property referred to. It is likewise true that the five hundred dollars deposit was paid on account of “property 1900 Penn. Ave.,” which we take to refer to the real estate only; and that it was provided that “in case title is not clear, deposit to be returned.”

The evident purpose of; this clause was that the whole contract was to be void if the title to the real estate should prove to be defective.

If the contract was intended to be divisible, why was the return of the whole deposit provided for, in case the. title to the real estate, alone, should prove to be defective?

While'the contract here is not in clear and specific terms an agreement on the one hand to convey, and on the other to accept conveyance of the whole, or none, of the property described in the contract, the principles applying to such a case would seem to apply.

It is apparent that the intent to make .an entire contract overbalances any presumption of divisibility by reason of the apportionment of the purchase price between the three classes of property described; the contract is, therefore, entire and not divisible.

Hermann v. Goddard, 82 W. Va. 520, 96 S. E. 792, and Floyd v. Arky, 89 Miss. 162, 42 South. 569, cited by the appellant, are cases where contracts, somewhat similar to the contract in this case, were held to be entire.

With the possible exception of Wootten v. Walters, 110 N. C. 251, 14 S. E. 734, none of the cases cited by the appellee, Kahn, involve facts in any way similar to this case. They are all cases where the consideration was apportioned in the contract and where ho other facts or circumstances from which a contrary intent might be inferred, were involved.

In the North Carolina case, the court commented on the fact that there was absolutely no evidence to show any intent to sell the two storehouses and stock of goods, as an inseparable whole, and that nothing was said or done tending to show that the parties would not have made the contract, unless it embraced both the store and the store goods.

Our conclusions as to the facts of the case, therefore, differ from the finding of the court, on facts, in that case. If, however, there were no other difference in the facts of the two case's, the clause in the contract between Kahn and Orenstein, providing for the return of the deposit in case the title to the real estate was not clear, is a sufficient difference to distinguish it from the contract involved in Wootten v. Walters.

It is a well-settled rule of equity that specific performance will not be granted where a contract is not complete on its face. Godwin v. Collins, 3 Del. Ch. 189.

The contract in this case was not definite and complete as to the price of the stock of merchandise. Equity, therefore, could not grant specific performance as to that part of the contract, and the contract being entire, a decree for specific performance could not properly be granted as to any other part of it. Nickles v. Hancock, 7 De. G. M. & G. 300; Wood v. Rowe, 2 Bligh, 595; Ford v. Stuart, 15 Beav. 493; Tombigbee Valley R. Co. v. Lumber Co., 155 Ala. 575, 47 South. 88; Elliott on Contracts, § 2276.

For the reasons above given the Court of Chancery was in error in holding the contract in this case to be divisible, and in decreeing specific performance of a portion of such contract; the decree of that court is, therefore, reversed.